Firms have 'heads in the sand' over supply chain challenges

17 August 2022

Business leaders have been told it is “unrealistic” to expect disruptions to be over by Christmas, despite renewed optimism. 

Nearly two-thirds (63%) of business leaders said they expect supply chain disruptions including shortages of raw materials to be over by the end of 2022, according to research by software company IFS.

Over half of survey respondents (55%) said they expected skills shortages within supply chains to ease by the end of 2022 and a further 57% believed disruptions caused by increased regulatory burdens, including Brexit trade friction, would be over by Christmas.   

However, Maggie Slowik, global industry director at IFS, said: “We are seeing many large enterprises across the UK still putting their heads in the sand and refusing to be realistic about how long the current supply chain disruption will last, and the response needed to mitigate the challenges being faced. 

“In particular, our survey highlights that the majority of respondents believe that current disruption will be over by the end of this year – with Brexit one of the areas they are most bullish about.”

Slowik's warnings come as businesses have been told to expect skyrocketing energy bills this winter following Russia’s war in Ukraine, as well as inflation on raw commodity prices.

In response to the disruption, firms said they had boosted inventory (76%), increased supplier numbers (75%), and sourced a higher proportion of materials/products from domestic suppliers (76%).

Slowik warned “short-term fixes” will not solve the issues in the long term.

She said: “Whilst nobody can fault a desire for a positive outlook after a tough couple of years, the truth is that the impact of supply chain disruption is, in many cases, here for the long haul and not only that, disruptive events are bound to happen at an accelerated pace in the future.

“Rather than focusing on short-term fixes like stock hoarding and increased vendor networks, businesses should be taking a longer-term perspective and concentrating on bolstering their supply chain management capabilities.”

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