Supply chain disruption and the associated increase in prices is likely to last well into 2022, new research has found, as British businesses continue to grapple with the long-term impact of the COVID-19 pandemic on UK supply chains.
A survey of 228 UK supply chain managers by the Chartered Institute of Procurement & Supply (CIPS) found that 85% of all respondents had experienced supply chain disruption this year. These professionals expect the disruption to continue well into the new year, with nearly three quarters (71%) expecting their supply chain interruptions to last for 6 months or more. Over a third (36%) expect shortages to exceed 12 months*.
The research reveals the scale of the damage to UK businesses, with risk-laden supply chains setting off a chain reaction of shortages and interruptions. Of those who experienced disruption, nearly half (48%) had increased the cost of their products and 14% were forced to stop selling some products altogether.
These disordered supply chains have also caused significant financial issues for firms, with 91% of those experiencing disruption stating the shortages had put financial pressure on their organisation in the last year.
The impact of shortages on UK businesses
- Delivery delays 71%
- Forced to ovr order stock 49%
- Increased prices 48%
- Less time/emphasis spent on sustainability 34%
- Revised product offering 17%
Dr John Glen, Chief Economist, Chartered Institute of Procurement & Supply (CIPS), said:
“Many businesses may have had the end of supply shortages on their Christmas wish list, but it seems they will be left disappointed with supply chain disruption expected to continue well into 2022. The disruption of this year has highlighted how important smooth running supply chains are to the business community, the economy and the public. As supply chain managers continue to grapple with the magnitude of the challenges of the last year businesses and consumers alike should brace for increased prices and a lack of product choice for some months to come.”
Shortages causes businesses to look for more UK suppliers
A third of UK supply chain managers who experienced disruption have replaced some international suppliers with UK alternatives as a direct result of supply chain disruption, while a further 12% intend to but have not found any suitable UK replacement suppliers yet.
Over 1 in 10 (15%) report that international suppliers had stopped working with them as a direct result of supply chain disruption, showing the shortening of supply chains is occurring in both directions.
Dr John Glen added:
“Many supply chain managers have turned to more local suppliers to adapt to these challenges, and while this may be a suitable solution for some, the unpredictable nature of supply chains means relying on a small pool of suppliers is always a dangerous game to play. Supply chain managers looking ahead to the new year should diversify their supply chain as much as possible and aim to build strong relationships with their existing suppliers to ensure they are in the best possible place to adapt to any future disruption.”
*Throughout this release unless otherwise stated the data is a percentage of the 85% of respondents who had experienced supply chain disruption in the last year. For completeness, 60.25% of all respondents expect supply chain disruption to last six months or more.
About the survey
These findings were drawn from a survey of 228 UK supply chain managers, 193 of which had experienced supply chain disruption. The survey ran from 18 November to 2 December 2021.