UK businesses are facing disruption due to supply chain issues, with industries such as hospitality, retail and construction all affected by Brexit, COVID-19 and the Russia-Ukraine war.
According to the ONS, the construction industry has seen stock levels change as much as 5% quarter-on-quarter as industries feel the effects of the last few years.
The combination of these issues has resulted in shortages of many of the products that UK businesses rely on, from food and drinks to timber and plaster to energy price increases which have all contributed to the severe impact on supply chains, resulting in where UK businesses experiencing delays on receiving products.
In addition to the supply chain delays and unavailability of stock, businesses are also dealing with increased average costs impacting most industries too.
Impact of Brexit
Due to Brexit, traders moving goods are required to meet the Rules of Origin which involves extra paperwork and expense. The new processes increase the costs of importing and exporting goods and the additional paperwork causes further delays in the movement of goods. Around 60% of the UK’s building materials are imported from the EU, so the impact of Brexit has a big knock-on effect to the UK construction industry.
Another impact from Brexit is that there is now stricter rules around foreign labour, which has led to a shortage in construction site workers, which has further delayed projects and caused increased costs to companies.
Impact of Covid-19 Pandemic
Due to travel restrictions, national lockdowns and business closures throughout the health pandemic, many materials were either completely unavailable for long periods or there were long delays for delivery. Materials such as sand, cement, bricks and plaster were all in shortage, leaving construction companies unable to deliver projects on time.
It was estimated that 80% of UK businesses were forced to cancel or postpone projects due to the pandemic and many companies are still trying to recover from the project delays.
Increasing Costs – Record Low Profits
While larger companies with diverse portfolios have been able to absorb increased costs, small to mid-sized companies have found it harder to overcome the challenges, with 115 companies filing for administration in the first half of 2022, according to Construction News. Profit warnings for public-listed companies increased by 66% compared to the first half of 2021.
How Companies are Overcoming the Challenges
One of the solutions that construction companies are trying is moving from the ‘Just in Time’ to the ‘Just in Case’ model. With supply issues expected to last at least until summer 2023, 84% of UK businesses plan to switch to the ‘Just in Case’ approach to prevent material shortages.
At FixFirm we are constantly reviewing our processes and services to ensure that we can provide the best possible support to our clients. Our proactive supply chain partnerships enable us to help our clients to navigate the supply chain issues that the UK is currently facing.
FixFirm have invested heavily in increasing our stock holding over the last two years in order to shield our customers from much of these supply chain disruptions. We carry stocks of over 10,000 separate products on our shelves and are consistently running at 99% of these products available at all times from immediate stock!
Find out more about how we can help you to reduce the impact of supply chain issues and take advantage of our ‘Just in Case’ stock holdings so you don’t have to carry excess stock!
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