Businesses brace for supply chain impact but are better prepared – RSM
Supply chain pressure started building again in April following a strong rebound in the first quarter, according to the Supply Chain Index published by Bristol- and Reading-based audit, tax and consulting firm RSM UK
Added to the SCI, a recent survey by RSM of middle market businesses in April found that 46 per cent of businesses who had encountered supply chain issues had seen a major increase in the price of goods.
It also found that unanticipated supply chain issues had caused 44 per cent of those affected businesses to experience a major hike in operating costs and 42 per cent to see a reduction in profitability.
Paul Anthony (pictured) regional managing partner for RSM South said: "In the past month our clients in the south have seen their order books lengthening from their own customers.
"Normally this would be a good sign, but under the current circumstances it puts huge pressure on them. If businesses can’t get supply, they can’t service their order book, which hinders growth and could potentially have more serious consequences for some businesses."
On the flip side, however, local manufacturers and multinational businesses are better prepared than they were before the pandemic to address such disruptions.
RSM’s survey found that, in the last 12 months, 42 per cent of businesses have increased the number of suppliers to become less reliant on one source. A third have near-shored supply chains with another 41 per cent considering this in the next 12 months.
Thomas Pugh, economist at RSM UK said: "Middle market firms face an increasingly challenging outlook.
"The Russian invasion of Ukraine has dramatically increased the scarcity and prices of a broad range of commodities, from oil to wheat, and that’s driving up costs.
"Restrictions on exports from Russia and coronavirus-related shutdowns in China risk sparking another supply chain crisis before the economy has recovered from the last one.
"As a result, instead of marking a return to normality after the challenges of the pandemic, 2022 is likely to be another extremely challenging year for the middle market."
