Businesses are reporting serious challenges to supply chains, with stock lead times hitting 56 weeks for even the most basic items.
Accountants, business and financial advisers Kreston Reeves in a survey of 100 businesses in London and the South East found that 41% are currently experiencing significant supply chain challenges with a further 17% expecting problems in the very near future. The issue is particularly acute for UK manufacturers.
One manufacturer has reported stock lead time of up to 56 weeks for even the most basic of items.
Andrew Tate, Partner and Head of Restructuring and Transformation at Kreston Reeves said:
“Manufacturing businesses are facing a perfect storm of delays caused by COVID, Brexit and the temporary closure of the Suez Canal, with stock lead times typically between 24 and 56 weeks.
“The demand for high quality and high value UK manufactured products is there, but the ability to stockpile for even just a few weeks is not possible for most businesses. Businesses are unable to fulfil orders and are taking a hit on margins.”
The problems rest in transportation rather than overseas manufacturing, with businesses simply unable to ship to the UK. Problems are expected to continue into the summer of 2022.
“The COVID pandemic has meant that businesses cannot send staff overseas to sort our problems on the ground, and when they can the transportation is simply not there,” says Andrew.
Increased costs to UK manufacturers caused by supply chain delays are currently being absorbed by CBILS and Recovery Loan funding that has yet to be spent, but funding challenges loom large.
Andrew says: “What will happen when that funding is exhausted? Will banks respond if more funding is needed? Businesses experiencing supply chain challenges should be speaking to their banks now.”