Five years after the UK’s departure from the EU, businesses are still grappling with supply chain challenges and the complexities of international trade.
The demand for improving and streamlining supply chains has rocketed, particularly as geopolitical tensions rise in China, Ukraine and the Middle East.
This article delves into the strategies businesses can implement to tackle these challenges in 2024.
Understanding post-Brexit supply chain challenges
First off, let’s identify some key insights from the post-Brexit landscape:
According to a recent report by Cambridge Econometrics, the UK’s Gross Value Added (GVA) was 6% lower in 2023 than it would have been without Brexit, with the gap projected to widen to 10.1% by 2035. The UK is also expected to see 5% lower exports and 16% lower imports than if it had remained in the EU.
Furthermore, the Office for Budget Responsibility (OBR) assessed that trading under a ‘typical’ free trade agreement would reduce long-run productivity by 4% relative to remaining in the EU.
However, the economy has shown some level of resilience. As of November 2023, 73% of trading businesses with ten or more employees could procure materials, goods, or services they needed without disruption. This marks a sustained improvement from the pandemic and shows that UK businesses are bouncing back.
Despite this, supply chain pressure on businesses, particularly SMEs, remains high due to escalating costs and the cost of living crisis.
Other supply chain pressures
In recent years, there’s been no shortage of geopolitical pressures affecting global supply chains, including geopolitical tensions with China and the war in Ukraine.
Research from the Institute of Directors (IoD) recently revealed that 35% of UK importers felt impacted by geopolitical pressures, leading to a reexamination of their supply chains.
Notably, 1 in 5 importers have already altered their supply chain, and an additional 15% are considering making such changes. So, how exactly can businesses strengthen their supply chains?
Streamlining supply chains for efficiency
Supply chains are multi-faceted, and their complexity is considerably higher for some businesses than others. However, most firms have some form of supply chain and can take steps to strengthen it.
Here’s how:
Technology integration
AI and predictive analytics tools are transforming supply chain management. Through AI technology, businesses can analyse large data sets, including historical sales, market trends, and external factors like seasonality, to make more accurate forecasts. This improved forecasting enables businesses to optimise inventory levels, reducing excess stock and associated carrying costs.
Meanwhile, Internet of Things (IoT) technology provides real-time visibility into the location and conditions of goods in transit. For instance, IoT sensors can track a product’s journey from the warehouse to the customer, providing valuable data on transportation times, route efficiency, and product conditions, such as temperature control for perishables.
Supplier selection and management
Choosing the right suppliers to work with is fundamental to a robust supply chain. The selection should be based not only on cost but also on factors like reliability, quality, and the supplier’s capacity to scale their operations as your business grows.
Meanwhile, establishing solid relationships with suppliers can help you secure improved contract terms and foster collaborative problem-solving.
Regularly evaluate your suppliers to ensure they continue to meet your standards and adjust your supplier base as needed to maintain a high-performing supply chain.
Efficient inventory management
Effective inventory management is vital to having the correct stock levels at the right time. Techniques such as Just-In-Time (JIT) inventory can help reduce storage costs and minimise waste, but they also carry risks like potential stockouts.
Implementing a sophisticated inventory management system can provide valuable real-time data, assisting in making more informed decisions about stock levels, reordering times, and inventory allocation.
Streamlining logistics and transportation
Optimising logistics and transportation is essential for reducing costs and improving delivery times.
Efficient route planning, shipment consolidation, and the strategic choice of transportation modes can boost efficiency.
Regularly analyse your logistics performance to identify areas for improvement and stay informed about the latest trends and technologies in logistics and transportation.
Summing up
As we forge ahead into 2024, these challenges will continue to evolve. If you’re experiencing supply chain disruptions in your business, we’re here to help.
From streamlining your operations to offering advice on managing your cashflow, our bespoke services are designed to strengthen your business’s financial foundation so you can focus on building a business that stands the test of time.
Contact us to find out how we can help you navigate supply chain problems.