Chain reaction

Supply issues leave £3.5bn of goods unfinished

Imports of components and other materials have been held up

About £3.5bn of products are in Scottish warehouses awaiting completion because of supply chain delays, according to a new study. 

The research by Barclays reveals that nearly nine in ten (86%) Scottish businesses are lacking raw materials, ingredients or component parts to finish off products. For each company this hold up in the supply is valued at an average of over £1.8m.

The study – ‘Chain reaction’ – focuses on manufacturing businesses with more than ten employees and found that many of those impacted by supply chain issues were finding ways to overcome the problem.

Products in the steel and metals sector are most severely affected, with £9bn worth of goods incomplete – equivalent to almost a fifth (19%) of the sub-sector’s annual turnover across the UK.

The most affected consumer goods sector is food and drink, with delays in sourcing ingredients causing a £3bn backlog. A high value of plastic products (£2.6bn) and electronics (£2bn) are also awaiting completion.

The trends are reflective of supply chain disruption that has challenged the manufacturing sector since the pandemic and nearly seven in ten (69%) Scottish firms say they are still facing supply issues.

This has been exacerbated by the invasion of Ukraine and the aftermath of the UK’s exit from the EU.

Customer relationships are now being impacted with over half (56%) of Scottish manufacturers saying their customers are having to wait longer for products and 21% describing the hold-ups as ‘significant’.

To offset rising costs such as energy and transportation, almost eight in ten (79%) manufacturers are planning price increases for their own products, of 38% on average.

The industry is innovating to solve these challenges. Most commonly, Scottish businesses are spreading their bets by increasing the number of different suppliers they work with (42%).

To prepare for the fact raw materials are taking longer to source, nearly four in ten (39%) have upped their storage capacity. Meanwhile, over a third (36%) are “near shoring” to move their supply chains closer to home and 33% have “friend shored” to work with suppliers in countries that have a strong trading relationship with the UK.

Lee Collinson of Barclays Corporate Banking, said:“Manufacturing firms have done what they do best and engineered new solutions to limit the impact of the issues they face.

“As a result, many businesses will enter the new year with a degree of cautious optimism and confidence.”

Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.