Supply chain challenges continue to hold back business growth

Supply chain pressures continue to plague mid-sized businesses with 77% facing persistent disruptions in their supply chains
These pressures outrank rising business costs and workforce challenges as the number one concern for a third of mid-sized businesses in the next six months
As a result, almost half (49.8%) of businesses say they will be onshoring their operations in the next 12 months

Continued supply chain pressures, including cost increases, delayed materials and shortages outrank workforce challenges and increasing business costs as a main concern for over a third (36%) of mid-sized businesses, according to latest research from accountancy and business advisory firm BDO.

The bi-monthly survey – which looks at the challenges and opportunities facing mid-sized businesses - reveals over three quarters (77%) are facing persistent disruptions within the supply chain. Faced with these prolonged pressures, almost half (49.8%) of mid-sized businesses say they will be focusing on onshoring as much of their operations as possible in the next 12 months.

This change in strategy is having the biggest impact for mid-sized businesses within the retail and hospitality, manufacturing and technology and media sectors with just over half (51%) planning to onshore operations, suggesting an urgency to reduce a reliance on imported goods and overseas suppliers. A quarter (24%) of businesses say their supply chain strategy is focused on reducing the impact of global geopolitical events on their business, whilst the same number wish to avoid complex post-Brexit customs regulation.

However, despite many making attempts to onshore operations, over a fifth (21%) of businesses report that costs are too high in the UK. A further fifth (20%) say there are no UK-based suppliers capable of delivering the services they need. Motivated by access to more competition, almost a third (31%) hope to find lower costs in markets with a wider range of suppliers.

Businesses are calling on government to incentivise more UK operations, in order to boost economic growth. When asked about what policies would help their businesses grow this year, a fifth (21%) want to see tax cuts for companies working with domestic suppliers and /or partners.

Ed Dwan, Partner at BDO LLP said:

“While the COVID-19 pandemic and Brexit have fallen out of the limelight somewhat, the supply chain pressures we’ve seen over the past few years are far from easing. Our latest research shows that mid-sized businesses continue to face persistent chaos and disruption, both at home and abroad, with many choosing to onshore operations to the UK, but still facing major barriers in doing so.

“These businesses should not be overlooked by policymakers who need to prioritise domestic partnerships and industry, as without the right support to help manage lingering supply chain challenges, they could see a knock-on impact on plans for improving productivity and UK market growth in the months ahead.”

ENDS

Note to editors

The survey of 500 medium-sized businesses was carried out by Censuswide on behalf of BDO.

Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world.

The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.

We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed. 

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BDO LLP operates in 17 offices across the UK, employing 7000 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

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