BCC calls for summit to resolve supply chain crunch

29 Sep 2021

Business

Research by the Office of National Statistics (ONS) has shown that during August and September almost one in five businesses were either not able to get the materials, goods or services they needed from within the UK, or changed suppliers or found alternative solutions to do so.

Across all industries, 10% reported they were able to get the materials, goods or services they needed, but had to change suppliers or find alternative solutions to do so. This is up from 8% in early July 2021. The construction industry reported the largest percentage at 28%, an increase from 15% in early August 2021. This was followed by the accommodation and food service activities industry and the manufacturing industry at 16% and 12%, respectively.

Across all industries, 8% reported they were not able to get the materials, goods or services needed, this has remained broadly stable from early August 2021. The other service activities industry reported the largest percentage at 20%, followed by the wholesale and retail trade; repair of motor vehicles and motorcycles industry at 13%.

In contrast, across all industries, 34% of businesses reported they were able to get the materials, goods or services they needed in late August 2021 without having to change supplier. The remaining businesses reported that supply chains were not applicable. Industries such as information and communication and education (private sector and higher education businesses only), which have a higher proportion of businesses reporting not applicable, are included in the headline figures. Also, businesses who have paused trading and respond to this question are more likely to select not applicable.

Overall, the construction industry was the top industry experiencing a change or disruption with supply chains, with 36% of businesses not permanently stopped trading reporting they either were not able to get the materials, goods or services they needed from within the UK, or had to change suppliers or find alternative solutions to do so.

Businesses not permanently stopped trading were also asked how their stock levels for the last two weeks compared with normal expectations for this time of year.

Of businesses not permanently stopped trading, 5% reported that stock levels were higher than normal, while 11% reported that stock levels were lower than normal. Almost one in four businesses (24%) reported that stock levels had not changed while the remainder either reported not sure or not applicable. These figures have remained stable since late December 2021.

The accommodation and food service activities industry reported the largest percentage of businesses that indicated stock levels were lower than normal at 30%, followed by the wholesale and retail trade; repair of motor vehicles and motorcycles industry at 23%.

The accommodation and food service activities industry also reported 27% of businesses experiencing supply chain changes or disruptions, and that the main reason for their changes in stock levels was the coronavirus (COVID-19) pandemic. In recent media, there have been reports of some businesses within the accommodation and food service activities industry experiencing supply shortages.

Responding to the latest ONS survey on business conditions, William Bain, Head of Trade Policy at the BCC, said: “This data backs up our own findings that the supply chain has been facing persistent challenges for the last few months. It is no surprise that more than one in three trading businesses have experienced problems in sourcing materials, goods and services at home, or had to change suppliers.

“Over the last 18 months, our own research has also illustrated the unprecedented impacts on revenue, cash flow and international trade.

“As recently as Q2 2021, we found that nearly 3 in 4 exporters reported no sales growth.

“We also discovered that 82% of construction sector firms that attempted to recruit in that quarter said they faced recruitment difficulties – the highest level on record.

“Around half of construction sector firms also cited ‘inflation’ as more of an issue to their business than the previous quarter.

“Other issues picked up included commodity shortages, skills shortages, new costs to international trade, and insecurity of supply chains

“The ONS data shows Brexit continues to be a major factor too, with companies experiencing challenges on both imports and exports, issues with customs duties and rising transport costs.

“This is further strong evidence that the UK Government should convene a summit with key business organisations and firms to consider the short and long-term solutions. The supply chain disruption must not be allowed to worsen over the next few months in the run up to Christmas.”