- These issues have cost £9.3bn1 in the past 12 months with lost orders, delayed deliveries and businesses turning down customer requests as they knew they would have fulfilment problems
- A third of businesses (36%) affected had to temporarily close their doors to cope – including a significant number of restaurants and pubs which have been particularly affected by availability of workers
- The biggest causes of supply chain issues in the past year were COVID-19's impact on labour (30%) and goods crossing borders (29%) – followed by the impact of Brexit on regulations (25%)2
- As a result of the issues, 80% of business leaders are set to simplify their supply chains, with many switching to more localised solutions to avoid the problems with international labour and materials
Supply chain problems have caused disruption to three-quarters (74%) of UK high street businesses in the past 12 months – costing them £9.3bn in the process.
According to research carried out by global risk management and insurance brokerage Gallagher, in the past year, businesses experienced serious supply chain disruption six times on average. This directly led to a loss of income, with many companies taking the extreme step of temporarily shutting down elements of their business (36%).
Across industries, building and construction was worst affected, with 80% of companies in this sector experiencing supply chain issues in the last 12 months. Healthcare closely followed (78%), as PPE shortages caused issues, and coming in third was catering and hospitality (74%).
Meanwhile, one in twenty (6%) restaurants owners said that they had to close their doors at some point in the past 12 months due to supply chain issues, while a similar proportion of pubs and bars (7%) experienced problems.
Businesses have been left out of pocket by having to turn customer orders down (19%) or absorb increased costs (16%) due to a lack of supply driving up prices. Meanwhile, almost half of all businesses who have ever taken legal action due to supply chain issues did so in the past 12 months3.
COVID-19 was the leading cause of supply chain disruption, affecting access to labour (30%) and the ability of goods and materials to cross borders (29%). The impact of Brexit regulation on borders (25%) and labour (18%) also had a notable impact, while a lack of drivers hit one in 10 businesses – as recently seen at petrol stations across the country. Political instability abroad (9%) and environmental disruption (8%), such as wildfires in the US and droughts in Brazil in 2021, played a role too4.
The vast majority of business leaders (71%) expect supply chain issues to continue in 2022 – with IT (84%), healthcare (78%) and construction (78%) bosses particularly concerned. Businesses predict that COVID-19 legacy issues (53%), Brexit fallout (36%) and even global warming (7%) will cause continued disruption.
To combat future issues, 80% of businesses intend to alter their supply chains. Despite the turmoil of the past year, this could mean a long-term benefit to some UK businesses, with 15% of senior leaders saying they’ll switch to domestic suppliers in 2022 to avoid cross border issues chains. Others intend to move away from 'just in time' supply chains (14%), increase automation (11%) or use insurance (10%) to help offset any financial impact. Currently 51% of businesses are uninsured for supply chain issues.
Commenting on the findings, Neil Hodgson, Managing Director of Risk Management at Gallagher, said: “Often operating behind the scenes, supply chains have been unusually visible to the public in the past year, with high profile shortages causing disruption. Business leaders clearly see further problems on the horizon and are keen to put the lessons of this year to use and make long-term changes – like looking closer to home for suppliers.
“No matter where your business sits within a supply chain, failures can have serious financial and reputational costs. Organisations should speak to their insurance broker who can advise on steps they can take to help mitigate issues. Tools like contract risk management, where risk specialists will review agreements in place with suppliers, and business continuity plans which help prepare businesses for critical issues, are key to help ensure businesses can keep trading effectively.
“Trade credit insurance is also a key tool when risks are changing. This can be used not only to help protect against bad debt, but also to protect against non-delivery through the supply chain. Trade credit has seen a step change in product development over recent years and historically seen as only an option for largest firms, innovation has seen new products become available, that can insure against specific projects, or clients at a small one off cost – making the cover affordable and accessible to even the smallest of businesses.
- There are 4,568,000 businesses in the UK with 0 employees, 35% of which had supply chain issues in the past 12 months, losing an average of £2,182 in that time period = £3,488,581,600
There are 1,405,000 businesses in the UK with 1-49 employees, 58% of which had supply chain issues in the past 12 months, losing an average of £6,893.60 in that time period = £5,617,594,640
There are 11,000 businesses in the UK with 50+ employees, 92% of which had supply chain issues in the past 12 months, losing an average of £19,151.30 in that time period = £193,811,156
£3,488,581,600 + £5,617,594,640 + £193,811,156 = £9,299,987,396 or £9.3bn
All business size data via Parliament Research Briefings
- Percentages refer to the proportion of businesses who experienced supply chain issues and had been impacted by this factor. Please note percentages can add up to more than 100% due to the ability to choose more than one causes of supply chain issues
- 14% of businesses took legal action against another business in the past 12 months as a result of supply chain failures – while 35% have done so at some point in the past (including the past 12 months). This means 41% of all businesses who took legal action due to supply chain issues did so in the past 12 months
- NB: Percentages add up to more than 100% as respondents were able to pick the top three causes of supply chain issues impacting their business