Increased pressures on UK supply chain

Cranfield School of Management professor of supply chain strategy Professor Richard Wilding OBE, said: “For any supply chain to operate you need processes, IT systems, physical infrastructure and equipment but critically you need people to support this. What we are seeing here is the removal of one of the critical fundamentals of the supply chain, people.

“Typically, organisations plan for a 3% absentee rate, what we are seeing here appears much higher and causing significant problems. Any reduction in the workforce above planned levels will always cause disruption. 

“The challenge is the ‘pingdemic’ affects all part of the supply chain in both the front end where customers are served in supermarkets, restaurants, hotels, pubs, health care settings but also the back end of the supply chain that supports these businesses including warehouse operators, delivery drivers, lorry drivers moving things across the country, manufacturing plant operators and ultimately those involved in waste collection and recycling.

“Even if you have a fully staffed supermarket, if you have a warehouse or a production plant running at 50% of its capacity, you will have problems filling shelves with product. The same is true if you lose supermarket workers, if you have product but nobody to stock the shelves or staff the tills, you can’t operate effectively.

“With no end in sight of the ‘pingdemic’, organisations will have to plan and prioritise operations to take into account a reduced work force, possibly over a sustained period. This could include reducing the number of shifts operated, focusing on the essentials, focusing only on high profit margin products and services to maximise revenue with the limited resource available and, in the worst case, shutting down parts of operations.  

“All these actions will potentially impact on consumer choice and the customer experience. The already burning platform of the pandemic is driving all organisations to explore automation in all areas to a greater extent. Supply chains will never return to the old normal and the impact on our society will continue as we move into the new normal.

“The challenge is that it is not only the “pingdemic” putting strain on supply chains, floods in Europe causing re-routing and disruption, hot weather causing change in customer buying patterns and the huge backlog in HGV driver tests caused by the pandemic, for example, all contribute to supply chain volatility and pressures.”

The Protocol

Dave Howorth, executive director at supply chain and logistics consultancy, SCALA, also commented on the Government’s plans to overhaul the Northern Ireland trade agreement, as well as the potential fallout for businesses.

“Ever since the Protocol came into place on 1st January there has been significant disruption to supply chains between mainland UK and Northern Ireland. While businesses and hauliers have come to terms with some of the onerous administrative requirements there are fundamental obstacles associated with some products, most notably sausages and chilled meats due to the UK leaving the EU and its food regulatory standards.

“At the crux of this issue, and the other challenges associated with the supply of products from UK mainland to Northern Ireland, is the fact that in order to avoid a hard border between Northern Ireland and ROI Northern Ireland effectively remains part of the EU single market as it stands. 

“Beyond a potential “Sausage War” it is clear that the Northern Ireland Protocol is forcing businesses to rethink their supply chains. Retailers in Northern Ireland have already switched to more local sourcing. They are experiencing additional cost of supply from the UK mainland and therefore, ultimately, prices to consumers have increased. One wonders whether at some point retailers such as Sainsbury and M&S will ultimately consider the difficulty of supplying to and trading in Northern Ireland too high an effort to sustain, with today’s news that M&S will be cutting its Christmas range unless a resolution could be found a potential harbinger of events to come. 

“In terms of resolution the stakes are high. If the UK Government was to press the “nuclear button” and independently refuse to comply, the EU may take punitive action and suspend parts of the wider UK-EU Trade Agreement, which would send a shudder down the spine of Supply Chain Directors across the UK and Europe.”