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Opinion > Aldermore

Protecting against supply chain disruption and the domino effect

Chris Meldrum, national business development director at Aldermore | 14:15 Wednesday 4th March 2020

Disappointingly, many UK SME business owners don’t understand their supply chains.

Recent research from Aldermore shows that 59% of SMEs don’t fully understand all the components of their supply chain and nearly one in 10 (9%) say they have no knowledge of any of their business customers whatsoever. The most concerning statistic is that one in 10 UK SMEs believe they would not survive disruption to their supply chain.

If SMEs want to be able to withstand supply chain disruption, then they first need to have a good understanding of who their suppliers are and where they are based. Aldermore found that over half of UK SMEs (51%) have suppliers based in the EU. This could potentially cause complications in the future as a trade deal with the EU has yet to be finalised. SME business owners will likely be aware that there are still significant questions over how the transition period will play out and how this will impact their supply chains. To combat the continued uncertainty over any trade deal, it’s important for UK SMEs to have an increased awareness of their supply chains.

With many business leaders pressed for time running their business, what can they do to ensure they have a robust supply chain? Overall, there are a few straightforward ways to manage a supply chain more effectively. One of the key things SME business owners can do is to create a supply chain map which shows the full picture of their supply chain network. This will make it much easier to visualise where potential change is needed and highlight potential risk areas within their supply chain.

Business owners can also work on building good relationships with their supply chain; clear communication makes risk areas easier to identify and will be useful in the event of any issues. If possible, also try to identify key stakeholders in your supply chain to negotiate with, as this could make it easier to amend certain processes and plan for contingencies.

Aldermore will continue to work closely with its SME clients and assist them to navigate supply chain changes. Within our invoice finance team, we are proactively looking at our clients to see who may be impacted and what we can do to support them. Whether it is a haulier which delivers parts from a UK manufacturer, or a recruitment agent providing labour into an impacted factory or distribution warehouse, both types of businesses will likely experience volatility in demand. Neither manufactures a product or trades stock, but they are key sectors using invoice finance.

Events like the current coronavirus outbreak are rare, yet even minor things, such as bad weather, can disrupt supply chains. By being prepared and understanding their supply chains, business owners can not only save time and money, but also potentially prevent their business from serious detriment.

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