With new requirements coming from Brexit and ongoing restrictions from Covid-19, recent research has highlighted that 6 in 10 businesses have experienced import and export delays at the UK-EU border since the start of the year.
The research conducted by the Chartered Institute of Procurement and Supply (CIPS)[1] focuses on the growing challenges and pressures industries face. Now over a third of businesses report delays by several days in moving goods from the UK into the EU and nearly half cite the same delays from EU into UK.
Financial management of supply chains
The financial management of your supply chain in the shadow of Covid-19 and Brexit is critical in the face of this significant disruption, with further changes still to surface. These are challenges that no sector can afford to ignore or gloss over – from the threat of shortages to increases in the cost of raw materials and components; from the rising cost of imported goods to any necessary tariffs and the movement of goods across borders.
Naturally, each sector also has its own particular added pressures. Demand volatility and uncertainty have left many manufacturing businesses with increasing operating costs, disrupted supply chains and a reduction in productivity due to health and safety requirements. Now 50% of manufacturing businesses believe their operations will not stabilise before the next planning process[2] and 26% feel their operations will not stabilise during 2021 or beyond.
For example, in Food and Beverages, disrupted supply chains make it more difficult to meet fluctuating production levels. Internationally sourced ingredients and packaging supplies may take longer to arrive given the reduction in flights and shipping. The same can also be said for locally sourced items such as seafood[3], where new legislation causes delays to the usual production or delivery lead times.
“The Covid-19 crisis has created an imperative for companies to reconfigure their operations—and an opportunity to transform them. To the extent that they do so, greater productivity will follow.”[4]
– ‘The next normal arrives’, McKinsey & Co
Good supply chain management equates to good cash management
With such a complex set of problems and an ever-changing environment, supply chain management needs careful attention – to properly account for lead times, costs, tariffs and any extra administrative burden through importing and exporting – plus the need to safeguard and keep growing overseas markets.
Ultimately, good supply chain management equates to good cash management and there are key actions your business can take now to mitigate challenges and any future vulnerabilities, including:
- Focus immediately on the present changes to the supply chain in order to ride out the current challenges.
- Manage cost and profitability effectively and make rolling forecasts on supply chain management for the future.
- Develop recovery strategies including inventory and data control, pricing and distribution decisions and resist using stock as a buffer.
- From a cash flow perspective, aim to reduce inventory and wastage.
- Address weaknesses in value chains to be ready for the uncertainty ahead while tackling any immediate issues from the current changes.
At Axiom, we have financial planning solutions that specifically support your individual sector needs. You can gain a better understanding of the impacts and changes that affect your industry, in order to reduce financial risks, deliver operational efficiencies, improve financial performance and, ultimately, grow every business through the immediate challenges and beyond.
Accurate forecasting to align with strategies
By using accurate forecast and budget data, your business can align supply management strategies with immediate and long-term objectives. For instance, Axiom’s Reporting and Analytics module can help your business to transform your financial data into insights by analysing and visualising financial and operational data to identify and highlight trends, variances, and improvement opportunities.
Our new eGuide, ‘Fit for the Now’, focusses on helping you through the range of pressures including those we’ve listed here, and how you can best manage and forecast your financial performance in these difficult times of ongoing uncertainty.
Axiom’s eGuide, ‘Fit for the Now: Adapting to challenging times and economic uncertainty’, explores:
- The immediate challenges for different sectors
- The importance of cash management
- Developing effective supply chain management
- Workforce planning and management
- Financial management data at a detail level
If you’d like to find out more about how you can empower your critical decision-making and leadership with agile financial planning in these uncertain times, download a free copy of our eGuide here.
[1] https://www.cips.org/supply-management/news/2021/january/six-in-10-uk-firms-hit-by-post-brexit-border-delays/
[2] https://www.westmonroepartners.com/perspectives/in-brief/manufacturing-business-planning-and-budgeting-in-a-post-covid-economy
[3] https://fishingnews.co.uk/news/23m-cash-for-exporters/
[4] https://www.mckinsey.com/featured-insights/leadership/the-next-normal-arrives-trends-that-will-define-2021-and-beyond