In a poll of construction industry managers, 83% said they had experienced an issue with their supply chain over the past 12 months and 85% said that they expected supply chain issues to pose a challenge in the next 12 months.
59 of the 100 companies in the survey said that once profitable projects had become unprofitable because of supply chain issues over the past year.
According to a new report, Supply Chains and the UK Construction Sector from QBE Business Insurance with Oxford Economics and Control Risks, the outlook for the UK construction industry in 2023 is likely to be as disruptive as 2022 was, with geopolitics and domestic developments continuing to affect access to materials and their price.
Andy Kane, construction portfolio manager at QBE, said: “Construction firms in the UK have seen continuing shortage of materials and supply chain disruption since the start of the pandemic. Therefore, it is no surprise that the majority of those we surveyed have seen disruption which has ultimately impacted profitability. With these challenges set to continue throughout most of 2023, now is the time to take action to limit disruption and protect profitability.”
He continued: “There are steps that construction industry leaders can take in order to lower their supply chain risk. This includes shifting away from the ‘just in time’ supply chain model we have witnessed in recent years to a ‘just in case’ supply chain.”
In addition, businesses can take steps such as using technology to automatically order supplies when stock levels go below a certain point, look to diversify suppliers and, where higher input prices are the likely fallout from supply chain disruption, consider adding a cost escalation clause to future contracts.
Many of the construction firms surveyed said they taking steps such as diversifying supply chains (42%), holding greater stocks of important materials (31%), establishing robust monitoring systems of stocks and suppliers (23%) and nearshoring (17%). However, 18% had taken no action.
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