Research Reveals Supply Chain Disruption Cost UK Manufacturers 58 million
New research has revealed that large UK manufacturers lost in the region of £58 million during 2013 dealing with the fall-out from supply chain disruptions.
Results of a survey commissioned by global supply chain risk management company, Achilles, shows the average cost of all supply chain disruptions was £105,000 per manufacturer and most could have been prevented.
The survey was carried out among procurement professionals from 108 manufacturing companies with 250 plus employees.
The top findings revealed manufacturers were hardest hit by supply chain disruptions and more than half of those surveyed suffered from failure to deliver products of the required quality costing the industry an estimated total of £20.4 million.
A total of 61percent of manufacturers suffered from failures of delivering on time creating an average bill per disruption of £55,000.
One third of manufacturers, 32 percent, experienced the financial failure of a supplier with 46 percent paying a financial price.
Smaller costs included the consequences of severe weather disruption and natural disasters which carried a bill of £3.6 million, damage to reputation cost £2.4 million, suppliers failing to meet health and safety regulations cost businesses £0.79 million and suppliers being involved in industrial action cost businesses a further £0.26 million.
Adrian Chamberlain, Chief Executive of Achilles, said: “This research shows that manufacturers are paying a heavy price for supply chain failures; many of which could be prevented.
“In our experience, efforts to improve information about the supply chain work best when whole industries, such as oil and gas, work collaboratively to agree and implement standardised requirements of all suppliers in terms of business critical areas, such as health and safety to reduce the burden of administration.
“They can then manage the information on a global, centralised database, implementing the same high standards not only in the UK but in every country in which they operate.
“With a significant impact on the bottom line, addressing supply chain failure should be at the forefront of people’s minds, because the cost will be felt not only by industry but also shareholders and consumers.”
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”