Strengthening the chain

Developing agile and more resilient supplier networks.

UK businesses have ingeniously and tirelessly navigated the persistent supply chain pressures of the past few years. With trade finance playing a supporting role, their focus is now shifting to future proofing, by developing more agile and resilient supply chain models.

Jaya Vohra

Global Head of Trade & Working Capital Product Management and Trade Client Management

Steering through the storm

Over the past five years, various factors – Brexit, the pandemic, geopolitical events, economic volatility and rising prices to name a few – have challenged and stretched traditional supply chain models.

Despite a range of pragmatic solutions to overcome the seemingly relentless challenges, supply chain disruption continues to impact many UK businesses. For example, 47% of manufacturers¹ are having to extend fulfilment times, while billions of pounds worth of unsold items are sitting in warehouses because key materials are unavailable.

Businesses are now focusing on developing more sustainable, agile and resilient supply chain models, which may require significant investment and alternative financing solutions.

Dealing with supply chain challenges

In the Barclays Corporate Chain Reaction research report, our findings concluded that:

39% of manufacturers have increased storage to hold more stock

37% of manufacturers have increased their supplier base

33% of manufacturers have moved to nearshore suppliers

Manufacturers, in particular, are increasingly implementing agile strategies to mitigate supply chain risks and improve business continuity. These include:

Shifting from ‘just in time’ to ‘just in case’

Many manufacturers are replacing the traditional ‘just-in-time’ inventory management model with a high-inventory ‘just-in-case’ approach. By holding larger inventories on hand, businesses are better able to deal with unpredictability across the supply chain.

Near-shoring

To boost value chain resilience and reduce cost risks, UK companies are increasingly widening their supplier base, while also moving all or some of their production closer to home.

Friend-shoring

Manufacturers are also choosing to build supply bases in – or re-routing their supply chains to – friendly or allied nations perceived as politically and economically safer or low-risk, to improve reliability of supply and production security.

Financing for success

Transforming supply chain models to boost resilience requires significant investment. At the same time, businesses must continue to deal with ongoing supply chain disruption, an uncertain economic environment and rising prices, the growing emphasis on ESG practices, compliance with complex sanctions regulations, and a changing regulatory environment – all of which add financial strain.

Managing these pressures on your business can include:

Optimising your working capital cycles to respond to buyers’ requirements for longer credit terms and suppliers’ requirements for faster payments

Exploring lending facilities structured around your working capital cycles, such as via trade loans, import finance, asset-based lending or sales finance

Accessing additional funding to manage the rising cost of materials and the needs of new suppliers, such as inventory finance, invoice finance or supply chain finance

Taking advantage of government support via UK Export Finance – helping you access the support you need to fulfil contracts, and guarantee payments even in challenging markets.

Jaya Vohra wishes to thank additional contributors:

Lee Collinson, Head of Manufacturing, Transport and Logistics, Barclays Corporate
Julian Walker, Chief Commercial Officer, Associated British Ports

¹https://www.barclayscorporate.com/insights/industry-expertise/chain-reaction/

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