86% of SMEs suffer supply chain disruption

Nearly nine in 10 SMEs have experienced supply chain disruption and difficulty this year, research by Paragon Bank has found. A survey of 1,000 firms, conducted on behalf of Paragon by Opinium, found 86% of companies had experienced some form of supply chain issue.

The most common issue was rising cost of goods and services, reported by 41% of firms, followed by the availability of goods (34%). One in five companies (20%) have experienced a supplier going bust. Other issues businesses have experienced are suppliers prioritising other clients (18%) and poor ESG practices from suppliers (16%). A third of businesses (37%) that have experienced supply chain issues found the disruption caused to be significant, with 49% experiencing a moderate impact.

Larger SME companies were more likely to report a significant impact to their organisations, with over half (54%) of companies with a turnover of between £25 million and £40 million experiencing significant supply chain disruption, falling to 36% for companies with a turnover of between £1 million and £2.5 million.  

John Phillipou, Paragon Bank Managing Director of SME Lending, said: “Supply chain problems have been an issue since the onset of the pandemic and are continuing to affect businesses of all sizes. This is not only impacting the input materials SMEs need to produce goods, but the assets they use for the business, such as machinery or vehicles – and this has been further impacted by the recent weakness of the pound.

“Many of our clients have been refinancing existing assets because they know they will need to run the asset for a longer period than they typically would. For example, a business that replaces an asset every three years may now run that asset for five years or longer, which comes with performance or maintenance issues.” 

He added: “We would hope supply chain disruption would ease as we head into 2023 and global manufacturing centres, such as China, operate more normally. However, businesses can’t be certain about this and need to factor in a degree of flexibility into their businesses.”