US-UK comparison: Supply chain, costs, war in Ukraine

Businesses in the United Kingdom seemed to fare better than US companies on numerous supply chain challenges, RSM data shows. While 48 per cent of US businesses surveyed said in April that their organisations experienced significant negative effects due to unexpected changes or disruptions in supply from an upstream supplier during the previous 12 months, that figure was 39 per cent of the 412 U.K. companies surveyed. This is probably because the US economy is more reliant on imports from China than the UK. Imports from China, which were heavily disrupted during the pandemic and continue to be, accounted for 18.6 per cent of total US imports in 2020, compared to around 7 per cent for the UK.

Of the UK executives whose companies experienced significant negative effects due to disruptions in supply from an upstream supplier over the last 12 months, 46 per cent said they experienced significant increases in price or costs for some items - that's significantly lower than the 78 per cent of US executives. Other areas where significantly fewer UK respondents reported negative effects were in delays in order fulfilment or receipt, unreliable or inconsistent times for order fulfilment and missed deadlines for order fulfilment.

In terms of actions those negatively affected companies took as a direct result of upstream supply chain issues, figures were comparable in several categories for organisations from both geographies; 40 per cent of UK respondents said they found other sources of supply outside the United Kingdom, for instance, and that was 36 per cent for US respondents. Thirty-three percent of UK executives said they exited one or more product lines, and 28 per cent brought production in house for some items previously purchased from suppliers (those figures were 32 per cent and 24 per cent for US companies, respectively).

Distinctions, however, showed up in the percentage of respondents who found other sources of supply outside their respective countries (70 per cent for US respondents and 51 per cent of UK respondents), and those who purchased some supplies from competitors at a premium (51 per cent for the US, 38 per cent for the UK).

‘It would appear that the combined lingering impact of Brexit coupled with the unique properties of pandemic induced supply chain disruptions have created a challenge for UK firms in finding alternative sources of supply,’ says RSM US Chief Economist Joe Brusuelas. ‘Given the shock to the U.K. economy caused by rising oil and energy prices, this implies an extended period of adjustment lies ahead for UK firms.’

On the cost and inflation front, 37 per cent of all U.K. respondents reported increased cost pressures around labour, significantly lower than 56 per cent of US respondents. Sourcing cost pressures were also an issue for more US businesses (51 per cent) than those in the UK (33 per cent), and the same goes for intermediate production costs (35 per cent of US respondents said they were experiencing increased cost pressures on this front, compared to 27 per cent in the UK). In terms of financing and real estate cost pressures, responses from both groups were comparable.

RSM’s April survey also included questions about how organisations anticipate supply chain issues and inflation related to the war in Ukraine will affect their business over the next six months. Effects of the war are already showing up in supply chains for energy, food and other goods.

In both the US and UK respondent cohorts, 38 per cent of executives said they anticipate supply chain delays within their respective countries. Twenty-four percent of US respondents anticipated supply chain delays outside their country, and that figure was 26 per cent for UK respondents. In comparison to their American counterparts, a significantly larger share of UK executives said they anticipate disruptions to marketing and/or sales operations, closing one or more worksites and seeking specialty financing to ensure liquidity.