Brexit and customer pressure chief challenges for supply chain

Supply chain leaders rate the threat of Brexit and price and service pressure from major customers as the chief challenges in 2016.

A poll of industry professionals by consulting firm Scala also found that more than a third (37.5%) are considering delaying supply chain investment decisions in response.

Scala managing director John Perry said the economy faces a range of emerging threats and that executives must find the right balance between tactical and strategic responses: “It seems clear that Brexit is a real strategic threat to the existing supply chains of British business, but that the chief day to day issue facing executives are customer service level demands and pressure on pricing.”

The poll found that customer pressure on price and service was ranked as being the biggest single challenge by 90.3% of respondents, with Brexit ranked as very or extremely important by 80.6%.

Results were much more mixed when considering other issues currently facing the supply chain sector, such as market dynamics, the introduction of the Living Wage and the growth of omni-channel operations.

Respondents also highlighted the risks currently surrounding global trade, with the increased threat of protectionism and the prospect of a falling pound in relation to the dollar both cited as key challenges.

Scala asked more than 3,000 senior industry contacts for their views and found 94% of respondents were aiming to prioritise reducing operating costs in response to current market conditions.

Perry adds, “British businesses are operating in a financially constrained environment and industry leaders need to think innovatively if they are to continue to develop their operations.”

The survey did find some cause for optimism – executives stated their supply chain priorities this year include improving supply chain planning (90.6%) and developing collaboration initiatives (87.5%).