More than seven out of ten importers are experiencing disruptions in their supply chains according to a new survey from the Confederation of Swedish Enterprise.
Swedish Enterprise asked its member companies how well their supply chains are working. In a panel made up of member companies, 77 per cent of 730 companies said that they have experienced difficulties importing goods and services. 62 per cent are experiencing problems with prices going up and 60 per cent with delays in deliveries.
Björn Wedin, Trade Policy Advisor at Swedish Enterprise, believes that businesses are keen to maintain trade with the outside world, but that currently they have to work creatively to solve challenges arising from supply chain difficulties.
How do delivery problems impact business operations?
“They affect businesses in many different ways, of course. Strategies that were previously well-established are now being reconsidered by many businesses.”
Wedin continues:
“However, we don’t see in our figures any major trend towards bringing production home to Sweden, for example; rather, businesses want to continue trading with the rest of the world. The idea that globalisation is on the wane, as many claim, is not supported by our figures or by global trade statistics.”
For the time being, many businesses are working to increase their inventory to create buffers. So there’s a shift, at least temporarily, towards a more “just-in-case” mindset instead of “just-in-time”. In parallel to this, businesses are looking to expand the number of suppliers so they are not as vulnerable to disruption, explains Wedin.
“With greater diversification, businesses are able to avoid situations where they have all their eggs in one basket.”
Is there any light at the end of tunnel?
“Both yes and no. Many of the factors that are currently negatively impacting global supply chains will persist for some time. But we can also see that businesses are adapting their operations to current circumstances.”
“The key thing going forward is that the EU pursues a trade policy that reflects the needs of businesses and creates more opportunities for businesses to spread risk. This has been overlooked recently.”
The issue of market access needs to be higher up the agenda, Wedin believes; pointing out that more free trade agreements would give businesses access to new markets and thus create new opportunities for diversification.
Svalson AB – a family business based in northern Sweden that has been manufacturing electric sliding doors since the 80s – has had to adapt in several ways in the face of supply chain disruption.
“We’ve been hit hard by shortages of materials,” says Svalson CEO Maud Spencer.
Spencer describes how manufacturing components such as cogs that the company used to import from China are now made on site after the factory in China closed in the wake of the pandemic.
“We’ve had to manufacture these parts ourselves by hand and it’s very time-consuming.”
It is hard to get hold of materials in general, Spencer adds.
“It takes a long time to source new suppliers and find alternatives. And then once you find someone to order from, you don’t know when what you ordered will turn up.”
Previously, the business had a glass supplier that delivered everything in well-organised batches. When they had to change supplier, glass suddenly arrived unsorted, which meant that their own staff had to do this on site.
“Two extra people out of a total of 12 employees now have to work with material handling. It goes without saying that this makes a big difference to us in terms of resources.”
Unfortunately, Spencer believes this is the new normal for her and many other businesses.
“I think this is how we’ll have to work in the future.”
“I don’t see any change going forward. Rather, I think this is how we’ll have to work in the future. Much more work will need to be done on materials and suppliers, something that previously just happened,” she says.
When deliveries from China became more complicated, the business looked closer to home. Spencer is currently in France to start up a production facility there.
“Glass production and deliveries work better here, especially with lower shipping costs within the EU, so this is attractive for us.”
Trade