business matters

The global logistics crisis and what UK retailers can do about it

The world is currently experiencing a crisis in the shipment of goods and it’s affecting UK businesses more than most. A combination of Brexit, Covid-19 and red tape have brought supply chains to a grinding halt and it’s a major concern for retailers.

Mike Jones

Head of Delivery, ILG

At ILG we’re working closely with our customers to minimise the impact of the delays. But why is this happening now and how can you best manage the crisis?

Perfect storm

The problem can be traced back to before the pandemic. With the benefit of hindsight, there were growing weaknesses in the global supply chain that may have looked manageable at the time but became unmanageable in the light of Covid.

With e-commerce booming, consumer demand at the end of 2019 was at an alltime high. In the UK, the haulage industry came into the pandemic already under pressure. Lockdown turned the screw, triggering a steeper rise in online shopping and accelerating a growing shortage of lorry drivers, brought on by Brexit, the IR35 tax regulation and slow processing of new driver applications.

Prior to the pandemic, there were around 600,000 lorry drivers working in the UK, a shortfall of around 60,000, according to the Road Haulage Association. In the last two years that shortfall has grown to around 100,000. Drivers have been retiring or leaving for alternative careers and not enough have been coming on board at the bottom of the ladder.

To compound the delays, some of the world’s biggest ports were forced to close this year due to Covid outbreaks, leaving cargo ships anchored at sea, unable to unload for weeks. In August, a terminal at the third largest port in the world, Ningbo-Zhoushan in China, had to close for a month, causing a knock-on effect through other Chinese ports and adding to the backlog still being felt from the Suez blockage in March.

It was a perfect storm of swelling demand, plunging supply and major hold-ups.

Impact on retailers

For UK retailers, the crisis is having a double impact of extensive delays and soaring prices. In September we received two shipments from China that were booked in April. That’s a five-month turnaround on a shipment that would normally take a few weeks. Another shipment booked in June is yet to arrive.

With everyone fighting to secure what little supply they can find, prices are going up on average £500 every two weeks. This has caught many people off guard.

Some of the world’s biggest brands have already declared that there will be shortages at Christmas and some distribution orders will not be fulfilled. And with Chinese New Year bringing its usual slowdown in January, things aren’t expected to improve until the end of Q1 2022. Even that is looking optimistic. We could well be looking at Christmas 2022 before things return to normal.

How to manage the crisis?

Our conversations with customers revolve around managing the crisis rather than finding solutions. In truth, there is no overnight solution. Eradication of the Covid threat, a revision of UK law and a streamlining of the driver qualification process will all make a positive difference, but will all take time. In the meantime, it’s a case of being aware of the situation, managing your customers’ expectations and making sure your processes are as efficient as possible, so there are no additional delays.

Number one - get your shipment spec exactly right before submitting it. Any late changes will cause new delays, which will be magnified several times over in the current climate.

Number two - give more notice. Shipments from China and India currently need two to three weeks’ notice rather than the usual one, so try to work to that schedule if you can.

Number three - as most quotes are only issued on a two-week basis, be prepared to book on provisional rates, so that you’re ready to go as soon as your shipment becomes available.

We’re aware that this is far from comforting news but it’s a global situation that, like Covid, we’re stuck with and must learn to live with. Along the way, we are constantly monitoring the situation, looking for solutions and helping our customers to keep their customers satisfied. It requires patience, understanding and a strong nerve but we’ll get there.

Shaping your future: business optimism high despite challenging months ahead, finds Kreston Reeves research

The business environment has never been so uncertain. The impact of the global pandemic and Brexit is likely to be felt for many years to come, bringing new challenges, opportunities and change. So too will the mitigation of climate change, the continuing impact of technology and changing working patterns. For many businesses, it is difficult to know what tomorrow might hold.

Andrew Griggs

Senior Partner, Kreston Reeves

That is why we have conducted a nationwide research project where we explore the issues, constraints on growth, priorities and plans for the future of 652 business leaders across the UK. Businesses must continue to look ahead and shape their future.

Our research, published in a report called Shaping your future, suggests businesses are incredibly confident for their future but are facing significant challenges over the next two years, with reduced cash reserves, stressed supply chains, and a tough recruitment environment.

The headline findings from our Shaping your future report include:

36% of businesses surveyed report lower cash reserves now than at the beginning of the COVID pandemic.

20% of businesses that have borrowed from Government-backed loan schemes do not expect to repay that money.

Despite this, businesses are upbeat for their future – 39% expect to see turnover increase by up to 25% in the next 12 months, and 27% expect turnover to increase by between 26% and 50%.

52% of businesses are experiencing supply chain delays of up to six months, with a third (32%) looking to reduce output and orders as a result.

62% of businesses experiencing supply chain delays expect profitability to fall by up to 10%; 29% expect profitability to fall by 11-25%.

23% of businesses are prioritising training and upskilling their workforce and 20% on staff retention to address recruitment challenges.

27% of businesses offer no incentive programme to their employees at all. A third of businesses surveyed expect to fund future growth through retained profits and organic company growth.

Over half (56%) say they are exploring merger and acquisition (M&A) opportunities over the next 12 months.

The current economic and business environment is incredibly tough for businesses: in some ways coming out of the pandemic feels harder than it did when COVID first began to bite. The shared common experiences of the first lockdown, where all businesses had to adapt to new working patterns, no longer exist as businesses return to whatever their ‘new normal’ might be.

It is encouraging, therefore, to see businesses so confident for their future – 87% of the businesses we spoke to are ‘confident’ or ‘very confident’ about the future of their business. There is much to celebrate.

This does not hide worrying signs on the horizon. Supply chains are causing serious problems for businesses and are predicted to do so for two or more years. That is, say businesses in our research, hitting bottom line profits. A fifth (20%) of businesses surveyed do not believe they will be able to repay COVID borrowing and then there is the threat of rising inflation having risen to a 10 year high of 4.2%.

Finding and retaining staff are also very real issues across many industry sectors and show no signs of abating. A key component of attracting and keeping staff are the incentive programmes offered over and above pay, and over a quarter (27%) of businesses surveyed offer no such programme leaving them at a disadvantage.

It is important, now more so than ever, that business leaders take stock, understand those pressures facing their business, identify and plan for future pinch points, and shape the future they want for their business.

You can download a full copy of the report by visiting:

www.krestonreeves.com/ shapingyourfuture

The Kreston Reeves Shaping your future report is being supported by a series of events, roundtables and articles over the next two years. We invite you to join the conversation at #shapingyourfuture

Beatson Clark solve “near-impossible” mould measurement accuracy problem with Baty Venture XT Vision System from Bowers Group

Looking for ways to improve the inspection of its critical components, Beatson Clark sought the help of Bowers Group, investing in a Baty Venture XT 3030 CNC to assist in its measurement of critical dimensions of mould components that produce the necks of glass bottles and jars.

Geoff Jackson

Business & Product Development Director, Baty

One of the UK’s largest manufacturers of pharmaceutical glass containers, Beatson Clark has been designing and manufacturing glass bottles and jars for 270 years and is still leading the way in quality, flexibility and innovation.

Whilst constantly striving to provide superior performance in its quality and service, the company also has an ongoing commitment to continuous improvement, investing in future technologies.

Offering a wide range of glass containers for the food, pharmaceutical and beverage markets, and working with clients such as Gaviscon, Hendricks and Baxters, the products Beatson Clark produce must be of the highest quality to protect its reputation and that of its customers’ brands.

As highly specified tooling is the start to the process at Beatson Clark, an improved inspection system was the next logical step in its evolution as the company looks for improvements across the whole factory. The Baty Venture XT offered the ideal solution for its unique measurement requirements for presented within its mould shop.

Used every day, primarily by quality department inspectors, the Baty Venture measures components that form the neck area of bottles and jars. These components have many critical dimensions and form the bulk of the systems work, allowing the team to check batch parts thoroughly and ensure only quality components are used in production. With its user-friendly design making the machine quick and easy to learn, the XT is also utilised to qualify machinist’s work, allowing for all components that make up a tooling set to be inspected along the manufacturing process.

Daryl Fletcher, Mould Shop Manager at Beatson Clark, said: “The vision system is very impressive. It is fast, accurate, and user friendly. Being able to import DXF files gives us the option of comparison as well as direct measurement. The software is intuitive and easy to use, yet very powerful with recognising features and alignment. We can very quickly give basic training to many users, so we are not reliant on a single person. There is one particular feature on our guide plates that previously was near-impossible to measure with any sort of accuracy and repeatability. The Baty now makes this measurement very easy and has already proved its worth.”

The Venture XT has a 300mm x 300mm x 200mm XYZ stage and includes a controller and two 19-inch monitors. With its simple teach and repeat process, the powerful CNC model takes the power of fusion software one step further by completely automating the inspection process. This allows advanced features, such as scanning and best fitting, to be done quickly without taking up the time of skilled operators.

The critical features that make up the neck equipment are extremely difficult to measure with any form of accuracy using traditional equipment, leading to the inspection of components being both difficult and time-consuming. The XT now renders the process simple and reliable with its ability to measure with complete accuracy, ensuring good tooling through to the moulding machines which translates into fewer quarantined products.

Speaking of the success of the Venture system, Daryl said: “The Baty Venture 3030 has been a great addition to Beatson Clark. So far it has improved speed and accuracy when inspecting the mould components that has translated to improvements in production, and we are still finding uses for it due to its ease of use and versatility. As a previous user of Baty, I was pleased to see that the team has continued to be extremely professional with good communication from the start and everything promised has been delivered. The ongoing support and backup have been excellent.”

The software is intuitive and easy to use, yet very powerful with recognising features and alignment. We can very quickly give basic training to many users, so we are not reliant on a single person.