Global instability is rarely welcome news for businesses. But for UK supply chain startups, it may actually be opening doors that did not exist a few years ago.
Research from accountancy and advisory firm BDO found that 57% of UK businesses say supply chain pressures and higher energy and fuel costs are some their biggest challenges as companies deal with the effects of conflict in the Middle East.
For context, this survey looked at 500 UK mid market businesses with revenues between £10m and £500m. Fieldwork took place between 24 April and 11 May this year, so this is a very recent look at how business leaders are reacting to it all.
For startups building tools around logistics, sourcing, supplier management and inventory tracking, this kind of disruption could possibly create demand. Businesses that once operated with long international supply chains are now rethinking where products come from and how goods move and are exposed they are to overseas events.
That creates an opening for UK startups building local supply chain tools, software and manufacturing networks.
What Is Making Businesses Rethink Their Supply Chains?
BDO found that 39% of business leaders named supply chain concerns such as material delays, higher costs, stock shortages and suppliers going out of business as a top worry.
These issues are affecting a particularly important section of the economy. BDO said UK mid market companies generate more than £1.8tn in revenue and account for one in three private sector jobs.
When companies of this size start changing how they buy, source and manage goods, it creates real commercial opportunities for newer businesses ready to help.
The research also found that 60% of mid sized businesses plan to stop or reduce investment until conditions settle. In retail and tech, that actually came to 69%, while financial services came in at 67%.
That caution may sound negative, but it also means businesses are likely to spend more carefully and look for better, more viable tools that solve immediate problems. Startups that help businesses track stock levels, spot supplier risk, automate procurement or source locally may become more attractive than longer term experimental spending.
Richard Austin, partner at BDO, said, “The mid-market is vital to wider UK growth. These companies are an overlooked engine of our economy, but instead of focusing their sights on expansion, they are struggling to absorb the latest economic shock in an uncertain global and political backdrop.”
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Are UK Suppliers Becoming More Attractive?
One of the most interesting findings from the research is how businesses are reacting.
BDO found that 31% of business leaders are prioritising UK based suppliers, while 28% are considering onshoring or nearshoring.
That’s important because it creates more room for startups connecting UK businesses with domestic suppliers, warehouses, manufacturers and transport providers.
A business that once sourced materials from multiple countries may now want a shorter supply chain with fewer risks. That can benefit startups building supplier marketplaces, sourcing platforms or software that helps businesses manage local procurement.
This also creates an opportunity for UK manufacturing technology startups. If more businesses want local production, demand may grow for smarter inventory systems, warehouse software, route planning tools and production management platforms.
Austin says this is one of the more positive findings in the report. He said, “There are bright spots in this research for UK manufacturing. However, mounting pressures around energy, fuel costs and supply chains, which were issues affecting businesses even before the conflict in Iran, are only adding to the sustained feeling of uncertainty amongst business leaders.”
So, What Support Are Businesses Asking For?
Businesses are not pretending these pressures are easy to manage as BDO found companies are considering difficult business decisions, with 38% thinking about increasing customer costs and 30% looking at delaying hiring or reducing headcount.
Business leaders are also asking government for help over the next 12 months, particularly around supply disruption support, transport costs and fuel relief.
This may create another opening for startups. If businesses cannot rely on policy support arriving fast enough, many will look for private solutions that help them work around problems faster.
That is where supply chain startups can become useful…
Austin said, “Now more than ever, it is crucial that the government is listening to the mid-market and helping them address these challenges head on, whether it be through supply chain disruption support or targeted energy cost relief. Addressing these challenges head on could be the key to providing the stability needed to reignite the UK’s economic growth.”
Global crises are creating more issues for businesses, but they are also forcing companies to rethink how they source, ship and stock products. That rethink, for UK supply chain startups, could turn into a timely business opportunity.
