Irish companies face a “real risk to security of supply” as a new survey finds 62pc of Irish SMEs have undertaken new strategies to deal with supply chain challenges, with 94pc claiming it had led to higher costs.
ccording to professional services firm BDO and business group Ibec’s SME sentiment index, more than six-in-10 Irish businesses have changed supply from British to EU suppliers over the last 12 months. It also found nearly a third of companies had diversified sales into Europe.
Commenting on the results, Carol Lynch, a partner in the BDO Customs and International Trade Services division, said the supply chain crisis had shown businesses that several geo-political factors, including Brexit and Russia’s war in Ukraine, can effect profitability.
Lynch said the changes in supply chains had seen companies move from just-in-time models and substantial outsourcing to a more costly just-in-case model and on-shoring.
She mentioned Janet Yellen, the US treasury secretary, calling on “trusted” US allies to strengthen their trade relationships with the country.
“This is an opportunity for Ireland in light of our strong relationship with the US,” said Lynch. “In particular, the difficulty here, as we see it, is your friend today might not be your friend tomorrow depending on their economic needs.
“All this means Irish companies are facing a turbulent time, an increase in costs and a real risk to security of supply.”
To respond to supply chain challenges, Lynch said companies should re-assess how they are currently doing things. She said evidence of this was already prevalent, with 70pc of SMEs increasing customs expertise and 69pc changing trade routes.
Lynch said she had not seen sufficient diversification of sales into Europe, which was important “particularly with the expected slowdown in the UK economy”.
The survey was carried out between the end of May and June among 167 SME business leaders in multiple sectors.
