Carol Lynch, Customs and International Trade Services Partner provided commentary to Sean Pollock, Irish Independent regarding the recent supply chain challenges SMEs are facing according to the new Irish SME Sentiment Index conducted by BDO and Ibec.
Irish companies face a “real risk to security of supply” as a new survey finds 62% of Irish SMEs have undertaken new strategies to deal with supply chain challenges, with 94% claiming it had led to higher costs.
According 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 said the supply chain crisis had shown businesses that several geo-political factors, including Brexit and Russia’s war in Ukraine, can effect profitability.
She notes 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 Carol. “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, she said companies should re-assess how they are currently doing things. She said evidence of this was already prevalent, with 70% of SMEs increasing customs expertise and 69% changing trade routes.
Carol 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.
If you have any queries related to the information discussed in the podcast, please contact Carol Lynch at [email protected] or click here to see how our CITS team can help you.
Content adapted from the Irish Independent.