Global supply chain and logistics consultancy Scala has warned that with the ongoing Iran conflict “weighing heavily” on the economic outlook, many UK businesses could be “financially unprepared” to withstand disruption.
Scala’s latest report, titled ‘The Resilience Gap: Assessing the Risks and Readiness of Global Supply Chains‘, was based on a survey of senior supply chain leaders. It found that 52% of UK businesses had only partly commenced strategies to avoid financial losses from supply chain disruption, while 14% have no strategies in place to mitigate serious financial impact.
Scala said that businesses faced renewed uncertainty around energy prices, shipping routes, input costs and service continuity, with geopolitical instability “continuing to test the resilience” of global supply chains.
The consultancy also revealed that 57% of businesses could not continue sales order processing or purchasing if their main system failed, while 52.4% said they were poorly prepared for war or political issues.
The findings suggested that many organisations remained exposed not only to operational disruption, but to the financial consequences that follow. A production delay, transport interruption, system outage or geopolitical shock could quickly feed through into lost sales, higher costs, cashflow pressure and weakened customer confidence, said Scala.
“Every supply chain disruption, be it a minor transport issue or a full-blown cyberattack, is also a financial event.”
Chris Clowes, executive director at Scala, said: “Every supply chain disruption, be it a minor transport issue or a full-blown cyberattack, is also a financial event. When goods cannot move, systems cannot process orders, or a key customer stops operating, the impact can quickly move from the warehouse or transport network into the accounts.
“Businesses are aware of the risks facing them, but too many are still only part-way through the work needed to protect revenue, cash flow, and service levels when disruption happens.
“Businesses should be stress-testing the financial impact of different disruption scenarios now. That means understanding where revenue is concentrated, where systems are fragile, which customers or products carry disproportionate risk, and what contingency options are commercially viable before the next shock arrives.”
The report set out practical actions to strengthen financial resilience, including:
- Identifying where a business is most exposed, including key suppliers, transport routes, IT systems and major customers.
- Using scenario modelling to determine the likely cost of different disruption scenarios, such as a warehouse outage, supplier failure or transport delay.
- Putting contingency plans in place to protect cashflow, customer service and revenue if disruption occurs.
- Reducing over-reliance on a small number of customers, suppliers, products or locations.
- Reviewing which products, markets and customers are most profitable once the full cost of serving them is considered.
- Ensuring back-up IT systems are in place so orders and purchasing can continue if core systems fail.
- Making supply chain resilience a regular board-level discussion, with clear actions, owners and progress checks.
