Industry collaboration: The key to tackling supply chain disruption

Though the chemical supply chain remains resilient, the latest CBA Supply Chain Survey, Q3 2024, highlights  the challenges and disruptions the industry still faces. In terms of sales, while 20% of companies have seen an improvement since Q2, up from 9% during the same period last year, 55% of respondents reported they remained the same, indicating that growth is still slow.

Similarly, with 75% of respondents reporting no change in sales margins over the quarter, and only 18% expecting improvements over the next quarter, it is clear that disruption has negatively impacted business and trade.

A hotchpotch of challenges

The chemical supply chain is essential for everyday life, ensuring access to vital products like food, medicine, and other necessities that support public health and wellbeing. Furthermore, while the chemical industry might have been previously seen as a polluter, it is the key to a sustainable future. And, with over 97% of manufacturing having a chemical input, it is perhaps not surprising that the chemical supply chains face challenges on multiple fronts.

As each issue requires a different approach, it is imperative that industry and government works collaboratively to address them. An industry-wide problem is the ongoing skills shortage. With the recruitment of fresh talent falling short of demand, future growth and innovation throughout the supply chain is potentially stalled. The legacy of Brexit, particularly UK REACH, has created chronic issues. This has led to increased bureaucracy and higher import/export costs, driving some UK companies to withdraw their operations from the UK.  

The legacy of Brexit, particularly UK REACH, has created chronic issues. This has led to increased bureaucracy and higher import/export costs

The Ukraine-Russia war and Red Sea shipping attacks continue to be major causes of disruption, causing materials and container shortages, blocked supply routes and road haulage capacity issues. The result is delays, scarcity and higher costs.

This is evidenced by the CBA’s Supply Chain Survey, which in Q3 2024 showed that 57% of respondents experienced increased shipping costs and Red Sea-related disruption of their operations while 16% reported problems relating to the Ukraine-Russia war. The knock-on effect of this disruption impacts not only the chemical industry but also many other supply chains, the wider economy, and ultimately, the public that rely on their products.

Collaborations and initiatives

Collaboration between industry stakeholders is essential to address the current challenges effectively and bring stability to the supply chain. Regarding UK REACH, the industry’s trade associations have persistently lobbied the government on the regulation’s operability and practicality and the impact of duplicate testing and costs. With some success achieved through the extension of deadlines and an agreement to consult on an alternative model, associations continue to work with multiple stakeholders, including government, towards a workable solution while supporting members with training, advice and online resources, such as the UK REACH Online Consultation Webinar.

Since the election, the chemical industry has increased its calls for greater collaboration and even closer ties with the government, with letters, orchestrated by the CBA, sharing direct correspondence with the Prime Minister and government departments like DEFRA and the DfT. At the same time, members have written to their local MPs asking for closer collaboration between government and industry for the betterment of the entire chemical supply chain.

Although it has been widely reported that the UK economy is suffering from an acute shortage of workers, there is not necessarily an urgent issue in the chemical supply chain. However, there is no room or time for complacency, not least as there is an ever increasing ‘war on talent’, as well as several factors that are likely to have an impact.

Although it has been widely reported that the UK economy is suffering from an acute shortage of workers, there is not necessarily an urgent issue in the chemical supply chain.

This includes the fact that many experienced members of the workforce are approaching retirement and there are skills shortages in the cohort that will step into their roles. There is also a general lack of awareness of the opportunities that are available, while negative perceptions of the chemical supply chain prevent potential recruits seeing it as an employer of choice.

Many stakeholders are involved in finding solutions to the skills shortage. More than 40 key industry associations and organisations participate in Generation Logistics, a DfT-backed project which seeks to raise awareness of logistics career opportunities and pathways in a bid to improve recruitment across the spectrum of industry roles. Likewise, Generation STEAM aims to tackle chemical supply chain skills shortages by encouraging the study of STEAM subjects; expanding on the traditional STEM with an A for arts, ability and ambition that emphasises the industry’s need for creative problem-solvers. The initiative also promotes career opportunities and pathways within the supply chain while highlighting the beneficial contributions these careers can make to society.  

Although it is essential to encourage new talent into the chemical supply chain, to address current challenges, it is equally important to develop the skills of today’s workforce and ensure employees stay in the sector by providing better career progression and upskilling opportunities. One initiative that successfully addresses these issues is the Future Council. By facilitating projects on which aspiring young professionals can work together, Future Council members benefit and learn from the wider group’s experiences and skills. This helps nurture talent by giving members a much broader understanding of the supply chain than they would experience in their daily roles.

With unresolved Brexit and skills shortage issues, together with ongoing conflicts, there remains a great deal of work to do to tackle disruption in the chemicals, pharmaceuticals, materials, minerals and oil and gas industries. At the same time, the chemical supply chain needs to be prepared for future disruption, such as the potential for protectionist trade tariffs that can have a global impact on growth. With these challenges ahead, industry associations, like the CBA, together with stakeholders and government, will continue to collaborate on resolving issues and implementing vital initiatives.

Tim Doggett is CEO of the Chemical Business Association (CBA)