Supply chain crisis chaos creating enormous uncertainty says boss of UK’s fastest-growing company
He says:
“The humanitarian crisis in Ukraine is quite rightly the critical area of concern at the moment, and the economic consequences are of secondary concern.
“Nonetheless, the economic consequences for companies are massive.
“It is unfathomable how deep and intrusive the whole crisis is upon the overall supply chain. The crisis is creating huge enormous uncertainty for businesses.
“Even companies that do not have direct exposure to Russia are being forced to undergo a massive re-examination of their supply chain, which will eventually have a knock-on effect on the economy, stoking inflation.
“The supply chain itself is an incredibly complex web of intertwining parts, and companies have to check if there are any links to Russian companies, even though they don’t deal with Russian companies directly.
“Among the challenges companies are facing are:
“The need to review all documents and engage in detailed due diligence looking for potential risks in their supply chain that were not considered a risk a few weeks before.
“Banking pressure, with banks asking customers to review their client and supplier list.
“The fear of financial penalties, even though a company might not be aware of a Russian link in the supply chain.
“There are also concerns regarding payments, from legacy transactions dating back to before the Ukrainian crisis involving Russian companies.
“Meanwhile, rising shipping costs creates a question mark over how companies can even fund their supply chain.
“On top of all this, companies are also having to examine potential exposure to regions near Ukraine such as Poland or the Czech Republic, to factor in the possibility of an escalation of Russian military operations or even in the event that the crisis overwhelms supply chain infrastructure in these countries.”
About OCI:
Working capital cycles are at their longest ever, restricting businesses’ potential for growth.
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