What Are The Causes Of Construction Supply Chain Disruptions?

Construction supply chain uncertainty continues at an all-time high in the UK. The ongoing pandemic, lack of skilled workers and the ripple effects of Brexit all contribute to rising prices and building costs. According to the BEIS Monthly Statistics of Building Materials and Components report, material costs rose every month from September 2020 to September 2021.

The shortage of skilled construction labourers means bricklayers are now charging upwards of £220 per day, and those fees were £180 per day before the crisis, The Financial Times reports. Construction companies and contractors need to effectively assess and manage these disruptions to mitigate the risks associated with loss of profit and rising labour and material costs. In this blog, we’ll discuss the causes of construction supply chain disruptions and how to be ready for a crisis so your company can be prepared and proactive.

What Is A Supply Chain Disruption?

A disruption is defined as a “disturbance that interrupts an event, activity or process”. A supply chain disruption is the interruption of the manufacture of goods and their delivery to the consumer. Today’s modern supply networks are complex, and the process contains many moving parts. The global supply chain connects countries and suppliers around the world, but one disruption can have ripple effects on several economies. The Coronavirus pandemic has demonstrated how interconnected our world is and how supply chain disruptions can have severe consequences for global markets.

Factors That Cause Supply Chain Disruptions In Construction

• Reputational And Compliance Issues

Since supply chains are so widespread, each so-called link in your supply chain can cause major disruptions to your business if risks materialise. Disasters like corruption scandals or safety compliance failures can scar your business’ reputation, and part of supply-chain risk management is ensuring compliance with all relevant legislation. This can protect your business from compliance risks and legal liabilities that can have devastating consequences.

Implementing an effective supply chain risk management process is crucial to avoid a complete stand-still in manufacturing and production when things go awry.

• Natural Factors

The flow of goods and services in the global marketplace means that a tsunami in the Philippines could halt your business operations across the world in the UK. Natural disasters, calamities and widespread disease can be sudden and devastating for supply chains, as we’ve seen with the effects of the COVID-19 pandemic. Unexpected spikes in demand for products like toilet paper early in 2020 resulted in shortages and widespread panic, while stay-at-home orders caused a halt in the production of many goods. These shortages are continuing in 2022 due to the pandemic and are expected to continue through the coming months.

• Man-Made Factors

There is an increased risk of accidents and physical injury with any manufacturing, construction and any profession that requires physical labour. If one or many employees at a particular location become injured, this can disrupt your production and distribution. They may have to take days, weeks or months to recover, depending on the severity of the injury. Your site could be shut down temporarily while you look for replacements or assess the situation and whether or not it is safe for others to return to work.

• Economic And Political Factors

The UK is seeing a massive plummet in the number of skilled workers in the construction sector due to economic and political factors. According to the Financial Times, “Building projects are stalling and wages are rising as a result of the labour squeeze, while costs are rocketing for materials caught up in the wider disruption to global supply chains.” The stigma around the trades and European labourers fleeing the UK because of Brexit have also caused major disruptions in the market. New laws can stall normal operations as companies take time to implement the updated regulations.

• Financial Factors

Many construction companies are loyal to their trusted suppliers and manufacturers, but a failure to diversify your contractor base can have a negative impact if there is a disruption within a specific company’s supply chain. It’s crucial to have a diverse network of suppliers to depend on in case a crisis strikes.

Other financial factors to mitigate supply chain disruptions include not overspending on unnecessary operating expenses and having an accurate outlook on your company’s revenue. When you’re consistently within your budget, you can be prepared if you need to spend a little more than planned in case of a supply chain disruption.

• Cybersecurity And Data Protection Failure

Strict laws regarding the use of personal data are set by the General Data Protection Regulation. Data breaches and GDPR violations can have devastating effects on businesses, slowing down and sometimes halting production. Significant reputational damage and lawsuits resulting in hefty fines or closure of the company are only a few of the consequences of GDPR violations.