Supply chain support key to closing UK’s productivity gap

The supply chain could be a key way of tackling the UK's productivity gap, according to research by the Federation of Small Businesses (FSB), which found that a minority – only three out of 10 – of small firms receive some sort of assistance from bigger firms to make positive changes within their business. Of the firms that did receive assistance, the majority (83 per cent) said it had a positive impact on their business.

These figures are part of wider research into how the UK can better use supply chains and it looks at innovative ways of sharing expertise and skills with smaller suppliers. For example, some of the smaller companies in the study received support in the following ways: sharing workforce expertise and time; help in the design of a product; mentoring and advice; and assistance with market research. The sharing of these skills with smaller suppliers in the supply chain had the effect of improving reputation and credibility for the smaller firms (39 per cent of cases) and increasing their turnover in 28 per cent of cases.

The FSB believes that this kind of support for smaller firms leads to business growth. It wants to see support for innovation in the supply chain hardwired into the Industrial Strategy and Sector Deals. The FSB's Mike Cherry said: “It’s essential that larger businesses are given incentives to encourage them to work with their small UK suppliers and acknowledge their impact on small firms in their supply chains. Government must take responsibility and hardwire this into the Industrial Strategy. Big businesses asking for Government support for their industries in Sector Deals must make clear how sharing knowledge and expertise will benefit the whole supply chain. It’s important that Ministers hold them to account to make sure this happens.”

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CTMfile take: The FSB's study doesn't look at financial support for smaller firms in the supply chain but reports show time and again that late payments are one of the biggest problems facing smaller firms. Industry-wide, national and international steps are needed to tackle this problem. Last month the European Commission announced it would be taking action to ban unfair trading practices in the food supply chain and according to a 2016 report by the FSB, late payments lead to 50,000 UK small businesses being forced to close each year. This is where the support and action needs to focus.