SUPPLY CHAIN MANAGEMENT this sector , with Twiss experiencing a triple effect . “ The post-Brexit shortage of knowledgeable , professional drivers has in equal parts increased haulage costs , lengthened lead-times and resulted in hidden costs associated with damages caused by inexperienced drivers .”
Another causal factor in the continued extension of lead times is the unwillingness of the owners of some newly sourced supply chains to engage in certain sectors for reasons of exclusivity or convenience . Martin Usher , Grotech Production ’ s managing director , has witnessed this reticence at first hand .
“ Having identified a potential new supplier of two crucial minor ingredients , a dye and a biological additive , to fulfil our specific needs , we were told by the owner of the new supply chain that they would not supply their products into our sector ,” he comments .
On a more general note , the effects of Brexit are still being felt in respect of the extended delivery times encountered , with more complex documentation being required for even the simplest of shipments to Europe . With the UK no longer part of EU REACH , relying now on EU-generated legislation , the UK chemical industry will have to generate all this toxicological information afresh , a consequence of which may be a fresh campaign of animal testing .
This will affect both manufacturing costs and timings . “ The days of being able to load a container at noon in Goole and unload it the next day in Rotterdam are sadly over ,” Usher says .
Twiss highlights the potentially huge cost implications of the UK ’ s departure from the REACH regulations : “ DEFRA ’ s assessment is that the move to UK REACH will cost industry a further £ 1.3 – 3.5 billion . Of course , a more sensible approach would be to approach the EU to buy access to the existing data .
“ Within the EU , such data sharing is mandatory , and companies are not allowed to profit from sharing these costs . No such obligation exists towards third nations . This is an enormous cost to the industry , which will inevitably be passed on down the supply chain .”
The war in the Ukraine , in particular , has thrown into sharp relief the fragility of some supply chains , with Twiss highlighting the exponential effect this had on one specific material , butyl diglycol ( Figure 1 ), which he says is typical of the alarming cost increases that followed Russia ’ s invasion of Ukraine .
“ The severe and exaggerated spike has now settled as the market re-sourced via alternative routes , an approach which has had to be adopted across a wide range of ingredients ,” he says . “ However , a sharp drop in commodity pricing brings with it other problems : as prices drop , certain materials become attractive options for larger users , who , when they come back on stream , soak up the available capacity , creating sharp price spikes and availability issues for SMEs .”
Inflationary pressures
Of course , one of the inevitable consequences of supply chain shortages is a rise in prices , further exacerbated by the current high inflation rate . In general , and where reformulations or alternative materials are not possible , this unavoidable effect seems to have been accepted , however reluctantly , by most customers . Usher has experienced both sides of this issue .
“ Where materials have been single sourced , or the global demand has reduced the availability of a material , then we have experienced delayed deliveries , especially from across the Atlantic . These have proved to be particularly costly ,” he says .
Cleenol ’ s five-litre production line in Banbury , filling liquid detergent and pine disinfectant
New markets
Again , the picture here within the speciality chemicals sector is mixed , with a number of BCMPA members experiencing expressions of interest from new markets , whilst others are experiencing challenges in this area . Dutton is seeing the positive side of this .
“ Over the past six months we have seen an increased number of opportunities coming from outside of Europe , for example Africa and North America ,” he says . “ Onshoring is a growing trend and companies are keen to establish a supply base in the UK to tap into not only the UK market but the EU one as well . These opportunities range from the contract
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