The Power of Supplier Resilience
“In an increasingly unpredictable world full of black swan surprises, supplier resilience is critical” says Mike Rigby, MD of MRA Research. “Now more than ever, merchants and contractors rely on strong, dependable hero suppliers.”
It’s been a tough few years for businesses in construction. Businesses have faced one black swan event after another: Brexit, Covid-19, climate emergencies and geopolitical tensions have all affected global supply chains.
The UK economy has not been at its healthiest, with persistent inflation, elevated interest rates and sluggish growth. The construction sector has seen higher financing costs, a slowdown in new housing starts, delays on non-domestic projects and tighter margins due to rising material and labour costs.
And then came Donald Trump. And again, our belief in the globalised model of an interconnected, just-in-time, borderless world without trade barriers was shaken to the core. Further disruption, this time from the threat of a global trade war, challenged supply chains and all who depend on them.
President Trump’s surprise announcement of a 10% tariff on all imports from the UK to the U.S., following even higher tariffs on steel and derivative products, sent ripples throughout construction. While the UK is a net importer, the US is our second largest export market for building materials. The broader implications are significant and there was also the risk of retaliation. And it is not over yet.
Navigating an Unpredictable World
If the last decade has taught us anything, it’s that the future is inherently unpredictable. The construction sector, however, thrives on stability and relies on long-term planning. It’s also, by its physical nature, less adaptable than many other sectors, so the prospect of more uncertainty and further supply chain disruption has been anything but welcome.
Trump’s tariff announcement serves as a powerful reminder that international policies have UK consequences. At the time of writing, it’s unclear whether a UK trade deal will be agreed or not, and if so, what it will entail. Nor is it clear if it will last. But the outcome doesn’t really matter – the damage has been done. The announcement has exacerbated the already unstable global trade environment.
In this landscape, the ability to adapt quickly when the unexpected happens is key. Resilience is not just about weathering the storm but about adapting and thriving in uncertainty. We can’t predict the future – but we can prepare for it.
Resilience in the supply chain
In construction, this means having the systems, the relationships and the mindset to absorb shocks and bounce back stronger. It’s about building flexibility into supply chains, maintaining strong financial fundamentals, reviewing stockholding and investing in both technology and workforce.
Merchants and contractors look to suppliers to ensure continuity of supply, so they can continue to deliver to their customers. Specifically, to suppliers who build resilience into their operations to ensure that supply is not disrupted when an unexpected event occurs.
Collaborative relationships with suppliers allow merchants and contractors to get early warnings about potential shortages or price hikes, while suppliers get valuable reactions from the market in return. Such relationships can reduce exposure to international shocks.
What to prepare for
How do you prepare when you don’t know what to prepare for? Well, what you need in a fast-changing landscape is up-to-date insight and knowledge. Market research helps businesses spot shifts in trends, moods or competitor behaviour before they become serious threats.
Resilient businesses stay aligned with evolving customer priorities. Customer research reveals shifts in demand, customers’ pain points and opportunities for new products or service. It also helps businesses diversify to reduce risk. If one sector becomes volatile, having insight or inroads into others can soften the blow.
Competitive benchmarking helps businesses gain an understanding how others are responding to challenges and avoid blind spots. This type of research lets you learn from others’ successes and failures, spot gaps in your own offering, stay competitive and agile.
Market research empowers businesses to see around corners and respond with agility when the landscape shifts. With solid market data, businesses can make smarter decisions on investments, pricing and product development while minimising risk. Resilient businesses make data-backed decisions — not guesses.
Uncertainty is the new normal
We’re unlikely to see a return to the conditions that created 30 years of steady growth. Just in time supply with minimal stockholding has given way to the need for resilience and business continuity, to trade through disturbances and turmoil.
In reality, some kind of trade deal offering more stability is likely, while it is less likely that the ‘Trump Slump’ currently experienced in the U.S. evolves into a full-scale trade war. But who knows in today’s world? And why take the risk?
Is reshoring the answer? Is it realistic? In the UK, we don’t have enough people (skilled or otherwise). Prices would also rise substantially. We probably couldn’t, or wouldn’t want to, go it alone.
After decades of relative stability, construction needs to expect the unexpected and plan for volatility, not stability.
Supply chain superheroes
Resilience requires proactive investment, and the focus is often on crisis prevention, continuity and cost. But resilience also equals competitive advantage.
Businesses with higher stockholding and good inventory management systems did infinitely better during the pandemic and in the subsequent period of high demand for building products, taking market share from those that were unable to meet demand.
In an era of uncertainty, companies that thrive will be flexible, informed and customer-focused to quickly adapt to changes. Suppliers who manage through the uncertainty and turmoil to deliver a seamless service to their customers, so merchant customers can supply their customers and thrive are, without question, today’s supply chain superheroes, contenders for Supplier of The Year awards.
This article was first published in the Builders Merchants News magazine.
