UK SMBs Missing Link to Strengthening Food Supply Chain Resilience

With the U.K.’s food security at risk, SMBs can help create more resilient supply chains.

The U.K.’s National Farmers’ Union (NFU) has warned that a nationwide egg shortage could soon boil over into a wider food supply crisis. Citing soaring fertilizer, animal feed and fuel costs alongside caps on seasonal migrant workers, the NFU has called on the government to intervene or risk the situation getting worse.

In the face of a looming food shortage, the critical role of small and medium-sized businesses (SMBs) in a diverse food supply chain is being highlighted. In fact, SMBs can help contribute to more resilient agile supply chains while at the same time mitigating the risks created by overdependence on a handful of large suppliers.

For example, international catering and services business Sodexo has stated that three-quarters of its U.K. suppliers are SMBs, and that smaller supply chain partners have been central to its efforts to reduce waste and work toward its net zero commitments.

What’s more, Sodexo isn’t alone in its view that SMBs are essential for building supply chain resilience.

In a survey of U.K. supply chain managers, the company found that 81% of buyers said that the supply chain crisis has emphasized the need to work with smaller suppliers. Of those surveyed, 38% said they were proactively working with SMBs to diversify their supplier base while 35% were looking to source more food domestically.

Commenting on the findings, Aoife Wycherley, head of Supply Chain and Food Procurement at Sodexo UK and Ireland, said that “diversifying the food supply chain is essential for building resilience. [SMBs] can enable greater agility because they’re more flexible, innovative and tend to drive domestic food sourcing.”

Breaking Down Barriers to SMB Participation

One of the organizations at the center of efforts to plug SMBs into the U.K.’s corporate supply chains is the Federation of Small Businesses (FSB).

Among other things, the FSB’s goal is to fight for better treatment of small businesses by their corporate clients. As FSB National Chair Martin McTague commented in March, “big businesses must become better corporate citizens with their supply chains, including when it comes to stamping out poor payment practices [and] reducing bureaucracy.”

Unnecessary bureaucracy can certainly keep small businesses out of important supply chains. Whether it’s accounts payable or accounts receivable, many SMBs are drowning under invoice complexity.

And while there are steps they can take to reduce their bureaucratic workload, such as utilizing automation software that removes the need for manual invoice review, large enterprises also need to make changes to their procurement processes.

Lengthy payment delays and unnecessary red tape risk locking smaller firms out of the most lucrative contracts, with both buyers and suppliers losing out.

At the same time, banks and other lenders can also contribute by enhancing their SMB trade financing offerings.

Read more: FinTechs Plug SMB Trade Finance Gap With Digital

In the public sector, both central government and regional councils have made changes to their procurement policies in recent years to make them more favorable to SMBs.

These include the development of online portals via which they advertise contracts that are put out for tender, efforts to streamline supplier registrations, and guarantees that aim to ensure prompt payment of invoices.

But while there is a legislative force directing the opening up of public sector supply chains, private businesses are doing so out of necessity.

Ultimately, enabling SMBs to fully participate in the U.K.’s food supply chains appears to be the ideal way to guarantee they run efficiently and effectively, helping to enhance the country’s food security and keep businesses afloat in a difficult economic environment.

For all PYMNTS EMEA coverage, subscribe to the daily EMEA Newsletter.