86% Finnish companies see worsening supply chain challenges: Survey

A total of 86 per cent of Finnish companies feel that challenges in their supply chain have worsened during the last few months, according to OP’s corporate survey.

However, two-thirds of companies reveal that they are able to pass on the prices of rising raw material prices to their own product prices, said OP in a press release on Wednesday, quoting the survey.

Localisation may also bring new business opportunities to Finnish companies.

This year, problems in supply chains have brought challenges to Finnish companies of all sizes, irrespective of the line of business.

A total of 86 per cent of the respondent companies in the survey commissioned by OP said that the global supply chain challenges, such as delivery reliability, availability and rising prices, have got worse during the last few months.

Over half of the respondent companies said that the supply chain challenges and a rise in prices caused by inflation have effects on the company’s working capital needs.

“It is highly relevant to the company’s business whether the company can pass on the rising raw material prices to the prices of its own products. According to OP’s corporate survey, 65 per cent can do so. When the trading volume slows down, cash flows also slow down, which pose challenges to SMEs, in particular. Companies are also worried about higher credit risks”, said Antti Niemelä, Business Lead, OP Corporate Bank.

More than half of the respondent companies seek to transform their subcontracting chain because of the challenges. The changes will become true already during the rest of the year at its quickest.

“In the longer term, changes in the subcontracting chain can mean a change in the global division of duties. The reversed China phenomenon and reacting to it emerge to an increasing extent in our discussions with companies. One of the strong drivers of the China phenomenon is low costs, although this cost benefit has now abated and the costs of incidents in the supply chains have increased. This means that companies have a justified reason to bring their supply chain closer to the market and production”, said Niemelä.

Localisation and an emphasis on sustainability and responsibility through the supply chain may bring new business opportunities to Finnish companies.

“Another positive effect is that the reliability and resilience of supply chains will improve if the distance to the supplier becomes shorter”, said Niemelä.

Supply chain problems and geopolitical uncertainty have made Finnish businesses react quickly. A well over a quarter of the respondents say that they have moved to markets other than the high-risk markets of Ukraine and Russia. Nevertheless, only 16 per cent of the respondent companies said that they have focused their investments on new geographical areas.

A total of 100 Finnish companies with net sales of at least 2 million euros responded to the survey, which was commissioned by OP Financial Group and implemented by Taloustutkimus Oy. The survey was conducted by phone in September.