A QUARTER of businesses in the North-East are at high risk of collapse due to the effect of coronavirus on their supply chain, according to a recent study.

Durham University Business School reviewed more than 1.7 million businesses in the North and Midlands, spread across 99 different sectors, and found that 29 per cent of these are at high risk due to how their supply chains operate.

This report, Covid19 and Supply Chains in the United Kingdom: Impact and Mitigation, was co-authored by Professor Kiran Fernandes, and Drs Atanu Chaudhuri and Manish Shukla, alongside other professors from the business school.

The Northern Echo: Kiran FernandesKiran Fernandes

Of the 95,516 companies in the North-East that were studied a quarter are high risk, a quarter are medium and the remaining half are low risk.

Kiran Fernandes, Professor of Operations Management at Durham University Business School, said: “The top sectors in the North-East that are likely to have the highest risk are companies in the construction and landscape, air transport, private social services, recreation and manufacturing of recreational and sporting products.

“The main reasons for this in addition to reduction in market demand are factors like complex supply chains, for example sourcing of parts from China and South-East Asia, lack of processes that can overcome external shocks, skills in agile decision making and limited use of advanced digital technologies.”

The researchers analysed data of more than 1,739,669 companies in 28 different regions across the Midlands and North to calculate the potential impact of the Covid-19 on the supply chains.

While, many of these companies operate through global supply chains, the impact of such an external shock is felt at a local level.

The researchers found that industries that were at the highest risk included, real estate, food and beverage, personal services and the construction sector.

Companies who were less likely to be affected by the Covid-19 pandemic included, computer programming companies, management consulting, architectural and parts of the retail food sector.

Professor Fernandes said: “Most companies in our region had never experienced such an external shock and therefore were not prepared with mitigation strategies for their complex global supply chains.”

The business school also reviewed a number of plans companies would be able to put in place to overcome the effects on the global economy.

Six mitigation strategies were reviewed by professors who then identified and assigned a specific, tailored strategy for each of the 99 different sectors, in order to provide advice on how business owners can help their company through the crisis.

Professor Fernandes added: “The Durham University Business School is part of our region’s ecosystem.

“It is critical and timely that we work with our regional businesses and ecosystems to ensure that our expertise can be used to make them develop both short term and long term resilience strategies that can help them not only survive but compete in the post Covid-19 environment.”

For a free consultation email: Business.externalrelations@durham.ac.uk