Kay Sandhu Written by Kay Sandhu

How stockpiling affects the sugar supply chain

Brexit uncertainty has caused some of our customers to stockpile. Here we look at the impact this has on the supply chain and how Ragus is equipped to meet demand.

 

What causes stockpiling?

 

Uncertainty is the main reason why businesses begin stockpiling goods. Not knowing what the future of the supply chain will hold requires preparation, with this often taking the form of being ready to combat potential shortages. Having an adequate amount of goods, therefore, limits risk and ensures businesses can still satisfy customer requirements.

In addition, times of supply chain uncertainty mean businesses often seek to quickly load up on goods, which puts considerable pressure on the shipping and transportation processes. The fear of future complications means they aren’t willing to adopt a ‘wait and see’ approach and feel far more comfortable with a warehouse full of received goods than the prospect of potentially facing long delays.

An example of this that we are currently experiencing at Ragus Sugars is Brexit. Potential additional tariffs on sugar coming from the EU, and a lack of clarity surrounding border controls and access to labour once Britain leaves the EU, has resulted in some of our customers ordering well ahead of schedule. Sometimes even going as far to ask for a year’s worth of deliveries at before the March 29th deadline! We understand this position, but usually advise against such measures as we are fully equipped to maintain normal levels of customer supply.

Pre-Brexit stockpilng has lead to Ragus Sugars experiencing an unusually busy start to the year

Pallets to packaging: stockpiling’s impact on every level of the sugar supply chain

 

Once businesses take a collective decision to stockpile to combat future uncertainty, the entire sugar supply chain feels the effect. Whether it’s companies producing the packaging materials or the manufacturers of wooden pallets for warehouse storage, the trickle-down effect is far reaching, and, ironically, usually causes shortages. Understandably, end consumers are often unaware of just how extensive the ramifications of a rush to stockpile goods is for every actor in the sugar supply chain.

From a Ragus Sugars point of view, the effect of the recent pre-Brexit stockpiling has been a historically busy first few months of the year. Border delays at Calais due to French strikes have ranged from 15 to 20 hours a day, sending a ripple effect through the supply chain caused by people believing they are witnessing a post-Brexit future. As a result, we have had to utilise our decades of experience and expertise to ensure all customer needs are still addressed to the highest standards.

The recently announced Brexit delay could, in theory, bring an end to this unusually high volume of orders, or see a repeat nearer to the time of the next deadline. However, our customers now have a somewhat less pressing window in which to implement their post-Brexit measures and can plan for possible outcomes, with many already employing a dedicated Brexit employee. But with no tangible framework for exiting the EU currently in the works, we could still be faced with a ‘watching and waiting’ scenario for the next few months!

 

Why Ragus Sugars’ advises against stockpiling

 

While we are fully appreciative of the legitimate supply chain worries our customers have in times of uncertainty, we would not suggest stockpiling as a means of coping. Instead, we advocate maintaining normal ordering schedules, backed by the knowledge that our track record of excellence in this area and supplier relationships means we can meet customer needs. In a Brexit context, this means we are already anticipating the several possible outcomes and developing solutions to address each one of these.

For more information on how to benefit from Ragus Sugars’ 97% rate of delivery perfection, contact us now.