80% of SMEs Negatively Impacted by Supply Chain Changes

"Raw Material Supply and Demand, the Biggest Challenge in Supply Chain Changes"

[Asia Economy Reporter Kim Cheol-hyun] Recently, global supply chain disruptions such as the sharp rise in raw material prices and logistics crises have emerged as major risks in corporate management. It was found that 8 out of 10 small and medium-sized enterprises (SMEs) are negatively affected by changes in the supply chain.

On the 21st, the Small and Medium Business Corporation (Chairman Kim Hak-do, hereinafter referred to as SBC) announced this in an issue focus report containing the results of a trend survey on SMEs' responses to global supply chain changes.

According to the survey, 79.6% of respondent companies reported being negatively affected by supply chain changes. However, only 18% responded that they were "prepared or preparing" to respond to supply chain changes. Meanwhile, 69.0% said they had no preparation plans related to supply chain response.

The production activity stage most affected by global supply chain changes was the raw material procurement stage (53.3%), followed by the intermediate goods procurement stage such as parts (27.0%), the final delivery stage (10.9%), and the production stage (8.8%).

In particular, the stage where companies are most affected is the raw material procurement stage, and at the same time, the biggest difficulty related to the supply chain was also found to be raw material procurement difficulties (50.0%). It is analyzed that expanded policy support is needed to resolve raw material procurement difficulties.

The sources of raw material procurement were domestic procurement/self-production at 50.6%, China 24.7%, the United States 6.0%, Japan 4.4%, and Europe 3.5%. By industry, the electrical and electronics sector showed higher import ratios from the United States (11.1%) and Japan (11.1%) besides China, while the machinery sector showed a higher import ratio from Europe (16.9%) compared to the overall average.

Additionally, since the main raw material import countries and import dependency vary by SME industry, it was found necessary to actively support supply chain diversification by establishing a database of alternative procurement sources by country for each item. In fact, companies identified the necessary support policies to respond to global supply chain changes as policy funds (47.9%), discovery of alternative sources (15.3%), raw material stockpiling (12.7%), expedited customs clearance and logistics support (11.6%), and technology development support (5.7%).

SBC proposed policy support measures for supply chain stabilization, including ▲policy funds ▲supply chain diversification ▲strengthening supply chain response capabilities ▲building a supply chain response foundation. Chairman Kim Hak-do stated, "As global supply chain uncertainties continue due to recent events such as the Russia-Ukraine situation, it has been identified that domestic SMEs are facing difficulties in various aspects such as delayed payment settlements, rising raw material prices, and logistics cost burdens," adding, "SBC will actively monitor on-site corporate difficulties by leveraging the strengths of its nationwide field organizations and will also actively support the stabilization of SME supply chains."

This content was produced with the assistance of AI translation services.