Innovation needed to tackle productivity gap

The UK’s productivity gap could be tackled by ensuring innovation among small firms is hardwired within supply chains.

New research from the Federation of Small Businesses (FSB), shows that just 30 percent of small firms are currently given some sort of help to make positive changes within their business by bigger firms in their supply chain. Of the firms that did receive assistance, the majority (83 percent) said it had a positive impact on their business.

FSB believes that the number of people growing their businesses using innovative techniques could increase significantly if more support is fed down from their business customers in their supply chain.

Of those that received support, one third benefited from their customer sharing workforce expertise and time (33 percent), while 23 percent were given help in the design of a product. One fifth (20 percent) were mentored and given advice, and 15 percent were assisted with market research.

The new data, which is part of forthcoming wider research into how the UK can better use supply chains, shows that through this help over a third (39 percent) of FSB small suppliers improved their reputation and credibility when they innovated using support from another business, while 28 per cent increased their turnover.

More than half of the small firms reported that they received support relating to developing new products (58%), with almost one third (31 percent) given assistance changing the processes they use.

FSB wants to see support for innovation in the supply chain hardwired into the Industrial Strategy and Sector Deals.