The rise of localised supply chains in the UK
The need for localisation driven by supply chain vulnerability
If the last few years have taught us anything, it’s the fragility of our global network of supply chains.
Whether it’s the impact of the COVID-19 pandemic, Brexit or the ongoing conflict in Ukraine, these events have exposed our supply chains susceptibility to disruption and vulnerability to unforeseen risks.
This has prompted a trend towards localisation, as companies seek to build resilience and reduce risk. In this blog, we’ll explore the trend of UK businesses starting to localise their supply chains on shore and the challenges and opportunities this presents.
Implications of Brexit and advancements in technology
A recent survey found that 47% of respondents cited the implications of Brexit as having a big impact on wholesale profitability, while 38% stated that inaccurate data affected profitability. The need for advancements in technology and automation was also highlighted, with 80% of respondents agreeing that automation would help improve competitiveness, and 82% stating that ERP systems could improve control.
The shift towards localised supply chains has been driven by the need for businesses to reduce the impact of supply chain volatility, delay, and disruption, especially when sourcing materials and goods from further afield using longer and ever leaner lines of supply.
Reshoring and its drivers
As the pandemic-enforced lockdowns pushed consumers to shop closer to home, alongside a wider re-evaluation of values and lifestyles, it has been suggested that mass consumption and globalisation have reached a tipping point. A greater emphasis on localised supply chains could stimulate UK manufacturing and supply chains.
However, it’s important to note that at a time of inflation and a surge in energy prices, increasing costs due to localisation could hit the living standards of many UK families.
The reshoring trend, also known as “Made in Britain”, has been driven by the introduction of full border checks following the UK’s exit from the European Union, as well as geopolitical tensions and the pandemic. “It takes a bit of a seismic shock to make companies re-evaluate strategy,” manufacturing boss Tony Hague said. “But price becomes fairly irrelevant if you can’t get the stuff.” In the last two years, his PP Control & Automation, located just north of Birmingham, has won more than £2 million worth of work that had previously been handled outside Britain, and its order book is up 25% in that time.
A survey of 132 companies by industry group Make UK showed that over two-fifths had increased their British supply base, with almost a fifth describing it as a “significant re-routing”.
Challenges of reshoring
However, reshoring is not without its challenges. The collapse of heavy manufacturing from the late 1970s onwards eroded many skills among the workforce, a gap that’s starting to be filled by robotics, automation, and 3D printing. It will take time and investment to rebuild the UK’s manufacturing capabilities, and there is a risk that the cost of localisation could hit businesses and consumers.
The shift towards localised supply chains will also require greater mapping and monitoring, as well as simplification and optimisation. This will help reduce the impact of supply chain volatility, delay, and disruption, especially when sourcing materials and goods from further afield using longer and ever leaner lines of supply.
Automating your supply chain
The trend towards localised supply chains in the UK has been driven by the need for businesses to reduce the impact of disruption and increase resilience. This shift could stimulate UK manufacturing and supply chains, but it is not without its challenges.
Businesses will need to invest in technology and automation, as well as mapping and monitoring of their supply chains.
Our comprehensive resources explore the latest trends and best practices for building a resilient and efficient supply chain that can withstand disruptions and help your business thrive. From technology and automation to localisation and sustainability, we’ve covered everything you need to know to take your supply chain to the next level.ACCESS NOW