Hytera logistics and distribution two way radio communication product solutions
2 in 5 UK businesses move to local suppliers as global supply chain disruption bites according to new data from CIPS

2 in 5 UK businesses move to local suppliers as global supply chain disruption bites

  • A third of UK supply chain managers are under pressure to source supply regardless of cost
  • More than a third (36%) want to switch to more UK-based suppliers in the future
  • The majority (70%) cited domestic suppliers as a more reliable source of supply

UK organisations are embracing reshoring as disruption in global trade forces them to look closer to home for more reliable sources of supply, according to new data from the Chartered Institute of Procurement & Supply, CIPS.

The survey, of 1,830 UK and international supply chain managers*, found that two-fifths of UK organisations (40%) switched at least one international supplier to a domestic alternative in the last year**. Of those who had moved to a UK supplier, 70% cited domestic suppliers as a more reliable source of supply and 59% referenced shorter lead times as the reason for the switch.

The trend looks likely to continue, with more than one-third (36%) of UK supply chain professionals** expressing a desire to switch to more UK-based suppliers in the future.

The move is driven by global supply issues caused by the Covid pandemic, the ongoing conflict in Ukraine, and rising global inflation. However, reshoring is not a viable option for all and requires the relevant capability in the UK. One in five (21%) of the organisations who had not moved to local suppliers said they looked for a UK alternative but were unable to find one.

In the last decade, British suppliers have usually been more expensive than international alternatives, but shortages mean that UK businesses are willing to pay more for local goods to ensure availability and shorten lead times. Internal pressure from C-suite decision makers adds to the urgency, with nearly a third (31%) of UK supply chain managers reporting that they are under pressure from their boards and CEOs to source essential supplies regardless of cost.

Dr John Glen, Chief Economist, Chartered Institute of Procurement & Supply (CIPS), said:
“Consumers and businesses alike have been used to having their goods made up of products from all corners of the world, but global supply chain disruption means we could be seeing more goods ‘Made in Britain’ as UK businesses look closer to home.

“UK products are often more expensive, but for supply chain managers the most expensive product is the one that does not arrive at all. Using local partners means the goods have shorter distances to travel and aren’t at risk of being held up in a port on the other side of the world, as well as having the added benefit of cutting down on red tape, custom procedures and potentially saving on pollution. We are seeing more multiple sourcing strategies as buyers look to reduce their dependence on once-reliable sole suppliers.

“The move towards local partners is driven by an immediate need for security of supply, but when global trade begins to stabilise UK suppliers will need to remain competitive in terms of quality and price to retain the new business. The reshoring trend has created an opportunity for UK suppliers that they must grasp with both hands.”

Reshoring is not just a UK trend. In the last year, more than half (66%) of supply chain managers in South Africa, MENA (58%), and Sub-Saharan Africa (62%) also swapped international partners for locally based alternatives.

Political tensions in Europe have also driven the search for new suppliers, with nearly 70% of UK supply chain managers planning to avoid working with Russian partners in the future. In fact, two-fifths (22%) of supply chain executives said that they intend to prioritise domestic supply as a result of the war.

Dr John Glen added:
“Businesses need to be careful not to make hasty decisions when it comes to moving suppliers back to the UK. Reshoring can be a long and costly process where compromises have to be made. With some evidence that global supply chain disruption is starting to ease, some businesses could be left wishing they had held firm with their global partners. In the ever-changing world of cross-border trade, businesses need to think carefully and avoid making short-term decisions to meet long-term demands.”

*There were 552 UK supply chain managers surveyed, 338 of which had international supply chains.
**This data refers to UK organisations with international supply chains.


Post Your Latest News On MHW

Check Also

Hovis reports 96% reduction in compliance incidents with TruTac TruAnalysis software WEB

Hovis reports 96% reduction in compliance incidents with TruTac software

Leading national baker, Hovis, has used TruTac’s TruAnalysis software to make its fleet among the …