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research from the Chartered Institute of Procurement & Supply CIPS

Inflation causing shift in the make-up of UK products

  • One in five UK supply chain managers have made a trade-off between price and quality
  • A quarter have shifted their supply chain to source alternative suppliers
  • Over a third have switched to alternative products as a result of inflation

Inflation is having a dramatic impact on UK goods as businesses switch to alternative suppliers, with many saying they have had to sacrifice the quality of existing goods as a result of rising costs, according to research from the Chartered Institute of Procurement & Supply (CIPS).

The survey of 552 UK supply chain managers found that over 20% have seen the quality of their goods hit by spiralling prices. With heightened costs putting pressure on procurement functions, a quarter (26%) of supply chain managers say they have been forced to source from alternative suppliers while over a third (36%) have switched to completely different products in an attempt to mitigate rising costs.

Despite sourcing cheaper supplies the majority have also had to pass extra costs down the supply chain, with 59% of organisations increasing their prices in order to try and combat inflation. There is not much expectation the situation will change in the short-term, with 40% of supply chain managers believing inflation will not start to fall for 1-2 years yet. Another 39% do not expect it to decrease for 3-4 years.

John Glen, Chief Economist at CIPS, said:
“Today’s supply chain managers are in an unenviable position, trying to maintain the quality of their goods whilst grappling with spiralling prices and attempting to limit the costs they pass onto consumers.

“Inflation is not only increasing the prices of the goods we buy but also having a fundamental impact on how these products are made and the different elements going into them. In the months ahead, consumers may start to notice that their shopping baskets no longer look the way they once did, as more companies switch to alternative products.

“Businesses should ensure they are working with their procurement teams to find solutions to the inflation challenge, rather than simply putting unnecessary pressure on supply chain managers to save costs which could result in a drop off in quality.”

www.cips.org; @CIPSnews

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