Stark Make UK/Infor supply chain survey suggests globalisation has peaked
17 May 2022
Two years of disruption to global supply chains has transformed the nature of UK manufacturing, suggests a hard-hitting survey by Make UK and business cloud software solutions leader Infor.
It reveals a widespread and serious impact caused by a ‘trilemma’ of factors including the pandemic, Brexit and increased energy costs.
This has resulted in a substantial shift in focus to suppliers within Britain or Europe at the expense of those further afield, particularly the East Asia.
At the same time, the total number of suppliers per company has risen markedly, increasing the complexity of supply chains, cautioned Make UK.
The report ‘Operating without Borders – Building Global Resilient Supply Chains’, based on a survey of 132 companies conducted between 2 and 23 February, has a stark message for businesses reliant on global trade, warned the organisation’s director of policy at Make UK Verity Davidge.
“For decades manufacturers have used increased globalisation and supply chains to drive efficiency and create lean manufacturing processes which have helped them grow and remain competitive. However, the economic shocks of the last few years have created a perfect storm which has turned these models upside down and forced companies to re-evaluate their business strategies and seek suppliers much closer to home,” she stated.
Longstanding strategies to off-shore in response to globalisation, operating a ‘just in time’ process with virtually guaranteed transport links and low-cost production, have been turned upside down with disruption and increased volatility becoming the norm said Davidge.
Added Davidge: “As a result, we may now be seeing the era of globalisation passing its peak, with disruption and volatility for global trade fast becoming normal.”
Key survey responses include:
The greatest disruptions have been caused by the pandemic (93%), Brexit (87%) and energy costs (80%)
Key supply chain challenges are increased raw material (79%), transport costs (74%) and transport availability (54%)
Almost a quarter of companies have between 51 and 100 suppliers, while one in six have more than 200
One in three increased the total number of suppliers in the last two years
One in two increased their UK suppliers
One in two intend to increase UK suppliers in the next two years
One in four will increase suppliers from Western Europe and Turkey
Andrew Kinder, SVP international strategy & sales support at Infor, explained the situation highlighted the need to ensure supply chain strategies are put in place along with technologies to monitor them. While one in five companies responding have digital supply chain monitoring there remained concerns over smaller companies’ ability to cope.
“The rules of supply chain are being re-drawn. Resilience trumps efficiency with winners being those who have been able to rapidly adjust their supply chain strategies to accommodate the succession of shocks,” warned Kinder c.
Make UK has now recommended a shortlist of measures for Government to address the situation:
Establish a cross-industry government resilience taskforce
Include supply chain software management in the Help to Grow: Digital scheme
Public data that reports on lead times of raw materials to aid businesses planning
Require larger firms to share supply chain information with SMEs
Financial incentives to adopt digital solutions such as blockchain
Regional institutions to deliver supply chain support
To read more about the Make UK/Infor survey, click here.