UK Government Urged to Help Secure Supply Chain

UK Government Urged to Help Secure Supply Chain



The COVID-19 pandemic damaged the global supply chain, maybe beyond repair. The semiconductor shortage that the pandemic caused provided the incentive that some countries needed to try to build more localised regional supply chains. The US cited national security, and to ‘build back better’ US industry, as well as stopping China gaining advanced technology, such as AI, which could be used for military or security applications. The EU did much the same, and followed the US lead on China, as did Japan and South Korea. All seem to be forming new trade alliances, and in some cases passing protectionist legislation. The UK doesn’t seem to be doing a lot at all at the moment, and risks falling behind the rest of the world. It also has to contend with Brexit, where it cut its own link to the EU market, and the EU’s trade agreements with the rest of the world.


To try judge the extent of the difficulties in the supply chain and see how it might be possible to minimise disruption using digital technology, Make UK, an organisation that looks after the interests of the UK’s manufacturing industry, conducted a survey with Infor, an ERP software provider. The survey found that the largest drivers of disruption in the supply chain are related to increased costs. 71% of the companies surveyed said that high raw material costs were a problem, while transportation and energy costs were problematic for 69% and 68% of respondents respectively.


Looking ahead, almost 80% of companies say supply chain vulnerabilities will be a strategic risk over the next two years. Only 3% of companies saying they don’t expect to face supply chain challenges this year or next. To try to negate as much of that risk as possible, manufacturers are assessing their supply chains and developing new monitoring processes. Over 81% of companies have diversified their supply chains and almost a third have added new suppliers to reduce risk. Around 40% of companies have reduced the amount of suppliers that they deal with to form long-term agreements with the remainder. Nearly half of the companies have invested money in building supply chain resilience over the last year and a further 20% are looking at ways to accomplish that task.


The survey also shows that 48% of EU suppliers are cautious about supplying the UK and almost a fifth of UK manufacturers say they have reduced the number of suppliers from the EU in the last year. 35% of companies found that suppliers from the rest of the world are cautious about supplying UK customers. 40% of companies have reshored their supply chain in the last year with a similar number planning to do so in the next twelve months.


82% of surveyed companies believe that monitoring suppliers is critical to their business. Although they cite its importance, most don’t use digital technologies to enhance their monitoring efforts. While dashboard and analytics dominate the most popular digital tool for 46% of companies, there is minimal take up of technologies such as AI and machine learning (8%), robotics and automation (7%) and augmented and virtual reality (4%).


According to Make UK, manufacturers need help with understanding what technologies are being used and, how to acquire them, while businesses need to feel confident that their security won’t be breached, and that commercially sensitive information is protected before they share their data with suppliers up and down the chain.


While there are many lessons for industry to learn, Make UK recommends that the Government and wider policymakers can help by -


  • Establishing a regional SME advisory service for digital adoption


  • Introducing a tax break for businesses that adopt digital solutions


  • Introducing a Manufacturing Mentor Scheme


At the same time, Manufacturers should:


Actively seek to use digital platforms in order to build supplier security.