Disruption the new normal for UK supply chain managers, according to new research from spend management firm Ivalua.
Ivalua’s report found that nearly half of UK businesses (47%) have experienced an increase in supply chain disruption in the last 12 months. In the last year alone, a significant portion of UK businesses experienced disruption. High inflation (79%), high energy/fuel costs (75%), the war in Ukraine (53%), and the Red Sea conflict (44%) all affected UK businesses’ ability to procure goods and manage their supply chains.
The study of 300 supply chain and procurement decision-makers in the UK found that over the next 12 months, 45% anticipate that supply chain disruption will increase. In fact, 60% of UK businesses agree that after years of disruption, their supply chains feel more fragile than ever.
Beating the trend — effective disruption mitigation strategies
As supply chains and procurement teams battle a growing ambient likelihood of disruption, UK businesses highlighted several strategies that they said had been effective at mitigating the impact of disruption to their value chains.
Improving the geographical diversity of their supplier base (64%), finding alternative suppliers for critical goods and services (64%), increased nearshoring (63%), and increased onshoring (61%) were all highlighted as increasing supply chain and source-to-pay process resilience.
“Supply chain disruption continues to have a significant impact on business operations due to repeated, unpredictable ‘Black Swan’ events,” comments Ian Thompson, VP Northern Europe at Ivalua. “These major disruptions used to be rare, but now feel like a fact of life. This has meant global supply chains have become more fragile than ever, causing delays, shortages, and increased costs as factories shut down and transportation networks fall victim to delays. Consequently, UK businesses feel like they’re stuck in a loop of constant disruption, unable to fully recover after each event.”
Preparing for disruption amid uncertainty
The increasing number of disruptive supply chain events have prompted organisations to re-evaluate supply chain strategies to insulate themselves from supply chain shocks. However, 46% say they don’t have enough sufficient visibility. This lack of visibility makes it hard to understand which suppliers are impacted by supply chain disruption. At the same time, 43% of organisations say they can’t adapt quick enough.
To deal with ongoing uncertainty, UK businesses are focusing on adopting the right tools and processes. Over half (58%) of organisations said investing in technology to improve supply chain visibility has been very effective at helping to mitigate the impact of supply chain disruption, while 58% said the same for collaborating with suppliers to share more risk data. A further 71% said implementing AI to automate supplier risk management has been effective at reducing the effect of supply chain disruptions.
“Four-in-ten UK businesses agree that their supply chain recovery is moving at a snail’s pace, so it’s vital they take proactive measures to minimise the impact of disruptions,” continues Thompson. “This means arming procurement teams with the right tools to improve supply chain transparency and collaboration.”
- Risk & Resilience
