Reshoring resilience: Navigating supply chain vitality in UK manufacturing

RESHORING RESILIENCE: NAVIGATING SUPPLY 
CHAIN VITAILITY IN UK MANUFCTURING

Throughout this reshoring series, we've been looking at what the trend means for UK and EU manufacturers. Verity Davidge is Director of Policy for Make UK, formerly known as EEF, which champions engineering and manufacturing, supporting businesses around the UK. 

Here, she discusses the growing significance of reshoring in the context of supply chain volatility and the challenges faced by manufacturers in the wake of economic shocks and global demand fluctuations.

You have reported on building global resilient supply chains. Can you tell us more about it and how this relates to reshoring?

The economic shocks of the last few years, and the knock-on effects to supply chains from increased energy, transport and raw material costs, have all impacted UK manufacturers. As a result of this sequence of events, it is evident that even more firms are bringing manufacturing back home. Our research found that two-fifths of manufacturers say that they have increased their supply from the UK with a similar number stating their intent to do so in the coming year. Therefore the concept of reshoring is fast becoming a reality.

Tell us about ‘friend-shoring’

While not fully defined, the concept is gaining international interest. Rather than just focusing on bringing suppliers closer to home, companies focus on growing suppliers in markets which are considered stable, reliable and have shared objectives; in order words ‘friendly’. 

Although it's expected to become more prevalent in the future, especially with ongoing market volatility prompting manufacturers to scrutinise their supply chains more closely, there is currently scant evidence that this is instigating immediate change.

Why do you think reshoring is gaining traction?

Supply chain volatility is fast becoming the norm and the UK’s manufacturing base has enjoyed little respite since it came under siege at the start of the pandemic. Business conditions have evolved since that time, but often not favourably. When the UK and other countries lifted pandemic lockdowns, it allowed trade to resume. But nobody expected that global demand would outpace supply so much that it would slow down the sector's recovery.

Given fluctuating prices, uncertain delivery times, and geopolitical supply concerns, it's no wonder that businesses have had to closely examine their supply chains more frequently. As they adapt quickly, uncertainty is increasing.

Is this likely to continue?

The challenges aren’t going anywhere. A Make UK report, published earlier this year, revealed that supply chain difficulties, particularly for medium-sized firms, are expected to persist in the coming year. The vast majority of companies anticipate facing logistics network pressures in the coming year.

Confidence has eroded, prompting a shift in behaviour, and the high degree of volatility poses a strategic risk to UK manufacturers. Consequently, they are increasingly prioritising resilience and adopting new strategies. 

This focus will go some way to managing the risk of further instability, and general functionality. There is a lot to be said for working with homegrown suppliers, having them on your doorstep can help to build trust and confidence in your operations. On a human level having suppliers in closer proximity, whom you can perhaps meet more often in person, can offer a boost to your working relationship too.

How can the UK remain a competitive place to do business?

The global challenges of energy shortages, raw material access, labour shortages, input costs, and supply chain disruptions have made it tough worldwide. Many UK manufacturers have persevered to meet demand amid these challenges and they should take great pride in that.

However, a concerning trend highlighted in this year's Make UK report shows that companies are looking away from the UK for their supplies. Nearly half reported that EU suppliers were cautious about the UK, and a third of non-EU suppliers were hesitant. This highlights the need for the UK to maintain its competitiveness.

A comprehensive industrial strategy, focused on supply chain resilience, is essential to forge a bold, long-term vision for the future of UK manufacturing. To achieve this, we must prioritise reshoring manufacturing activities, ensuring access to skilled labour and robust infrastructure. 

Make UK champions engineering and manufacturing in the UK, supporting businesses to thrive, innovate and compete. Visit its website to find out more.