Supply Chain Resilience in the UK

As published by the UK Department of International Trade (DIT) in November 2022, guidance for a supply chain’s resilience framework outlined important steps for consideration to help ensure strong and resilient supply chains for UK’s national and economic security.

In an effort to strengthen resilience of critical supply chains, the DIT has put forth a framework highlighting areas to help reduce dependency on external resources. The guidelines are intended to help organizations mitigate risks in their supply chains and work toward programs that will reinforce a lasting resilience during times of economic uncertainty.

Primary areas of focus and additional considerations are:

• Demand management – determine if alternative or substitute products/goods will help alleviate dependance on bottlenecked supply and if demand can be diverted to localized innovations.
• Diversification – establish an adequate number of alternative supply sources to institute a more diversified supply chain.
• Global manufacturing – expansion to global manufacturing and distribution through acquisition of competitors OR building wholly owned plants in other countries; establish distribution channels in other potential geographic markets.
• Establish international partnerships – develop relationships with international partners who face similar supply challenges to reduce trade barriers and provide flexibility to internal supply chains.
• Onshoring – identify methods to economically expand or increase domestic capacity.
• Increased inventory and surge capacity – identify if there are economies of scale to justify increasing inventories of components and/or raw materials to align with fluctuations in customer demand. During contract negotiations, investigate whether the expense of carrying specific customer inventory can be shared.

For companies that operate internationally, factories and distribution throughout Europe and the rest of the world help to strengthen their resilience at home by meeting the demands of their customers wherever they are. The importance of managing supply chains with real-time data and visibility is essential in moving any of the above areas forward. Ensuring this foundation of (organizational) communication at all levels is crucial in supporting decision making of the supply chain and helps to identify and inform which actions may be needed to avoid potential vulnerabilities or risks.

Furthermore, according to the DIT, government will manage policy levers to enact trade and investment measures, additional strategies, incentives, standards and regulations to support resilience of the national supply chain where necessary. As an independent trading nation, the UK intends to endeavor a climate of expansion to strengthen prosperity with value driven trade policies in an effort to renew international trade rules to open new markets.

A policy paper put forth by the government: Global Britain in a Competitive Age: The Integrated Review of Security, Defence, Development and Foreign Policy describes the government’s vision and plans for the country’s role in the world and the actions to be taken, including:

• Inspiring an innovative digital economy to establish the UK as one of the world’s most open economies, providing global services operating as a central digital data hub to advocate for fair and free trade.
• The alliance with the EU, the UK’s closest trading partner, and the securing of Free Trade Agreements with 66 non-EU countries, along with applying for admission to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the UK is linked to some of the world’s strongest trading alliances.
• Using market-led policies such as lowering barriers to trade and leveraging targeted trade promotions, the UK plans to further develop multilateral actions to appraise potential vulnerabilities in the global supply chain. Through the organisation for economic co-operation and development, there are plans in place for a stronger circular economy to reuse and regenerate materials in support of clean growth initiatives. Additionally, the country will reestablish international agreements to ensure open trade in critical goods during times of potential crisis.

As one of the world’s most important economies and trading partners, the United Kingdom is uniquely poised both geographically and economically as a major supply hub. As the world’s fifth largest exporter, the country’s diversification of exported products include:

Lastly, as the third largest global region to consume hydraulic hose, Europe and the UK are at the center of the fluid power market. 

Sources Include:

• Department of International Trade
• EMR
• HM Government