Written by Damilola Olasupo, Business Economics Reporter.
Summary:
Supply chains are complex networks essential for distributing products and services from firms to consumers. Current trends display shifts towards local production in an attempt to mitigate economic pressures, with technological progressions like Blockchain enhancing transparency and efficiency. Stabilising supply chains through improved inventory management and manufacturer diversification proves imperative for economic growth.
What is a supply chain?
In the global economy, supply chains are the backbone of every industry. They are the complicated networks of distributors and manufacturers that ensure the seamless progression of products and services from inception by businesses to the consumer. Stable supply chains are a core aspect of the global business landscape because they equip firms to handle unforeseen disturbances such as economic declines. The stability of a supply chain is dependent on its resilience, which is a supply chain’s ability to withstand changes in resources and recover quickly. The security of distribution activities also relies on visibility, a real time perspective into all operations allowing for proactive decision making. The flexibility of the process must also allow for the capacity to reconfigure operations in light of dynamic conditions.
In response to the ongoing global financial pressures, a study conducted by Software Advice on 200 supply chain professionals in midsize companies reveals that the bulk are transferring their supply chains to more local production:
- 25% said that, currently, all their suppliers are located in the UK or nearby.
- 69% of UK supply chain companies plan to switch all or most of their suppliers to ones that are closer to home in 2024.
- Only 12% said they don’t have any plans to use suppliers that are in or very near the country.
Improvements on the horizon.
Localising supply chains may reduce the pressure of economic struggles but will not eliminate some other challenges reported by participants. According to the survey, while economic inflation (39%) and the recession (36%) were the most frequently cited concerns among supply chain professionals in 2024, a further 27% expressed concern about the deficiency of skilled workers in the industry.
However, developments of advanced technology such as the implementation of blockchain has streamlined supply chain management. Blockchain is an advanced database mechanism that allows transparent information sharing within a business network. The advantages of the use of Blockchain in supply networks is that there is increased potential to drive cost-saving and improve the consumer experience through traceability and transparency. Enhanced inventory management practices such as the digitalisation of supply chain stock has also resulted in more secure distribution chains, because digitalisation improves supply chain forecasting and allows for better inventory planning. Therefore, leading to more efficient exchanges between firms and their consumers, bolstering economic growth. Firms have also stabilised supply chains by diversifying their supply sources, this is highly favourable because an over reliance on only a few distributors and manufacturers is inhibited.
Key takeaways.
To conclude, the recent stabilisation of UK supply chains is an advantageous development, spurred by progressions in technology, improved inventory management and strategic identification of suppliers locations. This stability is vital to economic growth because businesses can efficiently manage their operations and withstand disruptions. To maintain long term stability the sustained supervision of supply chains is imperative.
Further reading
For more information on how the digitalisation of inventory management has reduced supply chain disturbances :
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9946879
For more an in depth explanation on the role of Blockchain in supply chain management :
