UK Firms Opt For 'Onshoring' To Mitigate Supply Chain Risks

Snags in international supply chains lingering on from the Covid-19 pandemic are steering mid-sized businesses toward bringing their production lines back to the UK, a new survey out last night showed.

Research by consultancy BDO found just under 50 percent of the 500 firms they surveyed are considering “onshoring” as much of their operations as possible over the coming year.

The move is being driven by 77 percent of firms running into higher costs throughout their international supply network.

“Onshoring” is the process of moving as much of a businesses’ supply chains as possible within national borders. 

A mixture of supply chain disruptions caused by the pandemic, heightened geo-political tensions and post-Brexit challenges has prompted businesses to mull drawing some of their international operations back home in a reversal of the march toward globalisation that has been a fixture of the global economy since the 1990s.

“While the Covid-19 pandemic and Brexit have fallen out of the limelight somewhat, the supply chain pressures we’ve seen over the past few years are far from easing,” Ed Dwan, a partner at BDO, said.

There are concerns that onshoring could result in fewer goods and services in shops due to UK suppliers being unable to provide the necessary inputs for mid-sized firms.

“Despite many making attempts to onshore operations, over a fifth (21 percent) of businesses report that costs are too high in the UK. A further fifth (20 percent) say there are no UK-based suppliers capable of delivering the services they need,” BDO’s survey said.

A paucity of products risk putting upward pressure on inflation, which is already running high at 8.7 percent.

By CityAM

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