A recent Software Advice study shows that robust solutions are necessary to overcome high import costs and skills shortages hitting UK supply chains. SMEs point to AI and other tech investments as beacons of hope in calming business disruptions and ensuring a constant flow of goods.
Supply chains remain a major talking point in 2024. With less than a month to go before the government’s new Brexit border checks take effect—costing businesses that import products from the EU—the UK’s small and medium-sized supply chain companies will likely feel the force of the additional costs.
In response to the ongoing financial pressures, a study conducted by Software Advice on 200 supply chain and logistics professionals in midsize companies reveals that the majority are shifting 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.
Localising supply chains might ease economic struggles but does not eliminate some of the other challenges reported by respondents. 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 worry about the lack of skilled workers in the industry.
While staff shortages have been frequently reported as an underlying problem across most sectors in recent years due to global factors, small retailers and logistics firms could be hit particularly hard as they struggle to compete with larger companies offering more attractive salaries and employee benefits.
David Jani, UK Analyst at Software Advice, comments: “There are many areas where supply chain-focused companies are desperately searching for talent. This is likely to impact the ability to hire suitable workers and could increase the staffing costs in sourcing certain skills.”
In terms of the type of talent to which these companies fall short, a third (33%) of respondents say they struggle to attract or retain employees with skills in logistics distribution, data analytics, and quality control. In addition, 31% identified skill shortages in IT management, while 29% reported a lack of customer service professionals.
Could AI make up for the lack of supply chain talent?
While it might appear a losing battle for smaller supply chain companies, the respondents are turning to technology in their fight back against some key challenges.
The survey shows that technology continues to be a significant area of investment, as 42% of respondents said they have allocated between 6 and 10% of their total 2024 company budget to supply chain technology, and a further 8% said they will spend even more than that.
More specifically, most companies are prioritising investments in AI (47%), advanced cybersecurity (42%), and advanced data analytics (41%) to help optimise their supply chain management.
“Skills shortages in areas such as data analytics and customer service can be filled to a degree by technological solutions, with AI showing particular promise among surveyed professionals. The priorities of supply chain companies in their tech spend underlines this goal, however, upskilling the existing workforce also needs to remain a target for businesses to fill knowledge gaps”, David Jani adds.
For more information, read the full report.
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