As we head into the last quarter of 2024, businesses across the UK are grappling with the continuing aftershocks of economic and geopolitical disruptions, ranging from the global pandemic to Brexit. These challenges have exposed vulnerabilities in traditional supplier relationships and demonstrated the importance of supply chain resilience.
For procurement professionals, rethinking supplier relationships is essential to adapting to these new realities. Building a resilient supply chain requires more than just cost-efficiency and on-time deliveries. It demands strategic partnerships, flexibility, risk mitigation, and long-term planning.
In this blog, we’ll explore how procurement teams can transform their approach to supplier relationships to create a more resilient supply chain in a world that is increasingly unpredictable.
The Current State of Supply Chains in the UK
Supply chains have always been the backbone of business operations, but recent events have shown just how fragile they can be. The COVID-19 pandemic severely disrupted global supply networks, causing delays, shortages, and cost increases across sectors. Brexit added another layer of complexity, with new customs regulations and border delays hitting UK-EU trade hard.
More recently, fluctuating energy prices and rising inflation have created further pressures on supply chains, making cost management and stability difficult to maintain. In 2024, while some challenges have eased, the overall supply chain landscape remains fraught with risk. Businesses are still facing delays in production, rising material costs, and logistical issues.
These challenges have highlighted the need for procurement teams to move beyond traditional supplier management and focus on building stronger, more adaptable relationships with their suppliers.
Why Resilient Supply Chains Matter More Than Ever
A resilient supply chain is one that can absorb and adapt to shocks, ensuring continuity of supply even in the face of unexpected disruptions. In the post-2024 landscape, resilience has become a top priority for procurement teams, as businesses recognise that relying on cost-optimised, just-in-time models can leave them vulnerable. Resilient supply chains offer several key benefits:
- Continuity of Operations: With more flexible and diversified supplier networks, businesses are less likely to experience disruption from geopolitical events, natural disasters, or other external factors.
- Risk Mitigation: Resilient supply chains can better identify and manage risks, allowing businesses to take proactive steps to avoid or reduce the impact of potential disruptions.- Agility: A resilient supply chain is agile and can quickly adapt to changes in demand, supply shortages, or regulatory changes. This agility helps businesses stay competitive and respond to market changes effectively.
- Long-term Sustainability: Resilience is not just about short-term survival. It also contributes to long-term business sustainability by ensuring that supply chains can continue to function efficiently in an evolving market.
How to Build Resilient Supplier Relationships
So how can procurement teams shift their focus and create supply chains that are truly resilient? Below are key strategies that can help build more robust supplier relationships.
1. Diversification of Suppliers: One of the most important steps in building a resilient supply chain is diversifying your supplier base. Relying too heavily on one supplier or region increases the risk of disruption. For example, many businesses that were heavily reliant on Asian suppliers during the pandemic faced significant delays due to factory closures and logistical issues. Procurement teams should:
- Identify alternative suppliers: Work to diversify your supply chain by sourcing from multiple suppliers across different regions. This reduces the risk of disruptions caused by regional issues like political instability, natural disasters, or economic fluctuations.
- Develop local sourcing strategies: Where possible, look for opportunities to source materials and services locally. Local suppliers can reduce the risk of delays caused by international shipping and provide greater visibility into supply chain operations.
- Consider dual sourcing: For critical components or materials, consider working with more than one supplier to ensure redundancy. This means that if one supplier experiences a disruption, the other can step in to maintain continuity.
2. Building Collaborative Partnerships: A transactional approach to supplier relationships—where price is the only consideration—is no longer sufficient. Procurement teams should focus on building deeper, more collaborative relationships with their suppliers. This means working together to identify mutual goals, share information, and collaborate on innovation. Collaborative partnerships help create a shared sense of responsibility, enabling suppliers to prioritise your business needs and work with you to solve problems before they escalate. Here’s how to foster collaboration:
- Open communication: Establish regular communication with suppliers to stay informed about potential issues, challenges, and opportunities. This helps build trust and ensures that both parties are aligned on expectations.
- Joint problem-solving: When disruptions occur, work together with suppliers to find solutions. This could involve adjusting delivery schedules, sharing inventory data, or even co-developing contingency plans.
- Incentivising long-term relationships: Offer suppliers long-term contracts, preferred status, or other incentives to encourage them to prioritise your business and invest in building a resilient partnership.
3. Leveraging Data for Supply Chain Visibility: Resilience requires visibility. Without real-time data on the performance of your supply chain, it’s difficult to identify potential risks and respond proactively. Procurement teams should leverage technology to gain greater visibility into their supplier networks and track key metrics such as lead times, inventory levels, and supplier performance. Technologies that can help improve supply chain visibility include:
- Supplier management platforms: These platforms allow procurement teams to monitor supplier performance, track compliance with contracts, and access real-time data on key supply chain metrics.
- IoT (Internet of Things) and sensors: In sectors like manufacturing and logistics, IoT devices can provide real-time insights into the status of shipments, machinery, and inventory levels.
- Predictive analytics: By analysing historical data and current trends, predictive analytics can help procurement teams anticipate disruptions and take preventive action. For example, predictive models can help identify when a supplier might struggle to meet demand or when transport routes may be delayed.
4. Risk Management and Contingency Planning: A resilient supply chain is one that can quickly adapt to disruptions. To achieve this, procurement teams need to implement comprehensive risk management strategies that identify potential vulnerabilities and create contingency plans. Steps to build resilience through risk management include:
- Identifying critical suppliers: Assess which suppliers are critical to your business operations and which ones pose the greatest risk in terms of supply chain disruption. For these suppliers, you may need to establish contingency plans, such as having backup suppliers or stockpiling critical materials.
- Assessing supplier risk profiles: Conduct regular risk assessments for your suppliers to evaluate their financial stability, environmental impact, and operational capacity. This allows you to identify potential risks before they impact your supply chain.
- Creating a risk mitigation strategy: Develop a risk mitigation strategy that includes contingency plans for key risks, such as supplier bankruptcy, transportation delays, or regulatory changes. Ensure that your team knows how to implement these plans when needed.
5. Sustainability as a Pillar of Resilience: Sustainability and resilience go hand in hand. Sustainable procurement practices—such as reducing waste, minimising carbon footprints, and prioritising ethical sourcing—can enhance supply chain resilience by ensuring that businesses are better equipped to navigate long-term challenges like climate change, regulatory shifts, and resource scarcity. Incorporating sustainability into your supply chain strategy can include:
- Evaluating suppliers on sustainability criteria: Ensure that your suppliers meet sustainability standards and are actively working to reduce their environmental impact. This not only reduces risk but also aligns with consumer and regulatory expectations.
- Investing in circular economy practices: A circular supply chain reduces waste and increases resource efficiency by reusing, recycling, or refurbishing products. This can help businesses remain resilient in the face of material shortages or price fluctuations.
- Partnering with green logistics providers: Choose logistics partners that prioritise low-emission transportation and other sustainable practices to reduce the environmental impact of your supply chain.
The Role of Procurement in Building Resilience
Procurement teams are at the forefront of building resilient supply chains. By rethinking supplier relationships, embracing collaboration, and leveraging technology, procurement professionals can mitigate risks and create supply chains that are agile, sustainable, and adaptable to future disruptions.
The lessons of the past few years have shown that resilience is no longer a “nice-to-have” feature of supply chains—it’s a critical necessity for business survival. As we look ahead to 2025 and beyond, businesses that prioritise supply chain resilience will be better positioned to navigate uncertainty, seize new opportunities, and continue delivering value to their customers.
For procurement professionals, the time to act is now. By taking the steps outlined in this blog, you can build a resilient, future-proof supply chain that can weather the challenges ahead.
