As many people have come to realise since the Covid-19 pandemic, ‘supply chain’ is not just an obscure set of business processes. It underpins modern life, touches every part of public policy, makes or breaks businesses and facilitates the delivery of public services. A new briefing paper entitled ‘Changing Course: a new direction for the UK in a ‘post-global’ world’, published jointly by Ti Insight and the Foundation for Future Supply Chain, argues that policy decisions by successive administrations have created economic and geopolitical dependencies on ‘strategic adversaries’; placed too much reliance on international transport and compromised the UK’s ability to respond to a crisis.

Government policy must urgently address these vulnerabilities. By doing so, it will create many new opportunities which will provide a welcome boost to an economy which has lagged well behind many of its global competitors in recent years.

The paper’s author, Professor John Manners-Bell, draws on empirical evidence to provide ten broad thematic recommendations across key policy areas:

1. The UK must take steps to diversify its supply of critical products and materials, many of which can only be sourced from China – at best a ‘strategic adversary’, at worst a hostile state.

2. The government must target trade deals with friendly nations (so-called ‘ally shoring’) which would mitigate the risk that essential goods are disrupted in the event of a geopolitical crisis or pandemic.

3. The UK must prioritise the protection of its trade lanes by increasing its naval capabilities. Recent conflicts have shown the vulnerability of shipping to attacks from groups such as the Houthis in the Red Sea which have resulted in inflationary pressures and impacted growth.

4. Urgent plans must be put into place to re-industrialise the UK economy. The benefits of growing the manufacturing sector are manifold, not only creating high quality employment but reducing dependency on foreign markets for critical goods.

5. There needs to be smart investment in the UK’s transport infrastructure which has underperformed international competition in recent years. Resources should be focused on smaller initiatives which offer high returns on investment over short time scales.

6. A partnership between government, universities and the private sector will be required to realise the potential of the circular economy. New technologies and processes could reduce industry’s dependence on foreign suppliers of critical raw materials (CRMs) by recycling and reusing materials already in circulation.

7. The UK’s digital infrastructure is under attack. The threat from ‘bad-actors’ will only increase as criminal and state-backed organisations seek to inflict damage on supply chains. Public and private organisations must share the responsibility, alongside security organisations, for ensuring the resilience of their supply chain networks.

8. Training and education must also be a priority for government, manufacturers, retailers and logistics companies. Many employers believe that, even after years of government pledges, new employees lack essential technical skills needed for a workplace characterised by AI, automation and robotics.

9. The UK government needs to transform the way it looks at and engages with supply chains. At present, its policy-making structures are archaic and fragmented, with decisions often being made on a piecemeal, siloed basis with little regard to their economic consequences across increasingly complex supply chain eco-systems.

10. A new approach is needed to carbon emissions. At present, regulations and taxes encourage UK manufacturers to off-shore production to remote lower cost regions which, perversely, have lower environmental standards. By lowering these costs and the burden of regulation, the UK government could encourage ‘green-shoring’.

Professor Manners-Bell concludes that the UK government must recognise that in a post-globalised world in which Western dominance is being increasingly challenged, supply chains have become ‘weaponised’. He commented, “Those countries which have raw materials, energy wealth, plentiful agricultural resources and manufacturing capabilities have become ever more willing to use them for political leverage over those which don’t. Without shrewd and careful planning there is a significant risk that the UK becomes a virtual client-state, accepting the role of rule-taker in a hostile world. Radical action by politicians is required if this outcome is to be avoided.”

Manners-Bell concluded: “This paper sets out ways in which government policy can address the two critical imperatives of growth and resilience. These aspirations are certainly not mutually exclusive. Enhancing the UK’s resilience against geopolitical tension, conflict and economic shocks will create many new opportunities, which this paper sets out to identify.”
Source: Transport Intelligence