Supply chain professionals turn to AI and local goods amid Brexit complexity

With Brexit and other issues deepening the UK’s supply chain skill-shortage, new research suggests a majority of companies are looking to source more of their good locally. Firms are also increasingly turning to technology to lessen the strain on their procurement function – necessitating a strengthening of cyber-security across their functions.

2024 has ushered in a number of the most stringent new rules on inbound trade since the UK completed its divorce from the European Union.

Since January, the government has been rolling out wide-ranging Brexit border controls on the import of plants, animals and food to the UK from the mainland – with huge ramifications for businesses that rely on imports from the continent.

The first stage of a rolling programme of tighter controls on goods entering the UK from the EU, putting all plant and animal products coming from the EU and puts them into three risk groups: high, medium and low. As of the end of April, the government has commenced physical checks at the border on medium-risk and high-risk goods coming into the country. This will intensify in October, when these goods will then also require security declarations.

These changes look set to deepen a supply chain crisis which was already gripping the country. With the echoes of the last two years of supercharged inflation still impacting the ability of British businesses to import goods, and a growing range of geo-political challenges also slowing the flow of trade across borders in Europe and Asia, the latest development seems to have been a final straw for many. As a result, 69% of firms have told Software Advice that they plan to source more local materials and services in the coming year.

Talent shortage

The poll took input from 200 logistics professionals from SMEs across the UK, and found that the top concerns on their agendas are still economic inflation and recession – cited by 39% and 36% of respondents respectively. But the availability of skilled workers – also impacted by the UK’s exit from the EU – was the next most important factor, along with changing consumer demand, on 27%.

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. 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. Localising supply chains might ease economic struggles but does not eliminate some of the other challenges reported by respondents.

David Jani, analyst at Software Advice, commented, “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.”

The study also found that many firms are turning to technology to help lessen the burden. Some 42% said that they have allocated between 6 and 10% of their total 2024 company budget on supply chain technology, and a further 8% said they spend even more than that. Chief among the forms of technology invested in was AI – which 47% of respondents had sunk capital into.

Over the past 12 months, companies have turned to AI to automate processes, create content, and uncover new insights. In the supply chain, this can mean predicting disruptions long before humans can spot them or optimising inventory to meet fluctuating demand.

However, the introduction of more digital avenues of doing business also offers new opportunities for cyber-criminals. To that end, supply chain professionals are also pouring resources into addressing cyberthreats. Today, cybersecurity software often incorporates AI to predict threats, generate risk profiles, and learn which users and actions are dangerous. But with inflation still riding higher than usual in the UK as costs get passed to consumers, it is not clear just how effective any of this is for supply chain activity, in comparison to having maintained business as usual with the EU.