New research from the Institute of Grocery Distribution (IGD) reveals that rising costs and output expectations for UK food and grocery businesses are pushing competitors to collaborate to address supply chain inefficiencies.
In its ‘Supply Chain of the Future’ report, IGD has found that rising labour, energy and fuel costs are intensifying pressure across the supply chain, while demand continues to grow. The result, it stated, is a “widening gap between what supply chains are expected to deliver and what they can sustainably afford”.
IGD said it expects the industry response will include increased collaboration and accelerated adoption of technology to improve efficiency, productivity, and resilience across the supply chain, and noted that early signs of this are visible already as manufacturers, retailers and logistics providers are increasingly “sharing infrastructure, aligning logistics networks and pooling capacity”.
“While some partnerships may start as marriages of convenience, what’s exciting is the long-term potential to build a more resilient, better connected food system.”
James Rothwell, head of supply chain at IGD, commented: “With cost pressure exposing inefficiencies the industry can no longer absorb, the biggest efficiency gains now sit in the links between organisations. This realisation is breaking down competitive barriers as collaboration increasingly becomes a commercial necessity.
“While some partnerships may start as marriages of convenience, what’s exciting is the long-term potential to build a more resilient, better connected food system founded on collaboration.”
Supply chains are under pressure
According to IGD’s research, supply chains across the food system are being forced to “do more with less”: moving greater volumes with higher accuracy and service levels, but at a lower cost base.
Rothwell said he believed the shift marks a fundamental change in how supply chains will compete. He added: “With supply chains moving into a fundamentally different operating model, competitive advantage will depend less on individual performance and more on the strength and efficiency of the networks businesses are part of.
“In this new reality, those that continue to operate in silos will find it increasingly difficult to compete as collaboration becomes critical to success.”
IGD said its research highlights that cost pressure, resilience and sustainability will continue to drive structural change, requiring businesses to rethink operating models, integrate supply chains and strengthen partnerships.
