British companies are significantly increasing their reliance on regional suppliers and bolstering production facilities to mitigate the impact of global disruptions, as highlighted in Accenture’s latest research report titled “Resiliency in the making.”
By 2026, the study indicates that over half (53%) of UK companies plan to procure the majority of key items from regional suppliers, a substantial increase from the current 24%. Moreover, a significant proportion (73%) of UK-based organizations aim to produce and sell the majority of their products within the same region by 2026, nearly doubling from the present 40%.
This trend towards greater regionalization and reshoring is observed not only in the UK but across Europe. In Germany and Italy, 54% and 53% of organizations, respectively, plan to source most key items from regional suppliers by 2026. French producers exhibit even higher ambitions, with 91% intending to produce and sell most products in the same region by 2026, more than doubling from the current 44%.
While these European countries are embracing regionalization, the US remains ahead in the race, with 82% of companies planning to source most key items from regional suppliers by 2026, and 91% aiming to produce and sell most products within the same region.
Accenture’s research underscores the urgency for increased resilience in the face of recent disruptive events, such as the pandemic, geopolitical shifts, extreme weather, and material shortages. The economic repercussions of disruptions have been substantial, with companies missing out on £1.35 trillion ($1.6 trillion) in additional annual revenues during 2021 and 2022 due to disruptions in engineering, supply, production, or operations.
The report emphasizes the importance of companies achieving sustained resiliency by not only focusing on regional sourcing and production but also by increasing their digital maturity. Investments in data, artificial intelligence (AI), and solutions like digital twins are crucial for building reconfigurable supply chains and autonomous production.
On average, UK companies are currently investing nearly £1 billion to digitize, automate, and relocate supply and production facilities. This figure is expected to almost triple to £2.4 billion ($2.9 billion) by 2026, reflecting the commitment to building resilience despite challenging economic conditions.
Maddie Walker, UK, Ireland, and Africa lead for Accenture Industry X, highlighted the positive aspect of companies prioritizing investment in building resiliency, recognizing it as an opportunity for growth rather than just a survival strategy. Solutions like digital twins, automation, robotics, and generative AI are identified as key technologies that can help companies adapt rapidly to sudden changes and take data-driven, real-time actions.
However, the report suggests that sustained resiliency remains a distant prospect for many companies. Accenture developed a model to measure engineering, supply, production, and operations resiliency on a 0-100 scale, revealing an average score of only 56 among companies.
The report concludes with three key areas for companies to focus on to enhance their resiliency:
Visibility: Making supply chains and production processes more predictable and autonomous through technologies like smart end-to-end control towers.
Resiliency in design: Moving activities earlier in the development process to ensure products, processes, and ways of working are right the first time. Digital twins are highlighted as a valuable tool for identifying and troubleshooting potential issues before production begins.
New ways of working: Upskilling and reskilling the workforce in data, AI, and other digital technologies to enable data-driven decision-making at the frontlines of business.
The “Resiliency in the making” research is based on a survey conducted from January to March 2023, involving 1,230 senior executives across engineering, production, supply chain, and operations.
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