Over a third (38%) of senior UK supply chain professionals say they do not have processes in place to check if a supplier has been convicted of modern slavery infringements, according to research from national law firm Weightmans.
Weightmans says the figure, which rose to 47% among c-suite respondents, shows that the industry is struggling to get to grips with risk despite four years having passed since the introduction of the Modern Slavery Act.
The research surveyed 100 managers and above, in supply chain, shipping, receiving and transportation roles, across multiple sectors. Almost half of respondents (49%) said modern slavery was a difficult issue to monitor, with of 57% citing limited visibility of suppliers’ businesses as the reason.
Matt Williamson, partner at Weightmans, said: “Modern slavery is an issue that affects millions of people around the world and ensuring complex supply chains are free from the issue is clearly a huge challenge. Yet, it is something that businesses must continue to make significant efforts to get to grips with, not only on moral grounds but also in order to avoid significant potential business risks.
“While cases of businesses being prosecuted have, so far, been rare, the consequences of being associated with modern slavery are likely to be significant in terms of reputational or contractual costs. Our research shows many businesses are exposing themselves to unnecessary risk and suggests the government needs to do more to help businesses monitor the issue.”
The research was conducted to build a picture of the current and future challenges facing the UK supply chain. It reveals an industry bracing for a rise in insolvencies, as increasing fuel costs and pressure for quicker delivery times continue to erode margins.
In all, 85% of respondents said they expected to see an increase in insolvencies in over the next five years. Yet, only 69% said they were confident in how to deal with the impact of insolvencies in their supply chain and just one third (33%) had experience of dealing with them in the past.
The rising cost of fuel emerged as the biggest cause for concern for supply chain professionals today, with more than half (58%) of respondents naming it as one of their top three issues.
However, there was some cause for optimism. Over half (59%) of supply chain professionals expected to have greater access to new technology over the next five years, to improve efficiency. Artificial intelligence, cited by 22% of respondents, big data analytics (20%) and autonomous vehicles (20%) were expected to have the most positive impact on supply chains over the period.
The full research has been captured in a new report, featuring contributions from Weightmans’ supply chain experts, the UK Warehousing Association (UKWA) and property consultancy Savills.
Matt Williamson continued: “Fuel is one of, if not the, main drivers for the growing cost of transport and distribution in the UK supply chain industry. With retailers reluctant to pass on additional charges to their customers, many manufacturers and third-party logistics providers (3PL) are having to shoulder the burden. The upshot is that already tight margins are being eroded further.
“The fact is, suppliers have long been forced into a race to the bottom on price, as clients demand tighter terms to help them manage some major consumer headwinds. It’s little surprise then that for 31% of our supply chain professionals the pressure to operate more efficiently is among their biggest concerns.”
The majority of respondents (72%) said they expected demand for shorter delivery times to increase in the next five years. Yet, 78% believe end consumers will be least willing to sacrifice the quality of products versus speed of delivery or cost.
Commenting on the research Peter Ward, Chief Executive, UKWA, said: “The research elicits the age-old question of speed vs quality. The growth of the e-commerce market has been exponential, and the focus on ‘efficiency’ – trying to deliver next day or even within the hour - has almost certainly contributed to the casualties on the high street. Customer service has to be balanced with making money – what is our cost to serve? I believe we will see the market begin to adjust itself, and a reliable service at a reasonable cost will be the new ‘customer experience’ to aim for.”
About the survey
The survey was conducted by Dynata one of the world’s leading providers of first-party data contributed by consumers and business professionals. The company serves nearly 6,000 market research agencies, media and advertising agencies, consulting and investment firms, and healthcare and corporate customers in North America, South America, Europe, and Asia-Pacific.
The sample included businesses of a wide range of sizes, with 35 respondents from those with fewer than 100 employees, 14 from those with headcounts between 100 and 250 and 51 from larger companies.