UK manufacturers accelerate nearshoring plans amid data gaps and regulatory pressures

UK manufacturers are swiftly shifting towards localised supply chains to tackle global risks, yet face significant challenges due to limited supply chain visibility, operational resilience issues, and rising regulatory demands, risking increased supplier dominance and market disparities.

UK manufacturers are rapidly advancing plans to nearshore or localise a significant portion of their supply chains, with recent analysis by Dun & Bradstreet revealing that 84% inten...

d to shift at least half of their supply chain footprint closer to home. This sharp increase from pre-pandemic levels is driven by growing supply chain risks, tightening trade regulations, and a structural move away from reliance on single-country sourcing. However, this strategic pivot comes amid persistent gaps in supply chain data readiness and visibility, which pose ongoing operational and regulatory challenges.

Despite the widespread intent to nearshore, less than half of UK manufacturers (47%) currently leverage their own operational data to inform supply chain decisions. This gap creates a vulnerability, as many companies are relying on external signals rather than robust, integrated internal intelligence to manage their increasingly complex supplier networks. Bjorn Gerster, European lead at Dun & Bradstreet’s Centre of Excellence Manufacturing, cautions that while localising supply chains is a necessary response to global volatility, it remains risky without the right data infrastructure.

The challenge extends beyond the UK, with more than 70% of global manufacturers unable to map suppliers beyond the second tier. This lack of multi-tier visibility is increasingly problematic as governments implement stricter accountability regimes, such as the European Union’s Corporate Sustainability Due Diligence Directive, which demands thorough oversight of entire supply chains rather than just immediate suppliers.

Operationally, these data gaps are already exacting a toll. Dun & Bradstreet’s report indicates that 41% of UK manufacturers have experienced quality issues due to limited visibility, 38% have faced delivery delays, and 35% have incurred increased costs. Many cite time and resource constraints as significant barriers to enhancing supply chain intelligence, with 42% pointing to insufficient time and 40% highlighting workload pressures.

Supplier concentration risk further complicates the picture, with over a quarter of UK industry leaders flagging over-dependency on limited supplier bases. Data integration and system compatibility issues also hinder efforts to build a resilient and transparent supply chain. Meanwhile, regulatory pressures are mounting. UK manufacturers report a higher incidence of supply chain challenges related to tariffs and sanctions compared to their global counterparts, 42% versus 34% over the past year, and one-third foresee regulatory changes as a top risk heading into 2026.

This regulatory scrutiny is part of a broader shift towards embedding compliance into sourcing decisions rather than treating it as a mere reporting afterthought. Compliance demands in manufacturing have surged, particularly around cybersecurity, Environmental, Social, and Governance (ESG) criteria, and sanctions enforcement. According to Dun & Bradstreet, 68% of compliance decision-makers in manufacturing feel that regulatory pressures have significantly increased over the past year, contributing to a growing need for enhanced risk visibility. Notably, restrictions have forced 59% of companies in manufacturing and utilities to reject potential customers due to insufficient risk assessments.

As nearshoring intensifies, another subtle but important dynamic is emerging within supplier ecosystems. The competition for a limited pool of vetted, geographically proximate suppliers is shifting bargaining power downstream, from manufacturers to their suppliers. Early signs appear in sectors like electronics and specialty chemicals, where compliance-proven suppliers are securing preferential terms and longer contracts. This trend suggests that while supply chains may be shortening geographically, those suppliers best prepared for regulatory and operational demands will increasingly dictate market access and capacity allocation.

The broader UK manufacturing sector continues to wrestle with resilience challenges. Research indicates that 85% of UK organisations do not prioritise supply chain resilience and diversification as core strategies for future-proofing, even as 77% of business leaders express anxiety over their vulnerability to future disruptions. Previous events have exposed preparedness gaps, with over half of businesses acknowledging inadequate readiness and negative impacts from past supply chain shocks.

Economic pressures further compound these issues. Inflationary cost increases concern 53% of supply chain leaders, while nearly a third of manufacturers view the UK as becoming more competitive relative to other major European economies, potentially signalling opportunities amid the turbulence. Additionally, sustainability is gaining prominence, with 68% of executives indicating plans to boost investment in environmentally and socially responsible practices within the next two years.

The supply chain landscape is also being reshaped by ongoing logistical challenges, including rising freight costs, container shortages, route disruptions, and payment delays, all of which have dampened optimism for supply chain continuity between late 2024 and early 2025. The introduction of new tariffs adds another layer of complexity, underscoring the urgency for manufacturers to enhance data-driven oversight and agility to withstand future shocks.

In summary, the UK manufacturing sector’s move towards nearshoring reflects a strategic response to global uncertainty and regulatory tightening. Yet this transition is constrained by significant gaps in data visibility, operational resilience, and supply base diversification. To realise the full benefits of localisation while mitigating new risks, manufacturers must bridge these gaps with integrated, multi-tier supply chain intelligence and proactive compliance management. Otherwise, the shift in regional supply ecosystems may empower a select group of capable suppliers, reshaping competitive dynamics and access in ways that manufacturers have yet to fully anticipate.

Source: Noah Wire Services