Ivalua: Procurement Leads Expect Geopolitical Risk to Worsen
Almost three-quarters (73%) of UK businesses expect geopolitical risk to intensify over the next 12 months, with 62% saying their supply chains simply cannot contend with the shifting geopolitical sands.
That's according to the latest report from Ivalua, Adapting Amid Uncertainty: How Geopolitical Disruption is Reshaping Supply Chains.
The spend management platform surveyed 300 UK supply chain and procurement decision makers.
Supply chains struggling
Ivalua's research reveals the ongoing conflict in Ukraine is having the biggest negative impact, denting the confidence of 77% of leaders.
This is followed by US tariffs (75%), military exercises and testing disrupting major shipping straits (73%), tensions between China and Taiwan (62%) and the War in Gaza (58%).
The impact of these incidents is being felt on the bottom line, with around a quarter (26%) highlighting that geopolitical risk has put profitability under pressure, while 23% have already passed costs on to customers.
Almost a fifth (18%) have been forced to cut ties with suppliers in certain countries, highlighting how global disruption is fragmenting supply chains.
"Geopolitical risk is no longer an anomaly; it's a permanent feature of global trade", says Alex Saric, Smart Procurement Expert at Ivalua.
"Our research shows that no region is immune. Geopolitical shocks such as tariffs and mineral price fluctuations can erupt daily, or even hourly. UK businesses are stuck between a rock and a hard place as they either absorb costs or pass them onto customers, pushing them to the brink.
"Survival depends on making good decisions in critical moments, particularly as our research indicates disruption shows no sign of slowing."
Firms lack preparedness for geopolitical shocks
Unsurprisingly, many businesses are taking steps to reduce geopolitical risk.
Strategies found to be the most effective include onboarding alternative suppliers (73%) and deepening collaboration with existing ones (72%).
Other approaches, including nearshoring (64%), improving geographic diversity (62%) and hiring additional procurement staff (61%), have provided incremental benefits, though no single measure eliminates exposure to risk entirely.
Despite these efforts, just 22% of firms say they are completely prepared for geopolitical risk.
Preparedness is best in energy and utilities (59%), while construction and real estate (9%) and hospitality, travel and tourism (3%) are the least prepared. Recognising the need to bridge gaps, a clear majority of businesses (71%) say they must now invest more in technology to better identify and mitigate geopolitical risks.
Technology investment key to future resilience
Alex emphasises that, as geopolitical risk mounts, incremental steps simply won't be enough to ensure long-term resilience.
"Businesses have more data at their disposal than ever before, but it's fragmented, inconsistent and hard to act on," adds Alex. "Our study shows that, while businesses have the data, what's lacking is the technology to turn it into actionable insight.
"AI can bring dispersed data together, highlight potential risks, identify alternative suppliers and give procurement teams the foresight to act before disruption hits. If a critical shipping route closes, AI can model different logistics scenarios to keep production on track and costs under control.
"Combined with closer supplier collaboration, technology gives businesses the agility to respond quickly to geopolitical shocks whilst safeguarding profitability."
