New research from IGD shows that rising costs and expectations to increase output across the UK food and grocery supply chain are pushing competitors to work together to address inefficiencies.
Rising labour, energy and fuel costs are intensifying pressure across the end-to-end supply chain, while demand continues to grow. The result is a widening gap between what supply chains are expected to deliver and what they can sustainably afford, IGD says.
IGD expects the industry response will include increased collaboration and accelerated adoption of technology to improve efficiency, productivity, and resilience across the supply chain.
Breaking down competitive barriers
IGD says early signs of this are already visible, with retailers, manufacturers and logistics providers increasingly sharing infrastructure, aligning logistics networks, and pooling capacity. This is helping companies cut costs, improve utilisation, and invest in lower-carbon transport.
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.”
Profit squeeze creating new operating reality
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.
Manufacturers are under pressure to drive throughput while managing rising input costs. Logistics operators are expected to maintain service levels despite mounting operational spend. Retailers, meanwhile, are increasingly constrained in their ability to pass on costs to shoppers as margins remain thin.
IGD says this is shifting efficiency from a competitive edge to a baseline requirement, with underperforming supply chains at risk of falling behind.
Collaboration critical to success
Rothwell believes the shift marks a fundamental change in how supply chains will compete:
“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.”
A defining shift for the next decade
The findings form part of IGD’s ‘Supply chain of the future’ report, which explores how food and grocery supply chains will evolve over the next five years.
The research highlights that cost pressure, resilience and sustainability will continue to drive structural change, requiring businesses to rethink operating models, strengthen partnerships, and build more integrated supply chains.
A free summary of the report is available on the IGD website.
