Compliance in supplier management has never been simple, but the landscape facing UK organisations in 2026 presents particular challenges. Regulatory frameworks continue to evolve, stakeholder expectations have intensified, and the operational burden of demonstrating compliance has grown significantly. Understanding the major compliance challenges—and how to address them—has become essential knowledge for procurement teams.

Challenge 1: The Data Protection Complexity

Data protection compliance in supplier relationships has moved far beyond simply including appropriate clauses in contracts. The UK GDPR and Data Protection Act 2018 create obligations around international data transfers that have become considerably more complex following Brexit. Transfers to the EU benefit from adequacy arrangements, but transfers onwards to third countries—increasingly common in global supply chains—require careful assessment of protection mechanisms.

The Schrems II implications continue to ripple through supplier relationships. Standard contractual clauses now require supplementary measures and transfer impact assessments for many international flows. Organisations need to understand not just where their suppliers are located, but where their suppliers' suppliers are, and where data might flow across these extended chains.

Practical challenges abound. How do you assess the data protection practices of hundreds of suppliers with varying levels of sophistication? How do you track changing circumstances—supplier sub-processing arrangements, regulatory developments in relevant jurisdictions, evolving guidance from the ICO? How do you balance the operational need to work with global suppliers against the compliance complexities this creates?

Addressing this requires systematic approaches: clear data processing inventories for supplier relationships; risk-based assessment of transfer mechanisms; ongoing monitoring rather than one-time compliance checks; contractual frameworks that create appropriate obligations and audit rights.

Challenge 2: Supply Chain Due Diligence Expansion

Human rights due diligence requirements are expanding beyond the Modern Slavery Act's statement requirements toward more comprehensive obligations. While the UK has not yet enacted legislation equivalent to the EU's Corporate Sustainability Due Diligence Directive, the direction of travel is clear—organisations will face increasing requirements to identify, prevent, and mitigate human rights and environmental impacts in their supply chains.

The practical challenge is one of visibility and capability. Meaningful human rights due diligence requires understanding supply chains several tiers deep, into geographies and sectors where transparency is limited. It requires assessing risks that manifest differently across industries and regions. It requires engaging with suppliers on improvement rather than merely collecting declarations.

Organisations preparing for these expanded requirements are building supply chain mapping capabilities, developing risk assessment frameworks that go beyond compliance checking, and creating supplier engagement programmes that address capability gaps in their supply base. This represents a significant evolution from traditional supplier compliance approaches.

Challenge 3: Environmental Compliance and Net Zero

Environmental compliance requirements have proliferated across multiple dimensions. Carbon reporting obligations under SECR and TCFD are becoming more demanding, with increasing focus on Scope 3 supply chain emissions. Extended Producer Responsibility regulations are expanding, with implications for packaging, electronics, and other waste streams. Environmental permitting and pollution control create specific compliance requirements for certain supplier categories.

Net Zero commitments—whether voluntary or regulatory—translate directly into supply chain requirements. Organisations cannot achieve ambitious carbon targets without addressing supplier emissions, which for many companies represent the majority of their carbon footprint. This creates compliance-adjacent pressures: while supplier carbon performance may not yet be statutory requirement, it's essential for meeting organisational commitments.

The challenge is twofold. First, obtaining meaningful environmental data from suppliers—particularly smaller suppliers who may not track their own emissions or environmental impacts. Second, using that data effectively—setting meaningful targets, tracking progress, and engaging suppliers on improvement rather than merely reporting current state.

Challenge 4: Procurement Rule Changes

The Procurement Act 2023, transforming public procurement rules following Brexit, creates new compliance requirements for organisations selling to or working with the public sector. The new framework introduces different procedures, evaluation criteria, and transparency requirements than the previous EU-based regime.

For suppliers to government, compliance means understanding and adapting to changed requirements: new qualification systems, different contract modification rules, enhanced transparency obligations. For procurement teams in public bodies, it means implementing new processes while maintaining compliant operations during the transition.

Beyond public procurement, regulatory changes affecting specific sectors—financial services outsourcing requirements, critical infrastructure provisions, sector-specific supply chain rules—create targeted compliance obligations that vary by industry and contract type.

Challenge 5: Sanctions and Export Control Complexity

The sanctions landscape has become significantly more complex. UK autonomous sanctions regimes following Brexit, combined with evolving international sanctions responses to geopolitical events, create a compliance environment requiring constant attention. Understanding which suppliers, beneficial owners, or supply chain participants might be subject to sanctions—and monitoring for changes—has become a substantial undertaking.

Export controls add another layer. For organisations dealing in controlled goods or technologies, ensuring supply chain compliance with licensing requirements and end-use restrictions creates specific challenges. The extraterritorial reach of certain sanctions regimes—US sanctions in particular—creates compliance obligations even for purely UK supply chains where any US nexus exists.

Addressing these challenges requires screening capabilities that go beyond one-time onboarding checks. Beneficial ownership verification, ongoing monitoring, and prompt response to changing designations are all essential components of sanctions compliance in supplier relationships.

Challenge 6: The Resourcing Reality

Perhaps the most fundamental compliance challenge is one of capacity. Compliance requirements have expanded substantially, but procurement team resources have not grown proportionally. The result is an ever-widening gap between what compliance frameworks demand and what organisations can practically deliver.

This gap manifests in various ways. Compliance activities that happen at onboarding but not thereafter. Risk assessments that exist on paper but don't reflect actual practice. Documentation that's collected but not meaningfully reviewed. Monitoring commitments that can't be sustained alongside other priorities.

Addressing this requires hard choices about prioritisation—focusing compliance resources on genuinely high-risk areas rather than spreading effort uniformly. It requires technology that can automate routine compliance activities, freeing human attention for complex judgements. It requires acknowledging that perfect compliance everywhere simultaneously is impossible, and designing programmes that manage this reality thoughtfully rather than pretending it doesn't exist.

Moving Forward

Navigating the compliance landscape of 2026 requires accepting that this is not a static challenge with a defined solution. Regulatory frameworks will continue to evolve. Expectations will continue to expand. New requirements will emerge as others mature. Compliance in supplier management is an ongoing programme, not a project with an end date.

Organisations that manage this effectively share certain characteristics. They take a risk-based approach that focuses effort where it matters most. They build systems and processes that can scale with expanding requirements. They invest in technology that extends limited human resources. They treat compliance not as a standalone activity but as an integrated aspect of supplier management. And they stay alert to the direction of regulatory travel, preparing for emerging requirements before they become mandatory.

The compliance challenges are real and demanding. But with systematic approaches and appropriate resources, they're manageable—and managing them well creates competitive advantage alongside risk reduction.