Member Article

Global supply chain volatility could create UK opportunities

A large majority of manufacturers are seeing their supply chain disrupted by recession, research from EEF, the manufacturers’ organisation indicates.

82% of firms experienced supply chain disruption by recession, and 60% by local disruption, a survey found.

EEF suggest the findings indicate the globalised nature of manufacturing and supply chains, and the effects of recession and natural disaster on this network.

Two-fifths of firms have brought production back in-house to combat against such events, whilst a quarter have increased their use of local suppliers.

According to EEF this could give a real window of opportunity to build manufacturing capacity in the UK, and reverse some of the “hollowing out of supply chains” across the last few decades.

The survey found the average manufacturer has 190 suppliers, and one in five have half outside the UK.

Commenting, EEF Chief Economist, Ms Lee Hopley, said: “Supply chains have become increasingly globalised for manufacturers. This brings a range of benefits but there are risks attached when things go wrong.

“In recent years manufacturers have been hit by a host of unforeseen events, which has seriously tested their supply chain monitoring and business continuity planning.

“This can also create opportunities to re-shore production and rebuild key manufacturing with companies bringing some production in-house and using local supply chains. We need to capitalise on this opportunity by removing obstacles for manufacturers looking to expand capacity or diversify into new areas and, by creating a business environment that pulls in every pound of vital investment to our economy.”

Elsewhere in the survey, companies were found to be improving supply chain resilience through better inventory management, increasing collaboration and forward planning with suppliers and investment in IT to improve supplier management.

Such measures were seen to add benefits, including reduced costs and improved flexibility.

As a result of recent disruptions, one third of companies see supply chain management as a business critical issue, worthy of board level attention; whilst 60% of companies monitor their immediate suppliers.

A similar study conducted by Barclays has also been published this week; indicating that currency risk and fears that goods or payments might not be received, still deter some manufacturers from trading outside of the UK.

Mark Lee, Head of Manufacturing, Barclays Corporate Banking said: “There is a clear sign of patriotism amongst UK manufacturers as values, loyalty and confidence hold firm with proximity being seen as a key driver. Given the current economic climate, a focus on domestic strategies and procurement is understandable however manufacturers must not be afraid to play a lead role on the global supply chain stage.

“Self confidence and traditional values of quality appear to be key drivers behind UK manufacturers’ supply chain strategies. For UK manufacturers that are able to fully grasp the opportunities and risks related to global trade, there is undoubtedly a competitive advantage.”

This was posted in Bdaily's Members' News section by Tom Keighley .