Time to bring your supply chain back?
For the past few years China appeared to be well on the way to reshaping its economy, to focus less on exports and more on satisfying domestic demand. In line with that goal, Chinese leaders were willing to let factory wages rise to the point where it was becoming cheaper to manufacture products in the western hemisphere. As a result, UK and US manufacturers have been reshoring their supply chains, with a recent sourcing survey finding that a third (32 per cent) of North American and Western European manufacturers recently “re-shored” production or were in the process of doing so.
Here at Fascia we believe more UK manufacturers should follow this trend. A recent EY study has found that reshoring supply chains could create 315,000 UK jobs, and increase national output by over £15billion. Outside of boosting the local economy, there are many advantages to ‘making it in Britain’. Moving suppliers to the UK means you can have tighter controls on day-to-day aspects of the business and the production process.
It’s not just the UK economy that would benefit from a raft of reshoring, at Fascia we believe that there are a lot of benefits to bringing the supply chain closer to home. The key ones being:
Shorter lead times
A huge benefit stemming from shortened supply chains and low transportation costs is short lead times. You can respond to the latest trends and fashions and tailor production more closely to sales when there is only one week’s waiting time rather than four. As a result you can offer a more customised product to your customers, enabling you to stay competitive.
More reliable supply chains
Supply chains where manufacturing is separated across the globe, so that each component is made wherever it is cheapest, makes them highly vulnerable. For example, extreme weather, natural disasters and geopolitical turbulence can halt the production of one or more of the components and bring the entire manufacturing chain to a halt. By having your manufacturing operations all in one place and your suppliers close, your supply chain is much less vulnerable to these disruptions, and in turn so are your manufacturing operations.
There are no language barriers when dealing with suppliers in the UK, so any confusion is cut out, and there is less risk of a product arriving not as specified. There is no excuse for poor quality, but if for any reason there is a problem, it is a lot easier to call or visit the manufacturer. The fact that you’re in the same time zone also means that sales and technical representatives are on hand to offer advice during UK business hours.
Slashing transportation costs
With the cost of transporting goods rising, companies can no longer rely on the consistently cheap shipping they had previously been used to. By having your manufacturing operations close to your customer base, transportation costs will be minimal.
There are naturally downsides with what is happening in China, particularly for large UK exporters. However, it is my view that reshoring can certainly counterbalance some of this. Sourcing from within the UK will also strengthen our economy, create job stability, and contribute to building the nation’s growth and prosperity. If more companies bring production back home, they’ll be able to supply a better product to market, at a fraction of the time, and we’ll be able to continue to increase our manufacturing output for many years to come.
This was posted in Bdaily's Members' News section by Mark Anderson .