British manufacturers are calling for a cross-industry and government taskforce to be established to assess the UK’s current and future supply chain resilience.
Trade association Make UK, which has issued the call, said the economic shocks of the last few years have created a perfect storm, turning existing supply chain models upside down and forcing companies to seek suppliers much closer to home.
Its survey of members, reported in the Manufacturer, also indicated that increased energy, transport and raw material costs are having a negative impact on businesses.
Reshoring push
Manufacturers are ‘reshoring’ production lines in the UK as a result of the economic shocks of the pandemic and Brexit, according to the FT.
Three-quarters of the 132 companies surveyed by Make UK have increased the number of their British suppliers in the past two years.
Almost half of the respondents said they intended to further boost their UK supply base in the next two years, while more than 10% said they planned to reduce reliance on Asian suppliers.
Just in case approach
According to the Times, companies are increasingly switching from a ‘just in time’ supply chain model, that placed an emphasis on timely delivery and keeping inventory levels low, to a ‘just in case’ approach, with a broader supplier base and more local sourcing.
Verity Davidge, director of policy at Make UK said “We may now be seeing the era of globalisation passing its peak, with disruption and volatility for global trade fast becoming normal. For many companies this will mean leaving ‘just in time’ behind and embracing ‘just in case’”.
Andrew Kinder, senior vice-president (international strategy & sales support) at Infor, which collaborated with Make UK on the report, said: “The rules of supply chain are being re-drawn. Resilience trumps efficiency with winners being those who have been able to rapidly adjust their supply chain strategies to accommodate the succession of shocks.”
Recommendations to government
Make UK has made a series of recommendations to government to help ensure the UK economy is in a stronger position to respond to future disruption.
- Government should establish a cross-industry and government-led resilience taskforce
- Supply chain software management should be included in the ‘Help to Grow: Digital’ scheme
- Public data reports on lead times of raw materials should be developed and published to help businesses plan ahead
- Government should work with industry to explore how larger firms can provide greater visibility of supply chains at higher tiers to share information with SMEs with limited scope
- Capital allowances or a form of tax break should be introduced for businesses that adopt certain digital solutions, such as blockchain
- Regional institutions and long-term initiatives should be established to deliver supply chain support
Dialogue
Davidge said Make UK would be raising the recommendations in the regular discussions it has with government.
“The benefit would be that the economy would be better prepared in the future for the type of severe economic shocks we’ve seen in the last few years. It would also help manufacturers plan ahead with specific regard to issues like availability of raw materials,” she added.
