02 Nov What COVID-19 means for UK manufacturing
For several years, one country has been a mainstay of manufacturing supply chains throughout the world: China. UK manufacturing began its pilgrimage to China decades ago, with traditional manufacturers looking for a way to create their products in the same way, but with lower wage and production costs. China offered a silver bullet to this, with the country well placed to capitalise on effective offshoring strategies.
It was a strategy that was going well for several organisations, until COVID-19 hit. As China’s factories were forced to close their doors with other countries following suit, supply chains reliant on offshore partners began to break down, forcing manufacturers to consider new supply chain partners and processes.
For all the disruption COVID-19 has had on manufacturing to date, there may well be an upside, created by the fact many Original Equipment Manufacturers (OEMs) and tier 1 manufacturers are beginning to look closer to home for their parts and components.
There are numerous examples now cropping up of large OEMs tapping back into the regional supply chain for machining assistance, as well as help with sourcing certain components that would usually have been delivered from outside the UK.
The shift in supply chain comes as a big boost for Birmingham-based engineering firm, Rochford Engineering, who are just one of the many companies that are experiencing the reshoring effect with customers coming back to them with work they had previously lost to China. To have effectively ‘won’ back the work in this way is an extremely positive outcome for the family-run business.
However, there’s no guaranteeing:
· how long companies will depend on the UK’s regional manufacturing industry for and;
· if they will revert back to their original suppliers once vaccine programmes prove successful in containing and eliminating COVID-19 throughout the world.
How can manufacturers evaluate and manage this risk?
While we may still be reeling from COVID-19 in the UK, there are several measures manufacturers of all sizes can take to help minimise the associated risks.
These include financial risk assessments, which are essential for helping companies identify if their customers have the ability to pay them – and pay them on time – as well as determine if their customers are likely to become insolvent, which would leave them exposed on contracts.
There are also dedicated tools in place, such as Alliance Procurement Solutions’ free diagnostic tool, which has been specifically designed to help companies evaluate their procurement maturity.
The pressure to increase productivity is immense, but so too are increasing utility and commodity costs that, of course, can’t be passed on to customers.
Are you experiencing these bottlenecks?
Where are the risks?
And how are you protecting supplies to and from your business?
With COVID-19 continuing to increase its grip on the worldwide population, the pressure on supply chains to keep moving will no doubt continue to be felt for the foreseeable future. However, there are proactive actions manufacturers can be taking now to make sure they don’t just keep up with the shift from offshoring and reshoring, but thrive, for however long the virus takes hold.
For more information or to discuss how we can help you rise above the risks associated with the current COVID-19 supply chain picture, contact us on 0330 311 2601 or email [email protected]