Focus on Manufacturing | Irwin Mitchell | Supply Chain Management

Over the last few decades the UK manufacturing sector has changed immeasurably. We have moved from an era of rapid decline in outputs to a reinvigorated sector with renewed growth.

New trends are emerging and organisations must keep up to date on developments which could gain competitive advantage in their market. We are seeing for example a trend towards re-shoring, as organisations focus more on quality, lead times and innovation over pure cost. Mindful of recent failures and seeking a more accountable and shorter supply chain many companies are turning back to the UK. Reduced timeframes and the intangible benefit of the supply chain being close-by has resulted in a huge change in focus from the offshoring of recent years to local supply chains flourishing.

It is essential to ensure that supply chains are robust, have flexibility to adapt to new market conditions and future proof the organisations strategic objectives. If a business is looking to refocus closer to home, due diligence must be undertaken on current overseas contractual arrangements including termination rights and ownership of intellectual property and assets.

Due to the trimming of workforces in the recession and the lack of focus on training many organisations are now resource-poor and not equipped to meet the growth challenge.

Developing a more stable supply chain to attract the strong skills base around it is critical to developing a successful innovation led climate to help organisations gain competitive advantage. This is again leading to a move from purely overseas sourcing to other options such as multi-sourcing and a focus on the local supply chain.

Companies must ensure visibility of and an effective robust strategy for managing its supply chain. This strategy should focus on identifying and financially quantifying risks and disruptive factors which could impact on its supply chain, for example, the insolvency of a key supplier, termination of a key contract, material shortage, and ownership of core intellectual property or a catastrophic event. A plan should then be developed to minimise the effect of these disruptive factors with a strategy for how the business can recover quickly.

The plan must be regularly reviewed. This should include considering options which may make the supply chain more effective, minimise costs or improve quality. For example, depending on the type of business re-shoring or multi-sourcing could be a better option for minimising disruptive factors.
As part of supply chain planning the use of data and data analysis tools should also be utilised to ensure complete visibility of the chain. Whilst historic data remains important there is a new focus on analytical software to provide real time high quality management information. Companies could look at options such as cloud computing enabling more accessible information to manage and maximise the use of data as a control over its supply chain.

Selecting the right supplier is fundamental and vetting procedures must be in place. Contracts must be flexible, transparent and with effective remedies if the relationship deteriorates or if the supplier impacts upon your business. Exit management of contracts is also key to ensure transition and a seamless supply chain.

Reviewing contracts regularly and utilising all provisions available, such as audit rights, should be part of the supply chain management plan to avoid any sudden surprises in these relationships. Building transparent stable relationships is key to the success and resilience of any supply chain.

Key Contact

Sarah Riding