British manufacturing is going through a period of significant change and faces a number of key challenges through 2018, explains Dave Darby, sales & marketing director at MSC Industrial Supply. These include:
The uncertainty around Brexit continues;
The need for product development and innovation has increased;
A widespread skills shortage across the industry;
An increased need to manage costs in an uncertain period.
This has prompted many forward-thinking manufacturing companies to re-evaluate their supply base and ask some searching questions. Having a supplier that is efficient and price competitive is no longer the main driver.
They are looking for suppliers that they can trust, a supplier that is an extension of their business. They are looking for suppliers that can help transform how they operate. They are looking for ‘trusted partners’ to help them achieve their full potential, to grow faster, drive down costs, get to market faster and become more profitable.
As a consequence, suppliers to UK manufacturing have to adapt and be seen as trusted partners, where they are part of the solution to many of the challenges that manufacturers face today.
Uncertainty around Brexit
There is no magic answer to this, however what we have seen with several successful organisations is the willingness to adapt in an uncertain environment. Many manufacturing organisations are now focusing on two key areas:
Business Agility – manufacturers will need to diversify and look for different ways to strengthen their order books. Many manufacturers that we work with, due to the uncertain economic climate, have been forced to rethink their strategy, to become more innovative, to think differently, to move into new markets, to optimise their supply chain and are now looking at their supply base very differently. We have also seen that employee engagement and retention has increased in importance. Their people are understandably nervous about the future and seek reassurance. They need regular communication and want to be part of the future development of the organisation. It is critical that manufacturing businesses keep hold of their workforce during an uncertain time especially with a UK wide skills shortage.
Supplier Engagement – again as with employee engagement and retention it is important that manufacturers have the right suppliers in place that can support their business during the highs and lows through the Brexit period. As mentioned many forward-thinking manufacturers are now looking for suppliers that can adapt and evolve to meet their ever-changing needs. They are looking for a trusted partner, a partner that can help them improve the way they operate, someone that they can deeply trust, a supplier that can become an extension of their business.
Product development and innovation
We operate in a demanding ‘consumer’ driven environment which means that product development and innovation is moving at pace. Being first to market or at least fast to market is all important. We are seeing many manufacturers adopt a continuous improvement approach which becomes engrained within their culture. As manufacturers develop new products, look for innovative ways to improve their operations and diversify their product and service portfolio, they are now looking to their suppliers to do more than just keep up, they are looking for suppliers to help them lead!
Skills shortage
One of the biggest barriers to manufacturing growth is the chronic lack of skills within the UK, especially in the engineering world. The skills shortage is a problem we are hearing more and more from the industry and is a real concern when businesses are looking to develop and grow. Their teams are busy with their day jobs and keeping their customers happy, so how are they also expected to seek innovation when they don’t have time or resources available? Again, this places an added responsibility onto the supply base who should be aware of the challenge and provide innovative solutions accordingly. For example, suppliers of engineering consumable items should also be set up to provide technical expertise which leads to driving cost out of the business, streamlines the operation and bolsters any skills gap that may exist.
Cost management
We are now seeing a number of manufacturing businesses re-evaluate their supply chain practices. The focus initially is on ‘direct’ procurement (items that go into the end product) which makes sense, many organisations now have clever procurement practices set up to manage their strategically important purchases for planned, forecastable, items. However, studies have shown that 80% of the effort, time, cost and stress comes from ‘indirect’ procurement which typically only relates to 20% of the spend (‘indirect’ refers to tooling and industrial consumables that keep the factory running e.g. maintenance, repair and operational items – MRO). Unplanned, indirect purchases are particularly difficult to control and manage, those items that are only ordered on an infrequent basis.
A disproportionate amount of time is often spent on sourcing these items which adds significant cost to a business.
So how do you plan for the unplanned? In short, you don’t – you look to your supply base to do that for you. Clever manufacturing companies are now identifying trusted supply partners for their unplanned, indirect product needs. They are rationalising their supply base down to a few trusted partners who have the capabilities to supply the long tail of consumable items. They are looking for the supplier to provide the data that helps them reduce their consumption and improve their overall profitability. Many manufacturers have realised that shopping around for the best price (the typical three quote process) is a costly exercise and results in too many low value orders being placed and too many suppliers to manage that add no benefit to their organisation.
Looking ahead
We will be operating in an uncertain world for some time to come due to Brexit, financial turmoil, and the widespread skills shortages, which will place further demands on manufacturers. However, more and more manufacturers are telling us that it’s not all doom and gloom and in fact the uncertain economic climate has forced them to rethink their strategy, to become more innovative, to think differently, to diversify into new markets, to optimise their supply chain and to look at their supply base very differently.
So, I would encourage all manufacturing businesses to ask the question ‘are my suppliers part of the solution or part of the problem’?
Company profile
MSC is a leader in the supply of metalworking and maintenance, repair and operations (MRO) product and services. We will save you time and money by transforming the way you operate. The manufacturing world is split into two: those who love MSC and those who haven’t tried us yet.We speak to or visit hundreds of businesses like yours every day and we understand what you need, which is why we are passionate about providing a market-leading customer experience and quality of products tailored to the manufacturing sector.
For more information visit: www.mscdirect.co.uk.
