Though full of potential, supply chains are too often misunderstood, much to the detriment of the UK’s industrial base, says Jan Godsell, Professor of operations and supply chain, WMG at University of Warwick.
Big opportunities that could set the UK on the path to becoming an important hub for international supply chains are currently being ignored.
As evidence continues to mount that production is increasingly being reshored back to the UK, certain questions spring to mind:
- Does Britain have the right logistical and communication structures in place to support a new wave of manufacturing activity?
- Are supply chains integrated and streamlined enough for smaller companies to operate leanly and efficiently?
- What are the restrictions on the supply side and how can they be broken down?
- What are the opportunities in the UK and abroad if businesses develop their supply chain capacity to reach their full potential?
The supply chain has been de-scoped to focus primarily on procurement and supply management. In today’s globalised world, such a narrow perspective can be damaging to UK industry.
It’s about recognising international demand and configuring the right global supply chains to meet this demand effectively (meeting the customer requirements in terms of cost, quality, time and increasingly environmental and social sustainability).
Professor Godsell covered these key issues during the Crimson & Co Academy – dedicated to sharing worldwide best practice across the end-to-end supply chain – and discussed how they are affecting global supply chains in the recent APMG Term Paper.
Failure to do so will see the UK become increasingly marginalised with no recognised role or expertise to contribute to the global supply chain network.
The good news is that it’s not too late for the UK. With the aftershock of the global financial crisis still reverberating and traditional models being challenged by the internet, the time is right to revisit the role that the UK plays in global supply networks.
Whether this be local supply to meet domestic demand, regional supply for the European market or global supply for the world. To capitalise on this opportunity and redefine the UK’s role at the heart of the global supply chain network, there are five critical ways in which the UK needs to view supply chains differently:
1. Functional to holistic perspective
The UK needs to return to the origins of the supply chain and view it more holistically. Within a company, this means recognising the full scope of all the operational processes that define the supply chain – including planning; procurement; manufacturing; logistics, and return (i.e. logistics; repair; remanufacture, and recycling).
These processes are used to understand customer demand and translate it into effective and efficient supply.
2. Manufacturing to planning centric
If the UK wishes to maximise the role that it plays within a global supply chain network, it needs to consider the different ways in which it can contribute to manufacturing. The success of a global supply chain network relies on the correct positioning of the factories, suppliers and warehouses around the globe, to serve different markets.
Planning is the “glue” that holds the supply chain together yet it’s poorly represented. There’s a huge opportunity for the UK to continue to develop a full range of supply chain planning capabilities, and to position itself as the supply chain planning hub of the world.
3. Reshoring to right-shoring
Manufacturing is returning to the UK and one of the main reasons why this is happening is because businesses have started to look at their cost base more holistically and in relation to their competitive priorities.
They are no longer fixated with production costs (labour in particular) but are taking a more holistic view of the total cost of sourcing. The challenge for organisations is identifying the most appropriate supply chain network to support their business in order to determine which elements of their production should be made locally, regionally and indeed globally.
It’s not about reshoring but right-shoring. Enable our businesses to right-shore allows them to understand their strategic priorities and core capabilities, to develop the right global supply chain network and essentially to ensure the success of individual businesses and the UK economy.
4. ‘After thought’ to an integral part of strategy
UK businesses need to ensure that supply chain strategy is an integral part of their business strategy and find innovative ways to both increase sales today and reduce costs tomorrow. This will require increased presence of those with supply chain expertise at the board level.
5. Specialist function to a pervasive part of our social fabric
All roles in the supply chain are equal, as a supply chain is only as strong as its weakest link. We need a nation where our boards have good supply chain representation and have congruent strategies to enable competitiveness today while building capability for tomorrow. Where everyone in the UK understands the importance of our supply chains and the critical role that each and everyone plays in supporting our nation.
Together, we have the opportunity to put the UK back at the heart of the network of global supply chains, back at the heart of the global economy.