Large UK manufacturers lost £58m in supply chain disruption last year

Posted on 9 Apr 2014 by The Manufacturer

Large UK manufacturers lost £58m in 2013 due to issues around disruption to their supply chains, according to a new report.

The study, released by supply chain management firm Achilles, shows the average loss to each manufacturer amounted to £105,000 last year, despite many of the issues being preventable, according to Achilles chief executive Adrian Chamberlain.

A primary reason for the losses was the failure to deliver products of required quality, believed to cost the industry £20.4m.

This was followed by the failure to send goods on time, which resulted in a £17.2m loss, with financial failures of suppliers and exposure of firms to litigation both costing companies £7m.

Mr Chamberlain said: “”In our experience, efforts to improve information about the supply chain work best when whole industries – such as oil and gas – work collaboratively to agree and implement standardised requirements of all suppliers in terms of business critical areas, such as health and safety to reduce the burden of administration.

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“They can then manage the information on a global, centralised database – implementing the same high standards not only in the UK but in every country in which they operate.

“With a significant impact on the bottom line, addressing supply chain failure should be at the forefront of people’s minds, because the cost will be felt by not only by industry but also shareholders and consumers.”

The survey also revealed 61 per cent of manufacturers experienced failures to deliver on time, with 42 per cent of incurring a cost as a result and resulting in an average bill of £55,000 per disruption.

Failing to deliver products of the required quality was less common at 54 per cent, but average costs were higher at £91,000.