Are UK manufacturing supply chains fit for the 21st century?

Posted on 17 Jun 2019 by Jonny Williamson

The tenth National Manufacturing Debate, hosted by Cranfield University, brought together industry and academia to discuss one of the biggest challenges facing businesses – the digitalisation of supply chains.

Manufacturers take elements out of the ground, refine them and transform them into something useful, something with value. In that sense, humans have been doing it for thousands of years. We’ve got far better and more efficient at doing it in only the past 250 years or so.

But manufacturing means more than just transforming materials, the sector carries significant social, economic and environmental benefits that impact individuals, organisations, communities and nations.

Now more than ever, manufacturing relies on ever more sophisticated and complex global networks of suppliers, partners and customers.

The modern supply chain conundrum:

  • Cloud-based storage
  • Digital asset tracking
  • Digital trust
  • Reduced time to market
  • Increased customisation and personalisation
  • Real-time visibility, transparency and traceability
  • Predictive analytics
  • New regulations

These networks are no longer linear chains, but circular ecosystems built on collaboration, innovation, resilience and – increasingly – digital technologies.

This new paradigm is enabling us to manufacture quicker, to move more comfortably, to live more sustainably and address the 101 other challenges the world faces.

But what about the UK. How ready are our businesses for this transformation?

How healthy are their supply chains, and how well do they function? Do we have an ecosystem conducive to not only innovating but commercialising the winners?

Answering these questions was the focus at this years’ Cranfield National Manufacturing Debate and, fortunately, it appears that the UK is significantly further ahead than many other nations (though this doesn’t mean we can become complacent).

Cranfield National UK Manufacturing Debate 2019 - Audience

Supporting innovation

The UK government has put research and innovation at the heart of its current Industrial Strategy, setting itself the ambitious target of increasing total R&D spend to 2.4% of GDP by 2027. That’s a big jump from the 1.7% recorded in 2016, and our pioneering innovation centres are playing a critical role in moving the needle, said Dick Elsy, CEO of the High Value Manufacturing Catapult.

Through its seven High Value Manufacturing Catapult (HVMC) facilities, the UK has an enviable network of world-leading centres of innovation excellence helping turn ideas into commercial applications by addressing the gap between technology concept and commercialisation.

Operating across 18 locations, this network now offers £780m-worth of assets to deliver innovative solutions, backed up by 3,900 people – representing the greatest concentration of R&D activity in advanced manufacturing.

Elsy highlighted the success of the Fit For Nuclear (F4N) initiative developed by the Nuclear Advanced Manufacturing Research Centre (NAMRC), enabling companies to measure their operations against the standards required to supply the nuclear industry (in new build, operations and decommissioning), take the necessary steps to close any gaps and begin bidding for work in the nuclear supply chain.

Since 2011, more than 1,000 SMEs have taken the initial F4N assessment and over 300 annual support engagements are helping to drive continuous improvement. Combined, the NAMRC’s F4N and more recent Civil Nuclear Sharing in Growth (CNSiG) programme have delivered £550m+ of nuclear contract wins, supporting £50m+ of private investment and creating around 6,500 jobs.

Productivity through people

Much of the Catapult’s focus is working with and developing new advanced technologies. However, that alone won’t be enough to generate added-value across the UK, said Elsy. We also need to create a pipeline of skills fit for the future.

The sentiment was shared by Andy Schofield, head of manufacturing and materials engineering at BAE Systems, who noted that creating such a talent pipeline isn’t a responsibility that OEMs can simply hand over to their suppliers.

To meet the challenges of manufacturing the aircraft of the future, the defence giant annually spends £1bn on UK R&D and £4bn with its almost 9,000 suppliers.

How BAE Systems is addressing the key manufacturing challenges:

  1. Double productivity through the smart connected factory
  2. Reduce lead time and waste through the connected supply chain
  3. Halve the time to market by exploring data and digital twins
  4. Deliver customisation by enabling flexible operations
  5. Double labour productivity through integrated intelligent automation
  6. Creating increased value through disruptive new business models

It’s also developing a ‘smart supply chain’ overseen by a digital enterprise that is agile, reconfigurable and more efficient thanks to disruptive technologies such as additive manufacturing, collaborative robotics and ‘intelligent workstations’.

These developments aren’t happening in isolation, said Schofield. “Improving our productivity, our products and our performance starts with developing our people.”

Just one of the initiatives BAE Systems is involved in is Productivity through People, a 12-month, two-day a week programme at the Lancaster University Management School, co-developed with Siemens and Rolls-Royce, with support from the Northwest Aerospace Alliance.

Designed to support and invest in the manufacturers of tomorrow, the course offers access to the latest techniques, thinking and research to transform an organisation’s productivity and working practices. Crucially, graduates are exposed to world-class manufacturing environments and develop a support network of other SME owner/managers to collaborate with in the future.

Cranfield National Manufacturing Debate 2019 - Networking

Where are the leaders?

Management courses such the ones offered by Cranfield University and other institutions are vital because the skills shortage facing industry isn’t just at the operator or engineer level.

Part of the day’s debate focused on how the endemic practice of promoting people from within based on longevity and experience means many of those in senior positions haven’t received any formal leadership training.

Automation, for example, has become so easy to integrate, operate and maintain that the skills missing aren’t technical, rather we face a lack of people with the knowledge and experience to walk around a plant and identify automation opportunities.

“Many businesses focus on automating their most complex, difficult tasks because they assume that will bring the greatest return. However, they should be focusing on the quick, easy projects that cumulatively add-up to significant gains,” said Mike Wilson, chair of the British Automation and Robotics Assocation (BARA).

“Automation is definitely the answer, but do we have the people capable of asking the question?” he noted.

Herd mentality

Are we a nation of leaders or lemmings? asked Jan Godsell, professor of operations and strategy at the Warwick Manufacturing Group (WMG). Lemmings typically follow the market to failure rather than leading from the front and thinking for themselves, something which requires a sound understanding of the issue at hand.

“Not enough people understand what supply chain actually is,” Godsell said. “Most of the time, supply chain managers are really just logistics or procurement managers; they frequently don’t oversee the entire end-to-end supply chain, or even appreciate what that entails.”

A true supply chain leader has seven critical roles, according to Godsell:

  1. Drive change and improvement
  2. Increase performance and productivity through change in all operational areas
  3. Help the supply chain adopt new patterns of optimisation by improving relationships and trust
  4. Overcome the doubt of others through good performance, insight, careful planning, good timing
  5. Prioritise the mission of the organisation
  6. Use your available resources, talent and opportunity to execute said mission
  7. Be accountable for that vision and its execution

Godsell challenged the supply chain managers in the audience, and those who employ such people, to consider whether they currently address each of her seven criteria and, if not, to identify why and what could be done about it.

“Business typically focus on predictability (Lean), i.e. efficiency and cost reduction, managing predictable swings and inventory fluctuations and focusing on risk mitigation and prevention; or Exploration (Agile), i.e. dynamic, iterative strategies for solving the unexpected or adapting to new technologies. The challenge is that organisations today need to learn to manage both modes simultaneously,” Professor Richard Wilding (Cranfield)

Playing to our strengths

Today’s geopolitical and trading environment is characterised by severe turbulence, uncertainty and volatility, traits which aren’t likely to change in the coming years and decades.

UK manufacturing has a lot going for it in terms of weathering this storm, noted Juergen Maier, CEO of Siemens UK: a solid skills base (despite protestations to the contrary), strong R&D, an abundance of progressive businesses making and innovating, and a concerted effort to build a better, more collaborative ecosystem (spearheaded by joint industry/government endeavours such as Made Smarter and the Catapults).

However, the UK is struggling to create truly world-class supply chains, principally due to challenges around scaling up, despite the country being well-positioned to do just that.

“The third industrial revolution didn’t lend itself to the way UK businesses typically operate, i.e. huge, long-term investments in highly automated plants. The fourth is much more aligned to our preferred approach, based on less capital-intensive augmentation and increased agility,” said Maier.

To ensure our industrial supply chains are indeed future-fit, Maier and other speakers throughout the day strongly advocated embracing the largely digital technologies which underpin the fourth industrial revolution.

Making such a digital transformation industry-wide (as opposed to isolated pockets of excellence), however, will require far greater: collaboration, awareness, willingness to adapt, career-long training and upskilling, access to finance, leadership (at a national and company level), and accountability.

Additionally, it will require management teams to address the elephant present in almost every boardroom – if the rampant consumption which drove the first, second and third industrial revolutions isn’t going to drive the fourth and fifth, how does the next generation of companies make more money while selling less?