Will manufacturing mirror what’s happening in logistics?

Posted on 8 Nov 2017 by The Manufacturer

Confidence among logistics operators is higher than last year, with a sense of opportunity surrounding the growing impact of digital technology and data. Mike Rigby, head of Manufacturing, Transport and Logistics at Barclays, discusses what that means for the UK manufacturing sector.

Direct to Consumer UK Manufacturing Warehouse Logistics Boxes Forklift Supply Chain Orders - image courtesy of Pixabay.
Logistics businesses face numerous challenges, all of which will be familiar to those working within the manufacturing sector – image courtesy of Pixabay.

Earlier this month, Barclays published its tenth edition of UK Logistics Confidence Index – a survey which drew on the views of more than 100 senior decision-makers, including chief executive officers, managing directors and finance directors.

Logistics businesses face numerous challenges, all of which will be familiar to those working within the manufacturing sector – namely concerns around skills shortage, future talent gap, an increasingly competitive landscape and the UK’s future trading relationship with Europe. Yet despite these challenges, operators appear to be relatively optimistic about the future.

The headline index reveals a resilient sector, one in which overall confidence rose to 56.7 compared to the 53.0 recorded 12 months previously – albeit well below the peak level of 74.9 seen in H2 2013.

This rise in confidence would suggest that the sector is putting more credence on the UK as a whole, rather than micro-factors within individual businesses. Despite the latest HM Treasury forecast data showing the rate of growth in the nation’s economy slowing, the latest growth rate for the third quarter is slightly above the expectation.

At the same time, respondents of this and previous year’s Logistics surveys continue to highlight the growing impact of digital technology and data, and the opportunities embracing them create.

Already, technology is helping businesses to achieve greater operational visibility and reporting (30.7%), more efficient transport and warehouse operations (25.7% and 14.9% respectively), and improved customer communication (12.9%).

Technology, however, requires some form of capital expenditure and once again, there is a sense of confidence and optimism. More than three-quarters (77%) of operators are expecting to increase spending over the next 12 months and the number stating that they were “very likely” to increase spending rose to a third (33%) of respondents.

These expectations around capex suggest that operators may be taking a longer-term strategic view and preparing themselves for the challenge ahead, in particular the impact of Brexit – however negotiations pan out.

As we look ahead to the launch of our next industry thought leadership, it will be interesting to see whether a similar level of confidence is being felt by UK manufacturing businesses.

If not, the ramifications could be costly and far-reaching. Businesses which aren’t confident and optimistic for the future don’t typically make long-term investments, yet that’s exactly what the sector needs – arguably, now more than ever.

Further thought-leadership courtesy of Mike Rigby:

Holidays are over, so what now for UK manufacturing? – a timely discussion on why the government’s long-awaited industrial strategy is of such vital importance.

What role is the UK playing in Connected & Autonomous Vehicles? – lifting the lid on how the UK is driving the future of mobility.

Are UK manufacturers taking advantage of the opportunities? – is there still a lack of appetite for capital investments from UK manufacturers?