Agility is becoming more critical

On the face of it, life should be pretty good for manufacturers – after all the fall in the value of the pound since the Brexit vote makes manufacturing in the UK more attractive.

One of the key indicators, the UK Manufacturing PMI, rose slightly in March to 55.1 in March.

And a forecast due to be released today by HSBC suggests that exports of UK goods and services will increase by ten per cent this year.

This should be good news for UK supply chains. But, a study of the sector by the Chartered Institute of Procurement and Supply has found that almost half of manufacturers have already increased costs to their customers, while 58 per cent plan to increase prices.

Not only that, one fifth of manufacturers are planning cuts to their workforce to reduce overheads.

The reason for all this is, of course, Brexit. In fact, the survey of more than 2,000 supply chain managers, found 48 per cent saying they couldn’t prepare for Brexit at all because future trade arrangements are so unclear.

The lack of clarity is likely to continue for several months yet, until the shape of the final Brexit deal becomes clear.

The CIPS study also highlights some of the ways manufacturers are looking to manage rising costs, notably onshoring to refocus supply chains towards the UK.

But should manufacturers be focusing more on adopting digital supply networks (part of Industry 4.0). Certainly, a study by Deloitte and the Manufacturers Alliance for Productivity and Innovation, suggests that there are significant rewards to be reaped.

The report, Embracing a digital future, found that there is a currently a “notable disconnect between respondents’ opinions of the DSN efforts and the actual work they have done to implement DSNs across their organisation”.

While the study does not hide the challenges involved in implementing DSNs, it highlights the competition advantage to be gained by points to the competitive advantage to be gained, saying: “The fact that a DSN can allow for near-instantaneous manipulation of upstream and downstream supply chain activity makes it incredibly attractive companies to unlock new sources of value.”

Manufacturers, more than most, have reason to be concerned at the economic volatility over the coming period. Increasing the agility of the supply chain has never been more worthwhile.