In 2017 we are braced for times of adversity with Brexit in Britain, Trump in America and the change in political establishment across the West, yet the manufacturing industry in Britain is going through an unexpected boom!
Many predicted with current events that manufacturing would decline and suffer however many are being proven wrong with GDP growth and the announcement of there being a 17 year high in the demand of UK automotive. I will be looking at how the manufacturing industry seems to be thriving and what Procurement can do to sustain this?
British manufacturing has always been at the heart of our exports across Europe and the world. Initially many think tanks believed that by voting to leave the EU we would close the door on the single market and will lose our trading power. It would seem that we have potential to gain worldwide trade deals with locations such as the US, Canada, Australia and Far East Asia. This will open doors that have been sticking points for the EU for many years and can only benefit Britain with prosperity. Polarising a figure as he is, it has to be considered great that Trump is continuing to build the “special relationship” between the US and UK with Theresa May which will only help the reality of this trade deal. .
As reported yesterday in the Telegraph, UK manufacturing is now at a 20 year high; the CBI reported that in Britain demand is on the increase for the fourth month in a row. “The Confederation of British Industry (CBI) said order books improved for the fourth straight month over the quarter, hitting the highest level in two years. Order strength was driven by mechanical engineering and the metal products industries, as optimism about production across the sector rose to the highest in more than three years.” S. Ping Chan – The Telegraph (2017).
So what part can Procurement play in continuing to aid the growth within the industry and the companies they work in?
Firstly, by having a hands on approach thus continuing to help develop LEAN manufacturing processes. In manufacturing businesses procurement will help in developing these strategies, which in turn helps a business to work more efficiently and cut costs which both impact positively on the bottom line.
Procurement can help by developing a clearly defined Supplier Relationship Management strategy. Within this procurement should know how to best utilise their supply base. Procurement will develop KPI’s and SLA’s for suppliers to perform against which will help the business run in the best possible way.
SRM does require a procurement professional to look at the bigger picture than the impact on the bottom line. Suppliers who continue to perform should be measured across Price, Quality and Time. When carrying out a SRM approach a purchasing professional should be nurturing their suppliers and getting the best out of them and not brushing them aside when a cost can be cut.
Another strategy the Procurement department can adopt is looking at where they source their raw materials from. Clearly it is more expensive to purchase and import materials from Europe and with Brexit this could become a bigger cost and challenge for a business with tariffs in place. However, looking at Low Cost Country sourcing (LCC) is an option. In manufacturing, sourcing for small components and parts can be done more affordably by purchasing from Regions such as Far East Asia. The quality in the product is there and has a stronger price point which I am sure would rise should the demand also pick up. Procurement would need to factor in lead time-due to the product coming from further away you would need to establish the implications on your projects completion.
From this we can see that the engagement of Procurement with their suppliers and where they source from can have an impact on the bottom line which hand in hand with the current demand should see UK manufacturing continue to rise in the face of adversity.
By Chris Jackson – Recruitment Consultant – Procurement People