Covid-19 has shown that resilience must be built into the UK’s manufacturing supply chains, says Maddie Walker, Managing Director at Accenture.
It is fair to say no-one could have predicted the monumental impact COVID-19 has had on every single industry across the world. Typically, with financial crashes there are ripples and warning signs of imminent disruption, but the global pandemic came seemingly from nowhere and transformed the fundamental aspects of our everyday lives.
One sector that was hit particularly hard was the global manufacturing industry, many of whom rely on global supply chains. Many believed that robust global manufacturing supply chains were in place, but once China had gone into lockdown to suppress the virus, many global companies with a heavy dependence on China’s component parts soon struggled to maintain the output of their manufacturing production and operations. This came at a time when many countries, including the UK, were having to accelerate their infrastructure investment to keep the country running and businesses afloat.
This raises the question of how resilient the UK’s supply chain is and how it would fair in the face of other possible disruption in the future. While other potential threats might not be as big as COVID-19, lessons must be learned so the UK ensures it is prepared for the next big event, something particularly front-of-mind with Brexit just around the corner. COVID-19 has essentially accelerated the challenge the UK was already facing as a result of leaving the EU, needing to rethink how we invest in the product development lifecycle, manufacturing and supply chains as borders will have a new meaning.
One aspect organisations should consider is conducting a stress test of their capabilities and understand how resilient they are to different scenarios. After the financial crash of 2008, an industry-wide stress test was created in the financial services industry in an attempt to avoid anything like that happening again. A supply chain stress test that assesses risk associated with major market disruptors, disasters, or other catastrophic events can enable companies to avoid them or at least build the resiliency to overcome. This means identifying potential points of failure in the supply chain quickly, assessing financial exposure, and defining appropriate mitigation strategies and actions.
Now is a critical time for businesses to review their own processes and identify potential weak points. For example, anyone using a single supplier, should look to diversify their portfolio. It is not just a case of needing suppliers outside of China to avoid a similar scenario again and reduce our dependency on one nation, but building out a manufacturing and production portfolio to include multiple sites across the globe, even if this raises costs and reduces efficiency. Long-term, this will pay dividends should disruption rear its head again – with the ability to pivot more quickly.
The introduction of robotics and other new approaches to manufacturing also make the case for moving factories closer to home. This should help reduce the cost difference of transporting products across the supply chain from far flung locations and, in turn, increase responsiveness. Finally, it is also on each country’s government to uplift the infrastructure and transport spend, ensuring countries can cope in similar, challenging circumstances.
Considering the road ahead, it is vital that manufacturers are able to plan and anticipate problems before they even occur. This is why further investment within tech is needed. Ensuring each manufacturing site has the necessary level of connectivity, visibility, and data transparency with each other can enable rationalisation and increase onshoring, meaning manufacturers will be able to better predict capacity constraints, demand patterns, production volatility and address any maintenance downtimes quickly with sites much closer to home.
A key part of this is embedding intelligence in the product and the production line. Essentially, extracting the data and insights on how the product is being built and used by customers can frame decision making about future developments around the product itself. For example, if the latter part of the year is the sweet spot for selling, and production will need to be ramped up or if a particular aspect of a product is being used a lot and more equipment parts are needed to meet that demand.
Ultimately, COVID has disrupted almost every aspect of life and while people are trying to get back on their feet, attention is shifting to what lessons can be learned. An important one for the UK is understanding the resilience that needs to be built into its manufacturing supply chains – as their structure needs to be re-invented to account for market changes and new demands from the public – to avoid experiencing huge disruptions in the face of other, big events. Foresight, planning, and investment are the key to this resilience, alongside digital and tech adoption, to keep the UK’s manufacturing supply chains efficient and agile for years to come.
Maddie Walker, Managing Director at Accenture