‘Just in time’ replaced by ‘just in case’

The call was made on the back of a major report by Make UK and Infor, ‘Operating without Borders – Building Global Resilient Supply Chains’, which shows the stark impact on UK manufacturers from the economic shocks of the last two years and the knock-on effects to supply chains from increased energy, transport and raw material costs, as well as transport availability.

Of those surveyed, 93% were found to have had supply chains disrupted by the pandemic and 87% by Brexit, while 80% of companies said that increased energy costs have caused disruption. Increased costs for raw materials and transport and availability of transport were also identified as major issues.

The research found that more than one third of companies have increased their total number of suppliers in the last two years, with almost half of companies increasing their UK suppliers.

The findings indicate that the longstanding strategies manufacturers have adopted to off-shore in response to globalisation, operating a ‘just in time’ process with virtually guaranteed transport links and low-cost production, have been turned upside down with disruption and increased volatility fast becoming normal.

As a result, this has led to companies significantly increasing the number of suppliers so they have more options in the event of disruption, with these suppliers increasingly sourced back in the UK or Western Europe. Looking forward the report shows these trends were already accelerating in the next two years, to which the invasion of Ukraine and continuing disruption in China are likely to have given further impetus.

Commenting, Verity Davidge, director of Policy at Make UK, said: “For decades manufacturers have used increased globalisation and supply chains to drive efficiency and create lean manufacturing processes which have helped them grow and remain competitive. However, the economic shocks of the last few years have created a perfect storm which has turned these models upside down and forced companies to re-evaluate their business strategies and seek suppliers much closer to home.

“As a result, we may now be seeing the era of globalisation passing its peak, with disruption and volatility for global trade fast becoming normal. For many companies this will mean leaving ‘just in time’ behind and embracing ‘just in case’.”

Andrew Kinder, SVP International Strategy & Sales Support, Infor added: “Following a succession of shockwaves - Brexit, Covid and instabilities in Europe - supply chain strategists are examining the vulnerabilities of their supply chains. Long held beliefs in lean, Just-in-Time and off-shoring are being questioned, as volatility and uncertainty replaces predictability and reliability. The rules of supply chain are being re-drawn. Resilience trumps efficiency with winners being those who have been able to rapidly adjust their supply chain strategies to accommodate the succession of shocks. 

“Digital technologies play a part in building resilient supply chains and this survey by Make UK provides much needed insights from manufacturers on their response to this new norm and their use of digital to navigate the storm. As a sponsor of this research, we support the recommendation that ‘Supply chain software management should be included in the UK’s Help to Grow: Digital scheme.”

www.makeuk.org