The State of UK Manufacturing

Almost three-quarters of manufacturers are not expecting to return to ‘normal’ within at least six months. However, it’s not all doom and gloom as certain steps could help restart the UK manufacturing sector. Despite the lockdown, 90% of UK manufacturers continued to provide essential operations with nearly 80% suffering a decrease in demand (source: makeuk.org).

As the UK economy slowly starts making a comeback, manufacturers must consider various factors involving the return to normal operations while balancing employee safety and financial security. Here are seven ways to ensure a successful reopening of the UK manufacturing sector.

Related: ‘How UK Businesses Helped Fight Covid-19’

1. Perform a Detailed Supply Chain Audit

All types of companies are in the process of evaluating their operations to identify positives and negatives, focusing on what is working and what is not. While the pandemic has undoubtedly highlighted existing UK manufacturing supply chain issues, it has created an ideal opportunity to conduct a supply chain audit.

Not only does the audit aim at risk management but also to eliminate inefficiencies in preparation for the “new normal”. Treat the supplier audit as if it is the first time working with a factory. Among others, it must include elements of the following:

• Analysis of all vendors and suppliers
• Identify and prioritise critical parts, components or products in your list of purchasing demands
• Inventory management and eCommerce capabilities
• Identify new supply chain technologies (5G, AI, robotics)

Related: ’10 Key Questions To Ask Suppliers’

2. Determine the Financial Health of Suppliers

The lockdown resulted in many forced shutdowns of non-essential businesses which had a significant knock-on effect for manufacturers. This resulted in furloughs, a dramatic drop in demand and disruption to the supply chain, as previously mentioned.

At this critical time, company stakeholders should focus on cash flow and the state of suppliers as this is vital in maintaining liquidity. With cash flow such an essential element, manufacturers must evaluate all vendors and look into strategic sourcing, particularly to single or sole sourcing scenarios.

This means that UK manufacturers should invest in secondary and tertiary options to minimise the risk of future supply chain disruptions. This goes hand-in-hand with sourcing cost-efficient and reliable suppliers.

3. Plan for Possible Disruption in the UK Manufacturing Sector

Forecasting is challenging at the best of times but even more so in the current climate. This has forced finance teams to assess their liquidity and forecast more frequently to prevent any surprises.

With the current state of affairs, UK manufacturers must plan for a variety of scenarios. This includes having to balance holding enough inventory while not tying up too much cash. The primary goal is to avoid a depleted supply chain.

Global supply chains may take several years to go ‘back to normal’ but the best option is to find out as much as possible about current and future demands. This requires careful planning and financial modelling for scenarios based on best and worst-case outcomes in terms of sales, operational expenses and overall cash flow.

4. Put in Place Health and Safety Measures

The government has prepared Guidance on Working Safely which includes recommendations on what UK manufacturing companies should consider in their duty of care, aiming at a safe workplace during COVID-19 in factories, plants and warehouses.

Before continuing operations of any kind, manufacturers must determine how many employees can safely work at once. This involves deciding whether to reduce the number of people per shift or separate rotations, for example.

After determining the ideal number of workers, the next step could result in manufacturers getting creative with their existing space. Following social distancing regulations, they must assess the layout of their facilities and possibly reconfigure certain areas.

Some are adding physical barriers between workstations for added protection of staff and to maintain production. Manufacturers are also required to incorporate disinfecting into their processes. This not only involves staff but also how materials are transported between areas.

5. Keep Focusing on Customer Retention and Lead Generation

Finding new customers can be an expensive exercise so it’s even more important now to maintain strong relationships with existing customers. For example, this could include prioritising limited stock for the most profitable and loyal customers. Customer lifetime value should be a primary focus for everyone within the UK manufacturing sector.

To offset the financial impact of the coronavirus pandemic, manufacturers must also generate new business. They need to re-evaluate their communication, marketing and sales efforts to better interact with leads and prospects. It’s all about making sure that sales and marketing messages align with customer sentiment.

6. Eliminate Waste and Focus on Areas of Improvement

UK manufacturing has been hit hard by the pandemic but now is the time to eliminate waste in the manufacturing processes. Considering many manufacturers are already evaluating their factory floors for social distancing and general safety, they should also focus on implementing lean efforts while building better efficiencies in systems and workflows.

This could mean shifting equipment around, moving production lines, or reorganising things for a safer and more logical, productive flow. Team leaders need to put in place KPIs to boost efficiency and help eliminate barriers to meet the necessary standards.

7. Improve Communications and be Active on Social Media

As previously mentioned, staying in touch with customers is vital and that also means increasing real-time communication. From informing customers about delayed delivery dates or low inventory to managing customer expectations.

Stay active on social media, letting your customers know you are back in business. Put their minds at ease explaining your health and safety protocols. Use this time to ask your customers how they would like to receive communications, i.e. email or phone, and what information they would like to see.

Final Thoughts on Boosting UK Manufacturing

While it may be a long road ahead for UK manufacturing, we have the ability and knowledge to plan for future success. If companies choose the right priorities today, manufacturing leaders can take the necessary action to survive and prepare for whatever the ‘new normal’ might be.

The bottom line is to stay focused on your customers and suppliers as the crisis will come to an end at some point. What you decide to do today could make a significant difference to your business in the future. A great starting point is improving your supply chain and customer relationships.

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