Radical rethink of manufacturing supply chains

BDO’s head of manufacturing, Richard Austin
BDO’s head of manufacturing, Richard Austin

A survey by BDO suggests two thirds of UK manufacturers are planning dual or multi-sourcing for key components to avoid Covid supply disruptions.

In a survey of 206 manufacturing businesses conducted by Make UK and BDO in November 2020, almost nine in 10 manufacturers said they had reviewed their supply chains in response to the pandemic.

In total, 59 per cent of respondents said they planned to diversify their supply chains, with just under half saying they planned to create a UK focused supply chain. One third said they would focus on reshoring manufacturing.

Just over a quarter said they were looking to diversify their supply chains across different EU countries, while the same proportion said they were likely to diversify in countries outside the EU.

BDO’s head of manufacturing, Richard Austin, said: “The supply delays experienced by UK manufacturers at the start of the pandemic were a wake-up call, prompting many operators to confront the risks involved in over-relying on single suppliers for key components. This was particularly true in cases where suppliers were geographically very distant.

“Trade frictions created by post-Brexit trading arrangements have added a new layer of complexity which may prompt further supply chain adjustments and changes to logistics operations.

“As supply chains become more complex, many manufacturers are recognising that they will need to invest more in technology which provides end-to-end visibility across the supply chain in real-time and which provides the information required under EU export Rules of Origin. For many this will be critical in managing supply chain risks, reducing the likelihood of production stoppages and ensuring potential trading tariffs are avoided.”