NOTE’s UK business development director, Andy Thwaites, explains how a thorough examination of landed costs is driving OEMs to take tighter control of their supply chains
Some may be aware there is a substantial change occurring on the world stage of electronics manufacturing. Following the challenges of the pandemic and global component shortages, the now volatile geopolitical situation is causing many companies to revisit their manufacturing strategies.
Innovation within the world of electronics has continued at a fast pace and whilst some companies may have seen a slowing in 2020/21, in 2023 we found ourselves dealing with accelerated product development plans and re-designs to mitigate risks such as component availability and obsolescence.
The challenges of recent years have really shone a spotlight on the UK’s reliance on overseas manufacturing. Add Brexit into the mix and regardless which side of the fence you sit on, we cannot deny the changes in customs duties and general increases in landed costs some have experienced. For some companies this has really highlighted the need for manufacturing to return to the UK, or at the very least have a near-shoring strategy in place. Why, you may ask?
The cost of convoluted supply chains and extended lead times due to shipping delays and cost of shipping, has really brought a focus back to true landed cost. Added to that, when supplying product into certain geographies it often now carries a much higher import duty if it is manufactured in Asia. This in turn makes local sourcing more appealing.
We are all aware of the rich heritage that this country has for innovation and manufacturing. There is a great deal of admiration and respect for the products made in the UK and our capabilities have become synonymous with quality, integrity and trustworthiness from all stages in the supply chain, so it really does pay to invest in the manufacturing at home.
NOTE is seeing a trend of OEMs seeking to take back control of their supply chains by moving to a more regional strategy and using CEMs with sites in more local geographies. The trend seems to be driven by a focus to look at updated landed cost comparison
of local manufacturing versus managing their supply chains and product fulfilment at arm’s length. The key word here is ‘landed’ as some have omitted to consider the cost of engineering support, ease of communications, different time zones
and two key elements: flexibility and agility.
Today we are gaining momentum as the UK gears up for projected growth in the next three years and with the availability of buffer stock returning to suppliers, this will enable us to re-start our Kanban fulfilment model for many customers which offers a greater degree of flexibility and reduces lead times to a minimum. A well- engineered Kanban system self regulates by pulling higher level build when demand dictates and conversely slows up when demand falls. Meaning valuable resources are never wasted.
Reshoring manufacturing mitigates a lot of risk and so businesses can avoid rising costs and the additional administration. Even if manufacturing returning to the UK is born of necessity, there are many advantages to bringing the manufacturing process back to British shores:
Fast and flexible response:
By choosing to manufacture in the UK, customers can cut the time it takes to receive their products. Local supply means short response times and a greater degree of agility when OEMs require flexibility.
Reducing carbon footprints:
NOTE is committed to decreasing its carbon footprint and is constantly looking to improve its sustainability policies. Sourcing manufacturing locally cansignificantly reduce the distance that products must travel.
Relationship partnering:
Having a local partner and being able to have in-person visits comes with a whole host of intangible benefits. At NOTE we aim to build up a rapport with customers face-to-face, generate ideas with the team and shake hands with the team creating the products. The company aims to sit on the same side of the table as its customers when it comes to fulfilling their product requirements.
There is no escaping global uncertainly, but we can put things into effect to mitigate risk and use of the right supply chain technologies can dramatically reduce the worst impacts of disruption.