SUPPLY CHAINS MAY/JUNE 2020
PIVOTING
FOR SUCCESS
The COVID-19 pandemic could be the
perfect opportunity for UK manufacturing
to radically change the way it operates
BY JANET GODSELL, PROFESSOR OF OPERATIONS AND SUPPLY CHAIN STRATEGY, WMG
Over the last 30 years global
manufacturing strategy has seen a
shift to a model that has limited our
structural fl exibility as we off shored
manufacture. According to ONCTAD
data, in 2015 UK manufacturing
represented only 2% of global manufacturing
output. In comparison, the US, China, Japan and
Germany collectively accounted for 55% of world
manufacturing output. Against this backdrop,
the impact of COVID-19 on UK manufacturing
is becoming clear. The Offi ce for Budget
Responsibility (OBR) predicts a 35% single-quarter
hit to GDP and the largest defi cit since 1945.
UK manufacturing supply chains are at a
pivot point. In the short term it is essential to
protect vital the industry through a programme
of ‘lifeboat’ projects to sustain and enhance
current capability. These short-term projects
would provide support to those industries whose
demand for products has been most severely
impacted by COVID-19, but whose capability
is critical to the long-term success of UK
manufacturing and the broader economy, such
as steel, aerospace, automotive, oil and gas and
construction.
This is also a time to pivot and build capability
for the future. To do this eff ectively, there are
fi ve critical considerations for UK manufacturing
supply chains:
1What should the UK manufacture?
COVID-19 has highlighted the importance
for the UK to have domestically resilient supply
chains for the products and services that are
critical to life. This requires those supply chains
to have core manufacturing facilities in the UK,
which is one of the reasons why UK food supply
chains have been so eff ective at maintaining
supply, as much of their food production is
28
Historically the UK has lagged
behind other countries in
the creation of a connected
infrastructure. In June 2019,
Britain ranked 35th out of 37
countries assessed by the OECD
for the proportion of fi bre in its
fi xed broadband infrastructure.
There is an opportunity to
use the recovery period post-
COVID-19 to make signifi cant
investment in the infrastructure
required to ensure the UK has
world-leading connectivity. This
will have the short-term benefi t
of supporting the construction
and telecoms industries, but
longer term will create new
business models that leverage
connectivity to fi nd new ways
to manufacture and distribute
products and services.
Another critical area for
investment is industrial
decarbonisation. The UK has
clusters of large industrial
plants for energy-intensive
industries, such as steel,
cement, refi ning and chemicals.
Whilst they are signifi cant
contributors to the economy
and their communities, they are
also signifi cant contributors to
UK carbon emissions. The six
largest industrial clusters have
high emission plants totalling
around 40 million tonnes
of carbon dioxide per year,
accounting for approximately
one-third of all business
based in the UK. The UK needs
to strategically review the
products that are critical to
life, and ensure that there is
the capability to produce these
domestically, with the ability to
ramp up volume if required.
In addition, the UK should
take the opportunity to leverage
its strong R&D base to identify
globally competitive products
and services, and evaluate where
we have opportunities to make
these products in the UK and
export globally.
2What critical
infrastructure is
required?
Despite COVID-19, UK suppliers
supporting the development
of China’s 5G network saw
unprecedented demand for their
products throughout March. It
is suspected that the Chinese
government is heavily investing
in infrastructure programmes to
support economic recovery.
COVID-19 has reduced the
distinctions between home and
work, and has emphasised the
importance of connectivity.
2%
The UK’s contribution
to global industrial
output in 2015
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