MAY/JUNE 2020 SUPPLY CHAINS
Rawf8 / stock.adobe.com
Better adoption
of the ‘circular
economy’ is one
step to changing
UK manufacturing
for the better,
says WMG’s Janet
Godsell
5 How does the UK
build a bedrock
of fundamental
manufacturing and supply
chain skills?
Whilst technology may
change, the supply chain
principles and skills remain the
same. The fundamental principle
of supply chain management
is to balance demand and
supply, creating fl ow of product
through the end-to-end supply
chain in line with demand. This
is enabled by sophisticated
planning systems that recognise
the diff ering demand patterns
for products. The right supply
strategy can then be determined.
Over the last 30 years, the
core of these fundamental skills
has increasingly been overlooked
when deploying manufacturing
and supply chain strategy. UK
manufacturing supply chains
could be more competitive if
they were proactively designed
and managed. In doing this,
we could overcome the
ineffi ciencies of optimising
the performance of individual
functions or companies, and
instead holistically create
productive and sustainable
industrial supply chains that are
globally competitive. There is
expertise and leading practice
throughout the UK, across
companies, consultancies
and universities that could be
curated and shared. There is
an opportunity to match the
manufacturing and supply chain
issues that companies face, with
the right knowledge and leading
practices to solve that problem.
At the moment, this is largely
being missed across the UK.
Now is the time to pivot
Whilst it may be diffi cult to
currently see the silver lining
from the cloud created by the
COVID-19 pandemic, it has
provided a point of refl ection.
It has highlighted the criticality
of manufacturing supply chains
to deliver products and services
essential to life, and the fragility
built into supply chains over the
last 30 years. Now is the time
to pivot and to build globally
leading UK manufacturing
supply chains that are resilient,
productive and sustainable.
and industrial emissions. Investment
in industrial decarbonisation will have
the short-term benefi t of supporting the
construction and energy industries, but will
have the longer term benefi t of creating more
competitive foundation industries to have access
to cheaper and more sustainable energy.
3 How can the UK ‘mine for materials’?
Manufacturing supply chains have typically
been designed on the principles of a ‘linear
economy’ - one where we mine materials, make
products and then at the end of their life they
go to landfi ll. As resources in the world become
scarcer, rather than continuing to mine for
materials from the ground, we need to consider
how we can extract and recover materials from
products already in circulation. For instance, by
2050 the UK steel industry could ‘close the loop’
and only use recycled steel as a feedstock.
Currently, the UK is a net importer of steel,
meaning that we buy more from other countries
than we sell. We tend to import high volumes of
low-grade steel, and manufacture and export low
volumes of high-grade steel. To close the loop,
we would need to consider more carefully what
the sources of steel were, and how to ‘mine for
the materials.’ This may lead to the development
of new industries like aircraft disassembly, and
is also likely to require investment in sortation
equipment to separate materials.
As the UK looks to recover, there is an
opportunity to rethink the role of manufacturing
so that the focus is not solely on the production
of original products, but consideration is given
to how UK manufacturing can support the
principles of a more ‘circular economy’ and
innovatively support the repair, remanufacture
and redistribution of products.
4How can the UK design future-fi t
manufacturing supply chains?
COVID-19 has triggered the identifi cation
of products that are less
obviously critical to life for
the average person (e.g. PPE
and ventilators). The demand
for these products in normal
times may not be very high, but
they are strategically important
assets in a certain type of
emergency.
As we rebuild the network
of manufacturing supply chains,
we need to do so in a way that
enables our manufacturing
networks to be both
‘dynamically fl exible’
to the more normal
fl uctuations in
demand, but also
be ‘structurally
fl exible’ to
reconfi gure
when there is an
unprecedented
disruption.
This will not
happen by chance.
It is easier for
supply chains to be
structurally fl exible when
they are local, rather than
global. Ineos recently built
a hand sanitiser plant near
Middlesbrough within 10 days,
to provide a million bottles
of sanitiser per month to the
NHS. The main ingredient used
comes from a plant in Scotland.
Ineos says it hopes to replicate
this model in Germany.
Structural fl exibility
requires a focus on economies
of scope (effi ciency through
variety) rather than economies
of scale (effi ciency through
volume), as it is easier to switch
production. It can also require
a ‘co-opetitive’ approach, where
organisations collaborate with
their competitors to share the
bandwidth for assets. Structural
fl exibility is also easier to
achieve if supply chains are
designed with a greater number
of nodes in the network. Having
two factories is more fl exible
than having one, as volume
can be switched between
them. This requires a diff erent
approach to costing, one that
looks at the longer term and
factors in an option value. This
may result in a supply chain
cost that is more expensive
today, but provides greatest
fl exibility in the future.
www.manufacturingmanagement.co.uk 29
/stock.adobe.com
/www.manufacturingmanagement.co.uk