UK Manufacturing crucial to global supply chain

15/08/2012

Manufacturing in the UK is crucial to the global manufacturing supply chain according to new research released recently by Barclays.

However, many manufacturers still fear the risks of global trade outweighing the opportunities.

Over 200 manufacturers across the UK were surveyed with findings revealing an emphasis on quality and loyalty amongst UK manufacturers. In addition, businesses were looking to each other for support rather than looking abroad.

Of those surveyed, almost two thirds are source commodities or components for their products from the UK rather than abroad, with over half producing goods that are sold to the UK end user to used as components in UK production.

For those that do source inputs offshore, 32% look to China as a key market, followed by 19% who source from Germany.

36% state that they simply prefer to source from the UK as a rule, when asked what the key deterrents is for trading outside of the UK. This was followed by currency risk (19%), with one in 10 fearing goods or payment may not be received.

Mark Lee, Head of Manufacturing, Barclays Corporate Banking said,

“There is a clear sign of patriotism amongst UK manufacturers as values, loyalty and confidence hold firm with proximity being seen as a key driver.

“Given the current economic climate, a focus on domestic strategies and procurement is understandable however manufacturers must not be afraid to play a lead role on the global supply chain stage.”

The findings from the survey show that quality is a defining factor when it comes to choosing suppliers and winning business. 40% of manufacturers surveyed select a supplier based on ‘quality’, followed by 33% who declared ‘price’.

Taking into account increase in fuel prices, the costs related with transporting goods are also impacting manufacturers’ decisions when choosing suppliers and where they supply to.

Of those surveyed, almost two thirds stated that cost was influencing their supply chain decision making with a further one in 10 saying their decisions are being heavily impacted.

However, despite the harsh economic climate and cautious survey responses, there is a confidence amongst UK manufacturers when it comes to stability and security of their place within the supply chain.

Over half of respondents believed that their customer relationships to be stable in the short term whilst one third see stability for the foreseeable future, when asked how they would describe the level of contractual security they enjoyed with the companies they supplied.

Mark Lee said,

“Self confidence and traditional values of quality appear to be key drivers behind UK manufacturers’ supply chain strategies. For UK manufacturers that are able to fully grasp the opportunities and risks related to global trade, there is undoubtedly a competitive advantage.”

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