People & Skills  

Growing supply chain disruption encourages re-shoring

EEF has released a major survey outlining how increased disruptions to supply chains from recession and natural disasters is causing rising numbers of companies to bring production back in-house and search for local supply opportunities
 Global supply chains have become increasingly fragile
 
 

The survey, released today, highlights how the recent globalisation of manufacturing and its supply chains has created a fragile network at considerable risk of disruption. In the light of recent world events, 40 percent of companies surveyed have made production an internal process, while a 25 percent are increasing their use of local suppliers.  

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EEF Chief Economist, Lee Hopley commented:

“Supply chains have become increasingly globalised for manufacturers. This brings a range of benefits but there are risks attached when things go wrong. In recent years manufacturers have been hit by a host of unforeseen events, which has seriously tested their supply chain monitoring and business continuity planning.”

Hopley continued by noting that industry needs to capitalise on opportunities provided by the re-shoring of manufacturing with “companies bringing some production in-house and using local supply chains”. Adding that obstacles must be removed for those manufacturers “looking to expand capacity or diversify into new areas”, in order that every ounce of vital investment is pulled into the economy.

This re-shoring of manufacturing is creating a “real window of opportunity”, according to EEF, helping companies to “increase their control and visibility over key elements of the production process; and the economy, which needs this high value activity to generate sustainable growth.”

Other findings from the survey include:

  •   The average manufacturer has 190 suppliers
  • Around a quarter have seen an increase in the use of international suppliers in the past 2 years
  • The most significant impacts on companies from disruptions were loss of orders and loss of revenue
  • Preventative measures implemented have included better inventory management, increasing collaboration and forward planning with suppliers and investment in IT to improve supplier management
  • Additional benefits  from these measure include reduced costs and improved flexibility
  • As a result of recent disruptions, one third of manufacturers see supply chain management as a business critical issue worthy of board level attention
  • Despite potential risks to disruption, only 11 percent of companies monitor their entire supply chain, with 16 percent not monitoring their suppliers at all

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