UK manufacturers are spinning more plates than ever to keep up with supply chain risk factors. Due to growing customer demands, they are under pressure to develop new, innovative and affordable products at pace. At the same time, they must navigate new regulations, such as the need to mark goods placed in Great Britain with the UK Conformity Assessed product marking. Yet many manufacturers continue to face historical challenges such as siloed business processes, a lack of collaboration and visibility across the supply chain. What’s more, the technology solutions they have implemented have often failed to bring together company stakeholders, data, and strategy.
Global crises like COVID-19 and geopolitical factors like Brexit have exposed these weaknesses in technology and processes further. In fact, UK factory production has slowed as almost 60% of manufacturers have experienced longer delivery times from suppliers. As a result, many are looking to bolster their supply chain resilience.
However, manufacturers shouldn’t opt for quick fixes, instead using this as an opportunity to transform procurement operations. By laying the right foundations now, manufacturers can reduce risk, improve their ability to make strategic decisions, and collaborate with suppliers to launch better products faster.
Supply chain slowdowns
Currently, most manufacturers have a long way to go to optimise supplier management practices. Recent research from Ivalua found just 16% have standardised processes and advanced digital platforms in place to monitor supplier risk and performance. As many found during the COVID-19 pandemic, a lack of clear processes can knock key stakeholders out of alignment, breaking down effective communication and grinding strategic decision-making to a halt.
Visibility into suppliers is vital, as it ensures manufacturers have the latest data when communicating across departments and making strategic decisions. In fact, more than half of manufacturers believe that improved visibility and collaboration within their supply chains would reduce costs, improve decision making, and lessen supply disruptions.
A lack of supplier visibility is also hindering new product launches, slowing innovation cycles, and in some cases causing product launches to fail altogether. In fact, 48% of manufacturers launched new products on time and on budget less than three quarters of the time. This is further evidence that manufacturers need to make supply chain visibility a primary focus of future resilience strategies. Improved visibility will also help them to optimise production of existing products and maximise profitability.
A single source of truth
It’s clear that manufacturers need a centralised view of the supply chain. This means creating a single hub that can integrate effectively with other systems, bringing in and cleaning data from across the supply chain to offer a complete picture that will aid in decision making.
Not only will increased supply chain visibility help to improve decision making and risk response, it’s essential to facilitate collaboration between buyers and suppliers. By creating a clear way for stakeholders across the supply chain to share everything from new product requirements to production forecasts, organisations can easily identify new areas of innovation, and find new ways to work together to support business goals on either side.
For example, a recent report from McKinsey detailed how Unilever partnered with enzyme supplier Novozyme to work together on developing a more sustainable detergent. With Unilever’s knowledge of materials, and Novozyme’s experience with reagents that trigger the right chemical reactions, the partners created a new formula that performed better. The formula could also be transported at lower temperatures, so customers could save energy and reduce carbon dioxide emissions. Here, increased transparency across the supply chain accelerated innovation, improved profitability and supported the common business goal of improving sustainability.
It’s time for a smarter approach
To truly leverage data and improve strategy and processes, manufacturers must take a smarter approach to procurement. This will give them the visibility they need, while also providing tools to facilitate collaboration and improve efficiency. Today’s smart procurement platforms can boost automation, helping speed up supplier onboarding, maximise buy-in, and reduce change management across the supply chain – all while giving the organisation access to the data it needs to manage risk effectively.
Many manufacturers recognise the benefits of greater digitisation in procurement and enabling team members to collaborate using accurate data. In fact, our research shows that many organisations are currently planning to standardise their processes for supplier risk and performance management (54%), improve data quality (51%), and implement smart procurement solutions (44%). This ensures both greater resilience as well as increased profitability.
For example, global automotive parts leader Meritor digitised its complete product and supplier lifecycle, driving improved collaboration and efficiency. The resulting acceleration of product innovation and improved margins drove rapid growth in its stock price over several years.
For manufacturers that can standardise processes quickly, they will be able to use their deeper and broader visibility into the supply chain to thrive at a time where many are playing catch up. With access to real-time collaboration and automated spend management, advanced manufacturers will be in a prime position to anticipate risk, make informed decisions, and pivot as needed in response to changes and challenges.