How stable is your supply chain?
The past two years have certainly presented the biggest challenges to manufacturing supply chains all over the world. As we emerge from a global pandemic and face the current impact of the Russian invasion of Ukraine, we are witnessing a changed economic landscape for manufacturers and their customers. Having been exposed to the difficulties associated with extended supply chains, many players are now looking to secure their operations by reshoring the production of components back to the UK.
In the last few decades, many companies have made the decision to move their manufacturing operations offshore to cut production costs. This was driven predominantly by lower direct production costs, and relatively cost-effective shipping routes from China. Despite complex engineering and quality management processes, the lower direct costs of offshore manufacturing enabled many companies to achieve higher profit margins. However, in recent years, the manufacturing industry has seen a definite shift towards reshoring those operations as direct costs are no longer as attractive, shipping costs from Asia have increased hugely, and businesses seek to provide certainty to their operations.
COVID-19 has shone a new light on the risks associated with offshoring. It has become evident that disruptions in complex international operations could impact on the wider global picture. More and more companies are now realising the high risks associated with offshoring and are looking at reshoring options to bring manufacturing back into the UK.
More recently, the war in Ukraine has brought a lot of uncertainty to both the European and global economy. Russian products account for just 1.5% of the UK’s total imports, with around 6% of oil and 4% of gas in the UK sourced from Russia. However, the true economic impact of the conflict is still unknown and will depend on a number of factors, including the severity of sanctions, the rate that the war escalates and how long it lasts.
These events collectively have created a less global, more local economy which presents opportunity for those that are able to quickly adapt. Reshoring presents a significant growth opportunity for the UK manufacturing sector, whilst providing a number of key benefits to the companies looking closer to home for suppliers.
Key benefits of reshoring manufacturing:
- A UK supplier significantly reduces, in some cases completely removes, the risk of a supply chain collapsing.
- Weather, raw material shortages and a whole spectrum of other factors, including border control delays, can have a huge knock-on effect in delivery schedules. Reshoring manufacturing can help avoid risk of delays in delivery.
- Extended supply chains, with potentially many weeks production, have continual ‘on the water’ problems with product quality. These are only really identified when the shipment(s) arrive in the UK. Reshoring reduces shipment volumes, and lead times, and of course allows for frequent site visits to maintain quality and introduce changes effectively.
- Communication is easier with time differences and any language constraints removed, all of which allows for tighter control over product quality, easier negotiation of contracts and ensured compliance to appropriate industry standards.
- Companies with offshore production must ensure that ethical production standards are maintained and this really means positively vetting your international suppliers to international standards set out by the International Labour Organization (ILO). Remove any uncertainty around this important are of Corporate Responsibility and know your supplier.
- Visiting overseas suppliers to manage all of the issues associated with production, quality systems management and ethical compliance is time consuming and costly. Reshoring will significantly reduce travel costs and resources required to visit suppliers allowing for more frequent face-to-face meetings.
- The global economic climate is constantly changing, which frequently impacts currency exchange rates, often daily. Exposure to volatile FX changes makes cash forecasting difficult and could require ‘hedging’, and ultimately this has the potential to negatively impact profitability.
- From prototyping and samples to timely overseas freight processes, reshoring production can reduce overall turnaround time.
- Reshoring manufacturing can reduce or eliminate delivery costs entirely.
Reshoring is highlighting the skills, resources, and ability for innovation that the UK manufacturing sector boasts. As the UK continues to recover from the pandemic and also adapts to the implications of Brexit, there is a potentially a ‘silver lining’ as more companies transition and support UK manufacturing.
Brockhouse is a proud UK manufacturer, offering forging solutions for over 135 years. Our skilled workforce has been producing quality forgings for over a century, establishing a strong reputation for Brockhouse as a market leader, working with a network of customers globally.
We understand our customer’s requirements and the pressure to deliver a quick turnaround. We work alongside our customers to control costs whilst maintaining the high manufacturing, quality and logistics standards they require.
From our West Bromwich based facility, we offer a complete service including design, die & tool manufacture, forging, machining, and heat treatment for items up to 140kgs in weight.
As experts in this field, we can offer the following:
- Forging capabilities from 0.5KG to 140KG~
- Small and medium batch quantities in a variety of metal grades
- Create custom impression dies and store for repeat orders
- Full CAD design and CNC machining support
We are proud to offer a full turnkey service;
If you’d like to discuss the option of reshoring your forgings, or how we can help with your next project, please contact our team today to discuss your requirements.
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