Despite the recent slowdown in UK manufacturing activity, from 53.3 on the Markit/CIPS Purchasing Managers’ Index in November to 52.5 in December, 2014 was still a strong year for British manufacturing. But companies looking for growth face a tough challenge ahead. Manufacturing organisations supplying the big retailers are under growing pressure to reduce costs, and in order to protect their margins suppliers are focusing their attention on the ‘cost to supply’.
So how do smaller companies in particular cut costs and simultaneously pursue growth?
Critical to taking cost out of the manufacturing supply chain is ‘visibility’, achieved through integrating software solutions across an enterprise to deliver significant competitive advantage in terms of customer service, performance and profitability. Such joined-up information technology also forms the basis for enabling sustained growth. For, only by having slick, automated processes in place can a business see its capacity to perform and understand its potential for growth. These systems provide the clarity and confidence needed for business expansion.
For many SMEs such technology has been regarded as out of reach, only available to large companies. However, the threshold for introducing high visibility supply chain software has been tumbling in recent years and is now within the reach of businesses with a turnover of just two or three million.
This wider accessibility of functionally rich manufacturing and supply chain technology could be a vital ‘engine for growth’ for the UK economy. In fact, many start-up enterprises embrace technology from the outset. They have a clear idea of what they want to become – how to steal a march on the market – and fully understand what systems they want in place to give them a competitive edge. They are focused on growth from the start and readily deploy the technology to enable them to achieve it.
Established companies too are using this technology to take out cost and at the same time, facilitate growth. With aspirations to grow the business from £15m to £20m turnover in three years, Burts Potato Chips needed a system that would provide integrated finance, production and stock management. The business implemented Access Supply Chain, along with barcoding, to offer real-time data collection for stock and manufacturing. Burts is now benefiting from significant time and cost savings – no longer having to carry out monthly stock takes has saved £12,000 a year alone.
Manufacturing businesses both large and small now have the potential to reduce costs and drive growth using highly functional supply chain technology. The opportunity for growth is there for the taking.
Gary Bailey is director of account management at Access Group.