BDO: COVID-19 prompts rethink of manufacturing supply chains

By Georgia Wilson
Latest research from BDO has identified that manufacturers need to radically rethink their supply chains...

Following a survey of 206 manufacturing businesses, conducted by Made UK and BDO, the two organisations revealed that almost 9 in 10 manufacturers have reviewed their supply chain in response to the pandemic.  

“As supply chains become more complex, many manufacturers are recognising that they will need to invest more in technology which provides end-to-end visibility across the supply chain in real-time and which provides the information required under EU export Rules of Origin from 1st January 2022. For many this will be critical in managing supply chain risks, reducing the likelihood of production stoppages and ensuring potential trading tariffs are avoided,” commented Richard Austin, Head of Manufacturing, BDO.

“Our survey has found that many manufacturers are actively formulating strategies to diversify their supply chains and opting for dual or multiple sourcing for critical supplies.”

Key findings from BDO and Made UK’s survey

  • Two thirds of UK manufacturing businesses have plans to introduce dual or multi-sourcing for key components to avoid the supply disruptions
  • 59% of respondents stated they planned to diversify their supply chains, with 46% having plans to create a UK focused supply chain, however 27% said they were looking to diversify their supply chains across the EU, with the same looking outside the EU
  • 33% commented that they would focus on reshoring goods manufacturing to the UK

In addition to the impact of the pandemic, BDO and Made UK comment that new rules which came into effect following its withdrawal from the EU has resulted in new trade frictions and further disruptions and reorganisations identified in the survey. 

“The supply delays experienced by UK manufacturers at the start of the pandemic were a wake-up call, prompting many operators to confront the risks involved in over-relying on single suppliers for key components. This was particularly true in cases where suppliers were geographically very distant,” added Austin.

“The trade frictions created by the new post-Brexit trading arrangements have added a new layer of complexity which may prompt further supply chain adjustments and changes to logistics operations. Rethinking these arrangements is likely to be a priority for all manufacturing businesses over the coming year,” he concluded.

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