An unpalatable truth

by Andy White, Associate Director, Maisha + Co

This will most likely make for uncomfortable reading – but the UK manufacturing sector is in need of a cull of those suppliers (and there are many) who continue to under-perform in terms of capability, cost and delivery.

Sadly, paralysed by the fear of what having to address sub-par supplier performance might entail, the sector’s major purchasers typically choose instead to do nothing.

Somehow, manufacturing continues to grow (just about) but nowhere near quickly enough. Purchasing teams try to do their bit to improve their suppliers’ operations but fail to go far enough. And initiatives to improve the health of the supplier base come and go but with insufficient thought as to their effectiveness or whether they will achieve enough.

This leaves us with a situation whereby there are two variants of a single question in play. Managing a poor supply chain or finding a new one; which is easier and, in the long term, least disruptive? And which is preferable?

Fear of the unknown means that the safer bet apparently lies with the devil you know, as far as UK manufacturing is concerned.

That’s an illogical response. Greater ruthlessness is called for here. Ruthlessness and tough love in a concerted effort to be less accepting of poor performance from UK suppliers.

This is not a suggestion to switch to more overseas suppliers, implying that they are somehow better. I am merely suggesting that for most UK manufacturers, there are better suppliers to be found somewhere, if only they were prepared to look and to make the necessary effort.

Instead, manufacturers and suppliers alike avert their eyes and remain locked in a grisly stalemate, neither wanting to push the other too hard with talk of how they might improve their relationship, for fear of what they might hear.

How did it come to this?

We are all to blame here. Over the past 10-15 years, many small and medium-sized enterprises (SMEs) have failed to keep pace with global manufacturing developments, preferring instead their unhealthy obsession with determining how to compete with low-cost countries. At the same time, the Primes and Tier 1s have done little more than fiddle at the fringes in terms of helping their suppliers to raise their game.

Taking the latter point first, I believe the purchasing teams who are sent in to assist their suppliers often fail to look in the right places. I would want to know how my suppliers recruit, manage and train their people. Do they have the right people in place? How do they proactively align themselves to customers’ needs? How alert are they to the competition in their field?

These are the factors which can really affect how a supplier performs. Solving deficiencies in these areas may require coaching or the development of certain softer skills. But they certainly won’t be solved by the purchasing team parachuting in and merely installing the latest version of the in-house guide to lean manufacturing or supply chain management; something which, in my experience, happens far too often.

As for the SMEs themselves, I feel they should be giving more thought to how they can be truly competitive. The low-cost overseas competitors are already moving into the higher value product brackets. Our UK suppliers need to find their niche in the higher value sub-assemblies, perhaps even taking ownership of entire sub-assemblies on their customers’ behalf.

Simply hoping to trade punches with low-cost suppliers over low-value products is a futile exercise, especially in any product segment where labour accounts for more than 25% of the total production cost. Developing higher value products and services which complement those offered by their major customers is where their future lies now.

I’ve lost my appetite

But why bother to try to do things differently? Why bother when both customer and supplier seem so accepting of the status quo, when there is no imperative to change? Easy: because an embrace based on inertia, rather than mutual satisfaction, benefits no-one.

I have no doubt that the idea of finding new suppliers sits squarely in the ‘too difficult’ pile for many large manufacturers. How to re-source your supply is a significant undertaking and one which undeniably comes with risks attached. But it has to be better than the alternative.

Something else to consider

There are two other factors I would throw into the mix here; talent and government assistance. Much is made of the initiatives launched by the government (and certain Primes) to improve UK suppliers. I don’t believe they’ve really had much success. Training, grants, subsidies – these are all worthwhile tactics but I query whether they really targeted the right issues.

I feel that too much resource was expended on suppliers who were never going to be the sort of modern day supplier we crave. Did those who benefited have the right soft skills (as mentioned previously), the right people, management, infrastructure or culture? Did anyone ask the Primes who the suppliers were that they felt deserved support? Or did support just go to businesses that were financially viable, with a business plan and an order book? Too often, I believe it was the latter.

I am in no doubt that the future of UK manufacturing lies with the SMEs; with strengthening our capability from the grass roots up. After all, there are only so many Primes that the UK and our national competitors can fight over. Supporting the SMEs is absolutely the right thing to do – but we have to place our bets in a more thoughtful fashion.

As for talent, I know it’s unoriginal to talk about manufacturing’s image problem but if we think it’s hard to attract top talent into the sector, it’s even harder to attract top talent into purchasing roles within the sector. We all suffer as a result.

Successful, high-flying engineers will rarely gravitate towards purchasing, unless they’re working in one of the Primes. As a discipline, it’s too readily dismissed as being little more than placing orders. Yet a sharp engineering mind can work wonders in a purchasing role, improving the interaction between supplier and manufacturer. More work is undoubtedly needed here to resolve this particular image problem and put purchasing centre stage.

Just do it

In conclusion, I do find it amazing how many businesses shy away from making the awkward – but necessary – decisions about under-performing suppliers. It’s as if hard-nosed businessmen and women don’t want to do something which might prove upsetting.

I appreciate that there are political sensitivities around the desire to keep it local or, at the very least, keep it British – and that these concerns can make even the most belligerent purchasing director think twice. However, I think that this can also be a convenient smokescreen to hide behind.

I’m all for keeping it British – but I’m more interested in keeping it high performing.

Over the course of a 35 year career, Andy White has been responsible for manufacturing, product design and development, customer service, quality assurance and supply chain management across a host of leading blue chip manufacturing companies.  He spent 28 years in the aerospace sector, working for brands like Vickers, Aircelle and Safran, and a further seven years in the medical devices sector with DePuy orthopaedics, part of the Johnson & Johnson empire. During that time, he oversaw the delivery of hundreds of new products to the market and managed supply chains containing thousands of associates.

An expert in value-based decision-making, Andy now brings that expertise to bear as an Associate Director with Maisha & Co, working with organisations to assess their procurement activities.