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Manufacturers having to play ‘whack-a-mole’

Supply chain delays and rising material and labour shortages continue to constrain growth in UK manufacturing, with smaller companies being impacted the most despite production increasing.

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Supply chain delays and rising material and labour shortages continue to constrain growth in UK manufacturing, with smaller companies being impacted the most despite production increasing.

According to the UK Manufacturing Purchasing Managers’ Index (PMI) for September, monthly growth in the manufacturing sector is now at its weakest since February.

The primary cause is an ongoing combination of input shortages, longer supplier lead times and capacity constraints. Average lead times continue to hover around record levels, partly due to COVID-19 and EU Exit disruptions as well as staff shortages in the logistics sector.

Duncan Brock, Group Director at the Chartered Institute of Procurement and Supply (CIPS), confirmed that SMEs have been the hardest hit:

“Manufacturing activity in September was crammed with obstacles to succeed, as supply disruptions continued to dampen growth for a fourth month in a row. Smaller businesses were impacted the most as reduced resources in supplies and drivers made trade more unmanageable.”

The supply chain disruption has also led to increased inventory holdings as companies make contingency plans, with 99 per cent of the firms surveyed for the PMI saying that prices had either continued to increase or remained at elevated rates.

In addition, overseas sales contracted in September for the first time in eight months, as Duncan Brock explained:

“New orders growth slowed again compared to May’s high from both domestic and overseas customers as the Brexit and COVID-related long delivery times and accelerating costs contributed to a reduced eagerness to commit. Customers were becoming impatient with sluggish production times from UK businesses, opting to source for more efficiency elsewhere.

“Like a whack-a-mole game where once one difficulty is resolved, another appears soon after, the sector may be challenged but remains stoically convinced that things can only get better in 2022 once the next few gruelling months are at an end.”

Geoff Crossley, GC Business Growth Hub’s Senior Manufacturing Advisor, has urged SME manufacturers to build supply chain resilience through smart inventory management, sharing logistics capacity and considering product redesign.

Greater Manchester manufacturers suffering supply chain problems are encouraged to contact our specialist Manufacturing Service for fully-funded advice and guidance.

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