£100m to strengthen UK supply chains – Can this help close the productivity gap?

The UK government is to invest £100 million to help UK companies strengthen their domestic supply chains, business secretary Vince Cable has announced. Supply chain consultancy, Crimson & Co has welcomed the announcement, as it will provide a useful incentive for companies to focus on improving their supply chains’ productivity.  

Tom Woodham, Director at Crimson & Co states, “The increasing trend of ‘reshoring’, as companies bring manufacturing back to the UK from abroad can be hindered by the current capabilities of UK based supply chains. The productivity gap between the UK and other nations has increased since 2008. And indeed international comparisons released by the Office for National Statistics (ONS) show that output per hour worked in the UK is 21 per cent lower than the average for the other six members of the G7 – the US, Germany, France, Italy, Japan and Canada. This productivity has to improve if the UK is to compete.

“The fact that Government cash is targeting capital investments, research and development, and skills training is very welcome. Investments in these areas by businesses over the last five years have been too low and are a source of the productivity gap,” added Tom. “If this initiative only increases the focus on required business investment, then it will make a significant difference. If it encourages businesses to re-assess their supply chains, to establish what elements could be improved, then it could have a massive impact.”

Tom concludes: “By establishing a robust business case for investment in strengthening supply chains, UK businesses can ensure that they become both more competitive, and meet the growing needs of their customers. To do this they need to balance the opportunities and risks of where to locate their supply chains, including total cost, continuity of supply, product quality, lead-time and growing corporate and social responsibility requirements. By then focusing on how well these supply chains could operate with appropriate investment, rather than how well they operate now, businesses will make the right decisions for tomorrow.”