Industry issues

Key issues facing companies in the UK manufacturing sector include:

Manufacturing Excellence Awards 2008

PricewaterhouseCoopers sponsored the Manufacturing Excellence Awards 2008, an initiative of IMechE which has rewarded excellence and identified best practice in UK manufacturing for over 25 years. MX showcases the UK's top manufacturers and rewards their development and implementation of best practice. Every company that submits an entry receives a free, customised benchmark report with advice on how and where they can improve. This is what makes MX unique and why it is the leading scheme for companies to compare and reward themselves.

Emerging markets and low-cost manufacturing

Emerging markets, especially BRIC countries, offer UK manufacturers opportunities to relocate manufacturing operations to areas where labour and material costs are reduced. Successful low-cost sourcing requires strategic planning and must be in line with business needs. Coupling low-cost sourcing with effective purchase cost reduction is a key enabler towards better margins. Manufacturers face challenges including tax structuring, managing a global supply chain, operational management, dealing with different political and legal systems, and intellectual property rights.

Related reading: Machinery & equipment market in China & Risks & rewards

High value manufacturing

It is increasingly difficult for manufacturers in developed economies to earn reasonable profits if they do not add value in the manufacturing process. Moving up the value chain requires a clear strategy, an understanding of your customers and their aspirations and a workforce and facilities which are sufficiently skilled and flexible. Those who achieve this currently earn significantly higher returns and stronger customer relationships.

Manufacturing productivity

Measured by dividing output by labour hours worked, manufacturing productivity is lower in the UK than in many industrial countries, including France, Germany and the US. Manufacturers are seeking to improve productivity and competitiveness in a global marketplace through performance improvement, investing in a skilled workforce, effective supply chain management, and outsourcing operations where appropriate. The search for operational excellence is ongoing and many firms are moving towards lean manufacturing methodologies to achieve best performance.

Related reading: Manufacturing barometer

Innovation

Effective innovation in the UK manufacturing industry is key to succeeding in a competitive market. Manufacturers need to keep one step ahead of the competition through offering value added or niche products to customers. Innovation, whether it be through investing in R&D to develop new products or process technologies, improving back office or sales and marketing operations, must be in line with company strategy and ensure business needs are met.

Supply chain management

Effective supply chain management is a crucial to manufacturing companies. By working with customers and suppliers to plan supply and demand, identify and qualify improvement opportunities and implement process and technological improvements, organisations can significantly reduce costs and improve reliability of materials supply, stock holding and distribution, while improving customer service and cash flow.