Posted at 31-Jul-2020

Protectionism and Supply Chain Disruption

Paul Skade
By Richard Ludlam
Marketing Manager

Intrigued by all things engineering, as a youngster I originally looked to understand how things work then, how to make them work better.

After time in eng...

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One of the positive elements to come out of the COVID-19 pandemic – yes, there have been some positives – has been the ability of large parts of the UK manufacturing and supply chain base to adapt quickly and with remarkable resilience to dramatic change.  

 

While this has raised awareness among the wider public of the importance of manufacturing to the UK economy, it has also revealed the fragility of the existing supply chain model and, in some quarters, led to calls for faster reshoring of production and supply, together with a rise in protectionist trade policies. 

Although those calling for a return to protectionist policies are mostly found in the United States – perhaps one of the few nations capable of widely adopting such practices – they are also being heard elsewhere, including the UK.  This is, however, both short-sighted and unlikely to be successful as the realities of global trade significantly outweigh the supposed benefits of a closed, local-manufacturing, local-sourcing strategy.

Nonetheless, as the recent pandemic has shown, something needs to change if we’re to prevent future disruption of the recent scale, where overnight factory closures in the Far East fractured the supply of often critical components to factories around the world.

Supply chain resilience and hose production

For many companies their supply chains have largely been linear; a set of producers and suppliers transforming raw materials to parts, assemblies and finished products along an interdependent sequential chain.  As we have seen, break one link in this chain and, even with buffer stock, everything quickly grinds to a halt.

This was the case for a number of companies that approached our hose division during the early stages of the COVID-19 crisis.  They found themselves without supplies of crucial hoses and connectors and, as a result, unable to produce vital medical equipment.

In one example, our customer’s normal supplier of a specialised hose material was based in China.  When the pandemic struck, supplies stopped almost overnight.  They approached us with an urgent requirement for both replacement hose and a new design of connector that was intended for use in medical ventilators.

As the leading European industrial distribution business, we have developed an extremely flexible and agile supply chain model; unlike companies adopting a traditional linear approach, we work with diverse suppliers across multiple industries and geographies to enable us to provide a secure and reliable source of supply, even under the most difficult of circumstances. 

For our customer searching for hose replacement, some of which was for a particular non-standard compound, we were able to find a UK manufacturer with the capability to produce and supply over 40,000m of hose within two days.  Similarly, for a further enquiry for 40,000 connectors where there was no local stock and little likelihood of fresh deliveries from Far Eastern producers, we used our supply chain partners to manufacture locally; 40,500 parts were moulded, tested and supplied within days of the order being placed.

Supply chain resilience depnds on diversity and preparation

Our strengths as a business lay in the diversity, breadth and depth of our supply chain partners, combined with our technical and applications knowledge.  In the examples above, we were able to apply our experience working with many different hose and connector materials to help our customer find the best technical and commercial solution in an extremely short timeframe.

On numerous occasions, our technical capabilities have helped customers improve the performance and reliability of products and components, while reducing both purchase price and total cost of ownership.  This is equally true for high volume commodity items, such as hoses and connectors, and for custom engineered, low volume seals or gaskets.

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As the industrial sectors begin to return to normality – or at least something approaching normal – there will be an ever greater need for a new level of flexibility in our supply chains.  In particular, we’re going to see far stronger emphasis on cost reduction throughout the supply chain, at a time when falling demand combined with risk factors such as the growth of protectionism and trade wars make it even harder for supply companies to find cost-savings through economies of scale.

A better approach to supply chain modelling

One thing that the COVID-19 pandemic has taught us is that the previous supply chain model was extremely fragile and incapable of dealing with overnight disruption on a major scale.  This does not, however, mean that the model is inherently faulty, or that the answer is simply to reshore all production to the UK and embark on a policy of protectionism. 

What is required is carefully thought-out, long term strategic planning that creates a high-skilled, high-value UK manufacturing base, integrated with resilient local and global supply chains, built of multiple, diverse and interconnected sources.  Ultimately, of course, success depends on being prepared for every conceivable eventuality, with an agile supply chain model that can quickly be adapted to meet those eventualities for which no amount of prior planning can predict.

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