Recent InterAct research from the Strathclyde University based ‘Future of Work’ team has highlighted the major issue of UK public perception of the manufacturing sector. In the emerging ‘war for talent’, perceptions are essential to providing a snapshot of public opinion about the attraction of the sector and the desirability of working in manufacturing. They may not measure up against ‘reality’, they may be ‘misinformed’, but ultimately they significantly shape the workforce of the future.
In an effort to start changing the narrative around manufacturing, InterAct has partnered with expert creative change consultants GW+Co to deliver an online workshop for manufacturing leaders on 23rd May. The session explored the underlying issues for manufacturing, address the myths of modern branding and introduce ways for you to enact meaningful change within your business.
Attendees had the chance to work with GW+Co’s CEO, Gilmar Wendt, to learn about his innovative approach to tackling the brand and perception challenges of their own organisations, including:
How three manufacturing businesses have changed perceptions by aligning their people with brand, culture, and strategy.
Tools and approaches that deliver successful brands by tapping into the existing skills and knowledge within a business.
Training in a technique developed by GW+Co that helps businesses to identify the pitfalls specific to their business, and documents outcomes in a way that ensure project success and team cohesion.
If you are interested in learning more about the perception challenge facing the manufacturing sector, read our recent reports, which will be joined later this year by further work on practical guidance for rebranding.
You can listen to a summary of some of the key takeaways from the report by Dr. Robert Stewart for ManufacturingTV below
On the 5th June, Innovate UK’s Made Smarter Innovation Showcase took place at Smart Factory Expo.
For the past four years, Made Smarter Innovation Alley at Smart Factory Expo has been a key platform for connecting technology companies with manufacturers, however this year it had a strong focus on celebrating the incredible achievement of organisations the industrial challenge (ISCF) has supported.
The event was an opportunity for the dynamic display of cutting-edge companies and academic organisations. The showcase highlighted success stories where organisations have leveraged the Challenge’s support to become leaders in areas like carbon abatement, resilience, and productivity and people running through the heart of the Showcase.
Smart Factory Expo saw over 13,000 attendees across the 2 days who explored over 200 exhibitions. Made Smarter Innovation hosted over 30 organisations, including InterAct, on their stand.
Made Smarter Innovation supported a number of engaging talks across the Smart Factory Expo theatres:
Made Smarter Innovation Challenge update from Deputy Challenge Director Dr. Ben Farmer (Innovate UK).
InterAct also had the chance to showcase the latest animated videos from the ‘Insights from History’ project, highlighting the important lessons for innovators that can be drawn from past industrial revolutions. You can watch the full series on our YouTube channel.
On 16th April, InterAct Co-directors Professor Janet Godsell and Professor Jillian MacBryde joined audiences from across the manufacturing, digital technology, policy and academic communities at MACH24 and the ‘Future of UK Manufacturing’ Conference to discuss the strides InterAct is making to deliver new human insights into the digitalisation of manufacturing.
MACH24 is one of the UK’s largest manufacturing focused trade shows, bringing together over 500 exhibitors – all eager to showcase their latest cutting edge, innovative products and services across many sectors. InterAct was present for three days this year, with a stand in the Engineering Supply Chain Show where researchers and InterAct staff had the chance to engage with dozens of businesses.
The ‘Future of UK Manufacturing’ conference is an event organised by High Value Manufacturing Catapult, EPSRC and the Institute for Manufacturing (IfM), University of Cambridge, which brings together leaders from academia, government and industry. This year’s line up of speakers included: Sarah Sharples, Chief Scientific Advisor for the Department for Transport, Katherine Bennett CBE from the High Value Manufacturing Catapult, Benjamin Nicol from the Advanced Manufacturing team at the Department for Business and Trade, and Professor Jillian MacBryde, InterAct Co-director and Vice-Dean of Strathclyde Business School.
Visiting the events at the NEC, Birmingham and Cutlers’ Hall, Sheffield respectively, Professors Godsell and MacBryde delivered talks focusing on the scope of the InterAct Network’s projects, our growth over the past two years and the exciting forthcoming research outputs.
Discussing her session at the ‘Future of UK Manufacturing’ conference, Professor MacBryde said: “It’s fantastic to have the opportunity to be here with so many voices from across the industry, policy, and academic divide, all discussing how we can drive forward a bold vision for the future of manufacturing in the UK.
We are conducting a lot of really valuable work concerning the integral role of people and human insights in the digitalisation process, and it’s been great to have the opportunity to deliver a overview of what we’re doing to such a receptive audience. The discussions we’ve engaged in here today will definitely help to inform our research going forward.”
To improve productivity and efficiency the manufacturing sector has regularly looked to evolve its systems and embrace new technologies. More recently the pace of change has intensified as we see the emergence of digital technologies such as artificial intelligence, digital twins, advanced analytics, cobotics, and smart manufacturing. Learning from past challenges, particularly in the 1980s when the adoption of robotics faced obstacles due to insufficient consideration of human factors, centres like the Made Smarter Innovation: Centre for People-Led Digitalisation have recognised the important role that people play in the adoption and acceptance of new technologies.
Although digital technologies have the promise of creating significant economic, environmental and societal benefits, they also have the potential to substantially alter the future of work – the jobs people do and how people work. The world is currently at a crucial decision point – what do we want the future of work to look like?
Taking a people-led approach to digitalisation aims at improving the outcome of the adoption of digital technologies. This is achieved through prior explicit consideration and planned appropriate action that prioritises human needs and working patterns in the design and implementation of digitalised work systems.
The team at People-Led Digitalisation are seeking to publish innovative research which explores the human element of digitalisation, be that in the design of digital technologies or the implementation of digital technologies within a manufacturing environment.
They are welcoming original research, reviews, impact and industrial case studies, from the perspective of improving manufacturing performance such as (but not limited to); increased productivity, reduction in environmental impacts, re-imagining manufacturing jobs, people-led digital change. The following top-level themes should be used as a basis:
The future of work in manufacturing to 2030 and beyond,
Stakeholder engagement in digital change,
Digital skills,
Industrial Digital Tools for good work,
Metrics of success in digitalisation projects,
Enablers and barriers to the adoption of digital technologies,
Readiness for digital change,
People-led approach to design of digital technologies.
As part of Leicester’s Innovation Festival, InterAct partnered with Made Smarter East Midlands (MSEM) to host the latest in their series of Technology Transfer Workshops titled, ‘Increasing Productivity through the Adoption of Digital Technology’ on 9th February, 2024.
The InterAct and MSEM teams gathered a sizeable audience of manufacturers to hear from four Industrial Digital Technology (IDT) providers about solutions designed to assist SME’s with increasing productivity, and the InterAct funded, human insight focused research that can help to support successful implementation.
Attendees had the chance to learn about best practice for adopting new manufacturing technology, minimising implementation time, and maximising upside. Our guest speakers drew on a wealth of expertise to discuss the risks, key challenges, and considerations in adopting digital technology.
Presenters sharing the technologies on offer included:
Phil Tonge and Mark Lees of TQC – discussing their design and supply assembly automation, robotics, and testing equipment services.
George Slater of FourJaw – examining the how manufacturing analytics technology can use new and existing operational information to power data-driven production planning and strategy.
Vignaes Rajesh and Chris Pavelin of Sensopart – delivering a presentation on optical sensors and vision-guided robotic solutions.
Nicola Ballantyne of MESTEC – explaining the benefits of MESTEC’s integration of a manufacturing execution system with a traditional ERP framework to integrated front and back office functions more effectively.
Participants then had the opportunity to hear from two InterAct funded researchers from the University of East Anglia, Dr. Dimitrios Dousios and Dr. Antonios Karatzas about their work on application of digitally servitized business models for SME manufacturers. Their online tool offers decision-makers the means to diagnose the contextual and organisational conditions of their business and determine the suitability of digital servitization business models. You can access their full report and toolkit here.
The event concluded with a panel discussion featuring technology providers and InterAct researchers, discussing the challenges associated with digital implementation and improving productivity within the sector, followed by a general networking session and showcase opportunity for businesses and Made Smarter investments.
Made Smarter East Midlands – ‘Technology Transfer Workshops’ are a dynamic series of events dedicated to empowering manufacturing Small and Medium-Sized Enterprises (SMEs) in the East Midlands. Presented by Made Smarter East Midlands, these workshops are specifically designed to show how the adoption of digital technology can help manufacturers solve everyday challenges and capitalise on new opportunities. To find out more about how Made Smarter Adoption can help you, and keep up to date with upcoming events, visit their website.
I recently attended a workshop on international perceptions and megatrends in manufacturing. Hosted by Aston Business School, it featured various experts and practitioners sharing their insights on the current manufacturing landscape and the strategies required for its positive future. The research team (Dr Guendalina Anzolin, Dr Jennifer Castañeda–Navarrete, Dr Dalila Ribaudo and Yanan Wang) included researchers and practitioners from Aston Business School and the Institute for Manufacturing, University of Cambridge. The research is funded by InterAct, a network led by the Economic and Social Research Council and Made Smarter UK.
Initial findings from the research
During the event, the project team shared some initial findings from their research. This has involved a systematic review and expert validation, with a specific focus on how manufacturing is discussed in contexts where digital technologies have been adopted, and widely addressed at the policy level. The analysis encompasses the following countries: Canada, Germany, Korea, Singapore, Switzerland, the United Kingdom and the United States.
The results emphasised the different connotations manufacturing holds for various demographics and how manufacturing, ranging from robotics to engineering systems, varies in definition based on individual perspectives. There is an observed dichotomy in public perception of the sector, ranging from antiquated views of dirty factories to a modern, automated image. Consequently, while the industry still captures public interest and is deemed essential, there are disparities between generations in understanding its significance.
Furthermore, the research has found familiarity with the sector positively influences opinions, indicating a gap between the familiar and unfamiliar regarding job quality perceptions. The discussion also emphasised the shift of countries from manufacturing to services and explored the importance of a robust manufacturing base for sustainable growth. Gender dimensions and the impact of COVID-19 perceptions on the industry’s role in innovation were also explored.
External speakers
The external speakers included Professor Fumi Kitagawa (City-REDI), Ollie Burrows (West Midlands Growth Company), Stewart McKinlay (National Manufacturing Institute Scotland), and Alain Dilworth (Made Smarter UK) shared initiatives and challenges faced in different regions. From the UK’s creation of the ‘Catapult’ technology and innovation centres focusing on manufacturing-related R&D and emerging technologies, modelled on the German Fraunhofer Institutes, to regional strategies focusing on net-zero, automotive innovation, and the intersection of technology with manufacturing, various initiatives are driving growth and sustainability.
Insights
Insights highlighted a stark disparity between perception and reality, with challenges like labour shortages, health and safety concerns, and the need for upskilling the workforce. Additionally, a Senior Policy Manager at Make UK, highlighted upcoming narratives for the manufacturing sector, especially in the context of elections and economic resilience. Emphasizing net-zero goals and a push to increase manufacturing’s GDP contribution. There was consensus that an overarching industrial strategy is needed focusing on skills, supply chains, and technological advancements.
The workshop offered a comprehensive view of global manufacturing perceptions, challenges, and the need for a strategic shift in how we perceive and position the sector. Addressing misconceptions, advocating for skills development, and aligning policy with industrial strategies emerged as critical themes for the future of manufacturing. As industries navigate an ever-evolving landscape, bridging the gap between perception and reality will be pivotal for sustained growth and innovation in manufacturing worldwide.
Following on from our successful Sandpit event at Loughborough University, InterAct has funded five projects examining a range of topics concerning the manufacturing sector.
Developing a strategy that will shape the rebranding of UK digital manufacturing
Vitalii Vodolazskyi / Adobe Stock
Principal Investigator:
Dr. Karl Warner – University of Glasgow
Co-investigators:
Dr. Nicola Bailey – King’s College London
Dr. Imtiaz Khan – Cardiff Metropolitan University
Dr. Anna Chatzimichali – University of Bath
Malek El-Qallali – University of Bath
Dr. Anastasia Kulichyova – Queens University Belfast
Project Outline:
This project aims to highlight the most probable future scenarios for rebranding manufacturing that can help stakeholders attract the next generation of young talent towards a career in UK digital manufacturing by 2040. This is rooted in the ambition of making the future of the sector a place that attracts, includes, and supports young talent from diverse backgrounds and mindsets.
Recent research conducted by Make UK – a UK manufacturers’ association – found that only 2% of the average UK manufacturing workforce is below 30 years old. These statistics are concerning considering current labour market inactivity rates and the shrinking UK population.
These statistics have triggered further research, including a large-scale InterAct Perceptions of Manufacturing survey that investigated UK public perceptions of the manufacturing industry and its place of work. Based on UK-wide survey of 2,000 people, a powerful message coming out of the results is that younger generations identify UK manufacturing as a less desirable brand, with many people being primarily uncertain about manufacturing employment prospects.
Using a variety of innovative methods to gather insights on potential rebranding opportunities from employers, educators, industry experts, policymakers and young people, this project intends to co-create the most probable future scenarios that can help stakeholders attract the next generation of young talent. This will enable the creation of a cross-generational map of peoples’ experiences of UK manufacturing – both past and present – that visualises potential opportunities for attracting the next generation of young talent towards a career in UK digital manufacturing.
Informing empathy-led change management: Creating a measurable readiness health plan for the adoption of digital technologies in manufacturing
magele-picture / Adobe Stock
Principal Investigator:
Dr. Mersha Aftab – Birmingham City University
Co-investigators:
Dr. Mey Goh – Loughborough University
Dr. Iryna Yevseyeva – De Montfort University
Project Outline:
The project aims to improve the success of technology adoption in manufacturing organisations using an empathy-led approach to create a measurable readiness health plan for change management.
Whilst the value of digital technologies is well accepted, the UK is not adopting these technologies as quickly as our competitors. The Made Smarter Innovation People-Led Digitalisation (PLD) Centre has identified this as a challenge. They note that digitalisation tools are abundantly available and advancing at pace, but adoption rates could be higher, and it is not always clear what values these tools bring to an individual worker.
When trying to infer the adoption of technology by a person, it is important to consider what values they attach to the use of that technology. The difficulty is that most values are intrinsic, tacit, and non-transferable.
The Empathy-Led Change Management team aims to develop an initial version of a digital toolkit for businesses. This toolkit will be able to map and demonstrate the readiness level of the workforce in a company in real time. It will also support management to introduce the right strategies of people-led change at the right point of readiness, so the adoption is bespoke and ‘made to measure’.
Manufacturing a better future – exploring inclusive digital manufacturing
Firma V / Adobe Stock
Principal Investigator:
Dr. Marisa Smith – University of Strathclyde
Co-investigators:
Professor Nigel Caldwell – London Metropolitan University
Dr. Eun Sun Godwin – University of Wolverhampton
Dr. John Oyekan – University of York
Dr. Sebastian Pattinson – University of Cambridge
Project Outline:
This project is investigating how the use of digital tools can enable a more inclusive workforce in manufacturing. They will be focusing specifically on demonstrating how to engage disabled people to participate in digital design processes. The outcomes will include insight into removing barriers to entry for currently excluded groups to the manufacturing workforce.
The current focus in manufacturing policy and practice on equality and diversity has been limited to gender and ethnic diversity. Although according to Scope almost a quarter (23%) of the UK working age population are disabled, the industry has lacked a real interest in the inclusion of disabled people.
The employment gap between disabled and non-disabled people has also remained consistently high, at around 30% for the past 10 years, with a pay gap of almost 20% for disabled workers compared with non-disabled workers according to the Together Trust.
In order to counteract and overcome these challenges, the overall objectives of the project are:
To collaborate disabled people to understand how they can participate in digitalisation and manufacturing:
To gain a first-hand account of disabled people on manufacturing and working within the manufacturing ecosystem.
To understand technology developers’ expert view on technical constraints and adjustments with current digital technologies that need to be considered for accessibility of disabled people.
To explore how disabled people interact with AI interfaces and examine how the technology can be adapted to address any design challenges.
To build on the current InterAct 2040 scenarios by providing additional scenarios on inclusive manufacturing embracing disabled people through inclusive digital solutions.
To show small manufacturing non-adopters of digital tools the benefits and relative ease of adopting inclusive digital tools.
The project will provide greater understanding of how the digital divide, as well as the disability employment gap, can be narrowed through the inclusion of disabled people into the manufacturing ecosystem.
Community co-created distributed manufacturing platform (COCODISMAN)
vegefox.com / Adobe Stock
Principal Investigator:
Dr. Elaine Conway – Loughborough University
Co-investigators:
Atanu Chaudhuri – Durham University
Dr. Usman Adeel – Teesside University
Jay Daniel – University of Derby
Project Outline:
The aim of this project is to develop a blueprint for a co-created, distributed, community-based manufacturing platform in the UK with a business model to support its financial viability and scalability.
In many UK communities, there is apathy towards manufacturing, a digital skills divide, unemployment challenges and low engagement with disadvantaged or hard to reach groups. Equally, local manufacturers need to adopt digital technologies to remain competitive but face severe skills shortages.
Recognising these issues, the team behind COCODISMAN will be carrying out a scoping exercise to discover what community needs exist for digital skilling and local manufacturing. Using this information, they will create a digital platform which matches the needs with deliverables as they currently exist in the community. The ultimate aim of this process is to provide the link between community needs for products and skills and local manufacturing facilities with excess capacity.
The project objectives are to:
Understand the challenges which local communities face in getting objects repaired and delivered at reasonable cost, their perceptions about manufacturing as a career choice and acquiring the necessary skills to gain employment in the manufacturing sector.
Understand the challenges faced by local manufacturers in upskilling their employees while embracing digital transformation and in attracting a future workforce to manufacturing.
Understand the challenges faced by local councils in creating meaningful learning and employment opportunities for young people to enter the manufacturing sector and in supporting the elderly population in accessing manufactured goods and services.
Assess the potential of a digital platform in changing the perception of the community towards manufacturing, improving skills, reducing the digital divide and improving youth engagement in manufacturing.
Support sustainable and localized production.
The COCODISMAN platform developed and rolled out at the end of the project will form the basis for greater collaboration by the researchers involved with partners such as local county councils, local manufacturers, and industry representative organisations.
The role of consumers in driving UK manufacturing’s digital transformation
MyCreative / Adobe Stock
Principal Investigator:
Professor Ana Isabel Canhoto – University of Sussex
Co-investigators:
Dr. Maren Schneider – Anglia Ruskin University
Dr. Ahmed Beltagui – Aston University
Ramin Behbehani – Brunel University London
Niraj Kumar – University of Essex
Project Outline:
The aim of this research is to identify the factors that lead consumers to adopt new Everything as a Service (XaaS) models of consumption, and drive the adoption of digitally enabled, distributed models of manufacturing.
XaaS is a business model for consumers to pay for access to a product’s benefits rather than own it outright. XaaS may take the form of acquiring a product whose performance is remotely monitored by the manufacturer. Parts are replaced or instructions issued to the consumer, as needed, through a maintenance contract, to extend the useful life of the product, a XaaS ‘stewardship-model’.
Alternatively, XaaS may take the form of acquisition of a service, with the manufacturer owing the machine and monitoring its maintenance needs, remotely, intervening when needed to ensure continued provision of the service, a XaaS ‘usership-model’ of consumption.
There are numerous benefits to XaaS including reducing manufacturers’ incentives to make products obsolete in order to generate additional sales, reducing electronic waste, increasing consumer retention, increasing consumers’ access to the latest technology, improving the energy efficiency of household appliances.
The project will attempt to achieve the following objectives:
Analyse viable XaaS models for washing machines.
Identify the factors influencing consumers’ acceptance of XaaS for washing machines.
Test the impact of those key factors in driving demand for washing machines under the stewardship vs. usership models.
Develop recommendations to support the development and implementation of XaaS in UK manufacturing.
If you’re interested in getting involved with any of these projects, you can contact the project team or email us at info@interact-hub.org.
The European Union’s (EU) new battery regulations (Regulation 2023/1542 ), introduces many new legislative measures, including specific requirements for battery passports and smart labelling. It marks a significant shift towards enhancing sustainability and transparency within the battery value chain.
These battery regulations are pivotal in advancing the EU’s Circular Economy Action Plan. As the UK navigates its post-Brexit landscape, aligning with these regulations is crucial for maintaining trade relations and environmental standards. Recent InterAct funded research provides a comprehensive analysis of the UK’s readiness to adapt to these regulations, offering insights that highlight both opportunities and the challenges ahead.
New regulatory requirements
Under the new rules, there will be enhanced information and ICT system requirements for entities introducing batteries and battery powered products to the market. This applies to any economic operator involved in making batteries available in the EU, whether as separate components like cells, modules and packs, or as part of larger products. It also includes those who change a battery’s intended use or are involved in refurbishing or remanufacturing.
A key feature of the regulation is the mandatory inclusion of a QR Code on all batteries, facilitating the use of ‘smart label’ and ‘battery passport’ functionalities, varying by battery type. While specific operators are obligated to provide this information, in practice, a broader network of stakeholders will likely contribute, creating an integrated, multi-stakeholder ‘battery information ecosystem’. This ecosystem will span the entire value chain and lifecycle of battery products, supporting both passport and smart label functions with information from a diverse array of operators.
The analysis includes results from a nationwide survey, completed by 80 organisations, including 21 large, 28 medium-sized, 23 small enterprises, and eight micro-businesses, also representing a wide spectrum of products and activities across the battery value chain/system.
The findings from the survey were discussed in a roundtable discussion and follow-up interviews, available here, which offer a multi-dimensional perspective on the readiness and concerns of the UK battery sector. This breadth of participation underscores the comprehensiveness of the findings, capturing a wide array of viewpoints and insights from a variety of actors along the value-chain from beginning of life to end of life.
Awareness and attitudes towards regulation
The survey revealed that 63% of organisations were unaware of the new regulations, with this figure rising to 73% among UK-based suppliers to the EU. This lack of awareness is concerning, as it indicates a potential gap in readiness for compliance.
The industrial context of these regulations is complex. While there is optimism about the potential for more sustainable and circular business practices, there are also concerns about the administrative, technical and financial burdens the Battery Passport and Smart Labelling requirement might impose. The majority view these requirements as a significant challenge, with only a minority seeing any substantial benefits.
Information readiness: a critical gap
A significant challenge identified in the survey is information readiness. Many businesses reported inadequate access to crucial data on battery materials and supply chain details. This includes information on recycled material content, hazardous substances and critical raw materials, as well as supply chain transparency for components like battery separators and cell casings.
Only about half of the respondents felt confident in the accuracy and completeness of their records, highlighting a pressing need for improved information sharing and data management systems.
ICT challenges and opportunities
The survey underscored the significant challenges in ICT, data, and workflow requirements for compliance. The responsibility for the Battery Passport primarily lies with the manufacturer, who is required to create and maintain these records for each battery throughout the battery’s lifecycle.
In some cases, other economic operators also have roles to play in maintaining or updating certain information, yet many organisations lack the necessary systems and expertise to collect, create, share and report the required data. However, this also presents an opportunity for innovation in the sector, with the potential for new technologies and systems to streamline these processes.
Implications for UK battery producers and UK policy
More needs to be done to raise awareness and demystify the compliance obligations of UK battery manufacturers and producers. It was felt that the new regulations would dominate the focus of day-to-day business activities for several years.
Other issues raised – such as fragmented industry practices, lack of clear guidelines, and the complexity of supply chains – would benefit from clear policy directions, enhanced data management systems, and increased international and value-chain collaboration, which were seen as critical to overcoming these challenges.
The regulation necessitates a collaborative effort from manufacturers, producers, importers, and distributors of all battery types and is essential for implementing substantial changes in areas such as labelling, end-of-life management, and supply chain due diligence. Additionally, there is a need for establishing incentives that will enable increased collaboration between beginning-of-life and end-of-life operators.
Ask anyone involved in supply chain management or logistics about the last five years and most will agree they have been tough. Brexit, Covid and the war in Ukraine have caused uncertainty on both the demand and supply side.
Such geopolitical uncertainty raises complex questions for supply chain managers, such as whether supply chains could be better prepared for shocks.
Professor Jan Godsell is the Co-director of InterAct and Dean of Loughborough Business School and Professor of Operations and Supply Chain Strategy. After a career in manufacturing and supply chains, including spells at ICI and Dyson, she moved into academia covering all aspects of supply chains. According to Jan, a common cause of supply chain breakdown is just a lack of joined up thinking between marketing and supply chain strategy.
“It doesn’t matter whether you know why a demand pattern has been caused,” she explains. “If there’s a peak in demand, there’s a peak. The data should show that you get seasonal peaks, and you can react. We know we’re going to get shocks. We won’t know the cause, but we can have a degree of preparedness knowing there will be shocks at some stage.”
Dynamic versus structural flexibility
Dynamic flexibility is possible within the current network design, while the other, structural flexibility, demands a rewiring of relationships between suppliers.
She says the first type should be enough to cope with everyday swings in demand and supply. “If things stay within standard parameters, the network needs the right buffers to deal with that variability. It is a matter of analysing and assessing how unpredictable demand might be and using maths to work out required buffers and what inventory to keep.”
Jan says exceptional events in recent years have seen both sorts of flexibility at play.
“Brexit forced the UK to be fairly well buffered, so when Covid hit it meant we had a lot of inventory for the things we normally need. What also happened was unexpected demand for things we don’t normally require, such as Personal Protective Equipment (PPE) and ventilators.
“That required structural flexibility, creating new networks to produce things at a volume not seen before. With Covid-19, it wasn’t just the UK requiring flexibility, it was the world. We had to repurpose assets in the global network to provide them. And we did a decent job, globally.”
Jan adds that structural weaknesses highlighted by recent events have been partly created by decisions taken over many years, in particular making supply chain decisions based on short-term financials and procurement rather than long-term planning.
Finance runs the supply chain game
Holding buffers or inventory in a supply chain can be expensive, and it’s often not clear who should bear that cost. This, says Jan, is partly why supply chains have not been as resilient as they could be.
“We’ve had a financially orientated view of supply chains, focused on a return on capital employed (ROCE) that enables payback as quickly as possible. That means when building a factory, we don’t factor in spare capacity. And if spare capacity means inventory, we try to maximise return and minimise inventory.”
For Jan this goes back to how we value organisations, and the role finance plays in corporate strategy. And we haven’t learned much from earlier shocks.
She points out that financially driven supply chains had an impact in the recession of the late 2000s. A lot of firms had sent manufacturing and other parts of their supply chains offshore, often to low-cost environments. But they had forgotten to factor in the cost of logistics, which became a problem when the oil price peaked.
“Suddenly, the price of logistics was higher than the price of production. That reminded people to take a ‘total landed cost’ perspective [when deciding on location],” she explains. “People were lazily using manufacturing cost as a proxy for total landed cost. Worse still, they’d started to use labour cost as a proxy for manufacturing cost.”
While current trends such as “nearshoring” and “reshoring” are ways to de-risk supply chains, Jan suggests if cost must be the key factor in a decision, total landed cost is the metric to use. But when deciding where to place operations, she suggests not letting procurement be the drivers. Instead, she says, long-term planning and collaboration across the supply chain will be more effective at delivering efficient, resilient supply chains.
Let the SCOR guide you
Prof Godsell highlights the Supply Chain Council’s Supply Chain Operations Reference model (SCOR). SCOR consists of five core processes:
Planning
Procurement
Manufacturing
Logistics
The returns process
Planning is the primary element. Too many supply chains, says Jan, focus on a lowest-cost approach with procurement as the primary driver.
She describes this as “lowest cost, at all cost” and says it results in all parties doing things for themselves cheaply as possible, minimising buffers, passing risk to others and leaving the whole chain more vulnerable.
“Planning should be the integrative glue that holds it together,” she says. “It should be the function that connects a supply chain. We see lots of exploitative procurement practices, expecting year-on-year cost downs, because procurement managers have been incentivized on margin.”
End-to-end supply chains?
Jan’s ideal is to build what she calls “end-to-end supply chain optimisation” between retailers, manufacturers and suppliers. This creates flow and aims to manage the supply chain in a fairer way for everyone.
Buffers must be in the right place at the right amount. And there’s a collective responsibility for holding them and we don’t do things like promotions that mess up flow. The cheapest supply chain is one with steady demand, because it means minimal buffers, because you’ve got predictability.
And such end-to-end supply chains are likely to be less carbon intensive. “There is an inextricable link between productivity, sustainability and resilience,” says Jan. “The same principles underpin all three. If we could manage an end-to-end supply chain, so that we have flow and minimised buffers, within the current network configuration, it is likely to have the lowest carbon footprint, because you’ve got nothing in it you don’t need.”
Digitalisation is key
Like much else in modern organisations, supply chain optimisation requires technology. “We can’t do this without digitalisation,” says Jan, adding this is nothing new for manufacturing. “When I worked at ICI, we had electronic process control, it was just hard wired. Now the internet provides connectivity that spans the supply chain.”
Digitalisation enables us to understand demand and supply more accurately and we have the analytics platforms and the computing power to do the analysis we need in minutes.
Rapid market changes call for demand-driven collaborations in manufacturing, which trigger supply chain evolution to more distributed supply structures.
This paper explores the system dynamics of the largest European aerospace manufacturer’s supply chain. The authors conceptualise a manufacturing ecosystem by observing the impacts of supplier development, digital platforms, smart contracting, and Industry 4.0 on demand-driven collaborations in time.
The research team offers further contributions to the literature on ecosystem strategy, particularly for regulated industries, by disclosing the role of demand-driven collaborations in supporting the ecosystems’ growth. This paper also provides manufacturing firms with an open-access tool to exemplify their ecosystem development and produce initial training datasets for AI/ML algorithms, supporting further analytics.
This research was conducted by Dr. Nikolai Kazantsev (IfM, University of Cambridge), Oleksii Petrovskyi (National University of Kyiv-Mohyla Academy), Professor Julian M. Müller (Seeburg Castle University, Austria and Erfurt University of Applied Sciences, Germany). This work was supported by the UKRI Made Smarter Innovation Challenge and the Economic and Social Research Council via InterAct [Grant Reference ES/W007231/1].
For further discussions or potential applications/collaborations, please contact Nikolai Kazantsev.
