Article - Issue 84, September 2020

Strengthening supply chains

Scott Steedman CBE FREng

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Before the pandemic, we took it for granted that we could rely on global supply chains to support the UK’s engineering sector. This complex web of connections between manufacturers, other organisations such as the NHS and, ultimately, consumers relies on people, information and resources. Advanced manufacturing in many engineering sectors is particularly exposed to disruption. The concept of ‘just-in-time’ manufacturing that has revolutionised industry over the past half century was based on having a supply chain so reliable that manufacturers could keep stock levels at the minimum.

Dr Scott Steedman FREng

Scott Steedman CBE FREng

Companies came to expect supply chains to deliver components, services and finished products as needed. No longer. The system will grind to a halt if people cannot go to work, if spare parts are not available, or services such as customs and inspection are overloaded. 

For many years China has been the factory of the world. Over 200 of the Fortune Global 500 firms have operations in Wuhan, the centre of the original outbreak. When the city locked down, China’s biggest inland port closed. Life in China is reportedly slowly returning to normal, but the impact on global supply chains is continuing.

The National Engineering Policy Centre, led by the Royal Academy of Engineering, published an excellent report in June on the impact of the pandemic, Supply chain challenges, lessons learned and opportunities. Through surveying 60 companies of all sizes, the centre found that many factors influenced the risk to individual firms, including which sector they worked in, their size, role and position in the supply chain, and their global reach. 

Sectors such as aerospace have been heavily affected by cancelled orders and the collapse of markets as air travel came to a halt. Small companies servicing the major players in these sectors could lose everything. On the other hand, large companies with global networks may be able to keep trading in the event of a sudden lockdown by finding alternative sources of supply, even at short notice.

At the top level, many issues affect the whole industry, such as the need for flexible and adaptable logistics, common international standards that support regulatory requirements and clear guidance on safe working. As these issues are outside the control of any single company, we need a national response to strengthen supply chain resilience for the engineering industry in the UK. The Academy has a clear opportunity to push the sector and government to develop a robust strategy for the future.

Three themes have emerged where action is urgent to reduce the risk of future disruption. First, communication is vital to decision-making. Telecommunications networks are especially vulnerable. With only a small number of global suppliers (including Huawei, Nokia and Ericsson) the UK risks becoming dependent on other countries not only for components but for engineering support. Ensuring the availability of skilled, UK-based engineers who are sufficiently mobile under lockdown to maintain critical infrastructure requires forethought and planning.

Second, different sectors found different solutions to the challenges of lockdown and shortages of skills and resources. Could the food industry’s experience of large-scale refrigerated distribution be a model for delivery of pharmaceuticals if or when mass vaccination is necessary? Could lessons from the offshore wind industry on safe working be relevant to advanced manufacturing? Sharing corporate case studies and preparing safety cases for networks of industry will help safeguard future production.

Third, industry needs more clarity of regulatory requirements. Under emergency powers, government relaxed regulatory requirements for testing of personal protective equipment (PPE) but there remained widespread confusion over how to bring innovative products to market. Coordinating the flow of reliable, accurate information to the sector during a crisis is essential. Alternative working practices, such as remote auditing and approval processes for priority equipment, could all be agreed between industry and regulators in advance.

It wasn’t all bad. There were many individual cases of outstanding engineering achievement in response to the pandemic. Nineteen remarkable examples won President’s Special Awards for Pandemic Service in August for their transformative work. What we need now is a sector-led strategy, agreed with government, to strengthen our national supply chain resilience before the next crisis hits us.

Scott Steedman CBE FREng
Editor-in-Chief

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