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Strathclyde Business School

Manufacturing prosperity with efficiency

By Jillian MacBryde - Posted on 15 November 2013

Dr Jillian MacBryde, Vice Dean of Knowledge Exchange, casts an eye over positive economic signs to ask what more can be done to support our manufacturers drive growth…

It seems there has been a change in the language we’re using about the UK economy in recent months.  Where talk of downturn, slowing and recession were commonplace, phrases like consumer confidence, sustainable growth and recovery are now being bandied around.

But talk is cheap without the hard evidence to back it up, so it was reassuring to hear positive evidence  this week, with the release of the Bank of England’s latest quarterly inflation report.

On Wednesday, Governor Mark Carney confirmed what industry has been saying when he UK raised the forecast for UK economic growth from 1.4% to 1.6% this year and 2.5% to 2.8% in 2014.

Stating that the economic recovery had now indeed taken hold, the Bank of England’s assessment comes after positive news from most sectors, none more so than the UK’s valuable manufacturing industry which rose 0.9% in the third quarter of this year.

However, despite the positives, there remains a mood of cautious optimism with many hurdles to overcome before growth returns to pre-recession levels.

In the manufacturing sector in particular, having weathered the recession, SMEs are now having to find ways to pursue growth and find efficiencies.

By prioritising short-term cost cutting over the renegotiation of procurement contracts, many manufacturers may be artificially limiting their growth potential. According to a recent white paper by Expense Reduction Analysts, half of businesses held no benchmark data on purchases while 46% only discuss procurement at board level once a year.

If the sector really is to drive the UK’s economic recovery, it needs a change of mindset. Simple misconceptions, such as suppliers providing goods and services to all customers at the same price have to be addressed. Procurement has to be moved up the priorities list, with policies set at board level, to allow businesses to focus more resources on growth, increasing returns for shareholders and manage risks in the supply-chain.

Throughout companies, there also has to be more education to create a cost-conscious culture and avoid waste. If our manufacturers can get this right, the UK’s economic ambitions will become reality.

What are your thoughts in manufacturing’s role in the recovery? Can we do more to support the sector in areas like procurement? Let us know in the comments below…

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