
Just in case inventory model can maintain manufacturing resilience
Where efficient inventory management is a critical component of success, warehouse management software is especially important for helping UK manufacturers to stay as resilient to economic challenges as possible.
Resilience is one of the most important traits a manufacturing business needs to cultivate if they want to maintain a competitive position in today’s business world. Now, new data shared by Hennik Research for the Manufacturing Leaders Summit has highlighted that the UK manufacturing sector is showing remarkable signs of resilience. This, despite all the challenges it has faced in recent years.
According to the S&P Global UK Manufacturing Purchasing Managers’ Index™ (PMI®), UK manufacturing as an economic sector has undergone a remarkable recovery. This continued throughout the summer of 2024, with output, new orders and levels of employment all rising. In addition, rates of inflation in input costs and selling prices have both slowed. The PMI has also signalled a steady rate of expansion during the past six months. Over three-fifths (61%) of companies included in the PMI manufacturing forecast survey said that they expected production levels would be higher one year from now, compared with only 6% anticipating a decline. This positive sentiment was linked to expecting new client wins, product launches, successful efforts to open up new markets and hopes for economic recovery.
All this is excellent news for UK manufacturing and it comes despite all the challenges the sector has faced in recent years. Brexit, the Covid pandemic, supply chain disruption, instability of the pound and constant issues relating to skills supply. UK manufacturing has been showing remarkable resilience and growth in recent years. Yet while the UK manufacturing sector is thriving, the Eurozone continues to struggle. The HCOB Eurozone Manufacturing PMI remained at 45.8 in August 2024, signalling a contraction.
Experts believe that the many challenges UK manufacturing has needed to overcome are behind its success. For instance, Brexit’s impact has led to some supply chains being re-located to the UK, which has boosted domestic production. European counterparts have not needed to renegotiate and continued with established supplier relationships whereas Brexit forced UK companies to reassess and localise their supply chains. Some experts believe this early adaptation has helped to build resilience which is again proving beneficial in the midst of ongoing geopolitical tensions.
One critical way that UK manufacturers have boosted their resilience in response to recent challenges is to adopt a ‘just-in-case’ approach to inventory management. This has helped to mitigate some of the risks that have crippled many EuroZone businesses reliant on traditional, globalised supply networks. Just in Time inventory models rely on minimal inventory and a very finely tuned and reliable supply chain. In contrast, with Just in Case inventory management, companies will over-order, to mitigate concerns about having insufficient raw materials or sales inventory. Holding all this extra stock increases the importance of having very tight controls over inventory management and is one reason why a WMS is an essential investment.
WMS technology is the critical enabler
Tracking materials and goods from the moment they enter to finally leaving the warehouse, needs significant process optimisation to deliver effective results.. A WMS ensures improved visibility with real-time tracking of inventory and shipments, helping manufacturers optimise their operations, plus anticipate and mitigate supply chain disruptions. Given that inventory is one of the biggest cost centres in the warehouse, optimising it carefully will reduce costs and improve efficiency.
Here are five key ways a WMS will help maintain resilience for UK manufacturers:
• Creating more efficient systems and streamlining how workers pick inventory either for production orders or for dispatch to customers. A WMS also automates repetitive tasks, guiding operatives through their daily workloads to increase productivity and reduce error rates.
• Ensuring that an order – whether from production or a customer – is only accepted if the relevant inventory items are available. When an ‘order’ is taken, the WMS will flag whether the item is in stock before a purchase is confirmed.
• Storing up to 30% more inventory in the same space – items can be slotted into any location and the software will notify an operative of where to find it. There is no more relying on people remembering where that extra inventory was stored.
• Tracking best-selling items and suggesting how warehouse management can make improvements to the way inventory is managed – to improve efficiency and productivity even further. For instance, a WMS will suggest where inventory should be placed so that fast moving items are picked and packed as quickly as possible.
• By gathering data captured across the warehouse, a WMS also supports more accurate forecasting which helps to reduce wastage and improves resource and production planning. All of this data is tracked digitally in the WMS database and so additional complications arising out of any audit requirements are easily met using dashboards and reports available.
Nothing is a constant but one thing manufacturers can all rely on to maintain their competitive advantage is technology. It is the key enabler and growth accelerator. In a manufacturing environment, where efficient inventory management is a critical component of success, warehouse management software is especially important for helping UK manufacturers to stay as resilient to economic challenges as possible. By embracing this technology, UK manufacturers can mitigate potential threats, and potentially keep on outperforming their international counterparts.
Sources
https://manufacturing-leaders.uk/why-uk-manufacturing-is-thriving-while-the-eurozone-struggles/
https://www.oxfordeconomics.com/resource/the-true-impact-of-uk-manufacturing/