Businesses expect more UK sourcing

15 May 2013

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15 May 2013 | Andy Allen

Supply chains in the UK will become more important in ensuring global manufacturing profit growth, according to a new international survey.

In the latest KPMG Global Manufacturing Outlook survey, 16 per cent of executives said they expected to source more from the UK in the future, second only to China (34 per cent) and the US (37 per cent).

The 92 per cent of respondents who expect to increase sourcing from the UK said this would involve research and development and 81 per cent planned to invest in product design and development.

The UK’s relatively low tax rate, good intellectual property protection for businesses and the weak pound were all cited as important factors behind this decision.

Just over half, 51 per cent, of global manufacturing companies believed the supply chain and partnerships would be key to the future of innovation.

Stephen Cooper KPMG UK head of industrial manufacturing commented: “It is encouraging to see supply chains play a more active role in innovation.

“Yet, managing supplier performance remains a prominent concern, with half of UK and global manufacturers saying the reliability, quality and risk of suppliers was their top supply chain challenge.

“For instance, in the automotive sector, prior to a product launch, manufacturers must audit the readiness of suppliers to meet lead times and quality standards in time for launch deadlines. Failure to do so may incur both severe reputational and financial costs.”

Cooper said the illicit use of conflict minerals in the supply chain is becoming an increasingly important issue. Companies registered with the US Securities and Exchange Commission (SEC) and their suppliers will soon be required to verify whether their materials are ethically sourced.

“This may be impeded by the lack of supply chain visibility, with half of those surveyed having only limited tier-one supplier visibility,” Cooper said.

A majority of respondents (40 per cent) said they expected the bulk of their profit growth over the next two years to come from the US, followed by China (27 per cent), the UK (14 per cent) Brazil and Japan (12 per cent each), and then Germany (11 per cent).

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