Production perils

David Noble, Group CEO, Chartered Institute of Procurement & Supply
11 August 2014

14 August 2014 | David Noble

David Noble, CIPS CEOIt is certainly good news to
hear that the global economy is showing signs of a more robust recovery these last few months, and we can all start to get back to business as usual. The UK in particular appears to be racing ahead in recovery compared to our European cousins. The Markit/CIPS Purchasing Managers’ Indices 
in construction, services and manufacturing have all consistently shown improvements 
this year which supports the anecdotal evidence I hear from our members and partners that business is moving, at last.

With more housing activity reported, people are also out spending more in restaurants and manufacturers are placing higher levels of orders for the materials and commodities they need to meet demand for their products. Though the bounce back is gathering pace, I still see some bumps in the recovery road ahead, especially for the manufacturing sector.

Though the sector is responsible for only 10 per cent of the UK’s GDP in 2013 according to the World Bank, a figure which has been consistent over the last five years, manufacturing has traditionally been important to the psyche of the nation, brought up on the steel industry and ship building. The manufacturing sector has declined significantly from its 25 per cent of GDP peak in the 1970s, but it still contributes significantly to the global economy and around £140 billion to the UK alone. The UK still ranks 11th in the world with its manufacturing output and is well ahead in specific sectors such as aerospace production, and so it remains an important element of how we see our success in the world.

Given manufacturing’s importance, a report from manufacturers’ organisation, the EEF, has pinpointed exactly where the danger lies for the sector in the UK – rising risks to supply and management of commodities and materials.

They highlight how around 40 per cent of manufacturing costs are spent on materials and how the majority of these materials are sourced overseas. With Germany, China, Singapore and the US already implementing plans to minimise supply risks, the UK is falling dangerously behind. EEF is calling for an Office of Resource Management to assess risks on a regular basis and report to Whitehall, but I can’t help thinking that this is just part of good procurement practice. Understanding risk, looking to the future, understanding the sector you’re in, are all part and parcel of managing supply chains. The specific value in such a move however, is the link direct to Whitehall and reporting on a regular basis. The economy is the sum of 
many parts, but I would be particularly disappointed if an opportunity to stave off the danger to materials supply is thwarted by a lack of activity and action. Especially, when good procurement practice in this sector and the willingness of the UK government to take 
the threat seriously 
is all that’s needed.

Partnering with hays to bolster resources

In my experience it’s impossible to know too 
much or be in a position where you don’t need any more advice on your own career path, so we’re pleased to announce a partnership that will support that aim.

Our three-year partnership with Hays will offer CIPS members free career advice, information and guidance 
on topics from starting a career in procurement 
and supply management 
to tackling a competency-based assessment.

We’re keen to provide as many resources as possible 
to develop into new sectors and new roles and ensure that members make the best of their opportunities.

The profession is growing fast, the challenges are increasing and multiplying so we need as much support as we can handle.

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