Factory suppliers 'lose fight' on delivery times

Will Green is news editor of Supply Management
2 October 2017

Vendor lead times in the UK manufacturing sector lengthened to the greatest extent since 2011 in September, according to the latest PMI.

Input costs and output charges rose at faster rates against a backdrop of supply chain constraints, including lack of vendor capacity and shortages for a number of inputs. Rising commodity prices and the exchange rate were also factors.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index slowed to 55.9 in September, down on 56.7 in August and against a neutral reading of 50.

Duncan Brock, director of customer relationships at CIPS, said: “The biggest news this month is the fall in the productivity of manufacturing supply chains as suppliers lost the fight to keep on top of promised delivery times and their performance weakened to the greatest extent for six-and-a-half years.

“The blame lay squarely at the feet of capacity constraints and some commodity shortages in food, but also other materials such as plastics and steel.”

Manufacturing production rose for the 14th month running in September, though it eased from August’s high, linked to new business. Firms reported increased sales to Europe, the US, China and Brazil.

The business outlook remained positive, with 51% of companies expecting production to rise over the coming year, reflecting efforts to expand overseas customer bases, improved efficiency, company expansion and investment plans and new product launches.

Rob Dobson, director at IHS Markit, said: “On balance, the continued solid progress of manufacturing and export growth is unlikely to offset concerns about a wider economic slowdown, but the upward march of price pressures will add to expectations that the Bank of England may soon decide that the inflation outlook warrants a rate hike.”

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