Supply chain managers 'working round the clock'

1 July 2021

UK manufacturing recorded some of the strongest output growth in 30 years in June but supply shortages plagued the sector, according to the latest PMI.

Supply chain managers were said to be “working round the clock” to address shortages across chemicals, electronics, energy, food, metals, plastics and timber.

Duncan Brock, group director at CIPS, said “snarled supply chains were in danger of seizing up”.

“Supply chain managers worked around the clock to source ever-dwindling resources of raw materials, and building stock, resulting in supplier delivery times worsening again,” he said.

“The glut of purchases served only to exacerbate the shortages in transport and staff along with materials such as food and timber.”

The IHS Markit/CIPS UK Manufacturing Purchasing Managers’ Index dipped only slightly from May’s record high of 65.6 to 63.9 in June, the 13th successive month of growth.

The consumer, intermediate and investment goods industries all saw rapid rates of growth in manufacturing production during June, boosted by a rate of new business that almost matched May’s record high.

The easing of lockdown restrictions and gradual reopening of the economy has seen demand soaring.

This has been backed by increasing orders of work from mainland Europe, the US and Asia and an overall upswing in global market conditions.

Expectations of explosive post-pandemic growth contributed to supply chain pressures and inflationary pricing.

Input costs rose at their fastest rate in the survey’s history with 77% of manufacturers reporting increases. Raw material shortages, logistic delays, and demand outstripping supply led to the fastest increase in selling prices since the survey began in 1999.

This was accompanied by the longest increase in vendor lead times seen in survey history, apart from those witnessed during the first coronavirus lockdown in April 2020.

Companies have increased input buying and expanded inventories at the quickest pace so far this year as they seek to protect themselves from possible shortages and supply chain shocks.

Raw materials inventories rose at the quickest pace this year so far and to one of the greatest extents in the survey history.

Meanwhile there was a sharp decline in stocks of finished goods as manufacturers responded to previous disruptions to production schedules by settling sales from inventories.

Nearly 63% of companies said they expected production to rise over the coming year.

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