Organisations should use the coming year as a chance to invest in the future – by engaging with digitalisation, the environment and apprenticeships, says CIPS economist John Glen
As the UK election on 12 December and the end of this year approaches, it is time to take stock and consider what 2020 will bring. And three issues are worthy of examining; digitalisation, productivity and the green agenda.
The key challenge for many organisations is to standardise processes within supply chains to facilitate digitalisation. Once this has happened many can become ’low touch’ or ‘no touch’ processes with little human intervention.
Many of the routine, low productivity, low value-added activities that supply chain professionals have historically engaged in will be a thing of the past, freeing them to engage in higher value-added activities such as supply chain analytics, optimising supply chain design and managing relationships.
And so supply chain professionals will be called to enhance and develop their capabilities, while new recruits coming into the profession may be expected to have different skill sets to those that have been traditionally recruited. A greater emphasis on analytical and relationship building capabilities, for example.
Whatever the outcome of the December election and its impact on the Brexit situation, 2020 will be a year when the UK economy will have to re-focus on the productivity problem. UK output per person per hour is between 10 and 30% less than in the EU and US. To retain and recapture competitiveness in export and domestic markets it is vital that UK workers become more productive. This will be increasingly important against an economic backdrop in 2020 which is likely to see slowing growth in international trade and a low growth rate, probably around 1%, in the UK.
A resolution of the Brexit situation will help to reduce uncertainty and hopefully encourage UK firms to increase their investment, which should help productivity. However, this will only happen if the skills of our labour force are enhanced. For that to happen we need to increase our workforce training and education.
I would urge those organisations who are contributing to the ‘apprenticeship levy’ to ensure that their contributions are drawn down and the funds used to pay for higher quality, productivity-enhancing training and education.
That means collaborating with training agents, colleges and universities to demand that the training provided is of the highest quality. The combination of increased capital investment, increased investment in training and increased digitalisation, sustained over a number of years, has to be the answer to the UK’s productivity problem.
In 2019 I have had the pleasure of working with companies from the global logistics industry, automotive, industrial and domestic cleaning, airlines industry and government, to name a few. The one topic common to discussions in all is ‘the environment’ and how that is directly impacting the operations, innovative focus and future product/service portfolio of the organisations. The agenda being driven by Greta Thunberg and the Extinction Rebellion pressure group, coupled with images of climate change – be it floods or forest fires – that we see on TV nightly, have combined to bring the environmental agenda to the front of the public’s consciousness. The days of ‘green wash’ and lip service to a CSR agenda that purported to have the environment at its core are gone.
Organisations must directly address the green agenda and be clear about the impact it will have on their business today and in the very near future. Those who respond are finding a new set of consumers with a strong preference for environmentally sound goods and services – with some prepared to pay a premium.
Hopefully by January, we will have greater clarity regarding Brexit, and for the first time since May 2016 we can focus on those issues which will help us build competitive businesses to secure the UK economy into the next decade.