COVID-19 has created significant disruption for UK manufacturers forcing many to change the way they operate – from addressing sudden changes in demand, reconfiguring their factory floors to ensure staff safety, to sourcing new suppliers due to disruptions in global supply chains.
With the initial shock now behind them, manufacturers must now turn their attention to rethinking their business strategy in order to emerge stronger and succeed in the new reality. The new environment brings with it opportunities and challenges - businesses will have to transform the way they do business, by revisiting operations, identifying efficiencies, adapting product lines and finding new ways of working.
What should manufacturers be doing now not just to protect the business in the short term, but to ensure they are positioned for growth when the recovery hits its stride?
- Management and leadership – management needs to ensure collaboration across all business streams as business and financial plans are developed and revised in response to changing circumstances. The focus must be on scenario-planning, constant monitoring and communications.
- Financial – taking steps to maximise cashflow and financial headroom is essential as companies review their activities and plan for a range of outcomes.
- Suppliers – supply chains are likely to face ongoing pressure and flux as disruption to global supply arrangements and the repurposing of manufacturing capacity around the world becomes more evident. Preparing contingency plans, outsourcing or re-shoring operations, relocating production and reducing cash tied up in supply chains will remain key to future success.
- Customers – it will be essential to engage with customers, establish demand and focus on the most important business streams. Not only will there need to be a focus on retaining key customers but also development of a new customer acquisition strategy to drive future growth and demand.
- Employees – as the Coronavirus Job Retention Scheme comes to an end, a core focus for many manufacturers will be rightsizing the workforce to meet expected demand while retaining the right people and skills.
- Operations and infrastructure – core to developing intelligent operations and to support productivity and efficiency gains, businesses need to be embracing digitalisation and adopting new technologies. Digital transformation will not only provide greater insights through data analytics but also visibility through the supply chains and connectivity with customers.
For more information on navigating the new reality, visit our ‘Rethink Hub’ which offers practical guidance for companies on where to concentrate or speak to:
Tom Lawton
Partner and Head of Manufacturing, BDO
+44 (0) 7778 343346
[email protected]
Simon Bird
Director – Corporate International Tax, BDO
+44 (0) 7971 716375
[email protected]