The UK should focus on boosting supply chains that are primarily driven by innovation and service, according to a report by the Confederation of British Industry in association with AT Kearney.
Boosting growth in manufacturing sub-sectors driven by these factors could boost the economy by as much as £30bn by 2025, creating over 500,000 jobs, it reckons.
The report, “Pulling together: Strengthening the UK’s supply chains”, highlights the shift away from cost-driven off-shoring towards a recognition that other factors – the ability to innovate, increase quality and reduce product lead times – can be just as important.
“While we must be cost competitive, the UK cannot and should not aim to be the lowest cost economy on the planet, it says, arguing that “What the UK can and should aim to be, however, is the destination of choice for supply chains driven by innovation, quality and service.”
The report calls on the government to increasing spending on research and development with the aim of reaching a combined public and private spend of three per cent of GDP. It also calls on industry to play its part and expand collaborative supply chain innovation schemes.
There are also proposals on education and training, procurement, and supporting long term investment. Two other proposals highlight some significant weaknesses:
Production of critical materials is under threat, it says, calling on the government and industry to establish a UK ‘materials strategy’ along similar lines as the sector strategies already in existence and collaborate on the development of roadmaps for transformative materials technologies.
There are gaps in supply chains that need to be filled by attracting more businesses. The report calls on industry and government to establish an integrated approach to attracting foreign direct investment, with industry helping to ‘warm up’ potential investors and all layers of government joining up to present a coherent offer to them.
These are challenging tasks – but with £30 billion at stake it must be worth the effort.
Malory Davies FCILT