Supply chain · 13 January 2016

Spending forecasts could see small firms shake up supply chains

Consumer spending forecasts predict minimal year-on-year growth in the UK

Small business owners in the UK’s manufacturing sectors may begin looking for opportunities to consolidate and reduce costs in 2016, as consumer goods spending forecasts have predicted minimal year-on-year growth in the UK and across Europe.

With the pressures of competition mounting, and with slow growth expected in the next year, supply chain innovation could be a way for small firms to maximise growth potential, according to an expert.

Head of fast-moving consumer goods at supply chain consultants Crimson & Co, Nick Miller, said that small companies have the advantage of being more flexible than large firms, and should therefore be able to react better to lower predicted levels of growth.

“Small companies are able to react to market developments faster, changing strategies to bring fresh ideas to supply chains,” he added.

An increasing trend of larger companies shaking up supply chains by buying innovation could see the acquisition of more small firms offering specific services and expertise, said Miller.

“This trend in the supply chain is surely set to continue. Larger players, unable to invest in this dynamic way of working, have tended to buy innovation by acquiring smaller companies.”

With growth in Europe and China slowing, UK manufacturing could begin looking towards developing markets to streamline supply chains and reduce operational costs. Small businesses in developing regions tend to have strong local market knowledge, and may represent better business partners than large organisations which seek expansion.

“This will be a more cost-effective way of speeding growth in new regions, as well as providing immediate expertise into valuable areas,” Miller went on to say.

In December, Business Advice reported on the increasing trend towards small UK manufacturers producing specifically to sell to local markets, taking production closer to the customers in those markets as a result.

With small firms under pressure to produce and deliver products faster, and to be more flexible in making changes to product lines, an increasing number need to source suppliers more locally to satisfy buyer demand.

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Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

Supply chain