David Jennings, pictured, from the door hardware specialist, UAP Limited, discusses the importance of resilience planning and ensuring an efficient supply chain to enable security installations to be carried out on time and as specified.
For anyone relying on consignments of security products arriving from overseas for installations this year, it’s been a nervous few months. News coverage of stationery lorries marooned nose-to-tail at British ports in December was a worrying sight and the threat of extended lead times, unexpected delays and increased costs due to new import rules is creating challenges for the security industry across the delivery chain.
We may be seeing light at the end of the tunnel now as far as COVID-19 is concerned, but the impact of the pandemic will be with us for a while yet. As we’ve been told more than once by both media and Government over the past year, these are unprecedented times. During 2020, fluctuations in demand affected companies across all links in the supply chain which, coupled with changing rules, made it difficult to plan. For some security product suppliers, contraction in the market during the height of the pandemic lead to reduced production and ordering to protect cash flow and reduce the commercial impact of those difficult months. For those that did not plan ahead and invest in stock ready for the recovery, however, there is now a complex game of catch-up to be played and the downstream delivery chain is just as involved in how it plays out as the decision makers further upstream.
For the leadership team at UAP, it was clear from the earliest stages of Covid-19 that supply chains would be affected and that the effects would last beyond the peak of the pandemic. As time has gone on, the impact has been cumulative. Breaks in production, demand for warehousing and logistics and port delays have all had a profound and lingering impact on lead times. Our aim throughout has been to act promptly and wisely with contingency planning to ensure our customers get the products they need on time. That strategy and focus is now paying dividends, with lead times on most products remaining at just 72 hours between order and dispatch.
China affects the UK
A return to more normalised commercial conditions may be on the horizon, but the consequences of the past 12 months will continue to affect supply chain efficiency, particularly for any goods imported from China.
The Chinese manufacturing landscape is one we know very well at UAP Limited because we have been working with trusted manufacturing partners there for many years. Our products are designed, developed and tested by us in the UK, but manufactured to our exacting quality assurance standards by Chinese factories, so we understand how the sector operates over there. Just as the Christmas and New Year break punctuate production schedules and influence the timing of maintenance shut downs in the UK, Chinese New Year is a time of celebration that has a major impact on manufacturing capacity in China. Every February, workers who have travelled to the cities to work in factories travel home for Chinese New Year, often spending a two-week break with their family, which is bookended on either side by a journey of at least a week.
Each year, a proportion of the Chinese workforce opts to stay in the provinces after the celebrations and the need to replace them can cause further production delays and reduced capacity. That annual cycle has a significant effect on production schedules, for which UK companies importing goods from China need to prepare by ordering in advance and managing their UK stockholding. This year, the fall-out from Chinese New Year has been even greater than usual because lockdown restrictions prevented the 2020 celebrations, resulting in a longer hiatus and an increased worker drop off.
Against this backdrop, changes in the Chinese manufacturing sector are also affecting capacity. For example, the drive to meet international environmental standards has reduced the number of metal plating operators, cutting capacity for plating of hardware products. As a result, UK companies must have established relationships and diligent lead time planning in place if they are to meet demand and offer acceptable delivery terms to customers.
All of these factors make manufacturing products overseas for the UK market more challenging for the security supply chain, but none of them are insurmountable. At UAP Limited, we began the pandemic in a position of strength with long-established manufacturing partnerships and a good understanding of how the Chinese market operates. Indeed, our relationships in China meant that we were faster than most in recognising how severely it was likely to affect the UK market.
Because of those insights, we were able to plan and implement a strategy for maintaining stock levels and mitigating the risk of delays. Product development and investment continued, and we looked at where we needed to add more warehousing capacity in order to build resilience for the company and our customers. As a result, we started 2021 with an additional 25,000 sq ft of warehousing space, with a further 35,000 sq ft planned for this year, and our stockholding sits at £7 million, and will increase to £8m by the end of 2021.
Because we anticipated delays and production capacity issues in China during February and March 2021, we ordered our products months in advance and ensured that consignments for Q1-2 were either received or en route by the end of 2020. Products for Q2-3 are already on order and we will continue to build the likelihood of extended lead times and shipping delays into our production planning.
Capitalising on potential
2020 was a tough year but, despite the Q1 lockdown, the outlook for 2021 is all about recovery. The potential opportunities of the recovery can only happen if the products needed are available to respond to demand, however, so supply chain resilience is central to the future prosperity of the industry. That’s why UAP Limited has been so focused on planning ahead with high stock levels and advance orders; not only to underpin our own business continuity, but also to ensure our customers can rely on consistent service levels and short lead times.
