Supply Wars

Are we on the edge of a return to the dark days of the 70s when the UK was held hostage by trade unions, and a determined Prime Minister decided they would not be coerced, but instead apply political might, with the result that UK car manufacturing collapsed and UK jobs were lost?

That was my first impression when I read news Unite have given notice that 1,800 staff, who work for DHL, plan to strike on Tuesday and, potentially, bring Jaguar Land Rover’s production line to a stop.

This isn’t the workers strike of the 70’s but instead supply chain disruption.

While I am a Tata Group employee, I work in an entirely different part of the organisation and have no engagement whatsoever with JLRs procurement.  However, it does appear to me that JLR are unlikely to be held hostage to Unite and the DHL threat,

The gamble of the 70s was whether or not Thatcher would give way to unions. The gamble of today is at least two-fold.  JLR could drop DHL from its supply chain and find an alternative source, either in the short or long-term.  Tata, JLR’s owners, could also take a more political and strategic option, threatening to completely relocate their manufacturing beyond UK shores – there are no shortage of countries which would welcome that investment. If a relocation threat were made, would we see David Cameron and the coalition decide it is essential they intervene in the negotiations? DHL employee 1,800 on the JLR logistics, while JLR employee 24,000 and had pre-tax profits of £1.7bn. Then again, from the UK Government’s point of view, Tata Group are a major UK employer as owners of Tata Steel, Tetley Tea, etc..

The stakes are high in this supply chain game – it will be interesting to see, with the benefit of hindsight, the lessons learnt.

What did Fallon do?

Less than two weeks ago Michael Fallon gave an undertaking that "[UK Government] will look at what responsibility can be put on retailers" in response to the Dhaka factory tragedy, where it is now thought 800 people will have lost their lives.

The tragedy pricked the conscience of some of the UK public and some of those buyers who appeared to have been pursuing a low price (/high human cost) sourcing strategy. Supplier audits and risk assessments  became a topic of conversation for a few days. Unfortunately, as more domestic stories occupied our news headlines the working conditions in Bangladesh become less topical and the cost of low price clothes, like cheap T-shirts, fades. It does not have the same memory joggers as the daily decisions we make regarding the authenticity of the meat we buy which remind us of the horse meat debacle. Indeed even the Bangladeshi Finance Minister appeared to trivialise the significance of the 800 deaths.    

But Michael Fallon did give an undertaking about responsibility and there is surely an obligation on him to make clear what he actually did do and what the outcome was. Two weeks is quite a long time in politics and the rhetoric changes. But in Bangladesh there are families who will never forget that buyer deadlines contributed to death, maiming and loss of income. To make matters worse we have now learnt of more deaths in another Dhaka factory as a result of a fire with at least eight deaths.

Doesn't this put in context yesterday's blog on low spec uniforms?

Now may be a good time for Michael Fallon and those in the retail industry to let us know what preventative actions they took?

How public procurement can help UK manufacturing

I was recently asked for my suggestions on how UK public procurement could help the manufacturing industry. Here's what I said, I'd be interested in your views and am happy to pass any useful suggestions on:

1. The public sector is thought of as a provider of services and frequently not recognised as a major procurer of the manufacturing sector. I suspect this may well be due to three factors: 
   • disaggregated approach to the market; 
   • they buy through agents; and  
   • when they are in the pubic eye, as a major spender, it is often for major infrastructure construction projects and service.
2. The public sector, as a manufacturing buyer, could therefore be more clearly articulated as a strategic customer. This articulation could start with a pan-public sector spend analysis of what is bought and, in parallel, where it is bought? At the present I doubt if such an overview is available. 
3. There needs to be a recognition that if the public sector chose to buy services, rather than deliver them internally, there is less direct manufacturing procurement. However, that does not mean the public sector cannot shape manufacturing, through prototypes, issue of 'bounty challenges' and better interfaces with R&D and strategists - effectively procurement innovation labs.
4. The clarity of the spend analysis is required and, on that foundation, then a national manufacturing procurement strategy developed. It needs to be clear that multiple sourcing from SMEs will need to be present in stimulating on-going innovation and competition, while at the same time long-term massive (co-ordinated) contracts will be required, quite possibly staggered dual sourcing. Visualise revolutionising the design of one commonly bought manufactured item just because the public sector harnessed its purchasing power. (For example, it strikes me that virtually everyone who is tagged (very naughty boys and girls) is likely to carry a mobile phone - why can't we issue a manufacturing challenge with a bounty, to develop an integrated solution which is more effective, stops the visual kudos associated with tagging, can be used for those with sex offences too, and is largely paid for by the user - could require simultaneous finger print recognition & GPS). 
5. While single sourcing is in vogue, I don't think it is often linked with a robust risk management assessment and relative power assessment - that needs to change. I think staggered dual sourcing may work better in achieving mutual benefits.