Why use UK-based suppliers?

Onshoring is becoming increasingly popular as large businesses turn to UK-based suppliers to increase efficiency in the supply chain within a turbulent global climate. SMEs can also benefit from adopting this strategy as Jim Griffin, MD of automotive manufacturer Interflex explains.

Onshoring at Interflex

We began work on our own onshoring in 2021 while we were struggling with the impact of Covid restrictions. We examined data for our suppliers to evaluate standards around quality, delivery, performance and price. By identifying the worst performing suppliers, we found two key areas to focus on –moulded components and sound absorption materials.

We considered using new suppliers in the UK and producing these goods ourselves. This led to significant investment in our facilities to produce compression moulded components and the sourcing of sound absorption materials with two UK suppliers. We also funded a new moulding cell which was delayed due to Covid but is now fully functioning.

As we progressed, the impact of the Ukraine war further amplified the business case for onshoring due to the resulting rising costs of materials, transport and energy.

Efficiency

In my 36 years in manufacturing, mainly in the automotive sector, I’ve witnessed firsthand the OEM reliance on global sourcing. Due to this, I’m committed to moving as much of our supply chain to the UK as possible, or at least as close as we can within Europe.

One of the biggest benefits of doing this is that the time from placing an order to receiving it is greatly reduced. This is because there is far less potential for the delays that are so familiar thanks to post-Brexit customs red tape, transport disruption such as blockages in the Suez Canal and a volatile global climate - including the war in Ukraine, widespread strike action and the recent global issue with semiconductors.

Agility

Using a UK-based supplier means you have more control over receiving a high-quality product, tailored to your needs - and often with a smaller minimum order quantity.

At Interflex, when we source a product from as nearby as Germany, we still need to order a 40ft trailer’s worth to make it viable, whereas we can have a smaller delivery shipped along with another customer’s order from a UK supplier. Not only that, we’re looking at a lead time of 10 days in the UK as opposed to around six weeks from mainland Europe.

This shorter lead time allows us to operate a ‘just in time’ service, responsive to our customers’ requirements. Also, UK-based manufacturers are easy to contact and visit in person if required. Simply being in the same time zone and speaking the same language can make a big difference by eliminating issues such as one we had with goods being stuck in Italy because a public holiday meant there were no customs staff available.

Cost-effectiveness

Cost-effective sourcing is about considering savings that can be made on transport costs in the context of the recent hike in oil prices, and the cashflow benefits that come with smaller order quantities and shorter lead times. Also, by doing business on home soil, you’re not vulnerable to exchange rate shocks.

An individual widget may be cheaper in China, but by the time you factor in the unseen price of customs and transport delays and the risk of the product not meeting quality standards, it becomes clear it’s about the bigger picture.

Sustainability

By using a UK-based supplier, companies can vastly reduce their carbon footprint and often source a greener product than is available elsewhere. As a manufacturer of sustainable materials, such as our new lightweight NVH material, Ocean, this is a key benefit.

A sustainable approach increasingly also makes good business sense. We’ve recently been contacted by a couple of first-tier suppliers who were specifically looking for a product that not only was recyclable but was created from recycled materials. As the automotive industry strives to meet increasingly stringent eco requirements, this kind of demand is only set to increase.

The economy

For many businesses, a totally homegrown model is simply not feasible. However, by using our own valuable resources to pay for components sourced here in the UK, we can contribute to the overall health of the UK economy by helping to safeguard jobs and contributing to creating new investment opportunities.

Peace of mind

When suppliers let you down, you disappoint your own customers. So, when you’re waiting for the arrival of a time-critical order without knowing if the goods cleared customs on time or a ship was rerouted, it can become extremely stressful. Bringing the process home reduces this stress by removing the potential for these unpredictable yet all too common issues.

Results

Moving sourcing from two European companies to UK suppliers did not give the cost saving we expected when we first made our calculations in 2021, but it did negate the increases that arose when the Ukraine war began. The compression moulding work is ongoing and will be completed this summer.

Having a moulding cell in our facility has enabled us to win new work, to date exceeding £1million in sales. By September we will have moved around £1million of purchases to the UK, representing around 22% of this year’s purchases.

Onshoring is not a quick fix, and you may be surprised by customer resistance to change. Also, it’s crucial to make sure you can afford the initial costs to benefit from the eventual savings involved. However, once we have stabilised our existing supplies we will begin work on another key commodity, as experience has proven onshoring is the right strategy for us.

8 interflex2000.co.uk

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