Manufacturing is big business, contributing £6.7 trillion to the global economy. While misleading figures place the UK way down the list of manufacturing powerhouses, UK manufacturing statistics show that we are the 11th largest manufacturing nation, directly employing 2.6 million people.
However, it hasn’t always been plain sailing for UK manufacturers. The media has frequently reported a shrinking sector over the past few years as a result of UK economic changes. This was most notable during the economic downturns in the 1970s, early 1990s and between 2008 and 2009.
But despite these occasional hiccups, UK manufacturing remains decidedly British, powering through in the face of adversity. On average, the UK’s manufacturing output has grown by 1.4% each year since 1948, with the exception of the aforementioned contractions.
After what can only be described as a tumultuous year in the wake of Brexit, 2016 came to a positive close for those who work in manufacturing. UK manufacturing statistics released by the Office for National Statistics (ONS) confirmed that manufacturing output grew by 2.1% in December 2016, illustrating an overall growth of 1.2% in the October to December quarter.
In addition, manufacturing’s Purchasing Manager’s Index — an indicator of the health of the manufacturing sector based on new orders, inventory levels, production, deliveries and employment — rose to a 30-month high in December. Up from 53.6 in November, December’s score sat at 56.1 — significantly higher than the long-run average of 51.5.
While manufacturing may be celebrating their growth, it was a different story for those in the service industry. Decreased growth in new business and reduced hiring has resulted in the Purchase Manager’s Index falling to 54.5 from 56.2 in December. Despite this drop, there is no denying that the UK’s services sector is still healthy — well above 50, the level that signifies a contraction.
However, even taking into account the strong performance of the sector in the closing months of 2016, manufacturing still has rising costs to deal with. Factory costs rose and, despite dropping since their highs in October, inflation rates on input costs and output charges also grew at their fastest rate in December.
The priority of minimising costs
Clearly, while there are many positives that the manufacturing sector can enjoy at the moment, minimising costs is a priority. Although this can be done in a number of ways, streamlining processes and adopting leaner manufacturing techniques can make your business more efficient, minimising cost and maximizing profits.
Although you will need to consider the initial outlay associated with purchasing, ERP software offers a number of cost-saving advantages. It can help:
- Improve visibility of business finances — ERP software offers complete visibility to those who need it. This takes the guesswork out of managing your cash flow, assets and accounting, allowing you to identify issues early and make accurate predictions for the future.
- Keep track of projects — the project management feature of our ERP software enables you to monitor all of your projects. It provides clear visibility of budgets and delivery times on a case-by-case basis, ensuring employees are fully aware of what is required preventing costs and timescales from spiraling out of control.
- Minimise the time spent on essential tasks — working from a spreadsheet, gathering data and reporting can take time — time that could be better spent elsewhere. While not a direct monetary saving, minimising the time spent on this type of task will give your employees more time to spend on other business-critical tasks, maximizing productivity.
- Get tighter controls on traceability — by offering increased traceability throughout the manufacturing process; you can track items all the way through, allowing greater control of costs, waste and rejections. By identifying problems early, you can minimise the financial damage they can cause.
- Improved stock level intelligence — maintain the optimum stock levels for your manufacturing processes, ensuring your finances aren’t locked away in your stock inventory which can expire or become redundant.
By utilising software to best benefit your business, you can react to the hot topic of manufacturing costs. With Brexit posing an uncertain future for Britain’s international trade deals, tackling these costs head on now will provide a solid base for manufacturers in the future. Get ahead of the industry and invest in cost-effective software today.
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