Managing the Supply Chain as a UK SME Manufacturer

If the last few years have taught UK manufacturing anything, it’s that we don’t know anything (about what’s around the next corner at least…).

The combination of Brexit, Covid, the shipping crisis and chip shortages, all of which are book-ended by Russia’s invasion of Ukraine and soaring prices across the board, it takes a lot to stay focussed and to keep manufacturing.

Companies large and small are still feeling the pinch, but how are Cobalt weathering the storm? We sat down with three of our senior team to get their view. Managing Director, Tony, Chris our Sales Director and Owen, our Manufacturing Director. Here’s what they said:

Can you provide a brief overview of your inventory and what parts/materials you need to be able to function as a business?

Owen: There are two core strands to our inventory in terms of machines we build. We use a lot of machined or fabricated parts to actually build our print and apply machines. Things like machine housings, casings and chassis are all manufactured to our bespoke specifications. But we also procure proprietary components; switches, PLCs, reflective sensors and so on.

Tony: And of course, we also supply a lot of replenishable media to our customers. Things like labels and ribbons that print and apply machines need to do the day job of printing and applying barcodes and labels.

Can you provide an overview of your supply chain strategy?

Tony: I think it all leads back to the point at which we became a manufacturer. Prior to 2005, we operated as a distributor, but over time realised that manufacturing ourselves would give us far greater control over quality and the functionality we wanted to see in our print and apply technology.

Early on in our manufacturing journey, we worked with The Manufacturing Institute to put in place best-practice with regard to our processes which helped us with our ISO accreditation and of course involved good supply chain management.

Central to this is strong relationships with a network of local suppliers which affords us a parallel supply chain and a lot of resilience which of course has proven to be very valuable in the last few years.

Owen: Without a doubt, the most important thing is supplier relationships. Finding the right suppliers at the outset is important, but how you continue to work together is even more so.

For example, as a lean manufacturer, we don’t hold vast quantities of the parts and components required to build our machines. We rely on our suppliers to help with stock holding and because we have solid relationships we can do that. Essentially we view our suppliers as an extension of Cobalt and that brings a lot of benefits.

We don’t just send drawings off and expect a finished article to be sent back. We’re always happy to take advice if there’s a better, quicker or more efficient way and our suppliers want to help us in that way too. That’s a true partnership and is very important in terms of our company values and ethics, but with obvious commercial benefits too.

To what extent has the business been affected by the turmoil of the last few years?

Chris: It’s been an interesting time to run a business that’s for sure! With Brexit, we were able to fairly confidently predict what was going to happen and put steps in place to mitigate that; the net result being a decline in some of our European export markets. But having anticipated that, we instead worked hard to increase our foothold with UK-based partners and solution builders, which ultimately is proving just as successful as export.

COVID was obviously impossible to predict but was another catalyst for decline in one area of the business but growth in another. This was thanks to our NexPlex E-commerce print and apply solution. Whilst it was already an established product, COVID hugely accelerated the need for that type of system and we were well positioned to fulfil the need.

Owen: In terms of impact on our supply chain, machined and fabricated parts have been relatively unaffected. We put that down to the fact that our supply chain is primarily made up of local SMEs. We’re very loyal to our suppliers and that helps build good relationships.

Where we have faced supply issues at various stages is with our proprietary components and PLCs. Even then, it’s not that these things aren’t available, it’s more that lead times are longer or delivery times are not set in stone. We have also had to find alternative suppliers in some cases and that obviously takes time to source and ensure the quality is what we expect.

Have you changed your approach in the face of the above?

Owen: We now hold more stock than we normally would. We’re a lean manufacturer so holding a lot of stock is not natural for us so we’ve had to change our mindset a little. And as a result of sourcing alternative parts from new suppliers, we’ve also increased our supplier list.

How do you maintain good relationships with customers and supply partners when letdowns and disappointments are almost inevitable?

Tony: Communication is the key here.  As a company, we adopted the policy that bad news is better than no news. After all, these are issues that are affecting every business – our clients and suppliers alike and it’s much better to keep people informed than it is to bury your head in the sand and wait until you have something positive to say.

Chris: And as a policy that has reaped rewards for us across the business and for our customers too. For example, we noticed a sharp rise in lead times for print media and labels. That prompted us to proactively call our customers to suggest they place orders now to avoid disappointment down the line.

I think it would be easy to dismiss a call like that as nothing more than a sales ploy, but we’ve got a lot of credibility with our customers, so when we call to deliver what is basically bad news, albeit with a silver lining, they trust us and it works to our collective advantage.

Owen: From the point of view of Cobalt as the customer, we maintain the same policy. It’s critical that our suppliers know what we’re going to need and when. Good dialogue makes all the difference and helps cement strong relationships. It really is about working together and that only comes about as a result of good two-way communication.

What’s been the impact on the team at Cobalt and how have you navigated through the issues?

Owen: Well, it’s not been without some level of stress that’s for sure! But one thing we have here at Cobalt is a really strong sense of camaraderie and that has been a big bonus during this period. There’s been a simple acknowledgement by everyone that we all have to work a little bit harder to get our print and apply machines out of the door.

Chris: Good communication is important here too. We all know everyone is busy and that things can take a bit longer than normal, but individual team members are keeping each other in the loop as are different departments and that makes it easier to understand the issues, cope with the challenges and find solutions.

For more information on Managing the Supply Chain as a UK SME Manufacturer talk to Cobalt Systems Limited