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Short lead times have always been enticing for customers but, in recent years, manufacturers have found it harder to offer fast turnaround times. The global pandemic, war in Europe, shortages of raw materials, and spikes in consumer demand have redefined manufacturing timetables, which is why it’s more important than ever to outsource specialist precision engineering to reduce waiting times without compromising on product quality.
So, what have been the key drivers of longer lead times in recent times and what impact are these having on the manufacturing industry?
Supply Chain Disruption
Efficient supply chains help businesses to remain competitive and sustainable by ensuring that raw materials, tools, and finished products are in the right place at the right time. However, the Covid-19 pandemic dealt a severe blow to global supply chains as the immediate closure of factories, shortages in key commodities, and transport restrictions disrupted the worldwide flow of goods. The war in Ukraine and economic sanctions on Russia also impacted the supply of some commodities; chip shortages, for example, caused a 26 per cent slump in global car production in 2021. Supply chain disruption is a major cause of longer lead times, particularly if manufacturers source key raw materials or services from overseas suppliers.
Raw Materials Shortages
Manufacturers obtain raw materials from multiple sources but have been grappling with significant shortages, driven by an array of factors. Increased demand for certain products has led to stress on key commodities; for example, nickel and copper, which are key ingredients in lithium-ion batteries for electric vehicle, are in short supply. Extensive supply chain disruptions, extreme weather events, and trade conflicts have also severely restricted the availability of critical inputs, which has led to delays in manufacturing processes and longer lead times.
Soaring Demand
Surges in consumer demand haven’t just stretched the availability of raw materials, but have overwhelmed manufacturers, even when they have been able to secure supplies of essential commodities. Usual timelines have become elongated as manufacturers have had to create waiting lists for orders, especially if they haven’t been able to secure the additional manpower or equipment needed to scale-up production.
Labour Shortages
Labour shortages in manufacturing have an adverse effect on production timescales and lead times. According to MAKE UK, 36 per cent of manufacturing vacancies are proving difficult to fill due to applicants’ lack of skills, experience, and qualifications. While the exodus of overseas workers following Brexit may be partly to blame, a shortfall of school leavers seeking employment within the manufacturing sector is also impacting on recruitment.
Business Insolvencies
Since the end of the pandemic, many businesses have struggled to survive. As insolvencies have soared, it has become clear that the long-term effects of Covid-19 and global political events continue to bite. In 2022, 1 in 202 companies were declared insolvent, an increase of 50 per cent on the previous year and nearly one-fifth higher than the year before the Covid-19 outbreak. Companies that survive face the financial burden of repaying loans, such as Coronavirus Business Interruption Loan Scheme (CBILS), and covering increased energy costs, which prevents them from investing in the human resources or equipment needed offer shorter lead times – which is where outsourced precision engineering can be beneficial.
These factors have created intense pressures at all levels of the supply chain and businesses are doing their best to overcome them, but it is certainly a time when patience is becoming a skill as highly valued as the machining expertise we offer.
For more information on HOW MANUFACTURING INDUSTRY LEAD TIMES HAVE GONE FROM WEEKS TO MONTHS talk to Hone-All Precision Ltd