Since the UK downturn began in 2007 the name of the game has been survival for many companies. With cash scarce, businesses have found themselves increasingly constrained resulting in them making fewer and more selective investments. Whilst projects targeting cost reductions in supply chains have been popular, the number of investments being made into supply chain infrastructure to support sustainable growth has sharply declined.
In April 2008 the government scrapped rate relief on empty industrial properties such as warehouses. Despite this change in legislation, the fall in demand for warehouse space due to volume decline in the downturn, has meant that currently there is still sufficient availability on the market for warehouse property. However, what if the demand for warehouse space were to increase? Are companies now prepared for this?
- There are recent signs of improvement in the economy, such as the OECD revising the growth forecast this year to 1.5% (up from 0.8%).
- Manufacturing outputs are rising at their fastest rate for nearly 20 years.
Some of the companies that have managed to achieve growth during this downturn have, for several years, opted to use what would ordinarily be temporary offsite storage methods. These methods have been possible due to extremely low rates being offered in desperate times. However, it is an opportunistic approach and, without a clear strategy, companies could be left exposed to spiraling supply chain costs as the market improves, not to mention a lack of capability to meet any increasing sales demand!
If you have not got a strategy for supply chain investment, then get planning now! Make sure you are positioned to maximise sales with an agile and cost effective supply chain.