The current economic outlook for UK manufacturing businesses is poised between uncertainty and opportunity. In the wake of profound geopolitical shifts and the challenges of a volatile trading environment, the decision to stockpile now is a strategic one that could potentially cement your place as an agile player in the UK and global market. When combined with an investment in digital marketing, this forward-thinking strategy could protect your business and drive growth during uncertain times.
The last time that large-scale stockpiling took place in the UK was in 2019, when a no deal or ‘hard’ Brexit looked like a strong possibility. This was crisis planning. However, since mid-2023, stockpiling has taken place again in the manufacturing sector for quite different reasons.
In Q3 and Q4 of last year, many manufacturers saw an output surge up to three times faster than order volumes in Q1 and Q2 2023, indicating strong economic growth and renewed stability for the sector during 2024. Recruitment in the sector and capital investments also remain strong, indicating an optimistic and forward-looking economy.
We can’t advise one way or the other whether you should stockpile. However, given the intricate web of global supply chains and the unpredictable nature of the global economy, stockpiling can both serve as a safeguard against potential supply disruption and give you the operational base to capitalise on rapidly unfolding growth opportunities.
Stockpiling does carry risk – e.g. of overstocking if sales don’t materialise – and involves an upfront cost, but the potential saving the benefits it brings could outweigh the initial expenditure if the cost of preparedness is rewarded by strong growth.
Often, businesses invest in either marketing or stockpiling, not both concurrently. Expanding businesses traditionally favoured a lean model that minimised stock holdings in favour of just-in-time deliveries, whereas businesses that approached stockpiling as a demand-driven strategic caching approach often cut back their expenditure on marketing.
However, marketing and stockpiling can complement each other in more ways that many business owners think.
Effective marketing can help you to understand the needs of your sector and forecast demand more accurately, giving you the insight refine your stockpiling strategy by aligning the right products at the right time, minimising the risk of overstocking product that won’t move.
Stockpiling also gives you the capacity to supply faster and more reliably than your competitors, giving you access to a potentially greater market share. This can be communicated through your marketing to frame stockpiling as an assurance of service availability and reliability. By positioning your stockpiling strategy as a customer-centric approach, you create a business image of resilience, optimism, and preparedness, which can be a significant differentiator in a volatile market.
A well-managed stockpile can also facilitate various expansion opportunities. For example, stockpiling critical raw materials or components can allow rapid expansion of product lines without waiting for new stock to arrive, giving you greater agility in the way that you market your business. In a buoyant market, fast reactions and data driven decisions can often make the difference between capturing a sale and a lead going cold.
JDR work with manufacturing SMEs to help create achievable and ambitious plans for growth. To find out how we can help you set the stage for a prosperous year in 2024, please get in touch today by clicking here.