Significant shocks have been delivered to supply chains over the past 12 months, which have seen both global and localised networks impacted.
The decline in demand across many sectors as a result of Covid resulted in many plants closing or downsizing. As the post-Covid recovery gathers pace, this has brought many challenges to the supply chain.
These challenges have been exacerbated by the prolonged Brexit negotiations and the accompanying uncertainty. The extended supply chain has had to deal with the very real prospect of a no-deal Brexit, along with the logistical hurdles associated with the new regulatory framework around supplying goods into the EU. This fast-evolving backdrop has meant purchasing practices have had to adapt more quickly than ever to keep up.
There is no better example than in the case of commodity items, such as steel.
As the world lurched into various states of lockdown in April 2020, the steel mills were still producing at pre-Covid levels. Demand for steel dropped dramatically as manufacturing plants were closed, mothballed or slowed down, and there was a likelihood the market would become saturated with product. This forced the mills to act.
Hence, a view was taken to “cool down” the mills and reduce the rates of production to better suit the much reduced demand; this defence mechanism would prevent the anticipated market saturation and protect prices.
Nationwide, as a Brexit deal was secured, and the impact of Covid was beginning to be mitigated via the vaccine rollout, levels of confidence grew and gradually business across the country finally started to resume, returning to the operational levels not seen since before the pandemic. Demand for raw materials began to not only match those of previous levels, but exceed pre pandemic requirements.
With the barometer of demand now rapidly rising, the mills’ decision to reduce steel production threatened to create a perfect storm for supply chains.
Demand for steel was now beginning to outweigh availability in both the local and global market places. The interrupted raw material supply and volatile, unsecured price points were factors that resulted in overnight price increases by dealers, aggregating over 30% across all grades of material in a matter of weeks.
Alpha Manufacturing, during pre-Brexit preparations, identified the need for our supply chains to be stronger, smarter, more diverse, and agile. We optimised our supply chains, and worked transparently and tirelessly with our business partners across this key material area. Steps were taken to ensure continuity of supply so that delivery of finished product to Alpha’s end customer wasn’t jeopardised.
Purchasing processes and controls throughout the business, along with the strong relationships and support of our resilient, flexible supply chains, have once again, post pandemic, been all the more important to have in place, to mitigate the impact to our end users potentially caused by gaps in material availability.
In summary, throughout an exceptionally challenging 12 months, I am proud to state that as a business we have been successful in securing levels of raw material that have allowed our production facilities to remain fully operational, satisfied the requirements of our customers, and ultimately, have enabled us to diversify and develop across the business.
As more and more businesses across the country come back to work, and once again begin to thrive, I am confident in the capability, and capacity of Alpha Manufacturing, to meet with the positive growth in demand that we are experiencing.
Here’s to getting back to better!