David Jennings from leading hardware specialist, UAP Limited, discusses the importance of resilience planning and ensuring an efficient supply chain for fabricators.
Between the challenges of the pandemic and the unexpected boost to the market as homeowners repurposed their holiday funds for home improvements, 2020 was a year in which it was difficult to plan from one week to the next. 2021 is already shaping up to be just as unpredictable and, as we continue to cope with infection rates and lockdown conditions, it’s supply chain uncertainty that is worrying many in the fenestration sector. Confusion over new import rules and paperwork requirements following Brexit, the ongoing effects of the pandemic and the hangover from last year have created a complex supply chain landscape with the potential to spell one word for the fenestration sector: delays.
The Ripple Effect from China
The Chinese manufacturing landscape is one we know very well at UAP Limited because our products are designed, developed and tested by us in the UK, but manufactured to our exacting quality assurance standards by our Chinese partners. Chinese New Year is a time of celebration that has a major impact on manufacturing capacity in China every February. Each year, workers who have travelled to the cities to work go home for Chinese New Year, often spending a two-week break with their family, which is bookended on either side by a journey of at least a week. Every year, a proportion opts to stay in the provinces after the resulting in reduced capacity while factory owners replace them. That annual cycle has a significant effect on production schedules, for which UK companies importing goods from China need to prepare by ordering in advance and managing their UK stockholding. This year, the fall-out from Chinese New Year is likely to be worse than usual because lockdown restrictions prevented the 2020 celebrations so Chinese factories are anticipating a longer hiatus and an even greater worker drop off.
Changes in the Chinese manufacturing sector are also affecting capacity. For example, the drive to meet international environmental standards has reduced the number of metal plating operators, cutting capacity for plating of hardware products. As a result, UK companies must have established relationships and diligent lead time planning in place if they are to meet demand and offer acceptable delivery terms to customers.
All of these factors make manufacturing products overseas for the UK market more challenging for the fenestration supply chain; but none of them are insurmountable. At UAP Limited, we began the pandemic in a position of strength with long-established manufacturing partnerships and a good understanding of how the Chinese market operates. Indeed, our relationships in China meant that we were faster than most in recognising how severely it was likely to affect the UK market.
Because of those insights, we were able to plan and implement a strategy for maintaining stock levels and mitigating the risk of delays. Product development and investment continued, and we looked at where we needed to add more warehousing capacity in order to build resilience for the company and our customers. As a result, we started 2021 with an additional 25,000 sq ft of warehousing space, with a further 35,000 sq ft planned for this year, and our stockholding currently sits at £7 million, and will increase to £8m by the end of 2021.
Because we anticipated delays and production capacity issues in China during February and March 2021, we ordered our products months in advance and ensured that consignments for Q1-2 were either received or en route by the end of 2020. Products for Q2-3 are already on order and we will continue to build the likelihood of extended lead times and shipping delays into our production planning.
Capitalising on Potential
It’s been a tough year for the fenestration sector but, with a strong housebuilding sector and consumer focus on home improvements, there is potential for a strong recovery. But recovery can only happen if the products are available to meet demand, so UAP Limited is focused on planning ahead with high stock levels and advance orders, underpinning our own business continuity, and ensuring fabricators can rely on consistent service levels and short lead times.