For UK manufacturers, realising the full value of the digital supply chain will require a new strategy and more collaborative culture

31 May 2018

For manufacturers based in here the UK, the findings of PwC’s Global Digital Operations Study 2018 bring major cause for concern. The study is the largest of its kind to date, based on responses from 1,155 senior executives in industrial products companies in 26 countries, including 72 in the UK. And the clear message that emerges is that UK manufacturers risk losing competitiveness and growing at a slower rate than their global competitors.

Why? Today, manufacturers worldwide are now moving to embrace digital operations, involving end-to-end digitisation and data integration of their supply chains. And the problem in the UK lies in the approach that manufacturing companies are taking to this process. To explain where and how UK players need to raise their game, let me start by looking at the characteristics of an effective and efficient digital supply chain.

If created properly, a digital supply chain enables a business to solve both traditional and new challenges while also opening up fresh revenue opportunities. The traditional challenges include things like excessive inventory levels and high cost of goods sold, while the new ones include rising demand for next-day delivery, personalisation and supply chain transparency. The revenue opportunities related to digital supply chain spring from impacts like greater customisation of products and better customer insight through data analytics.

However, digitising an isolated process or implementing an isolated digital technology within the supply chain won’t deliver these benefits. What’s needed is end-to-end digitisation and integration – all the way from suppliers to the end customer – that includes embedding data analytics throughout, and changing standard approaches and processes to maximise visibility, agility, speed and collaboration.  

The key to delivering this lies in understanding where and how to digitise the supply chain from end-to-end. And how to develop an integrated solution that maximises the value of the product or service for the customer and minimises the cost.

When these goals are achieved, the result is the kind of operational architecture shown below:

Jens graphic


At PwC, we describe companies that have embraced digital from end-to-end, looking beyond the organisation’s perimeter, as ‘digital champions’.

These companies operate collaboratively in wider, multi-partner digital ecosystems to increase competitiveness and customer value still further. Crucially, to enable the building of digital customer ecosystems through partnerships with other companies, digital champions have also aligned their technology ecosystem to operate in an agile and efficient way, and have generated the right people ecosystem as the backbone of their success.

So far, so clear. But where are UK manufacturers falling short?

What our research shows consistently is that industrial products companies in the UK are good at digitising their supply chain in specific silos. But when the supply chain crosses organisational or company boundaries, weaknesses and dislocations often emerge.

The result? While manufacturers in other territories are collaborating increasingly across their ecosystems to generate joint value, the value created by their UK counterparts tends to remain trapped within their own organisations. Which limits the benefits along the supply chain as a whole.

The figures from our study speak for themselves. Globally, 10% of companies qualify as digital champions – but in the UK it’s just 1%. Also, while digital leaders worldwide expect to reduce their costs over the next five years by 16.2%, and the average company globally by 12.3%, the corresponding expectation in the UK averages just 9.3%. This adds up to a higher cost base and lower competitiveness – further exacerbated by the failure realise revenue opportunities by participating in collaborative digital ecosystems.

All of this leads me to the obvious question: what do UK manufacturers need to do differently? Three things. First, understand what their end-to-end digital supply chain should look like – and how it will operate – to deliver the best for customers. Second, create a clear strategy to build it, ensuring all the gears mesh together across and beyond their business. And thirdly, put in place the technology skills and collaborative culture needed to drive the digital supply chain forward and oil the wheels.

For UK manufacturers, our Global Digital Operations Study 2018 is a wakeup call. In my view, it’s one they can’t afford to ignore.

UK Digital Supply Chain Strategy Lead

Jens Wunderlin  |  UK Digital Supply Chain Strategy Lead, Strategy&, part of the PwC network
Email  |  +44) (0) 7710 035 681