University of Warwick
This blog post was produced for inclusion in the Birmingham Economic Review for 2021.
The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions.
This post is featured in Chapter 1 of the Birmingham Economic Review for 2021, on Birmingham’s economic recovery and resilience following the coronavirus crisis.
Click here to read the Review.
Supply chains play a key critical role in improving the Midlands’ productivity and resilience
The supply chain (SC) is the glue that links all firms in the business to deliver value to end customers. Industry has long recognised that today ‘it’s SCs that compete not individual firms’, with operational synergy a key competitive advantage.
To maximise competitivity in a globally connected, constantly evolving global market, regional SCs must demonstrate both resilience to external shocks and high productivity.
Global disruptions such as COVID-19 and Brexit brought unprecedented challenges to the regional SCs, which in turn become critical inhibitors to the productivity goal. Resolving this requires a high level of resilience – an ability to recover from external disruptions.
Equally, productivity disparities at different points in the SC (i.e. large vs. SMEs, West vs. East Midlands) can limit whole sector competitiveness. As SCs have their roots in manufacturing, this creates an opportunity for sectoral and cluster groups in the region to take a coordinative approach in improving SC productivity (the aggregated productivity of all entities across the end-to-end (E2E) SC), improving and sustaining regional productivity growth in the long term.
This means SC resilience and productivity are both key considerations for regional growth, as firms need to retain operational continuity (high resilience) to deliver customer value at the lowest possible cost (high productivity).
A regional ‘supply chain productivity’ goal should be established to align the development goal at the firm and regional level
Our recent study on the Midlands indicated that the value created by SCs is perceived differently at the firm and regional level. From the firm perspective, having a resilient and efficient SC enables the firm to be more competitive in terms of cost, quality and time. From the regional perspective, the development of SCs create social value through skill development and increased employment opportunities, as well as economic value by attracting more foreign direct investment.
To align the interests of the two levels, a ‘regional SC productivity’ goal could be established, enabling firms to unlock the benefits of integrated industrial SCs and allowing them to improve overall visibility through data sharing, make better decisions through effective cooperation and achieve the sustainability goal through resource optimisation across the SC.
Midlands is experiencing challenges in its physical SC network and the way it is being managed
Within the current Midlands SC network, multiple challenges for resilience and productivity growth were identified:
From the supply chain management (SCM) perspective, regional firms face three enduring issues, including:
At the firm level, our research identified specific challenges which limited resilience and productivity:
Effective solutions for these challenges have the potential to significantly improve the SC resilience of the region and therefore improve overall productivity.
Regional growth opportunities
To improve the regional SCs, a set of practical and political considerations is proposed to support the future growth.
At the firm level, six SC resilience practices – planning, visibility, collaboration, buffer management, supply flexibility and adaptability, can be adopted to create a high degree of SC flexibility in terms of SC network configuration and SCM. The key to this is to build SC integration within and across SC entities, so that business activities can be managed by taking a coordinative approach.
At the regional level, organisations such as Midlands Engine could take a coordinator role to leverage resources across different stakeholders to provide support around SC investments, skill upscaling, and infrastructure development.
To grow sustainably in the long term, the adoption of CE provides the biggest opportunity to tackle rooted issues, such as resources sacrifice and carbon emissions, by encouraging the reuse, remanufacture and recycling of existing materials, rather than mining from the ground.
Dr Wanrong Zhang and Prof Jan Godsell, WMG, University of Warwick
 University of Warwick, WMG, Jan Godsell, Leveraging Supply Chains to Create Competitive Advantage for the Midlands Region: A Systematic Review