If Brexit rocked the boat, then the coronavirus pandemic threatened to tip it over entirely.
It is fair to say that 2020 has been a challenging year for international business — one which will likely become the catalyst for a series of knock-on changes across many different sectors.
One area which has already been significantly impacted by COVID is global supply chains. And once the Brexit transition period ends on the 31st of December, we can expect even further changes.
However, rather than being something to fear, forward-thinking companies will seize the chance to innovate, progress and explore previously untapped (yet highly valuable) opportunities elsewhere.
The tried-and-tested approach
For years, electronics companies have concentrated their efforts on the Far East and, particularly, China — the long-standing hub of international supply chains. The products coming out of China are stable, and it has typically been difficult to find similar quality at that price anywhere else. Until now, there had been little incentive for manufacturers to look for an alternative to this tried-and-tested model.
When the pandemic hit, many factories in the Far East were closed down — halting production instantly. And although most of these facilities are now up and running again, the cost of freight has skyrocketed, meaning freight costs are almost as much as the cost of goods in some instances.
This unique situation — the combination of a pandemic and Brexit — has presented several challenges, particularly for UK electronics manufacturers. Some are treading cautiously and choosing to keep operations planted firmly on UK soil. Yet, there is one major flaw in this approach: very few electronics components are manufactured in the UK, meaning these manufacturers could risk severely limiting their options.
A world of opportunities
Nearshoring and building supply chains across Europe, on the other hand, offers a wealth of opportunities.
Manufacturers that have already established their operations in Europe will be exceptionally well placed to tap into these suppliers if they use their existing knowledge and on-the-ground recommendations to their advantage.
In terms of costs, Eastern Europe remains competitive in both components and manufactured parts. Whilst not as cost-effective as China, the lower freight costs can balance out any price increases for goods. European supply chains can also solve the time problems many UK manufacturers encounter when shipping goods from the Far East — saving several weeks and drastically reducing lead times.
Nearshoring offers a greater degree of control, too. Similar time zones, shorter flight journeys (when there are no COVID travel restrictions) and overland transport options mean it is much easier for UK electronics manufacturers to maintain close contact with factories and suppliers in Europe.
It probably doesn’t make sense for manufacturers to switch off supply chains from China (or, indeed, anywhere else in the world) entirely. A well-balanced supply chain will likely include elements from many regions.
Instead, it is about thinking strategically and grasping potential opportunities to help future-proof operations. Supply chains need to be able to adapt to external, unexpected influences as well as fluctuations in customer demand.
And if there is one thing that we have learned from 2020, it is that having all your ‘eggs in one basket’ (or suppliers in one location) is a dangerous game when something goes wrong. To help mitigate risks, it is vital to have a range of different options available. Manufacturers should be able to offer choice to their customers across a range of projects — whilst maintaining complete control of their supply chains at all times.
At EC Electronics, we are ahead of the game. Through our established European supply chain, we are bypassing the risks associated with Brexit and the pandemic. Our operations are continuing to run smoothly, and we are dedicated to an uninterrupted supply and the seamless transfer of goods, ensuring our customers see absolutely no disruption.
Our customer service and engineering teams in the UK, Netherlands and Romania are on hand to support customers across Europe. Contact us today with any queries.