Why the UK’s Industrial Strategy needs the channel

The UK government’s new, eagerly awaited, industrial strategy was released hot on the heels of big promises in the Chancellor’s budget, which detailed a £75m investment into AI, and £76m into digital and construction skills. These plans are to raise UK spending on research and development from 1.7 % to 2.4% of national income by 2027. The government thinks extra spending on R&D could mean about £80bn of additional investment in advanced technology in the next decade, as they aim to foster new ideas and turn them into commercial products.

The intention to invest is there in the private sector as well. A recent report from Deloitte suggested that 85 percent of businesses have plans to invest in artificial intelligence (AI) and the Internet of Things (IoT). However, the report also revealed that only 22 percent of businesses have invested in these areas so far and only one in ten business leaders currently see the UK as a leader in digital.

The level of intended investment is tremendously encouraging. But the risk of investments being made without real impact arguably gets bigger the grander the ambition. Alongside the strategic thrust of the Industrial Strategy, and the investment intentions of the UK’s businesses, the private and public sector alike needs a set of active channel players who play a role defining and integrating technology innovations that create real value.

One good area example of the role that the Channel has to play in securing the UK’s competitiveness is in the area of supply chain, a particularly important focus given the ongoing Brexit negotiations.

As part of the focus on encouraging the growth of UK industry and business, the government’s Industrial Strategy report includes a plan to “launch a new Supply Chain Competitiveness programme”. It is intended to target areas where key businesses need to improve to match the best in Europe and beyond, supporting training and enhanced business processes.

Other than this specific action, the 62 mentions of the phrase “supply chain” throughout the 255-page whitepaper lack much specific detail. Many of these are slightly vague comments about actions that will “boost our supply chains”. But to create sustained growth and innovation, the supply chain expertise of global channel players will be invaluable.

The renewed focus on supply chains, in a time of uncertainty for travel and border regulations, is an opportunity for channel players to seize the moment and expand their strategic position as drivers of industrial growth. Businesses involved in the channel and supply-chain management could find increasing recognition for their role in industrial efficiency. But this may require a change in attitude from these players themselves.

If it is ever going to happen, the time is now for the channel to shift from simple value added reselling towards technology integration, providing front end and managing consulting. As well as buying and selling-on services and technologies, channel players can play a much more active role integrating them into their clients’ businesses, adapting general technology capabilities to provide a solution specifically matched to the business need it aims to fulfil.

The cornerstone of technology integration is communication and skilful implementation. And as supply chains often rely on a large selection of businesses working together, the channel could have a huge role to play in making this more effective.

Supply chain solutions need to be implemented with coherent oversight, to keep things running smoothly at a time when the borders and boundaries that these chains straddle may change.

The Industrial Strategy doesn’t mention the effects of exiting the European Union on the broader economy, other than as an encouragement to raise the country’s industrial game. The Brexit outlook continues to be fluid with multiple scenarios of wide ranging impact still within the realm of possibilities. In the simplest of terms, the two fundamental impacts for businesses operating a supply chain across the UK border could be potential increases to Time to Operate and/or Cost to Operate.

On the one hand, these changes are likely to adversely impact the time and costs of all suppliers who are moving goods in and out of the UK. On the other hand, those providers who have the strongest global supply chain capability, with strong expertise in integrating solutions, will be better able to drive continued innovation despite these challenges.

Either way, as trade and border regulations are subject to change, and as the UK’s Industrial Strategy aims to secure the country’s future competitiveness, the supply chain and the channel will be at the forefront of making innovation happen. Channel players in the UK need to work out exactly what their role will be in implementing it. Those suppliers who have first worked to define a clear set of objectives and outcomes for their customer will be able to deliver value whatever the impact of Brexit on the supply chain.