UK firms are holding double the stock during an 'inventory crisis' says new data

Unleashed’s Manufacturers Health Check report found that businesses have been forced to stockpile huge quantities of goods as they face delays and shortages, against a background of rising inflation.

The analysis of more than 4,500 SMEs (small and medium-sized enterprises) provides analysis of the manufacturing sector’s health by examining four main data points: the value of stock on hand, Gross Margin Return on Inventory (GMROI), fulfilment days, and the price paid for goods purchased.

Overall, stock on hand levels for manufacturers in the UK jumped by 99.7 per cent, from an average of £365,736 in the third quarter of 2019 to £730,681 in the third quarter of 2022, while GMROI dropped from 2 to 0.9 in the same period, and fulfilment times fell from 20 days to around two weeks.

Manufacturers are on average paying 10.24 per cent more for their goods now when compared with the start of 2022, the survey found.

Gareth Berry, CEO of Unleashed, said: “What started as a supply chain crisis appears to have evolved into an inventory crisis at the individual business level. We've seen shipping times and prices ease, but that’s at the expense of firms who are forced to hold far more stock just to stay operational.”

“It’s a tough situation for manufacturers that will present real cash flow pressures. Managing those stock levels down in the coming months will be a delicate task.”

Noah Warren, the CEO of UK bicycle manufacturer Temple Cycles, said the impact on his business has been considerable.

He added: “One of the biggest problems we’ve had is lead times going crazy. So we’ve had to move away from a just in time stock model to just in case. The only way we could be in stock is to invest more money in it. But you can’t do that indefinitely.”

Daniel Myers, Director at Plastock, a material services provider to retail and display markets, added: "We have witnessed first-hand the significant supply and demand instability of materials, going from peaks of very stable supply to huge surges in demand and this is having a significant impact on costs.

"Price increases of as much as 45 per cent presented us with fairly significant issues, and then with the cost of those materials increasing week by week people started panic buying any available stock. So it makes it really difficult to manage stock – it's unprecedented."