As we look to the year ahead, the supply chain looks healthier than it has for some time, with good levels of inventory overall, and shorter lead times than we’ve seen for some time. Customers should beware of complacency though, as the economic headwinds that are already visible will mean that this situation won’t last. Inflation continues to have a sustained impact on the economy. Although there is likely to be limited growth in the industrial sector, we expect other markets including those driven primarily by consumer spending to decline.
Beware of complacency in 2024
By Steve Rawlins, CEO, Anglia Components PLC
As we look to the year ahead, the supply chain looks healthier than it has for some time, with good levels of inventory overall, and shorter lead times than we’ve seen for some time. Customers should beware of complacency though, as the economic headwinds that are already visible will mean that this situation won’t last. Inflation continues to have a sustained impact on the economy. Although there is likely to be limited growth in the industrial sector, we expect other markets including those driven primarily by consumer spending to decline.
The market situation
The build-up of inventory in the distribution channel and at end customers is a consequence of these economic factors, which has led to a decline in demand as this stock is consumed. Our current expectation is for this situation to continue until the second half of 2024, at which point we are planning to review our sales budget when hopefully we have a clearer view of the market.
Therefore, it is important not to be complacent. The current oversupply situation is tempting some customers to source on the spot market, and not place forward orders or schedules. No market condition lasts for ever, and tempting though it is to assume that the current oversupply situation will be with us for a while, the current oversupply situation will correct itself as inventory in the supply chain is used up. There is an increasing risk that lead-times on some components may start to extend again as soon as the second half of 2024 which could catch purchasing teams out if they are not planning for it correctly. Prudent customers should create their best forecast based on their own demand and plan accordingly. Services like Anglia 80/20 can help by taking the risk out of holding inventory from the customer’s perspective, allowing them to have inventory dedicated to them instantly accessible, but not pay for it until they use it. It is backed by Anglia’s exceptionally strong inventory position. As a privately owned business, Anglia maintains high levels of inventory as a proportion to the size of its business.
Importance of people
Work-life balance has always been important and has come under the spotlight in the last few years, in an ever-tighter labour market we are acutely aware of the need to look after our people so that they can continue to look after you, our customers. In 2023 we brought in a series of measures which included reducing working hours and closing at 1pm on Friday along with increasing holiday allowances. Other new benefits now extended include a comprehensive health plan, with a range of features to assist with the health and well-being needs of our employees and dependents. Anglia is also now offering company life insurance, additional flexible leave for important family events and the opportunity to access pay early in times of financial need. Employees have responded very positively, and these changes, including the early closure have been implemented with little or no impact on our customer service.
Importance of the environment
As the effects of climate change become more apparent every day, businesses can no longer stick their heads in the sand and leave the problem to regulators and the government. It is up to everyone to take these issues which affect our planet seriously. Those that implement good practice at a time of their choosing will enjoy a competitive advantage when regulations are brought into force, as they surely will be.
During 2023 Anglia worked in partnership with ClimatePartner to measure the carbon footprint and climate impact of our business. As part of this scheme, we are now offsetting the carbon emissions due to our business operations and have committed to a robust forward-looking plan to reduce our emissions in the future. We already maintain an effective Environmental Management System (EMS) that meets ISO 14001.
This commitment enjoys enthusiastic backing at all levels in the company. Anglia's directors and management are fully committed to a sustainable continuous improvement system. Staff have been equally enthusiastic about the implementation of the policy and were involved in the selection of the scheme that we are using to offset our carbon emissions. The carbon offsetting scheme is a central element of an enhanced sustainability policy for the business, which is available on our website. We believe carbon accounting will soon become as ubiquitous as financial accounting. It isn't currently mandatory to report corporate GHG emissions, but we believe it will be soon – and Anglia is ready.
Another step we have taken is to adopt unbranded recyclable packaging. Whilst most of our packaging is already recyclable, by removing the branding we have made it more reusable too. Customers can now use the boxes we send them to forward goods to their end customers without featuring Anglia branding on their shipment.
Importance of growth
A growing business with an expanding customer base can afford to invest in its inventory, people and customers, driving further growth. One of the major growth initiatives by Anglia at the start of 2024 is bringing the Anglia Live eCommerce platform to Europe, following a major investment in our logistics infrastructure and website. In the past 5 years we have consistently grown faster than the market by offering exceptional service and stock levels. We aim to replicate this model in Europe via our Anglia Live service.
Anglia can compete on price, availability and delivery with anyone in the market, and we have identified there is a gap for a Europe-wide digital distributor offering a competitive service from locally held inventory. Invited by major franchises to bring our service to Europe, it was an opportunity we simply could not say no to. We invest heavily in inventory supported by smart AI algorithms which have been developed by our team of in-house software engineers. Now customers throughout Europe can experience the benefits of our approach.
This move will very much benefit our UK customers too. We have invested £2 million in expanding the UK distribution centre and increased the overall inventory storage space by 40%. This enlarged inventory will be fully accessible to UK customers too, improving our ability to support them. By expanding our customer base, we will also generate more funds to invest in our business, further enhancing our service.
Customers in Europe will enjoy real-time visibility of inventory as do our customers in the UK. They can not only see live inventory but also inventory due in, which is not already committed – something which some competitors are unable to do. Other features are a comprehensive parametric search engine, industry standard cross-reference and all product change or termination notifications (PCN / PTN). Products have full lot traceability back to the manufacturer’s pack, even in broken pack quantities such as cut tape and ready reel formats.
Conclusion
We’re expecting 2024 to be another challenging year for the industry, because weak consumer demand will most likely outweigh any growth seen in other sectors. Although next year is likely to be tricky for many, the investments we have made in our business give us confidence that Anglia is well positioned to support our customers’ needs. By working together and planning together, we are confident that we can continue keep you supplied with the inventory you need for your production in 2024 as we did in 2023.
