Rupert Musgrove, UK managing director at quality management group G&P, believes that component suppliers need to look outside of their organisations to thrive. In this article, he draws on his experience at the forefront of the European automotive industry to share some important lessons.
Businesses throughout the UK manufacturing supply chain face an uncertain future. Last October, the Confederation of British Industry (CBI) reported that the manufacturing sector had “slammed the brakes on investment”, with output volumes down in 13 of the 17 main sub-sectors. More recently, the Make UK Executive Survey 2026 found that one in two manufacturers fear that their future business performance is threatened by economic uncertainty and geopolitical instability. Building greater resilience throughout the supply chain is the best antidote against uncertainty. And this is where component suppliers, the backbone of the UK manufacturing industry, can play a pivotal role.
OEMs have a significant interest in the continued collaboration of successful and effective suppliers. This vital synergy largely relies on suppliers ensuring that products are both commercially competitive and maintain effective quality standards. So, how can suppliers rise to the challenge? The answer: by boosting their own resilience, which ultimately depends on a greater ability to rapidly scale up or down according to changing market needs.
As new research from the University of Manchester highlights, “responsiveness” - the ability to adapt to evolving customer needs - is presently the most critical success factor in UK manufacturing. There are three primary ways in which component suppliers can become more responsive and resilient: controlling costs, diversifying product offerings and managing supply chains more effectively. Outsourcing core competencies, such as quality management (QM), can make a difference in all three areas.
There’s no resilience without cost control
Achieving financial resilience is the first, fundamental step to long-term business resilience in the UK manufacturing sector. Establishing cash reserves and setting up preferential bank loan agreements can help prepare a component supplier during a downturn. Businesses can also take advantage of AI-driven smart finance tools to predict cash flow more reliably. Yet, without managing and controlling costs effectively, even the most efficient financial strategy won’t guarantee resilience, now more than ever.
Rising costs are the number one threat to the manufacturing sector’s resilience, owing primarily to mounting energy prices. Until the UK government enacts stronger intervention measures to stifle these price increases, energy will continue to be a major contributing factor to manufacturers’ rising overheads.
Employment costs have also taken centre stage, mainly due to the landmark Employment Rights Act and rising minimum wage. The Make UK Executive Survey 2026 suggests that 86% of UK manufacturers expect employment costs to increase this year. Worse still, more than 6 in 10 see this rise as a top risk to their business. For component suppliers, managing and controlling these outgoings more effectively has become an essential prerequisite to resilience. The reason for this is simple: controlling and reducing costs is ultimately essential to protect and improve a company’s profitability and its capacity to invest.
When dealing with soaring employment costs, many manufacturing companies have responded by pausing recruitment - a finding corroborated by Make UK’s data. At the end of 2025, there were 48,000 live vacancies in the UK manufacturing sector, 2,000 more than in the previous quarter. While reducing the number of new hires may help reduce costs in the short term, it may also limit access to critical skills and labour, hindering long-term resilience.
This is where experienced providers of engineering and supply chain quality services, like G&P, can help. Relying on QM and technical experts when needed is a cost-effective way of quickly augmenting a team’s capabilities with the necessary skills and resources. For instance, in a recent collaboration with an automotive OEM, G&P deployed over 200 skilled technicians in a very short space of time. This temporary injection of targeted human resources enabled the OEM to successfully ramp up the development, prototype build and eventual manufacture of its own batteries, electric drive units and vehicles.
Flexibility and diversification are a must
Keeping employment costs in check is critical to safeguarding long-term business profitability and resilience. Yet, to become more resilient, component suppliers must also rethink their business strategies. This is where investment in innovation, flexibility, and diversification is paramount.
While, as previously noted, investment remains low, there are some reasons for optimism. The UK Government’s ten-year industrial strategy is having a positive impact, with 63% of businesses now agreeing that the strategy will help increase their investment plans. Digital technologies, AI and automation are where over three-quarters of manufacturing companies plan to direct this expenditure. Investment in cutting-edge technology is essential to enable more flexible and responsive manufacturing, enabling component suppliers to adapt quickly to changes in product type, design or volume.
The focus on technological transformation is inextricably linked to the need to diversify. The vast majority of UK manufacturers (8 in 10) plan to invest in new product development. Many also focus on diversifying their offering and taking a more customer-centric approach to be more adaptable and responsive to changing market needs. In fact, expanding the product portfolio, exporting into new markets and entering products into new sectors are seen as the top three business opportunities this year. Ultimately, diversification appeals to businesses because it enables them to spread risks and increase revenues, broadening their customer base with more products for multiple sectors.
While customer-centricity, flexibility and adaptability appear to be the common thread running through UK manufacturing, each component supplier will have to choose what specific business strategy to adopt. This may involve some degree of prioritisation, for instance, deciding whether to focus on cost, quality, lead time or product functionality. In addition, a business may opt for a high volume/narrow product range approach, while others may choose the opposite strategy. All these variables mean that every business will face specific engineering and quality challenges associated with new products. Solely relying on in-house capabilities to address these unique challenges may not be enough.
One alternative is partnering with an external provider of engineering, technical, and inspection services. For example, providers like G&P can supply prototype technicians or skilled Advanced Product Quality Planning (APQP) engineers to help achieve Production Part Approval (PPAP) for a new component, system or product. G&P’s experts can also support the product development process by implementing robust verification methods and utilising technical risk management through models like DFMEA. G&P’s recent collaboration with a European OEM exemplifies the effectiveness of this approach. G&P’s skilled technicians worked as fully integrated members of the OEM’s team to identify issues and implement process improvements, enabling the OEM to improve output and successfully diversify its product offering.
Keeping on top of supply chain issues
There’s another critical factor affecting a business’s resilience: supply chains. Major crises such as the COVID-19 pandemic or the war in Ukraine are stark reminders of how global supply chains can be extremely fragile and exposed to external factors. In the present era, where trade instability and tariffs are evolving threats, supply chains continue to be at risk.
In this climate, suppliers must avoid single sources, particularly in the upstream supply chain. By contrast, spreading the risk across different vendors and geographies, adopting dual- or multi-source strategies, enables suppliers to fend off unexpected disruption and stay resilient. Nearshoring, for example, has quickly emerged as a growing trend for companies looking to diversify upstream supply and improve supply chain resilience.
While this may translate to a higher unit cost, it also protects against potentially catastrophic line stoppages. As a recent University of Manchester study found, this strategy, known as buffering, enables companies to “protect their most important customers when chaos hits the global supply chain”.
Once again, component suppliers may not always have the internal resources needed to address constantly evolving supply chain issues. By contrast, external partners can rapidly deploy Supplier Quality Assurance (SQA) utilising 8D and 6-Sigma toolsets to reduce variation and improve process capability. By focusing on preventing quality issues before they arise, external providers like G&P can proactively identify suppliers with a higher risk of disruption, shielding manufacturers from costly delays. In addition, component inspection services can be deployed higher up the supply chain to contain non-conforming components at supplier premises and prevent operational disruption further down the line.
G&P’s collaboration with a global automotive organisation is a case in point. A dedicated team of specialists was deployed to manage supplier performance and implement improvement initiatives, helping resolve multiple issues, including delivery shortfalls, misaligned capacity with demand, and inconsistent adherence to quality and on-time performance metrics.
The path towards long-term resilience
Despite the challenging landscape presented to UK component suppliers, a downturn in manufacturing offers a window to evaluate practices and processes; to fortify the foundation.
Collaborating with experienced providers of critical services, such as QM, is not only a cost-effective way to protect profitability against rising employment costs. It also provides a component supplier with added capability that can strengthen its relationship with key OEMs. This is because engineering or design collaboration provides far greater value to an OEM than solely supplying components. Deepening this relationship can be achieved through early supplier involvement or risk-sharing in relation to stock and tooling.
Experienced providers like G&P provide component suppliers with the skills and resources they need, when they need them. From product development to supply chain management, suppliers can augment their teams’ capabilities to build resilient supply chains and help the UK manufacturing sector thrive, now and in the future.