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Maximising supply chain resilience with the Preston Model
Find out how the Preston Model is helping supply chains adapt to disruption.
Let’s start with a recap. Our previous blog post outlines the principles and background of the model, and its relationship to the circular economy.
Developed in the aftermath of the 2008 financial crisis, local leaders and community groups in the city of Preston came together to develop a game-changing economic strategy that would build a fairer, more resilient, and self-reliant local economy: The Preston Model.
By investing in locally owned and democratically controlled businesses and increasing local procurement, the model keeps money circulating within the community, boosting community wealth.
Since its implementation, the Preston Model has received recognition for its success in reviving the local economy and has inspired other communities around the world – looking to improve their resilience by reducing dependence on external resources – to adopt similar approaches to economic development.
As MSc Supply Chain Management Course Leader Dr Kamalavelu Velayutham puts it, “Through the Preston model, we aim to explore the question: To what extent are supply chains able to adapt when responding to disruptions, regardless of their level of innovation?”
What does this mean for supply chain professionals?
The COVID pandemic shook global supply chains. Businesses increasingly turned to local suppliers to ensure a steady supply of goods and services, opening new opportunities in the local market for businesses to explore and reducing hefty logistics and inventory management costs.
Keeping everything local means shorter supply chains, and shorter supply chains mean increased resilience and sustainability – big wins for supply chain professionals.
Getting it right involves modifying policies and adopting a more progressive way of thinking – weighing up value for money against social value.
Delivering on social value
Organisations should set out their social value pledges. These could be anything from hiring and training apprentices from the local area to paying the Real Living Wage.
But Jon Tabbush, senior researcher at Centre for London says that procurement teams should define their own social value priorities, which should be fed into the tender process: “Set priorities […] and then be more strategic and intentional about procuring from suppliers.”
Progressive procurement is central to community wealth building. This includes procuring from nearby organisations, which Tabbush describes as creating a “multiplier effect”, where money “is paid to local employees [which] will circulate through the local economy”.
He goes on to explain that supply chain professionals also need to consider procuring from companies “with a proviso that, in return for going to them with the contract, they have to hire a certain number of local people.”
Putting people first: the HR perspective
With digital innovation transforming the supply chain, it can be easy for managers to see technological solutions as the only solutions. But to get the competitive edge, it’s vital to remember that the supply chain is fundamentally about people.
It’s the people who design and operate the systems, interact with customers and suppliers, and it’s the people who ultimately make the business a success.
By managing the needs and concerns of those involved in the chain – not only providing them with the necessary technological tools to perform their jobs, but also creating a culture that fosters collaboration, communication, and teamwork – organisations can improve how quickly and efficiently they deliver products, respond to customer needs, and control costs.
The Preston Model recognises the importance of strong relationship between all parties involved – from suppliers and manufacturers to distributors and retailers. By working together, they can all create a more efficient supply chain that benefits everyone.
When a company improves its supply chain at local level, it often leads to improvement at a global level too. So by working with local suppliers, who are often more culturally aligned, organisations can enjoy long-term, successful partnerships, with fewer quality-related problems.
One of the key HR aspects of the Preston Model is the focus on creating good jobs with fair wages and benefits. That goes for everybody – not just the employees of local businesses but also those in the supply chain. It's all about treating all workers fairly and with respect, no matter where they are in the supply chain.
The Preston Model also encourages local businesses to invest in their employees' training and development, which can lead to increased job satisfaction and higher productivity.
This focus on employee development can help to create a more skilled and motivated workforce, benefitting both the local economy and the wider community.
Partnering with SMEs, co-operatives, and social enterprises
SMEs (small and medium-sized enterprises) are often embedded within local communities. Small but mighty, they represent 90% of all organisations worldwide, making them influential players in the global economy and across all business sectors.
Research by the Centre for Local Economic Strategies (CLES) for the Federation of Small Businesses (FSB) found that on average, 63 pence per pound is spent in the local area if local authorities purchase from SMEs, in comparison to just 40 pence when spent with larger businesses.
Choosing SMEs over international corporations has a positive effect for your supply chain’s business as well as the local economy. But in order to achieve everyone’s goals, both parties need to work collaboratively and as flexibly as possible.
What do the benefits look like for supply chains? First and foremost is adaptability – a key component of supply chain resilience. The smaller a supplier is, the more agile it tends to be, which is invaluable when it comes to forecasting trends and meeting ever-changing consumer demands.
They’re also able to modify their operations more easily than larger firms – great news if you need a bespoke service or have specific requirements.
SMEs are hubs of creativity, and in a field where innovation is key, supply chains can use this to their advantage. Embracing SMEs’ fresh and diverse approaches, supply chain professionals can be inspired to look ahead, try new ways of working, and escape the risk of being trapped in familiar patterns.
A successful and genuine partnership also works wonders for an organisation’s image, showing a commitment to corporate social responsibility.
Going one step further, Jon Tabbush recommends choosing to work with co-operatives, as they “are generally more resilient than most other kinds of SMEs” and “more actively and effectively keep money in the local economy”.
According to The Co-Op Economy report 2021 by Co-operatives UK, worker-owned and run businesses were four times less likely to go bust in 2020 than other businesses, even taking into account the global pandemic. In fact, just 1.5% of co-ops were dissolved throughout that year, compared to 6.5% of businesses generally.
Rose Marley, CEO of Co-operatives UK puts this resilience down to “The co-operative purpose, ownership and governance [which] all dictate long-termism […] Co-ops patiently build-up and reinvest reserves […] rather than piling on debt to achieve faster growth.”
UCLan Online’s MSc Supply Chain Management programme explores supply chains within their wider contexts, examining the social, environmental, and economic impact they have in the world.
Discover how we can create more ethical and efficient supply chains on the MSc Supply Chain Management course:
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