UK manufacturing is producing more according to the latest figures. But manufacturing output is currently rising faster than headcount, and handling this work with current workforce numbers is putting companies under strain and making it unsustainable in the long term. The latest statistics show output at a 21-month high, yet job creation is modest. The organisational stress is getting more acute across the board. Hiring as a solution appears logical, yet it might be the hardest part. Below, we explore six practical ways to solve this.
Supply chains are already stretched. Deliveries are lengthening due to geopolitical events and an output surge. What this means in practice? More expedite requests as delivery schedules get disrupted. Meanwhile, the increase in output growth, as the latest PMI figures suggest, puts current stores staff under pressure to get parts to assembly while also processing the queue of new items at the goods-in bay. Rushing to meet production targets can allow shortcuts to creep into the process. Inventory doesn’t get properly logged and stored, further amplifying (wasted) effort later on, as items are hunted for in warehouse corners.
It may not be a full collapse of your company’s logistics process, yet each problem gradually erodes production capacity. It’s easy to think fixing it with recruitment, simply hiring more people, is the logical answer. But recruitment has been made harder by the complicated story behind the industry figures: skills shortages, rising employment costs, and uncertain demand despite healthy order books.
So what’s the quickest route to additional, and flexible, capacity if recruitment isn’t the answer?
"Every movement removed is one less opportunity for delay, and more time for production.
Why manufacturers are holding back on hiring
Hiring with caution is logical in the current climate, even when it appears to be the clearest answer to your immediate production problems. June’s UK manufacturing PMI data at 52.5 shows an eighth month of expansion, down from May’s four-year high of 53.9 (S&P Global UK Manufacturing PMI July report). Output growth is at its strongest since September 2024 (a 21-month high!). Employment increases are following but only modestly, as many firms are being explicit in their caution by trimming headcount or implementing hiring freezes. Market uncertainty and rising input costs are the stated reasons.
Now the other clouds on the horizon: new orders grew at their weakest pace since the end of last year, suggesting customer stockpiling ahead of price rises. Demand is being borrowed and front-loaded, creating a rosier picture than the underlying reality. Supplier delivery times keep lengthening, and output charges keep rising. This is key to why manufacturing is reluctant to invest in increased workforce.
Operational problems start before delivery performance drops
Production output is easy to measure, but every additional order increases pressure on your staff. Industry data illustrates the scale of the wider challenge. Make UK previously estimated that unfilled manufacturing vacancies were costing the UK economy around £6 billion in lost output. 75% of manufacturers name skills shortages as their biggest barrier to growth (Barclays/The Manufacturer). But employment costs are higher than ever, with nine out of ten manufacturers expecting them to rise further, and recruiting is slow.
Holding off on increasing staff is prudent management. But workload isn’t disappearing. And with 55,000 live manufacturing vacancies (Make UK / BDO Manufacturing Outlook), 97.5% of companies say hiring and retaining skilled staff is a key challenge to their growth. People are at a premium. Organisations need to make sure they’re working smart, not busy, doing the right things, not chasing around, band-aiding a broken system.
Six ways to release capacity without recruiting
If we look to extend capacity by redesigning workflows rather than crudely expanding the workforce, systemic solutions present themselves. What if we can provide more flexibility while sidestepping the current labour issues?
Problem: Storage pressure
Solution: Move inventory off-site
Manufacturers feel safer when inventory is close to the assembly line. Yet factory space is expensive. And manufacturers rarely have best-in-class storage; understandably, focus is elsewhere. It might make sense when on-site storage space is plentiful, but in most cases, utilising premium production space for material overflow, buffer inventory, and inbound materials creates a false sense of resilience and cost-effectiveness.
It actually lowers efficiency and flexibility. Every pallet occupying expensive production space carries an opportunity cost load. It creates more internal work strain, constrains future production layout, and complicates internal movement. All at a premium cost.
Moving to off-site storage changes that formulation. Workload is offloaded to an environment maximised for storage flow and effectiveness. Scheduled replenishment and proven service levels from an experienced logistics partner doesn’t just give you more flexibility and better storage. It gives you room to manufacture, and more time for your own personnel to focus on their most valuable work.
Problem: Fetching components, not assembling product
Solution: Complete kits, assembled component modules
It’s a familiar scene. Experienced line assembly workers shuffling around the factory playing hide and seek, looking for missing parts. Are they at another workstation? Are they on a shelf in the back of a storage bay? Have they even been delivered? It’s not planned for, and it’s not properly measured. Instead, it appears as slower assembly, production delay, and energy-sapping busywork.
Kitting removes this hidden work. Complete parts in custom packaging, quality-checked and sequenced to be at hand, ready for the correct assembly timeline. Having complete Bills of Materials picked, checked, and production-ready before they ever reach the shop floor is transformational for piecing assembly together in a seamless flow.
Acorn’s storage facilities have QA facilities and built-in operational processes for controlled kit preparation, BOM verification, batch traceability and final inspection before dispatch to production.
This reduces handling downstream. And with the addition of modular sub-assembly, this process can be accelerated through off-site assembly, giving your company effectively an additional flexible production line. A supply chain partner, tried and tested in offering these features to clients, allows your skilled people to spend their day building your products, not searching for the pieces to make them.
Problem: Purchasing strained by replenishment
Solution: Vendor Managed Inventory for C-class parts
Procurement shouldn’t be a hard hammer; not every purchase needs the same effort to hit the mark. These departments have shrunk, and with more complicated products comes more BOMs to coordinate than ever. High-value strategic components will always require more oversight and close supplier relationships. Thousands of C-class consumables don’t. Yet they still need assurances in quality and delivery. A missing screw can create a production delay just as much as a radar array.
Buyers need to avoid spending disproportionate time on routine tasks such as raising orders, monitoring stock levels, resolving shortages, and checking delivery timelines. Vendor Managed Inventory provides a service-led solution, passing ownership of this activity to an expert provider who’s responsible for coordinating and leveraging supply and supplier networks. An experienced VMI provider has the expertise and systems to manage agreed inventory parameters, min-max stock levels, replenishment, buffering and delivery consolidation.
The commercial benefit is that it reduces stock-outs and lightens the workload, improving inventory performance, risk management, and cost competitiveness. Inventory clarity and efficient delivery create fewer parts-in problems and workload at your production site.
Problem: Internal movement overload
Solution: Direct line feed to production
Every movement offers an opportunity for delay. Goods arrive: are they immediately processed, left for later in the day, or overlooked and forgotten until they need to be processed and delivered to the production line ASAP? Moved to stores: are they checked, logged correctly, and positioned in the right location? Picking, packaged with other components, and delivered to assembly while being handled once more before production begins.
Each point of contact needs to be performed cleanly and effectively, but there’s no value in each until the part is transformed into a high-value complete product. Fewer touches and transactions mean fewer opportunities for error between delivery door and assembly line. Direct line feed (DLF) can streamline all this activity, reduce processing touchpoints and streamline flow in the production process itself, meaning less handling and more production. Every movement removed is less opportunity for delay, and more time for production.
Problem: Supplier count scales admin
Solution: Consolidating supply
One partner providing master supply, coordinating and leveraging a global supplier network. One solution to the problem of burgeoning transactional overhead. And with delivery and customs procedures getting ever more complex (new legislation, volatile supply and supplier schedules), consolidation through an experienced supply chain partner attacks your BOM headaches head-on.
Savings in recovered inventory management time and administration accumulate quietly when the loud call of expedited packages and emergency deliveries fades.
Problem: Hunting and chasing stock
Solution: Inventory visibility
Capacity can’t be confidently maximised if you don’t know your minimum stock levels. Stock needs to be reliably trackable and visible for it to be managed optimally. Digital systems need to be synchronised and compatible; most importantly, they need to have correct and consistent input through implementation of rigorous SOP booking systems and technologies (whether QR or other barcodes, RFIDs, etc).
The fewer questions you need to ask about stock levels, inbound delivery, whether you’ve got your goods-in yet, items QA-tested, your buffers, and expected time to replenishment, the better. Because if you need to ask fewer questions, it means the systems are already giving you the answers you need. And if the system is set up to give you the visibility you need, it enables seamless production flow. Less chasing, just tracking, verification and notification when decisions need to be made.
These changes all look to lower your transaction cost and effort. Allowing your staff to apply their expertise where it is most needed, by removing the preparatory work. It enables your company to utilise its full capacity by removing a thousand cuts of admin and busywork. Allowing your workers to get on with the core work that genuinely belongs to them, rather than picking up slack in an underdeveloped system.
Capacity is a workflow issue, not a labour problem
An increasingly volatile, unpredictable business environment forces difficult decisions. One’s where it is easier to hold off on labour than commit. Where skills are scarce, and recruitment is difficult. One where demand can remain uncertain, but order surges need production to be ramped up to fulfill the business opportunities presented. That’s what the PMI manufacturing data, and Make UK sector outlook confirm.
This doesn’t mean you can’t scale or develop capacity, or revamp your operations. The hindrance: most manufacturers have accreted and inherited dozens of handling activities and legacy processes that nobody deliberately designed. If not attended to, it’s natural these evolve over years of organic growth, product changes, and operational adaptation.
As production volume increases, small inefficiencies scale. Ensuring your key personnel are employed in their most valuable way is essential to the health of the business. Skilled people should spend their time applying skilled judgement. Assembly teams should assemble. Engineers should engineer. Buyers should manage supplier risk and commercial performance, not spend most of the day expediting routine replenishment and chasing parts.
Few businesses would deliberately employ experienced production staff on non-core work, such as moving pallets, searching for stock, reconciling routine deliveries, or assembling low-value kits, if there were a better alternative. But legacy processes can let this class of activity creep in.
Each of the above six approaches removes work from the manufacturing process without removing capability. They reduce handling, minimise transactional effort and return skilled people to the work that creates the greatest value. The objective is to remove the friction that prevents your prized personnel from working at their highest value. This means reviewing how OEM supply chain partners are viewed – the right partner becomes an extension of the factory. Much more than a component source or off-site warehouse, an operational extension that absorbs logistics, manages inventory handling and optimises material flow.
Ultimately, increasing capacity isn’t simply about employing more people. It’s about improving the flow of work through the business, so the people you already have can create more value.
Are your people spending their time on the right work?
If your operation is under pressure to increase output without increasing headcount, we’d be happy to review where unnecessary handling and transactional effort may be limiting capacity.
Explore how you can extend capacity through a trusted supply chain partner
