UK electronics firms boost stock as lead times rise before Q4

UK electronics manufacturers are increasing stock levels as they respond to ongoing shipping delays and heightened demand in the approach to the year's final quarter.

Fresh data from Unleashed, an inventory management platform, reveals that small and mid-sized firms achieved GBP £401,262 in sales during Q2 2025. This represents a 16.30% decrease from the same period last year, yet a 5.33% improvement compared to the previous quarter.

The report also highlights a significant extension in supply chain lead times. Lead days rose from 15 to 20 days quarter-on-quarter, illustrating a lengthening wait for components and raw materials. Simultaneously, purchase orders surged by 278.13% year-on-year and nearly doubled from 129 in Q1 to 242 in Q2.

Unleashed's findings are based on data from more than 600 UK manufacturing firms using its software, covering sectors such as electronics, food and beverage, clothing and construction. The increase in purchasing by electronics and telecommunications businesses corresponded with a notable rise in excess stock values, up more than three times quarter-on-quarter, from GBP £24,743 to GBP £94,034.

Profitability, assessed by Gross Margin Percentage (excluding direct wages), saw a modest upswing, climbing 0.71 percentage points quarter-on-quarter and 1.13 percentage points year-on-year to 44.9%.

Industry response

The latest Unleashed report notes that efforts to tactically build up inventory are intended to maintain product availability and service levels, especially as retail peaks such as Black Friday and Christmas approach.

"The rise in POs and stock levels marks a tactical pivot for electronics manufacturers, with cautious buffering designed to mitigate the risk of delays and stockouts, particularly ahead of Black Friday and Christmas.

"In many cases, this isn't a knee-jerk reaction to market conditions but a measured response. As manufacturers become more data driven, they're able to improve their forecasting capabilities and reduce the risks associated with stock purchasing decisions."

Joe Llewellyn, General Manager of ERP Small Business at The Access Group, the parent company of Unleashed, emphasised the deliberate nature of these strategies as a way to address ongoing market uncertainty.

Llewellyn also commented on the broader economic context potentially influencing manufacturers' outlook.

"Looking ahead, there are promising signs that manufacturers will end 2025 in a good position. Sales are healthy, while separate figures show that business confidence has risen steadily every quarter this year. The Bank of England has also cut interest rates from 4.25% to 4%, while inflation is expected to fall below the 2% target. Taken together, this could contribute to margin recovery and selective growth."

Sector-wide pattern

Similar inventory management tactics were seen in other manufacturing sectors. The average sales value across all categories reached GBP £365,565 for Q2 2025 - a 47% increase compared to the previous year and up 1.9% quarter-on-quarter. Corresponding rises in purchase orders, lead times and excess stock values were also recorded across the board.

The report found that the food industry experienced the largest jump in sales revenue at 60% quarter-on-quarter, while the beverage sector saw purchase orders climb by 250%. The biggest lead time increase was in the sports and recreation category, where it grew by 175%. Excess stock values expanded the most in electronics and telecommunications, with a quarter-on-quarter rise from GBP £24,743 to GBP £94,034.

The Manufacturing Health Index, which underpins the Unleashed report, assesses small and medium-sized manufacturer performance using a large dataset approach, drawing from over 1,400 businesses in the UK, Australia and New Zealand, and tracks every purchase, sale and stock movement since Q1 2018.

Gross Margin Percentage, the main profitability measure in this report, indicates the share of sales revenue left after covering direct costs (excluding wages), providing an indication of unit-level profitability for smaller manufacturing firms.

The recent findings suggest that as supply chain disruptions persist, UK electronics manufacturers, along with their counterparts in other sectors, are placing renewed emphasis on stock management and supply chain resilience to meet market demand and prepare for key trading periods.