Applying the Theory of Constraints to Explore the UK Renewable-Energy Supply Chain

Abstract

As a result of the emerging energy crisis and the requirement for countries to utilize more energy derived from renewable sources, demand for renewable energy technologies is likely to rise. Therefore, it is critical that production of such technologies is ramped up in order to meet this demand. However, evidence suggests that engineering and manufacturing companies in the UK are not entering the renewables market at the desired rate and, hence, renewable supply chains currently lack the ability to respond to increased demand due to the lack of businesses willing to move into supplying the renewables sector. Through a three phased research approach, this paper will identify the barriers and risks that are suggested as reasons why companies do not invest and operate within the renewables sector. Through further analysis obtained from the survey work and focus groups, the paper goes on to identify and categorize these barriers and risks in the form of ‘system constraints’ which are then used to construct a current reality tree (CRT) that connects the constraints into a comprehensive characterization map of the sector which suggests why companies fail to enter the renewables supply chain market. The CRT identifies the complex arrangement of issues which act as risks and barriers. These issues include; poor supply chain readiness leading to a company’s inability to respond quickly and correctly to opportunities, a lack of suitable policies and government investment in the renewables infrastructure (which leads to a lack of opportunities for supply-chain companies) and a lack of knowledge of the sector by companies, meaning that supply-chain companies are resistant to investing in the sector for fear of poor return on investment. This work provides key insights into the UK manufacturing supply chain and its attitudes to entering the renewables sector. Furthermore, the paper also applies and evaluates the use of the CRT technique and ascertains its suitability to effectively characterize sector issues and its current problems.