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Is your Supply Chain ready for Brexit?
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Aimée Gleave

Jun 20, 2017

Is your Supply Chain ready for Brexit?

Blog

The uncertainty around international trade agreements will be making long-term planning a difficult task for supply chain managers alongside fluctuating rates of currency. Research from CIPS found that 32% of UK business using EU suppliers are looking for British replacements. In line with this, almost half (46%) of European businesses plan to reduce their use of UK suppliers. Currency fluctuations are already having a huge impact on UK firms with the weaker pound making elements of their supply chains becoming costlier. The research by CIPS found that around 29% of UK business have already had to renegotiate some contracts, and 36% plan to respond by beating down supplier prices. The looming Brexit will affect many other areas of business as well as foreign exchange rates, such as;
  • Tariffs
  • Labour market
  • Supply Chain delays
  • VAT
  • Taxes
  • Legal requirements
  • Supply chain hubs
  • Lead times
  • Grants and incentives
Despite the uncertainty of Soft versus Hard Brexit, it is essential that companies start to plan for the changes that Brexit will generate. This entails defining the uncertainties themselves facing your business, identifying possible scenarios & their impact, creating a set of strategic options and finally identifying a clear list of markers for action & tracking these. In essence, there are three varying degrees of strategic action:
  1. No-regret actions: such as improving cost management and operational performance – this will pay off in any scenario
  2. Considering various options & hedges: creating strategies for various future scenarios can help you as Brexit negotiations progress
  3. Speculative strategies: large scale investments can have different outcomes depending on unknown future scenarios
The CIPS survey showed that despite the uncertainty, supply chain managers are already preparing for Brexit in a variety of ways such as mapping the potential costs of new tariffs, strengthening relationships with existing EU suppliers, undertaking risk analysis (44% of companies surveyed are already doing this), seeking alternative suppliers outside the EU or inside the UK and pre-emptively increasing costs. At Cast UK, we have seen an increase in client enquiries regarding both permanent and interim supply chain professionals. Brexit is on peoples’ minds and many are looking to ensure they have the best supply chain talent in their businesses to overcome the uncertainties that they face. All businesses should be asking themselves two questions as a matter of urgency: ‘How will Brexit affect us?’ & ‘How can we minimise Brexit disruption in our supply chain?’ If you require help with finding the best talent to work on your Brexit strategy, please call me for an informal chat on 0161 413 6904 or check out our website here for more information about Cast UK.