rexit Proof Your Supply Chain
Paul Trudgian Ltd | Supply Chain & Logistics Consultancy No Comments

We are, of course, still hearing a great deal of concern about Brexit and supply chain. This leads us to consider what we can be doing to Brexit-proof our business and supply chain. However, should we? If so, how? It comes down to knowing your supply chain’s strengths and weaknesses. Fundamentally Brexit is a change. With change comes opportunity. Knowing your business strengths and weaknesses equips you to capitalise on the changes ahead, quickly and profitably. Agility alone can become your greatest strength.

Working with Unknowns

Our biggest problem remains that we are working with a huge set of unknowns. Making decisions with little concrete information is incredibly anxiety inducing for businesses. This is further exacerbated by the fact that few business experts are prepared to put their reputation on the line and state exactly what they believe is likely. The key has therefore got to be to plan for the unknowns using your own variables. It’s about managing risk in this environment.

Planning for the unknowns should enable you to act quickly and much more confidently when things happen. You open up your options. On the ground this will look like taking different approaches to key variables such as warehousing. For example, flexible warehousing leaves your options open.

Things you can do

It is important to realise that the unknown shouldn’t paralyse you, but instead spur you on to make changes to Brexit-Proof your supply chain. Different industry leaders have different ideas of how this can be done. A good example comes from Clive Stevens who is the chairman of Kreston Reeves. He suggests there are six things you can do:

  1. Buy British as this reduces your exposure to duty and exchange costs.
  2. Export because British goods are currently competitive abroad due to the weakened pound.
  3. Invest whilst interest rates are low.
  4. Establish overseas branches where your clients are in order to reduce the cost of cross border transfers of either goods or people.
  5. Lobby so that your voice is heard as EU negotiations are underway.
  6. Don’t panic as the UK is still one of the largest economies in the world.

Being presented with this concise list is reassuring. It gives us an action plan with which to work with. However, what else can we, and should we, be doing?

Negotiate Flexible Contracts

With the uncertainty ahead it’s going to be your negotiation skills which enable you to thrive. If you are looking to enter in to, or renew, contracts with either suppliers or customers which will extend beyond March 2019 you need to build in flexibility. It will be a dangerous game to get stuck in to fixed prices at the moment.

This is hugely reliant on your negotiating ability because many partners will be reticent about how flexible contracts will in turn affect them.  Kristina Boulden, director of Romney Marsh Wools, explains how you have a secret weapon here: “The UK has traditionally always been renowned for its highly-skilled manufacturing and high-end quality. Many countries specifically seek UK made products and this trend is ever growing. Capitalise on that.”

Listen to Your Clients

In the context of negotiating contracts, but also generally, speak to your most important clients and ascertain what their fears are regarding Brexit. Different areas of the supply chain will have different concerns. You need to listen to these specifically so that you can work out how to continue supplying to them, within their needs, whatever happens in terms of Brexit. Simply letting them know that you are aware of the impact on them will help to ensure longevity in the relationship. Transparency needs to exist between you.

Consider Where Your Money Comes From

Many UK supply chains are heavily reliant on funding from EU grants. While we are hearing that you can and should continue to apply for these, we also need to be realistic. Firstly this is because of the likelihood of success. Secondly it needs to be considered because it won’t now be a long-term funding solution. You need to look at UK specific grants and keep a close eye on how you are accessing the local, not EU market.

Diversify to Create Flexibility

There has been a great deal of talk about whether businesses should relocate their operations to elsewhere in the EU. However, this is somewhat limiting in itself. Tim Cole, chief executive of ITL Group states: “By operating across three continents, with clients worldwide, we are less susceptible to the ups and downs of one particular economy. We have leveraged the weak sterling to make us more competitive, thus allowing us to accelerate orders from the US and China.”

In other words, spread yourself out so that your entire business can flex and adapt according to where the opportunities are.

Look to Your Workforce

Of course, one area where Brexit stands to create enormous waves is within the supply chain workforce. Where you operate with a large proportion of EU staff you need to consider the implications. The more EU staff you employ, the more you need to consider the effect on them.

This is a tricky line to walk because in the meantime you mustn’t discriminate against available EU workers. You may need to take temporary measures over the transition period, for example utilising temporary labour. Try to look to the long-term in all new staffing approaches though.

Face the Uncertainty Head-On

It is tempting to stay the same and stagnate purely because you’re operating in an area of unknowns. However, now is precisely the time not to let this happen. You need to accept the uncertainty and act within it to minimise risk and maximise opportunity. Creating your own models of how Brexit will pan out for you will help you. Embrace the uncertainty and use it to your advantage.

To help you navigate the changing landscape of Brexit for your supply chain, get our consultants on board to help. Call +44 (0) 121 517 0008.

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