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BREXIT and Supply Chain

27/10/2016

If ever the importance of developing a Supply Chain Strategy was demonstrated, BREXIT was it.

‘BREXIT means BREXIT’ insists the UK Prime Minister, but what exactly does this mean for British businesses, and indeed for foreign businesses exporting to Britain?

The reality is, no-one really knows, but this does not negate the need to have a supply chain strategy in place to mitigate possible risks.

The knowledge of a referendum on the UK’s place in the European Union (EU) was known for well over a year before the ballot, so there was no excuse for businesses not to have a strategy developed to cope with either a Remain or Leave vote (irrespective of personal views on the matter).

An earlier article highlighted the importance of assessing risk along the total length of the supply chain, BREXIT highlights some important ones, namely:

• Exchange Rates – The pound has fallen to its lowest levels in decades against the Euro and US Dollar. This is good news for UK exporters, but bad for importers.
• Import/Export Duties – will the UK be allowed to stay in the European single market, does it want to be?
• Free movement of Labour – how will UK businesses which are dependent on European Labour resources e.g. NHS, Fruit/Vegetable Farmers respond?
• Regulations – will there be increased bureaucracy between the UK and the EU? Will different approvals be required for products such as pharmaceuticals and chemicals?

These risks go well beyond day-to-day operational risks; they are fundamental strategic risks which could determine the very existence of an organisation if they are not properly considered at the beginning of the building and development of your supply chain.

If you do not already have a supply chain strategy in place, start by mapping your existing supply chain and identifying areas of risk.

As with all strategies, it should align with your business strategy and importantly, it should involve cross-functional resources in its development.

The supply chain does not exist in a silo, but crosses many business functions, and in some instances, touches them all.

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