UK supply chains – what you need to know
While COVID-19 is definitely the biggest concern for businesses over the last 18 months, our Procurement and Supply Chain project teams have carefully monitored the effects of Brexit.
Pre-Brexit the EU accounted for approximately half of all imports and exports, playing a critical role in supply chains for finished goods and intermediary products. Since the start of the year, 61% of firms have reported that Brexit has caused them difficulties, with more than a third specifically highlighting delays or additional costs. The Centre for Economic Performance report highlights these challenges (read more).
What problems has Brexit really caused your supply chains?
Increased Costs
The Brexit deal the UK reached with the EU has meant that tariffs were mainly avoided on goods themselves, however the additional paperwork or customs brokers costs have led to an inevitable increase in operational and administrative costs.
For trades to be tariff-free they now need to meet the ‘rules of origin’ requirements, ensuring goods coming from within the EU or in reverse the UK meet these rules.
While each additional cost per trade may be relatively small, this can obviously have a big impact over time especially for SME businesses, or those operating on thin margins who may have to pass these costs on to their end consumers.
Extended Timelines
Additional paperwork and border checks on both sides have led to delays and increased lead times for supply chains involving both imports and exports. While many firms have learnt to factor this into their production timelines over the last 12 months, this has caused significant issues for manufacturers who rely on “just-in-time” supply chains and those dealing with perishables like food that can lose quality while sat at the border.
These delays and lead times can have an impact on the bottom line as customers find companies with faster turnarounds, or those suppliers in the specialist food supply chains who can provide fresher produce.
How to manage these challenges?
Assess your supply chain
To avoid tariffs at the border, you need to carefully assess your suppliers and ensure they have full transparency over the origin of their products and parts. This will allow you to identify and plan for any delays from your suppliers that could impact your business – even if your suppliers are local, their suppliers could be based in Europe, India, China or other lower cost global supply chains.
Assessing and optimising your full supply chain will be one of the best ways to mitigate the risks and problems associated with the Brexit deal.
Improve the people behind your supply chain
You need the right leaders and managers behind your supply chain to be able to capably and confidently handle the changes and obstacles posed by Brexit. As specialist recruiters for procurement and supply chain roles, ProSearch are skilled in assessing, training and recruiting the talent needed to make your business successful.
The same diligence is essential when introducing new suppliers. While for some, the logical option to avoid Brexit supply chain problems will be to simply change from EU suppliers to UK ones, there is no guarantee that these companies will provide the same value and quality that your business needs, if they are supported themselves by international suppliers.
Obtain additional supply chain support
With the extra complications that Brexit has thrown into the world of procurement and supply chain challenges, you may find your business is in need of temporary, project-based or on-demand support. With a vast amount of supply chain consulting expertise, we can help you by providing interim supply chain staff, on-demand procurement resources or supply chain consultancy.
The pandemic has given businesses a larger obstacle to handle but as we return to normality, we need to acknowledge the impact Brexit has had on our supply chains and take steps to manage them effectively for the long-term success of our businesses and the UK economy.
Have you seen problems with your supply chain since Brexit? Let us help you solve them.
Get in touch with one of our advisors to discuss how we can help you and your business. We partner with organisations in a transparent and open approach to ensure they have all the external market knowledge and information needed to make the right hiring decisions for their supply chain.