07 January 2019
Ready for Brexit – Your Supply Chain
Shulmans’ Commercial team look at how to protect your business and manage your supply chain to prepare for Brexit (no matter what Brexit looks like in the end!)
Whatever the ramifications of the UK’s swiftly changing political situation, the Shulmans Commercial team think there is still productive and useful work that can, and should, be done by businesses to try to evaluate and mitigate the risks posed by different Brexit related scenarios and impacts. Below, they have considered the direct and indirect risks.
As with so many aspects of commercial and strategic planning, it’s worth starting with a risk based assessment. What precisely are we assessing when thinking about Brexit and how it might shape up when so much is still up for debate? We’re taking our inspiration from the approach outlined in the recent report issued by publicly listed company, Next plc, as well as from our clients’ and contacts’ own experiences during these last few months.
Again, without trying to forecast the unpredictable, we think it is a sensible approach to break down the threats and opportunities into direct and indirect impacts to your business. We would advise businesses to form a Brexit steering group or project team within the business to help share the discussions around these issues and ensure there are no gaps.
Perhaps the best place to start is to work through the direct risks. As Next plc outlined in its analysis and report on its Brexit preparedness, these might sensibly be considered to include:
- increases in tariffs and duties on goods which apply when importing goods into the UK;
- increases in administrative procedures and costs when providing necessary data on goods coming into the UK from the EU;
- increases in tariffs and duties on goods which apply when exporting goods to the EU; and
- regulatory risks due the alignment (or not) of UK and EU product standards.
Of the indirect risks your business might consider, a reasonable place to start would be:
- decrease in the value of the pound and associated increase in costs of raw materials sourced from outside the UK;
- delays and other issues at ports due to increased administrative and customs procedures; and
- lack of preparedness of supply chain members impacted by direct risks identified above.
We’ll be addressing each of the direct risk areas in a series of short briefings in the coming weeks to support you and your colleagues in evaluating how these potential aspects might impact your business. We would argue that such a risk assessment will help any business to a have a greater awareness of the gaps in how prepared it is for different scenarios as well as enabling a flexible approach to adapt to the changing situations more readily.
If you would like assistance in how your business is preparing for Brexit, please do get in touch with any member of our Commercial team whose contact details can be found here.