UK businesses, in general, will have plenty on their plates as 2020 enters its last quarter. Most companies are already focused on recovering from the slowdown caused by the coronavirus pandemic. Big businesses are not expecting a quick recovery; a Deloitte survey showed that nearly half of financial officers from large UK enterprises only expect to return to pre-pandemic levels of business by the latter half of 2021.
But aside from this, companies have to plan for the end of the Brexit transition period on 31 December 2020 when the UK’s trade with the rest of the EU will cease to go unhindered.
Among businesses’ major concerns is the impact that this will have on supply chains. 45 percent of businesses expressed concern about potential delays in shipments as increased border friction is expected to add to the time products spend at ports. Companies that deal with perishable goods and products with short shelf lives may have to spend more in improving their cold chain logistics. Investments in better transportation, robust packaging, and data loggers for condition monitoring have to be made to help them maintain the quality of their products.
In addition to all of these, the impact of tariffs and duties, fluctuating foreign exchange, and legal matters such as the enforceability of existing contracts also have to be considered. The compliance and paper work involved can be taxing tasks to manage for some enterprises. Preparing for Brexit is not something that businesses can entirely ignore either as trade with the EU has been essential to most operations. The EU accounts for 54 percent of the UK’s imports and 49 percent of exports.
As such, businesses need to have well thought-out strategies on how best to prepare for the transition and establish their own resilient supply chains. Several measures that they can take include:
Understanding the situation. The transition period allowed for matters to be “business as usual,” but the real impact of Brexit will only be truly felt once it ends. Companies must know what would be involved and prepare accordingly. Tariffs, taxes, and foreign exchange will certainly affect prices. Goods will also spend additional time at ports and documentary requirements will also increase. Even personnel traveling across borders will need to have proper licenses and documentation.
Strategizing based on the business’s own context. Companies must then reconcile these issues with their own situation. Brexit may affect each company differently, depending on the nature of the business and the activities that it performs. Major decisions such as choosing which market to serve—whether companies focus on local customers or continue with cross-border commerce—may have to be made. Revisiting the product catalog may also be necessary as some products may bring more complications to support, making it more sustainable for the business to streamline its offerings.
Reorganizing supply chain networks. Businesses should also review their supply chain networks and determine if their roster of suppliers and service providers would be in line with their new strategies. For larger operations, the matter of where to situate their warehouses can become a critical matter further down the line. For smaller operations, they may have to consider building up inventory, especially if they deal with products with longer shelf lives, in order to mitigate the impact of longer lead times and shipping delays.
Adopt technology solutions. Technology may also help lessen some of the impact. Shipping condition monitoring can greatly help businesses relying on cold chains. Sensors and trackers can provide parcel-level information on the actual condition of the shipments. So, even if these goods spend extra time in transit or at ports, businesses can be assured that the products are kept within recommended temperatures. Companies can also adopt and employ analytics to help them better predict demand, allowing them to order materials or products from suppliers and manufacturers in a timely manner.
With only a few months left, it is high time UK businesses work on their respective Brexit strategies. The coronavirus pandemic has already shown that a resilient supply chain is crucial in ensuring that business can continue operating. Thus, it is important for businesses, regardless of size, to prepare their respective supply chains in preparation for Brexit.