With just weeks until Brexit, procurement professionals need an action plan in place to ensure their relationship with international suppliers is not affected.
Leaving the EU will change how you deal with suppliers, so it is best to be prepared to protect your supply chain from disruption.
Customs and VAT
It is important to remember that borders will become redefined.
Therefore, it is best to be prepared for customs and VAT. Suppliers based in the EU will have to pay customs charges at the border, while UK-based suppliers may have to contend with import and export VAT charges.
Those fees will have an impact on the cost of sourcing and, in turn, your products or services could witness a price hike.
If you do not want to pass on the higher cost of procurement to your customers, it is best to find a domestic supplier to meet your requirements.
Assess the lead time for products to reach customers
Due to the formalities that will come at the border, it will take time for products to reach you.
If you are selling perishable goods, you cannot afford to be complacent.
You need to plan your procurement strategy so that you can deal with delays and long lead times.
If you cannot, it is prudent to scout for a local supplier who can deliver products on time.
Fluctuating pound rates
Ever since the Brexit referendum, the pound has been freewheeling.
The fall in the pound rate and the constant exchange rate fluctuation have an impact on international suppliers.
The amount you pay your international suppliers will keep varying based on the exchange rate.
So, if you do not want to deal with constant calculations and re-calculations, find a domestic supplier, who you can pay in pounds without worrying about the exchange rate.
These are some of the issues you will have to contend with once Brexit comes into force.
The issues will vary based on the industry and in some cases, where finding a local supplier may not be an alternative.
In such circumstances, it is best to review existing contracts and plan for any exigency.