Odesma sought to examine the effects of Brexit on the Procurement function. In doing so, a report by the Chamber of Commerce was also commissioned to uncover the thoughts behind the leaving of the EU. Visit the previous article here for more info…
The procurement landscape is certainly uncertain following Brexit, not least in terms of risk management for businesses. Odesma’s survey generated some interesting responses about whether or not companies had started putting measures in place to prepare for Brexit. Just over half indicated that they had already begun to put plans into place, but perhaps surprisingly around 40% said that they had not. Furthermore, only about 50% of companies believed that Brexit and its impacts were a significant risk within their company’s risk register. The mixed response on preparing for Brexit and identifying how much of a risk it will be for a company shows just how difficult it is to call what will happen.
Is Brexit and it’s impact a significant risk within your company risk register?
- Yes 50% 50%
- No 41.67% 41.67%
- Don’t know 8.33% 8.33%
What we do know is that the vast majority of companies recognise that procurement is an important part of the business when preparing for Brexit, with over 90% of results from the survey showing this, but just a mere 20% of companies said that they had conducted scenario planning around Brexit. We don’t know exactly how it will pan out but the macroeconomic environment will likely create risks through domestic inflation, exchange rate volatility, the cost of capital and interest rates, and import and export tariffs. There will undoubtedly be much business uncertainty surrounding investment and capital expenditure decisions, and operating expenses.
Procurement functions will be erring on the side of caution when making decisions and act in a more risk averse manner than they may have done with the safety net of the EU.
What measures are your organisation taking to better prepare themselves?