A procurement expert has compiled a procurement checklist to help organisations manage the possible outcomes of Brexit negotiations. Soft Brexit, which will involve restrictions on the free movement of labour; Hard Brexit, which will see tariffs, higher costs for customers, and significant sourcing changes for industry dependent on EU-supplied goods; and No Deal, which will prompt a fall in the pound, seized-up borders, and significant slowdowns in the supply of migrant labour.
Procurement expert, Jeremy Smith, who has over 20 years of experience in the profession, identifies the following core issues to prevent disruptions to the supply chain, ensure the continuation of strategic sourcing, and limit compromises to cost-reduction efforts given the three scenarios above.
Workforce: be clear where your workers are coming from. Sourcing both skilled and unskilled labour from abroad will become harder, and worker shortages are likely to drive up wages. Consideration must be given now to where an alternative supply can be found.
Currency volatility: this will continue for three years regardless of the deal. Businesses need to be clear about their level of sensitivity to currency market vulnerability.
Tariffs: companies must assess now how tariffs might affect their supply chain. Industries, such as fashion, rely on supplies from Asia, Turkey, and Thailand, which all come through the EU and will be affected by post-Brexit tariffs. New thinking about the route for goods to reach the UK is essential.
Supply relationship management: new sources of supply will be inevitable for many. Many items are manufactured in the UK with components from Europe. Understanding the roots, and what alternatives exist, is vital.
Lead times: this is likely to have a bigger impact on perishable goods and medicines, but lead times will get longer for goods that cross borders. Higher stock levels might need to be put in place now.
Regulation: re-examine existing contracts and check for the impact of regulatory changes.
Brexit will be tough, but even tougher without these considerations
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.