10th November 2019

Is Your Supply Chain Brexit-Ready?

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Brexit is a big deal for any business attempting to forecast demand or planning a product launch over the next 6 to 12 months. The shape of Brexit is still undetermined. Nevertheless, the Withdrawal Agreement gives some indication about the state of trade between the EU and the UK over the coming years.

If the Withdrawal Agreement is ratified, some things will change, but disruption to supply chains will be minimal. A no-deal Brexit is a more worrying proposition, but even then, there are things you can do to limit its impact on your business and customers.

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Potential Problems & Opportunities Arising From Brexit

It is worth being prepared for the following scenarios:

  • In the short term, your customers may experience difficulty sourcing their products from Europe, and look for an alternative supplier. This is a potential opportunity for your business and one that can be planned for.
  • The rules and regulations regarding overseas shipping may change for some types of product. This might involve new paperwork, checks/inspections, and costs. Preparing for these eventualities will minimise delay.
  • Tariffs may apply to goods shipped to and from the UK and EU. This has implications for inventory management and the cost of importing goods from Europe. It may also make your business less competitive in the EU compared to competitors from EU member states. Tariffs will only apply if a free-trade agreement (FTA) is not agreed by the end of the transition period on 31st December 2020.
  • Brexit is likely to lengthen supply chains, meaning that importers have to allow longer for products to arrive in the UK. There will also be more uncertainty in supply chains, necessitating greater contingency in delivery schedules. Therefore, forecasting will become more challenging and more essential. This isn’t necessarily a negative thing, but importers will have to rely on more inventory to secure their service levels. If you plan to increase inventory, do so scientifically – using data analysis and algorithms, and not just personal judgement. Otherwise, you could invest unnecessary cash, fail on service and impact your sales.

How To Avoid Brexit Disruption

There are several things you can do to help get your business ready for Brexit:

1) Stock up on strategically important items to avoid potential delays. Pre-Christmas shipping is busy at the best of times. A no-deal Brexit could amplify this.

2) Verify whether or not your European employees in the UK, and any UK employees working for you in Europe, will need a work visa after Brexit.

3) Ensure you have all the relevant permits and licenses you need to continue trading in each relevant EU state following Brexit. Ensure your product labels are up-to-date with the information you need.

4) Update your contractual terms to take into account any extra tariffs, admin, or transport costs when trading with Europe. Communicate any price rises or changes with your customers as soon as possible.

5) Update your sales forecasting models to account for increased costs due to tariffs. Our Reflex Planning solution allows you to adjust your inventory investment accordingly.

6) Know what your customs duty rates are likely to be for each category of product. This won’t just affect exports to the EU. Currently, goods from the UK exported to some non-EU countries benefit from free trade agreements agreed between the EU and these nations. These advantages will cease to apply after Brexit.

7) Be aware of what additional paperwork will be required and estimate the cost to your business in time and money. Factor this into your accounting and stock control procedures.

8) Ensure you are registered for VAT in all import/export countries.

Get Brexit-Ready With Reflex Planning

Like thousands of other businesses in the UK and Europe, we sincerely hope that the uncertainty around Brexit will be over soon. Brexit will bring challenges and opportunities. However, much of the disruption likely to arise from Brexit can be counteracted by careful planning on the part of individual businesses. We are here to support you in making your business ready for Brexit. To find out how our software can help, please call 01889 508 075 today.

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