Is your supply chain Brexit-ready?
22 December 2016
New research has shown that the volume of UK retail sales will drop 1.8% year-on-year in 2017, according to the Economist Intelligence Unit (Consumer Goods and Retail 2017 report). As Brexit concerns continue to hit the value of the pound, this would put the UK among the five worst performing retail markets in the world next year.
Retail sales are one of many areas that will be impacted, and whatever your industry and supply chain we are in for a period of huge change. For the procurement professional, this is especially true as every area of spend has an international element in some part of its supply chain. International trade for the UK has been based on our membership of the EU since 1973, so has been the norm for most people in employment today. This is based on assumptions about free movement of labour, goods, services and capital within the EU and regulations, taxes and customs with international markets. We now need to plan for a world where those assumptions don’t apply.
This is not all about downside, there are opportunities for companies to steal competitive advantage as the environment changes. What is required is a plan comprising key scenarios, which should consider:
- How are you going to approach currency fluctuations?
- What will be the overall trading position, including likely customs costs?
- How fast can you move and what work can you do in advance, whatever the outcome?
- How can you manage supplier and supply chain risk?
- What historic decisions need to be re-assessed?
This plan needs to be a living document that can flex over time. As things stand, we don’t know when the negotiations will start, what form they’ll take or when information will emerge. Much is uncertain, and will be for some time. But some change is already happening, and other developments are easy to predict. Procurement teams that are on the front foot have the opportunity to drive the Brexit agenda both within their own companies and with their suppliers. As with any negotiation, making sure that we are asking for the right things is really important. We all need to take appropriate action through industry groups and trade bodies, so that we can put the case to Government for what is important to our businesses.
Tom is a Director in the Consulting practice of PwC, focusing on the Retail and Consumer Goods sector. He works with organisations to implement fresh thinking in their operations to deliver tangible value.