Brexit - considerations for procurement

Brexit - considerations for procurement

There are many examples of procurement teams doing awesome things to ensure continuity of supply during Covid-19 but I wonder how many organisations have taken their eye off the ball in preparing for Brexit.

As procurement leaders, we must consider the future and face into how Brexit will impact our businesses before it rapidly arrives.

Discussions are ongoing and to date, there has been no clarity over what a trading arrangement with the EU and other countries will look like, which makes it very hard for businesses to prepare sufficiently. Many businesses are also facing serious financial challenges and other pressures caused by Covid-19.  

So with all of the uncertainty and lack of detail, what can procurement teams do to help their organisations best navigate through things as we get closer to January 2021.

Do not ignore

Whilst it is not yet clear how our trading relationships will work procurement must not be unprepared for Brexit. Speak openly to suppliers about potential risks and have an open discussion to build an understanding of the potential risks.

Deep research into your suppliers

Understand not only your non-UK suppliers but who subcontracts into your tier 1 suppliers and several layers down. Whilst you might appear to have a UK based supplier they could be relying on EU or other country suppliers which cause you supply issues later. Doing the work now will allow you to track the origins and routes of all goods, you can then assess any stumbling blocks.

Ask yourself how you would cope if the goods you needed to import or export are subject to new rules, procedures, and inspections in the UK-EU border in the future. What would the impact on your business be if shipments were held up and delayed? Will you see increased lead times for orders?

Understand your contracts

Work with your legal team to understand the impact of Brexit on your contracts. For example data transfer, price changes, EU funding, lack of freedom of movement impacts labour availability driving wage increases and foreign exchange and tariffs creating cost pressures.  

Capture and prioritise risks

It won't be possible to address all risks you discover in your supply chain given that things will constantly evolve as things are understood. However, having a list with prioritised risks so that you can build mitigation plans with internal colleagues and suppliers is critical.

Constantly reevaluate 

The next six months moving towards 1st January will see a constantly evolving risk landscape with new guidance from the government-issued constantly as we get closer. Therefore any plans you produce and risk/issues logs will need to be continually updated as things evolve.

In summary - another opportunity to show leadership

Covid-19 has shown what a massive impact an unforeseen pandemic can have on organisations. Brexit will have a massive impact and could result in an end to the free movement of goods and services alongside the need for the renegotiation of all trade agreements. Leading procurement teams will be considering all of the likely outcomes of Brexit including the most severe. Risks should be understood and constantly monitored and evaluated as we get closer to January 2021.

Brexit presents an opportunity for Procurement to step up and lead their business through the times ahead. A call to action which I hope leaders seize. 

Very interestning article Dave Jones, a scary connection is the reactions to Covid19 towards local protectionism, both outside EU but also inside. This could be a threat, where bad forces use both these "happenings" to create new blockings or hinders. But it could also be a tool for procurement to work against free trade, using bad examles to influence politicians and decission procedures in the direction of free trade rather than protectionism. This article is one example, creating awarness. What more can we in the procurment community do now, before its to late? Any ideas?

Andrew Taylor

Business and Solutions Transformation Leader. World Rugby Level 2 Coach

4 å¹´

Back in the good old days of January 2020, I could not have stressed the importance of procurement organisations preparing and planning for Brexit. It was then a delicate balancing act with procurement organisations which had tasked back and front office operations to ensuring supply chain continuity post 1st Jan 2021. Along came COViD, and I can guarantee you the majority of procurement departments in organisations I advise have had to pivot very quickly. I can only relay a recurring theme from my clients, Brexit is now a secondary consideration compared to what is happening at the moment. UK based Procurement and supply chain teams could have, to a certain degree, completed their Brexit contingency planning without COViD happening, but COViD is front and centre of their thinking and has been since March, and will continue being until we are on a slightly less bumpy road. As others have said, we are 5 months away from whatever Brexit brings, and procurement organisations have their eye off the ball with very good reason.

Scott Bennett

Adaptable, highly experienced and successful procurement practitioner

4 å¹´

Imagine working for an Italian based company with 65 to 70% of your supply chain also in Italy with their 2d tier across europe and SE asia One of the many things you will be planning for now is supporting project deliveries (about 20 week installs) one in NE England and one in NE Germany with on site dates in Jan and Feb 2021 straight after Brexit for a US based global end customer who operates through a German Logisitics business as our primary customer and we will mostly likely manage both programmes here from the Midlands... Welcome to ever more interconnected world we need to navigate, risk manage and mitigate for...any pointers on local warehousing and transport providers welcome!!!!

Chris Young

Interim Director of Procurement & Transformation, Procurement Consultant & Category Manager at C YOUNG PROCUREMENT CONSULTANCY LIMITED

4 å¹´

Hi Dave Jones Thanks for sharing this, a timely reminder and insight into one of the key issues in the "in tray" of Senior Executives and Procurement Leaders. I think your advice to harness the knowledge of key supplier's is very sound and appropriate on this particular issue. Bringing their knowledge into the Brexit planning activity will undoubtedly help to identify areas of potential supply risk. I would also build on this by suggesting Procurement need to tap into the wider sources of market intelligence that are available e.g. trade associations, market research companies, Gov.uk & industry and Procurement roundtable forums & think tanks. Procurement should be ensuring the risks associated with Brexit are continually updated in both their own and the corporate risk registers. Cross-functional working groups with key suppliers and end customers where appropriate should be established to plan for Brexit and manage any associated supply risks. Category plans should be updated and these should be continually reviewed by Procurement Leaders. #sourcing #procurementleaders #brexitplanning #personalbranding

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