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Supply Chain: Prepare for Brexit

By Jane Barrett | July 01, 2016 | 0 Comments

My sincere condolences to the English. Not only because of the Brexit result but also losing to Iceland in the UEFA Euro 2016 football championships. It’s been a tough time!
The vote to “leave” the EU was certainly unexpected and will have major implications on the future landscape of the EU. Consider the $575 billion in annual trade between the U.K. and the EU. But while it brings additional complexity logistics leaders should also be ready to capitalize on opportunities.

Our European logistics analysts Lisa Callinan and David Gonzalez recently published on the impact of Brexit from a global supply chain perspective. Here I share some of their insights:

– Trade Implications: Prepare for added Supply Chain complexity. Supply chains will need to be disentangled and redesigned, taking into consideration how duties will be applied. This could take years to figure out. But one thing is clear, there will be some form of customs control adding time and administration to logistics
– Logistics Implications: Prepare for change, but retain perspective. While the details are being worked out, run what-if scenarios, build more flexibility into your network and review your internal and outsourced capabilities. Make sure your technology platforms will be able to deal with the added complexity and changes that will be required. Anticipate longer lead times and cost increases; model the potential implications
– Supply Chain Planning Implication: Be ready for increased demand variability. Use your S&OP process to review various scenarios and potential action plans. Build more agility into your planning processes, with the ability to sense and respond weekly.

Lisa and David have some solid recommendations:
• Avoid knee-jerk reactions to changing processes
• Review scenario plans, risk assessments and business continuity planning, and develop actions plans to respond promptly to unfolding events.
• Consider the opportunities presented by this evolving event, and move fast to take advantage of them — for example, trade agreements.
• Form cross-functional task forces (along with finance and commercial) to start to understand and manage what needs to be done.
• Review technology platforms and identify potential changes such as master data to accommodate a multiregional European market
• Collaborate with logistics providers immediately to anticipate ongoing changes to European distribution
• Anticipate the impact on your workforce as guidance emerges on how to treat U.K. nationals working in another EU state and non-U.K. nationals working in the U.K.
• Avoid making long-range plans until the tone of the negotiations between the U.K. and the EU is known.

 

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