How might Brexit uncertainty affect procurement?

Original Post Source

On the 29th of March 2017, Article 50 was triggered, hurtling the UK towards Brexit.

Consulting group Ayming asked the question: do we truly understand the implications of Brexit on procurement professionals? The company published an expert opinion piece on the subject, written by its UK Director of Operations Performance, Alejandro Alvarez; we reached out to Alvarez for further comment.

How might two years of Brexit uncertainty affect supply chains?

The actual implications, possible tariffs and so forth will continue to be unclear for some time. Therefore, it is important that businesses identify any potential risks so they are ready for changes as and when they arise.

To do this, businesses first need to identify potential risks within their supply chains and create strategies to mitigate these. This will have an implication on the relationships between companies and their supply chain providers, particularly those that have their supply chains outsourced to third party providers. The impact for supply chains could range from nothing to having to relocate something as significant as production facilities to avoid increases in tariffs.

Will we see a continuing slow-down in manufacturing growth and supply chain delays as uncertainty takes root and develops?

While this is certainly possible, it is unlikely. The IMF has recently increased the growth prospects for the Eurozone which would suggest that at least existing relationships between the UK and other European countries will result in higher exports and manufacturing output.

The markets have also reacted quite positively following the announcement of a UK general election. If the Conservatives win by the much-predicted landslide, this will provide stability and certainty for businesses as they are likely to take a longer term pro-business stance as part of their Brexit negotiations.

Are there any positives that the manufacturing and supply chain industries can take away from the triggering of Brexit?

This will depend on the outcome of the Brexit negotiations. However, there may be opportunities to explore additional sources of supply outside of the Euro zone.

Given that there are potential risks on the horizon, businesses must take the opportunity now to ensure their operations are under control. The activity of identifying risks may result in companies deploying new strategies that will result in positive outcomes going forward.

Another benefit of the triggering of Article 50 is that it’s actually helping some procurement and supply chain functions to successfully reposition themselves within their businesses as a more strategic and value-adding function.

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