Three key areas where procurement and supply chain should look to invest in 2021 and has a good business case to do so…

The Brexit debate is over with the UK and EU finally agreeing on the trade and cooperation terms after Brexit. A lot has been mentioned about the negative impact of Brexit on the UK and EU business supply chains. However, I think it is an opportunity for businesses to review their supply chains and turn this change into a competitive advantage. In my opinion, the following are 3 key areas where procurement and supply chain should look to invest in 2021 and has a good business case to do so.

1. Sourcing capabilities

Most of the organisations I have worked with over the last several years go back to the same set of shortlisted suppliers and look to conduct negotiations and auctions to achieve short term goals. This could be working with the same pool of suppliers either in the UK or EU suppliers or in a particular global location, i.e. China. However, there have been significant changes over the last few years whether it’s in currency, new emerging supply markets, existing supply sources losing advantage, or even the overall cost of managing offshore supply chains vs. local changing dramatically. Brexit and Covid have further accelerated or exacerbated some of these changes. Having some dedicated resources now to understand market options and a full evaluation will really help understand organisations options they have and plan their future supply chains accordingly.

2. Strategic partnerships

With the unprecedented disruption in demand and supply over the last year, organisations have never more realised the need to have a different relationship with their suppliers. As the long-term changes from Brexit and Covid come into effect, organisations having close strategic partnerships with their suppliers will be the ones who will mitigate issues better or benefit from the opportunities. Strategic partnerships don’t have to be just long-term commitments but communication, transparency, and both parties working towards shared goals. Also, the key is to look at the criteria for selecting partners. While on a short-term basis, working with a supplier who can fulfil your immediate needs at the best price makes sense, unless you look at long term fit, you will never have true partnerships in place.

3. Supplier assurance and development

With Brexit, there will be significant regulatory and standard changes over the years and suppliers will need support to transition to new standards and procedures. Also, to allow the sourcing team to find new sources and locations, they need appropriate support to be able to assure and develop new suppliers. Too many businesses, see the role of supplier assurance team as limited to assurance only and have an auditor mindset, however, the key is that they are working more as a development team and helping develop suppliers to contribute to the business.

The deal agreed is described as a narrow deal as it allows the UK to gradually move away from the EU sphere of influence if that’s really what the UK wants to pursue. While the current relationship with the EU is the starting position, full changes from this deal will only be visible over the next couple of years. Businesses who will be making the right investments in their supply chain and procurement capabilities will not only mitigate issues as the changes come into immediate effect but also find themselves in a better place vs their competitors.

One World Express has commissioned an independent survey among over 900 decision-makers within UK businesses to explore how they are responding to the coronavirus pandemic.

UK businesses are pivoting and seeking growth opportunities in international markets as they seek ways of overcoming the COVID-19 crisis, new research has found.
Logistics firm One World Express commissioned an independent survey among over 900 decision-makers within UK businesses. It found that 43% have pivoted their product or service since the pandemic began – this being particularly true of large businesses (57% among firms with over 250 employees).
A quarter (24%) of companies have also begun selling to new demographics of customers since the lockdown began in March.
One World Express’ research showed that, at present, 42% of UK businesses export their products or services globally. However, in light of the difficult trading conditions resulting from coronavirus, 57% are considering expansion into new international markets in the months ahead, with a further 44% saying Brexit has prompted them to explore new export opportunities outside of the Single Market.
Almost half (45%) of private sector organisations say the pandemic has made them realise they are overly reliant on one particular marketplace – this figure rises to 58% among large businesses (250+ employees)
A slim majority (51%) of decision-makers believe a lack of knowledge about international markets prevents their organisation from expanding outside the UK. Further, 43% feel the cost of doing so would be prohibitively high for them to make a profit from the move.
Atul Bhakta, CEO of One World Express, said: “At a time when the world has been turned upside down, it is unwise for business leaders to believe they can simply “keep calm and carry on”. So, it is positive to see many companies taking bold action in the midst of the pandemic.”
“Exporting globally could be the difference between life and death for businesses in 2020. After all, countries around the world have been affected by the virus’ spread in different ways, so any business that sells to a broader range of markets is giving itself the best possible chance to succeed.”
“Importantly, while many UK business believe expanding into international markets would be too complicated or costly, this is not the case. Selling products or services cross-border is both simple and affordable, as long as the prepares thoroughly and finds the right partners.” 

CBI data suggests only 4% of companies are prepared for no deal, putting those that aren’t at risk of tumbling…

CBI data suggests only 4% of companies are prepared for no deal, putting those that aren’t at risk of tumbling over the cliff edge on the 12th April

Smart procurement firm Ivalua has today warned that businesses trading with Europe need to urgently review supply chain operations ahead of Brexit, or risk being unprepared for the cliff edge posed by leaving without a deal. With the date for leaving the European Union extended to the 12th April at the earliest, companies have been granted more time to prepare for Brexit, which must be used to assess how the disruption to goods and tariff changes could impact them.

With each vote in parliament, it looks more likely that the UK will leave the European Union with no deal in place. In a no deal scenario, the UK will leave without a transition agreement, a legislative cliff edge that will see the European Union apply new rules and tariffs at UK borders. The Government’s own Brexit advisory found no deal would cause additional costs and burdens through new customs procedures, compliance challenges and traffic reduction, all of which businesses need to assess and be prepared to face.

“Despite the spectre of leaving without a deal, many businesses are in no-deal denial, and simply aren’t prepared for free movement of goods to come to an abrupt end,” explains Alex Saric, Smart Procurement Expert at Ivalua. “There will be no transition period and no time to prepare, meaning the business environment will literally change overnight. Businesses must use this extension wisely to evaluate their supply chain and identify potential bottlenecks for the movement of goods, as well as how new tariffs would affect prices. By doing this now, they can pinpoint contracts that could be at risk due to incurring late fees or missing SLAs, allowing them to plan and communicate with customers about how they are going to mitigate against supply shortages and delays. Those that don’t prepare will be left facing the no deal cliff edge and supply chain chaos.”

The CBI said just 4% of businesses are prepared for a no deal scenario as companies bury their heads in the sand. This needs to change, as the CIPS found delays caused by Brexit could hit businesses hard, forcing them to discount goods or see contracts cancelled if there are delays at the border. Businesses must urgently look at key areas of change, factoring in longer lead times, customs and tariffs, as outlined in the PwC advisory. Even with a deal secured, companies could be left scrambling to adapt to the new terms by the 22nd of May.

“We must remember too that Brexit has multiple possible outcomes, so it’s impossible for companies to try and predict the future,” advises Saric. “Instead, businesses need to be able to act fast and make sure they are prepared no matter the result. By taking a smart approach to procurement, companies can ensure supply chains are flexible and gain complete visibility across the supply chain. This will play a vital role in supplier management, helping to identify issues such as future supply shortage or non-compliance and adapt accordingly so they can navigate the turbulent political and economic waters ahead.”