What has Brexit meant for your Supply Chain?

What has Brexit meant for your Supply Chain?

Posted on 4th May 2022 at 20:27

As you well know, the process of leaving the European Union has been a hot topic since the United Kingdom’s (“UK”) In/Out referendum in 2016, when a majority vote concluded that the UK would leave the European Union (“EU”) and withdraw from all the related institutions. Ever since the referendum, negotiations have taken place on various important topics surrounding customs and supply chain matters. 

As you well know, the process of leaving the European Union has been a hot topic since the United Kingdom’s (“UK”) In/Out referendum in 2016, when a majority vote concluded that the UK would leave the European Union (“EU”) and withdraw from all the related institutions. Ever since the referendum, negotiations have taken place on various important topics surrounding customs and supply chain matters. 

Now in 2022, the UK no longer operates within the EU Customs Union but instead operates under the UK-EU Trade and Cooperation Agreement (“TCA”), and we are beginning to see first-hand the implications for UK businesses. The ability to adapt to the changes and challenges Brexit presents is key to remaining agile in the marketplace and staying competitive in the face of unexpected landscape shifts. By understanding how Brexit affects your company, you can prepare and ultimately mitigate the impact to your organisation. 

 There are three key steps for being Brexit-Ready: 

 • Staying informed 

• Building flexibility into your supply chain 

• Contingency options when things don’t go as planned  

What is Brexit? 

Brexit is a term used to refer to the process of the UK’s withdrawal from the European Union. The referendum in June 2016, in which 52 per cent of voters in the United Kingdom voted to leave the EU, set the Brexit process in motion. This article will examine how Brexit will impact your organisation and what steps you should take to stay prepared. 

 Whilst the UK has already left the EU, it is still important that you stay informed about Brexit-related happenings. This includes legislative changes, amendments to customs regulations, and new agreements being agreed between countries in any way related to Britain withdrawing from the EU as well as the NI protocol arrangements which is highly sensitive. It is important for UK businesses to establish contingency options when things don't go as planned, as they often haven’t over the course of the Brexit Lifespan.

As we say as Tarn International: “Fail to Prepare, Then Prepare to Fail”. 

What is a supply chain? 

Simply put, a supply chain refers to the implicit end-to-end steps involved in getting your product from the place of manufacture to your customer's door. This includes where you source your raw materials and how they are manufactured, packaged, shipped, and delivered to your customer's premises. Every person, company or entity involved in this process will have an influence over your supply chain, and oversight and controls are more important than ever. 

When you start considering the additional barriers introduced by Brexit, like import tariffs and cross-border trade regulations, it becomes clear that the scale of change and adaptation is no small matter and we have seen many companies struggling to maintain ‘as-is’ operations in the UK due to the catalogue of post Brexit changes. 

The Supply Chain Impact

In the last couple of years, we have seen the fiscal costs skyrocket for companies who trade with the UK and EU, due to the additional burden of customs administration as well as increased demands for customs brokerage services. Given there is still much uncertainty of how the new economic reality will play out even in 2022, companies outside of Britain will continue to face greater risk when shipping goods e.g. Lack of understanding of new import tariffs, change in certification requirements, regulatory barriers, prohibitions & restrictions etc. 

 Despite these challenges, there are ways to keep your supply chain strong in this new era of international trade. By planning for disruptions and having contingencies in place, along with experience-led personnel, it is slowly becoming clearer. For example, by implementing a robust alternative supply lane, and by knowing your customer’s needs, it is possible to develop alternative stock and supply strategies to keep your business operating efficiently in the face of challenges that the business has no direct control over. E.g. Implementing customs warehousing and building stock levels in the UK and/or EU to (1) avoid unnecessary duties and VAT via duty suspended sales and (2) continue to have stock available for UK/EU sales. 

 Additionally, building flexibility into your supply chain will likely be necessary as a result of potential fluctuations in currency values and changes in tariffs and regulatory structures. A very recent example of current impacts on supply chains is the war in Ukraine, which has resulted in a 40% reduction of the Rouble: USD value and created a minefield of financial sanctions that have no doubt had catastrophic impacts on Russian businesses. For those businesses outside Russia with a single-point-of-failure reliance on Russian suppliers, the impact has arguably been just as large. It is vital to identify any potential impacts to your supply chain, including those that may come from suppliers outside the United Kingdom. 

 On the Brexit front, reports of the economic consequences have been mixed, and the uncertainty surrounding the UK’s decision to leave the European Union is still causing a lot of anxiety. Some economists predict that Brexit will lead to a technical recession in the UK and Ireland, with effects rippling onto other countries across Europe. For example, where a company once relied on an EU negotiated free trade agreement to source raw materials at a 0% duty cost, this source of supply diminished after Brexit, meaning a lack of raw materials and a reduction in the output of finished products.

The efficiency and compliance of your supply chain in the face of new challenges are critical to a competitive and growing business. 

Tarn International - How we can help

Tarn international has developed a wealth of experience within the digitally powered supply chain and customs industry and has rapdily become a go-to trusted repeat executive search advisor for specialist hiring plans.

We are able to support your business in a number of key areas within digitally powered supply chain SaaS businesses (Customs Software, TMS, Freight Exchange, Demand Planning, WMS, Robotics) and Operational Customs positions.

We have references to support our work finding the best talent in the market working under the following titles.

• VP- C Level
• New Business Sales
• Account Management
• Pre Sales
• Project Managers
• Developers & Solutions Architects
• Customs Operations (Head of Department, C-Level, Managers, Supervisors, Customs Clerks)
• Customs Advisory (Customs Consultants & Directors)

Please do not hesitate to get in touch with our team at [email protected]