Organisations are facing a new age of supply chains in the post-Brexit world and can overcome future disruption with better data access
Global supply chains will always be disrupted, but the past few years have been on another level. Supply chains right across the world have been grappling with the widespread impact of the pandemic, and at a local level, this has been paired with the ongoing consequences of Brexit. Adam Bimson, Chief Customer Officer, Vuealta discusses exclusively the technical aspects of the modern supply chain and how it functions in the new age post-Brexit.
The impact of these disruptive forces will no doubt be felt for many more months to come, even once we’re back to so-called ‘normality’. But supply chains are a critical part of our economy, with the recently reported ongoing struggles in China testament to that, and these latest disruptions will not be the last. So, it is crucial that supply chains today prepare for the future.
The impact of Brexit on UK supply chains so far
There are a number of differing views on the consequences of Brexit for UK and European supply chains. On the one hand, the UK government suggests the supply chain issues caused by Brexit have eased significantly due to fewer queues at the border, on the other hand, there is a lot of research to suggest that this was only the tip of the iceberg.
According to IHS Markit data from February of this year, supply chain disruptions caused by Brexit pushed UK manufacturing output to its weakest level in nine months, due to continued friction around transporting goods across the border. IHS Markit said its composite Purchasing Managers Index is still below the critical 50 mark that demonstrates expansion. More than half of all companies reported lower exports at the time of the research, blaming the decline on our departure from the EU.
On top of these issues, there are ongoing concerns around new costs that businesses and their supply chains will incur due to an increased amount of paperwork needing to be completed. This, paired with time delays at the border due to ongoing Covid-19 tests, could be devastating for businesses already operating on slim margins.
Unfortunately, experts warn this will only get worse with additional rules and regulations being phased in throughout the year, which are likely to cause further ‘random’ delays and shortages.
How increased disruption is driving a rise in onshoring
This disruption wrought firstly by Brexit and then, more intensely, by Covid-19 has caused many businesses to relook at their supply chains. In particular, they are reconsidering how resilient their networks are and asking whether they are truly fit for purpose. At the same time, leadership teams are wrestling with the need to cut costs to protect what margin they can.
We can expect this to have a big impact on how businesses choose to operate in the future and one trend this could lead to is a boom in onshoring i.e., transferring overseas operations back to their country of origin.
Bringing different parts of the supply chain closer to home, and therefore siting them in economically developed countries, may seem at odds to a money-saving goal, but if it reduces risk and improves the likelihood of goods arriving where they need to be, when they need to be there, then it may actually contribute to improved performance across the business.
But onshoring alone is not enough to future-proof today’s supply chains in a world where disruption is around every corner.
Why data is the logistics panacea for greater efficiency and resiliency
That is why many businesses are implementing new technologies to support their global operations. Alongside many other industries, the past year has seen our supply chains undertake huge digital transformation projects. But technology itself is not the logistics panacea for greater efficiency, though it is a direct route to what is. Data.
In their hunt for efficiency, many businesses have ended up over-optimising. They have cut here, reduced there, and instigated lean inventory policies. Alongside this, supply chains have become increasingly intricate. Those yet to bring operations closer to home are stretched geographically which, combined with poor visibility across increasingly disparate networks, has made them difficult to manage and has heightened supply chain risk. While networks are more fragile on the one hand, the global nature of networks has also made them more susceptible to an array of events including natural disasters and political upheaval which would not have affected older and more local supply chains.
What businesses therefore need as a fundamental foundation to operate in today’s uncertain world is access to data that enables them to design and model all the conceivable scenarios they could face, and then use them to inform a dynamic plan that can adapt as the situation changes.
This scenario planning approach requires businesses to rapidly simulate and assess the impact of various events across a wide range of supply chain measures. Fundamentally, it is built on a business’ ability to access data rapidly. Internal, external, from customers, third parties, suppliers, industry analysts, the media, social networks – intelligence that needs to be captured, distilled and analysed quickly. All of which can provide the information that businesses need to inform scenarios and build plans. And this is where the right technology platform for data collection and analysis, in real-time, comes in.
Having that access, that ability, is critical to making accurate decisions and acting in not only an efficient, but also a resilient manner – the sort of decisions that can mean the difference between recovery, or the ability to take advantage of unexpected business growth, and failure.
Data is the foundation for supply chain networks and increased visibility
Having this better view of data can also help businesses build greater supply chain networks.
Supply chains have traditionally been seen as a linear flow of products, starting from production, and making their way through the distribution centres, warehouses and on to the customer. But today’s supply chains should be led with a network mindset, which can lead to supply that is more flexible and resilient, whilst also being more cost effective. Once again, the key to achieving this lies in data.
One characteristic of a supply chain network is to include greater visibility of what is up and downstream of that chain. Understanding the supply of raw materials, or the capacity of contract manufacturers, and being able to collaborate with these suppliers, allows the enterprise to avoid production surprises. And similarly, collaborating with customers to better understand their demand and onward use of products, means that high service levels and customer service can be met, but without undue cost or waste.
Another key feature of a network is to recognise the complexity of the linear supply chain. Transferring stock between distribution centres so that the network can be rebalanced gives greater flexibility and a more efficient use of inventory. Many supply chains are not just this sequential movement of finished goods but involve processing steps such as component assembly or packaging/repackaging at various stages.
New age supply chains must become today’s supply chains
Disruption will not cease for our global supply chains. One way of tackling future uncertainty may well lie in bringing operations closer to home, and businesses that decide to jump aboard the onshoring trend could gain competitive advantage as a result.
But those supply chains that are truly future-proofed will be those that put data and planning at their core. With better access to data, businesses can improve planning processes within their supplier networks and increase their efficiency, resiliency, and visibility. All vital for a supply chain that can withstand unexpected disruption.
Post-Brexit commerce pandemonium
Davind Dhingra, Director, Solution Consulting at BluJay Solutions discusses the post-Brexit commerce craze and how it will not dissipate itself.
Although the last-minute Brexit deal brought a sigh of relief to the worldwide business community, the first few months of post-Brexit trading have been anything but smooth. Customers began to face the brunt of the changes almost immediately: a surge of excessive charges, product shortages, and obstacles to particular products or retailers have come as a shock to customers accustomed to easy UK-EU trading.
These post-Brexit customs challenges are not simply the maturation of the early stages of the Brexit deal. They are the after-effects of the agreement’s terms. Sending a product across the border has changed forever. Without properly doing their homework, companies are ending up passing huge costs onto the customer.
Adaptation to this new business environment is critical to ensuring sustainable cross-border trading in the long-term. Below, we ask why these costs are creeping up on customers, and what can be done to absorb them further back in the supply chain process. This way, organisations can ensure consistent levels of quality service as they navigate the post-Brexit trading landscape.
In today’s ‘now economy,’ UK shoppers are used to quick and easy delivery at the lowest cost possible. However, since the 01 January 2021, nearly half of UK consumers who have purchased goods from retailers based in the EU have experienced issues. The most shocking of these may well be doorstep taxes, such as a surprise fee of £82 on a £200 coat from the EU.
These fees have come as a surprise not only to consumers, but to product sellers too. Though a Brexit deal was secured, the new trade landscape remains vastly misunderstood by swathes of the international business community. A lack of preparation has caused confusion over new VAT requirements, duties requiring payment, and the mitigation options available. Indeed, the British Chambers of Commerce (BCC) states that 49% of UK-based exporters in a survey of 470 firms had suffered problems with post-Brexit arrangements. This all filters down to poor communication to customers who are left to foot the bill.
Without expert assistance, few organisations will be able to comprehend the complexities of post-Brexit customs. However, there is plenty of advice out there, in the form of hiring customs experts, adopting assistive technologies to streamline processes and provide good ROI, or even simply using online resources to educate and inform. Whatever route an organisation chooses, specialised knowledge and tools are key to providing the confidence to continue competing in the profitable UK-EU market.
These new costs are not going anywhere fast, so the best thing an organisation can do is focus on minimising the risk posed to the customer. This way, they will maintain much-needed customer loyalty, even as we continue adjusting to a challenging trade environment.
Commentary: Davind Dhingra, Director, Solution Consulting at BluJay Solutions
Shoppers are facing a commerce headache. Many are finding their favourite brands to show new levels of unreliability; they are paying higher prices, waiting longer for purchases or refunds to process, or simply being unable to find products online or on shelves. In fact, consumer group Which? recently found that 24% had experienced delays in receiving goods following Brexit.
Businesses that have noticed the shock ‘doorstep fees’ customers are facing, but also do not want to pull out of the international trade market, are forging their own way through the customs confusion. They are certainly brave; according to government estimates, 147,000 businesses who trade internationally have no prior experience of customs because they have only sold goods to EU states.
However, there is another cost to pay. Customers who are used to a smooth returns processes are receiving poor service. Which? found that a huge 87% of those who returned goods to sellers or manufactures in the EU have faced delays, unexpected paperwork, or extra charges. The reason behind this is that returns cost more than ever for companies who are unable to claim duty and VAT back. As they attempt to manage these costs long-term, whilst avoiding shipment mistakes in the present, managers are struggling to provide the stability that customers need.
Commentary: Adam Bimson, Chief Customer Officer, Vuealta
There are several differing views on the consequences of Brexit for UK and European supply chains. On the one hand, the UK government suggests the supply chain issues caused by Brexit have eased significantly due to fewer queues at the border, on the other hand, there is a lot of research to suggest that this was only the tip of the iceberg.
According to IHS Markit data from February of this year, supply chain disruptions caused by Brexit pushed UK manufacturing output to its weakest level in nine months, due to continued friction around transporting goods across the border. IHS Markit said its composite Purchasing Managers Index is still below the critical 50 mark that demonstrates expansion. More than half of all companies reported lower exports at the time of the research, blaming the decline on our departure from the EU.
On top of these issues, there are ongoing concerns around new costs that businesses and their supply chains will incur due to an increased amount of paperwork needing to be completed. This, paired with time delays at the border due to ongoing Covid-19 tests, could be devastating for businesses already operating on slim margins.
Unfortunately, experts warn this will only get worse with additional rules and regulations being phased in throughout the year, which are likely to cause further ‘random’ delays and shortages.
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Media contact
Rebecca Morpeth Spayne,
Editor, International Trade Magazine
Tel: +44 (0) 1622 823 922
Email: editor@intrademagazine.com
