Preparing Your Supply Chain for Brexit
The United Kingdom’s vote to leave the European Union has been rattling markets and supply chains for the last few weeks. Uncertainty rules while the world waits to see how and when Britain will eventually decide to exit.
Although no one knows what this will mean for exporters, it is important to look forward and keep your supply chains moving. No matter the outcome, there are three measures supply chains should take now to cushion the potential impact.
Form a Plan B
Were you blindsided by the Brexit outcome? It was a surprise to many companies, which is why so few have a Plan B. But it is important to think ahead and develop a backup supply chain plan that does not use the United Kingdom as an entry point to Europe, because the U.K. may apply new import policies.
There is a chance your company won’t need to implement this emergency plan. However, if you wait until the outcome is announced before forming it, the process will be much more stressful. The earlier a plan is created, the smoother the transition if you need to use it.
Analyze Your Free Trade Agreements
Look at your supply chains to determine whether your company uses any free trade agreements (FTAs) that involve the United Kingdom. With 22 FTAs between the United Kingdom and individual countries, and five multilateral FTAs involving Britain, there are at least 52 countries that could be affected. All of these FTAs will have to be renegotiated, and you need to be prepared to research alternatives.
Monitor Your Supply Chain
Your company should continually monitor and remodel its supply chains based on all the changes that could happen between the time the clock starts on Britain’s two-year withdrawal and the end state.
Don’t get too attached to any plans you create, because conditions will change during this time. It is important to be flexible and stay current on the latest Brexit news so you can update all strategies accordingly.
Preparing your company for Brexit’s impact is a complicated and lengthy process. There is no such thing as a quick transition period. You will have to constantly reevaluate and update all of your plans and tactics, based on the ever-changing news. It could take up to two years for Britain and the European Union to finalize their arrangement, which leaves much room for change during that time.
There are ways to alleviate this process. Working with a trade compliance consultant will simplify everything by helping you take an objective, holistic view of your supply chain, identify opportunities and mitigate threats. A consultant will make sure your plans and tactics are on the right track, and will help you better prepare.
It is possible you won’t need to make any changes as a result of the Brexit referendum. However, if anything does need to change quickly, the extra preparation will prove worthwhile.
Susan Pomerantz is senior director, GTM Governance and Compliance at Livingston International.