Preparing the supply chain for brexit

There's no doubt that Brexit will disrupt businesses, bringing both uncertainties and opportunities. As strategic supply chain risk expert Professor Omera Khan tells us - organisations need to transform their supply chain now in order to prepare.

With both business transformation and Brexit, there are three important stages in the journey to implement real change: mapping out a vision, identifying the people and capabilities required, and planning and designing the transformation. Each of these phases calls for time and investment to affect the best possible outcome.

Transforming the supply chain today, not tomorrow

It is imperative for businesses to transform their supply chain today, investing in people, processes and competencies and in training and supporting these initiatives if they are to prepare for the uncertainty that lurks in the not too distant future.

Supply chain resilience and adaptability to a changing world are as important as ever. The need to embrace uncertainty and to develop dynamic systems that are capable of adjusting quickly to volatility and turbulence arising from geopolitical, technology advancements and changes in consumer behaviours require us to rethink the design or shape of our supply chains.

The likelihood of more local-to-local sourcing or transport options, new trade routes or indeed barriers and the added costs and risks as a consequence of these changes, must be factored in when creating the vision.

Resilience and agility have been advocated for some time as a way of dealing with unknown or difficult to detect risks, such as natural disasters, cyber risks or the potential disruptions caused by the current trade wars around the world. Agility implies flexibility and we have witnessed recently that even well-oiled supply chains (mind the pun) are at risk. The stockouts at KFC and the recent closures across the UK retail industry are just some examples of an uncertain and rapidly changing business climate. It can be argued that the long-term impacts of Brexit on our supply chains are also unknown. But we know for sure that it will be a different operating environment to today.

Those companies that start to plan and invest in a business transformation today will be better prepared for the unknowns and challenges they may face post March 2019 when we depart from the EU. You could argue that one of the biggest threats is ignoring the issue and not recognising that change is inevitable.

On the upside!

Brexit could be seen as a ‘shake up’ or ‘wake up’ for the industry. A catalyst for change, requiring businesses to transform and plan for resilience and greater flexibility. The companies that do will have a better chance of adapting when the UK is formally out of the EU.

Greater collaboration is required within the industry to support the network to thrive. With the prospect of more local sourcing and trading, we may see the emergence of business clusters operating as an ‘almost’ vertically integrated enterprise. Just like the textile manufacturing verticals in the 70’s and 80’s.

The new business clusters would link businesses, training and a wide spectrum of entities operating in the chain, thus creating new jobs and competencies that are better and closely aligned to actual business needs.

But the question is can this vision become a reality? Are businesses prepared to disrupt and transform the status quo? We currently have a skills shortage in logistics and supply chains, yet we have thousands of graduates in this field. Is it time that we re-train the trainers? Tomorrow’s leaders will need to have skills and capabilities in areas that we don’t know yet. Is it time that we implement the same dynamism in our teaching and training, creating adaptable and flexible people that are optimal in an uncertain environment?

These are challenging but exciting times. There is no doubt that Brexit will disrupt, and it will create uncertainty as well as opportunity. Businesses must use this time wisely to ‘shake up’ their supply chains and transform their practices or the areas where greater resilience, flexibility and agility will help them adapt to the new scenarios of tomorrow.

To find out more about Omera's work within supply chain, please visit her website here.

In our Supply Chain Risk Survey 2018 we explored the biggest challenges for the supply chain function, how organisations are dealing with current risk factors, and how much of a role transformation is playing within the function. To download your copy of the report, click the link below.