With an EU-UK trade deal secured, business owners can now get to work on ensuring supply chain continuity under the new regulations. Businesses importing from or exporting to the EU will be spared from new tariffs, but additional safety checks and customs declarations will be introduced at borders. By carefully auditing your supply chain, you can ensure compliance with new procedures and the continued smooth and cost-efficient management of your business.
Assess Your Supply Chain’s Brexit Preparedness
“The Brexit deal is excellent news as trade can carry on as before albeit with additional documentation, most of which can be done electronically – the good news is the technology to transact has never been more accessible.” says Martin Palmer, supply chain consultant at Logistics UK.
EU-based businesses will need new paperwork to import goods from the UK. Palmer says most will have these ready, but he recommends businesses double check and confirm this with any import or export partners. Although the Brexit deal means most goods can be imported or exported as before, “some specific areas such as plants or agricultural products may have additional requirements,” says Palmer “what remains to be seen is how legislation will work where products deviate from EU rules in the future.”
Changes to Rules of Origin could impact non-agrifood producers in the UK. According to UK Government guidance, goods will have originating status where they’re "wholly obtained" or "sufficiently worked or processed" in a country; “each agreement will set out the rules that goods must comply with to be considered substantially worked or processed. This will include: the product classification heading or chapter number, a detailed description of the goods, a description of how non-originating materials must be worked or processed to get originating status.”
The UK has also renegotiated provisions of EU Free Trade Agreements or expanded negotiations with some non-EU partners including Japan, Australia, the US, and New Zealand, so if your supply chain runs outside the EU, it’s worth continuing to check in with government guidance on any changes to trade that could affect your business.
Avoid Extra Costs by Reviewing Packaging & Transport Logistics
Prior to Brexit, online menswear brand, Luca Faloni, had imported goods from Italy into its UK warehouse, which serviced all orders. But due to the complexity created by Brexit, Founder Luca Faloni says “some courier companies have increased pricing of their services.”
He took precautions to reduce risk of extra costs or border delays by opening a warehouse in North Italy to service international orders: “We now have to run two warehouses,” he says. “Our UK courier company was an important supplier of logistic services, but now we will move 70% of that spend to their Italy-based operation. We cannot do much about it, there will be equal added costs for all players in our industry, and any price increases will be passed onto the customer.”
New regulations could increase the cost of packaging and shipping goods from the UK to the EU: from the 31st of January 2021, all wooden pallets, crates and boxes used to export to the EU (except for Ireland) will need to be certified to comply with ISPM15 guidelines.
This certification declares wooden pallets have been heat-treated and are free from pests and fungus. Until Brexit, any pallets used in the shipping of goods to countries within the EU were exempt from this requirement. Dale Patterson, Exporta's managing director, says SMEs could “use shipping material such as plastic pallets which are not subject to the rigorous ISPM15 checks to reduce the time their goods spend in customs and avoid extra costs.”
Audit & Stress-test Your Supply Chain
You can create a supply chain map to audit and stress-test your supply chain by simulating the potential impact of your most likely risk scenarios. Can you adapt your supply chain to remove risks or minimise their impact? Your key risk scenarios should form the basis for your supply chain preparedness and demonstrate where to hedge against risk. “You will need to map and understand the processes and costs involved,” says Patterson, “gather data of issues, and then analyse this to look for strengths, weaknesses, opportunities, and threats.”
Build strong relationships with your contractors and suppliers and communicate clearly to understand their supply chain preparedness. Below are a few important questions to ask your suppliers:
- How much stock do they have available?
- How quickly can they supply stock with the new regulations in place?
- Do they have a Plan B should traditional shipping methods become bogged down with a time lag?
Confidence in stock levels allows for efficient planning, and regular supply chain reviews ensure risks can be planned and provisioned for.
What’s Your Supply Chain Management Plan B?
Once you’ve established your most likely risk scenarios, compare what the extra costs might be, if they occur, against the cost of adjusting your supply chain. This could help you to see where contingency planning or diversifying your supply chain would make sense for your business; “mitigating the impact of disruption on your supply chains could require a new approach and new forms of collaboration to increase your overall resilience,” says Patterson.
Faloni says that although he doesn’t foresee major supply chain risks to his business, he has robust contingency plans in place to avoid potential delays on importing goods in the early post-Brexit transition phase by shipping goods by air.
“One thing 2020 taught us is to always have a Plan B. Prepare for every scenario and put contingency plans in place to ensure your stock keeps flowing. That might mean diversifying your suppliers and having more than one back-up,” says Patterson.
Efficient use of resources and sound contingency planning will keep your shelves stocked and your business competitive. By regularly auditing your supply chain, you can ensure a dynamic response and speed of implementation to keep one step ahead of the tightly integrated networks of today.