More than four years in the making, the Brexit agreement has largely been greeted with relief by UK supply chain leaders. Yet, while costly tariffs have been avoided, the devil is in the detail.
Two months into the new Trade and Co-operation Agreement (TCA), and it’s quickly become clear that Britain’s formal departure from the EU single market and customs union means that businesses face a wave of additional paperwork, new bureaucracy and checks at ports. In fact, HM Revenue & Customs estimates that post-Brexit arrangements will add £7bn of bureaucracy to the cost of doing business with the EU.
The good news is that companies exporting goods from the UK to the EU have been given a year to produce the supporting paperwork necessary to be eligible for zero-tariff access. As a result, 2021 will be a pivotal point for
UK manufacturers as they take stock and assess their organisational resilience to ensure they are prepared for not only the ‘new normal’ after the pandemic, but also a post-Brexit landscape with all the paperwork and bureaucracy that entails.
So, how can manufacturers set themselves up for success to trade effectively and remain resilient in a post-Brexit world?
Remove friction with digital ecosystems
One of the major impacts of increased regulation and paperwork can be seen at the borders. New customs and export documentation led to huge delays even before the Brexit deal was finalised. These delays are forcing many companies to re-engineer their supply chains.
Many manufacturers, particularly in the automobile and aerospace sectors, relied on well-oiled, yet complex and interconnected supply chains. These snaked across Europe to move materials, components and finished systems between locations and suppliers. Then COVID-19 and Brexit hit these highly tuned ‘’just in time’ operations hard. The suspension of production at Honda’s Swindon plant shows what can happen when ‘just in time’ supply chains unravel.
In many cases, ‘just in time’ is being supplemented by ‘just in case’. Companies are localising production and suppliers as they re-design their supply chains for resilience – building on the trends which arose during the pandemic. As a result, we have seen a rush to build warehousing capacity on both sides of the English Channel. Most worryingly of all, after years of driving the cost of inventory from the supply chain, some manufacturers appear to be going back to creating buffers at different points in the chain. This may seem like sensible contingency planning, but it is not a long-term solution.
To manage disruption effectively, both now and in future, companies must drive inefficiency and delays from their own supply chain operations. Manufacturers have little choice but to become data-driven to build the resilience, agility, and scalability they need to react rapidly and remove inefficiencies. In short, deploying highly flexible and agile digital ecosystems that let them handle disruption is key. Importantly, documentation must flow digitally through each stage of the supply chain journey. Manufacturers can implement cloud-based enterprise integration platforms to connect with their suppliers, logistics carriers, customers and customs authorities seamlessly and securely, removing friction from the flow of information and physical assets while remaining compliant with new regulation.
Complex supply chains require absolute visibility
In 2021, the need for up-to-date and accurate supply chain documentation has never been greater. To meet fast-approaching deadlines, organisations need the capabilities to quickly consolidate overlapping and disjointed systems for a single point of visibility and control of all documentation.
Iain Wright, ICAEW’s Director for Business and Industrial Strategy, says: “Absolute clarity and transparency as to how your supply chain works and where it derives from will now be essential. Greater awareness of the supply chain will be an even bigger driver of business success, because failure to understand where you are getting components from will trigger tariffs and will undoubtedly make your product uncompetitive.”
By transitioning to a single cloud platform that connects to all trading partners, seamlessly exchanges information, and directly integrates third-party data sources, manufacturers can achieve the comprehensive visibility required to manage disruption, remain resilient and meet new documentation requirements. Complete visibility – for everything from real-time views of shipment disruptions to supplier delay updates – will also enable them to speed up and improve decision-making processes to adapt further as needed in future.
Re-think the supply chain
Looking beyond the TCA deadlines, supply chain leaders need to establish the necessary digital backbone for long-term business resiliency post-COVID and post-Brexit. By leveraging cloud-based information management platforms, manufacturers can achieve a very high degree of visibility and flexibility within their supply chains – setting them up to trade effectively and remain resilient in a post-Brexit world.
In truth, complex trading requirements like the rules of origin and specific tax declarations are here to stay. It’s up to manufacturers to re-think their supply chains and operations to comply with them effectively and profitably.
By Thomas Leeson, senior industry marketing strategist, manufacturing sector, OpenText
images supplied by OpenText.