Brexit and how British businesses need strengthen the supply chain

Complex pan-European supply chains are commonplace for many UK Original Equipment Manufacturers (OEMs).

Prior to Brexit manufacturers made good use of the free and rapid movement of goods (components and finished goods) and cross border trade with the EU. However, Brexit has seen disruption to UK OEMs and a rapid decrease in the efficiency and cost effectiveness of their current operations and supply chain.

With a high number of SME (Small and Medium Enterprises) businesses in the supply chain, the implications could be significant if the supplier base is not able to quickly adapt to new processes and trading regimes to maintain parts supply, production output (delivery and quality) along with price. The introduction of tariffs, customs duties and other barriers to trade are having a significant impact on suppliers and also for how manufacturers source materials and components.

Despite Brexit and the deadline to leave the EU being in process for many years, many companies are now facing disruption as they and/or their suppliers were not ready or were unaware of the new processes, protocols and regimes to move parts from the EU and into UK.

Knowing that changes were on the way, Brexit should have seen an overhaul of all supply chain processes and supply chain operations (including dealing with new customs processes, paperwork and compliance). However, seven months after the UK’s exit, many manufacturers are still trying to sort out processes to get their parts from suppliers or return parts to suppliers in the EU, which is having a negative impact on productivity, efficiency and ultimately profitability.

So what could have been done to aid manufacturers and support them into this new chapter?

Ideally with clearer information on what impact Brexit was going to have, businesses would have been more prepared. It would or is also a good opportunity to conduct a full review of supplier agreements, lead time offsets and enterprise systems to reflect all of the supply chain process changes required to ensure uninterrupted manufacture and operations, leading to no losses or disruption to customers.

Many companies are seeing delays as components and supplies get stuck at border control. In many cases incorrect or missing paperwork is the hold up and not necessarily the process, however delays are causing frustration and inefficiencies. Knowing this would have enabled businesses to ensure the right paperwork was completed and/or increased stock in the supply chain to manage any delays due to new processes and teething problems.

Additional data or reporting is also key to capture and assess whether enhancements are necessary particularly buffer stock or increased stock levels to cover increased lead times and to mitigate any uncertainty in supply.

So, in order to mitigate risk and reduce disruption, manufacturers need to act quickly and have the ability to see, adapt and learn during these changing times to get back to a position of stable supply and efficiency within UK factories and OEMs.

How can this be achieved?

We believe that it could take a number of weeks for a business to be able to get their systems and processes with their supply chain back on track and the flow of necessary materials or supplies to meet production demands.

To strengthen the position, it is important to review and understand the end-to-end process from supplier to point of use and to have visibility over the stock management, ideally through the ERP/MRP and scheduling process.

If the process is not clear or understood, a simple way to visualise the ‘current state’ is to create a detailed process or value stream map and then to evaluate any quick wins or ways to improve the flow, stock management or time to receive parts. Putting in additional checks for paperwork to reduce delays is also a simple but effective way to reduce rework.

As with any process evaluation there will be quick wins, medium and long term actions that can be considered to improve the status quo and improve QDC (Quality, Delivery & Cost) to regain or improve efficiencies within the end to end process and profitability of the business.

What is vital is to ensure that a short term ‘sticky plaster’ approach isn’t taken to the situation, and rather a more robust process should be introduced to ensure longevity to the business.

Consultants with firm knowledge of the industry, experience of the latest issues affecting businesses post-Brexit can help create a bridge between the current state and future state, and improve these vital supply chain links that we have become so reliant on to keep our businesses moving.

If your business is struggling with the new implications of Brexit and you need support with your supply chain contact Develop Consulting for more information on how we can assist. Cal 0247 736 0164 or email info@develop-consulting.co.uk