How can I make sure my supply chain is ready for Brexit?
It is difficult to fully predict how Brexit will impact on supply chains. However, there are some basic actions you can take to reduce the potential risks.
- You should consider reviewing your supply chain. Mapping your supply chain is a useful tool for doing this. You should identify key suppliers and parts of your supply chain that are most likely to be impacted by Brexit. See Landing page icon title: Your Supply Chain for guidance on how to map your supply chain.
- You should consider the sources and drivers of risk in your supply chain related to Brexit. You will need to identify a number of categories of supply chain Brexit-related risks including delays, disruptions, IT systems-related changes, forecast, inventory and warehousing and procurement.
- You should formulate strategies for dealing with supply chain risks such as holding inventory, switching suppliers, or establishing longer-term contracts with current suppliers.
- You could then test for risks under different Brexit scenarios and identify risk reduction strategies including working with different suppliers or building in contingencies for any supply chain delays.
For detailed guidance on how to manage Brexit-related supply chain risk refer to the Risk topic.
If the UK exits the EU with no-deal and reverts to WTO terms, what does this mean for my supply chain?
Where the UK leaves the EU in a no-deal situation it would have to trade under World Trade Organisation (WTO) rules, and would no longer be party to agreements with the EU in a range of areas. This would have significant implications for your supply chain as WTO rules would mean customs checks, tariffs on goods and a regulatory barrier to trading with the EU in some areas. For example, on tariffs the UK government has published guidelines on how these will apply to goods entering the UK from mainland Europe. See link below for these guidelines:
Goods going into mainland Europe in a no-deal situation will be subject to the EU’s Common External Tariff. However, different arrangements will apply to trade between Northern Ireland and the Republic of Ireland. The details of these arrangements still have to be finalised.
The UK Government continuously publishes and updates guidance on how firms should prepare for a no-deal Brexit as shown in the link below:
Are there any administrative processes I can complete to reduce cross-border and customs difficulties associated with Brexit?
Delays at the borders between the UK and the EU are likely to be one of the most significant difficulties arising from a no-deal Brexit. Where the UK leaves the EU without a deal, you will have to follow different customs arrangements when dealing with businesses in the EU. There are a number of steps you can take to reduce the impact of potential delays:
- Register for a Economic operator registration and identification (EORI) number.
- You should also consider registering as an authorised economic operator (AEO), which is a trusted trader scheme.
- Apply for the transitional simplified procedure (TSP). HMRC have announced that they will automatically enrol VAT-registered firms who import from the EU into the TSP scheme. Firms not registered for VAT should apply for TSPs to make it easier to import goods from the EU.
For further guidance on these steps, refer to the the Logistics topic.
How can I minimise delays in my supply chain as a result of Brexit?
The potential of customs checks to cause delays at the border will depend on how any new policies are implemented in practice. As yet, there are no details on how enforcement might be executed in practice. Some questions you should answer include the following:
- How resilient is your supply chain to potential border delays?
- Do any contracts you have include penalties for late delivery?
You may want to discuss with your logistics providers whether you would require any new arrangements. You may need to increase your inventory and/or buy additional storage space.
How will rules of origin impact my supply chain in the event of a no-deal Brexit?
Where the UK leaves the EU without a deal, it is likely that any firm exporting goods into the EU will need to comply with rules of origin and prove the origin of the various components that make up their end-products. This can be particularly complex if your components are manufactured in more than one country. Refer to useful links below for further guidance on rules of origin and Brexit.
I am a UK company only. I do not trade with the EU and I do not have suppliers in the EU. Is Brexit likely to impact my firm?
Although you do not have suppliers in the EU, your suppliers might have suppliers in the EU. In this case, there could be disruptions to supply from the supply chain of your suppliers in the case of a no-deal Brexit. Therefore, you should engage closely with your suppliers to understand the level of their exposure to Brexit-related impacts in their supply chains. Another related issue is the composition of your workforce and that of your suppliers. Most firms have some employees who are originally from the EU, and their settled status may be impacted by Brexit.
Will my firm still have to meet EU safety standards for products post-Brexit?
To sell products in the EU, you have to meet safety standards set out in EU regulations. The CE mark is used on many products to show that they meet these standards. However, in the event of a no deal Brexit, products tested for conformity with EU standards by a UK body may not be automatically recognised by the EU and therefore may have to be re-tested in the EU.
Are there any skills my firm should acquire in the event of a no-deal Brexit, particularly related to customs processes and compliance requirements on UK-EU trade?
You should consider whether you have any current staff knowledgeable in customs and exporting procedures. It might be worthwhile training a member of staff in this area. You could also consider recruiting people with skills in this area. However, Brexit has placed increased demand on people with expertise in customs, which may make recruitment difficult.
Government bodies have been providing some training in this area. HMRC announced training and IT support for customs. The purpose of the training is to give traders an understanding of how to compile the information needed for simple import and export customs declaration entries. HM Treasury and HMRC announced a one-off investment to support broker training and increased automation. As part of this investment, funding has been set aside for grants to help meet the upfront costs of employee training and IT improvements. Below is a useful link in this area.
How will a Brexit no-deal impact cash flow in the management of my supply chain?
If your firm has a tight cash flow situation you will need to consider the implications of having products delayed or stuck in transit for your working capital. Where you have a strong working capital position, you will be able to better withstand a no-deal Brexit and the challenges it brings about. There are a number of ways to free up working capital including renegotiating payment terms, stringent credit control and agreeing improved finance terms with banks. You should also check the financial health of your suppliers.
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