JUNE 2019 OPINION
Operating at
full capacity
With a Brexit extension until Halloween, will the extra time reduce the
risks, or merely extend the period of uncertainty for manufacturers?
BY STEVE PURVIS, OPERATIONS DIRECTOR, BIS HENDERSON SPACE
As the deadline on Brexit moves
back to Halloween, attention turns
to reassessing the balance of risk
to supply chains – the levels of
inventory needed to secure supply, the costs
of extending contracts, and the potential
horrors of trying to find warehouse space.
Many have already committed to plans on
holding more inventory, while others have
held back. But have the risks receded or has
the period of uncertainty just been extended?
According to a survey conducted by UKWA
in January, 85% of members surveyed had
received Brexit-related inquiries, with about
75% being unable to take on more business
from new customers. Storage costs were
said to have soared by up to 25% over the
preceding three months.
So, have those who moved quickly to secure
storage contracts ahead of the original 29
March Brexit date lost out, or were they wise
to secure space early?
There is plenty to suggest that the winners
are those who started thinking about their
plans for Brexit early. They had the pick of
locations and were able to consider how to
use those facilities to full commercial effect.
By committing to a plan in advance of 29
March, they may have had some additional
costs on storage and inventory to consider,
however, they have been able to secure
their supply chains and provide tangible
reassurances to their customers on future
service performance.
These businesses now face a further
challenge. With the deadline on Brexit shifting
to the autumn, the period of uncertainty
over the shape of trading arrangements has
lengthened and many of the businesses that
entered into a 12-month contract in March
to cover any transitional disruptions must
now weigh-up whether or not to extend their
contracts by a further six months or longer.
Those organisations that held back on
committing to Brexit plans might, to some
degree, feel vindicated by their decision and
may be counting some interim cost savings.
However, as the new deadline approaches,
things could become a little scary; particularly
as the new exit date coincides with seasonal
events such as Black Friday and the ramp-up
to Christmas.
Many businesses will consider the risks as
just too high. But how easy will it be to find
additional warehouse space at this point in
the protracted Brexit process? Is there even
still space available?
Businesses can turn to third-party logistics
providers or agents to find extra warehouse
space when it’s needed. However, at this stage
in the game, these avenues have been well
explored and the obvious sites have either
been taken or are priced at premium rates.
Options may be running out for those
companies that failed to plan ahead. However,
there is an alternative strategy that can be
employed, and there are further prime sites
available for those that know where to look.
Many businesses across the country have
underutilised warehouse capacity and a
great many are searching for ways to put
those resources to work. The opportunity for
collaboration is far and wide. Many warehouse
users have excellent facilities, proven IT, and a
highly motivated workforce with a low ratio of
full-time staff to agency operatives.
For some more forward-thinking
organisations, flexible storage is part of a
bigger plan, beyond the immediate concerns
of Brexit. There are businesses that are
winning out by taking a strategic approach to
utilising flexible storage space on a planned,
on-going and co-ordinated basis, creating
a continuous dynamic buffer that flexes
with the business. Most organisations tend
to look to a broker to find more space as
a contingency, or when things go wrong.
However, enlightened businesses are factoring
in the use of a specialist service provider to
their supply chain models, analysing and
then segmenting steady inventory from
unpredictable, higher risk stock.
Rather than maintaining a steady state
solution on 95% of peak inventory, with 5%
held in flexible storage, forward-thinking
businesses are adjusting those levels by a
few percentage points to make viable a more
flexible, lower risk solution where short-term
storage can be deployed when and where it
is needed.
By thinking smartly, businesses can
confidently prepare for an autumn Brexit with
a more agile warehousing provision, free of
the thought of any supply chain nightmares
before Christmas.
Have you found a bold solution to finding warehouse capacity in the run-up to Brexit?
We want to hear from you. Email: chris.beck@markallengroup.com
www.manufacturingmanagement.co.uk 11
romaset /stock.adobe.com
Options may be running
out for those companies
that failed to plan ahead”
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