FEBRUARY 2019 LOGISTICS
adverse impact on the supply chain,” he says. “The
only thing that’s in question is to what extent that
will be. In a no-deal situation the impact will be
massive. We’d be in control of our borders – and
therefore be expected to monitor everything that
comes in and out. That will lead to major delays
that many industries cannot cope with, given the
just-in-time approach.”
Stockpiling: a sign of panic?
Many companies have already started taking stock
out of the supply chain to keep them agile and
responsive, storing it until they know the outcome
of the deal. Both Perry and Owens agree that this
isn’t an ideal approach, but that manufacturers’
hands are tied by – again – a lack of information.
“A lot has been said about the amount of
stockpiling that is going on, and this is increasing
rapidly,” says Perry. “It’s a short-term solution,
and a poor one, but it’s the only thing that most
companies can safely do at the moment. It’s tying
capital up and means product is being left in
storage, which in a sector such as food and drink,
will lead to a lot of waste once product reaches
the end of its shelf-life. There are also issues over
the cost and capacity of warehousing, which need
to be considered. Warehouse space is already at a
premium, leading to some of our clients asking us
to source supplementary storage space as a matter
of urgency.”
How, then, should manufacturers be preparing
for the Brexit outcomes? Unfortunately, there’s
no defi nitive answer. Indeed, says Owens, “if I
could give you an answer to that question, I’d be
a very wealthy man!” However, he adds, one thing
is for certain: “The whole withdrawal hasn’t been
thought out properly, and all industries – not just
manufacturing – are in limbo, unable to prepare
properly until they know what’s going to happen.”
Marcos Hart, group transformation and risk
director at logistics supplier, Wincanton, says
that any changes will hit some industry sectors
harder than others, and that there’s no ‘one size
fi ts all’ approach. “Just-in-time manufacturing,
pharmaceuticals, perishable goods and fashion
retailers will be among the most heavily aff ected
as they adjust to the new world,” he says. “Whilst
those business models will inevitably adapt, as
their understanding of the new supply chain
dynamic grows, they will need to minimise what is
likely to be inevitable disruption. Full mitigation
of that disruption will be a challenge.
“Whilst it’s likely that high-priority
pharmaceuticals will be expedited, all other goods
will be addressed on a fi rst-come, fi rst-served
basis and this will create uncertainty – some of
which can be mitigated by stockpiling. We have
seen a change in buying behaviours over the past
seven months with existing and new customers
seeking short term space and building their
inventories, even to the point of reserving and
pre-buying warehouse and transportation space
as they fi nalise their Brexit planning.”
Another solution to any potential tariff s is to
apply for Authorised Economic
Operator (AEO) status. This
provides any logistics supplier
who moves goods across
borders with priority status with
this accreditation, and would
theoretically help companies
‘jump the queue’ post-Brexit.
However, says Hart, “in reality,
the technology is not in place
to enable this and the lorry will
enter the country, regardless of
whether it has AEO status or
not, based upon its place in the
queue. This is likely to create
issues for driver accompanied
transport entering the country
as the delays in moving in and
out of the UK will drive their
costs up signifi cantly.”
A new skills gap
One thing all manufacturers –
and, indeed, any company that
exports to Europe – can do to
prepare, however, is look at the
skills gap, but not in the most
obvious sense of that phrase.
There are nearly 150,000 UK
fi rms that export only to the EU,
all of which will have enjoyed
over 40 years of tariff -free
trade. If this were to change,
and companies were required
to fi ll in paperwork under WTO
rules, then the upheaval would
inevitably be massive.
“There is a real skills
shortage in terms of dealing
with trade tariff s,” says SCALA’s
Perry. “It’s not just a question
of a few days of training to get
people up to speed: it’ll take
months, if not years, to get
the expertise to do it properly.
Companies are thinking about
it, and many may have made
some small steps into training,
but most will be holding off
doing anything major because
until they know what’s going
on, training your staff up is
a huge investment to make
for something that you can’t
currently predict.”
Today’s supply chains are
complex, multi-national and
fi nely tuned. Brexit threatens to
change all this. In reality, only
time will tell what the outcome
of the negotiations will be, and
what impact that will have on
manufacturers. One thing is
certain, though: any changes will
take time to implement – likely
more time than we actually have.
As Perry concludes: “Once
we know what’s what, we
will need time to properly
implement all the changes.
The implications of Brexit on
the supply chain have not been
explored fully, in my opinion.
Discussions have only started
relatively recently, and for all
the government’s planning over
the past two years or so, we’ve
still not got a clear answer.
“One thing we defi nitely
don’t need is an all-guns-blazing,
‘let’s just get on with it’ attitude.
There’s always someone on
the TV who just wants it all
sorted right now, but that’s a
dangerous approach. We have
to get the best arrangements we
can, and to do that we need to
spend time working them out.
To do that, though, we need
more time.”
www.manufacturingmanagement.co.uk 33
Björn Braun 200% /stock.adobe.com
Just-in-time
supply chains
are at risk, warns
Wincanton’s
Marcos Hart
Don’t panic: the view
from the coalface
While many manufacturers are mired in
confusion and worry for the future, some are
looking ahead with confi dence and clarity.
One such company is Warwickshire-based
compressor manufacturer, Lontra. Steve
Lindsey, the company’s CEO and founder,
says that while a no-deal Brexit will have an
impact, there’s little point wallowing in misery.
“In such an uncertain environment, it’s
imperative that British manufacturers focus on
what is possible and where opportunities may
lie,” he says. “For Lontra, some of our biggest
commercial opportunities are outside of the
European Union, notably with the US and UAE
showing very strong appetite for our products.
With the pound consistently low against the
dollar and Euro, British manufacturers looking
at new export markets have a competitive edge.
“If we are to retain our position as a global
manufacturing nation, British manufacturers
must be prepared to think seriously about the
exporting opportunities outside of the European
market. At the same time, it’s important that
we keep supporting growing and innovative
companies so that they can become large
British businesses. Export deals are important
but arguably as important is having products
that the world wants to buy.”
/www.manufacturingmanagement.co.uk
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