Procurement and the Brexit debate
Businesses in all industries and sectors are calling for greater clarity over the Brexit negotiations. Some see opportunity, while others see increased risk. If one headline offers focus, another washes it away.
It is reassuring, nonetheless, that many commentators are beginning to turn their attention to procurement and increasingly the need for specialist expertise to support procurement departments who find themselves facing massive changes.
In January, a study by think tank Bruegel found that British firm’s supply chains will suffer more from Brexit than those of European companies, as tariff increases apply.
In May, a new survey by CIPS found that 32% of UK businesses who use EU suppliers are looking for British replacements, with nearly half (46%) of European businesses expecting to reduce their use of UK suppliers.
Critically, perhaps 36% of UK businesses plan to respond to Brexit by beating down supplier prices. If price becomes the battle ground it creates a vicious cycle down the supply chain and ignores many of the other benefits that a proactive and strategic procurement function can provide. Safety, authenticity and sustainability must all remain priorities for procurement managers.
The fact that procurement impacts on economic growth and therefore ‘best value’ principals, contractual terms and regulations all play an important role is reflected upon in recent articles in Supply Management and Raconteur.
In the food industry, food safety standards were highlighted by Ian Wright, Director General of the Food & Drink Federation, as a key Brexit issue. Over the course of the last few years, the EU has sought to standardise the likes of biocidal products and it could be catastrophic if these new regulations and others start to unravel.
Just last month, food manufacturers wrote an open letter setting out its concerns over Brexit. "Our trading ties with the EU are deeply interwoven, as is the regulatory framework. Abrupt change would have enormous consequences for our industry, its employees and for the choice and availability of food in this country," the letter said.
The received wisdom is to get ahead of any disruption. Speak to the procurement experts and work collaboratively. Here’s the CIPS’s Health Check and a good place to start.