Five years of turmoil after no-deal Brexit
The consultancy predicted it could take UK businesses this long to re-engineer and optimise their supply chains, in the event of the UK leaving the EU without a deal in March next year.
Scala urged companies to re-evaluate their requirements by undertaking a full assessment of their supply chain strategies, considering everything from sourcing, manufacturing, transportation, warehousing and inventory through to customer service.
Managing director John Perry said UK businesses had become increasingly reliant on sourcing from the EU, but a no-deal Brexit would mean this would drastically change.
“Companies will need to determine the impact of new trading laws and tariffs, as well as the potential costs and duration of new supply chain routes,” said Perry.
‘Alternative options considered’
“Borders will be more complicated, so supplier relationships will need to be revaluated, and alternative options considered – such as stockpiling in UK warehousing.”
While there have been reports of some food and drink businesses stockpiling food to weather the storm, grocery think-tank IGD suggested it would only offer a short-term cushion against the full impact of Brexit.
The UK Warehousing Association was also sceptical about the practicalities of stockpiling goods, citing a critical lack of fit-for-purpose warehousing close to large population areas.
However, whatever actions food and drink manufacturers did decide to take, Perry urged they need to be proactive and start preparing now.
“The ramifications of Brexit are major, and it is not a quick process for companies to re-optimise their supply chains,” he added.
‘Re-assessed and optimised’
“Some companies may just tweak elements or try and make-do for short term survival, but for long term competitiveness the supply chain needs to be properly re-assessed and optimised.”
The Food and Drink Federation’s chief executive Ian Wright echoed concerns over the short timeframe in which food and drink firms have to potential rethink their entire supply chain and business strategy.
Commenting on the latest round of Brexit technical notices published by the Government, Wright said the “administrative hurdles further threaten the success of UK export sales to the EU, our largest export market”.
Meanwhile, time is running out to put in place contingency plans to ensure the smooth flow of materials post-Brexit, food and drink companies are being warned.
