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Brexit and the Global Distribution Landscape

The fears of how the global distribution landscape would change following Brexit were founded on the uncertainty that the referendum created. According to the Washington Post, Brexit would create a break among its trade-dependent partners, including Ireland. Without a successor agreement in place, financial costs could lead to supply chain meltdown and even threaten the state of the EU, not to mention omnichannel supply chains. In some cases, “companies dependent on British trade secure state-backed bridging loans, pivot to new products and markets, and smarten up on accounting skills before new customs barriers and tariffs hit.” To avoid complete disruption to products imported from or exported to the UK, supply chain leaders need to understand a few things about the break and what it means for the global supply chain.  

What’s the Risk of Brexit in the Global Distribution Landscape? 

Brexit was and remains a major risk to the global supply chain, but now, Brexit’s pre-existing disruptions will be put to an even bigger challenge in the wake of the coronavirus. As reported by Natasha Bernal of Wired

“The supply chain is resilient and capable of coping with demand,” says Andrew Potter, a professor at the University of Cardiff who specializes in logistics and transport. “Where the problem will come is if other people are infected and there will be fewer people going in [to work]. If you start to have a situation where you have to quarantine distribution centers for a longer period of time or there is a drop-off of the workforce, that’s where you’re going to see much more issues in the supplies coming through.” 

Since Brexit’s impact is still in infancy, the UK supply chains lacked much of the preparedness activities needed to handle the massive swell in consumer demand amid panic buying, but there might be an opportunity to learn something from this event. Britain could be faced with added tariffs and surcharges to meet basic demand regardless of whether those products have already become part of the list of in-demand items in response to the coronavirus. 

Potential Opportunities to Drive Higher Profitability Despite Brexit 

Supply chain leaders can secure profitability and supply chain stability despite Brexit, but the coronavirus adds a new level of uncertainty. As customers have grown to push for more products and put an immense burden on the supply chain, the whole system sits on the cusp of collapse. Months of Brexit preparation among UK-consorting businesses helped to build up supplies and warehoused goods in advance of the perceived disruptions. With the coronavirus rapidly spreading, those supplies will undoubtedly become central to the global response. It might seem odd, but the measures undertaken to shore up supply chains around Brexit may have a slight protective effect against the coronavirus and help improve the global disruption landscape. 

How to Safeguard Your Supply Chain From Brexit and Other Risks 

The writing is on the wall for the supply chains of the UK. Brexit is here, and the coronavirus is continuing to plague the planet. Instead of throwing in the towel, supply chain leaders need to take drastic steps, including: 

  • Reassure the workforce, if not increasing it temporarily, to fulfill more orders.  
  • Improve operational efficiency through AI and machine learning.  
  • Avoid unnecessary software changes during the tumultuous period.  
  • Start evaluation of processes that prove inefficient to handle the changes caused by Brexit and the coronavirus. 
  • Start thinking about how to better improve home delivery. 

The last step is the most important, as noted by Bernal: 

“It [supply] will eventually run out. In most cases, it won’t run out this week or next. You’re probably looking into a situation in April. We could end up with this kind of perfect storm where just as inventory starts to run low, people stop venturing out to buy things. And therefore, your whole world becomes a home delivery model.” 

Brexit and the Global Distribution Landscape Will Affect Your Supply Chain Ability to Succeed 

There was a time when Brexit seemed like the gravest threat to the global supply chain. However, the coronavirus has fueled a resurgence in the global supply chain and fears of the proverbial supply chain apocalypse. With that in mind, supply chain leaders that take extraordinary steps to secure more capacity, avoid out-of-stocks, and embrace digital transformation during the uncertainty have an opportunity to come out as winners down the line. Learn more about the ways your organization can reduce the impact of Brexit, the coronavirus, and any other supply chain disruption event by contacting Veridian online today. 

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