Brexit. It’s a stressful topic for many, but it is something that I can’t shy away from discussing. As an ERP consultant, I can already see the impact it is having on firms of all sizes. Some larger firms are choosing to relocate overseas in preparation for the worst, but this is not usually an option for many smaller firms.
In this post, we will take a closer look at the main things businesses need to think about when it comes to Brexit, and how you can minimise the impact it may have on your business.
#1 Drop in the number of employees available
Many businesses today rely on European workers and they have already started to see a drop in the numbers of workers available since the UK voted to leave the EU back in 2016. This has led to more progressive companies increasing investment in automation as employees become scarcer and more costly. The unexpected benefit of this investment could be an increase in productivity.
ERP systems will come into their own with the increase in investment in robotic workers, as this will create more data that will need to be shared between the machines and human employees. Capturing this sort of data from automated production lines as well will enable managers to have a more informed view of all activities being undertaken, allowing them to enhance the way their manufacturing processes flow and so enable them to have a more connected supply chain.
#2 Disruption of the Supply Chain
Recent research by the UK Border Force stated that up to 87% of cross-Channel freight could be stopped in the event of a no-deal Brexit, with at least three-quarters of trade between Dover and Calais grinding to a halt for up to six months (should the UK leave the EU without an agreement in place). This is bad news for UK manufacturers as it means that the supply of raw materials and components may be severely affected.
Many manufacturers who are already mindful of this happening, are starting to stockpile the items they need in case they come up against disruptions in their supply chain. This means many are changing to a ‘just-in-case’ JIC model from a ‘just-in-time JIT model. However, the downside of this is that it increases the risk of waste which may put extra strain on firms that are already feeling under pressure.
Again, this is where investment in ERP software will be useful as it can help firms to reduce non-value-adding activities, making their whole supply chain more efficient.
#3 The ‘Rules of Origin’ criteria
HM Revenue and Customs define the ‘Rules of Origin’ as “rules to establish the country of origin of imported and exported goods and to help identify those which qualify for lower or nil customs duty”.
At the moment, the EU doesn’t enforce rules of origin for trade within the EU, but if we exit the EU without a Withdrawal agreement then it is likely that any business which continues to export goods into the EU will have to prove the origin of every component of their product. This could be quite a complicated process if your product contains many different components all of which are manufactured in separate countries.
One way to ease this process is to start to use software which allows for full traceability and visibility, and that can handle the complex data that will be gathered as part of this.
As you know, Brexit is a subject in which there are no certainties as yet. We just don’t know what is going to happen and can only make informed guesses as to what might happen.
What we can say with certainty is that having a robust and up-to-date ERP system will set you in good stead to be able to maintain and even potentially increase your business performance – whatever happens.