Hard Brexit or last-minute deal

Challenges companies should expect to face

The 29th of March, when the British are expected to leave the European internal market, is approaching- according to current status, without an agreement. Experts agree that a tough exit would be associated with numerous problems. In addition, there is a great deal of uncertainty: thousands of companies are wondering what actually happens next and nobody knows for sure. One thing is clear, it will be difficult to find a solution that will prevent the separation from causing serious damage to supply chains. Because with every week, a chaos-brexit becomes more likely and withdrawal without clear rules how Great Britain and the EU will deal with each other in future can be disastrous.

A withdrawal without a trade agreement would have serious consequences for the following business areas:

1. Shipping and logistics: When Great Britain leaves the internal market and the customs union, border controls, on a large scale, will be unavoidable. For many companies, the material flow of components and raw materials is precisely timed. There is always enough scheduled to ensure that there is inventory on hand – but never too much so that storage costs get out of hand. Additional border controls would cause many supply chain and production processes to come to a standstill.

2. Recognition of certificates, product approvals and safety certifications: After Brexit, all British manufacturers will have to put their testing processes under EU law. If the manufacturer of a part is not certified, then it may no longer be used – which in turn endangers the entire supply chain. This also applies, for example, to chemical substances that have been registered in the United Kingdom for distribution in the EU. These would no longer be allowed to be sold in the EU without being authorized twice – once for the British market and once for the European market.

3. Supply chain transparency: Many companies often lack visibility into their supply chain and important information, such as which precursors or components of their products come from Great Britain. However, if only one component fails for production, the entire supply chain could be endangered. Therefore many companies have begun to stockpile supplier parts.

However, not only cross-border developments, such as Brexit, can cause issues and challenges within your organization. Cyber-attacks, which are on the rise in most countries, environmental pollution, weather and socio-economic issues can also be responsible for conflicts within your supply chain. Companies that are able to be proactive when it comes to problems within their supply chain have a major advantage.

Elemica Risk Management offers a powerful solution for obtaining real-time information about incidents that can affect the supply chain. Elemica Risk Management is a visibility application that includes threat detection, qualification, early warning and network assessment. It correlates risk incidents with a customer’s network assets, orders and deliveries to identify and understand the impact of incidents. It brings a holistic approach to risk mitigation to improve the safety and security of the supply chain while improving customer satisfaction and bottom-line profits.