European Union Leaders Agree Brexit Deal – So What Are Your Supply Chain Risks?

European Union Leaders Agree Brexit Deal - So What Are Your Supply Chain Risks?

As stated by Donald Tusk, President of the European Council, the UK’s withdrawal agreement from the European Union has been approved, now the question is does Brexit represent a supply chain risk to be mitigated, or a supply chain opportunity to be exploited?

UK’s Withdrawal Agreement from the European Union

As reported by the BBC, the UK’s withdrawal agreement from the European Union has been approved by EU leaders, its chief official Donald Tusk has announced.

The 27 leaders gave it their backing after less than an hour’s discussion in Brussels.

Mr. Tusk signaled on Saturday that the deal would be approved after Spain withdrew last-minute concerns over Gibraltar.

The deal needs to be approved by the UK Parliament, with many MPs opposed.

Mr. Tusk, the president of the European Council, broke the news on Twitter.

Hard Lessons from a Hard Brexit Landing

Yossi Sheffi from the MIT Center for Transportation & Logistics wrote; the United Kingdom’s tortuous withdrawal from the European Union appears to be headed for a hard landing.

Instead of leaving the EU in an orderly fashion, the country could be unceremoniously dumped outside the door.

The experience is delivering some harsh lessons for the UK – and for other countries including the United States.

Brexit’s supply chains lessons are especially painful.

Chief among them is that a Brexit-scale disruption can shatter product delivery schedules that are finely attuned to lean manufacturing principles. If the divorce is messy and acrimonious, the shock waves will reverberate for some time and leave crippled or destroyed companies in their wake.

As the Wall Street Journal reported recently, a survey of 1,310 supply chain managers in Europe carried out by the Chartered Institute of Procurement & Supply finds that one in 10 company executives in the UK fear that their enterprises could go bankrupt if Brexit causes Customs delays of just 10 to 30 minutes.

If delays of one to three hours or 12 to 24 hours become the norm, 14% and 15% respectively of the UK businesses surveyed expect to go under.

These findings provide a stark reminder of just how vulnerable international supply chains are to interruptions to the free flow of goods.

The survey responses also highlight the importance of risk management in supply chains – and how political uncertainty can paralyze companies.

Sheffi describes in his blog post, How to Prepare for a Brexit-Style Disruption, there are a number of risk mitigation measures companies can put in place to prepare for this type of crisis. And the survey respondents indicate that companies are implementing some measures.

For example, 23% of companies plan to stockpile goods, and many enterprises are looking to build more flexibility into supply contracts with European customers.

But absent a political agreement or effective exit plan, companies are understandably cautious about committing too much money to expensive actions such as paying for additional product storage space.

Moreover, the decision is becoming more difficult by the day as the political impasse continues and related costs increase. Hubris also is playing a part in preventing the Brits from preparing properly for a disorderly exit.Read more here

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