Brexit Contingency Planning at eWorld – Or Lack of It

We attended the Edbury Daley workshop at eWorld Procurement and Supply last week. It was intended to provoke discussion about Brexit, business preparedness, and the changing demands on skills and supply chains. Edbury Daley is of course a specialist in global procurement technology recruitment, so it’s a very relevant subject for them. It was an interesting discussion, and quite revealing …

Andrew Daley, co-founder of the firm, hosted the very informal discussion. It has to be said that the audience comprised mostly representatives from the manufacturing sector. Maybe that’s unsurprising given the subject matter. The session turned out to be one of sharing ideas rather than discussing what ‘readiness’ should look like, with the feeling that most people had turned up to learn a few things, rather than impart their wisdom.

The aim was to find out the level of contingency planning in place, but first, we took a measure of the kinds of industries and roles in the room – as we said, majority procurement and category managers from manufacturing but with a few others like financial services and consultancy thrown in (the public sector was conspicuous by its absence – maybe they’ve got it all sewn up). Andrew asked for a show of hands of how many voted to leave the EU and how many to remain. It was a 79%/21% split in favour of stay. He then asked, which we thought quite brave, how many would now change their vote if they had the chance! Only one hand was raised ….

So then we went on to find out what the current major concerns are.

Their biggest concern, it would appear, is whether they will be able to deliver at the same level post-Brexit, thinking specifically about frictionless movement of people and goods, and regulatory alignment. There is a definite fear of the impact on the mobility of seasonal temporary labour, as you’d expect from those industries. As one (plastics) manufacturer stated – our biggest labour workforce are EU nationals, and on minimum wage. A lot have left already, rather than wait to be forced to leave. That’s 70% or our workforce! Will the UK replace these people? And what happens to EU contractors who signed their contracts before the referendum, but which expire at the end of 2019? - another asked. There was a real feeling of so much uncertainty.

One delegate from the bio-medical sector talked about the perceived impact on their industry, one which relies on top scientist talent, recruiting the vast majority from the EU. This is already suffering from unclear messaging, which makes for an unsettled atmosphere among potential employees. Another concern is imports from the EU in order for the scientists to carry out their work, and whether these will be held up at customs owing to inaccurate/incomplete/missing (take your pick) paperwork. That turned to concerns over the loss in funding for research, which amounts to 10s of millions, and how that funding will be replaced – what is promised and what actually is delivered are two different things – so we just have to wait and see, he said – how do you plan for that?

As well as those main concerns, there was a universal feeling of ‘limbo.’ Only  one delegate said they had begun any contingency planning. He  was from a well known chocolatier organisation, who said they’d been planning for different eventualities for some 18 months now. (But we’ll hear more about that in due course, as he has kindly offered to talk to us separately about that Brexit approach.)  The majority felt that planning is futile at the moment, and have a wait-and-see agenda. “How can you plan when you don’t know what you are planning for?” So there was a definite sense of unsettledness as a result of lack of information. As another said: “Some of the remedies will take longer to put in place than the lead times we’ve got anyway!”

Andrew then turned to the supply chain. What will the effect be? And, ultimately, will it be down to us, procurement, to sort it out?

As you’d expect, the main concern ultimately was around customers. We need to understand our supply chain’s and customers’ plans, everyone agreed. Where are your suppliers now? How will they be affected? And where will they be in the future? There is much to consider: customs approvals, working capital, how much stock you will hold, how you will handle VAT, etc. So it was food for thought, but one clear message came out – undertaking a proper risk assessment is paramount.

But the discussion came back round to talent – it is clearly a major worry.

For the international firms, getting the right skill sets is a big enough challenge without the added worry over whether they will be allowed to work in the UK. Andrew advised that in terms of procurement technology, there is a big pipeline of talent that could be affected, which could lead to a skills shortage. As more people are moving out of the UK, there could be major issues for the procurement supply chain, for example, multilingual skills might be at risk.

That raised another question - is the procurement and supply chain function ‘training’ their people to face Brexit? The room felt that it is not hard training that is needed, rather awareness building – and that applies to all functions.

But it was not all doom and gloom, to keep a balance, Andrew asked about the positives. And it was comforting to see that the majority agreed Brexit could mean an opportunity for growth (sector dependent of course) and competitive advantage – but only if you are prepared. The UK is a large consumer market, and there will be organisations desperate to get a foothold. So while it might be scary for a couple of years, long term it could bear fruit.

Our good friend David Atkinson of Four Pillars consulting, remarked that in manufacturing, at least, we have become battle-hardened to change. So he thinks we can be cautiously optimistic. The market has been relatively stable for quite a long period, and some leaders today don’t have the experience of those challenges. Some of us have been through the wars already he said. He was thinking of the forces of the bird flu epidemic, foot and mouth, swine flu, etc. that had the power to devastate some industries. The key thing now with Brexit, he says, is that it’s not happening to one industry, it’s happening to all of us, at the same time!

In summary, apart from some activity around financial goals, there’s a very fragmented attitude towards contingency planning. It was interesting to witness only one hand was raised in answer to the question – are you putting teams in place to address Brexit contingency planning! And out of the whole room only 5 people indicated they felt their organisation was doing enough (whatever enough means to them). So, post Brexit, it would seem, unless we want to buy chocolate, we might be in trouble!

Edbury Daley will be featuring related findings in its next Procurement & Spend Management Insider report – look out for that later this year.

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