Supply Chain Guide to Brexit: Digitisation Paves a Way through Uncertainty

We like to discover new relevant companies and bring them to your attention. Slync is a fairly young digital supply chain platform, founded in 2017. We are pleased to hear from Nikos Papageorgiou, Vice President of Solutions, on supply chain challenges to watch out for.

Geopolitical disruption is nothing new to supply chain leaders. And one thing for certain is that the UK trade lines will persevere beyond any Brexit deadline. Although a unique case, Brexit is only one of several events expected to introduce net new complexities and friction in international trade (e.g., US-China tensions, EU core-periphery imbalances).

The mega-trend of the past 50 years of decreasing trade barriers is reversing, at least in the short-term, as competition intensifies. Digitisation enables supply chain leaders to alleviate financial and operational issues stemming from Brexit cross-border issues while setting the foundation for long-term global competitiveness. The need to digitise is already there, but with Brexit, there is even more urgency.

Trade will change as we know it

Regardless of which UK-EU agreement is reached (‘no deal’, transition period, Norway-style agreement), there will be supply chain disruption and companies need to be prepared. Per The Register, when the UK exits the EU, the number of customs declarations is expected to increase from 55 million to 255 million a year, bringing the greatest amount of change in the least amount of time – and huge pressure on capacity and capability at the border.

Arguably the most disruptive case is a “no deal,” with the Road Haulage Association predicting trade movement could come to a complete halt , and ports such as Dover – where over 99% of all trade is with the EU – could see increases in customs declarations of over a hundredfold.

Whatever the outcome, Brexit’s impact on the supply chain falls primarily under three categories – import/export tariffs, quotas, and customs checks. Renegotiated tariffs and product quotas will impact trade volume in unpredictable ways and will depend on new bilateral deals the UK will establish. Exiting the customs union means new custom checks procedures would need to be enforced to product flows (EU/UK), such as labeling, certifications, production standards, safety regulations, sanitary checks, etc.

Other challenges companies need to watch out for are product delivery delays, stockouts, and shortages, transportation capacity shortages, shipment holds, long waiting lines at customs and channel ports and potential quality issues with sensitive goods (cold chain) that could drive excess operational costs and erode margins.

Lack of visibility into the situation is the typical roadblock that exacerbates a problem or impedes resolution. Think of a company trying to comply with newly established and perhaps evolving import regulations, standards or policies as they relate to a specific shipment – or a company trying to manage a critical product delivery in light of shipment holds downstream in the chain. For British and EU companies operating with disconnected legacy systems, limited supply chain visibility and lack of automation, Brexit can have immediate and lasting adverse impacts – and this is where digitisation comes into play.

Digitisation – Brexit’s deus ex machina?

In the context of Brexit, digitisation can alleviate disruptions due to customs checks through multi-party visibility and automation, logistics exception management and process compliance. With low-cost, off-the-shelf technologies readily available to deploy, it is up to supply chain leaders to prioritise the use cases that are tied to tangible, short-term business outcomes.

Multi-party visibility enables shared and easy access to newly established import regulations, standards and policies as they relate to a specific product. A contextually-rich view of a shipment is stitched – one that includes the multitude of shipping documents (e.g., BOL, invoice, safety), external signals regarding current wait times at customs and internal shipment attributes and prioritisation.

In a period when exceptions due to customs checks become the norm, an efficient and proactive resolution is paramount. Real-time identification of exceptions bundled with automated resolution workflows speeds up the time required for a shipment to get through a checkpoint from days to hours, because up/downstream partners can share and request documentation ‘on-the-fly’ based on the contextually-rich view of the shipment.

Process compliance becomes exponentially difficult in times of uncertainty because it’s a moving target. Supply chain leaders can benefit from a SaaS platform that can facilitate, or even automate, multi-party workflows to enforce process compliance – for timely pick-ups, timely customs clearance, cold chain compliance, and on-time delivery.

Taking it a step further, if AI is employed, exceptions can be predicted before they happen to allow for the humans ‘behind the algorithms’ to manage proactively by focusing their attention where it’s   needed – the critical shipment – to potentially avoid any adverse impact, such as product stockouts.

Digitisation is not Brexit’s ‘deus ex machina’ and can’t help with the physical supply chain constraints, like storage capacity at customs. However, it can certainly increase the ‘effective’ throughput for the companies that are willing to invest. Think of a digital platform that is accessible by a shipper, its truckers, forwarders, and brokers: shipment status, standards, and external events all in one place. Knowledge is institutionalised, enabling teams to streamline multi-party operations. This multi-party digital platform requires slivers of data blended across several systems and partners. A roadblock that has traditionally led to siloed approaches can now be overcome with modern logistics software with robust integration engines.

Brexit as a technology catalyst – seeing beyond the disruptions

Irrespective of Brexit, businesses should be looking into supply chain digitisation as a strategic competitive advantage. As reported by McKinsey, the biggest future impact on revenue and company growth will occur through the digitisation of supply chains. However, the investment focus has traditionally been on digitising the consumer experience – and rightfully so thus far. Furthermore, the existing ‘technology debt’, meaning the outdated, inflexible, ‘user-hostile’ current-state supply chain software has impeded any efforts to digitise.

Looking beyond, it is evident that a new era for the supply chain is emerging. The new era will be digital and based on a symbiotic human-machine relationship, and the key is modern supply chain orchestration software – software that stands up quickly to solve tangible business problems, while simultaneously paving the ground to the next generation IT architecture for the enterprise.

Disruption is rarely welcome, but by digitising the supply chain, businesses will not only be equipped for the Brexit outcome but also, they’ll be strapped with the tools to lead for years to come. Look at Brexit as a launching point to upgrade, improve and innovate – not as a setback to success.

 

Disclaimer: the opinions expressed in this guest post of those of the author and do not necessarily represent Spend Matters' official position. 

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