Brexit


Procurement and supply management professionals have a unique and important view, and control over how to mitigate impact on supply chains and build stronger networks. As guardians and suppressors of panic within their own organisations they have a great opportunity to implement not just best practice but sustaining the future of their business. Throughout the Brexit process CIPS will be regularly gathering the view of procurement professionals and reporting on their responses.

The Brexit Storm

How procurement and supply chain professionals are tackling the issues

11 Mar 19 - UK exporters will foot the bill for Brexit border delays, EU supply chain managers warn

A delay of just one day at the UK/EU border could lead to a significant bill for British exporters in late delivery discounts and lost contracts, according to a survey of supply chain managers from the Chartered Institute of Procurement & Supply (CIPS).

  • One in ten UK exporters could have contracts cancelled if there are delays at the border
  • One in five EU businesses will expect a discount from UK suppliers if border delays persist for just one day
  • Just 40% of UK businesses would be able to export to the EU in the event of a no deal as a result of EU customs requirements

 A delay of just one day at the UK/EU border could lead to a significant bill for British exporters in late delivery discounts and lost contracts, according to a survey of supply chain managers from the Chartered Institute of Procurement & Supply (CIPS).

The warning from European supply chain managers comes as the UK enters a crunch week for Brexit, with the prospect of border complications looming large. While UK businesses have been slow to prepare for a no-deal scenario, EU businesses have been preparing to push costs down to their British partners.

 

A 24-hour delay at the border would see 20% of EU businesses push their UK suppliers for a discount on their order while 11% of UK exporters would expect to have their contract cancelled outright by their clients in the event of delays. A quarter of European businesses, meanwhile, would withhold payment until after goods arrive, posing potential cash flow challenges.

 

If that delay grows to 2-3 weeks, 60% of EU businesses would leave their UK suppliers in the lurch, switching to back up suppliers based elsewhere. Worryingly for consumers, considerably fewer (44%) UK businesses would be able to switch to an alternative supplier if there was a similar delay getting goods into the country. The uncertainty has already proved too much for some of the UK’s European business partners, 38% of whom have switched suppliers as a result of Brexit, up dramatically from 18% in October 2018.

The findings come from a survey of 1,749 UK and EU-based supply chain managers, the professionals responsible for navigating customs, negotiating with suppliers around the world and keeping supply chains moving.

 

A no-deal, meanwhile, would lead to thousands of British exporters being turned away at the UK/EU border because they lack the expertise, data or technology to comply with the relevant EU customs rules. Just 40% of UK supply chain managers say they would be able to comply with four* of the EU’s customs requirements, leaving them unable to trade with the EU if the UK left without a deal later this month.

While border complications seem likely, this has not been enough to put off all UK businesses from exporting to the EU. The survey found that 39% of UK businesses said they will continue exporting to the EU after Brexit regardless of possible delays and costs, signalling that British exporters are determined to sell their goods to the continent despite short term risks.  

*The survey asked respondents if they could: apply for an EORI number; ensure they can complete each data field in the declaration; agree responsibilities with their customs agent and logistics provider; and identify software for submitting documents if they do not use a customs agent.

 

Find out what John Glen, CIPS Economist and Visiting Fellow at Cranfield School of management said in his latest Interview:



Read the full August 2019 report:

cips 2019 brexit report

Read the full November 2018 report:

Read the full June 2018 report:

 Read the full July 2017 report:

The Brexit Storm