What Does Brexit Mean For Procurement?

brexit

The effect that the EU referendum result will have on procurement professionals is, unsurprisingly, prompting much debate from within the field.

Straw polls and twitter polls (although small scale) conducted in the days after the Brexit victory suggest that opinions are divided. Some are taking the optimistic view that the UK's departure from the EU will provide an opportunity for those working in procurement to show how they can genuinely add value to their organisations, and offer a chance to take a more cross-functional approach. However, 65% of respondents in a social media poll expressed anxiety about how their work will be affected by the referendum result.

Few commentators across the UK would disagree, having seen the political turmoil and unprecedented series of events that have unfolded before our eyes since the result was announced, with the description that the country is now in a very current crisis. However, the positive spin is that in a crisis, it just calls for a combination of steady stewardship and fresh thinking on the part of procurement teams.

Procurement now needs to be about making the most of the supplier relationships that are already in place and, at the same time, beginning to explore a range of new sourcing choices. In many ways, the current situation should hold no fears for procurement teams and supply chain managers. After all, managing complex situations and uncertainty has always been fundamental to successful teams anyway.

The risk is that procurement teams become over-cautious and focus too much of reducing costs. Of course, the ability to identify where savings can be made is important, but procurement that adds genuine value, rather than just cutting costs, will be procurement that looks for new opportunities to stimulate growth and that identifies rapid routes in new markets.

It's also worth bearing in mind that suppliers need to be able to supply to be successful. Suppliers from the EU are bound to feel the same nervousness and uncertainty about what will happen in the future as the UK businesses they currently supply to.

However, now is the time for procurement teams to review their existing supply chains in Europe. With trade negotiations months away from even beginning, there is no need to change everything, or anything, tomorrow. But, in the event that the UK fails to agree free trade deals with the EU, it is sensible to weigh up which suppliers might be affected.

There are so many variables to consider that it looks like being a busy time in the coming months and years for procurement teams. However, there is at least some safety in the knowledge that nothing has to change immediately and that business can carry on as usual for now. 

Although it is likely that importing will become more complex, experts suggest that there is little chance that the UK will distance itself from the existing EU international agreements. Furthermore, many of the EU rules that apply to procurement have now become national legislation and regulations that are binding unless parliament decides to revoke them - which is unlikely to be high on the government's agenda.

At this stage, it is difficult to predict what the full impact of Brexit will be on procurement and supply chain management. In time, there will inevitably be some knock-on effects to some aspects of legislation and the overall landscape will become clearer in the coming months.

This article was written by Michelle White, Board Director at Pertemps.

Connect with Michelle on LinkedIn here.

You can also stay up to date with all Pertemps Managed Solutions articles by following our Company Page here