Since the UK’s departure from the European Union in 2020, procurement and supply chain professionals have had to adjust to a new trade landscape. Brexit has brought significant changes to the way goods and services are sourced, affecting everything from customs processes to regulations and tariffs.
As businesses continue to navigate the post-Brexit world in 2024, procurement teams are at the forefront of ensuring that supply chains remain resilient, cost-effective, and compliant with new trade rules.
In this blog, we’ll explore the key challenges and opportunities facing UK procurement professionals in a post-Brexit environment and offer strategies for adapting to the evolving trade landscape.
The New Trade Landscape: Key Challenges
Brexit has created several new challenges for UK procurement teams, particularly when it comes to sourcing from the EU. While the UK has secured various trade agreements with countries worldwide, the impact of leaving the single market and customs union is still felt in supply chains. Here are some of the most pressing challenges:
1. Customs and Border Delays: One of the most significant changes post-Brexit has been the reintroduction of customs checks and border controls between the UK and the EU. Goods that once flowed freely now face customs declarations, inspections, and longer transit times. This has led to delays at ports, increased lead times, and added complexity to supply chains. For procurement teams, managing these delays requires careful planning and communication with suppliers and logistics providers. Delays can have a ripple effect on production schedules and inventory levels, making it crucial to anticipate potential bottlenecks and build flexibility into supply chains.
2. Tariffs and Increased Costs: Although the UK and the EU signed a trade agreement in December 2020 that avoids tariffs on most goods, certain products may still face duties if they do not meet specific rules of origin requirements. This can lead to unexpected costs for businesses that rely on EU suppliers or materials. Procurement teams must closely examine the origin of goods and ensure they meet the rules of origin criteria to avoid tariffs. This involves working closely with suppliers to understand where their products are sourced and how they are manufactured, adding another layer of complexity to the procurement process.
3. Regulatory Divergence: As the UK establishes its own regulatory framework, separate from EU rules, procurement teams must stay up to date with changes in regulations. For example, the UK has introduced its own version of CE marking for product standards, known as UKCA marking, which affects certain goods sold in the UK. Navigating different regulatory requirements between the UK and the EU can be a challenge, particularly for businesses that operate across both markets. Ensuring compliance with both UK and EU standards is essential to avoid disruptions in supply chains and ensure that products can continue to be traded smoothly.
4. Labour Shortages and Workforce Challenges: The end of freedom of movement between the UK and the EU has exacerbated labour shortages in sectors such as agriculture, logistics, and manufacturing. Many businesses that relied on EU workers now face difficulties in sourcing skilled labour, which can affect supply chain operations. Procurement teams need to consider labour shortages when planning for production and sourcing. This might involve working with suppliers to ensure they have the necessary workforce in place or looking for alternative suppliers who are less affected by workforce challenges.
Opportunities for Procurement in a Post-Brexit World
While Brexit has undoubtedly introduced new challenges, it has also created opportunities for UK businesses to rethink their procurement strategies and build more resilient, innovative supply chains. Here are some of the key opportunities that procurement teams can leverage in 2024 and beyond:
1. Diversifying Supply Chains: One of the most significant opportunities post-Brexit is the chance to diversify supply chains. While many UK businesses have traditionally relied on EU suppliers, Brexit has encouraged procurement teams to explore alternative sourcing options from non-EU countries. The UK has signed trade agreements with countries such as Japan, Australia, and New Zealand, opening up new opportunities for sourcing goods and services. Diversifying supply chains can reduce reliance on a single region, making businesses more resilient to disruptions. It also allows procurement teams to tap into new markets and access competitive pricing and innovative products from a broader range of suppliers.
2. Supporting Local Suppliers: The post-Brexit landscape has also prompted many UK businesses to reconsider their reliance on international suppliers and focus on supporting local suppliers. Sourcing from domestic suppliers can reduce lead times, lower transportation costs, and help businesses navigate the complexities of customs and tariffs. By building stronger relationships with local suppliers, procurement teams can enhance supply chain resilience and contribute to the UK’s economic recovery. Additionally, working with local suppliers can align with sustainability goals, as it reduces the carbon footprint associated with long-distance transportation.
3. Leveraging Digital Tools for Compliance and Efficiency: As the procurement landscape becomes more complex, digital tools and technology can play a crucial role in helping businesses manage post-Brexit trade challenges. For example, procurement software can automate customs documentation, track regulatory compliance, and monitor tariffs, making it easier for procurement teams to stay on top of evolving trade rules. Additionally, digital tools such as supplier relationship management (SRM) platforms can help businesses build stronger, more transparent relationships with suppliers. These platforms provide real-time visibility into supplier performance, enabling procurement teams to identify risks and opportunities more quickly.
4. Reshoring and Nearshoring Opportunities: Brexit has sparked renewed interest in reshoring (bringing production back to the UK) and nearshoring (sourcing from countries closer to home). Both of these strategies can help mitigate the risks associated with international supply chains, such as customs delays and regulatory divergence. Reshoring production to the UK not only reduces reliance on overseas suppliers but also supports local industries and reduces transportation emissions. Similarly, nearshoring to countries like Ireland or other non-EU partners can offer the benefits of proximity without the complexities of EU trade. Procurement teams should explore the potential for reshoring or nearshoring by assessing the feasibility of sourcing goods and services from UK-based suppliers or neighbouring countries. This approach can enhance supply chain agility and reduce the impact of Brexit-related disruptions.
Strategies for Adapting to Post-Brexit Procurement
To successfully navigate the post-Brexit trade landscape, procurement teams must adopt a proactive, flexible approach to supply chain management. Here are some key strategies for adapting to the new environment:
1. Strengthen Supplier Relationships: Building strong, collaborative relationships with suppliers is essential in the post-Brexit world. Procurement teams should work closely with their suppliers to understand their capacity, production processes, and compliance with trade regulations. Open communication is key to managing delays, addressing challenges, and identifying new opportunities. By fostering long-term partnerships with suppliers, procurement teams can gain greater visibility into potential risks and build a more resilient supply chain. This may involve developing joint initiatives with suppliers to improve sustainability, efficiency, or compliance.
2. Enhance Risk Management: Risk management has become even more critical in the post-Brexit landscape. Procurement teams must conduct thorough risk assessments to identify vulnerabilities in their supply chains, such as reliance on a single supplier or exposure to customs delays. Implementing contingency plans, such as diversifying suppliers or holding buffer stock, can help mitigate the impact of supply chain disruptions. Additionally, using digital tools to monitor real-time data on supplier performance, customs processes, and tariffs can help procurement teams stay ahead of potential risks.
3. Invest in Compliance: Expertise Navigating the complexities of post-Brexit trade rules requires specialised knowledge of customs regulations, tariffs, and rules of origin. Procurement teams should invest in building internal compliance expertise or partner with external consultants to ensure they remain compliant with both UK and EU regulations. Staying up to date with regulatory changes is essential to avoid costly mistakes, such as misclassified goods or non-compliance with product standards. Investing in compliance expertise can also help businesses identify opportunities for tariff reductions, preferential trade agreements, and other cost-saving measures.
4. Monitor Trade Developments: The post-Brexit trade landscape is still evolving, with new agreements, regulations, and policies being introduced regularly. Procurement teams must stay informed about these developments and adjust their strategies accordingly. Monitoring trade developments can help procurement teams anticipate changes in tariffs, regulations, and market conditions. For example, future trade deals with countries like the United States or India could open up new sourcing opportunities for UK businesses.
Conclusion
The post-Brexit trade landscape presents both challenges and opportunities for UK procurement professionals. While customs delays, tariffs, and regulatory divergence have added complexity to supply chains, Brexit has also created opportunities for diversification, local sourcing, and innovation.
By adopting a proactive, flexible approach, procurement teams can navigate these challenges and build more resilient, sustainable supply chains. Whether through diversifying suppliers, reshoring production, or leveraging digital tools, procurement professionals have the opportunity to play a key role in shaping the future of UK trade in a post-Brexit world.
As businesses continue to adapt to the evolving trade environment, those that embrace change and invest in strategic procurement will be best positioned to thrive in the new landscape.
