As everyone holding procurement jobs knows, Brexit has the potential to seriously disrupt supply chains.
Even Brexit Secretary David Davis has conceded that the UK Government has so far done little modelling regarding the impact of exiting the EU on British businesses and their supply chains. And the reason for that is that there are as yet simply too many unknown factors, making modelling virtually impossible.
But given that the one thing that seems certain for businesses right now is uncertainty, it’s time to plan for these unknowns by integrating new options into the business model.
In financial markets, this is pretty straightforward. One simply buys risk management tools that enable traders to instantly seize an opportunity or exit a position whenever the market doesn’t go the way they wish.
However, in the logistics market, which most procurement staff must deal with, such rapid manoeuvres aren’t so easy. But even so, Charlie Pool, CEO of warehouse-as-a-service provider Sowga, believes that improved options are available.
A persistent weak link in the supply chain, he notes, is warehousing, which requires long-term commitments. But flexible warehousing is a rising new alternative, allowing firms to transact swiftly while granting them the freedom to end the contract at any point instead of being locked into a lengthy servicing lease.
As he puts it: “This is game-changing because what you’ve done is financial wizardry: you have turned the fixed, long-term cost of a lease into a short-term variable cost. Not only have you given yourself options to hedge against uncertainty, but you will dramatically improve your underlying economics because the variable model is so much more efficient – you only pay for what you use.”
This may well prove to be an option that procurement professionals, with their supply chain management responsibilities, could profitably look into in the midst of these stubborn Brexit uncertainties.
Pool concludes: “Preparing your business to deal with uncertainty means you’ll be in far better shape when the ups and downs do come.”
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