Today, EU leaders have agreed to the extension of Brexit until 31 January 2020. But (even) with UK party differences on whether or not to support a December election, it is important to remember that the possibility of a no-deal Brexit is not completely off the table. In that light, it would be wise to consider how a no-deal Brexit could impact your business, and more specifically your supply chain. I think it’s fairly safe to assume that, regardless which direction the negotiations take, there will be a significant impact on warehousing both in the UK and in the EU as businesses continue stockpiling goods.
It also goes without saying that things will be a lot more complicated for manufacturers of products with a short shelf life such as food or cosmetics. When it comes to pharmaceutical products and medical devices, additional pressure is being put on manufacturers, healthcare systems and Authorities to ensure the continued supply of life-saving products.
In terms of infrastructure, most businesses have chosen the location of their warehouses based on their customer service strategy. Under a no-deal Brexit, the question businesses should be asking themselves is – will this infrastructure still fit the service needs of my organization? And this is before you’ve even considered changes to various legislation in terms of, for example, customs clearance and the additional paperwork regarding labelling, packaging or updating of your technical files.
One approach could be to store all products destined for the UK in a UK warehouse and/or to re-assess your warehouse landscape to continue servicing the remaining Member States. Ultimately, the question comes down to the location of your warehouse(s) and whether or not you use your own facility(s) or one(s) operated by a third party contractor. In both cases, at least the following elements need to be considered.
- Relevant skillsets and experience in terms of both project and operational management to drive such a project
- Access to the necessary assets and funding
- Potential impact of implementing existing or new IT systems
- Effect of transferring or building up new stock in terms of working capital and service level
- Appropriate skills and experience to manage an outsourcing procurement exercise
In addition to the above mentioned points it is important to understand that there is currently already a shortage of warehouse space across many parts of the UK, including a short supply of development land with which to create more. Especially for the temperature-controlled and cold-storage warehousing required by pharmaceutical and food industries.
Furthermore, with the shift towards e-commerce and discounted retailers I have noticed a significant increase in demand for warehouse facilities next to major transport routes, putting further pressure on the availability of storage space. With population density in the UK already high, it even creates a particular dilemma for e-commerce companies. This is not only an issue for UK companies storing and delivering products within the UK, but also for US companies and other foreign sellers. While selling from within the UK will bypass distance selling thresholds