The new year may not quite have felt like the start of a new chapter, with the country back in national lockdown. But there was one big change on 1 January: the UK’s new trading relationship with the EU began. And while it was looking increasingly unlikely in the weeks before Christmas, a trade deal was agreed – albeit a skinny one. So, what will life after Brexit look like? And what does the deal mean for UK plc?
Last week, I hosted a digital event looking at the key Brexit considerations for business in 2021. I was joined by Mark Berrisford-Smith, Head of Economics at HSBC UK – Commercial Banking, and David Grimes, CEO of Sorted.com. We also heard from KPMG’s Rebecca Okuda, Linda Ellett, Mina Shiraishi and Iain Prince. They provided some great insights on how businesses can address concerns around the movement of products and people.
Here are six things I took away from the event:
Get to grips with rules of origin and supply chain visibility
The trade deal has provided us with a new phrase: ‘rules of origin’. These are tariffs you face depending on where your goods originally came from. For example, if your product comes in from Asia and is then sent to a customer in the EU and you don’t ‘add value’ (by substantially transforming it, not simply repackaging), you could face duty in the UK and duty in the EU – double duty. That’s going to impact the commercial terms of manufacturers, distributors, retailers and service providers, and affect profit and loss. And it could break some business models.
2021 is the time to create a resilient and agile supply chain network both globally and locally.
Make sure you have the right documents
Many of the delays we’ve seen at ports have been the result of incorrect or incomplete “paperwork”. To minimise delays, make sure your suppliers, buyers, hauliers and your own operations team understand the requirements around customs declarations – both sides of the UK/EU border. To make things even more complicated, these are now specific to different ports and products. You can’t abdicate responsibility to your logistics partners.
Keep your customers in the loop
Having open communication and clear lines of sight across your supply chain is going to be more important than ever. If you’ve ever been waiting for a package to arrive, you’ll know just how important it is to get regular communications from the sender, so you can track its progress. And as we heard from David Grimes, CEO of Sorted.com, there’ll be an uphill learning curve for many retailers to get the international distribution of parcels flowing as it was pre-January 1st 2021.
Regular communications are essential as customers buy more online than in store. With data rules tightening, consumers will also expect greater transparency over the use of data. Let them know that their data is safe.
Stick to what you do (and what sells) best
It’s a common mantra – customers love choice. But do they love it more than getting what they ordered on time and at a competitive price? Probably not. As you come to terms with new trade rules, the pandemic might affect your people and their ability to come in to work – and that will have a knock-on effect on your service. In these circumstances, it’s better to restrict choice than to give consumers lots of options and then fail to deliver.