Potential no-deal Brexit adds pressures on supermarket supply chains

    Matt Hopkins on August 6, 2018

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    In the on-going saga that is the Brexit negotiations, supermarket supply chains are now in the front line. Brexit secretary Dominic Raab recently implied that it is the role of the grocery industry to ensure there are "adequate food supplies". The immediate response from the British Retail Consortium (BRC) was that stockpiling was "not a practical response" - retailers lack the facilities to house stockpiled goods. "In the case of fresh produce, it is simply not possible to do so," it said. "Our food supply chains are extremely fragile and this is yet further demonstration of the need for an agreement on the backstop to ensure frictionless trade is maintained after the 29 March 2019."

    Reacting to this news, it has emerged that discount supermarket giant Aldi has contacted suppliers about contingency measures that might be needed in the case of a "no deal" Brexit as fears over potential shortages grow. Suppliers have been asked questions around what proportion of EU staff they employ and the implications of World Trade Organisation (WTO) tariffs for their products, according to a Sunday Times investigation. Aldi, with 700+ stores in the UK, also said it was keen to work with suppliers "to help understand the potential implications" and to "mitigate any negative impacts" of a no-deal scenario.

    The threat of shortages has scared some of the UK’s major industries in the last few weeks. The head of NHS England recently said that "extensive" planning is being undertaken to prevent medicine and doctor shortages if no British-EU deal is reached. Recent research from the London School of Economics (LSE) even suggested that everyday dairy products such as butter, yoghurt and cheese could become luxury items in post-Brexit Britain.

    Can UK supply chains cope?

    Let’s face it, whatever happens there is going to be economic disruption and significant physical disruption at ports such as Dover because of the need for customs and regulatory checks on goods. Even a high-tech system of checking freight lorries requires them to be held for at least five or 10 minutes – longer if something goes wrong, which it will.

    On top of the pressures retailers are already facing in the high street, the idea of not being able to access product to fill shelves should be focusing people’s minds.

    Talking this through with our clients, the more pro-active companies are using this situation as a catalyst for reviewing their supply chain structure and management. Less progressive retailers are finding that a lack of investment in supply chain management software and best practice in recent years is potentially leaving them exposed to added risk. We often find that a lack of communication between functions and poor visibility of customer buying trends makes the situation worse. Not only is product not available, but cash is tied up in inventory just sitting there. 

    Supply chain management software has come a long way in recent years and can rapidly deliver real value. Perhaps today’s extraordinary set of circumstances will inspire retailers to strengthen their supply chains by using experts and the latest technology to better manage inventory and keep the shelves stocked – for all our sakes, let’s hope so!

    Topics: supermarket, supply chain, Brookes

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