Outsourcing your global supply chain following Brexit

August 10, 2016
Neil Moon
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June 23rd may now seem a distant past. The shock and denial of the following days didn’t last long and even the anger has subsided. And we are now just depressed.

As supply chain professionals we live with uncertainty and complexity and find meaningful ways to maintain and improve our performance but now that the dust has settled there does not seem to be any clarity about what’s next. We have entered into a period that could last over two years where we know our global supply chains will be changing but there seems no consensus what that change will be or when it will happen.

Already the first signs of a global slow down are appearing, but the US seems to be countering this remaining robust and global stock markets have recovered earlier losses. The step change in exchange rates seems to have stabilised in the short term. However the UK government has not given any clear direction for the future and the EU seems poised to enter into exit discussions, but without a clear direction from its members. Meanwhile EU markets and politics are starting to fray as Italian banks face up to their bad debts and extremist parties throughout Europe grow more vocal as we progress to elections.

In this environment it is easy to understand why the best strategy might be seen as “do nothing and wait”. It’s easy to focus on day to day management and where possible continue local cost reductions. However I think this is exactly the wrong time to be doing this.

Now is the time to be building the foundations of a supply chain strategy that will be able to withstand the storms ahead.

In these unchartered waters reactions to the slightest shift will be significant and volatility will dominate both supply and demand markets. For businesses with established global supply chains or those seeking to enter new global markets it will be essential to have the agility and coherence to act and react. And central to this will be defining your strategic activities and identifying the right partners to help deliver them. Procurement professionals who excel in extracting the greatest service at the lowest cost will have to step aside and let the supply chain professional determine right partners to outsource global logistics services. Traditional logistics service providers (LSPs) who provide low cost, efficient but rigid systems are not going to be able to adapt to the changes quickly enough to be able to meet customer requirements.

I would recommend now is the ideal time to review your global outsourcing of logistic services. High in your criteria should be companies that have strength and depth of expertise to be able to understand changing circumstances and work with their customers to inform and adapt. Common values and aligned goals will be needed to ensure that both customer and LSPs are moving together to mutual benefit rather than creating conflict. Clarity of communication and cultural coherence will be essential to allow rapid and effective decision making and execution.
Global outsourcing can deliver a stronger, more capable and flexible supply chain if the right partners are involved. And this will place your company in the best possible position to weather the storms and come out ahead. Sticking to keeping it in-house and driving costs out of the supply chain will reduce your capability, lose skills and expertise and damage your supply chain flexibility.

So get over the depression and start testing. Seek out new partners and new solutions that will make Brexit firmly part of your past and not your future.