Perspectives

Getting to grips with Brexit

Meet Jim Gouldie, our Supply Chain and Technical Services Director.

‘Clarity’ and ‘confidence’ are words that you will rarely have heard associated with Brexit, certainly over recent months, unless prefixed with phrases such as ‘total lack of’ or ‘no’. But while it seems our elected representatives in parliament have struggled to agree on anything other than what they don’t want, here at Bidfood our aim has been to implement comprehensive plans – and provide our customers with clarity and confidence on these plans – so that, even in a worst case scenario, their businesses can still fully operate.

Obviously, this is extremely difficult as there remain so many unknowns. Our plans have been pragmatic and I feel we have implemented robust solutions that will deal, within reason, with any major disruption resulting from even a worst case Brexit scenario.

Putting aside my own personal views on Brexit, from an industry perspective I believe there is a commonly held view that a ‘no deal Brexit’ would be a worst case scenario, at least in the short term. It is estimated that there would be significant initial disruption to imports out of the European Union, particularly between Calais and Dover, that could last between 3-6 months, and possibly also pricing challenges from tariffs, additional bureaucracy and currency devaluation. It is primarily these impacts we have looked to mitigate through our contingency plans.

At Bidfood, whilst keeping the needs of our customers at the forefront of our plans, we have also tried to balance commercial pragmatism against many alternative outcomes, including the fact that many of our contingencies and investments may not prove necessary. Even as I write this today, some 4 working days until our scheduled revised exit date we appear to be at a crossroads between developing an alternative exit agreement, or crashing out of the Europe Union with no deal at all.

We have always been clear that we believe business will react positively when it knows what it is planning for, but something as significant as Brexit without knowledge of actual outcome has made planning extremely difficult for everyone.

This brings me back to where I started initially; even without knowing what is going to happen, our aim has been to offer confidence and clarity to customers. In our activity we have invested significantly whilst trying to keep things simple, applying a three-step approach in the following areas:

  1. Review of customs requirements. We have:
    • clarified import, clearance and customs requirements for imports from the EU and established strong relationships with senior representatives from UK and EU Customs
    • proactively worked with DEFRA and associated government departments; also leveraging our close relationships with industry bodies such as the BFFF, FWD, agents (which affords us a higher level of ‘trust’ status when importing goods) and UK Hospitality
    • we already have strong relationships built across our base of excellent supply chain partners who are experienced in international product movement – including AEO accredited clearance
  2. Supplier review. We have:
    • worked with all our core range suppliers for many months, and issued a number of Brexit planning communications and guidance to them
    • risk-assessed all our core range suppliers taking into account their own Brexit contingency plans
    • provided recommendations on next steps to suppliers to help them mitigate risks and manage their own supply chain.
  3. Product level review. We have:
    • reviewed all core range products and established those that would be most affected in the event of a no-deal Brexit
    • assessed country of origin, WTO tariff impact, sales levels, alternatives, UK sourcing opportunities, requirements of key sectors
    • matched availability risk for key products against our suppliers’ own plan risk assessments

Using all this we have identified key SKUs where we have implemented our own contingency plans to protect our customers, covering a range of approximately 1,500 SKUs. We have sourced two UK third party warehouse locations to store contingency stocks, and against these contingency products, we have implemented additional contingency stock holding of four to eight weeks – additional cover of approximately 7,500 pallets.

This activity is in addition to our existing UK stockholding, managed across 26 different locations, of approximately three to four weeks.

Customer impact assessment

For some time we have been able to provide our customers with risk-assessment of the potential impact of a non-deal Brexit on key lines, with suggested alternatives and allergen matches, taking into account all the factors detailed previously. This enables our customers to conduct informed reviews about likely risk of a no-deal Brexit to their products across their own range, and proposed solutions, so they can also minimise and mitigate any risk.

More recently, we have analysed the impact of the tariffs issued by the government which are effective in the event of a no-deal Brexit and can provide customers with similar summary analyses of the tariff impact for the top products.

If you don’t already have plans in place, and we were to leave the European Union this week without a deal, the likelihood is you are already too late, but, with the decision now potentially delayed till end of June

Here are my top 4 tips of some sensible last minute actions I would recommend:

  1. understand your supply chain and areas / products of key importance and check you are at least comfortable that appropriate plans are in place; you should expect clarity and confidence from your supply partners
  2. read the government guidelines for the food and drink sector in preparing for EU exit
  3. whilst being very clear on what you need, also work positively with your supply chain partners to find a solution, as this is a very fluid situation; no one needs unreasonable demands at this stage; if there are things you need, work positively to find a solution even if it is a compromise as again there are some major lessons to be learnt on how not to approach things that our elected representatives have shown us, be prepared to deal with the initial impacts, concerns and queries that could arise if we enter a no deal Brexit
  4. hope for the best but be prepared to deal with the worst – that is certainly the approach we have applied at Bidfood.

Please also refer to Bidfood supplier or customer communications which provide much more detail of the activity we’d recommend in any no-deal Brexit plans. We have provided regular updates on our plans and activity, including some of the information shared above. Please do read these before asking questions that we have already covered.

Let’s see what the next few days bring, but I remain hopeful that we may at last get some of the clarity and confidence back from Parliament, that we have at Bidfood very much sought to provide to our customers.

Date posted: 09/04/2019
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