Brexit Negotiations - The weak link in EU/UK supply chains?
Professor ManMohan Sodhi reflects on the challenges facing supply chain one year after Article 50 was triggered.
When Article 50 was invoked, my initial thought was that supply-chain complexity of goods flowing back and forth across the English Channel would force both the EU and the UK to look for ways to mitigate unnecessary challenges to business.
However, both sides have seemingly expended a lot of energy posturing in the media – although we hope they are negotiating more seriously in private. This has increased uncertainty for business in both the EU and UK.
As a result, one in seven EU companies have moved supply chains (suppliers) partially or completely out of UK, according to the Chartered Institute of Procurement & Supply (CIPS).
According to a recent article from the Financial Times, five sectors in the UK may be particularly vulnerable:
- Financial services
- Food and drink
- Chemicals and plastics
The pharma sector is also vulnerable because of having to duplicate efforts to meet regulations.
A sensible transition
Still, reality may be prevailing as reflected in the 21-month transition deal to reduce uncertainty for businesses on both sides for the near term. However, this period of time may be too short, with many experts believing that negotiations could go on for a decade!
This is the question of how and whether to cut the supply-chains: quickly by accepting or rejecting Brexit entirely or spending the next ten years doing Brexit-in-name only?
ManMohan Sodhi is Professor of Operations and Supply Chain Management.
The views expressed here are those of the academic and do not represent those of Cass Business School or City, University of London.