Supply Chains and lessons from Brexit

While the shock of Brexit passing is wearing off, the confusion remains. This portion of Brexit holds several lessons for our supply chains, both to survive Brexit and survival in general. First you need to know:

Cynthia’s Second Rule of Business:

Don’t make it confusing for your customers to do business with you.

Since it’s too late to avoid the confusion, let’s look at a couple of things to help your supply chains:

  1. Review extended supply chains.If there is a part of the supply chain that will be affected, immediately begin communications with that segment/supplier/customer.Ideally, by using risk management tools, potential risk would have been identified prior to the Brexit vote and contingency plans would have been put in place. This may have allowed for alteration of the supply chain configuration, legal review of what loop holes exist for your type of alliance if EU treaties no longer apply, and maybe even expansion of the British supply chain link into another physical location (maybe yours if they are critical) perhaps with a spin out.For now, embed early warning signals in your supply chain risk management that forces you to review risks that may or may not become an issue. Assign responsibility to someone for reviewing the risk signals periodically.
  2. Understand the options.While no one really knows what to expect at this point, scholars and think tanks have been putting forth potential scenarios. Often those scholars work at a university near you. The think tanks may reside close by as well. Link to their websites to view their insights. Bring them in for discussion with your company or with a group of companies (perhaps your supply chain). Find scholars and think tanks that offer dissenting views so that you get a full understanding of the various paths Brexit may take (or your current supply chain concern), the likelihood of each, and what the results may be in general for business (new laws, taxes, documentation, etc.) Don’t forget to look for the opportunities as well.By the way, university scholars often look to industry for interesting problems to give their students to work on during the semester. Perhaps you can have them provide you with research on what Brexit may mean for your supply chains and type of business. You’ll get a variety of conclusions, some great some not so great, but it will be sure to stimulate your out-of-box thinking.
  3. Don’t wait for someone else to tell you what the answer is. If confusion reigns, you need to act to reduce the confusion. Not only by positioning your supply chains to handle the risk, but also through marketing communication that keeps your customers and supply chains in the loop. Assure them that while others are confused, you have a plan and are acting on it.
  4. Be flexible. Research shows that Brexit’s passing may put British consumers back in the price war mind set. The trick is to communicate your value; the stuff no one else brings to the table, the stuff that you do exceedingly well that customers want. It will help keep you out of the price wars.If you end up having to be a part of the price wars, make sure you eliminate equivalent amounts of value provided if you reduce your pricing. It provides you with additional variations of product/services that allow you to fulfill customer demand while playing with pricing in a more protected manner. Removal of value also allows you restore pricing and offerings to normal when your customers can handle it.Make sure you coordinate these changes with your supply chain. Your flexibility won’t work if the rest of your supply chain is confused.
  5. Listen. It is interesting to hear that many voters just wanted to show their dissatisfaction in EU planning, execution, and results but were shocked that the vote to leave actually went through. They are now joining the rest in confusion about what is next. The rest includes Britain’s closely tied neighbors.The vote to show dissatisfaction is similar to the fact that about 60% of all consumers are unhappy with the customer service they receive and are looking to jump ship. When they jump, they don’t know if things will be better, just different. Keep your passengers (customers) by listening to their input. Use your flexibility to adjust your extended supply chain performance and carry on.

While it will be an interesting time over the next month, year, decade, one thing is certain: those who instill confidence in their customers (in great part by making things less confusing) will survive.

I’d like to hear your insights. Please join the discussion.

Key works and concepts: Brexit, supply chain, customers, supply chain segmentation, value, flexibility, listen, coordination, Cynthia Kalina-Kaminsky, Process & Strategy Cynthia Kalina-Kaminsky with Process & Strategy consults with and provides training for organizations eager to increase their competitive value by helping enable growth, align performance, make and move product (even when the product is a serving of electrons). She has been invited to teach SCOR (Supply Chain Operations Reference model) in Baton Rouge this October. SCOR is the framework Fortune 500 companies use to increase their agility.

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