The anticipated adverse consequences of the United Kingdom’s decision to leave the EU in June 2016 have been widely documented over the past number of months. Nowhere will be affected by this massive political, cultural and economic change moreso than the island of Ireland.
Whether you are located north or south of the border between the Republic and Northern Ireland will determine what Brexit looks like for you, but the consequences of the period of uncertainty that will follow over the coming months and years are in common – that is they too are uncertain!
Due to the high level of interdependence between Ireland and the UK, our manufacturing sectors are set to be dis-proportionately affected by the entire process. Irish manufacturers exporting goods into the UK face the risk of imposition of duty, documentation and taxation costs, and those importing goods from UK suppliers or even suppliers from elsewhere delivering product via the UK have an uncertain future. This is where a modern ERP system can help – knowledge is everything in these times. While we don’t know what the final outcome is going to be, with up to date information we can make short and medium term strategic decisions that will help us mitigate the risks.
The ability to run an up to the minute margin analysis by customer type, region, product line, territory, country, etc. is invaluable in an environment where costs and terms are changing on a monthly, weekly, even daily basis. Do you have the ability to accurately value the cost of time delays at port inspections, cost changes due to currency rate fluctuations? Can you spot a trend quickly and easily where deliveries are being delayed, or where the goalposts have moved in terms of quality standards? Weekly, even daily Brexit meetings will become a familiar concept to many Irish manufacturers over the coming months and this is where information from all departments will be required – integrated reporting is key to getting business decisions made.
A good, modern ERP solution will give you the ability to assess your suppliers on the basis of adherence to delivery dates, price and quality. Using the system correctly will allow you to identify where you have bottlenecks or delays. For example, you might have a raw materials supplier in the UK whose delivery times have slipped due to port inspections. Maybe there’s an alternative supplier in France who can ship to you via Rosslare cutting the UK delays out of the equation. The point is to monitor everything that has any link to the UK very closely so that alternatives can be identified well in advance of making the change. Similarly pricing might creep slowly up. Using a system to implement supplier performance metrics means you’ll see a gradual trend which might otherwise have gone un-noticed. And in the scramble to get more product through the clogged ports you might find that quality is compromised.
There’s going to be changes here. It seems certain that the UK will now be considered a “third country.” This means VAT reporting will change. How so remains to be seen but it is important that all Irish companies dealing with goods and services that are imported, exported or both with the UK have a system in place that is flexible enough to accommodate changes. And those changes may not be “one-off.” It’s entirely possible that over the coming 2 to 5 years the rules and regulations will change periodically. Then there’s the possibility of new tariffs, duty charges, any new Brexit related Revenue Returns (you can bet that the statisticians in Brussels will want to report and quantify the extent of the cost to the EU of the whole process so there will be new returns). What about those exchange rate fluctuations? Can your system receive automated exchange rate updates in real time via online services?
Irish companies with operations in the UK will need to take special note. These companies will have both positive and negative impacts relative to their single site counterparts. On the one hand, they will face all of the challenges of the Brexit process from both sides. This could end up in extreme circumstances with duplication of processes. Conversely however, they will have the ability to retain some of the business where relevant in the same country and currency. For example a company with a UK site and UK customers could now channel production for the UK customers in the UK premises. If they can source the relevant material in the UK as well, even better. However it will take significant re-organisation and that process needs to start as soon as possible. An ERP system will help them quickly identify what customers, products, materials, etc. are suitable for changing.
A massive buzz word over the past few years in manufacturing is “traceability.” Everyone from food, pharma and medical devices to engineering, aerospace, electronics, even field service companies are now looking to have every transaction user, date and time stamped and every ingredient, batch, material or item traceable from finished product right back to the originating supplier. In a post Brexit world one can only see even more regulation here. For example, UK suppliers of goods may no longer be on approved vendor lists for European corporations. So the certification and paperwork overhead may increase and the ability to produce a certificate of conformity on demand could become a new requirement.