The combined effects of the coronavirus pandemic and Brexit have impacted some business sectors more than others.  Take the car industry for example which has been impacted by both of these challenges. Due to COVID-19 consumer demand for vehicles has plunged, trickling through the supply chain. Adding Brexit into the mix a car produced in the UK will often have more than 30,000 parts with components that use different raw materials and manufacturing processes, many of them imported from the EU and beyond.

The Consequences of Brexit

The truth is that the consequences of Brexit will have a ripple effect for a long time to come.  As businesses struggle to get to grips with new paperwork and systems this chart paints an isolated picture of the UK.

A double hit for supply chains:  Brexit and COVID-19 Darian Global Sourcing

 

Here are a few important things to consider when sourcing engineered components from abroad after Brexit.

Additional Customs Checks

Being able to import smoothly is an essential step for businesses that trade with Europe. Additional customs checks mean your outsourced components could take longer to arrive than hoped. We can help by working with your global supplier to plan and avoid delays, as well as helping you with the new customs processes, dealing with any issues as they arise.

Reviewing contracts

There are now additional import declaration costs which are over and above the usual administration costs. As costs and prices fluctuate, existing contracts with suppliers may no longer be tenable. Review your contracts to see if there is any flexibility. Is there adequate protection from supply chain risks? If not, consider whether the relationship with your international partners needs renegotiating, or whether you need a new supplier altogether.

Increased tariffs

Brexit means higher tariff rates will may be applied to goods at the border when they’re imported into the UK. How has this impacted the financial relationship with your suppliers?  Have suppliers been unwilling (or unable) to absorb these higher costs?

How you progress is largely down to your negotiation skills and how much you value the relationship. However, at Darian we have years of experience in this area and can help both sides achieve an acceptable outcome:  You and your supplier continuing to co-exist post-Brexit and move on together.

If Brexit has damaged your relationship with international suppliers Darian can help

We have helped many world-renowned companies boost their market share and sharpen their competitive edge. The new customs rules which took effect in January 2021 have increased the cost and complexity of trade between Britain and the EU, especially for smaller firms, and caused delays to freight at the borders. Darian is well placed to help you embrace these challenges.

Impact of COVID-19 Pandemic on Global Supply Chains

It is transparent that the global economy has been greatly affected by the COVID-19 Pandemic, and many companies have had to close temporarily or furlough staff to survive during lockdown. Nevertheless, there is a sense of cautious optimism for the recovery of the world’s economic situation thanks to the roll-out of vaccines and PPE that offer workers more protection and security in their occupations. The graph below examines the 2019 projection of economic output and compares it to the 2021 projection, to emphasise that growth is still on the horizon despite the various setbacks in the past year.

A double hit for supply chains:  Brexit and COVID-19 Darian Global Sourcing

This trend anticipates the economy will return to a “Pre-Pandemic” output before the end of 2021, with the downside scenario falling marginally below the expectations. In contrast, the upside scenario replicates a similar pattern of growth to levels shown before the Pandemic. This offers hope to businesses that have been impacted, as their resilience in these turbulent times will eventually be rewarded.

Global Supply Networks

‘Modern products often incorporate critical components or sophisticated materials that require specialized technological skills to make. It is very difficult for a single firm to possess the breadth of capabilities necessary to produce everything by itself’ (Shih,2020)

Many companies in the Pandemic have relied heavily on supply networks to source materials and technology from elsewhere. Without these links to other countries, resources that cannot be developed easily would simply run out. Take the UK automotive industry for example, which manufactures vehicles in factories using parts shipped in from abroad. Certain items like the electrics and technological features can’t be implemented without global supply lines. It is critical that these supply chains continue to function so that we can work towards a better economic recovery for the future.

This also reinforces the crucial impact of the Global Sourcing industry, as it allows materials and resources to reach companies fast and seamlessly. In the current economic climate, keeping your company fully stocked has never been so important.

Darian Global

The Pandemic has exposed the vulnerability of supply chains because borders have become stricter, and less people are working to transport these materials effectively. At Darian Global, we want to make sure our clients receive the highest quality products at great value. We can address your concerns and source materials globally to help keep your company stable in these unprecedented times.

Darian has faced the challenges of COVID-19 and Brexit and is determined to continue sourcing the best products and components for our clients. To speak with us about any aspect of global sourcing, call Liz Samandi on +44 (0)1858 433096 or visit our contact page, and our expert team will be pleased to assist you.

References

https://www.statista.com/chart/24212/uk-status-in-european-agreements/

W, Shih., Harvard Business Review. 2021. Global Supply Chains in a Post-Pandemic World. [ONLINE] Available at: https://hbr.org/2020/09/global-supply-chains-in-a-post-pandemic-world#. [Accessed 10 March 2021].

https://www.statista.com/chart/22924/global-gdp-projections-made-before-and-during-covid-19-pandemic/