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Brexit creates supply chain uncertainty

Bart Perkins | Aug. 17, 2017
Monitor Brexit closely to avoid having your supply chain disrupted. If you don't, Britain’s exit from the EU might not be the only exit in your future.

Evaluate contracts. IT vendor contracts can limit an enterprise’s flexibility to change the way IT systems operate.  Since few people imagined that Brexit would pass, most enterprises are currently using standard vendor contracts.  Enterprises need to examine existing contracts to determine if they can be modified or canceled in the event the enterprise’s information systems need to be re-architected. Any contracts currently being negotiated should be relatively short-term with as much flexibility as possible until Brexit terms are finalized. 

Evaluate systems. Since the supply chain is typically a core system that is tightly coupled to other systems, it may be necessary to change virtually all IT systems.  Evaluate systems’ strengths and weaknesses to determine whether or not they are robust and flexible enough to accommodate what could be significant change. If enterprises with British operations or service providers are lucky, few changes will be required.  However, if massive changes become necessary and the enterprise doesn’t have a plan, more resilient companies could use Brexit to gain a competitive advantage.

Do your research. Start researching Brexit’s impact on your supply chain contracts and your enterprise’s IT systems now and closely monitor the Brexit terms.  If you don't, Britain’s exit from the EU might not be the only exit in your future.

Very little is known about the eventual Brexit terms.  Theresa May’s recent loss of her parliamentary majority adds to the confusion.  Even though she has not stepped down, it is possible she will be forced out.  A new government could push for a “softer” Brexit than the “hard” Brexit that Ms. May advocates.  Even if someone else becomes Prime Minister, Brexit is so complex that the terms are unlikely to be finalized until shortly before Britain leaves the EU in March 2019.  Even after terms are finalized, no one knows how much time will be allowed for the transition or what penalties will be imposed for failing to comply.

 

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