Procurement will be “front and centre” of the issues thrown up by Brexit, the CIPS UK Conference was told.
John Glen, CIPS economist, said he expected a Chequers-style agreement would be reached with the EU, but long queues at the border, skills shortages and a downturn in growth could not be ruled out if no deal was agreed.
“You are going to be front and centre of those issues,” he told delegates. “People are going to be presenting you with problems and asking for solutions.”
Glen said he expected a Brexit agreement to include a transition period of perhaps two years and a divorce bill of £40bn. He said the issues of free movement of people and the jurisdiction of the European Court of Justice would be “fudged”. “Ireland is the problem,” he said.
Glen said the option of onshoring for UK firms was limited because there was “very little headroom in the economy to produce more output” due to high employment and low productivity levels.
He said following the Brexit referendum firms had reduced investment due to fears of investing at the wrong time and leaving themselves short of cash in a downturn. “When you have uncertainty this is what organisations do: they go to cash,” Glen said. He said during a recession it was not survival of the fittest but “survival of the fattest”.
During a panel discussion on security of supply, Alex Jennings, CPO at packaging firm DS Smith, said a truck driver shortage in Europe would be exacerbated by queues of lorries in Kent and Dover. “We will get to a stage where if you don’t have the right relationship with customers and suppliers, you will stop,” he said. “We will get to the point where who pays the highest gets the truck.”
However, Jennings said supply chains “find a way of optimising themselves over a period of time”. “What we are talking about is interactions with suppliers facing a significant period of disruption for a sustained period of time,” he said. “It will find a level but this is going to be significant and we need to make sure we are ready for it.”
Jennings said the firm had produced an internal handbook to explain to employees what it was doing about Brexit. “The only chink of optimism is it gives us the opportunity to have supply chain and procurement people in the room with customers to have proper discussions,” he added.
Gordon Tytler, director of procurement at aerospace firm Rolls Royce, said Brexit was part of a “blend of geopolitical issues”, including the US China trade war, that it needed to manage.
“We have very focused activity around the Brexit challenge,” he said. “We have been preparing for that over a significant period of time.”
But he said Brexit was not the “sole concern” for Rolls Royce, which operates globally. “Queues at borders and supply chain disruption is something we have to manage as part of our normal behaviour,” he said.
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