Brexit – Preparing in the face of uncertainty
Turnkey and SAP are currently working with organisations both in the UK and further afield to better prepare for this impactful change in the political makeup of the European Union, as well as the ongoing changes in trade agreements globally.
The associated costs with international trade are already high due to the sheer volume of documents to be processed, compliance checks to be run, customs requiring clearing and increased warehousing expenses.
The risks, financial and operational, of getting it wrong can be very costly and should not be underestimated. This leaves businesses facing a potentially hefty additional burden in trying to get themselves into a position to comply with any new international trading requirements post Brexit. We are identifying the following trends and requirements from businesses.
Notwithstanding Brexit, one thing we know for certain is that the international trade environment is ever-evolving and growing in its complexity. The Brexit negotiations show us how difficult these trade agreements can be, and the result will no doubt add to the tangle of regulations that businesses are already required to navigate.
This will be especially painful for small to medium enterprises that until now may not have had to deal with complex supply chains and customs processing requirements. Paul Lloyd-Smith, Solution Sales Executive at SAP has worked with a number of larger organisations both in the UK and Ireland to better understand the present and future challenges and identifies the need for organisations to centralise their global trade management efforts using aligned technology to remove manual process bottleneck whilst also removing inherent risks associated with manual work.
The uncertainty of what the Brexit agreement will be is adding a huge risk to business operations on both sides of the channel. It is not currently known what changes will take place and how long any interim processes can be followed. Therefore, businesses will need to be in a position to react quickly to avoid falling foul of the changes, whatever they may be.
One thing we can be sure of is that regardless of the future trade agreements, adhering to them efficiently will require a greater reliance on technology. The UK has recently brought in a new electronic customs reporting process, one which they have emphasised is scalable to deal with increased declarations. This just goes to show the direction the government are preparing for and therefore businesses should think about putting in place technology solutions that are up to the task or face the risk of increased resources being required to deal with customs.
The future may not be all doom and gloom, however. There are potential opportunities on the horizon for businesses post Brexit. New trade agreements may be established that allow for strategic sourcing that takes advantage of reduced tariffs and changing preference rates.
Having systems in place such as end-to-end supply chain management that can adapt quickly to take advantage of sourcing improvements and also to continue to be compliant with regulations, will allow a business to gain a competitive advantage over their rivals.
So how can businesses position themselves to both take advantage of changes to the UK’s customs standing whilst also reducing the risks that may be posed by the changing regulatory environment? SAP Global Trade Services could be the answer for many.
In our next blog, we will be exploring the different elements of SAP GTS to show how customs departments can utilise this system in preparation for changes to come.