Did you try to figure out how a robot vacuum can clean up Brexit? Fortunately, this article will have a different spin on clean up. The debate around Brexit and its impact is becoming a regular part of our press. The affects of Brexit on global manufacturing companies has many facets. One of the most critical ones is the product transfer across the future borders. Prior to the effective date of Brexit, the import and export of products will have their challenges as the system will be overloaded due to lack of processes or lack of knowledge related to new processes. Many of the companies exporting or importing products are building up inventory to compensate for the anticipated chaos. For the aerospace industry, building up inventory is creating an additional challenge as the supply chain is already under great pressure with high demand. Let’s break the challenges down and see what technology can do to address the impending disruptions.
- Border crossing – Products have to physically cross the border. Product with certification requirements or specific border crossing paperwork will require additional time. Furthermore, some of the agreements to acknowledge certifications will consume even more time. For spare parts, this might add additional time and impact service level agreements.
- Additive manufacturing can step in and address some of these challenges. Foreign companies can find partners to collaborate on the design and perform the printing in different countries. For example, a UK based company can find a EU local partner to print and certify the parts in EU. This offsets having to manufacture in the UK which would require certification of UK process as well as part certification in EU. This could streamline the certification process and greatly reduce the logistic times.
- Border operations – Today there are agreed forms for the process to import and export between UK and other countries. With Brexit, new documents and processes will be in place and the amount of paper work for all parties involved will increase. This will cause additional steps and elongate the processing time. The paperwork will likely double and the amount of manual reviews will slow the process down (learning curve etc.)
- Blockchain can be utilized to standardize the information being exchanged. The individual border operations can then fill their forms based on the blockchain information. This will streamline the operations as the content is the same just on different forms. Blockchain will also increase efficiency because border operations can access the information in a digital format allowing them to build consistent processes.
- The above-mentioned extra effort on foreign trade related paperwork and process administration will result in extra cost and increasing lead times. Companies will want a fully automated global trade system, natively integrated with core ERP systems, that can quickly incorporate these new regulations and minimize disruptions. Logistical processes can consequently run highly automated even in a post-Brexit world, managing customs paper work, declarations, and other trade processes in the background.
- As the different processes settle in, new lead times will have to be established. The use of artificial intelligence can help identify or predict lead times and provide suggestions for system updates. This will in the future create better forecast and inventory calculations.
- Tracking of inventory flow – time is of the essence. As the border crossing will consume time, it is crucial that any possible delay is addressed as soon as possible. Before the products even arrive or after they cross the border, delays can have a big impact.
- Aerospace companies will need to manage inventory levels prior to the actual event effectively by understanding the customer needs, their risk exposure and their forecast. Collaboratively plan effective inventory levels so that appropriate buffers of inventory are built up. Currently, many manufacturing companies either send inventory build ahead of the requests that are not manageable or simply freeze suppliers because of their lack of understanding the actual demand in order to adjust their manufacturing plans accordingly. These plans are also not built in a collaborative fashion, as raw material or other supplier constraints are not considered. Collaborative planning would streamline the entire supply chain.
- Track & Trace solutions can help manage the routing of the shipments and correlate with external information to optimize the transit. Clear communication with transportation partners is also critical. Should any potential risk or issue arise, the company can address it to minimize the impact. Intelligent systems can help predicting impact on product lead-times and risks – e.g. on SLAs or customer deliveries. Holistic, prescriptive models would help to identify optimal solutions, e.g. to expedite parts from other sources in critical cases.
- Supplier Risk Control
- Many, especially smaller, UK suppliers will become more vulnerable as their margins might slip, due to rising shipment and foreign trade overhead costs. Some will also see negatively impact their existing strategic partnerships across Europe. Potential issues are reduced foreign investments, difficulties to win new contracts, and more challenges to easily access workers with critical skills as well as know-how. It will be important for companies to gain visibility into these potential risks as early as possible. Real-time supplier risk analytics tools can automate this process, scan through high volumes of supplier related, publicly available, information sources, and apply machine learning to translate these data points into predictive alerts if a significant supplier risk is detected on any level of the supply chain.
- Raw material sourcing optimization – to ensure supply continuity and responsiveness while considering extra costs for UK based raw materials, re-negotiations between UK and EU companies will happen. Companies will need systematic ways with simulations and predictions to identify optimal price points and find alternative solutions – making negotiations more intelligent, automated and optimized.
There are probably many more challenges awaiting the Brexit. We used Brexit as an example for a geo political event. Many others such as trade restrictions, tariffs or other border crossing operational changes will impact companies in the future. In addition, the hyper customer focus will also require manufacturing companies and their suppliers to relocate closer to their customers. This will not only reduce the supply chain risk but also allow them to reduce the lead time for engineering changes so that customers have more time to adjust their orders.
We so often run into challenging situations but as life gives you lemons, make lemonade…just make sure you use the right technology to make it taste good.