There are a lot of talks, workshops, consultant offers and helplines being offered to anticipate possible consequences of a hard Brexit. Every day we read opinions and assessments of what impact the different Brexit scenarios can have on our business and daily life.
We have been asking our customers in FMCG related businesses “the question”: How are you preparing for the different Brexit scenarios and what are your contingency plans ?
There seem to be two pieces of feedback that are similar and coming from different kinds of companies in different parts of the supply chain.
The first is the general view that we shouldn’t worry too much and leaders will not let it come to a point that economies, borders and supply chains get blocked. The current situation, however, is too vague and unclear to take drastic measures, so let’s hold off on changing too many things.
This positive mindset offers a warm blanket for Christmas and can work in personal life, but as a business you have to prepare for a negative scenario as well.
So, the second piece of feedback we have received is much more realistic. Over the next months, for most companies this means early 2019, factories will prepare for a, hopefully short, period of uncertainty where leaders will work under pressure to resolve the shortcomings of any Brexit deal.
During that potential “moment” of uncertainty, companies should be able to continue production and delivery as usual. We therefore expect companies to temporarily increase safety stocks of raw materials, packaging as well as (semi-) finished products. Yes, this will affect working capital for a short period of time, but rather this WC-dip than a breach of delivery towards a customer.