IGD suggests Brexit 'workout' to test supply chains

The Brexit workout is a framework for companies covering continuity issues that could emerge, without taking excessive time or effort.

The IGD Brexit workout steps are:

1. Identify one product as your test case, probably a best-seller or signature item
2. Itemise the inputs needed to create the product and bring it to market; not just the ingredients and packaging but also machinery, energy, labour, administration etc. 
3. Consult with all stakeholders to understand the worst-case scenario for disruption from Brexit for the cost, quality and availability of these inputs – this includes partners from other businesses and the supply chain
4. Piece this together to get a picture of the overall Brexit risks for the product
5. Consider the steps you could take to mitigate these risks
6. Consider how representative your test product is likely to be for others in your range

James Walton, Chief Economist at IGD, said: "The alternative of sitting back and waiting for clarity while the clock runs down is extremely risky. Negotiations could go to the wire, with results emerging at the last moment. The least likely outcome is 'business as usual' and better prepared competitors could use this period of confusion to seize a decisive advantage.

"In every aspect, existing UK and European grocery supply chains are the product of their evolution in the Single Market and its regulatory framework. Even businesses that operate entirely within one country will have international connections somewhere along their chains that could be disrupted when the UK is no longer a member.”

It is possible that negotiations will proceed smoothly and result in relatively minor changes, but companies also need to consider more disruptive scenarios. Potential outcomes of the UK's departure might include long delays, big swings in costs, severe skills shortages and new barriers blocking some suppliers or sales routes. Remedial work could extend to every element of supply chain activities such as product specifications, sourcing decisions, transport routes, manufacturing locations, stockholding policies, quality control procedures, forecasting methods, customer service levels, KPIs and more. 

"The task will require teamwork through the chain and across the whole company," Walton continues. "It could be the ultimate test of a company's collaboration skills. For most grocery companies, this could take several years to complete, which is a daunting prospect. It is a management marathon and like many long tasks, it is hard to know where to begin. That is where our Brexit Workout comes into play, allowing companies to begin in a small way."

Brexit will be one of the main themes explored at the upcoming IGD Leaders' Forum on 18th October, where attendees can hear the latest insight from a range of leading experts on the forces of disruption. Additional information and tickets are available here.