The Brexit Effect

Elizabeth Maffei

Doing nothing can be a remarkably rewarding thing. For example, when I did a click-n-collect no-show at John Lewis for something I realized I don’t need, JL auto-refunded me the product cost. However, with Brexit, doing nothing and getting No Deal might not have such a happy outcome. Or perhaps it will all be fine … who knows? Even though Parliament’s been prorogued – something most of its members aren’t taking lying down – we may still get a Boris Brexit, which may, or may not, be a No Deal Brexit.

Whatever, let’s hope the uncertainty will end soon and that will be good news for businesses. In the absence of any concrete information about what Brexit will look like and when (or if) it happens, businesses have applied the reverse of the classic supply chain dictum by substituting inventory for information. Those businesses with better supply-chain and supplier-risk management will have been able to make the best of a bad situation by more easily being able to shift to a less-risky supply allocation via visibility across their entire ecosystem. Nevertheless, when there is uncertainty, Brexit-related or otherwise, it is harder than usual to keep working capital flowing – not tied up in inventory – to get the right products to the right place at the right time at the right cost.

It is difficult to tell what will happen next. If we do get a Boris Brexit, there are some clues as to what it will look like. An interview he gave 19 years ago when he was starting out in politics and talking to a school radio station (not my school!) offers some pointers. I’m assuming that even with less than John Humphrys’ intensity grilling, there must be authenticity in this recording. If you listen from 16:50, you hear him observe, “We get a bit hysterical about Europe … Where it all goes wrong is where you start trying to create a single country …” In summary, it’s not Europeans, it’s Europe, the political institution, that is the problem.

We still have center ground in the UK – a good chunk of which needs to be captured for a Parliamentary majority. This approach could enable him to keep the right-wing of his Conservative Party happy with a No Deal Brexit while body-swerving away from the xenophobes and, therefore pitching his policy tent much nearer the center ground, for example, with announcements like this.

If that is the plan, will it survive contact with the enemy? Enemy, in this context, meaning economic reality: the economic reality of being the world’s fifth-largest economy with potential slippage to seventh place. The extent to which the UK will be geopolitically hamstrung by the economic travails of having cut itself adrift from the world’s largest trading bloc is a related matter and the subject of much speculation. The cynic in me can’t help remembering that the announcement, more than 20 years ago, of the erstwhile perfidious Albion’s foreign policy with an ethical dimension, didn’t survive its exponent’s tenure as Foreign Secretary. It has been said before and is still nearly true: Plus ça change

But relative GDP isn’t the same as it used to be, and causing upset is easier to get away with when you’re not tumbling down the global GDP rankings. Plan B could be to fall back on superlative diplomatic finesse to give dealings with the UK that perfidy-free feeling. Given our new prime minister’s diplomatic performance when Foreign Secretary, I feel a Plan C may be required. Whatever Plan C might look like as far as trade is concerned, the clothing sector tops the IFS’s list of affected industries. As if things weren’t tough enough already for the UK retail sector.

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This article originally appeared on SAP Community.

Elizabeth Maffei

About Elizabeth Maffei

Elizabeth Maffei is the Spend Value Advisory Director, for the Nordics, United Kingdom, and Ireland regions, at SAP. Often analytical and creative, she is curious about tech, procurement and supply chain operations, and the world around them. Prior to SAP, Elizabeth earned a master of science degree in Logistics and Supply Chain Management at Cranfield School of Management and spent 10 years as a procurement practitioner and best practice researcher at organizations such as Procurement Leaders and the London Olympics.