How to manage supplier relationships after Brexit
Today Conservative MPs cast their first votes to elect the next UK Prime Minster, with Andrea Leadsom, Esther McVey and Mark Harper the first to be eliminated.
Over the last few weeks, all ten of the prospective candidates' campaigns have been defined by their position on a single issue: Brexit.
31 October 2019. That is the current date on which the UK will leave the EU. Is there enough time for the new leader to renegotiate the withdrawal agreement? Would the EU grant another extension to negotiate with the new PM? What would be the impact of leaving without an agreement in place? Will the UK leave at all?
Opinions diverge wildly, but such is the way with politics. For business, the more pertinent question is how they can best manage the risk and prepare for the future. Here is some practical advice on managing supplier relationships after Brexit.
Know Your Supplier
It is critical that companies know who they are doing business with, and not just for legal and reputational reasons. If you don't know your supplier, how do you know you can rely on them when the going gets tough?
Products like Mastercard Track Trade Directory in partnership with Tungsten Network, gives companies access to a wealth of trading information on the companies they do business with, including registration and compliance information. As a secure, permissioned repository of over 150 million company registrations worldwide, this central directory will integrate feeds from more than 4,500 compliance lists into one place, making the screening and onboarding suppliers more efficient while being confident of meeting OFAC, AML and KYC compliance standards.
When asked, only 23 per cent of companies have achieved “mature” supplier-related processes that involve them monitoring and analysing their suppliers using clear metrics. Meanwhile, just 12 per cent of businesses scored the highest level of ‘optimised’ maturity, which sees processes being constantly monitored and improved to maximise performance. This research shows that there is still a long way to go before the business community can boast of having mature, streamlined and transparent supply chains and more help is needed to get them there.
On Time Payments
Developing healthy supply chains makes good business sense whatever the season. In steady and uncertain times, regular communication with suppliers is key and benefits all. Trust needs to be built both ways and is integral to creating frictionless trade. Suppliers need their customers to trust that they will deliver their goods on time, at an agreed price. Equally, businesses need to treat their suppliers with respect by doing all they can to complete payments in line with the agreed terms.
When you can rely on your suppliers, you can adapt more easily to changing circumstances. This winter, businesses are going to need their suppliers to be particularly responsive and agile as they prepare for various outcomes, and communication and collaboration will be essential throughout. In contrast, poor supply chain relationships can damage businesses. Our own research has found that 84 per cent of businesses have suffered from some form of supplier failure in the past three years, which can result in stunted business growth and increased risk levels.
A well-implemented invoicing system can provide you with the infrastructure to take control your cash and ensure your suppliers are paid to terms. Plus it gives your suppliers visibility of their invoices, which avoids the need for them to call or email you chasing for payment status; the extra visibility can be a good way of building trust.
Do Your Due Diligence
In addition to nurturing supply chain relationships, there is a huge amount of due diligence to be undertaken over the coming months. Companies need to explore whether new licences will be required after Brexit – many are already filing the appropriate paperwork to transfer EU Marketing Authorisations to EU-based entities. They may need to relocate or appoint new personnel into EU-based entities and they are already exploring the impact of increased timelines on supply planning.
It will also be important to clean up existing data and prepare processes and systems to collect and store the customs information that might be required under new trading agreements. This is where ensuring that all back-office processes are digitised will really help, so different departments in different countries can access invoice data at the touch of a button.
For companies to overcome the ongoing economic uncertainties, global supply chains will need to be flexible and ready for much change. The UK and Europe have a long, shared history of innovation and collaboration within the life sciences and no matter what, everyone who works within the industry is passionate about this continuing long beyond October.
To find out more about how improving your invoicing processes and how Tungsten Network can help, get in contact with us today!