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Managing supplier relationships in a post-Brexit world


As Brexit draws closer, there continues to be widespread speculation about what will happen on March 29th 2019. No one has a reliable crystal ball and the complex ongoing negotiations could  have any number of outcomes. As the date approaches, it’s clear the UK Government and pharmaceutical industry are doing some serious contingency planning.

Every month, 37 million packs of medicine arrive in the UK from the EU and 45 million are transported to the continent. Firms such as AstraZeneca, Sanofi and Novartis have already confirmed that they are increasing their stock supply in Europe and UK Health Secretary Matt Hancock recently confirmed that he has asked pharma companies to set aside six weeks’ worth of medicines as a precaution. The Government is also discussing the logistics of flying certain short shelf-life medicines into the UK and associated refrigeration costs. It holds pharmaceutical companies responsible for honouring and fulfilling existing contracts, but is planning to reimburse suppliers for any extra costs involved such as air transportation.

Making sure the supply of medicines is uninterrupted next spring is the number one priority for the industry, so how can businesses prepare for whatever comes their way beyond March 29th?

Building trust with your suppliers

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, pharmaceutical 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.

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.

It is critical that companies know who they are doing business with, for both legal and reputational reasons. 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.

Mitigating supply chain risk

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. Pharma firms 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 Pharmaceutical 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 March 2019.


About the author

Ruud van Hilten

A process automation expert, Ruud van Hilten has supported global organisations such as HP, GSK, and Siemens re-invent their procure-to-pay function for over 12 years. As Tungsten Network's SVP Strategic Business Development and Country Compliance, he is responsible for high profile partner engagements and accelerating the benefits of the network for Tungsten Network customers. Prior to Tungsten Network, Ruud worked with early e-commerce adopters all over the world at BroadVision.



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