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Procurement being squeezed out of Brexit preparations, research finds

Brexit and procurement

As uncertainty continues to surround the final outcome of negotiations between the UK and the European Union over the UK’s withdrawal from the trading bloc, Odesma conducted its annual survey to try and better understand the sentiment towards Brexit within procurement and supply chain functions.

 

Here is what we found in five key areas:

 

Suppliers

While more than three-quarters (82%) of function leaders say they feel under more pressure to reduce the cost of third-party goods and services, 72% say they have yet to consider or do not plan to seek new suppliers in non-EU markets.

 

On a positive note for UK-based suppliers, 45% of respondents say they are planning to look within the UK for alternative supply lines in future.

 

Planning

The research also indicates a drop in the level of planning being undertaken by the industry in regard to Brexit with just 39% indicating they are planning in 2018, down from 54% in 2017. Either function chiefs feel they are satisfied with their planning to date or they simply do not know what the outcome will be and are waiting for a clearer picture of the negotiations before they commit to any plans.

 

The role of procurement

Despite leaders feeling unprecedented pressure to drive down costs, the research found procurement teams are also being squeezed out of their organisation’s Brexit preparations. Almost three-quarters (73%) of respondents say their functions are playing a critical role, compared with 92% in 2017.

 

With its finger on the pulse of the supply chain, procurement chiefs must ensure the function is involved in these discussions to ensure all risk areas are considered.

 

Sector growth

One of the most reassuring aspects of the research is the fall recorded in the perceived impact of leaving the EU on sector growth. In 2018, 45% say they feel it will hamper growth – down from 67% in 2017.

 

Global issue

Finally, the research found Brexit is increasingly being considered as an international rather than European issue, with almost one-quarter more respondents saying that it will disrupt procurement globally (52%) compared to just 29% in 2017.

 

What next?

Getting your house in order, putting plans in place wherever possible and preparing your business as best you can based on current political sentiment all remain critical. However, until the government agrees the terms of the UK’s exit from the EU, uncertainty is likely to remain.

 

Although they cannot change the direction this journey will take, procurement executives can seize the opportunity to re-engage with stakeholders in order to enhance the position of procurement in readiness for the vital role it will play once Brexit is initiated.

Nick Ford is executive director at procurement advisory firm Odesma

 

Odesma first conducted its Brexit research in January 2017

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

Nick Ford
Posted by Nick Ford

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