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Today, Britain goes to the polls in a referendum to decide whether they want to remain or leave the EU. If there is a vote to leave there will be repercussions for businesses and procurement functions alike, but the full repercussions of that vote may not be known for some time to come, so the question is what can the function do to mitigate any risks both in the short and long term?
1) Get yourself a good lawyer
A vote to leave will mean fundamental changes to the nature of trade between the UK and the EU. A good lawyer with expert knowledge of what these changes might mean is essential. Fail to do that and fully comprehend what any changes will mean will leave your function and your business open to what will be completely unknown risks.
"During a period of uncertainty [following a leave vote], there will, at the very least, be additional trade tariffs imposed on trade between the UK and the EU," said Gregor Irwin, global economist at the Global Counsel at this year’s World Procurement Congress.
2) Assess your supply chain
CPOs will have to take stock of where their suppliers reside and consider what will happen and how their relationship with those businesses will change. That isn’t just tier one suppliers though, it will have an impact throughout the supply chain.
"Logistics providers may get more business initially because of the need to manoeuvre around Brexit; however, the long term competitiveness of the UK may reduce. Then the short term benefit will indeed be short lived," said Alejandro Alvarez, director of operations performance at Ayming.
The relationship with suppliers will become more complex and potentially more costly too.
"If additional trade tariffs are introduced, this will impact prices and margins for businesses," said Lesley Batchelor of the Institute of Export in a debate on Brexit at the World Procurement Congress.
Duncan Boyd, management consultant specialising in Supply Chain and Operations, at Crimson & Co, meanwhile said that a Brexit would "be like a divorce".
"If the UK does vote to leave it changes the relationship. There will be a change in the attitude towards Britain and British businesses," he said.
3) Talk to your CEO
If a vote to leave is cast the question from the boardroom to procurement is going to be ’how are we dealing with this?’
CPOs should already have plans in place to deal with this, if they don’t then the influence the function has built up over the last few years will almost certainly disappear pretty quickly.
Predicting the future is impossible but ensuring that your business understands what will happen and when is the surest way that you can protect the business without causing undue concern.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.