On June 24th 2016, citizens of the United Kingdom voted and passed a referendum to leave the European Union. Better known as “Brexit”, the move sent a shock wave through global financial and currency markets. In context of the interconnected globalized economy, Brexit is not a localized phenomenon. Given the significance of the UK to the world economy, the vote has global economic repercussions and its’ impact is not limited to the UK and its citizens.
“Every crisis is a threat, but also an opportunity to grow, grab market share, and change the competitive landscape. Brexit has created many risks to global supply chains, particularly those touching the UK and Europe. However, companies armed with information about their supply chain dependencies will be able to exploit the opportunities that open up quickly during this period of turbulence and uncertainty.”
– Bindiya Vakil, CEO of Resilinc.
By analyzing the macroeconomics of the UK combined with advanced multi-tier supply chain intelligence available in the Resilinc global repository, Resilinc provides a window into what supply chain experts can expect in the coming months, and what opportunities and risks this historic event has opened up. This paper also includes a deeper analysis using Resilinc’s supply chain intelligence about the High Tech, Life Science / Pharma, and Automotive industries.
The Resilinc analysis provides:
- An analysis of the macroeconomic metrics of the UK
- An examination of currency, labor, trade and financial risks unleashed as a result of Brexit
- Near to medium term outlook for supply chain practitioners
- Analysis and recommendations for the High Tech, Automotive, and Life Science industries
- Outline of opportunities for companies and countries
- Recommendations for supply chain practitioners to navigate through the period of disruptions
Supply chain practitioners who have made the investment to map their supply chain and proactively identify who their key sub-tier suppliers will be able to begin the process of predicting potential problems immediately. Often operational performance problems can be early indicators of financial stress. Many companies in the UK face an extended period of uncertainty where some key projects may go on hold, access to investments gets jeopardized and currency fluctuations make imports of critical raw materials more expensive and squeeze margins and cash from operations. Knowing which companies are based in the UK or operate from there will enable these companies to monitor their performance and collaborate with them closely can help pinpoint potential problems before the manifest or escalate.
The turbulence in currency markets also opens up opportunities for cost savings for companies importing from the UK. Additionally, cash rich companies in emerging countries, as well as the US and EU can use the period of currency turbulence to identify key M&A opportunities for robust UK brands or snap up UK’s existing supply chain operations and access to markets in the US and EU. These moves can protect long term supply assurance of critical components, but also be used to disrupt the supply chain for key competitors. Deep multi-tier supply chain intelligence can provide tremendous opportunities for arbitrage and be a tremendous source of competitive advantage.