Guidelines for Manufacturers Preparing for Brexit
John Basinger, Inoni, discusses the implications of Brexit to the manufacturing industry…
I saw this article in Cabinet Maker magazine which discusses the findings of a recent KPMG report into the future of UK manufacture. The report details key practical measures that manufacturers can begin to put in place now to prepare for when the UK exits the EU in 2019. They include:
1. Plan to move inventory/stock closer to markets.
2. Finance or re-finance to lock in lower cost of capital.
3. Keep close to your customers and prepare to support OEMs and exporters.
4. Maximise cash and de-risk by reducing costs and liabilities.
5. Understand the appetite of your market for price changes now
6. Mitigate supply chain risk.
Each addresses an aspect of increased risk arising from the Brexit change. Individually, and in moderation, any might require an adjustment, perhaps leaving a recoverable dent in revenues. But what if it’s worse than that? Who is to say the effect will be singular or moderate? We need to be aware of the possible extremes, hedging, defending and learning to recognise the signs.
Brexit should be a clarion call, urging UK manufacturing to become more competitive and more self-sufficient in the face of protectionism and tariffs. In the report KPMG say that we must invest more in developing digital skills and innovation as well as encouraging the Government to support R&D into artificial intelligence and advanced robotics if we are to remain in the frame.
The report tells us that those who capitalise on new technology, who understand and systematically manage-out the downsides associated with older modes of working are demonstrably the most profitable and successful. But to become like this, we all need the clearest possible view of where we are, where we are headed and what lies in between.
But we don’t have a crystal ball and this is a narrow and winding path. On one side, competition threatens to consume the lacklustre; on the other, badly planned technology can kill performance. Our way is made more precarious by skills shortages, as highlighted in the report, to the point where manual workarounds may cease to be an option. It’s no walk in the park.
Business continuity is the art of looking ahead, anticipating the challenges and seeing innovative ways round or through them. We use scenario modelling and mapping techniques to achieve this, reasoning and planning against all kinds of extreme risks. We use them to map markets, operations and supply chains, gaining a surprisingly detailed view of the organisational landscape.
Inoni has a wealth of experience in supporting the manufacturing sector, helping it to become more resilient by planning and managing risk. We have noticed an upswing in referrals from insurance brokers, whose manufacturing clients have been required to produce a Business Continuity Plan. Why now? Insurers of manufacturing businesses are becoming increasingly concerned at the growing business interruption exposure they face. They realise that clients are much less likely to resume following a major disruption if they don’t own a working business continuity plan.