Time ticks down on Brexit
Like last year’s C02 crisis on steroids or a handshake away from stability?
With only a few weeks left to go before the UK’s Brexit deadline of 29 March, nobody expected the debate to be roaring on about no deal, revolts, or how, when or if the EU split will happen. Then again, maybe they did. But while the nation is glued to the news waiting to hear a conclusion to endless debates, votes and discussions, wholesalers don’t have the same luxury to take no action.
For many FWD members, plans have been under way for months, with the threat of a no-deal exit still causing a few sleepless nights.
“Overall, the picture is still very unclear,” says Confex Business Development Director, Tom Gittins. “We’re being advised that there will be food-chain disruption through to late summer should the no-deal scenario occur. “However, should a deal be reached, we don’t foresee much disruption within our sector for the next two years while the detail of the exit deal is thrashed out.”
Like many others, Confex has made tentative plans, with nobody – least of all the politicians – knowing what the state of play will be by the end of the month.
As a senior figure of a buying group with lots of independent members, Gittins has fielded a lot of questions on the topic, but says Confex’s strategy has been for communication across the supply chain.
“Confex has asked all our suppliers for their Brexit strategy detail and provided this as an online resource to our members,” he adds.
“Confex has also been involved in the FWD-led talks with government officials in an effort to safeguard against any food supply chain issues arising from Brexit. “We stepped up our Brexit planning strategy last autumn [when] suppliers had started to look towards their 2019 plans, while members were starting to question the knock-on effects of no deal.”
For others, there has been extensive work done to plan against any disruption. Bidfood’s leadership team was planning a contingency several months ago to ensure its 48,000 customers would notice as little impact on supply as possible – even though there is still a chance that the time and resource would be wasted if a deal is rushed through by the government close to the deadline.
“We have assessed all of our core range products that come in from the EU and identified key lines where we’d need to build additional contingency stock levels of up to eight weeks, taking into account what suppliers have said about their own plans to hold contingency stocks,”
Bidfood’s Supply Chain and Technical Service Director Jim Gouldie explains. “We’ve identified alternative products for those we believe are at risk, as well as lines we feel we need additional stocks of. As part of this process, we’ve looked closely at the products which are important to sectors that have a duty of care, for example education, healthcare and public services.
“Following this assessment we are now in the process of implementing our contingency stock plans and have invested in additional warehousing to house these stocks as we approach the end of March.”
For other wholesalers, such as Sony Bihal’s Time Wholesale Services, a different approach is being taken. Instead of stockpiling, Bihal has remained in regular contact with his suppliers about the topic and is holding his nerve to see what happens.
“Planning for a no deal in wholesale is difficult as we are only as good as our suppliers serving us,” he says.
“Wholesalers will be under pressure due to availability and panic buying – we are already seeing supplier promotions called no-deal Brexit pricing.
“The reality is that no wholesaler can afford to stock six months’ inventory due to cash flow, space and expiry dates. Most efficient wholesalers will work on a stock turn of 10–12, so the impact of a no deal will hit us on the third and fourth week as stocks diminish.
“Replenishment will be a nightmare as brand owners will have to service large retailers first, then the medium-to-large retailers, followed by national wholesalers and, lastly, independent wholesalers.
“My view is that a no-deal scenario will look and feel like last summer’s CO2 crisis, but on steroids in all categories.”
With the stakes getting higher as the clock runs down on the deadline, most wholesalers in the sector are following FWD’s advice, as the Federation provides as much clarity as possible on the situation to allow its members to prepare accordingly.
“We’re following the FWD position,” Sugro Managing Director Neil Turton adds. “We attended their London briefing and they’re giving good advice. They’re on top of the extra planning and information needs if a no-deal outcome looks likely.
“We sit squarely round the FWD’s position. They’re doing the best job they can and doing it well.” So, while the uncertainty continues to reign, wholesalers – like the rest of the country – are eagerly awaiting the latest updates coming out of Westminster and Brussels.