The cases when protectionism makes business smooth
6 January 2018
After Brexit equality is over at least for some businesses.
The vote in favour of Brexit was once described by the former chancellor George Osborne as the “biggest act of protectionism in British history.” Indeed, since the referendum the pound has fallen sharply against other currencies, and much uncertainty exists over the negotiations and whether Britain’s exit will be a hard or soft one.
Richard Wilding, professor at Cranfield School of Management, believes that the biggest threat for supply chains post-Brexit will be the devaluation of the pound. “It has either created challenges from the fact their demand has increased dramatically or it has created challenges from the perspective that all of a sudden their raw materials have gone particular high,” he says. “The bottom line for supply chains is that they run extremely smoothly. If you are looking at an event like Brexit there are standard supply chain risk management techniques that you can use.
“The good news with something like Brexit is we do have two years notice on it. We are going to have a disruption and it is going to occur so we can plan for it. This is actually really important, because [for] a lot of supply chain disruptions you don’t get much notice of – [such as] terrorist attacks, or volcanoes going up, or storms going across the ocean.”
Wilding suggests that companies take steps towards gaining a greater understanding of where their suppliers and customers are located in the world. “When something like protectionism starts to rise, companies need to know how exposed they are to it,” he says. “To be quite frank, that has been a challenge for many organisations, because they have not really understood the complexity of their supply chain networks.
“It might be that you need to change the routing of products. It might be that you need to identify different suppliers, or reduce exposure by finding customers in different areas.”