brexit procurement

Brexit – Is it an opportunity for the Procurement Sector?

With Brexit looming on the horizon, is the forecast gloomy, or are chinks of sunshine bursting through to herald a new dawn for UK business? And what will the outlook be for those of us involved in the Buying and Procurement sector?

A GCSE economist could tell us that the sterling’s sharp loss of value makes our exports cheaper and point out that the FTSE actually rose in the months following the vote – and hit its highest ever level this May – yet the reality behind these changes is altogether more concerning.

Whilst a weak currency promotes exports, it also leaves the door open to foreign companies being able to take advantage of the situation and acquire UK businesses cheaply. Being based in Cambridge in East Anglia, two deals that stand out are Vantiv’s takeover of Worldpay this January, and Softcat’s purchase of ARM Holdings. Both businesses had a big presence in Cambridge, especially ARM which was founded in the city. Whilst it’s great that jobs will stay, questions do have to be raised over where profits will end up.

Likewise, the ‘vanity value’ of the FTSE’s strength is undermined by the reality that many of its constituent companies conduct a large share of their business overseas, so those ex-UK earnings are naturally going to boost sterling revenues and the perceived value of the respective companies.

How will Brexit actually affect Procurement for UK businesses in the long term? The negativity surrounding Brexit by far outweighs positive sentiment, with the naysayers warning of shortages, price hikes and queues of traffic either side of the Channel. Yet others have a more positive outlook. Sue Arrowsmith addressed the YPO World of Procurement conference in London recently, and suggested that – for public sector buyers at least – moving away from onerous EU regulations and falling back on WTO Government Procurement Agreement rules would open up the market whilst also stripping away a lot of bureaucracy.

For manufacturers, there are also perceived benefits for companies with predominantly export-led sales ledgers – whilst importing raw materials is more expensive, higher revenues mitigate this. However, for those businesses dependent on imported raw materials to service a domestic market, there will be tough times ahead, with pressure to either increase sale price or cut margins.

One of the most widespread concerns is that food costs will rise. As a nation that has doubled its import of food over the past few decades – now importing 40% of everything we eat –  the UK is particularly vulnerable to any fluctuations in cost or ease of access both to produce itself and seasonal labour that many farms rely on. Earlier this year, the National Farmers’ Union warned that Britain would run out of food in seven months if it had to subsist with no imports. Yet on the flipside, we see that almost 5 million tonnes of food grown in the UK is being thrown away because it doesn’t meet criteria (either EU or supermarket), and 75% of fish caught in UK waters is exported – partly down to EU quotas, yet also because of consumer taste. Is the challenge for supermarket buyers in the UK to educate consumers about wonky veg or strange species of fish?

What are your views on the Brexit situation? How do you think it will affect your job and business on a day-to-day basis?

Zero Surplus is a leading recruitment agency for  Supply ChainBuying & Merchandising and Procurement  within Cambridgeshire, Suffolk, Norfolk, Essex and the Northern Home Counties. If you’re looking to recruit staff in the Supply Chain or Procurement sectors use the link below.

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