Effects of Brexit on Procurement Processes

Introduction

Procurement process is a complicated process. It requires data from all the areas of the organisation i.e. different departments. To carry out this process the organisation has to setup a strategic procurement team. It is this team responsibility to set direction for the procurement keeping the business strategy in mind. The team then use the data from the process collect through different departments to create and implement a strategic procurement plan.

This paper discusses about the effects of Brexit on procurement process of Reflex limited. What is Brexit? Bexit in easy terms means British Exit, it refers to the UK’s decision to leave EU (European Union) on 23rd June, 2016. The reasons after people wanting Brexit were Sovereignty and Immigration. On the referendum day the polling team questioned people who voted and about 49% people said that Decision about UK should be taken in UK and One third of them said it’s the best chance for UK to gain control over immigration and its borders.

Due to which there are multiple threats to procurement process of this Irish company which manufactures medical devices for EU, USA and Far East. Being a global supply chain gives them an access to multiple suppliers overseas. Leading to 90% of component required for manufacturing devices comes through imports, out of which 60% is from UK. With majority of its imports coming from UK and UK leaving the EU will have some serious impact on the company. This has become a threat for the company’s supply chain.

Identification of Threats

Now, it’s the responsibilility of Supply Chain Manager to identify the threats to the supply chain, which can be done by performing the followings steps:

Five Main Threats Identified

There are multiple threats which can be identified to the supply chain by following the above steps, but there are 5 main threats in my eye which I believe could have a negative impact on the supply chain. They are as follows:

All the threats listed above are essentially leading to increase in cost which inturn increases the prices of our products.

Potential Actions to Address Brexit

In such case Joan Murphy, Supply Chain Manger could take certain actions to address these threats, that are:

Threat Mitigation

These action may be very effective but how does it affects Reflex ltd supply chain still remains the question. Let see how these actions mitigate the impact of Brexit and will assist the company to remain profitable and competitive in the market.

Conclusion

Brexit has brought numerous up’s and down’s in possibly every business sector and procurement is no exception. The company operations were affected due to the various criterias they have to fullfil. This report covers some of the effects of brexit on Reflex Ltd. It has hindered the overall performance and structure of the company. In this risk of potential threats were identified for Reflex Ltd. Both internal and external factors were cover in the report to identify the threats. In order to safeguard from the effects of Brexit, The company made multiple changes in regards to the cash flow, policies, workings, etc. It also shows the possible actions the company would take to mitigate the identified threats.

Brexit has drastically effected the companys supply chain as it made it difficult for the company to procure the materials required for the production. There are certain perimeters that needs to taken into account such as the immigration, laws, licensing, currency and many more. The company has tackled the situation in the best possible way which has helped them reduce the negative effects of brexit. Also the company’s operation were not seriously effected. The company has found multiple ways to cover all the perimeters and also brexit without facing loss.

Bibliography

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