What Does Brexit Mean For Supplier Relations?

Updated: Mar 24





Three and a half years after the British public voted to leave the European Union. Yet the future remains highly uncertain, particularly when it comes to international trade and business relationships. Fortunately, there will be a year-long transitional period, giving companies the time they need to rethink supplier relations and overcome the various other challenges ahead.

What are the risks for businesses?

Today, even small businesses can have a global reach thanks to technology. Many now work with teams and suppliers and serve clients all over Europe and beyond. But doing business within the same economic bloc is far less restrictive than doing business with those outside it, hence why many companies prefer to keep their supply chains within the same political-economic regions where they largely only have to worry about one set of trade rules.

Brexit will impact all businesses, especially those with highly integrated supply chains across the bloc. For example, just-in-time manufacturing may suddenly find itself subject to restrictive international trade rules, particularly if the UK ends up being unable to agree on a trade deal with the EU. Highly regulated sectors, such as finance and healthcare, may find themselves subject to multiple compliance regimes.

Data sovereignty is another major source of concern, especially for businesses based in the EU which work with cloud vendors in the UK. GDPR, for example, requires that data belonging to EU citizens stays in the EU, although exceptions may be made for other jurisdictions which offer a similar level of protection. While the UK itself isn’t planning to abandon GDPR, many UK businesses are either relocating to the EU or taking their digital assets back home with local server colocation and cloud facilities to reduce the risk of potential compliance issues in the future.

Is it time to rethink business relationships?

Change is constant in today’s technology-driven world, so it’s always wise to have adaptable business model and be prepared for any likely eventuality. When it comes to Brexit, the uncertainty is greater than ever. If, for example, the UK ends up becoming what the EU describes as a ‘third country’, any trade relationships between UK and EU businesses will no longer be subject to far less restrictive EEC trading rules, but instead to those laid out by the World Trade Organisation.

Supplier relations must be built on trust and certainty, especially when working with vendors critical to the continued operation of your business. Every supplier carries a degree of inherent risk, and one of the factors which increase that is whether the supplier is located abroad and, consequently, is subject to a different set of rules and regulations. In some cases, outsourcing a business operation to a foreign supplier can end up being a legal issue. While that’s unlikely within the EU itself, relationships between UK and EU businesses will likely find themselves under increasing strain.

To reduce risk, particularly when preparing for the possibility of a no-deal scenario, companies may need to revisit their supply chains. Some may want to outsource certain operations to local suppliers. For those set on continuing business between the UK and the EU, it might be necessary to replace some suppliers with ones which offer a post-Brexit guarantee concerning matters like compliance and time to market. Other businesses may even find it more profitable to focus on new markets entirely, although that could involve completely rethinking many key business relationships.

Although we’re all agreed that the future is highly uncertain, it’s important to look forward and prepare for the challenges ahead, just as it is to identify the opportunities. Although Brexit will undoubtedly transform the supply chain landscape, now is a more important time than any to surround yourself with people you can trust and ensure you have the solutions and processes in place to make it happen.

Mazepay offers dependable procurement solutions for buyers and suppliers looking to reduce risk and simplify onboarding and maintenance. Contact us today to find out more.