27 July 2016 
Emma Keenan, Procurement Specialist
While we know that much of what will come from the result of the Brexit vote is yet to be understood, one thing is for sure – the change in the strength of the pound is affecting us now! So what can you do to protect your institution?
A key requirement is to work closely with your treasury manager. This relationship is vital to ensure both parties have enough information to minimise impacts where possible.
Review your current contracts. Who are you using for what? Where is what they supply coming from? How much of the end product is made up with imported components? Ensure you don’t just consider the first tier supplier – how does the supply chain look? Are there overseas suppliers further down the chain? What are your suppliers doing to mitigate the risks on pricing?
Understand how your supplier’s costs are made up, what percentage is materials, labour, profit etc. This will help you to ensure you can argue that any price rises requested/imposed are realistic and appropriate. Don’t forget that our Cost Modelling e-learning is available if you want to review this subject.
I have tried to gather here some useful articles to help you, but if you are doing something innovative or have any advice for other institutions you could share please get in touch.
As a reminder of the basics on how to manage currency risk in the supply chain, this article, whilst a few years old, does pick up on the key considerations.
Not very cheery but this one details what has happened already in relation directly to procurement, and what might happen next.
This article from CIPS has some excellent points around the overall Brexit impacts as well as highlighting their useful Brexit Healthcheck to help you identify and prioritise potential exposures and opportunities.
