No DEAL or DEAL Brexit Scenario

The vast majority of our key raw material supplies already come from outside Europe. We always carry buffer stocks of raw material in case of delays within our supply chain. This is built into our standard procurement policy as we do buy the majority of requirements direct from plants outside Europe now and need to ensure sufficient stocks in case of delays with ships / plant issues etc. In the case of a no deal and the possibility of 6% duty added, we currently see no or very little impact on our costings in this scenario, due to our purchasing strategy as a business.

So, we are carefully the monitoring the situation, as all UK businesses should be, and we will be carrying additional material in Q4 2020 & Q1 / Q2 2021 and perhaps beyond to ensure we have no disruption. We are also in discussions with our other “non raw material” UK suppliers for other items to ensure no disruption in any areas. We also monitor FX movements and hedge accordingly on all non sterling transactions to ensure pricing volatility due to currency is kept to a minimum. The base raw material pricing is constantly monitored in any scenario.

Rest assured we are preparing for all eventualities, but our procurement strategy is already well positioned and agile enough to align to either a soft or hard Brexit scenario.

We recognise there will be pinch points and crucial deadlines over the next few months and as we as businesses gain more clarity regarding the situation. We are scheduled to hold 25-30% additional raw material & finished goods at critical points in order to ensure a smooth supply chain in any scenario. As part of our contingency plans, we have also familiarised ourselves with “what if scenarios” and have sought insight and attended international trade briefings (webinars) with Trade experts and advisers to the EU commission., where AEO ( Authorised economic Operator) and potential future customs clearance processes have been discussed in detail.

We are monitoring the situation on a regular basis and will adjust our position as this process develops.