In this useful guide, Denis Casey examines Brexit in the context of risk; specifically when it comes to customers, suppliers, and logistics.
1. Customer risks
Let’s start by looking at customer related risks. When assessing this, you will need to consider risks posed by your customers’ customers and perhaps your customers’ customers’ customers. You need to look for risks as far up the supply chain as is necessary. For instance, if all your direct sales are to Irish based customers, but they in turn export say 50% to the UK, then your business is exposed to risk.
When you have exposure by having customers in the UK, your action plans should include the following:
i) Liaise closely with your customers to understand their Brexit challenges and action plans – then assess how severe an impact their plans will have on your business. Now you can base your risk assessment and action plans on facts rather than speculation. Where possible try to agree on some joint actions to address their challenges. However, in addition to any collective actions agreed, you should develop additional action items focused on your own needs.
ii) If you don’t already know, find out how price sensitive your customers are. It may be possible to pass on some price increases. This will depend on the competitive landscape and whether you have UK based competitors. For instance, if all your competitors are based outside the UK, then you should start to condition your customers to expect price increases. It’s unlikely that the full Brexit cost impact can be passed on to customers, but even small price increases will make the challenge a little smaller.
iii) If your UK customer base is significant, you will need to investigate the costs and feasibility of setting up an operation in the UK. This will help to overcome
