Post-Brexit uncertainty raises global supply chain risk
Post-Brexit uncertainty raises global supply chain risk
The Chartered Institute of Procurement & Supply (CIPS) Risk Index indicates that the risk in global supply chains has reached its highest figure since 2013.
The overall figure is influenced by risk increases in a number of regions, including Central and Eastern Europe, Latin America, the Middle East and Sub-Saharan Africa. The trend is most prevalent in Western Europe, however, and the report cites post-Brexit uncertainty as one of the underlying factors.
The report states that the rise in supply chain risk is partially caused by a collapse in the political consensus over globalisation. In Western Europe, a great deal of uncertainty surrounds the post-Brexit interactions between the UK and the EU, and this has already impacted business sentiment and trade in a negative manner.
Currency volatility has seen suppliers start to increase their prices in the UK in reaction to the weakening pound. The report indicates that the “brief stand-off between Tesco and Unilever looks to be only the first of many challenging negotiations for British procurement teams.”
Elections over the next year could result in gains for populist parties in France, Germany, Italy and the Netherlands, all of which are sceptical regarding European integration and unwelcoming towards free trade. The situation in Syria is also adding to the uncertainty over European supply routes.
CIPS Economist John Glen said: “Supply chain managers are facing a new wave of impediments to the flow of goods across borders. With international trade deals under threat around the world, supply chain managers must be as aware of political risks as they are of natural disasters and economic hardship.
“Skilled supply chain managers are adept at managing the short-term supply chain disruptions, but with supply chain risk returning to record levels, businesses must be continually vigilant in vetting their suppliers and preparing contingency plans.”
