For any retailer shipping into or out of the UK, Brexit will create an “unknown” step in the supply chain as it relates to the new customs border and the taxes, duties, tariffs and VAT changes that come along with it. While the cost associated with all of these factors is a major concern, ‘time’ is another key consideration. All of these new requirements will likely result in increased processing time, impacting your ability to quickly fulfil cross-border orders.
While COVID-19 has created a diversion from all of the Brexit press, companies must continue to keep Brexit planning top of mind. The UK government insists that Brexit will happen on Dec 31st 2020 in spite of ongoing coronavirus disruption. As the deadline draws closer, you need to be looking at both the physical locations where you process orders as well as the systems you are using to process those orders to ensure your supply chain continuity post-Brexit.
With any omnichannel retail operation, when it comes to supporting a successful eCommerce operation, it’s not just about capacity, it’s about business continuity. Where you place inventory will have a significant impact on your ability to keep business running smoothly all year long.
Perhaps one of the largest advantages mega marketplaces such as Amazon and the like have over individual brands is their presence in both regions, with multiple distribution points across each region. Customer satisfaction is huge when it comes to competing with marketplaces. Delivery delays due to extended processing times at the border could quickly result in permanently lost customers to the mega marketplaces for brands.
Retailers operating in the UK and Mainland Europe should look to third-party fulfilment providers to make inventory provisions in both locations. Review your existing data to better understand where your customers are located and determine how inventory should be dispersed across the two regions – whether there is specific inventory for the UK or Europe, or whether a joint inventory selection should be split across the two regions.
For brands selling primarily in the UK, spreading out your inventory across multiple locations and channels within the UK can help you get product to customers quicker. Utilise a mix of distribution centres, micro-fulfilment centres (aka pop-up DCs) and even brick-and-mortar locations or dark stores to get product closer to consumers and diversify your inventory pull – something many retailers are already seeking to do in the wake of COVID.
Regulated products such as those classified as HAZMAT must also be addressed. If you are fulfilling from one location to both regions, there will be a significantly higher cost to consider post-Brexit due to the increased amount of paperwork. Additionally, the cost of storing these items may cause brands to hesitate in setting up redundant facilities.
Consider your options. If you have a mix of products that includes some HAZMAT, you might choose one facility for those items to be shipped out of. Or, if the majority of your product is HAZMAT and you are operating in both the UK and Europe, it will likely be necessary to fulfil from DCs located in both regions to ensure timely fulfilment and reduced customs fees. Take the time now to review your options and determine what makes the most sense for your bottom line.
In order to reap the benefits of a multi-node fulfilment operation, one obvious requirement is that you have the necessary systems in place to direct incoming orders to the appropriate location. Obvious, but not simple.
Adequate time is required to plan and implement a distributed order management (DOM) system that can support these activities. Most fulfilment operations mandate a Q4 IT systems freeze to minimise potential risk during peak season, possibly shortening available time to implement. And, of course, COVID-19 complicates things even further with the many unknowns about what is to come this fall. If you want a smooth operation from the start of Brexit, it’s time to act.
An effective DOM will ensure your OMS can divert orders to the correct inventory pool, whether that is a central distribution centre, a dark store, etc. For instance, if you have a distribution centre in Southampton, a micro-fulfilment centre in Birmingham, and you’re also doing store fulfilment from your brick-and-mortar location in London, the DOM will direct a customer order to whichever location has the product and can get the order to the customer fastest. Being able to fulfil a Scotland-based customer order from Birmingham as opposed to Southampton will make for a dramatically shorter delivery time and an overall improved customer experience. Which leads us to our next focus, ensuring transportation considerations are in place.
Work with your transportation provider to understand the additional fees they are planning to implement due to the increased amount of paperwork that will be required. Additionally, it is important to understand product classifications and how they are being prioritised. A bottleneck at the border is one of the biggest risks for retailers post Brexit, potentially slowing down the supply chain by as much as two weeks. Certain categories such as healthcare, pharmaceuticals and food products are being prioritised for customs processing. Classifying products correctly, especially if they are in a higher-priority category, ensures the fastest available processing at the border. The same goes for recording and paying the correct duties, having these tasks automated via an effective carrier utilising automated customs processing can help minimise delays at port.
Is it too late? Not yet, but don’t delay! Many companies with deep pockets who have avoided the financial burden brought on by COVID-19 are already planning for Brexit. Look to the above to prioritise tasks and start making the necessary preparations to ensure your business can remain competitive post-Brexit.