PSI Blog

Fit for Brexit with Smarter Logistics Software

15 Oct 2019 - Logistics, Transport, Production

Screenshot PSIglobal in case of a hard Brexit scenario. Source: PSI Logistics
Screenshot PSIglobal in case of a hard Brexit scenario. Source: PSI Logistics

Intelligent software systems aid companies in mitigating the consequences of uncertainties in the Brexit process. The optimal alternative for supply chain network design can serve to secure important supply chains in advance of any Brexit scenario.

Much has been and continues to be disputed and rejected in the ongoing discussions about the course of Brexit. You can safely say that, since the referendum of the British at the end of June 2016, nothing has become really certain about 'Brexit'. The EU's hopes in connection with the extension of the deadline until the end of October that a contractual basis for the British's withdrawal from the European single market will be signed on the basis of the negotiations remain, to date, uncertain.

Securing of supply chains is the top priority

Many companies, especially those in production and logistics, lack the necessary planning security for their logistics networks beyond 31 October. In order to minimise the impact of the expected slowdown in the flow of goods between Great Britain and mainland Europe, logistic experts throughout Europe are working hard to secure their supply chains.

Cost comparison of each scenario. Source: PSI Logistics
Cost comparison of each scenario. Source: PSI Logistics

The discontinuation of the free movement of goods will prolong customs clearance times at borders due to import duties, goods controls and increased bureaucracy. Companies must expect delays, bottlenecks and cost increases.

Air, rail and shipping are therefore faced with unknown challenges.

The results of a survey conducted by the Institut der Deutschen Wirtschaft (IW – German Economic Institute) in the spring of this year are therefore no surprise. They reveal just how poor the preparations for the potential Brexit actually are:

"More than 80% of German companies are not or are only slightly prepared for the consequences of the British departure from the EU.”

In other words: If you don’t know where your travels will take you, it is difficult to pack your suitcase. You have to pack an outfit for every possible climate.

Plan for possible Brexit scenarios in advance

Regardless of all the uncertainties about future trade relations, the possible Brexit scenarios can be analysed and evaluated in advance, particularly with regard to the company's own supply chain. From quantity control and transportation management to resource management, proven strategies and models as well as optimal processes for supply chain management can be calculated.

In essence - depending on the industry – it is possible to describe the exit process with one of three Brexit showcases, each with different scenarios and alternatives, as well as the necessary measures for the design of the supply chain.

Three possible showcases for Brexit

  1. Hard Brexit as no deal scenario with an unregulated departure of Great Britain. The United Kingdom (UK) leaves the EU without trade agreements. UK becomes a third country for the EU. Future economic relations will follow the rules of the World Trade Organisation (WTO): No free movement of goods and services, new tariffs, conditional access to the EU internal market.
  2. Soft Brexit with a scheduled transition phase and conclusive agreement.
  3. Brexit from Brexit – the withdrawal request itself is withdrawn by the British after a second referendum; everything remains as it is, changes in the supply chain do not have to be introduced.

Helpful support through strategic software

In view of the three possible showcases, companies with trade relations in the United Kingdom should intensively examine the forthcoming changes and prepare themselves for all the possible scenarios for the Brexit. Strategic software such as PSIglobal, the planning and optimisation system for the supply chain network design (SCND) from the PSI Logistics Suite, offers helpful support.

With the integration of customs and transport costs as well as geodata functions, the options for an optimal design of secure, international and multimodal supply networks, PSIglobal provides a proven basis for solutions for every Brexit scenario.

Showcase PSIglobal: Soft Brexit.
Showcase PSIglobal: Soft Brexit.
Showcase PSIglobal: Hard Brexit.
Showcase PSIglobal: Hard Brexit.

This is the method for both transparently representing and minimising the increasing transfer and procurement times as well as the higher cost blocks through intelligent, IT-supported planning. Optimal alternative routes including cost factors for transit traffic over the "land bridge Great Britain" to Ireland under consideration of restrictions are only one of many advantages of PSIglobal:

  • Minimal costs of duties
  • New, local procurement chains
  • Calculation of cost factors for transit traffic
  • Consideration of restrictions

Regardless of whether and with which scenario the Brexit is carried out: Goods must flow. Companies that have prepared an intelligent Plan B for their supply chain with strategic software need not be terribly concerned about the actual developments.

Additional information about supply chain network design

Dr. Giovanni Prestifilippo

Managing Director PSI Logistics GmbH