Despite the UK being scheduled to leave the EU at the end of next month, uncertainty and anxiety about the final Brexit deal remains. This is particularly true for the automotive industry, where many original equipment manufacturers (OEMs) – including Honda, Renault-Nissan and most recently Ford – have all publicly raised their concerns.
A recent study – commissioned by OpenText and carried out by The Centre for Brexit Studies at Birmingham City University – set out to identify the likely implications that different Brexit options could have on the industry and how prepared organisations were across five key business areas: supply chain management, operations and logistics, human resource management, regulations and compliance, and customer communications.
The findings suggest that all current available trade scenarios put up different types of trade barriers for the sector, potentially increasing costs and decreasing the UK’s attractiveness as a base for automotive manufacturing. The findings also reveal that the uncertainty around the UK’s trading future with the EU is deterring investment into the sector, which will likely have consequences further into the future.
So, what risk management and scenario planning strategies can help companies to adapt, whatever the outcome of Brexit negotiations? Here are some key recommendations:
- Get digitally organised
- Ensure compliance is baked into strategy
- Invest in your people
- Prioritise communication and collaboration
- Get to know your supply chain
Automotive companies need to have good enterprise information management (EIM) policies in place for managing and reporting on contracts to implement changes and mitigate risks. Managing information such as contracts digitally helps establish governance processes that will help amend existing contracts and generate new contracts as the details of Brexit become law.
OEMs and suppliers need to have a strong information governance strategy in place to ensure compliance with any new regulatory requirements or checks. Getting control over the acquisition, management, retention and disposal of all the information within a business means, no matter what the impact of Brexit, businesses will be better prepared.
More emphasis on workforce planning and skills development is needed for the UK automotive industry to mitigate restrictions or changes to the free movement of people. HR managers will most likely face a different talent market post March 2019 and should consider transforming employee information such that it is easily accessible, particularly relating to employee skills and training needs that support them through any transition needs.
Communication and collaboration between automotive manufacturers, partners and customers will be more important than ever. Digital technology can be implemented such that information exchange is transacted and communicated in an efficient and consistent manner. The OEM can then react quickly to supply chain changes and communicate those changes in a way that’s personalised to the business needs of each partner.
Automotive manufacturers need to have an improved understanding of their supply chain, particularly relevant for any new documentation and compliance requirements that might be put in place. New supplier relationships and possible change to existing relationships are inevitable. Companies would therefore benefit from a fully digitised supply chain particularly for visibility and engagement of lower tier suppliers.