Brexit bottleneck

Brexit

Even though the Brexit has failed to materialize yet again, it is already starting to have a negative effect on the UK and Dutch economies and their supply chains. Stockpiling by British companies and consumers alike is taking Dutch export figures to new heights, but a deep trough is set to follow.

At the start of this year, a senior supply chain executive at a well-known multinational told me that his company had spent €150 million on changing its packaging to enable as much of the manufacturing as possible to be done locally in the UK. The multinational and its competitors will pass the extra costs on to the retailers, which will lead to rising grocery prices for British consumers, irrespective of whether the Brexit is hard or soft.

According to a study by the University of Leuven, the Dutch economy will be the third-hardest hit by the Brexit, after the UK and Ireland. A soft Brexit will lead to the loss of 18,600 jobs in the Netherlands, and that figure will rise to 75,200 in the case of a hard Brexit because of the associated import and export tariffs.

Polarization

The UK will remain bitterly divided whatever happens, Brexit or no Brexit. What strikes me is that – as far as I know – the British House of Commons is the only parliament building in the world where the governing party and the opposition are positioned directly across from one another. This tradition dates back to the 18th century. In my view, this setup automatically reinforces polarization in British politics and hence among the UK population.

‘Current reality tree’

Logistics guru Eli Goldratt wrote in his corporate novel called It’s not luck, first published in 1994, that literally sitting on the same side of the table enables parties to succeed in finding a way to solve problems. To do so they need to visualize the problem in a ‘current reality tree’ – a diagram showing the relationships between cause and effect. Goldratt is wholeheartedly convinced that this diagram helps opposing parties to identify the original bottleneck and hence reach a solution together.

The key to finding a solution lies in visualizing the problem – but in the case of the Brexit it’s probably too late for that.

Martijn Lofvers, Chief Trendwatcher Supply Chain Media
martijn.lofvers@supplychainmedia.nl