Whatever your political views are on Brexit, there’s no escaping the news articles discussing the contingency plans for the multitude of potential outcomes. For some of the worst case scenarios, the word that sends a shiver down the spine of anyone involved in logistics and distribution is simply “Stockpiling”.
Modern distribution networks make the most of new technology, so from manufacture to drop-off the longest the goods remain static is when the delivery vehicle is stuck in traffic. “Just in Time” manufacturing is a process where stock is ordered and delivered based on a continuous flow and fast turnaround.
One of the best examples is food. Fresh produce doesn’t stay fresh for long so an order needs to be picked, packed and en route to the customer with minimal delay. Whilst refrigeration and other preservation techniques can buy some extra time, the longer it spends in transit, the less time it can spend on the shelves.
One of the other advantages of this system is less need for warehousing. If the goods arrive at the point of need and get utilised straight away, the supermarkets can have larger shop floors and smaller warehouse space on their sites. Manufacturers ordering components can have a larger production area, as their need storage is minimal.
This relies on transport routes and distribution processes running like a river and the biggest risk is any kind of disruption to this flow.
There is usually enough slack in the system to cope with temporary delays but if long term interference in the supply chain is approaching, what can businesses do?
It’s safe to say that most firms are unlikely to have an additional 20% of their building that’s been lying idle on the off chance, there is always the option to lease additional space or rent storage on a rolling monthly contract until things are resolved but these options carry a cost which squeezes margins and affects prices.
Even for those that can find the space, there are challenges. Food and medicines have a use by date so whether it’s held in your storage or at the border, the value is falling by the minute. Manufacturers rely on all the components arriving so running out of even one of them means the stock and production line sit still while you wait.
Outcomes are uncertain, there may be minimal disruption or massive upheaval. It could be temporary or the effects could linger into the following financial year. One thing is for certain, looking at your options, talking to providers who can help and planning for the best and worst outcomes is better than hoping it will sort itself out.
(Jason Jones works for Access Self Storage and has over 11 years experience in commercial property and warehousing)