Should businesses continue stockpiling post-Brexit?
In many ways, Brexit was not a sudden change for the UK. Delay followed delay, then all of a sudden the UK had left the EU and businesses were left reeling on 31st December 2020.
In the lead up to Brexit the uncertainty it caused was distressing for many people and for businesses. Unsure when it would come, many businesses started stockpiling to be ready for the new post-Brexit world.
Now, a few months after Brexit what should businesses do? Should they continue stockpiling? We explore more with the experts from Western Industrial Business Interiors.
Difficulties with stockpiling
Stockpiling has several difficulties. They mainly revolve around space and shelf life.
Space
In a county like the UK, space is limited. It does not have masses of land like China or the USA. The UK is a tiny island compared to many countries around the world.
Brexit exacerbated the problem of space. Many businesses were uncertain about what Brexit would mean for them. There was not much information from the government so many businesses (that could) decided to prepare for the worst. This meant stockpiling.
Stockpiling before Brexit reached the point that 75% of warehouse owners claimed that their warehouses were full. It highlighted the issue in the UK with storage capacity.
Shelf life
The main difficulty for stockpiling in certain industries is product shelf life. The FMCG industry requires specialised storage equipment to ensure fresh and frozen products are stored correctly.
Over 40% of the UK’s food and drink was imported before Brexit. Many of these items are perishable, so only a certain amount of stockpiling was possible.
The special requirements of short shelf life products severely limits the number of warehouses that can accept such products. Months after Brexit there have been some supply chain issues for food, with the effects of leaving the EU and imposing new border checks worsening.
Supply chain issues are always on the agenda for retailers as they do not want to disappoint their customers. Stockpiling could be the answer to the problems caused by Brexit.
Benefits of stockpiling post-Brexit
Brexit has changed the lives of every UK business, and we will still see changes in the years to come. When it comes to stockpiling in warehouses it is the same.
Demand
If you own a warehouse, then good news! Like some businesses during the pandemic, business is booming.
The increased demand for your space means it is at a premium. If space is at a premium then your prices should reflect that. More money coming into the business allows you to expand and either purchase more space to cope with increased demand, invest in new technologies or increase your profits.
However, as with many businesses that find a sharp increase in success, you need to invest wisely. You do not want to be in the situation that you have too much space when the need for warehouses cools.
Emergencies
One of the biggest arguments for Brexit was to not rely on Europe. Leaving the EU gives the UK a measure of independence. UK businesses have an opportunity to do the same.
In the past, if an emergency like COVID-19 arrived in the UK there may have been a view to look towards the EU for guidance and support. Now the UK has to rely on strategies like stockpiling to get through national emergencies.
We have seen an example of this with the Suez Canal incident. A cargo ship blocked one of the busiest trade canals in the world. Businesses around the world were panicking due to their products and materials being stuck on the wrong side of the canal. If any of these businesses had utilised stockpiling for 1-2 months they would be safe in the knowledge that their stocks had a lot of time before they ran out.
If the past year has told us anything it is that UK businesses are resilient. Utilising stockpiling may not always be the correct decision for every business, but more should consider this strategy in the long term.
