January brings the second part in the three-stage implementation of the UK government’s new Border Target Operating Model (BTOM). This introduces controls on EU imports in line with those applied to the rest of the world, including new physical and identity checks for food and plant products. From October 2024, all EU suppliers (not just agri-food) must provide safety and security declarations, whereas previously only customs declarations were required.
With 48% of total UK imports coming from the EU, most UK manufacturers will have EU suppliers who need to be fully briefed of the changes and ready with processes for the new checks. However, the director of the Institute of Export & International Trade recently reported that there is a “growing anxiety that the state of preparedness in the EU is very low.” Delays and congestion at ports are a real possibility, risking a choke point in the supply chain with disastrous implications for manufacturers’ stock levels and ability to meet demand.
There are ways that manufacturers can manage and adjust their supplier contracts, both preventing disruption in the first place and creating contingency plans. A strong supplier management strategy will help leaders successfully navigate the upcoming changes.
Contract management
Around 70% of companies cannot find 10% of their supplier contracts. If manufacturers want a stress-free transition to BTOM, it is vital they buck this trend.
Strong supplier management software is the solution; a single source of truth to help leaders assess which suppliers are most likely to struggle with compliance. The right system allows for the assignment of risk levels, keeping track, for example, of the smaller exporting companies that will find it hardest to adapt. With each manufacturing firm likely to have hundreds of suppliers – the average automotive manufacturer, for example, has 250 - a single, accessible database provides a comprehensive picture of their EU supply chain, minimising the chance of oversights.
BTOM readiness checks can be created and added to each supplier, including dates for completion and alerts as deadlines approach. Leaders can more effectively audit EU suppliers, set them KPIs related to BTOM preparations, and create reports on progress to share with the wider team. A strong supplier management system encourages better planning from suppliers or, if certain companies present too high a risk, allows leaders to make informed decisions to switch to UK alternatives well in advance.
Contingency plans
Even if all your suppliers are ready to go, border delays are still likely, with experts claiming that “inevitably, things will be slower” following BTOM implementation.
Steps towards mitigation can be taken, such as stockpiling and contract changes. Procurement leaders can build in priority supply obligations, such as rights of first refusal, where you pay more to be able to transact first with your suppliers. Adding these clauses avoids you being left at the back of the queue if blockages build up. A contract management system will allow you to effect these changes quickly and easily, and to build up a list of reserve suppliers, with contracts ready to go if others are delayed.
The BTOM represents a significant change in the way customs and border procedures are handled between the UK and the EU and is one of 2024’s most pressing challenges for UK manufacturers. It will reveal weaknesses in supply chain operations and introduce a new dynamic in EU/UK supplier relationships. However, with a forward-thinking mindset and willingness to invest in IT, manufacturers can get ahead by evaluating and streamlining their supplier management processes and tools. Ultimately, by taking a proactive approach to the much-contested BTOM, businesses can enjoy the silver lining of improved supplier management and emerge stronger in a post-Brexit world.