Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
The UK may have finally left the EU on 31 January, but many businesses marked the start of an 11-month transition period with a still-unknown conclusion.
The UK is still to agree a trade deal with the EU, meaning many of the concerns that the channel was faced with last year may still arise.
If the UK remains in the Customs Union, or agrees a new trade deal, the flow of goods across the channel could remain relatively seamless. But if no deal is reached, complex tariffs and charges could be applied. There are also a number of options in the middle ground, with recent reports suggesting that prime minister Boris Johnson is lobbying for a Canada-style deal.
IT distributors need to prepare for a number of outcomes because of this.
CRN spoke to bosses from eight of the largest disties in the UK to find out how they are preparing for different eventualities.
Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
David Watts, UK managing director, Tech Data
Tech Data has worked hard preparing for Brexit, particularly a hard Brexit, and we've worked closely with our customers in readiness for that scenario.
We're now well positioned for any potential future situation that doesn't involve us being part of the EU Customs Union. That said, we're expecting no immediate changes to our supply chain or the seamless movement of goods across the UK, Ireland as well as into the EU during the transition period.
Our Brexit team will continue to follow events as they unfold throughout the year and we will continue to engage with customer and vendor partners as early as possible as more details of the future trading relationship with the EU and others becomes clear.
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Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Alex Tatham, managing director, Westcoast
Westcoast spent a considerable amount of effort during 2019 preparing for a no-deal Brexit and all the disruption that this would have brought to the supply chain - the chief of these being delays at key ports in the UK, Ireland and mainland Europe.
Under the transition period starting on 1 February 2020, this will not be a problem. We have done work on commodity codes and improving paperwork on our shipping documentation; weighing and measuring goods to correct shipping dimensions; forcing our vendors to include points of origin on their documentation - all so that Westcoast can minimise any delays through customs.
This work will still be important but there will be a much softer landing and supply chains will continue to improve before the end of the year.
Westcoast has invested in a significant amount of new warehousing both in Europe and the UK, with a stunning new 340,000 sq ft facility in Andover providing capacity for direct deliveries from the Far East into the UK without transitioning through "somewhere beginning with V in Benelux" and increased UK stock holding as well as improved services. The facility is flexible and Westcoast will increasingly encourage resellers to close down their own warehouses. Why does any reseller want a warehouse anymore?
Resellers themselves should be engaged with their distribution partners to help them reduce the impact of Brexit and free up the cashflow tied up in inventory and buildings.
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Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Richard Hinds, UK&I chief operating officer, Exertis
Exertis is determined to embrace the challenges of Brexit and ensure we are best placed to continue to provide all our partners with class-leading distribution solutions whatever the final form of Brexit may be after 31 December 2020.
In order to ensure that our business remains sustainable, we have undertaken a range of risk-mitigation actions designed to deliver the best possible outcome as the UK leaves the EU.
Therefore, there should be no direct impact on Exertis' business during the transition period and no immediate changes to our processes for international supply. Exertis will continue throughout 2020 to deliver the high standards of service excellence our customers have come to expect.
The final form of the trading relationship between the UK and EU after 31 December 2020 is not clear yet, so the long-term impact is difficult to predict. It is likely that some form of Free Trade Agreement (FTA) will be concluded between the EU and the UK, but we are confident that we are doing everything possible to ensure that Exertis continues to offer a first-class service to all our partners, whatever Brexit developments may occur.
Exertis' objective throughout has been to mitigate Brexit risks as far as possible, while maintaining maximum strategic agility and the flexibility to respond to events as they unfold. Specific actions include the following:
- We continually carry out dynamic analyses of foreseeable Brexit risks, using a rich variety of information sources to assess the full spectrum of opportunities and threats, including the expected new Customs borders and tariffs after 31 December 2020, the potential impact on demand in the wider economy and foreseeable changes in legal and regulatory frameworks.
- We have worked with our professional advisers to model the impact of various Brexit outcomes, including a ‘Canada Plus' style comprehensive FTA, and an ‘Australia' type outcome with World Trade Organisation tariffs being applied to some categories of EU imports and exports after December 2020. The model is dynamic, allowing Exertis to react rapidly to developments. Many of the product categories managed by Exertis are currently expected to be subject to zero per cent import tariffs.
- In March 2019, Exertis (UK) Ltd was successful in achieving Authorised Economic Operator (AEO) ‘trusted trader' status, an internationally recognised quality standard. Among other benefits, AEO status gives Exertis quicker access to some simplified customs procedures and the potential to avoid friction at borders.
- As part of the AEO compliance programme, Exertis has invested heavily in strengthening its import and export processes, under the auspices of an enlarged internal specialist team led by our head of customs and taxation and our trade compliance manager.
- Through dialogue with our key vendor partners, we have sought assurances that they are themselves properly prepared for Brexit.
- We have liaised closely with our preferred freight forwarders, both in relation to their own Brexit preparations, and to identify and mitigate the impact of any supply route bottlenecks.
- We are continuing to review our supply chain to mitigate the impact of any major changes following Brexit and to identify any refinements to our processes that might prove necessary. We will continue to assess the appropriateness of inventory levels, taking account of the need to manage Brexit-related supply chain risks in the run-up to 31 December 2020.
- As the technology division of DCC Group, Exertis already benefits from access to significant continental European infrastructure and premises, providing a range of logistical options for servicing our partners efficiently, whatever customs and tariff arrangements may be applied after 31 December 2020.
- Exertis is not critically dependent on non-UK nationals in its workforce, but steps have been taken nevertheless to mitigate any potential risks stemming from the EU citizenship of any members of our staff. We have already invested heavily in automation within our state-of-the-art National Distribution Centre in Burnley, Lancashire.
We are confident that we are doing everything possible to ensure that Exertis continues to offer a first-class service to all our partners, whatever Brexit developments may occur.
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Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Antony Byford, UKI managing director, Westcon
Although there is a high level of confidence that the Withdrawal Agreement Bill will be approved in time, Westcon-Comstor has taken several steps to mitigate any risk associated with the uncertainty that still exists:
• The new Netherlands company code that came into effect in SAP on 7 October 2019 is being fully utilised and enables us to optimise our supply chain in Europe for export destinations.
• We are actively working with the Netherlands government to obtain NL Export Licences.
• We are actively working with all vendors to ensure compliant invoice and VAT treatment.
• Although now highly unlikely, we are monitoring all customer orders which may be at risk in a hard Brexit situation, and will address accordingly.
The new supply chain policy for non-EU customer destinations will be implemented after 31 January and in line with the new Netherlands export licences (approval date TBC). Confirmed dates and details on this transition plan will be communicated in due time.
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Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Alex Phillips, commercial director, Northamber
This has been a very popular question for a couple of years now. We work closely with our key partners - both resellers and vendors - to make sure we're forecasting business a lot and we're really close to opportunities.
So either way, we can have a higher stock profile on our brands than many other distributors do. We've got that natural buffer in there anyway and by being closer to the opportunities, we are able to better forecast that to make sure we're able to deliver to our customers.
I think some of the resellers that are focusing on UK-only businesses and small opportunities or healthcare, public sector or education are going to see a different impact from those who are focusing on more pan-European businesses where the change of headquarters in some large businesses may negatively affect their business.
Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Graham Jones, UK regional director, Exclusive Networks
Disruption is in our DNA so we're pretty adept at coping with change, and the challenges and opportunities that come with it. We've been preparing the UK business for some time now and still have 10 months to go, so I don't think we, the channel or vendors will be caught by surprise. All parties have a real drive to not let Brexit get in the way of business.
While we are moving towards providing more consumption models including licensing or annuity-based as-a-service offers, 30 per cent of our business still involves hardware shipments so we have a contingency for that. Most of the product we supply originates from outside the EU and we envisage that the delays incurred for product importing from outside the EU will be minimal. We are currently working with our vendors to mitigate the risk of delays in the supply of product in the event of a no-deal Brexit. For deliveries from the UK to European destinations we will leverage our pan-EMEA operations to alleviate any potential issues.
Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Murray Pearce, UK managing director, Infinigate
Infinigate has not experienced any stock delivery issues due to Brexit so far. However, until a trade deal is completed, it is hard to know what the impact will be and so we are continuously monitoring and working with our vendors to ensure that we can quickly increase stock levels and cover any hiccups that might occur.
The general market situation is interesting. The UK government growth expectation is still for slow overall growth, but our experience since the election is that there has been a markedly more positive sentiment in the channel. I guess the 'Boris bounce' is real, and we have seen this in activity and in our strong January sales results.
There also seems to be a lot of movement with people and vendors and this creates opportunities.
Infinigate has taken on a record number of new vendors in the past 12 months including Cyber Ark, Entrust, iBoss, iDaptive and Netwrix and there are two further major brand signings that we will launch this quarter.
I cannot remember a time when there was this much market movement. I think the winners and losers are reflected in how well companies are able to execute under pressure and take advantage of the opportunities this brings, as Brexit volatility will continue for some time yet. In our case, we are expecting a very positive 2020.
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Eight distributors on how they're preparing for post-transition Brexit
Execs from Tech Data, Westcoast, Exertis, Infinigate, Northamber, Westcon, Exclusive and Varlink talks CRN through the plans they are putting in place
Mike Pullon, managing director, Varlink
Varlink has been importing Auto ID (barcode & RFID), rugged computing and EPoS products from outside the EU since our inception in 2005. This has given us the experience to deal with the practical implications of the end to frictionless trading between the UK and the EU.
We are, however, not complacent about the need to prepare for the new arrangements that will apply from 2021. Recent announcements about declarations, inspections and VAT on importations not being deferred mean that we are engaging with our EU suppliers to ensure that they are geared up to minimise the risk of unnecessary delays during the importation process. Of course there is a risk that the sheer volume of importations from the EU may overwhelm Customs systems and that delays in clearing consignments do occur, so we will be building up inventory and will be working with our customers to ensure that hardware required for project installations and rollouts is available.
Communication with our suppliers and customers is going to be key to managing our way into the new reality of trading with the EU and we have already started the process to ensure that risks of business interruption are minimised.
The solutions that our customers sell yield increased productivity and improved service levels. In an increasingly competitive and evolving business environment, investing in systems that include the technology we distribute will be a driver for profitable growth for our customers, their customers and for Varlink.