In a truly historic month, on Thursday 23rd June the long-plotted EU referendum finally took place in Britain, with the results seeing the general public narrowly voting in favour of leaving the European Union. Since then the aftershocks of this vote have been felt up-and-down the country with the nation left divided and businesses are left waiting to see how the dust will settle over the coming months. In this time of change, it is more important than ever for UK businesses to stay ahead of the curve and ensure their operations are fully prepared for the UK’s eventual exit from the European Union, while also being well positioned to take advantage of new opportunities whether they are domestic or global.
With this in mind, we have got together what we believe to be the five key action points businesses should be looking to implement over the coming months in order to maintain a competitive edge and increase profitability.
- Increase Productivity
It is no secret that when it comes to productivity, the UK is well behind the pace set by other countries. In February this year, Britain’s poor productivity was highlighted by figures released by the Office for National Statistics which showed the gap between Britain and other leading western economies when it comes to productivity was the biggest it had been since records began. In terms of output per hour, these statistics showed that Britain has a 36 percentage point gap with Germany, 31 point gap with France, 30 point gap with Ireland and a massive 45 point gap with the Netherlands. You can read more on these statistics HERE.
This huge productivity gap shows just how much room there is for Britain to do better and if the country is indeed to flourish on its own outside of the EU, then UK businesses need to look at improving their own internal processes and the productivity of their staff. To achieve this, businesses should be looking at ways to increase the output of their staff by working smarter in all areas of their operations. Stripping out inefficient procedures, improving workflows and automating activities allows companies to increase capacity without increasing costs and enables staff time to be spent on more profitable activities. As well as this, businesses should also be looking to monitor the performances of staff, operations, customers and suppliers much more closely through the application of more accurate reporting, using the information provided to ensure that all areas of the business are hitting their targets and maximising their potential.
Businesses need to ensure staff are provided with all the tools they need in order to work more effectively. To do this, companies should put a sound IT infrastructure and systems in place that helps to keep all their processes streamlined, is adaptable to their methods of working and is well suited to getting the most out of their existing staff. Whether implementing these measures delivers significant or incremental gains, all of these things help to add up to increased productivity in a post-Brexit trading environment.
- Gain Greater Control Over Costs
Although the full cost of Brexit on companies importing goods into the UK will not be known for some time, the value of the pound against the dollar and the euro means the cost of imports for some businesses have already crept up. Although some business will be protected from these fluctuations through currency hedging, businesses could well be faced with increased purchasing costs either via their direct imports or through costs being passed down through their supply chain. With this being the case, many firms must think that they are faced with a choice of either increasing their prices and risk losing custom or simply accepting lower margins on their products. However the key to mitigating these risks is for businesses to ensure they gain detailed control over their costs and sales prices.
Firstly for many companies purchasing from overseas, when it comes to determining the sales price of products in order to gain an acceptable level of profitability, they often only look at the purchase cost of the actual product. This means that currently businesses are already incorrectly calculating their profitability by simply not taking into account shipping costs and import levies when calculating their product margins at the order level. However with the value of the pound currently on the wane and the possibility of some tariffs on goods being imported from the EU on the horizon, it is vitally important that businesses look at the true landed cost of their items and not just rely on flat product costs or inaccurate estimates. By having the tools in place to use true product landed costs when controlling margins, businesses will find themselves able to effectively manage their profitability and have the information available to make key decisions based on fact, not instinct. Regardless of when Brexit does indeed happen, this is fundamental to the profitable operations of any business as it helps to keep margins well in check.
- Introduce Tighter Stock Control
Tying in with businesses needing to gain greater control over costs is companies also ensuring that the stock they buy in from now on is only the stock that they actually need. Too often businesses simply rely on guesswork when it comes to managing their purchasing activities, resulting in warehouses filled with non-shifting stock and a back log of customer demand for sold-out products. Although these are already costly problems for businesses, again with import costs set to rise and the value of sterling falling, over and under-stocking on items is likely to be even more costly to UK businesses moving forward.
To counteract this, it is essential for businesses to become much smarter and more intelligent with their purchasing. By scrapping purchasing instinct and instead using historical usage, carefully forecasting for peak seasons or upcoming promotions and also taking into account supplier lead times, businesses are able to gauge their stock requirements much more effectively. This will not only help to dramatically cut costs but also help businesses to increase their profitability by maximising sales opportunities too, something which will no doubt prove crucial to success once Brexit finally comes to fruition.
- Improve Customer Service
Even by reducing costs and gaining greater control over profitability, it is possible that the changing market means businesses may not be able to price products as competitively as they were previously. With this being the case, in order to get ahead of competitors UK businesses should be looking to go above and beyond in order to deliver exceptional service to their customers.
At the back end of last year, Xerox did a study into The State of Customer Service which revealed that over half (54%) of consumers are happy to pay more money for better customer service. You can read more on this study HERE.
Therefore with many customers willing to pay for it, businesses should invest in the infrastructure necessary to ensure that their customer service works better than that of their competitors. Whether it is less queuing times in trade stores, a better, more personal online shopping experience or faster, more accurate deliveries, businesses should be looking to the technologies available to them in order to tailor the sales order process to meet each customers’ expectations. By offering a top-drawer service to customers, UK businesses can negate some of the impact of any possible price increases by helping to promote repeat custom and build up a loyal client base.
- Integrate Your Systems
The final key action point companies should think about when preparing for Britain’s exit from the European Union is actually a method of implementing the first four points and that is integrating together their business management systems. For a lot of businesses, regardless of the sector they are in or whether they are a SME or Large Enterprise, daily operations are often reliant on staff having to pass data between multiple disconnected systems either through manual interaction or a series of imports and exports. This is not only incredibly time-consuming but also leaves room for errors to be made somewhere along the line, resulting in low productivity, unnecessary costs being incurred and poor customer service.
However by working from an integrated solution, businesses can eliminate the need to rekey information as data is seamlessly passed between departments. Orders from all sales channels are automatically sent down to the warehouse to fulfil, with automatically updated stock levels then passed back to the purchasing department to accurately buy the stock that is required. This not only helps to increase staff productivity, increase control over costs but also deliver better customer service through faster order turnaround too. Furthermore by getting this integration from an all-in-one solution, businesses can also save massively on their annual software costs by only needing to invest in one system, from one supplier.
So in conclusion, although we won’t know whether leaving the European Union was the right or wrong decision for a number of years following Article 50 of the Lisbon Treaty being invoked, UK businesses shouldn’t wait around before they act. With Brexit now an impending reality, companies should make sure they are well prepared for each scenario by addressing their internal operations, highlighting areas for improvement and putting the necessary measures in place so they can continue their success unobstructed.
For information on how OrderWise could help your business, visit this page HERE.