The impact of Brexit in the constantly evolving economic landscape has caused an increasing period of uncertainty, forecasted to last for no less than a decade.

The biggest concern currently is on the impact of tariffs on the businesses competitiveness and of border regulations for industries involving short shelf-life of goods and just-in-time production.

UK and EU relationship

The United Kingdom has an important role in the global economic picture, and imports from abroad represent roughly 70% of FTSE 100 revenues. Exports in the highly diverse service sector represents double the value of UK’s goods export, and 8% of the intangibles value worldwide.

This is one of reasons why the area on which Brexit will have its major effects is the import-export of goods, not only globally, but increasingly with the EU. In fact, the EU represents the biggest partner for the UK businesses, with roughly half of the UK’s imports and exports with the EU, directly or as intermediary with third parties.

Concerns of the UK businesses

The main concerns of for UK businesses fall into four areas:

• Tariffs on goods imported and exported
  • Since we mainly deal with non-European suppliers, tariffs might not impact us as deeply as they would for businesses perpetually dealing with European suppliers.
• Delays in the deliveries
  • When having to go through the UK borders (if the supplier is European and the recipient in the UK), the procedure and timing of imports and exports will be heavily influenced. Our business will be influenced when dealing with the European suppliers importing in the UK, and the European customers buying goods from the UK.
• Inflation
  • The increase of prices on goods might represent a problem if the suppliers are in the UK. According to the past analysis on the suppliers, 60% of our quotations have been derived from UK businesses, hence hedging against inflation would mean finding new suppliers, or subsidiaries of the UK businesses in foreign countries.
• Loss of strength of GBP against foreign currencies
  • Unexpected or negative outcomes of Brexit might lead GBP to lose value against the EUR, the USD and the other currencies we deal with. The only protection would be introducing fixed exchange rates with the customers, keeping the rate hedged against any fluctuation of the pound.

Uncertainty surely also develops on the way Brexit will unfold. The tight integration of British supply chains with the EU will increase the difficulties in taking a step back and having the two parties to build looser relationships among each other. Even if a Brexit deal would happen in the short time, uncertainty about the UK and EU regimes might persists for even longer than a decade.

Global Synergy Resources is prepared for Brexit.

Our business structure is built to face and mitigate any changes in the market, always providing our customers with the best solution, tailored for their needs.

By Ottavia Cannavo, Financial Analyst, Global Synergy Resources, London 11/10/2019

contact: marketing@globalsynergyresources.com

 

 

How Exchange Rates Can Impact Supply Chains.

Global product distribution is a reality hard to avoid this days, as procurement departments continually source for goods and services suppliers internationally. Consequently, currency fluctuation is one of the major impediments to global sourcing strategies to achieve cost savings to the supply chain. Procurement strategies aiming help getting the best deal may represent zero or even negative results if currency exchange rates are neglected. One of the main problems for exporters is when buying in a currency with a high valuation and then selling in a weaker currency. Any strong changes affecting either currency will impact profit margins So what can procurement do?

Risk assessment

Exchange rate fluctuations should be part of any organization risk assessment plan. It is important that companies keep ahead and understand the impact of currency fluctuations.

Primarily, you should have fair idea of your organization risk level; procurement departments should work closely with finance departments to help better understand the level of risk. And find out how to reduce the currency aggregated risk cost. In other hand understanding and hedging the currency risk. Also, figure out if you can implement a system that will minimise your risk.

“Oscar Salehi, Global Head of Supply Chain for Technology & Consumer Goods at Thomson Reuters points out that in the past, corporate treasury had a very different agenda to that of the organization’s supply chain professionals. Treasurers were solely concerned about cost, while supply chain executives were more concerned with production and building long term relationships with suppliers. Echoing Henson’s views on greater collaboration, Salehi says that this dynamic is now changing and companies are realizing that finance and supply chain teams must work together to achieve their objectives. Salehi comments, ‘Historically we have seen a lack of common metrics along the supply chain. It is time for treasury to think out of the box and take cognizance of long term supplier relationships. The same is true for supply chain professionals, who have not previously been concerned about, for example, hedging. This must change and there must be mutual objectives and extensive collaboration at all levels of the supply chain. There is no room for the silo thinking that we saw in the past.’…”  Thomson Reuters

Economic Uncertainty

Economic uncertainty sometimes is hard to plan against. But Procurement professionals recognise the negative repercussions that unplanned economic uncertainty can have on an organization supply chain and that is why it is important to have a global overview of economic environments. Economic uncertainty in one country can have an impact effect to another country, as debt issues and currency devaluations can occur. What organizations need to understand is that all supply chains are global these days.

 Supplier relationship

Understanding your suppliers’ modus operadi can also help to plan better your buying strategy. Purchasing from a UK supplier today could be expensive, but knowing that the supplier is buying from non-UK manufacturer or distributor and paying them in their foreign currency for example Euros can work in your advantage when negotiating paying currencies with your supplier.

The effective management of supply risk involves partnering with suppliers and working internally with other departments for mutual long-term benefit and managing expectations to achieve the best results.

Global Synergy Resources supply chain considers currency fluctuation and economic changes with a planned and adaptable approach to our clients’ needs internationally. Check daily currency exchange rates on our website.

By Sergio A. M. Chiteculo – Global Synergy Resources – London, 16/10/17 

contact: marketing@globalsynergyresources.com

 

 

The future of the electricity and power industry is in question of whether they will survive in 30 years’ time. France is setting strict regulations on licencing restrictions with the goal and vision of switching to renewable energy sources and putting an end to nuclear power stations which can influence other countries and impact businesses globally. Coming up with a solution to reduce the Co2 emissions is becoming a global trend which developed and developing countries are taking steps towards.

France will no longer issue new licences for oil and gas exploration
An environmental step ‘Lizzie Dearden’ from the Independent mentions, ‘France is to stop granting licences for oil and gas exploration as part of a transition towards environmentally-friendly energy’. Environmentally friendly attempts are being made and an ultimate goal of switching to a renewable energy source is leaving the nuclear power stations that provide ‘Around 75 per cent’ of France’s electricity and ‘around 200,000’ staff in risk of employment. France has set a goal to run completely on renewable energy similar to what Norway has achieved. However, this will come with a price.

Unemployment rates will increase

Hundreds and thousands of Jobs in the electricity and power industry will be lost if all the electricity and power is received from renewable energy sources.

Government has to be a step ahead to soften the impact

Governments must help provide transferable skills to the electricity and power industry staff that are in risk of losing their job in the future. This must be done in order to support the economy by enabling employability of electricity and power staff to be transferred into the new sector.

Influence on developing countries

This is influencing developed countries to compete in building a reputation for reducing Co2 emissions and the world is slowly moving towards an environmentally-friendly era.

– Chinese energy firms have built a Panda-shaped Solar Farm

– England aims to switch 90% to renewable by 2030

– In France a law was passed last year to reduce the nuclear proportion to 50 per cent by 2025

– Brazil is aiming to reduce its emissions and cut deforestation by 80% by 2020.

– European Union wants to reduce their emission by 20% by 2020.

Countries, governments and regulators are working to create a sustainable future. Companies must conduct their operations in an environmentally friendly way to contribute to the sustainable development of the environment they work in.

Global Synergy Resources has a market orientated approach in matter to meet our clients’ needs in constantly developing and adapting to the market changes and managing our supply chain from supplier to end user with a responsible approach towards the environment

By Ibrahim Can Kaya, Financial Analyst, Global Synergy Resources, London 02/08/2017

contact: marketing@globalsynergyresources.com

 

In the procurement industry there are many ways to save. There are three main areas to look into when assessing how to save costs.

There are three main methods: purchase demand management, supply base management and total cost management.

The easiest way to save costs is to decrease the demand. This can be done by:

Reducing consumption – Every organization has goods that they could do without. The business needs to see whether they actually need the product. This often arises in times of economic growth and stops when the situation becomes less positive.

Improvement of specification – Technicians are striving for perfection and find the nicest product, often the most expensive solution, but another less expensive option would be suitable.

The supply side is associated with procurement. It is how to use suppliers to save costs.

Restructuring supplier relationships – Better relationships with suppliers may result in better quality products. It is possible to gain additional cost advantages by intensifying the collaboration with suppliers, starting up partnerships and striving for a sustained cooperation.

Increase competition– This is the opposite of restructuring supplier relationships. The competition between potential suppliers is stirred up to achieve favorable conditions.

Finally, decrease of demand or reducing direct purchase expenses lead to savings.

Optimization of total supply chain costs – This has expanded enormously over the last 30 years, it saves a lot of money.

• Reduction of transaction costs – Costs that may easily be overlooked are the costs related to the process of ordering, receiving and paying for purchases.

Global Synergy Resources has a cost orientated approach allied with international quality standards. Our team sourcing strategy enables us to source effectively. Meeting the client’s needs and making our services accessible globally.

By Simrah Ahmad , Assistant Accountant, Global Synergy Resources – London, 31/07/17

contact: marketing@globalsynergyresources.com