Disruption to supply chains is one of the biggest risks facing the Irish food and drink industry, according to a new report from Bord Bia.
As Brexit looms large, the ‘Food and Drink Supply Chain Logistics, Strategies for Success’ report found that increased lead times, especially when related to short shelf life food and drink products, in conjunction with a complex supply chain, is a major concern for the industry.
A significant risk which has been identified is the potential for disruption to the frictionless movement of Irish exports through the UK to other markets. These product flows could be subject to future tariffs or customs delays.
Currently food and drink products can move freely within the EU without customs checks, and there are no limits to quantities of import or exports, or any other trade restrictions.
The requirements for documentation to accompany shipments within the EU are also minimal, according to Bord Bia.
But it is likely these factors will change for trade between Ireland and the UK once the UK leaves the EU next March.
In order to reduce the impact of this, new supply chains to service existing markets need to be explored, the report found.
“There are significant challenges ahead for Irish companies in the food and drink sector, many of whom rely heavily on the UK land bridge to access other EU markets,” Shane Hamill, overseas trade manager at Bord Bia, said. “It is essential that companies assess or audit the Brexit readiness of their supply chain partners, their market access routes and their channels for accessing raw materials.”
The report follows the release of Bord Bia’s Brexit Barometer in June, which found that almost nine in 10 respondents in the food and drink sector said that their commercial model is “moderately or highly dependent” on low supply chain costs.
Meanwhile two-thirds of those surveyed by the State Agency said their commercial models are sensitive to increases in lead times.
The latest report from Bord Bia aims to assist food and drink manufacturers to identify operations partners, establish more efficient distribution channels and identify possible strategies for reducing supply chain costs.
“Many companies will have to consider direct routes to the EU and potentially holding stock closer to the European markets if this is cost effective,” Mr Hamill said.
“It is imperative that all companies have a strategy for reducing their cost base, reviewing product and market profitability, and also have contingency plans in place for a range of complex Brexit scenarios.”