The UK is the 9th biggest manufacturer globally and according to a 2019 study, 64% of UK manufacturers were expecting Brexit to create chaos for the manufacturing sector. Yet after all the concerns about no deal disruption and massive shortages, even those vehemently opposed to Brexit must now be feeling more reassured by the eleventh-hour free trade agreement (FTA). It will be far from perfect for many, but it is a lot better than it could have been.

If you are a manufacturer in the UK and reliant on a non-UK based supply chain, or perhaps you are selling to customers in the EU, here is what you should understand about the Brexit FTA.

Key details of the Brexit free trade agreement

Incredibly, the UK and EU have agreed to an unprecedented 100% tariff liberalisation. This means there are no tariffs or quotas on the movement of goods produced between the UK and the EU. This is the first time the EU has agreed a zero tariff zero quota deal with any other trading partner.

For the food industry, organic producers will not face additional certification requirements and there is full equivalence between the UK and EU. This means products certified as organic in one market are recognised as organic in the other and wider benefits, including cooperation to combat fraud and the future development of organic standards have also been agreed.

Ham sandwiches aside, hauliers also have an agreement in place to enable frictionless travel to and from the EU. Service providers e.g. selling financial and legal services don’t have such free conditions to trade and do face other restrictions, although there is an agreement in place to support them. Haulage operators will continue to be able to move goods to, from and through each other’s territories with no permit requirements, provided they adhere to core standards when undertaking international journeys between the UK and the EU. These standards include restrictions on driver hours, requirements about professional qualifications and tachographs and vehicle weight and dimension limits.

Where the FTA does become more complicated relates to the appropriate rules of origin (RoO) which is designed to ensure that only ‘originating’ goods are able to benefit from the liberalised market access arrangements agreed in the TCA, while reflecting the requirements of UK and EU industry. Guidance from the government is that goods must be either ‘wholly obtained’ from the UK or EU – so, entirely made in the UK from materials produced in the UK – or ‘substantially transformed’ in the UK or EU – in such a way that value is added through the production basis, the goods change tariff classification as a result, or that goods are made from specific products using specific processes covered in detail in the agreement (further information is available from https://www.gov.uk/government/publications/rules-of-origin-for-goods-moving-between-the-uk-and-eu).

This will be of particular relevance to advanced manufacturers, for example the automotive industry with very clear incentives for home sourcing and onshoring supply chains. For example, the RoO agreed for batteries and electric vehicles will ensure that UK-made electric vehicles are eligible for preferential tariff rates, supporting the country’s transition towards Net Zero.

All these regulations point to some key requirements for enhanced warehouse management efficiency and improved reporting, traceability and stock auditing. Manufacturers will need to maintain a clear audit trail of all stock movements, the origin and in some cases, cost of raw materials to stay compliant. Having these processes automated through a warehouse management system (WMS) will help ensure that information needed by regulators will always be just a click away, plus help reduce operational costs.

5 ways a WMS will streamline every manufacturer’s warehouse

Putaway management and location assignments

Regardless of whether you operate according to JIT principles or maintain excess inventory, an effective put-away process is an important stock management strategy. It will help to maximise space utilisation and ensure the physical movement of products can be kept to a minimum. There are a number of ways a WMS can automate putaway, for instance, by identifying the best place to store items based on available space, monitoring how frequently the items will be picked and where they should be placed in the warehouse and whether items need special storage considerations.

Pick route optimisation and planning

As travelling can take up a large part of the time spent on warehouse picking processes, appropriate sequencing of picking tasks within an order is crucial to achieving high efficiency. After evaluating the order pool and assigning tasks, a WMS automatically evaluates the routes available and will direct operatives to fulfil pick instructions using the most efficient travel path for their immediate location. Goods are picked more quickly, potentially using fewer resources.

Shelf-life management and stock rotation

There is huge value in using a warehouse management system to optimise stock rotation and ensure that items with a limited shelf life are carefully managed to avoid any wastage. This extends beyond the obvious perishable raw materials to also include packaging items, which can in turn also impair finished product quality if they are past their recommended use by date. A WMS makes this easy by automatically reminding operatives of which lots to pick first, based on first in first out principles.

Perpetual inventory (PI) stock counting

By introducing a daily PI or cyclical counting process supported by a WMS, warehouse managers can eliminate the need to undertake stock counts on a monthly or yearly basis. Cyclical counting is the most effective way to maintain inventory. It also means business as usual whilst counting is in progress and shrinkage can be minimised. All material movements are accurately recorded with an electronic audit trail and discrepancies are immediately apparent.

Traceability management

When product quality issues are raised, it is vital that all affected products can be quickly and accurately identified to minimise potential losses – both financially and to brand reputation. Using a WMS, it’s possible to create reports detailing lot/batch/expiry date information which confirms to compliance requirements and also allows for detailed trend analysis. At any point in time, a WMS will provide a full trail of what has happened to every element of stock during its entire lifecycle, providing extensive traceability management options. The audit trail covers the entire supply chain, right down to the source and provenance of the original raw ingredients at the SKU, UPC and lot level, limiting the impact of inventory wastage.