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Alan McKinnon – Professor of Logistics

THE 
LOGISTICS BLOG

Current issues in logistics and transport

Supply Chain Naivety in Brexitland

In 2008, the UK Department of Transport published a series of case studies ‘to bring out the full complexity, interaction and diversity of transport chains’. They explained, for example, how a sofa got from China to a home in Newcastle, wine from California to a shop in Manchester and coal from Russia to an English power station. The studies received virtually no publicity at the time and so had no impact on public understanding of supply chains and how they work.

The following year, 2116 UK adults, surveyed by tns-bmrb, were asked how much they knew about the ‘role of logistics in the economy’. Only 14% claimed to have ‘some knowledge’. The Freight Transport Association responded by launching a ‘love logistics’ campaign to inform the public of this vital service they simply take for granted.

There is little evidence that the message is getting across. Consumers pick items from the shop shelf and order goods online without giving any thought to where the stuff actually comes from. When logistics works well nobody notices it. People only become aware of it when things goes wrong, possibly because of a strike, bad weather or an IT failure. This partly explains why the words most commonly linked with ‘logistical’ these days are ‘disaster’ and ‘nightmare’. Regrettably these verbal couplings may become more commonly used once Britain leaves the Single Market and Customs Union.

Supply chains are the very essence of the EU. They bind countries into a continental-sized economy offering huge economies of scale and scope. In a border-less EU, free of tariffs and customs checks, they do this by tightly coupling business processes in disparate locations. Within finely-tuned just-in-time systems transport has become an integral part of companies’ production lines.

Consumers get a sense of this logistical capability when, for example, they order online in the morning for same-day delivery. What they don’t realise is that many of the upstream links in European supply chains are also highly ‘time-compressed’. For much UK-EU trade this will no longer be possible if customs barriers are re-imposed at UK ports and airports. Despite glib reassurances from government Ministers, this will be a major shock to the logistical systems that currently integrate us into what is, overwhelmingly, our main international market for trade in goods.

Many people still harbour Victorian notions of bilateral international trade: raw materials in and manufactured goods out. In practice, the world is now cocooned in a dense web of supply networks within which value is added to products and services incrementally in many different locations. Intermediate trade within these ‘value chains’ comprises around 60% of all global trade. So when politicians talk about reshoring and repatriating manufacturing they typically under-estimate the difficulty of disentangling particular activities from this international nexus of value-adding processes.

If the UK electorate had had a greater appreciation of the immensely complicated systems which supply us with everything we consume and maintain the competitiveness of our economy, at least some of the 52% that voted for Brexit might have had second thoughts.

Posted in Discussion | 1 Comment

One Response to Supply Chain Naivety in Brexitland

  1. Brian Kenny says:

    A stark comparison when compared to the Scottish referendum where businesses (including many logistics firms) educated their staff on what life out of the union and the EU would mean. That education is what we all need to be promoting given the huge effect that leaving will have on everyday food prices in the future.

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© Professor Alan McKinnon 2017

Kuehne Logistics University
Hamburg
Germany

contactme@alanmckinnon.co.uk

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© Professor Alan McKinnon 2017

 

Kuehne Logistics University
Hamburg
Germany

 

contactme@alanmckinnon.co.uk

 

Contact me

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