A pan-European Food Producer preparing their imports & exports for Brexit
A large, Europe-based food processor and producer engaged Falsum to undergo a full Supply-Chain mapping exercise in reaction to the changing trade, customs & transit arrangements due to the UK’s exit from the European Customs Union in January 2021.
The Challenge
A large, pan-European Food processor & producer engaged Falsum to establish the impacts of the UK’s exit from the European Union (“Brexit”) on their pan-European operations. The business had multiple sites of production, procured raw ingredients from outside the EU, processed goods & made intra-Group sales between separate business entities.
The client brief required a proposal to understand tariff costs on their existing intra-Group transfers, establish customs compliance requirements based on the existing flow of primary, semi-finished and finished goods, and calculate the costs of Sanitary checks & Certification (SPS) at the UK & EU Borders.
The Falsum Solution
The mapping exercise highlighted areas of significant risk & additional cost to the client, including new compliance and regulatory divergence in high-risk agricultural commodities. The programme team developed proposals to mitigate the tariff-duty impact and reduce the costs of trade compliance by automating trade documentation from within the business’ proprietary ERP system.
Firstly, Falsum prepared the client’s submission to operate a Duty-Deferment Account (DDA) in both the UK & the European Union. Deferring tariff duties for up to 6-weeks from the date of import. The DDA realised significant cash flow benefits for a business with 30 to 90-day payment terms.
Second, the automation of trade documentation served dual-purpose; first, to limit the costs of fixed Customs Broker fees (per transaction) for a high-volume, low-value product portfolio. Further, automating trade compliance on certification & Food Safety / Sanitary Measures reduced the expected workload from an estimated 5 Full-Time Employees (FTE) to 0.75 FTE. The return-on-investment (ROI) for the IT Development would be realised in less than 4 months of post-Brexit trade.
In the longer term, governance and regulatory monitoring services are being delivered to the client across 8 regulatory geographies. Any change to import, labelling or technical requirements will be delivered to the client through a purpose-built portal.
The Result
The Agile development & implementation of a bespoke, automated trade compliance module based on Falsum’s proposals will save the client an estimated 32% of UK revenues (based on FY18-19 figures) over a 3-year period.
