Managing risk to thrive in uncertain times

The Brexit referendum presented the biggest uncertainty Eurilait had faced in its history. As an importer of continental dairy products getting Brexit right was essential to our future viability. Waiting for politicians on both sides of the Channel to come up with answers, or hoping for the trading status quo to remain the same, wasn’t an option. We had to act.

Rather than getting stuck in the remain/leave debate or following the endless upheaval in Westminster as proposed deals, elections and resignations came and went, we began planning for a new commercial reality.

This meant accepting that Great Britain would become a third country trading independently with Europe and beyond. But this posed several key questions for us:

1. How could a company with no previous experience of importing or exporting make this transition?
2. What knowledge existed that could be tapped into?
3. Where would we start?

Preparing for a new reality

We had to be honest; we didn’t have all the answers. It was all about committing to the goal of being ready for this new reality in whatever specific form it might take.

The first action was to make this a strategic priority at board level in the UK and for our parent companies in France. Key personnel were assigned responsibility to scope out the areas that might change ranging from potential tariffs, customs paperwork, dairy specific certifications, logistics and VAT. We knew were approaching the challenge from a standing start, with limited experience and without the bank of resources larger companies can often access.

It was imperative to collaborate and use our networks. 

Expecting the government to come to the party with clarity and detail in advance wasn’t realistic and would have inevitably led to a last-minute scramble for compliance.

Some of the actions we took to educate ourselves included:

• Working closely with our sector specific trade bodies, the CBI, local chambers of commerce
• Attending a multitude of webinars on the topic of trade post-Brexit
• We compared notes with other businesses, suppliers and even competitors.

These practical conversations and insights in time gave us the confidence that we could manage an EU exit even if it took a harder edge than many predicted in 2016.

With the risk of trading compliance and business discontinuity easing, our attention turned to how we could make the most out of the reality of EU exit. We had lots of ideas around supply chain and factory optimisation, but the two initiatives we focused on were:

• Setting up outsourced packing operations in Ireland to reduce costs arising from the trade deal
• Ensuring our use of transport was as efficient possible.

Then, the pandemic struck

When COVID-19 arrived, we had to react. Quickly.

Almost overnight, we went into survival mode. Teams launched into remote working and safety measures were introduced as the scale of the health crisis rapidly emerged.

For Eurilait, Brexit was primarily a risk to supply but the pandemic threatened both supply and demand.

We went through the same thought process as with Brexit: Control what you can control and figure out the rest as external events take shape.

Questions we got to grips with included:

• How do we protect our people?
• How will incoming supply of product be affected?
• How will our customers be impacted?
• What can we do to build resilience in our production operations?

This last question would prove to be essential to navigate both the pandemic and the full reality of Brexit.

Protecting profitability through innovation

Our supply chain and commercial teams jumped straight into protecting profitability through effective stock control, while continually adapting our sales and procurement forecasts as the full impact of lockdowns and social distancing became clearer.

These actions were essential to our short-term viability. We had to ensure our business model would be truly resilient for the long haul.

Eurilait creates value by transforming and processing product at our facility in Somerset, particularly at Christmas when cheeseboards are a festive must-have. In a post Brexit and COVID-19 world, being reliant on a seasonal spike in production activity for Christmas looked increasingly risky on a number of levels. Securing EU labour was going to be tough given changing immigration requirements and the impact of COVID-19. Also with furlough, overall skills shortages in the economy and low regional unemployment suggested our previous ability to source large numbers of temporary workers was going to be impossible.

We were left with 3 options:

1. Do nothing and hope for the best, accepting our exposure to external factors
2. Limit our sales capacity at Christmas given the risks of not being able to supply
3. Or look at innovative ways of doing work earlier in the year.

As a team we were up for the challenge and put in place a project team to set out ways to address this. We explored ideas such as extending shelf life on product, freezing and changing recipes to facilitate both increased shelf life and the ability to freeze. We redesigned packing and pallet configurations to ensure effective product tempering. Our commercial team secured contract packing opportunities for export customers in the US which drove a smoother labour requirement outside of Christmas.

All of this innovation was delivered during a pandemic, whilst working remotely and through collaborating between every department in the business.

Our labour profile is now flat from June onwards and has given us a fighting chance of delivering a successful year in 2021 as the labour market tightens across the country. These actions have enabled us to increase permanent headcount.

What have we learned?

Have a plan. Focus on positive actions. Be prepared to change and adapt. Don’t let uncertainty be a barrier to creativity and innovation.

Members can also watch our exclusive video interview with Eurilait, part of our 'Leading the way' series, here.