Will Scottish Independence affect your Strategy?

We are a month away from the independence vote for Scotland and the debate and rhetoric on both sides of the issue are firing up to full speed. However, the question procurement teams need to be asking is what the outcome might do for or to their category strategies. (I’ll provide a note of insight here; being half Scots, your writer may or may not have bias!)

At the onset, it may seem unlikely that there is an effect. How can a distant political decision shape the way in which my strategy operates? The challenge here is to consider our supply chains more broadly and to imagine a series of effects which could arise from either a yes or a no vote: and it’s clear there will be some level of change in either direction.

Firstly, we have to imagine if there are particular parts of your supply chain which could be affected by a ‘Yes’ vote. If there are no physical goods or services impacted, then the answer may be easy; however, there is a considerable part of the UK finance sector which is based in Scotland. If your suppliers are insured with some groups, or have banking services provided from Scotland, there may be a period of change while the issues and implications of new currencies, and risk exposure in those businesses sort themselves out.

Where there is a set of goods or services of Scots origin, we have to consider the potential impact of border and customs changes, of different currencies and of changes in the overall legislative landscape. Much of this will not have an immediate effect; in the event of a yes vote, there will be an indeterminate period of negotiation and legislation to deliver those changes, during which clarity will be sought. However, in that intervening period, there is likely to be an element of uncertainty and instability which is developed.

Here, for more significant suppliers, there may be opportunity from strengthening a relationship; both to seek benefit by providing an element of stability in a less stable world, but also to make sure you have a good understanding of any more strategic changes ( like, moving elsewhere, as has been suggested in some financial reporting).

Equally, it may be useful to pay close attention to businesses which have very full exposure to the Scottish economy, such as BP, and track and understand the actions they are preparing and developing in that period.

If there is a ‘No’ vote, then there seems a high likelihood of further measures of devolution to the Scottish Parliament. The extent of this seems indeterminate, although reports of further tax raising powers and spending opportunities for Scotland seem to have more reporting. Again, there is an implication for this; if there is a change in taxation regime, there is more than likely an impact on businesses and as such there will be a need to review the impact of those changes over time; however, decreasing Scotland’s competitiveness at this point in the economic cycle cannot be a key aim of the Scottish Parliament (one would hope).

At last though is provided by the online betting company, Betfair, who suggest that the betting they are seeing is providing a 14% chance of a yes vote. Interestingly, the odds being provided actually go the other way, which may give more insight into how bets are laid off than anything else.

More background at http://www.thetimes.co.uk/tto/news/uk/scotland/referendum/article4161690.ece

Mark Hubbard thinks about purchasing at Smart Brown Dog Ltd.

http://www.smartbrowndog.com

 

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About Mark Hubbard

I set up a specialist purchasing consultancy and a business focussing on seeking innovation. I work all over the world with clients, helping purchasing teams develop new ways of delivering value for their businesses. I love thinking about how purchasing works, and how it can be better, and I'd love to share some of those thoughts with you
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