While supply chain disruptions were felt all over the world, Australia arguably felt these issues more intensely because of the country’s unique supply chain conditions and an already tough summer. However, experts say there are steps Australian businesses can explore to manage supply chain disruptions and improve their resilience to major shocks in the future.
Australia’s supply chain impacts
Supply chain disruptions aren’t new to Australia. Overseas, geopolitical shifts and trade disputes have had an impact, while locally we’ve seen a major drought and a catastrophic bushfire season. But the pandemic has affected supply chains in ways that are perhaps more visible to end customers.
“Where COVID-19 is unique is that it has made the issue of supply chain disruption visible and front-of-mind to everyday consumers,” explains Henrik Smedberg, Regional Vice President for SAP Ariba ANZ, which provides procurement and supply chain management software. “From empty supermarket shelves to PPE sourcing issues, supply-and-demand risks have been felt on a broad scale across the country.”
“As an island country, we tend to rely on imports, and Australia’s sheer size means longer distances for those goods to travel, ultimately slowing delivery times. We also have a high volume of agricultural exports, creating perishability issues throughout lockdown.”
“Lastly, state-level regulations and border closures have presented further hurdles for Australian businesses as they attempt to maintain business continuity.”
Better visibility, better communication, better partnership
Smedberg identifies supply chain visibility as perhaps the most urgent and significant factor in managing – and potentially pre-empting – disruptions.
In some cases, particularly when first responding to an unexpected shock, that might be as simple as more proactive communication with customers, suppliers and customers. The more they know about where goods are in the supply chain, why delays are happening and what to expect in the immediate future, the more easily they can manage their own stakeholders’ needs.
Empathy and understanding can go a long way to managing negative impacts. They can also foster greater partnership and collaboration, which were critical in the early days of the crisis.
In an example of public-private cooperation, as well as competitors teaming up for the greater good, Australia’s supermarket giants were able to work together to get much-needed supplies into stores quicker after the Australian Competition and Consumer Commission temporarily allowed the retailers to coordinate on manufacturing, transport and logistics.
“Businesses need to ensure they’re working to understand how other parties are impacted and how they might be feeling,” Smedberg says. “Your partners need to feel supported and heard during this time, and often these conversations become a collaborative space that puts problem-solving at the fore.”
To ensure long-term improvements, though, Smedberg emphasises that true visibility will depend on businesses’ willingness to invest in digital solutions.
Technology-enabled solutions for greater visibility
Digitising supply chains will play an important role in managing the current crisis as well as building resilience to future ones.
“Regardless of industry, any business should be utilising tools that are going to provide a complete picture of their end-to-end operations,” explains Smedberg. “That means digital solutions that ensure insights into every single link in the supply chain.”
“This visibility into a business’ operations gives key decision makers deep insight into the effect of any changes to any stage of their supply chain. Moreover, it will highlight how it impacts the rest of the chain, like production, distribution, demand, or financial performance, so businesses can adapt accordingly.
“Coles Group, one of Australia’s largest retailers, is an example of a brand who accelerated digitising aspects of its supply chain with SAP Ariba. It was a timely investment, as it helped the business manage suppliers and customers more effectively through disruptions caused by the drought, bushfires and now COVID-19.”
Making data-informed decisions for smarter supply chain operations
Digitising supply chains doesn’t just make them more resilient to shocks and improve business continuity, it helps make them more efficient and more effective overall – and speedy, smart operations can be vital during a crisis.
“Greater visibility should come with larger data-sets and deeper insights, helping businesses model different scenarios and make more informed decisions,” says Smedberg. “The financial forecasting element of the SAP Ariba’s Digital Supply Chain, for instance, is especially important in the context of the pandemic, as it will help businesses plan for the future of social distancing regulations.”
“For example, some businesses might realise that closing certain retail locations or venues would enable them to maintain margins and make a profit in the face of additional costs or reduced demand from pandemic-related restrictions.”
“This kind of analysis and predictive functionality is essential for businesses today and in the future, as 2020 has shown us just how unpredictable the world can be.”
Smedberg points to Frucor Suntory, one of ANZ’s largest beverage companies, as an example of how digitisation can have wide-ranging impacts on a business’s ability to minimise disruptions and work more nimbly regardless of the circumstances.
“The business created digital touchpoints and analytics throughout its supply chain, including for online ordering systems, quality assurance, stock checks, customer service, and delivery processes,” says Smedberg.
“Not only did this give Frucor a far better understanding of the needs and habits of its 3,000 retail customers, but it also enabled business continuity as nearly all aspects of its operations can now be done remotely or online. This meant that any stores that remained open throughout lockdown were still able to use the online portal to order.
Frucor also uses planning software to manage warehousing space and ensure seamless distribution. Throughout the pandemic, this technology has reduced the time it takes to cater to retailers running low on stock. It has also helped Frucor manage stock levels, warehousing space and costs since many retail outlets closed during lockdown.
Faster businesses in general
It’s not just supply chain operations that could use a boost in speed. With pandemic responses proving that previously unthinkable turnaround times were, in fact, thinkable, businesses and their decision-making are also likely to get quicker.
“During the height of the pandemic in Australia, we also saw customers make decisions about and implement technology in days or weeks – processes that previously would have taken months,” Smedberg says. “This included one of Australia’s largest grocery retailers who overhauled its delivery service in the course of a weekend, to better support vulnerable customers.”
“Additionally, one major Australian financial institution was able to source and buy face masks for staff in less than 24 hours.”
“As a result of Australian businesses successfully implementing these changes at a faster pace, it's likely we’ll see a longer-term impact on expectations of delivery times and faster innovation in the future.”
However, some of this swiftness goes back to the right investments in technology. To make the evidence-based decisions that help businesses react to sudden shifts, they’ll need deep data insights into a variety of scenarios and intimate knowledge of their supply chains – the kind that can likely only be achieved through technology-enabled visibility.
While there is no way to completely insulate a business from the effects of an event like a global pandemic, using technology to gain better visibility, work smarter and make faster decisions can help to manage impacts on Australia’s supply chains.
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