Why supply chain resilience is key for Australia

The combination of volatile economic, geopolitical and environmental factors is contributing to supply chain complexity for Australia. Surety of supply is a hot topic for just about every business. Organisations, industries, and entire economies continue to feel the impacts of disrupted logistics, rising freight and fuel costs and shortages of essential materials which are creating supply issues worldwide. Changing consumer demand has trigged the bullwhip effect, a chain reaction across several supply chain networks.  

With Australia’s heavy reliance on exports, largely commodities, and our large number of imported manufactured goods, we’re particularly vulnerable. The supply chain challenges are intensified as our nation experiences catastrophic weather events alongside the pandemic, rising inflation and interest rates.

Modern supply chains have evolved into highly complex global systems. They have multiple interdependent components and hidden vulnerabilities. They therefore need a multi-layered approach that addresses resilience over three different time horizons: short term (operational), mid-term (tactical), and long term (strategic).

Securing Australia’s domestic capability

The combination of a local strategic approach and critical targeted partnerships co-ordinated with different levels of government plays a key role in building future resilience and responding to shocks. Across the globe, we’re at the dawn of a new phase of manufacturing investment. In the US, Accenture research found 94 per cent of executives say their organisations plan to invest in onshoring or nearshoring. We see the Australian Federal Government planning investment in such areas as medical and advanced manufacturing, pledging commitments of $AUD1 billion and $AUD1.5 billion respectively. Bringing supply chains closer to home isn’t just about flexibility or resiliency, but also about imbedding sustainability, positively impacting the planet, reducing carbon footprints and creating opportunities for local workforce.

Digital transformation underpinned by new technologies

Companies are seeking to execute compressed transformations. These bold programs often span multiple parts of the enterprise simultaneously and are delivered on accelerated time frames. Such transformations are based on new technologies, underpinned by cloud, data, analytics and artificial intelligence that can help build a more cost-effective, resilient supply chain.

Organisations are no longer limited to the high-cost options of keeping more inventory and building redundant capacity. Accenture research shows that companies with greater supply chain visibility are more likely to maintain revenue, profit, and share price performance during periods of disruption. Intelligent visibility is the combination of structural visibility and dynamic visibility supported by analytics and artificial intelligence.

Structural visibility helps organisations understand what supply chains look like. It includes traditional activities like network mapping, risk assessment, now work assessments and modelling, often with the help of a digital twin. Dynamic visibility explains what's happening across the supply chain in real time. Dynamic visibility includes monitoring, predicting, prescribing and autonomous execution, which is typically handled by a supply chain control tower. Both types of visibility are essential and help assess where organisations are most vulnerable, providing visibility of the extended supply chain. With intelligent visibility insights, quick fact-based decisions can enable targeted investments that help improve structural resilience.

Organisations are increasingly using the cloud to help move beyond their current supply chains. Leading companies see the cloud not as a destination; instead, they see it as a continuum of capabilities that help create powerful new operating models. In addition to enabling cost savings, the cloud drives speed, agility, scale and visibility. As a result, companies can anticipate and predict market changes and risks across the supply network. They can design, make and deliver personalised products and services that boost customer loyalty.

All roads lead to not just technology, data and AI, but how organisations use insights to transform the organisation. With greater rigour applied to data and analytics, this becomes key to enabling organisations to accurately report ESG performance, such as Scope 1, 2 and 3 emissions and their reductions, as well as complying with Modern Slavery Act commitments.

When it comes to skilling, we’re seeing a gap between the typical supply chain skills most companies have and those they’ll need to compete and grow in the future. For example, Accenture US research found 61 per cent of participants said they can reduce the cost of goods and services with state-of-the-art technology. At the same time, they said automation and robotics technicians are among the hardest roles to fill. Reskilling will be needed. Looking ahead, leaders are exploring how human ingenuity and technology can create more advanced and autonomous supply chains.

This article was contributed as part of the Accenture – CEDA 2022 Supply Chain Series cross industry roundtables – Supply Chain Outlook: Shocks, Shifts and Trends.