As costs rise, political uncertainty hangs over the US and Europe, and the skilled workforce grows ever-smaller, Australian manufacturers are looking for logical solutions closer to home – increasingly working to onshore manufacturing and investing in automation.
Supply chains are the backbone of the food and grocery industry, but they continue to suffer under intense pressure from soaring costs and disrupted international trade.
The Australian Food & Grocery Council (AFGC) and global management consultancy, Argon & Co, have released their latest Supply Chain Survey Report, conducted every two years, to determine the most important challenges and trends manufacturers are facing.
Climate and geostrategic uncertainty
While many respondents reported mostly recovering from Covid-19 disruptions, supply chain interruptions remain a significant hurdle to industry productivity. Enhancing supply chain resilience was identified as the biggest opportunity for the AFGC to pursue.
The Report found the top challenges for manufacturers, with lowest preparedness relative to their impact, were global supply chain disruptions, cybersecurity threats, and geopolitical conflicts. Nearly 80 per cent of companies reported experiencing moderate to large-scale disruptions, with international shipping delays highlighted by 68 per cent of respondents.
Onshoring manufacturing was identified as one of the top three planned technology investments over the next three years, highlighting the growing desire for sovereign capability in a time of uncertain geostrategic and climate circumstances.
Closer to home, natural disasters in Australia are resulting in failures in key infrastructure, such as roads and rails, and leading to costly congestion and delays. The Report stated 21 per cent of companies have no formal risk planning or scenario analysis for supply chain disruptions, and another 14 per cent are still developing these.
Less than 50 per cent of organisations have a proactive risk monitoring process, with most organisations relying on monitoring risks based on past disruptions or warnings highlighted by governments or in the media.
Businesses have started responding to supply chain disruptions by diversifying suppliers, boosting resilience, and increasing agility. The AFGC stated it recommends government investment to fortify the East-West freight rail line and East Coast freight rail network, critical arteries for delivering essential food and groceries to consumers nationwide.
The push for automation
Talent shortage was considered the workplace issue of highest importance level for organisations surveyed, closely followed by workplace diversity and labour costs. As the rise of automation takes away manual labour roles, the need for highly skilled employees has grown.
Companies are attempting to level this issue with the help of artificial intelligence (AI), with an overwhelming 93 per cent of respondents stating they are looking to deploy AI within their supply chains, and 61 per cent have implemented it to some extent. From demand forecasting to warehouse automation, AI is revolutionising supply chains.
However, the process of developing these systems is held up by the same challenge it aims to address – a declining skilled workforce. Organisations are less ready to utilise machine learning and AI compared to the technology’s ranked level of importance, with 55 per cent currently leveraging unsophisticated systems in the planning space.
Surveyed organisations stated that barriers to AI adoption include system integration, staff skill gaps, and high investment costs.
Although a shortage of highly skilled workers is slowing adoption, 74 per cent of businesses are investing in generative AI over the next three years, betting on its ability to optimise routes, improve efficiency, and enhance quality control.
The Report showed the most researched and invested-in technologies are manufacturing robotics, machine learning, and warehouse automation. Over the next three years, ERPs and advanced planning systems are the top planned technology investments, closely followed by advanced analytics/business intelligence.
Embracing digital transformation was identified as the second most important opportunity for the AFGC to pursue, only a few percentage points behind boosting supply chain resilience.
Overall, the report paints a picture of an industry under pressure, but with the motivation to overcome. The AFGC is calling for increased government investment in infrastructure to reduce supply chain bottlenecks, support for industry-led initiatives to enhance supply chain resilience, and solutions to supply chain labour, talent and skills shortages.
Strengthening the resilience of supply chains by investing in rail and road, embracing AI and adapting to shifting consumer demands will be critical to the industry’s success. With the right action, Australia’s food and grocery sector can build stronger supply chains for the future.
