Supply chains must be ‘future ready’

• Disruption vulnerability – 47 percent of global businesses still feel vulnerable to disruption with the largest impacts from disruptions coming from macro factors.
• Improved visibility – 87 percent of global businesses see improved visibility of suppliers as vitally important, yet 43 percent are unclear about their performance.
• Technology investment – 94 percent of survey respondents are optimistic that digital twins will add value in supply chain planning. While 37 percent are already using automation or robotics, 39 percent plan to invest in digital technology to bolster data synthesis and analysis.

Australian businesses must increase their investment in their supply chain workforce, ESG commitments, and in technologies such as AI in order to be competitive. KPMG’s latest Future of Supply Chain report shows global supply chains are further advanced than Australia, but also face challenges.

Peter Liddell, KPMG Global Head of Supply Chain said that Australian businesses remained focused on building resilience after surviving multiple years of disruption and crises but needed to ensure they stayed abreast of change, especially in the areas of advanced technology and ESG imperatives.

“Supply chains were required to develop resilience post COVID and are now faced with a new set of issues. Supply chain challenges are expected to continue and therefore being ‘future ready’ is key,” he said. “Our report shows that increased adoption and maturity of technology is being used to ensure the business is future ready. It’s significant that 63 percent of global businesses believe many repetitive tasks humans do will be replaced by automation – while 87% see improved visibility of suppliers as vitally important.”

Peter Liddell said that while Australian businesses are still building resilience global leaders have invested in advanced automation, robotics and adopted AI and machine learning across the entire supply chain to become future ready.

“For Australia, while the adoption of advanced robotics and automation is in its infancy the agility and efficiencies these bring will shape the skills and roles required in future supply chains,” he said. “Already, automation is in action, with 37% of survey respondents using it to replace warehouse labour. Over half the companies surveyed are preparing to heavily invest in technologies and implement advanced robotics into their supply chains. What’s more, 59 percent expect manual activities that have a high risk of injury will become automated.”

Despite Australia’s domestic transportation and logistics industry having access to a highly skilled workforce and a reasonable quality of infrastructure assets, Mr Liddell says Australian supply chains also perform below the level of global standards and those of their regional neighbours.

Peter Liddell said: “With insufficient investment in Australian supply chains, they remain highly manual and inefficient. Compared to global leaders, we can see there’s a lack automation applied to key supply chain tasks, less data and analytics used to support strategies and decision making, and so the Australian transport and logistics process is slower, less agile, and not as responsive to customer needs. In addition, it is still more expensive than global competitors.” 

He also said there was an increased focus on the impact of ESG on supply chains. “The supply chain has become one of the most powerful sources of ESG progress, yet there is much more to do in Australia. ESG is now a ‘must have’, not a ‘nice to have’, and the entirety of the supply chain will be brought into the heart of the corporate ESG strategy,” said Peter Liddell.

According to Mr Liddell, Australian businesses needed to act now to keep up with global developments. “You need to analyse and understand your supply chain, prioritise its management and invest in it.”

He said that many of the industries that supply chains support are on the brink of innovative change themselves: “Companies that hope to maintain a competitive advantage should keep a very close eye on how product innovation and advanced supply chain technologies are progressing, and which modernisations they can embrace.”

Mr Liddell said a key shift over the coming years will be how humans and automation work together, and redirecting human focus towards creative, innovative, and collaborative tasks that elevate the supply chain’s potential.

“Businesses must ‘seize the day’, by investing to become ‘future ready’. The biggest risk to supply chains in Australia right now is to do nothing.” 

Marjorie Johnston
+61 407 329 430
mjohnston4@kpmg.com.au