A 2012 report on resilience in the Australian food supply chain by the Australian Government found that up until then Australian food supply chain showed a high degree of resilience. However, the same report also indicated that future resilience will decrease due to challenges on both supply and demands side of the chain.
That foreshadowing came to fruition last year when a triad of unexpected disruptions including the COVID-19 pandemic revealed the need for a resilient and pivoting food supply chain in Australia.
This conundrum leads us to the question of how the Australian food supply chain can be made more resilient and what role do food suppliers have to play.
What the Food Supply Chain Looks Like in Australia
Expectedly, the food supply chain in Australia is a complex and nationally distributed system and several government departments work with the industry to ensure the security, continuity, and safety of the Australian food supply. Moreover, it is not organized along territory or state lines and is majorly owned and operated by the private sector.
The reigning complexity of the supply chain presents challenges in ensuring continuity, especially during widespread emergencies. In such scenarios, the responsibility to plan for and respond to emergency events falls on states and territories.
However, there’s no specific legislation giving the Australian government the authority to regulate or manage manufacturing, distribution, or sales in case of an emergency. In such a case, ensuring supply chain resilience becomes important not just at the national level but at regional, territorial, and local levels too.
When referring to the food supply chain in Australia, it’s important to remember that it includes a wide range of production areas, manufacturers, suppliers, and retailers. The supply chain includes thousands of different participants, ranging from international companies to local traders as well as more than 20 million Australian consumers.
While some parts of the supply chain are wholly domestic, others must rely on the import of fresh produce, ingredients, or packaging to make up part or whole of the supply chain. In short, it encompasses a broad spectrum of processes beginning from agricultural production to manufacturing and finally to consumption.
How the Food Supply Chain in Australia Is Changing
The food supply chain in Australia is already undergoing several changes which are leading to a transformation in the relationship between the suppliers and consumers.
Some such changes are happening dramatically over a short period mainly due to advancements in logistics and transportation technologies. These advancements are enabling rapid delivery, lower inventories, and wider sourcing of food in terms of geography. These changes are also directly impacting the consumer options and variety as well as the supplier costs.
Other changes in the supply chain are a result of more long-term trends such as an increase in demand for readymade foods, diversification of the Australian diet, and an increase in the transfer of products between Australian regions and territories.
Essentially, both the short-term and long-term changes can be classified as either being supply-driven or consumer-driven. A good example of supply-driven changes are the supermarket chains seeking to leverage commercial efficiencies throughout their distribution network.
Consumer-driven, on the other hand, are changes affecting customer behaviour and preference due to societal and demographic changes.
Why Food Supply Chain in Australia Needs Resiliency
The need to increase food supply chain resiliency is clear and a $10 million fund was created by the Federal government to secure the food supply chains in Australia and build the resilience of Australia’s food sector to shocks and disasters.
Karen Andrews, the Minister for Industry, Science, and Technology cited how the COVID-19 pandemic had fuelled digital innovation in the food sector. A great example of this can be how suppliers are making use of order management systems to connect to retailers all over Australia.
However, the need for resiliency was most obvious last year, when the Australian food sector, as well as the country as a whole, faced the perfect storm. The combination of several severe events put the spotlight on food supply chain vulnerabilities. With bushfires, the COVID-19 pandemic, and ransomware attacks, Australian businesses and their supply chains saw a large number of disruptions.
These trends were also fuelled by global trends such as technological advancements, climate change, and globalisation. A study from Kearney and AFGC (Australian Food and Grocery Council) identified six supply chain trends and issues that the Australian food businesses will continue to face.
1. Sustainability and Corporate Social Responsibility
With the effects of public health issues such as the pandemic and climate change, companies need to up their corporate social responsibility and put increased focus on sustainability.
2. Tech Adoption and Industry 4.0
The fourth Industrial revolution and widespread adoption of technology bring forth a host of new issues. From cybersecurity breaches to artificial intelligence and data loss and control, and data readiness, suppliers need to embrace new technologies while also being aware of the threats.
3. Geopolitical Instability
The current geopolitical instability will continue to disrupt fuel supply lines and lead to an escalation in trade wars.
4. Consumer Centricity
Food suppliers and retailers need to be more consumer-centric owing to customer fragmentation, channel proliferation, and a shorter product life cycle.
5. Demographic Shifts
The tightening labour market and ageing population in Australia are also causing demographic shifts that the suppliers and retailers need to be aware of.
Increasing costs of land and rising traffic congestion will also play a disruptive role with regard to the food supply chain.
The combination of these black swan events has shown that the Australian food supply chain is not designed to deal with major unexpected events. As a result, all the participants need to identify and understand the risks and work on mitigating these risks.
The Role of Suppliers in Building a Resilient Food Supply Chain
Suppliers are looking for as cost-efficient a supply chain as possible, but it’s about time focus is put on resilience as well. However, aiming for cost efficiency can often run counterproductive to making it more resilient. Therefore, the suppliers should be seeking a balance between cost efficiency and resilience.
According to Kearney, suppliers can achieve this balance by focusing on the following dimensions:
1. Geographic Makeup
Suppliers should consider the geographical distances between supply and demand. Moreover, the geographical diversity of the sources of supply and demand should also be considered.
2. Planning Capability
How can suppliers sense the demand using technology and how quickly can they do it? For instance, using an order management solution can greatly improve the planning capability of the supplier.
Suppliers can do so by keeping track of their customers’ (food businesses and retailers) ordering history and patterns. The improved planning capability allows suppliers to predict and react quickly to demand changes.
3. Supplier Landscape
Do suppliers have visibility and are the supply bases diversified? Are you, as a supplier, overly reliant on a few customers? Connecting to new customers can be easier if you can show them how convenient it will be to work with you as their supplier. OMS is a great way to offer convenience to potential new customers.
4. Inbound and Outbound Logistics
It’s also relevant how much control and visibility the supplier has when it comes to inbound transportation and outbound logistics. Does the supplier have more than one mode of transportation available? Do they have diverse carrier options and alternate modes?
5. Financial Health
Do the suppliers have access to a healthy volume of safety stock inventory for core products? Inventory management is crucial for suppliers and can lead to serious disruptions in the supply chain. However, stocking up on inventory requires healthy finances as well as a deep understanding of the retailer’s demand.
In other words, suppliers can create resilience by building agility and flexibility in their supply chain. The flexibility and agility put suppliers in the ideal position to respond to unplanned disruptions such as pandemics or natural calamities like bushfires.
By creating a pivoting supply chain, suppliers can create resiliency. Essentially a pivoting supply chain is all about sensing a changing operating environment and then pivoting with the help of technology which helps suppliers improve their capacity.
In other words, suppliers can gain sense and pivot capability by switching to order management solutions that can help them sense the changes in consumer demand and then pivot their capacity accordingly.
How Order Management Solutions Can Help Suppliers Build Resiliency
In other words, suppliers need to build supply chain resilience by streamlining their operations. With OrderTron, suppliers can executive easy and quick order capture, processing, and payments.
As a result of using an order management solution like OrderTron, suppliers can also achieve cost efficiency by saving money and time using the most affordable, efficient, and effective wholesale ordering solution in Australia.
OrderTron is unique because it has been designed to fulfil the specific requirements of suppliers serving in the Australian foodservice landscape. It offers comprehensive capabilities including order capture, fulfilment, payment, invoicing including purchasing and inventory.