Research: How are Aussie companies preparing for global supply chain disruptions in 2024?

GetApp’s latest report finds out why adopting supply chain management software is imperative for safeguarding supply chains and ensuring uninterrupted business operations as international business challenges continue. 

As 2024 unfolds, economic factors, including inflation and possible recessions, are the top challenges Australian companies are expecting to face this year in regard to their supply chain. Economic factors can, for example, cause changes in consumer demand that can impact supply chain dynamics, leading to overstocking, understocking, or supply shortages.  

As a result, Australian companies may be gearing up to implement and boost their supply chain management and procurement strategies. Businesses need to adopt innovative approaches to ensure operational continuity and resilience during the economic downturn. Which technologies are companies planning to invest in and how can they be used to combat supply chain disruptions?

To find out, GetApp surveyed 200 Australian employees working in supply chain and logistics employed in small to midsized enterprises (SMEs). In some cases we will compare results to the other countries where the GetApp survey was conducted. The full methodology is available at the end of the article.

Aussie companies forecast economic factors as challenges for 2024

Inflation in Australia peaked at 7.8% in December 2022. The latest figures show inflation retreating to 4.2% for the year to December 2023, compared with 5.4% for the 12 months to September, according to the Australian Bureau of Statistics (ABS). Still, inflation is significantly higher than the average from previous years, which continues to have a ripple effect on the Australian economy by impacting trade and commodities. 

Inflation can increase overhead costs, including labour, fuel, transport, insurance, and other inputs needed to bring commodities to market. As a result, inflation is a significant concern for Australian businesses: nearly half (49%) said they expect it to be a supply chain challenge, which is slightly above the international average of 45% across all countries that participated in the GetApp survey.  

High inflation in Australia has already had an impact on supply chains for many businesses, specifically when it comes to the procurement of goods and services. Notably, the most significant procurement challenges that businesses have encountered over the last six months are the following:

• Product availability issues: 43% of respondents said they had experienced problems with product availability, which can result from various factors including supplier issues, transportation challenges, demand fluctuations, or poor inventory management, to name a few. Inventory management software can help monitor inventory levels and prepare stock orders from suppliers in advance to mitigate shortages and enable organisations to manage product availability.
• Product quality issues: 35% of respondents cited the procurement of quality products as a challenge, suggesting possible weaknesses in quality management systems. Quality management software can help automate processes of tracking products and enable organisations to monitor and control product quality. 
• Delays in procurement: 32% of respondents noted delays in procurement from suppliers as a challenge, which may imply logistical challenges such as transportation bottlenecks, customs delays, or port congestion. Logistics software can automate warehousing, transportation management, shipping, and other logistical functions needed to monitor the flow of products from supplier to end user.

Most Aussie companies plan to have suppliers closer to home in 2024

Australia's unique geographical position can expose it to risk when global events lead to shortages of major products and supplies. When it comes to supply chains, Australia is often at the beginning or the end of them, according to a research group from the University of New South Wales (UNSW).

Businesses may be looking to mitigate supply chain risks by learning from past procurement challenges and anticipating difficulties expected for the year ahead. As such, about six out of ten businesses (61%) plan to continue switching to suppliers in or nearer to Australia, and a further 20% plan to start doing it. 

Having suppliers closer to Australia can offer benefits such as reduced shipping costs, which can combat rising costs associated with inflation. Businesses that diversify their supplier base to include local options can help mitigate risks, such as geopolitical tensions, natural disasters, or transportation disruptions that impact supply chains. 

Currently, 45% of Australian respondents said most of their suppliers are nearby. A further 27% said all of their suppliers are within close proximity, second only to the U.S. (36%). 

Geolocation for both Australia and the U.S. has a significant impact on the supply chain, and many businesses in both countries, the U.S. (39%) and Australia (33%), are planning to have all suppliers be in or very near to their countries in 2024.

67% of Aussie companies plan to adopt new supply chain tech

As we’ve seen, the adoption of certain technologies can help when it comes to switching suppliers. However, it can also be useful in aiding other areas of supply chain management, such as security, data analysis, automation, and more. Almost four out of ten (37%) Australian companies plan to continue adopting new supply chain management software, and a further 30% plan to make a start in 2024. 

However, Australian companies will allocate less of their budget towards supply chain technology than the international average. Only 36% of Australian companies plan to allocate more than 5% of their budget to supply chain technology, compared to 48% of the international average. In comparison, more than half of U.S. companies (56%) said they would allocate more than 5% of their budget to it. 

While Australian companies may plan to spend less on supply chain management software compared to the international average, we investigated further to find out which technologies Aussie companies plan to maintain or increase investment in 2024. The following are the most cited technologies that Aussie companies plan to maintain or increase spend on this year:

• Advanced cybersecurity (47%)
• Advanced data analytics (46%)
• Artificial intelligence (39%)
• Internet of Things (IoT) devices (33%)
• Blockchain/smart contracts (25%)

How to measure supply chain tech return on investment (ROI)

Levels of investments vary from country to country and business to business. However, evaluating how those investments pay off can help determine if more or less investment is required. ROI measures the financial return generated by the software investment compared to the initial investment cost, thereby calculating the ratio of net gain to initial cost. Companies must measure the net gain of their supply chain tech investments by tracking specific metrics. The following are the top measurements used in Australian companies:

1. Track customer satisfaction: 59% of respondents said they use customer satisfaction as a method of tracking the success of supply chain technology investments. To do this, companies can use survey software to collect feedback from customers about their experiences with the company. Companies can tailor questions to gauge how their technology implementations have had an effect on the customer experience. 

2. Cost reductions: 44% of respondents said they measure the success of tech investments based on cost reductions. Businesses can track costs and expenditures related to the supply chain using financial reporting software which can also help control, measure, and increase operational efficiencies. 

3. Logistics key performance indicators (KPIs): 41% of respondents said logistics KPIs are used to measure the performance of their supply chain technology investment. KPIs can be used to track measurements such as order fulfilment cycle times, on-time delivery performance, or lead times. By tracking these logistics KPIs, organisations can evaluate the performance, impact, and value of their supply chain software investments.

4. Employee satisfaction: 41% of respondents said they measure employee satisfaction to evaluate their supply chain tech investment. Companies can measure employee satisfaction with 360 degree feedback software which allows organisations to measure how employees are finding the software and if it is helping them do their job more efficiently. 

5. Sales KPIs: 40% of respondents cited sales KPIs as a way of measuring supply chain investments. Sales can be used as an indicator for the efficiency of supply chains such as by measuring inventory turnover rate, which calculates the amount of inventory sold and replaced within a period of time.

72% of Aussie companies express concern about cyberattacks impacting supply chain operations

Nearly a quarter (22%) of Australian respondents said they expect cybersecurity disruptions to be a top supply chain challenge in 2024. The threat of cyber attacks on acting public officials is of concern, and will likely be used to target governments and critical infrastructure, including supply chains, as part of ongoing cyber espionage, according to the Australian Signals Directorate’s (ASD) cyber threat report 2022-2023.

In the past 12 months, over a third (35%) of Australian companies have experienced disruptions linked to a cyberattack, where 9% cited more than one occurrence. As such, nearly three-quarters (72%) of Australian respondents are perturbed by the possibility of looming cyberattacks, which may disrupt their supply chain operations. 

When it comes to supply chains, cybersecurity concerns are further highlighted when we look at the types of technologies Australian organisations plan to maintain or increase investment in 2024. As seen previously, advanced cybersecurity remains a top software priority for Australian companies. 

Cybersecurity and supply chain management tech investments are vital to avoid disruptions

In summary, businesses can mitigate the challenges they anticipate for 2024 by reevaluating procurement strategies and increasing cybersecurity. The latter represents a significant importance for businesses, with 59% of Australian firms citing advanced cybersecurity as very important to the success of their company. As such, businesses must continually evaluate their technological investments such as supply chain management software or cybersecurity technology to help deliver on safeguarding supply chains and enabling business continuity. 

Businesses must aim to manage supply chain disruption occurrences to reduce their impact on business operations. Supply chain management software helps to strategically preempt disruptions and plan accordingly to mitigate their effects and manage supplier relationships. Businesses should keep the following steps in mind when preparing for supply chain disruptions in 2024:

1. Mitigate supply risks: Identify potential vulnerabilities and disruptions within the supply chain, such as economic factors, natural disasters, geopolitical risks, or cyber threats.
2. Switch to local suppliers: Include nearby or in-country suppliers that are better suited to your business to reduce dependency on suppliers across geographic locations. 
3. Monitor supply chains: Invest in supply chain technologies and tools to help track and monitor inventory levels, shipments, and production processes in real time.