Supply chain models reviewed

The supply chains of the post-COVID world will not be driven by products and processes but by customer needs.

Exporters are experiencing limited access to airfreight

The supply chains of the post-COVID world will not be driven by products and processes but by customer needs, and companies may look to appoint chief logistics officers as part of their leadership teams to extend the “Uberisation of transport” solutions, according to KPMG.

The firm’s ASPAC head of supply chain, Peter Liddell, said it was seeing multiple requests by clients for support in upgrading their supply chains to make sure their systems supported a renewed customer focus.

“It really is the customers’ determination on how they purchase something, where they purchase it and the form in which the want it. We are seeing the emergence of demand-driven supply chains. COVID-19 has highlighted those companies that haven’t been prepared to pivot to online,” he said.

In a post-COVID world companies would not depend on capital-intensive fixed assets and linear flows but “on an ecosystem of modular capabilities, delivered through a network of trusted third parties, that can be scaled and recombined as needed”.

“It’s likely supply chain operators will become leaders in data, analytics, sensors and the Internet of Things — and that means new skills and thinking will be required and new job roles created. A chief logistics officer might be a new role within the senior leadership with other essential jobs in that team. That’s the evolution we’re seeing; pivoting and repurposing today will help us get where we need to go for tomorrow.”

KPMG head of agribusiness Robert Poole said fleets of vehicles delivering supplies of fresh products such as dairy and bread for limited hours each day could have their capacity reutilised in other key parts of the food supply chain.

Mr Poole described the plan as extending the “Uberisation of transport” concept into supply chains.

“I think we have only scratched the surface here. A lot more will happen post-COVID-19 on the utilisation of fleets, especially in a country like Australia with the distances involved. The food sector is especially problematic because of the cold-chain,” he said.

Exporters are experiencing limited access to airfreight and even shipping containers for fresh produce and as a result freight prices have risen sharply.

The price hikes look set to hinder the competitiveness of Australia’s food exports moving into key Asian markets as they emerge from lockdown.

“So we are seeing airfreight consolidation at an industry level. There is more analysis of what products can travel together as airfreight. For example, don’t put lobsters together with chilled meat because the CO2 emissions from the meat will kill the lobster,” Mr Liddell said.

Shipping volumesset to decline

Shipping volumes look set to continue to decline from China to Australia by 10 per cent between May and July.

“You are looking at a few weeks longer to turn around the ships in the system in both directions. Industries have to work together. Those that used to compete against each other for freight space have to work together,” Mr Liddell said.

Mr Poole said the COVID-19 crisis had shown the resilience of the food retail supply chain in Australia, as supermarkets and brands managed to cope with panic buying.

“The packaging and ingredients companies managed to keep up with Coles and Woolworths. In some cases they had to pivot a bit but I was impressed by even some of the highly challenged ones how organised they were. Full credit to the food companies in Australia because they all seemed to respond brilliantly. No one has run out of packaging or ingredients,” he said.

“One of the real bonuses for the sector is that we haven’t disrupted our food manufacturing industry, our workforce has been maintained. The successful suppression of the virus has helped our food supply chain functioning. We have only experienced a hiccup compared to everyone else in the world.”

But the challenge ahead lay with managing the impacts on the fresh fruit and vegetable sector of the next stage of the crisis, which is seeing fewer in-supermarket purchases of products like avocados and lettuce.

“COVID-19 has also put systematic pressure on global markets and that is most highlighted in fibre. The crash of the oil price has had an impact on sugar,” Mr Poole said. “Weaker demand in the apparel sector has also impacted cotton and wool.”