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Supply Shortages lead to learnings for the future on Supply Chain Management

  • emmat
  • February 4, 2022

As Australians begin to ease back into a semi-normal lifestyle, it’s not easy to forget the additional risks we now face. It’s not just those going about their everyday lives who face the threat of catching COVID-19, but also the risks and challenges businesses face, including disruptions to their activities.

In the last few weeks, walking into your local supermarket or retail outlet may have looked a bit different to what we’ve known the past few months.

Just as we thought supply of meat, veggies and of course toilet paper were back to normal, businesses were hit with another round of supply chain disruptions. This has seen new customer limits on goods such as meat, perishables, Rapid Antigen Tests and again, toilet paper.

In 2020-21, the empty shelves were due to spikes in demand from customers, as many responded to lockdowns by overconsumption of goods. This shocked supply chains as it caused a disruption in the rhythm of distribution. In 2022, the shortages are due to supply-side issues and the impact of this not only locally but globally leading to large delays in shipping goods and higher costs in airfreight for urgent goods, most of which is not predicted to subside till Q2 this year.

COVID has not only impacted staffing levels on the front line due to the rise in the number of cases and quarantining, but has also impacted all facets from truck drivers, warehouse workers, to the issue of availability of workers, many overseas such as fruit growers.

Woolworths chief executive Brad Banducci stated that “more than 20 percent of distribution staff and more than ten percent of store workers are absent”.

Whilst much of this seems uncontrollable it does give the learnings to keep one eye on seeking a way to future proof disruptions to your supply chains, some key things to think about are:

  • Consider whether you should purchase surplus stock when ordering from suppliers. Having additional stock than what was originally needed can help mitigate the risk of supply chain disruptions, that would otherwise lead to customer orders being placed on backorder while more stock is ordered.
  • Invest in technology such as inventory management software that can provide real-time updates, including inventory levels, stock on order and supplier on-time performance.
  • Ensure you have backup options to your major supplier.
  • Regular audits of stock through an Audit Specialist can identify any potential risks and review your business’s supply chain.

 

Travis Noffke – Senior Risk Adviser | Adroit Insurance and Risk

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