Australian companies to rework supply chains in wake of COVID-19

• More than two-thirds of Australian businesses are focussed on improving supply chain security in response to COVID-19.
• Over half of Australian firms are motivated to make changes to supply networks in order to support the survival of their business.
• More than a third of Australian businesses are driven by a need to improve the reliability of their supply chains regardless of the cost.

New research from HSBC reveals that Australian businesses are planning significant changes to their supply chains as they seek to boost their resilience in the wake of the disruption caused by COVID-19.

HSBC Navigator: Building Back Better surveyed decision-makers in more than 2600 companies in 14 markets, across Asia Pacific, Europe, the Americas and the Middle East.

The findings reveal that a fifth (16%) of Australian businesses compared to a quarter (26%) across all markets surveyed are operating as normal and considerably more, four in five businesses (78% compared to 63% in all markets) are operating with either minor (44%) or major (34%) changes.

Companies which operate in international markets were less ready for the business interruption caused by the pandemic, with only a quarter (26%) stating they were as well prepared as possible (compared to 45% of domestic businesses).

More than two-thirds (68%) of firms are now focussed on improving supply chain security to protect their future activities and over two-fifths (44%) are aiming to increase the transparency of their supply networks.

“COVID-19 has shown that supply chains should be an integral consideration in a company’s overall strategy. There are a number of steps that can help build their resilience while maintaining the benefits of global trade, starting with a supply chain audit which maps all the parties within it,” said Steve Hughes, Head of Commercial Banking, HSBC Australia.

Of the firms surveyed, more than half (57%) are motivated to adjust supply chains to support the survival of their business and maintain growth, while over a third (37%) are driven by the need to improve reliability of supply networks regardless of an increase in costs.

“Companies could consider diversifying across suppliers in different markets to protect themselves against disruptions in one region. Suppliers who are relatively close to home could also be included in this mix,” Mr Hughes said.

Businesses in Australia are slightly ahead of the global average when implementing changes to their supply chains. These changes include identifying and securing critical suppliers (34% vs. 31% globally), diversifying supply networks to work with more suppliers (31% vs. 29% globally), increasing transparency of existing suppliers (31% vs. 27%) and making supply chains more environmentally sustainable (29% vs. 27% globally).

“Businesses cannot control unforeseen events but they can bolster their defences against external shocks. Remodelling supply chains is one of several steps they appear to be taking to support their future resilience,” Mr Hughes said.