Supply chains disruption: A deep technology shift required to build the new face of manufacturing and distribution in Australia

By Greg O’Loan, Regional Vice President Australia, New Zealand & Pacific, Epicor

Location independence is one of the major forces that will impact businesses and shift how operations are carried out in 2021 – and beyond.

COVID-19 has shifted where employees, customers, suppliers and organisational ecosystems physically exist, and has dramatically disrupted traditional supply chains – in particular our reliance on global supply chains.

The distribution and manufacturing industries were both at the heart of this disruption. They had to adapt and innovate to create new supply chains and new ways to operate.

It is now clear that this blend of globalised and local supply chains will change​ the face of manufacturing and distribution as we know it.

A more balanced global vs local supply chain model

As we slowly open up to the rest of the world, countries like Australia are starting to resume some of the global supply and distribution chains that were put on hold since March 2020.

However, COVID-19 has shed light on how critical supply chains are, and how susceptible to risk they are too. Risk experts say we are set to continue evolving in an increasingly growing risk landscape, even after the COVID-19 situation has resolved. Organisations need to be more proactive about how they manage third-party risk, and have more control over supply chains.

Further to this, Australia is likely to be impacted by further shifts off the back of the current tensions with China, which means local industries will continue to look at shorter, more regional supply and distribution chain options.

We are slowly shifting to a more balanced global vs. local supply and distribution chain model, to accommodate the unpredictable world we live in.

Local circuits and a return to the Made in Australia: distributors leading the innovation train while manufacturers lagging behind

COVID-19 has deeply challenged the local Australian landscape and the distribution and manufacturing industries have all of a sudden become mission critical services and to some extent essential businesses.

Governments and industry bodies are now all pointing out to the importance of the local manufacturing and distribution industries in Australia’s economic recovery, and many predict a return to the ‘Made in Australia’.

Technology has been critical in enabling those businesses to operate, and it will continue to be essential as organisations further their transition to a mixed global/local production and distribution model.

As a result of COVID-19, most organisations had to fast track their digital transformation plans from years to a matter of months​.

The distribution industry moved very quickly: we’ve seen Click & Collect, delivery, and online e-Commerce options made available almost overnight. This was possible because many distributors already had a strong technology foundation that made it possible to easily accelerate their digital investments and pivot almost seamlessly to the new normal.

Key technology investments and cloud migration acceleration needed to build relevance long-term resilience

Today and tomorrow’s reality will be very much anchored in being able to manage things remotely, making quick changes and strategic decisions informed by real-time data, and scaling activities up and down almost on-demand as we continue to evolve in a highly unpredictable world.

As ​Gartner​ pointed out when discussing the location independence trend, a technology shift is needed to support this new version of business operations.

Companies investing in technology will be the ones to reap the benefits of that new model, and adapt to new levels and types of local demand.

The first key technology investment manufacturers and distributors should look at is cloud. Migrating to the cloud will help them add the agility and scalability layer needed to operate in today’s environment, as well as cut costs and improve operational efficiencies.

Secondly, apart from the drive in changing philosophies in supply chains, philosophies have also started to shift, as we’re seeing manufacturers that have an on premise solution in their factories looking to now adopting cloud remotely. This will build the foundations for other strategic technologies down the lines and bring manufacturers and distributors fully into the Industry 4.0 era.

For example, technologies such as Artificial Intelligence (AI), automation, IoT and robotics will power the future of the industry and open new growth avenues.

Investing in those technologies is what will differentiate the organisations from those that might unfortunately disappear if unable to adapt.