Megatrends, Opportunities and Challenges in the Australian Supply Chain Sector
Australia’s supply chain is changing. Natural disasters like floods and bushfires, plus the impact of the pandemic, are affecting the demand for essential goods and services and how manufacturers, technology and logistics providers meet this increasing demand. In 2021, Australian online retail spending grew by 35%, further straining the vulnerable supply chain.
Peter Walsh, CEO of Australian Industry Standards (AIS) states in a recent report that,
“Supply chains are a key cog in every business and a major contributor to our economy. The supply chain industries that support Transport and Logistics, Aviation, Maritime, and Rail provide essential services in the movement of services, goods, and people across Australia. These industries together employ over 679,000 people across its different sectors and generated annual revenue of over $179 billion from 2021-22.”
This article highlights six megatrends that will continue to impact the supply chain industry and how the Vocational Education and Training sector (VET) can evolve to meet the challenges and opportunities presented by these megatrends. Here’s what we’ll cover:
- Double disruptors
- Supply chain resilience
- Data analytics and logistics
- Labour shortages
- Digital transformation
The pandemic accelerated the coming of the digital age. With limited physical interactions, most businesses had to adapt to online interactions rapidly. So it’s no surprise that the digital transformation sector achieved ten years of growth in only a few months.
While this accelerated growth presents lots of opportunities, it also unearths a possible bottleneck — a dearth of skilled workers. Data from The World Bank states that, on average, 40% of workers will require reskilling to fit into the digital era, and 94% of businesses require their staff to acquire new skills. In other words, there’s a need to invest massively in “upskilling” and “reskilling” the current Australian workforce to meet the demands of today’s digitally-driven post-pandemic economy.
Australia’s Vocational Education Training (VET) sector provides the core of skilled professionals powering the supply chain — which means the VET industry should directly benefit from the government’s skill acquisition and development efforts. The government recognises this, which is why its Digital Transformation Expert Panel has developed strategies to help VET become a dynamic ecosystem supporting lifelong learning in the supply chain.
Supply Chain Resilience
Despite the countless challenges faced by Australia’s supply chain, the sector continues to meet the changing consumer demands.
The ripple effects of the pandemic like lockdowns and restrictions in activities, increasing demand for goods, labour shortages due to infection of workers and isolation rules have significantly impacted the movement of goods and product availability. For example, transport and logistics operators across Australia have reported a 5% to 20% reduction in their available staff, including heavy vehicle drivers, warehouse staff, and forklift drivers, due to COVID infections and isolation requirements.
Again, the VET sector plays a crucial part in cushioning the impact of labour shortages by providing skilled and job-ready workers for the supply chain. And the government is already taking the proper steps through deliberate policy-making. For example, The Transport & Logistics Industry Reference Committee, supported by AIS, proposes a new heavy vehicle driving apprenticeship that will play a vital role in professionalising the heavy vehicle driver occupation and attracting new workers. If successful, this training will go a long way to reducing truck driver shortages and contribute to Australia’s economic recovery.
Data Analytics and Logistics
There’s an increased reliance on data to solve critical problems across different areas of logistics and supply chain in Australia. For example:
- The Australian government is currently capturing freight and supply chain performance data via a Supply Chain Benchmarking Dashboard, which provides greater visibility of road and rail freight data.
- The rail sector is leveraging data through technologies such as the Advanced Train and Management System (ATMS) to improve rail network capacity and operational flexibility.
- The maritime sector uses e-navigation systems which facilitate the harmonised collection, integration, and analysis of maritime information to enhance the navigation and improve safety and security.
Data analytics technologies also provide real-time data that helps operators monitor vehicle performance, manage fleet downtime, and reduce costs, allowing for optimal fleet movements and business operations in the supply chain. The long-term impact of these improvements includes:
- Dynamic routing
- Anticipatory shipping
- Real-time tracking of shipments
- Warehouse-capacity optimisation
- Predictive asset maintenance
- Improved last-mile delivery
- Proactive fault detection and resolution.
This increased reliance on big data further transforms skill needs across the aviation, maritime, rail, transport and logistics sectors. And the VET sector needs to provide a workforce with these critical competencies.
Automation is improving the global supply chain’s efficiency, reliability and scalability, and Australia is no exception. For example, the transport and logistics sector is increasingly using robotics and Automated Guided Vehicles (AGVs) in warehouses to perform tasks more efficiently and safely. And autonomous trains are already reducing costs in Australia’s rail freight.
The National Skills Commission indicates that occupations in the transport and logistics sector are more likely to be impacted by automation, which means organisations will be able to make better use of digital devices and technologies to improve their performance. For these technologies to be used effectively, employees need to be upskilled and reskilled. Developing transferrable skills will result in a more agile and resilient workforce.
Industry-wide labour shortages are one of the main challenges adversely affecting Australia’s economic recovery. According to the Australian Bureau of Statistics (ABS), more than a quarter of businesses (27%) have experienced difficulty recruiting qualified staff. AIS Industry Survey also indicates that 78% of respondents believe their organisations will continue to face labour shortages in the post-pandemic world.
The top three causes of labour shortages are:
- Lack of job applicants
- Lack of required skills and qualifications
- International border closures resulting in a decline in net migration
The NCVER VET data shows an increase of 35% in apprenticeship and traineeship enrolments compared to the start of the pandemic, indicating an influx of people into the workforce to reduce labour shortages. However, there’s still a need to align the vocational education curriculum with the demands of a digitally-driven supply chain.
Business leaders in Australia consider digital transformation, upskilling, and reskilling among the top priorities in the next three to five years on the path to a more digitised future. A recent study by AlphaBeta of six APAC economies indicates that Australia has the highest level of application of digital skills (64%) in the workplace.
While acquiring digital skills is essential, the future of work will still be human-centred. The Digital Transformation Expert Panel states that while future jobs are technology-enabled, they still significantly rely on those human skills that cannot be replicated by algorithms like strategic thinking, collaboration and communication.
Australia’s VET system is robust, life-changing and pivotal to optimising what technology offers our economy and workforce. Industries directly impacted by the supply chain need to continue to monitor changes and provide real-time data that will inform curriculum development in the VET sector.
You can read the complete Supply Chain Industry Outlook Report here.