Australia's supply chains unprepared for looming crisis

Australia’s peak supply chain body warns that the country faces a looming skills crisis among supply chain professionals, leaving companies vulnerable to supply chain breakdown, fraud and human rights abuses.

A global survey of 645 supply chain professionals has revealed that almost half (48%) of Australian supply chain managers say their employer has failed to equip them with the new skills they need to fulfil the demands of their jobs and avert major crises.

This finding comes to light against a backdrop of significant and far-reaching changes within the global supply chain industry, as the required skill set moves beyond hard analytical skills to include a broader skills base and a need for a range of ‘soft skills’ such as relationship management, influencing and persuasion skills, as well as more sophisticated and technical expertise.

According to Mark Lamb, Chartered Institute of Procurement & Supply Australasia (CIPS) managing director, there has been a fundamental shift in the role and priorities of supply chain managers from a traditional cost-control role to one that increasingly prioritises managing risk and building fair and sustainable supply chains. He believes this change has come about due to the growing complexity of supply chains coupled with a heightened focus on supply chain risk.

There is also evidence of a motivation crisis among professionals, with 62% of Australian respondents believing their role is not adequately respected within their business — which hampers their capacity to improve supply chain management and develop their own skills.

CIPS warns that without trained and qualified supply chain professionals, Australia’s businesses and consumers become exposed to fraud, unreliable partners and human rights abuses further down the chain. They believe that these factors pose serious moral questions about the basis for, and sustainability of, Australia’s economy.

“Our findings show that in Australia, demand for skills is not being met and the ability of professionals to do their job has been undermined. Without proper skills and training, we risk human rights abuses and malpractice all along the supply chain. Professionals are doing the best they can with insufficient training, but as the threats to Australian supply chains continue to evolve, so skills must be continuously refreshed to keep up,” said Lamb.

The survey reveals that across the globe, inadequately trained supply chain managers are failing to prevent malpractice, investigate the origin of raw materials or follow best practice. Globally, 80% of those who consider themselves as inadequately trained supply chain professionals admit that there could be undetected malpractice in their supply chain, with only 17% able to see the entire length of their supply chain.

In a telling statistic, supply chain managers who have been adequately trained are 53% more likely to be carrying out yearly supplier audits — an important way to prevent disruptions and spot fraud.

“You wouldn’t trust an inadequately skilled surgeon using outdated equipment to operate, but that is often what is happening in the management of Australian supply chains. It is a looming crisis that requires immediate action,” warns Lamb.

These findings are shared as the Q2 2015 CIPS Risk Index reveals that global supply chain risk has jumped to its highest level since late 2013. The rise has been driven by a tightening of credit in China, which has forced supply chain managers to look much more closely at the durability of their Asian supply chains. As a result, the Asia-Pacific region contributes more to global supply chain risk than any other region.

The survey also reveals that Australian supply chain managers see ethical considerations as the most important responsibility of the profession. Almost half (44%) say that treating human beings fairly at all levels of the supply chain is one of the top three aims of a supply chain professional, followed by helping to promote economic stability and fulfilling regulatory standards (both 38%). Supply chain managers are also decreasingly concerned with driving down supplier quotes at all costs. Only 6% in the survey were motivated by driving a hard bargain, with 56% motivated by the task of contributing to business growth.

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