MORE than one-third of Australian businesses across industries including healthcare, technology, retail, mining and energy, and construction are looking to onshore their manufacturing according to a survey by global logistics company, Toll Group.
To understand the impact of COVID-19 on global supply chains, Toll surveyed more than 341 businesses across Australia, Asia, Europe and the USA, with the results showing that organisations expect the global pandemic to have long-lasting implications on the way they source product and manufacture goods.
Among a range of findings, the survey revealed that 25% of retail businesses and 55% of healthcare companies are planning to regionalise their supply chains in the near future. However, most medium-sized businesses indicated that they unlikely to relocate their operations from China. Due to the high cost of manufacturing in Australia, only 23% of industrial manufacturers and 29% of technology customers are looking to transition to local suppliers.
Peter Stokes, Toll Group president Global Logistics, said the research demonstrated clearly that the events of 2020 have forced businesses to consider new ways of managing critical supply chains post-COVID.
“The impact of the pandemic has been far-reaching on businesses around the world with 90% of businesses surveyed experiencing operational challenges as a result of COVID-19. In Australia, countrywide-lockdowns, manufacturing delays, limited international flights and remote working conditions have all combined to create an extremely difficult operating environments for businesses small to large,” Mr Stokes said.
“To protect and manage their supply chains more effectively, many of our Australian customers are now considering diversifying their operations from China to other parts of Asia, with Vietnam, India and Malaysia the most preferred alternate locations. They’re also evaluating onshore production to meet the needs of their customers,” he said.
The research also identified that e-commerce as a high priority for a large proportion of businesses, with 46% indicating an intention to expand their online offering. Of that cohort, Toll’s retail sector customers (75%) say that they are planning to improve their e-commerce capability to capitalise on a COVID-driven online shopping boom.
Mr Stokes said that Toll, which operates an extensive transport and logistics network across more than 50 countries, has seen first-hand how organisations are pivoting their operations for a post-COVID world.
“We’re working closely with our customers to support them through the changes they are making to their sourcing and supply chain arrangements. For some, we anticipate this will be a gradual process over the coming months while smaller, more nimble businesses have already begun the process of diversification,” Mr Stokes said.