Omicron to complicate supply chain disruption

Following two years of disorder, global supply chains have been pushed to the brink causing worldwide timber shortages, fuel and energy scarcity, major issues with semiconductor supplies, and a run on toilet paper right here in Australia.

Global supply chain issues are set to remain despite the end of lockdowns, well documented by media and commentators in the lead up to the gift-giving season. Ongoing complications can be attributed to the limited capacity of factories forced to furlough workers with Covid-19. Subsequent pressure on this limited workforce has also been intensified by a mismatch in the location of existing containers, with supply unable to meet demand.

Australian digital credit reporting agency CreditorWatch has laid out how Australian SMEs can navigate the great supply chain disruption and associated risks as the omicron variant overshadows confidence in the economy’s reopening, during a panel discussion with lsupply chain fintech Earlytrade on Tuesday.

The expert panel discussed the risks facing Australia’s business leaders, with CreditorWatch CEO Patrick Coghlan and Earlytrade Head of Treasury Sam MacPherson drawing on data sets from the two Australian technology providers’ networks of diverse business users.

The panel highlighted the local pressures on businesses and SMEs with 40% of Australian businesses reporting that supply chain issues had greatly impacted their operations.

Despite the widespread effects of supply chain disruption, data shows small to medium businesses are disproportionately bearing the brunt of the pain.

CreditorWatch CEO Patrick Coghlan says SME businesses employ roughly 40 per cent of the workforce in Australia and uncertainty for both leaders and their employees remains, even as restrictions ease,” says.

“Uncertainty will be the theme for the foreseeable future, which we hope will be the catalyst for the accelerated adoption of technology to improve supply chain operations,” he says.

“Without technology to support the return to life post-lockdown, SMEs in particular will be left open to complications and further financial strain, placing their future in jeopardy.”

Earlytrade’s platform data indicates insufficient access to capital underpins three issues facing SMEs: the inability to pass on rapid price increases to consumers, lack of warehouse storage to house increases in orders and reduced ability to pivot to digital or online.

Earlytrade Head of Treasury Sam MacPherson says:“Regardless of how serious Omicron is, it’s clear that as new variants arise policy-makers will have a propensity to buy time and proceed with caution. This has implications for a stop-start recovery and will fuel uncertainty”.

Partnership and collaboration through technology will be crucial for buyers and suppliers seeking to navigate that uncertainty, he adds.

“A central dilemma for many Australian business leaders is how to manage input cost rises as demand increases, while not passing costs onto their customers or placing further pressure on already stretched suppliers.”

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