CIPS News


Australia’s supply chains face a looming crisis, warns CIPS

CIPS 7 August 2015

Australia faces a looming supply chain crisis, according to the Chartered Institute of Procurement & Supply (CIPS), as it reveals 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. 

  • 48% of supply chain managers in Australia say they are inadequately trained , according to respondents of a global survey of professionals
  • Supply chain managers increasingly focus on protecting vulnerable people further down the chain rather than focus on cost cutting
  • These findings come as supply chain risk in Asia Pacific reaches an all-time high

Australia faces a looming supply chain crisis, according to the Chartered Institute of Procurement & Supply (CIPS), as it reveals 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 forms part of the results of a global survey of 645 supply chain professionals which reveals that globally the required skill set has moved 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, alongside the need for more sophisticated and technical expertise.

When asked about the level of respect accorded to the role of supply chain manager, worrying 62% of respondents from Australia believe their role is not adequately respected within their business, hampering their capacity to improve the way their supply chains are managed and to develop their own skills. This has the added effect of de-motivating talented individuals.

Supply chain managers are responsible for controlling the flow of products and raw materials in and out of Australia. 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. Together, these factors pose serious moral questions about the basis for and sustainability of the Australia’s economy.

The survey reveals that a core of inadequately trained supply chain managers are failing to prevent malpractice, investigate the origin of raw materials or follow best practice. Globally[1], 80%[2] of those who consider themselves as inadequately trainedsupply chain professionals admit that there could be undetected malpractice in their supply chain with only 17%[3] able to see the entire length of their supply chain. Perhaps most telling, adequately trained supply chain managers are 53% more likely to be carrying out yearly supplier audits, an important way to prevent disruptions and spot fraud.[CC1] 

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.[4] 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.

Mark Lamb, CIPS Australasia GM, said:

“The growing complexity of supply chains coupled with a heightened focus on supply chain risk, are changing the role of supply chain managers. There is already evidence showing 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.

“However 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.

“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.”

Notes to Editors:

About the Chartered Institute of Procurement & Supply:

The Chartered Institute of Procurement & Supply (CIPS) is the leading international body representing purchasing and supply management professionals.  It is the worldwide centre of excellence on purchasing and supply management issues.  CIPS has a global community of 114,000 in 150 different countries, including senior business people, high-ranking civil servants and leading academics.  The activities of purchasing and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability.  www.cips.org

About the survey:

The CIPS Supply Chain research is based on an international survey of 645 purchasing and supply chain executives worldwide. The sample includes 82 supply chain managers in South Africa, 460 in the UK and 63 in Australia. All respondents are CIPS members at manager level or above and the survey was conducted between 18th and 29th May 2015.

 


[1] Note that statistics in this paragraph are taken from respondents world wide

[2] Compared with 64% amongst those with training

[3] Compared with 27% amongst those with training

[4] For more information on the latest CIPS Risk Index or to speak to a CIPS economist, please contact H+K strategies: GCIPSTeam@hkstrategies.com


 [CC1]Note that these statistics are global rather than Australia specific to overcome sample size problems

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