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DISCUSSION PAPER Supply Chain Resilience

DISCUSSION PAPER Supply Chain Resilience

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Page 1: DISCUSSION PAPER Supply Chain Resilience

DISCUSSION PAPER

Supply Chain Resilience

Page 2: DISCUSSION PAPER Supply Chain Resilience

2Supply Chain ResilienceDISCUSSION PAPER

Background

Standards Australia is an unbiased, transparent and accountable standards setting body. Nationally and internationally, our influence and relevance are strong and sought after. We are fortunate to be able to work with committed partners developing globally aligned Australian Standards.

Across all sectors, we are working hard to make sure that the standards we use today, and the standards we build for tomorrow make sense for Australia and connect us to the world.

We aim to be a global leader in trusted solutions that improve life, today and tomorrow. We want to continue to support Australia’s growth of new industries, the development of a safe and secure environment and create market confidence in new and established technical fields.

During COVID-19, our priority is assisting the Australian government, industry and businesses to deal with this situation in whatever capacity we can. This effort involves working strategically through the whole supply chain to ensure that our content adds value to the Australian community.

We are seeking feedback from Australian stakeholders across industry and government to map out the road to success and ensure our strategic standards development targets align with industry, trade and other national policy needs.

About Standards Australia

Standards Australia is Australia’s National Standards Body, with a 97-year history in developing and adopting standards to meet Australia’s economic, social and community needs. We facilitate Australian participation in International Standards development, as Australia’s voice and vote to both the ISO (International Organization for Standardization) and IEC (International Electrotechnical Commission). We do not enforce, regulate or certify compliance with these Standards.

We form technical committees by bringing together relevant parties and stakeholders. Through a process of consensus, these committees develop standards for Australia’s net benefit. We also undertake stakeholder engagement activities to support Australian government agencies and industry partners, with identifying, developing and adopting standards for the Australian context.

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IntroductionMany of Australia’s sectors rely heavily on overseas suppliers for vital goods such as medical equipment and have struggled with the sudden changes in global trade.

42% of items consumed or used in households in Australia’s largest cities come through a shipping container.

The risks of solely relying on overseas suppliers are not new, but the COVID-19 pandemic has caused economic challenges to make global headlines. Disruption to global supply chains presents an opportunity for Australia to become a more independent and self-sufficient economy and trading partner, as opposed to being overly reliant on other countries and the flow of goods.

However, as a trading nation, Australia should remain focused on taking advantage of opportunities presented by an open global market, as well as meeting the strong demand from Australian consumers to use local products. By balancing scalability and resilience, we can prepare for shocks in the future.

With thousands of standards and related guidance supporting each sector of the Australian economy, Standards Australia has been helping small business and multinationals alike in new markets and traditional areas for decades.

In terms of trade opportunities and investment, establishing accepted standards can enable manufacturers to reach international markets through ensuring the compatibility of products, as well as having a trusted pathway to help stimulate trade between all parties.

With growing cross-country digital connections and the globalisation of production, we are seeing the importance of international standards increasing. The Organization for Economic Cooperation and Development (OECD) has estimated standards and related technical regulations influence up to 80% of trade.

As business and industry look to innovate and strengthen our economy in new ways, standards should be front of mind to make this recovery as beneficial as possible for the entire economy. Also, to ensure we have the right standards and conformance to match the new supply chain practices for a more reliable and resilient Australia.

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COVID-19 impact

The impact of COVID-19 has resulted in economic disruption and numerous factory closures that are ending business relationships across the globe. Many companies with prior relationships with overseas supply chains are desperately seeking alternative suppliers and factories to maintain business continuity and are reeling in the race back to viability.

Across Australia, many industries are reeling in the race back to viability. Peak bodies and industry groups have put forward their case for what the government should do in their sector to support the thousands of employees and businesses in their respective field.

To help in the reboot of our economy and support manufacturers, we must adopt new models and embrace new behaviours to strengthen supply chain resilience and make improvements to enable visibility, collaboration, agility, and resilience to the unexpected.

The pace and breadth of lockdowns across Australia’s biggest trading partners and the resulting downturn in demand have delayed several industries and required governments to intervene with assistance packages to prevent outright collapse. Minister Karen Andrews described disruptions to global supply chains as a wake-up call for many Australian businesses.

Minister Simon Birmingham has spoken to diversity in supply chains and when disruptions occurred, being able to turn to alternate sources. In contrast, approximately 18 percent of Australia’s imports come from China. The push for geographical diverse global supply chains presents an opportunity for Australia as a potential option for increased production.

Prime Minister Scott Morrison stated at a press conference that as a trading nation, Australia would remain an outward-looking, open and sovereign economy. The COVID-19 crisis has brought into focus Australia’s reliance on other countries and susceptibility to downturns in global supply chains, but also shows the strength of the Australian people that must be engaged in the rebuild in years to come.

Supply chain disruption

During the of the COVID-19 pandemic, headline news revealed, consumers panic buying, for household goods, global shortages of critical personal protective equipment and health sectors under extreme pressure to deal with a surge in demand, the capacity of intensive care units and securing enough ventilators.

Across industries, supplier capabilities struggled to address shortages, supply chains reliant on overseas products and materials reported hold-ups and delays, and right across the economy logistics and freight transport services faced disruption from travel restrictions.

In contrast, the disruption to global supply chains presents an opportunity for Australia, such as pushing for more sovereign capability. Prime Minister Scott Morrison has talked promoting Australia’s economic sovereignty.

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One practical example is in the Australian mining sector and the abundance of lithium. Currently, more than half of the world’s lithium comes from mines in Western Australia. However, Australia exports the raw product to China to create batteries used in devices such as the iPhone and electric car batteries, and in-turn repurchases the cells at 50-times the price.

Minister Karen Andrews, who told the ABC news the pandemic had shown some gap in our manufacturing ability and supply chains. Minister Andrews has also spoken to the strong demand from Australian consumers to use local products in a post-COVID-19 environment.

Other elected officials, such as Finance Minister Mathias Cormann has talked about our agriculture supply chains, as critical to Australia’s international competitiveness and economic growth. Similarly, Deputy Prime Minister, Michael McCormack suggests the agriculture and manufacturing sectors as instrumental to Australia’s economic recovery and growth, not only to keep our supermarket shelves stocked but our international trade routes open for business.

The National COVID-19 Coordination Commission has also given focus to Australia’s advanced manufacturing sector and future opportunities presented by global supply chain disruption. Including efficient technologies in supply chains and a digital economy to accelerate Australia’s rapid economic recovery.

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Role of standards

One of the most effective means of addressing this crisis is through timely, accurate information. Through difficult and challenging times, standards are essential tools in fostering confidence, coordination and consistency.

In different areas of work, standards bring experts together from industry, government and the community intending to ensure products, services, and systems are safe, consistent, and reliable.

Standards can help to build trust and improve recovery processes and enhance services, as well as assist businesses and industries innovate and implement new technologies. This transformation includes traceability systems that talk to each other and consistent data languages to avoid confusion and difficulties for players in the supply chains.

Our call to industry leaders is to come forward to help us realise the opportunities presented by global supply chain disruption so that the whole of Australia benefits.

Through our trusted standards process, Standards Australia can provide a useful platform to explore, shape and agree on a way forward regarding Australia’s future.

We want your feedback The questions below aim to help Standards Australia form strategies to help build Australia’s supply chain resilience.

This work will guide a position paper that will collate major themes from submitters and identify potential areas of focus.

What was the biggest shock to your industry as a result of COVID-19 and why?

Were digital technologies in the supply chains a factor for your industry?

How do you think your industry will transform to increase supply chain resilience as a result of COVID-19 and why?

Are there any critical roadblocks that prevent Australian supply chains from building capability in your industry?

Are there additional challenges which could benefit from a standards-based solution?

Please send your feedback by 11 October 2020 to [email protected]

If you have any questions, please contact:

Daniel Chidgey, Head of Stakeholder EngagementEmail: [email protected]

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