New Zealand’s supply chain experts are anticipating smoother operations in the coming year, but many risks remain including financial instability, cyber security and skills shortages.
That’s among a number of key findings from Massey University’s latest Supply Chain and Logistics Risks Outlook report.
The analysis was gathered from 145 responses from those working in New Zealand’s supply chain including many with more than 15 years’ experience and others in senior management.
Among the main themes were financial weaknesses, cyber security, soft demands and price competition, skills and labour shortages, changes to supply chains due to cost saving initiatives, staff burnout and change in culture.
Around 80% of participants anticipate smoother operations in the coming year.
However, certain persistent challenges remain a cause for concern, the report says.
“These include the ongoing risk of cyber-attacks, financial vulnerabilities within businesses, and their subsequent rippling effects on supply chains.
“Additionally, high inventory carrying costs and staffing challenges are experienced. The collective input of these practitioners provides a comprehensive snapshot of the potential risks and opportunities that lie ahead,” it says.
Businesses operating in the supply chain should also be focused on staff culture and high levels of stress which could impact operations.
“Experiencing staff burnout, efficiency drives, and cost cutting simultaneously while the memory of working from home over COVID can have a detrimental impact on staff culture within a company.
“The cumulative effect of these factors can create a challenging work environment characterised by high levels of stress, demotivation, and job insecurity. Staff members are likely to feel overwhelmed and overworked, leading to decreased morale, lower job satisfaction and high risk of staff turn-over,” the report says.
Meanwhile, a slowdown in demand and supply chain activity can provide an opportunity for organisations to focus on enhancing their supply chain performance.
“When demand is low, businesses have the chance to evaluate and improve their supply chain processes, optimise efficiency, and address any existing bottlenecks or inefficiencies. This period allows for streamlining operations, reducing waste, and enhancing overall supply chain responsiveness,” it says.
With lower demand and higher costs, this could also hit some operations.
“An extended recession can have significant impacts on supply chains. We already see evidence of excess inventory and disrupted production schedules, as businesses struggle to adjust to lower demands. Suppliers may face financial difficulties and even liquidations,” it says.
The report concludes with other broad risks to the New Zealand supply chain which includes:
- A domestic breakout of foot and mouth disease
- The Zaporizhzhia Nuclear Power Plant (Ukraine)
- Large-scale international telecommunication infrastructure damage
- Extreme weather driven by current exceptionally high sea surface temperatures
