Vulnerable Supply Chains in the spotlight

The Productivity Commission’s interim report on Vulnerable Supply Chains suggests Australia is resilient to disruption through our ability to pivot but seeks confirmation from industry.

HVIA’s Government Relations and Advocacy Manager Greg Forbes said the draft report predominantly focusses on disruptions to imported commodities, whereas the final report will also consider disruptions that can affect exports.

“The transport industry’s concerns over minimum stockholding requirements for liquid fuel have been considered, but the report does not specifically discuss the risks associated with other consumables,” Mr Forbes said.

“Commodities that could impact on domestic transport supply chains, if subject to major disruption, could include essentials such as tyres, lubricants, and brake parts.

“That is where our consultation with members comes in; the report has been framed to invite testing of its conclusions by industry and experts.”

The report proposes an analytical framework which classifies risks based on three factors Mr Forbes explained.

“Firstly, identifying commodities that are vulnerable to supply chain disruption.

“Then assessing whether vulnerable commodities are essential to the well-being of Australians.

“Lastly, assessing whether commodities that are considered vulnerable and essential, are critically important. That means there are no substitutes or work arounds.”

Mr Forbes said that, as an example, the report argues that Australia has capacity to substitute between types of food in the short term.

“While food as a category is essential, and individual food products may face supply chain disruptions, we are a major and diversified producer of food as a category.”

The report categorises supply chain vulnerabilities into geopolitical, environmental, economic, societal and infrastructure related risks, and provides examples of each.

“The report discusses the risks associated with Australia’s dependence on China for many of the most vulnerable imports, but overall, the findings suggest that the supply of essential goods and services in Australia are not highly susceptible to short term disruption.

“Vulnerable goods represent a relatively small fraction of the value of essential goods and services consumed by Australians.”

Risk management strategies for supply chain management are also explored.

“The report raises a number of questions about what role Government should take in mitigating supply chain risks,” Mr Forbes added.

“One particular issue discussed in the report is a need for governments to look at removing barriers to trade.”

The full report and links to pages to make comments or submission are available here: Vulnerable Supply Chains.

Comments and Submissions related to the report will be open until 30 April 2021.