Why Australia could be the digital hub of global supply chains post-COVID

Australia could emerge as a heartland for digital supply chain services after the COVID-19 global pandemic in a bid to ensure the current instability is not experienced again in the future.

As of July 7, the world has seen 11.7 million cases of the novel coronavirus and over 540,000 people had unfortunately died from the virus. While some countries have been able to ease restrictions after months of isolation and economic shutdown, other countries have not been so fortunate.

With most of the innovation in global supply chains originating in the US and China the home of many manufacturing operations, distribution of many products – especially electronics – have been delayed.

That could result in opportunity for Australia in the post-COVID world, with Melbourne-based demographer Simon Kuestenmacher saying that we have a chance to become a hub of supply chain innovation moving forward.


How COVID-19 has disrupted global supply chains

You have probably noticed it simply shopping for items that you need for your own household. Many of the big-name department stores have empty shelves, especially in the household appliances sections. Computer parts have become harder to source and prices have spiked, same with video game systems which saw a global shortage of Nintendo Wii consoles.

This is largely because global distribution has centred around three major hubs in China, Europe and the United States – which all experienced (and are continuing to experience) major disruptions because of the COVID-19 virus.

These hubs are called global value chains (GVCs) and are the beating hub of the world’s supply chains, with production and activities divided up amongst different countries. Products are not manufactured, assembled and distributed at one central point, each country has its own task in the chain before the final product is ultimately shipped around the world.

COVID-19 has obviously driven a firm wedge between these GVCs as cross-border productions are stalled by the closing of borders.

GVCs were made possible by technologies and innovations in the digital world that allowed for cross-border manufacturing and production. Now, Simon Kuestenmacher believes that innovation has to come from other sources than just Silicon Valley.


The supply chain innovation opportunities in Australia

Simon Kuestenmacher said the time is right for Australia to assert itself as a global leader in supply chain innovation and said there was no reason for all the best talent to be housed in the US.

That would mean that if there was another major global disruption, supply chains wouldn’t be broken by the issues experienced by a single country.

“Australia produces enough food for itself but at the digital end of the spectrum we all rely on lots of things like Facebook, Gmail, Google. In that space we heavily rely on Americans…” Simon said.

“There’s no reason why Google needs to sit in the Silicon Valley except for the reason that all the other [major tech] firms sit there and that’s where the talent is.

“It’s absolutely crucial that you harvest talent here, that there is free training and networking opportunities, and that we’re working closely with universities to ensure that young talent is coming up with relevant skills,” he continued.


How you can streamline your procurement during the COVID pandemic – and beyond

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Contact us today to find out more about how we can help you during these challenging times.