Australia experiencing supply chain issues similar to the US in 2020

Australia, is currently undergoing significant supply chain issues as a result of Omicron, and the global shortage of products and materials is putting a large strain on almost every industry.

In the early days of the pandemic, the country's medical supply chain was strained but consumers were largely spared (save, perhaps for the Great Toilet Paper Crisis of 2020). This time the issues are much more systemic.

Mark Prendergast, global markets director at US industrial bakery business AB Mauri reflects on Australia’s current state and likens it to what the US was experiencing at the beginning of the global pandemic in 2020.

“For a long time, Australia just operated in a bubble. While they had all the same rules around planned entry, cleanliness, mask wearing, they never had to deal with the staff absences as a consequence of isolation,” Prendergast said.

Prendergast worked in the US with AB Mauri from 2012 to 2020 as the managing director of the North American branch.

AB Mauri calls themselves a bakery technology company whose customers range from industrial bakeries to the “mum and dad” bakeries. Their core capabilities lie within industrial baking supplying yeast and dry baking ingredients primarily, as the US is the largest baking industry in the world.

To put it in perspective, one of AB Mauri’s customers have 72 industrial bakeries scattered across the US, whereas Australia does not have 72 industrial bakeries nationally.

Like every business, AB Mauri was impacted by the global pandemic as people in lockdown began to try and bake the boredom away by kneading their way through various bread recipes.

Since Australia opened its borders — both state and national — in late 2021, the country is now experiencing the same Covid related issues the US did a few years prior. Prendergast noted Australia is dealing with a staff availability issue due to the lack of casual and overseas workers.

“You don't have temporary workers available either. One thing I've noticed, that's a bit different is I'm listening to people in businesses around me now talk about staff shortages. Whereas that's was the case the US had in 2020,” he said.

Prendergast said in 2020 the procedures were the same in Australia and the US. However, because of the bubble Australia had they didn’t have the disruption to the businesses that the US had during that time.

He said organisations are taking up SKU rationalisation to help with the supply chain disruption. This is when retailers and supermarkets determine which products need to be kept or discontinued to reduce costs and cut down on procurement complexities.

“You see it in supermarkets now, certain products aren't available and whole shelves are empty. It's because people are having to make decisions about what they supply and where they supply it. That is the exactly the same thing we did in 2020 in the US,” Prendergast said.

Looking back at how Prendergast tackled his supply chain issues in the US, he said for business continuity managers he would advise looking at the sales and operations planning (S&OP) process and identify the critical suppliers. He would also figure out where the strengths and weaknesses are in the business.

“Look at your carrying inventory levels of key raw materials and even if you think they're fine, carry more, especially of non-perishable items with longer shelf life, particularly things like specialised packaging,” he said.

“Particularly if that packaging was coming from offshore, because none of us predicted what was going to happen.”

Despite putting in the proper S&OP processes when he started back in 2012 and fine tuning them over the years, when the pandemic hit, Prendergast said every side of the business was struggling.

With shipping, Prendergast said their industry was blindsided by the long delays and never anticipated that bottleneck.

From this entire experience Prendergast offers this advice, “Look at the key raw materials and look at the key inputs. I'd be carrying more inventory, onshore closer suppliers and I would be stress testing that.”