UTS Business - Post-Pandemic Supply Chain Resilience and Sustainability
Pavlina Jasovska 00:15 Good morning everyone, and welcome to everyone joining us today as we explore Post-Pandemic Supply Chain Resilience and Sustainability. My name is Pavlina Jasovska from the Management Discipline Group at the UTS Business School. Before we begin the proceedings and on behalf of those present, I would like to acknowledge the Gadigal people of the Eora nation upon whose ancestral lands the UTS City Campus now stands.
The Gadigal people have cared for the community land and waters for thousands of generations based on their deep knowledge of their country. I pay respect to the Ancestors, their Elders and acknowledge their ongoing status as the First Peoples of this land. Pavlina Jasovska 01:02 Before I introduce our special guests, just a few housekeeping items. Today's webinar is being recorded, and will be made available as a download soon via the UTS YouTube channel. We will share the link by email to each of you and via various UTS social media channels by next week.
But I encourage you to submit questions and comments in the Q&A box in the Zoom control panel. We will try to get to as many questions as possible during our our discussion. Pavlina Jasovska 01:37 And now, it gives me great pleasure to introduce our panel. Our first panellist is Eric Blackburn, who is a Senior Procurement Specialist at the World Bank Group.
Then we have Urszula Kelly, who is an Outsourced Logistics Specialist at the Logistics Bureau. Then Daniel Esdaile, who is Associate Director from TMX Global. And finally, we have Paul Davies, who is Founder and Principal of Think Sustainability.
And of course, we have Maruf and Sanjoy from the Management epartment who will be moderating the discussion. So now I will hand over to them. Thank you. Dr. Sanjoy Paul 02:21 Thanks, Pavlina. And I want to give a brief introduction about the topic, which is Post-Pandemic Supply Chain Resilience and Sustainability.
We all know that COVID-19 pandemic is a global disruption and it has impacted the global supply chains of many critical items like food, medicine, pharmaceuticals, and so on. So we can say that this pandemic has been an extraordinary disruption in all supply chain stages, and it has been impacted significantly. So now the question is, how can we prepare our supply chains in the post-pandemic era so that we can better manage the supplies and operations. So in this aspect we'd like to hear from our industry expert. And first I'd like to invite our first speaker, Eric Blackburn from World Bank Group. So very now over to him.
Eric Blackburn 03:21 Good morning, everybody. I'm just going to share my screen, and then I will. Perfect, so you can see my screen. Yes, yes. Excellent.
Thank you. So I'm going to start with this slide, and for me, it was just interesting. And I was at a dinner the other night with a bunch of Chief Procurement Officers and we were talking about, you know, the impacts of the pandemic. And they were very optimistically looking towards the future. And I like this slide, because what it highlights for me front and centre is an Australian, rather than a representative of the World Bank, is our largest trading partner, by far more than double, is China.
And so, you know, I think that as we move forward from the pandemic, that it will be really important to see. Eric Blackburn 04:14 You know, how things sorry, how things move. Just make sure I've got the right slide.
Can you see my second slide now Sanjoy? Yes. Perfect. Okay. Thank you.
So I think, you know, one of the things that's very interesting at the moment is that, you know, I think we're not out of the woods yet. And while you know, we've moved from a pandemic to an epidemic I was looking online at the New South Wales Health website on Facebook, which during the pandemic I was looking at every day, and I see that in New South Wales, 14 lives have been lost today, we still have 18,167 people in hospital, and we have 38 of those people in ICU. And so, I think that you know, we've seen, quite rapidly a dramatic change from being locked down either forcibly or through your own means to an environment where we've come out of that. And I think that that points towards how people tend to focus optimistically, where they think the risk is less than themselves personally, they get on with things. But my background, other than working at the World Bank as a Senior Procurement Specialist prior to that, we, I was working with the ACT Government during the 2003 bushfires, I also managed to respond to recovery to Tropical Cyclone Marcia in Queensland. And for me, what it puts front and centre and I think, also in terms of governments, too, is that, you know, while you're in the midst of a pandemic, you know, governments and people are very, very much focused on what's in front of them and the risk and exposure.
As soon as we feel that that risk is acceptable, we move on very quickly. And I think the problem that we face collectively, is that as we come out of the pandemic, into an epidemic, and what what we see in the future, is how we ensure that the things that were discussed, and the changes that were made, you know, continue. So for example, based on the figures I throw up at the front, we're very heavily reliant on imports and exports. And, you know, while one of the things that the pandemic certainly presented us with was some significant problems, we weren't manufacturing vaccines in Australia, we had problems with access to PPE, medical equipment, consumables, and our exposure to a globalised market became very apparent.
And as a result of that, some changes were made, so we're now manufacturing vaccines in Australia, we've made some adjustments, but my concern, I guess, is that as we move out of the pandemic, like a disaster, it's very easy for people to forget and move on. And the ability and so, again, it's like the following on from a disaster, you go into those recovery phases, and they're often long lasting, we've seen it with the New South Wales floods, and some communities that have been flooded more than once in a short period of time, that once the flood has passed, we move on very quickly. But those communities, those individuals, are impacted, you know, for for weeks, months, years, and sometimes they, they never recover. For me, you know, I've been fortunate, I think, in terms of, and I wanted to talk about the second point, opportunities to do better.
So Australia is a very wealthy country, during the pandemic we spent whatever we needed to, to ensure that in the queue to buy vaccine, we were towards the top. And we were able to do that, because we're a wealthy country, the countries that I work in, so, you know, the Bank Office in Sydney, support 13 countries in the Pacific, you know, they're very small island states, they have very small populations, and they have very small, access to capital. And so their ability to get the vaccines and to get the other equipment, supplies they needed was significantly hampered. And so for most of these islands, they shut their borders, I was fortunate enough to go to Samoa on the first of August, this was the first commercial flight to go into Samoa since the pandemic, so they shut their borders for two and a half years. For me, it was lovely to get back on island. But what was very, very noticeable was that, you know, the economic impacts from, you know, the border shutdown, you know, to their tourism, to their exports.
And so I think the thing that's also needing to be mindful is the fact that while we're in this new world, and we're moving forward it's not the same world that we're going back into. And so, the places that it's not like, it's the world is progressing, and coming out of the pandemic, pandemic, uniformly, there are countries that are only just opening their borders now. And so not only the progress towards whatever the new world looks like, but also, you know, being very mindful, particularly in this region of our partners, you know, in countries that we have, you know, very heightened issues around regional security at the moment, there's a real need for countries like Australia to be a better partner to certainly our brothers and sisters in the Pacific.
And while the back end of the pandemic, Australia was front and centre in terms of calling out what it called injustices, making sure that we could provide vaccines on mass to countries like Papua New Guinea, Samoa, Kiribati, and other Pacific islands. It was done late, and it was always done after our own interests were protected first, and I think that, if any, I'll stop on that point. Because I think that, you know, there is, there was an opportunity, and there's still an opportunity for countries like Australia, and other developed countries to do more and do better. You know, of course, countries like Australia will always put their national interests first, but I think that, there is an opportunity for us to do more in terms of, supporting what is a region that's crucial to our own security, but also crucial to our economic prosperity and our future as we move into a world, which is very uncertain. It looks much the same, but it's not actually the same, unfortunately.
And so I think for me, I'll stop there. And hopefully that provides a nice introduction for the other speakers to get into a bit more detail. Thank you. Dr. Sanjoy Paul 10:21 Thanks, Eric, for your wonderful insight and information presented and providing importance of this taxing distribution in all other countries to go move forward in post-pandemic times.
So thanks. And next, I'd like to invite Urszula Kelly from Logistics Bureau. So Urszula over to you.
Urszula Kelly 10:43 Thank you. I'll share my screen. There you go.
Share, please let me know if you can see that. Dr. Sanjoy Paul 10:54 We can see Urszula Kelly 10:58 Wonderful.
Okay. Alright. We all know what resilience is. We all know what sustainability means. But what it actually means for the business? So my understanding of it is how well your supply chain can predict and recover from unexpected events like COVID-19 crisis was, or bushfires, or floods and whatnot, and continue to operate at a certain level. So what I thought I would put together today are three ingredients to building a resilient and sustainable supply chain.
So what I what I did, I think, you know, talking about sustainable and the resilient supply chains, it's a very long conversation, and we couldn't really combine it into five minutes. But let's just talk about these three things that I find are very important to building such supply chains. So the first one for me is visibility. Why is it so important? If, as an example, if you know where your product is, at any given time, you can provide better customer service. Because we all know that in this day and age, the pressure for instant availability of information is huge. We expect to be informed immediately, all day every day, maybe even without realising it.
And that's when we buy things online. And we want to know where their product is right now. We ordered food online right now we want to know if it's being prepared right now.
If you want to purchase something, and it's out of stock, you immediately want to know, when is the next restocking date just as an example. And I think having that ability to answer your customers' questions is very important. And it is definitely a crucial element of providing a great customer service. Urszula Kelly 12:55 The second one that ties into the first one, is ability to provide an agile response are part of the service. So not 'okay, we'll get back to you tomorrow, we'll get back to you next week', you need to have that information available right now.
That benefit of visibility of supply chain is much easier identification of immediate problems that might occur. If you have an ability to watch an evolving event in real time, or close to real time, you can be proactive about problems that are about to occur. And, you know, put some measures in place to avoid them from happening or substitute. Visibility-created data or one could say, sorry, visibility creates data, or one could say that data creates visibility. I won't argue either way. But that takes me to another ingredient of a resilient supply chain, which is data collection.
Again, why is it so important? Because it allows us to make informed decisions and develop accurate theories. Without data, a theory is just an assumption or a guess. It also allows us to identify weak links in our supply chain, as well as identify the strong aspects of our business so that we can learn from what we're doing wrong and what we're doing right. And the next benefit of data collection, it helps us with better understanding of risks associated with with the activities. So the question is like, if X happens, how does that affect Y? And is that going to happen? And I think learning from past data, can prepare us for future and can be really powerful.
Now that we have all this visibility, and we have the data, and we want to prepare for future, what will be the next logical thing to do? In my opinion that will be preparing a strong crisis management plan. Why? I think it is essential to have one in every business, whether it's a small business or big business. So first thing is the analysis that goes into putting such plan together allows us to identify threats and opportunities that are that might come our way in future.
The second very important thing is it assigns responsibilities and empowers people to act quickly. When a crisis comes, being it COVID, flood, or bushfire or, you know, a death of a director of the business even think of something like that, the team now knows exactly what they're doing. There is no second guessing -who's doing what and when - that part is already sorted, and everyone can start actioning their tasks right away, rather than spending all that time on planning that should have been done way before. Crisis Management Plan, so of course, keeps your employees safe, and helps with mitigation of reputation damage, and decreasing revenue, which in revenue, which are, of course, really important for all businesses. I think that the less reactive you are in the crisis, the less damage will occur to any business.
Urszula Kelly 16:21 And the last one, it is very possible that it is part of your local regulated regulatory compliance requirements, that you as a business actually have that such plan in place. It's not a very common thing here in Australia just yet, but just as another example, European Union, they do require every business to have a crisis management plan, depending on what area they're in. So it's yet another very good reason to look into it. And the last thing to remember, sorry, there's actually one more that I should mention - that's collaboration. I think we have all learned throughout COVID, that stronger relationships equal more stability.
That collaboration also gives us competitive advantages, which equal then better deals, and of course, lower costs. And the third advantage is the data and knowledge exchange, you are now not all only learning from your own backyard, but you also have the ability to understand other people's businesses and their perspective. And I think that can be very, very powerful. And just to summarise, very, very important thing to remember about any crisis, these are famous words by Winston Churchill - never let a good crisis go to waste. Crisis is never going to be a positive experience.
But I think a lot of positive things can happen out of it. If you went through any crisis, and you have learned nothing, then that is that essentially crisis. But if you went through a crisis, and you have learned how to thrive, you know, how to improve how to plan better for future. That's, that's, that's a real success.
So that's all from me, guys. Thank you. Dr. Sanjoy Paul 18:17 Thanks, Urszula, for your wonderful presentation
at summarising those important strategies for supply chain in post-pandemic times. So yes, visibility using technologies, you know, analytics, data analytics, and analysing data for decision-making, and developing a crisis management plan is really, really critical things for any business to move forward in post-pandemic times. Because what we can see from our research, most of the organisations, they don't have crisis management plans. Very few have.
So if we had a crisis management plan already established, maybe we could better deal with this backdrop of COVID-19 pandemic. So hopefully, this is a good lesson for us. And we know we can move forward from the lesson and learn it and implement it for our future supply chains. So thanks again. Now, I'd like to invite Daniel Esdaile from TMX Global. So Daniel, over to you.
Daniel Esdaile 18:18 Thank you can you see my screen? Dr. Sanjoy Paul 19:33 Yes. Daniel Esdaile 19:34 Excellent. Okay, thanks.
So maybe just a quick touch on TMX Global before we get into the presentation. So we're a supply chain consulting firm, we've got about 200 consultants globally. This graphic shows us through Australia and South East Asia but also have teams now in the US and UK. And we're sort of offering that full end-to-end service from sort of supply chain strategy into warehouse design, all the way into actually sourcing and building industrial property, combined with a digital consulting practice.
So that full end-to-end focused on supply chain, we just a image of some of the clients that we've worked with. So got a fairly good breadth across across all the major businesses here in Asia, Australia and APAC. In terms of what are we seeing in the market, like where is their supply chain disruption.
So I think what we continue to see are labour constraints and we know in Australia, we've always had very, very high labour rates, but that that labour constraint is now compounded by sort of COVID disruptions, we have major outages in the supply of labour. Supply chain is now a 'sexy industry', but working in a warehouse isn't. So we're all the businesses that we work with are struggling to find staff. So that means they're topping up their labour with with temp hires, who don't know the process as well, who don't know the business as well. And actually, that adds more more cost and 99% of the time, they don't turn up.
So if I've got a couple of friends that are in businesses that have said, they're paying for forklift drivers over $40 an hour, and they'll resign the next week and go to someone who's offering them $1 more an hour, it's very, very competitive. In the, in the global supply chain, obviously we know there's super high demand for services, but real lack of availability in vessels, etc. So that's, that's increasing the cost of those goods, but also really constraining service. So we've got bottlenecks both on the origin side, and then on the destination side here in Australia. In terms of industrial property, what what we're seeing more of is that businesses in order to account for these international and global issues are actually holding more inventory.
So their week's cover in terms of inventory holding is increasing. So what's that that is doing is increasing their footprint or the amount of storage that they need locally. And what we're also seeing is a lack of available industrial property in the market. So that is increasing. You know, that means there's really, really low vacancy rates like in Melbourne that is less than 1% vacancy at the moment. So people wanting to then they're growing their business, they're wanting to look at opportunities, that the actual price, availability of land, or the right type of land is constraining their operations and also increasing price.
Then the other I guess how that summarises is, you know, we're seeing significant inflationary pressure, access to capital is, is declining. And so businesses, you know, you look at, say, the last mile space where there's been lots and lots and lots of innovation over the last 24 months. Companies like, the on-demand workforce, like your Ubers, and your DoorDashes, etc, but also, a number of carriers are starting to go broke because of those inflationary and cost pressures, they've sort of been growing fast, because the cost of capital is, is cheap. But now that dynamic has changed, it's created real, real cost pressure on their businesses.
So they're kind of really macro themes that were seeing. Daniel Esdaile 24:19 And then on the next slide, just really starting to talk through some of the solutions. So on the labour constraints side of things, which is one of the massive ones, we're seeing a huge demand for automation. So, one example would be in the United States, they have traditionally very low labour rates so that they haven't had a huge need for automation. But now what the problem is, is that supply of labour isn't there. And they have really, really increasing service levels like you've got this next-day, same-day delivery, that's really, really increasing.
So we're seeing a lot of growth in that that last mile capability, which is driving a huge demand for automation. In terms of then, we spoke a little bit about labour rates and the demand for industrial property, we're seeing more flexibility required in businesses operating. So, you know, you talk about omni-channel fulfillment with we're seeing lots and lots of omni-channel fulfillment.
And what we mean by that is the ability to fulfil and use every single node in your supply chain to fulfil products. So, you know, you saw a lot of businesses move from a traditional fulfillment, where they're just fulfilling from a warehouse in Sydney or Melbourne, to actually opening up then saying, 'Okay, how do I actually get products from all my stores? What's the optimal fulfillment path in order to solve that problem?' and, using every single asset that they have in the network to get closer to their customer. I don't know about you guys personally, but I actually ordered every single product via Express Post now, because I know that it bypasses the Australia Post sorting centres, and goes through the airport and gets to me quicker.
So consumers will adapt to that, but certainly trying to ensure that that you've got every point possible to make sure that you can meet those sales. What's required to obviously do that as a higher digital footprint. Also, I guess, then, we spoke about low vacancy rates. In Asia, we're seeing a big growth in in multi-storey warehousing - we think that would continue. So I don't know if everyone's heard of the AMR solution or automated mobile robots.
One of the really interesting things is they're only going to about 1.8 meters high. But often in Australia, we've got single-storey warehousing, and so they don't use the whole footprint, 14 meters of the building. And so there's, you know, businesses starting to explore that multi-user warehouse. We're seeing a bit of that actually, also in micro-fulfillment centers, ie at shopping centers as well.
So where businesses are looking more and more to, or that industrial property landlords that own shopping centres, investing in that capability, on behalf of all the retailers that operate there. Daniel Esdaile 27:44 In terms of, we spoke about BCP. So we're seeing procurement plans having a BCP involved. So what that typically means is, we're seeing a change in procurement approach from last, going about 'How do we optimise costs?' like that was 12 months ago, that was all everyone was focused on cost cost costs. Now it's 'How do I maintain service? And how do I stem cost growth?' So embedding that BCP plan in to make sure that you've got, you know, flexibility is really key, and a proliferation of carriers. So if Australia Post can't deliver, who's the next carrier that I'm going to put in, so a lot of businesses are doing, like Shippit as an example.
But so a technology platform that will enable you to hold multiple carriers in the one place, and tender a service on a particular day to that carrier, if your core carrier can't meet supply, whereas, you know, previously it was centralised, centralised, and now it's how do I just make sure I meet service levels, and I don't significantly grow my cost base. In terms of, I guess, on the international side, in terms of BCP, what we're seeing now is increasing in offshore consolidation, so, or what so what we mean by that is, is looking at parts that have less disruption to look at ways that we can pull that volume and dispatch, it to the right location. We're seeing port splitting more, so that means if for example, today, you ship product to a DC and Sydney and then line haul it up to Brisbane, could you port split directly into the Brisbane market, so that you don't have to do that last mile kind of line haul. So a lot more I guess, optimisation of what we would call 'flow paths' to reduce transit time, to improve service levels, and so on and so on.
Daniel Esdaile 30:03 The other interesting thing that we're seeing is that internationally because of the some of the container shortages, there are huge congestion at ports inbound and outbound, which is driving a lot of businesses to return, you can't like book a booking slot to return your containers. That's driving an increase in demurrage and detention charges, which a lot of businesses are really, really struggling with the visibility of their end-to-end, because what they're doing is that with that carrier proliferation, they're pushing products into a different carrier network that might not have the same returns, terms and conditions, as an example. So there's challenges there, too. So we're supporting a number of clients in that space to kind of mitigate some of those issues. I think I've talked a lot. So that's probably I guess, then just summarising the kind of key themes, it's really around, similar to what the other speakers have said, business continuity, making sure you've got flexibility in your supply chain, ensuring you've got digital capability to know where all your product is.
And then the ability to execute on changes in a dynamic manner. They're the really, really key themes that we're seeing, and obviously investing in that automation and continuing to mitigate any any labour supply issues and improve your service levels. Dr. Sanjoy Paul 31:43 Thanks Daniel for your great presentation, and summarising the facts, and the future strategies to move forward.
So I can see that you've talked about automation, flexibility, digital planning, and better optimisation, to you know, that could be the future things to move forward for any supply chain. But I would acknowledge that you talk about, you know, previously managed to cost-focused decisions, like, you know, everything focused on cost instead of service focus, but in future, it would be more service-focused. But we'll discuss more about these things during the question and answer session, because how can you develop service forecast, supplies and in future. So thanks, Daniel. Now, I'll request our final speaker, Paul Davies from Think Sustainability for his presentation. Paul Davies 32:40 Thanks, Sanjoy.
Good morning, everyone. Paul Davies 32:51 It's always hard to be the final speaker after such great speakers. So I'll try not to be repetitive at all. But I just absolutely endorse the points.
And I think some of the views that my expert peers have put forward will certainly be picked up in my final presentation today. So just to step back a little bit. So in terms of recent times, we've really faced a perfect storm. So we've obviously had the COVID pandemic to deal with. But we've also had a number of other things that have coincided with the pandemic, which have just come together in a way that has created some profound impacts around supply chain resilience. So obviously, one of them is COVID.
The other one is the disruption caused by particularly the war in the Ukraine at the moment, which has had some quite interesting impacts on supply chains and how companies deal with supply chains. And then finally, the pervasive and increasingly important aspects of climate change. And really, these three have sort of coalesced, each has unique impacts. And what I'd like to do in the short time I have is just focus perhaps, on one impact of each of these, so you can just get a sense of how they each have contributed to some of the challenges in the resilience of supply chains. So obviously, COVID is the one that we're most focused on today.
The aspect I'd like to look at and I'm very much involved with is the impact on modern slavery. So for those of you who aren't familiar with the modern slavery term, modern slavery refers to things like child labour, forced labour, indentured servitude, other human rights abuses that are inflicted upon people who are often victimised or have very little power, or opportunity to lift themselves out of a situation where basically it is what it is - it's a modern form of slavery. It is obviously a crime here in Australia, and in many other countries. What's happened with the pandemic really is the disruption to the employment cycle and to people's economic livelihood has really potentiated the likelihood of modern slavery over the last three years.
That could be a whole talk in itself. But you'll just have to take my word for that. The main thing here, though, is that it has put the onus even more on companies to need to understand and respond to the increased risk of modern slavery that they have in their own supply chains. So that's one particular aspect of the pandemic that I'd just like to draw to your attention. Paul Davies 35:37 In terms of the war in the Ukraine, the Ukraine war itself has disrupted supply chains and cause companies to really reevaluate how they deal with actors involved in unacceptable or aggressive behaviours both on a regional and an international basis. So what we've seen is dozens and potentially hundreds of global brands have chosen to cease operating in Russia since the invasion six months ago.
Many companies have also made decisions about their willingness to continue to purchase materials, goods and services from Russian-owned or Russian-operated companies. Some of these decisions, obviously, are driven by financial, logistical and risk-based considerations. But we need to remember too, that companies are also making ethical decisions about who they are sourcing from and what sort of public position they want to take both on global conflicts, and how does that align with the integrity of their brand and their reputation.
Paul Davies 36:43 The third one of the three, is the, to me perhaps to the the the most significant one, because of its pervasiveness and its longevity. And that is climate change. Needless to say, climate impacts have been a feature of the past decade, and likely even longer than that. Increasingly, we're seeing natural disasters that scientists are directly linking to anthropogenic causes. In other words, humans are contributing to this.
And there's very little doubt now that the impact of human activity and population growth is not going to continue to be a fundamental driver of climate change in our lifetime, and our children's lifetimes. Australia and most other countries are finally recognising the need to act now in reducing emissions. The thing about climate change, though, is it's likely to impact supply chain reliability for years and almost certainly decades to come. And it also will affect what products and services we choose to buy, and those we choose to stop using. So again, each of those does have multiple impacts on supply chain, but I just thought, for this exercise, I'd just tease three particular ones out that are associated with that, that perfect storm of those those three disruptive factors. Paul Davies 38:10 So the good news is that over the 15 years I've been involved with helping companies institute sustainable procurement practices within their organisations, there is strong signs that sustainability can nurture supply chain resistance in these turbulent times.
Again, without going into these in detail, the main sort of things I've seen over those 15 years around embedding sustainable supply chain practices, processes and risk management is it enhances a range of outcomes both directly and indirectly. And those outcomes include enhancing market differentiation, reducing costs, and some of that may surprise you because often people think that sustainable procurement actually adds cost in terms of the cost of goods and services. It does encourage innovation among suppliers. It does help companies manage supply chain risks within their supply chain. It does in helping improve supply chain security. It does help companies meet stakeholder expectations around their alignment with sustainability principles and values.
It also equally helps demonstrably attract and retain employees who liked the fact that companies that act sustainably and procure sustainably tend to align with the current Gen X / Gen Y values of, you know - it's not just about the dollar now, it's also about a values alignment with who we work for. There is strong evidence that supplier relationships are strengthened by engaging them around good sustainability practice. And it's also a very powerful way to demonstrate your organisational ethics by saying 'Yes, we're not going to just be a sustainable company. But we're going to spread the love when looking to lead our suppliers in the same direction as ourselves'. Paul Davies 40:11 And finally, even though sustainability and compliance don't always sit comfortably together, there is compelling evidence that a sustainable procurement approach also supports compliance for organisations. So with all this good news, why isn't everyone just grasping, sustainable procurement as the must do? Well, unfortunately, there are arguably five barriers to companies and businesses implementing sustainable procurement practices.
And they range from things such as cultural, cultural being, we've always done things a certain way. So why should we change? Now? In other words, if we don't think our supply, supply chain processes are broken? Why should we try and fix them? Geographical considerations, which is a lot of businesses and companies in remote parts of Australia and the globe, just don't have access to a variety of choices around purchasing or obtaining more sustainable goods and services. Paul Davies 41:10 Risk management, there is still a feeling that exploring new horizons in terms of new goods and services that are more sustainable, does create additional risk for a business. And that's quite a strong perception.
In certain areas that I work in, particularly in one area, which I work in, which is the infrastructure sector, technical barriers, which is where we don't understand the performance or the lifespan of sustainable goods and services. So therefore, and we're also constrained by the technical standards that we're required to meet. So why should we stick our neck out and sort of try and break out of, as I said, our comfort zone around what our technical standards, what our RL risk management standards, what are our comfort levels about fully understanding new or differentiated products. And finally, the big one often is a perception that going down a sustainable procurement pathway will just simply add more and more cost to your supplier and purchase of goods and services.
These are very difficult barriers to break because they're grounded in a way of thinking and a grounded in a certain inertia in the business world today, which is said, 'If it ain't broke, don't fix it,' at least in that perspective. Finally, then, there aren't any magic bullets, but there are some baby steps that I think most organisations I've dealt with have been able to manage in terms of leading them down a more sustainable pathway in terms of their procurement practices. One is a clear commitment to sustainability in their governance framework. One is getting your people and leadership behind you, so it's not just you being the lone voice of sustainability, and basically, getting everyone on board to say, this is a good thing to do, and we're going to commit to this.
Very importantly, and I think Urszula, you mentioned this too, is getting your suppliers on board, you need to treat this as a collaborative approach with your supply chain. You can't do it on your own. Identify, assess and manage your supply chain sustainability risks, sometimes easier said than done. But there are ways to do that, particularly for your most material. So your top 10 suppliers by spend, it's always a good place to start.
And just evaluate what are those environmental, social and governance risks that reside in your top 10 suppliers that you deal with. A clear point of accountability, so you need someone to drive sustainable procurement and be responsible and accountable for it being delivered. Obviously, you need to have some clear objectives and targets - SMART targets, SMART objectives - so you can measure how well you're delivering your sustainable procurement approach. Regularly to check to see are you getting the right outcomes. If you've set up a an approach to sustainable procurement, is it driving the right behaviours, both within your business and within your suppliers. And then finally, a very powerful tool that often gets forgotten is if you're finding suppliers are going above and beyond in delivering you better outcomes from a sustainability point of view, reward them, showcase them, promote them.
It is a very powerful tool to draw the wider sort of supply market along this path. So again, it's it's less about the stick approach. It's much more about the carrot approach, in terms of getting suppliers to feel that they are doing something that's not just right from a values and an ethics point of view, but is going to reward them in terms of being recognised for the efforts they're making. So Sanjoy, I'm going to hand back to you now and hopefully I stayed within the five minutes. Dr. Sanjoy Paul 45:02 Thanks Paul for your wonderful presentation and summarising the recent issues going on in supply chain, in global supply chain.
Also, summarising the importance of sustainable practices for for our future generation and future supply chain. There's definitely a wonderful things to do. Hopefully, our practitioners will follow that. So thanks all the speakers for your wonderful presentations.
Now, I'll hand over to Maruf Chowdhury for moderating thw question and answer session. There are a few questions. And Maruf over to you. Dr. Maruf Chowdhury 45:36 Thank you, Sanjoy. And my special thanks for the discussions and the participants. We have few questions.
The first question is from David. David mentioned this question to Eric, as you're dealing with Southwest Pacific countries, many of which are tourism dependent economies, and how did World Bank assist them to develop alternative sources of income when they are closed to international visitors due to COVID-19 pandemic? Eric Blackburn 46:17 Yeah, thanks for the question. So I think, you know, during the pandemic, the World Bank's provided financing in what we call a COVID emergency response project. So for a lot of these small island countries, they don't have the financing or access to markets that would allow them to prioritise or have access to good or essential services, so you know, medical consumables, medical equipment, PPE, etc.
So, interestingly, you know, ordinarily, for a bank finance project, from a request from the government through preparation can be anywhere from 12 to 18 months. These COVID Emergency Response projects were prepared, signed off by the bank board within three months, and in the case of Papua New Guinea, the government had entered into $20 million worth, 20 million US dollars worth of contracts, within a week following the project approval. And so what they were using in that area was they were using UN agencies. So like the United Nations Office for Project Services, which is a large procurement agent, those entities went out and essentially aggregated requirements for small island states, and then went out and purchased and delivered that. What we're doing at the moment in terms of recovery is we have what we call development policy operation. So essentially, that will be budget support for these countries to ensure that they can keep operating.
And you know, and then we do have parts of the bank that work in specific sectors. So, while that comparative advantage is often in infrastructure, you know, we do have a number of tourism projects working in the Pacific. And we will look at arrangements where we can provide additional financing, or work with governments assuming that this is their priority to look at tourism, for example. So, you know, as I said, I was in Samoa recently had the opportunity to go through Fiji, you know, aesthetically, it looks much the same as what I remember from two and a half years ago, but understanding that the impacts have been significant.
And I thought one of Paul's comments were really interesting, particularly around modern slavery, Paul, so thank you for bringing that up. I think, from my perspective, and this is just a thought to consider that, you know, if we talk about the poverty line being more than one US dollar a day, you know, what we've seen as a result of the COVID 19 pandemic is families that that were making that transition out of poverty now thrown back into poverty, and those families will be in poverty now for generations. So this is an intergenerational impact from COVID-19. And so I think that, you know, this is a really interesting point, and maybe also talking about Daniel's point around, you know, Daniel was obviously talking about the supply chain and moving product. But, you know, one of the challenges, as I mentioned this dinner I was at the other night, what they were talking about was where manufacturing is coming out of China, and looking at trying to force those Chinese manufacturers to establish manufacturing facilities in other countries. So that that, you know, significant supply chain manufacturing risks associated with, having everything embedded in China is at least mitigated to some point.
So I think that's a really interesting point as well. Thanks. Dr. Maruf Chowdhury 49:20 Thanks, Eric, for your valuable information. Now, we have another question from Juliana. And this question is to Daniel, in terms of value creation, what is the role of procurement and supply chain for maintaining service rather than controlling cost? Daniel Esdaile 49:42 So I think the first thing is it not necessarily it's switched focus completely, like what we're seeing is it's more around cost containment So the ability to you know, just bash a carrier around the head and say please can we can we have lower rates and go through a process to get there doesn't seem to be the lever that, it's not the lever you can pull anymore. So it is around, you know, really working with procurement and the organisation to define what that BCP is, what flexibility you need, what the service outcomes are, and then design for that, I think the other thing that we're seeing a little bit more of is, customer expectations are changing a little bit.
So Coles are ruthless for managing dy fot inbound into their warehouses. And in some instances, we have seen, I've heard scenarios, I don't want to get in trouble for saying this. But where that is relaxed, a little bit just in the current environment. So I think the outcome that we're sort of highlighting there is supply chain working with the customer facing roles or working with customers to ensure alignment from that supply planning point of view. And then I guess, working down with technology to make sure that the right digital solution is in place to manage that entire process. Supply chain is obviously always going to be focused on maintaining that cost.
But I think it's linking into other parts of the business to ensure that that we're creating value across all the requirements of procurement, customer, etc. Dr. Maruf Chowdhury 51:42 Thank you Daniel, for your informative answer. Actually, cost and service level, maintaining a trade off between the two is very important as it is pretty much clear from Daniel's answer.
So optimisation of cost and service level and managing optimal service for the customer is very important. So we have an open question from Jacob. How do we weigh up the cost of automation versus labour shortages? So it's open to all discussion. So who wants to answer this question? Daniel Esdaile 52:24 I can I can try that, that that one if you like. So automation is - what we do is we go through a process to define the requirements of a business and to develop less automation focus, but say what is the right materials handling solution for that business? So it is not necessarily just about saying, 'Okay, let's automate. And let's go through a process to do that.'
Every business has very unique requirements, the process we go through as we develop that labour model. So what is what is the baseline cost today? How is that going to change given the current constraints? So is their labour supply? And what is that going to do that typically is going to push your labour rates up because you're going to be sourcing, less, less, more labour hire and less kind of internal stuff, and you have those those continued disruptions. So it's kind of push your labor costs are also with like, online as an example, as fulfillment costs move to stores or to different channels, as that penetrates more of the mix, your costs are going to grow disproportionately. So we model that out across the whole network. And then we do that materials handling concept and design the right solution, and then essentially build a business case for the different particular options and say, which one is the best. So we sort of compare, we approach that sort of, you know, with some subject matter expertise to find the right solution, but agnostically, and kind of quantify which is the best solution for that business.
And obviously, which has the most viable payback? I think the only thing that may or may change over the next little while is access to capital and, you know, automation requiring high levels of capital. And that dynamic is going to change in the next six to 12 months, I think. Dr. Maruf Chowdhury 54:28 Thank you, Daniel. Now we are moving to another question. This question is from Akshay. And it's an open question.
Resilience and sustainability are conflicting in some cases. What can we do? Achieving resilience helps in achieving sustainability or vice versa. So which can foster resilience or sustainability, how they impact each other Urszula Kelly 55:02 I'll jump in.
It also depends on how we understanding sustainability. Because if we go back to what I was just talking about before, if we see sustainability as being able to operate at a certain level, then you can't really choose because if you cannot operate at certain level, you're not really resilient. So these two, we can't choose the first one or the second one, unfortunately, it's just one of those things that they just need to work together collaboratively. Because you just don't have the first one without the second one. So that's, that will be my answer.
So it's just one of those happy mediums that you need to find in the business, one of many. And this is this is definitely one of them. Paul Davies 55:54 Yeah, I tend to agree with Urszula.
I think there's a lot of overlap between the two is if you look at resilience, resilience is about durability, and the ability to recover. And to me, when you think about sustainability, sustainability is about the durability, the ability to endure, and the ability to regenerate and recover. And the two sit so comfortably side by side, in my mind, I know that, you know, there's no such thing as a match made in heaven, and there will be some divergence at times between them. But to me, I just think the overlap between the two is far stronger than than any differences between them. That's just a personal view.
Eric Blackburn 56:39 Yeah, I have a thought on this as well, maybe I'll dig into the practical. So in terms of a lot of the infrastructure projects that we finance in Pacific Island countries, we look to try to support improvements in climate resilience. So a road infrastructure that is, is raised or has moved back from potential surge impact from storm or tsunami. But in addition to that, you know, obviously, there has been a tendency to focus on on capital expenditure, which isn't sustainable, you know, in small island states where they don't have the funding to for the recurrent maintenance that's required.
And so to tackle that, what we're looking at is essentially, procurement arrangements that will finance the capital, and then also will maintain that infrastructure for an extended period of time. So let's say for 10 years, so then that infrastructure as well as being renewed, is maintained, which then supports other things, so access to, you know, access to market access to education, access to health facilities. And so that's how it sort of ties in, in the world that I work in. Thanks. Daniel Esdaile 57:41 I might build on all those comments is, you know, if we talk about resilience, often it's like, can we put another shed somewhere to create a little bit more fat in the network to enable enable, whereas in the past, it's always been can we centralise and consolidate and make it more efficient? I think we're seeing more increased demand for optimisation, so sweating the asset. And what I think that that means I spoke a little bit before about omnichannel.
So it's, it's ensuring you know, you've got the ability digitally and physically, to enable fulfillment to be flexible to your needs, because the cost dynamics are going to keep changing, the service dynamics are going to keep changing, and we need to be quite dynamic. So I would say to businesses looking to do that it's fulfilled from every single point in your supply chain that you possibly can; ensure that you've got the digital solution to enable that and ensure that you've got the right supply chain, operating model ie the team etc, that sits behind that, and the processes that sits behind it to support other things like flow path management, port splitting, you know, etcetera, etcetera. The list goes on. Dr. Maruf Chowdhury 59:01 Thanks, discussing.
We have only two minutes, so we can take one question right now. The last question that I can take is from Xuerui. And it's to Paul.
Are there any good technologies or remedies for the deterioration of global climate change in recent years? So what are the technologies that can help us in overcoming the climate change challenges? Paul Davies 59:33 From a supply point of view, the key one that and it's an obvious one, I apologise to telling everyone the obvious, but it's to really understanding the carbon footprint of your supply chain. As I said, there's very little doubt that every, every piece of carbon that gets offered up out of the products and services and transportation and everything else that we do in terms of getting goods and then moving them or shipping them out the door generates carbon, but it's it's it's a complex area. Some products are low carbon, but they have high carbon shipment costs some products are high carbon, but there are ways to move them around that reduces the carbon footprint. But I think the big thing for me is for companies to get hold and have an understanding of the length and the depth of their supply chain and where those key carbon emitters are and where those key embodied carbon products reside. And I think that's a pretty fundamental step in terms of how supply chains can actually help us solve the significant impending issues associated with a changing climate.
Dr. Maruf Chowdhury 1:00:54 Thanks, Paul. We have many questions. We'll take notes of your questions, and we'll pass it to the discussions. Just send an email, we'll send mail to them. And now I'm handing over this session to Pavlina. Thank you.
Pavlina Jasovska 1:01:16 Thank you Maruf to all our panelists and on behalf of the Management Department and UTS Business School a sincere thank you for sharing your expertise and insights with us today. We need to draw close to today's webinar. Thank you for everyone who has joined us online today and I do hope you enjoyed today's discussion and hope you will join us for future events organised by the Management Department and UTS Business School. So on behalf of the Management Department and UTS Business School, goodbye and thank you.
2022-09-04 19:05
