The latest SME Growth Index by non-bank business lender ScotPac reveals that 28 per cent of Australian SMEs plan to add new domestic suppliers in the next 18 months to build greater supply chain resilience, rather than going with international suppliers.
The smaller SMEs are leading the way in this move at 32 per cent. A further 21 per cent also plan to cut ties with international suppliers in 2023-24 to instead support local products, services and jobs.
Other key measures Australian SMEs said they planned to implement to guard against future supply chain turbulence included:
- Securing more flexible trade/supply chain funding arrangements (54 per cent).
- Getting closer to key suppliers and customers (52 per cent).
- Focusing on key inventory items and removing others (36 per cent).
- Stocking up more inventory in specific areas (26 per cent).
- Switching from ‘just-in-time’ to ‘just-in-case’ inventory management (22 per cent).
ScotPac CEO Jon Sutton said that the global supply chain challenges of the past three years had sharpened the focus on inventory management for all SMEs and improved the outlook for Australian suppliers.
“Disruptions and challenges caused by events like the COVID pandemic, political conflicts and rising inflation have become the new normal for business owners,” Sutton said. “It is clear from the well-considered strategies SMEs have outlined in response that a growing proportion view strengthening supply chain resilience as a core business planning priority, rather than a reactive event.
“That is also reflected in the surge in demand for ScotPac trade finance facilities in the past 12 months as SMEs have sought greater purchasing power to support their trade needs and opportunities, both domestically and internationally,” he added. “It highlights the fact that access to fast and flexible finance will always be one of the best tools any SME can have at hand to mitigate supply chain shocks.”
Sutton also encouraged business owners to talk with their brokers or advisors to ensure finance is part of their supply chain management strategy.
