Vulnerable supply chains: Productivity Commission study report
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 Vulnerable supply chains: Productivity Commission study report
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3.43 MB |
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Vulnerable supply chains (executive summary and findings)
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839.83 KB |
Australia’s supply chains proved generally resilient in response to the COVID-19 pandemic, unexpected trade restrictions, the devastating 2019-20 bushfires and 2021 floods in Eastern Australia. Nevertheless, these experiences have highlighted potential vulnerabilities in Australia’s supply chains. The onset of COVID-19 saw immediate impacts on logistics and transport. A global surge in demand and panic buying of some essential goods, notably personal protective equipment, with export restrictions placed on such products by some governments, added a degree of urgency to the unfolding situation.
In this environment, understanding the nature of possible disruptions received relatively little attention, but it did prompt a host of views on Australia’s degree of self-sufficiency and strident opinions on how best to manage the risks involved.
Regardless of the response, managing the risks of supply chain disruptions — whatever their origin — inescapably entails costs on businesses, consumers and governments. These costs vary substantially and depend on the choice of strategy — stockpiling, diversification of suppliers or markets, contingent contracting, developing domestic capability, or tolerating the residual risk, among others. They also depend on the state of preparedness of firms and governments.
The purpose of this study is to help further Australia’s preparedness to deal with possible global disruptions to the supply of inputs (upstream risks), as well as global disruptions to markets for goods and services (downstream risks). The report considers the factors that make supply chains vulnerable, with a focus on the international linkages and dependencies from trade. Significantly, the Commission has developed and piloted a framework for identifying those supply chains and products that are vulnerable to disruption and critical to the effective functioning of the economy, using trade and production data. The report then explores risk management strategies for governments and businesses and provide policy guidance on the roles for government.
