The impact of the ongoing COVID-19 pandemic is still being felt in the way we do business. Whilst some of the fallout has been minimised here in Australia, the impact that continues to be felt overseas has left a long tail in terms of supply chains and logistics.
Contributing factors include:
- Raw Material Shortages: Due to COVID-related disruptions to mining, the supply of raw materials such as silica and copper required for manufacturing electronics has been in short supply.
- Reduced Manufacturing Output: Manufacturers are not operating at full capacity due to the above mentioned shortages, market uncertainty, COVID restrictions and a shift towards manufacturing-to-order (see below).
- Stock On Hand: Supply chain participants such as manufacturers, OEM’s and distributors are unwilling to risk being caught with excess stock should demand suddenly drop again, and have therefore drastically reduced their on hand inventory.|
- Manufacturing To Order: Companies are producing more items on a ‘by order’ basis and holding less stock on hand. When end customers place an order for some items previously available ‘off the shelf’, they now need to factor the entire manufacturing and shipping process into their lead times.
- Shipping Delays: There is currently a shortage of shipping containers compounded by restricted access to ports. This is resulting in significantly longer shipping timelines and increases in shipping costs, with huge premiums being commanded by shipping suppliers for priority delivery. When importing items from overseas it is now necessary to factor additional cost and time and/or consider international air freight options (which are also at a premium).
The net result is that despite the current strength of the Aussie dollar, import supply chains are experiencing increased costs and significant delays in delivery timelines.
Our advice to clients is to budget and plan as early as possible and communicate with solutions partners such as datmedia at those early stages.
That allows us to negotiate the best rates and availability with suppliers on your behalf and deliver projects on time and on budget as often as possible.