Peter Jones discusses with MHD the results of Prological’s annual survey of supply chain industry leaders.
Prological’s new Supply Chain Pulse-Check Survey is out now and Peter Jones, Founder and Managing Director of Prological, says there have been significant shifts and new trends in the supply chain and logistics industry in the year since Prological conducted its last survey.
Peter notes that the predominant sentiment of pessimism about the economy, prevalent in the previous year’s responses, has now stabilised.
“Last year, people were reasonably pessimistic about the economy and what was coming around the corner,” Peter says.
“That has now flatlined.” This change in economic outlook has been pivotal, with last year’s survey indicating that 90 per cent of respondents anticipated a worsening economy in 2023, a prediction that did not materialise. Now, there is a general consensus that the economy will more or less maintain its current state. “People now think that the economy throughout 2024 will, at worst, stay as it is.”
A significant trend in the industry, as identified by the survey, is the increased focus on enhancing visibility within supply chains. Peter points out a substantial leap in this area: “Visibility has really lifted. Companies told us in our previous survey that visibility was a key priority on the agenda, and they seem to have delivered on that priority.”
Approximately 70 per cent of respondents now claim to have either full end-to-end visibility over their supply chain or are very close to achieving it, a notable increase from 57 per cent in the previous year. This enhancement in visibility is a clear indicator of how companies have been proactive in implementing systems and resources to achieve greater transparency and efficiency in their operations.
Peter also points to the evolving dynamics of skills and recruitment within the supply chain and logistics industry as a key takeaway from the survey. A stark contrast is drawn between last year’s scenario and the current state of affairs.
Peter explains: “In last year’s survey, skills and recruitment was seen as quite a significant issue. This was primarily due to the phenomenon known as the ‘great resignation’, which had a notable impact on nearly 60 per cent of businesses, either partially or significantly.”
There was for a time a cascading wave of pay raises throughout the workforce as one person would leave a job for higher pay and then their replacement would in turn have to be paid more to fill the vacant position, and so on. This had a big inflationary impact on salaries, Peter says, as there wasn’t enough of the right skilled labour to fill in all the new gaps as people moved around.
“This scenario created a challenging environment where, regardless of the financial incentives offered, companies often couldn’t find the talent they needed,” he says.
“The situation has now normalised, thanks in part to the recalibration of economic expectations. Last year, with 90 per cent of respondents bracing for a tighter economy, many companies halted the creation of new roles, leading to a decreased pressure on staffing growth. This is not to say this issue has gone, it has just been better calibrated within the new norms.”
At the same time, the re-opening of immigration post-COVID has meant more talent is available for basic supply chain jobs, enabling a smoother flow of personnel within individual companies.
WAREHOUSE FOCUS
Since the previous survey, there has been an even greater emphasis put on finding the right warehouse, Peter says.
“Forty percent of respondents said they’re planning to expand or move into a new warehouse within the next five years. This trend is driven by two primary factors. Firstly, businesses are recognising their growth cycles and the need for more space. Secondly, there is an increasing awareness of the economic benefits of transitioning from older warehouse designs to newer, more efficient ones.”
Such expansions and upgrades to warehouses are influenced not just by the need for space but also by the desire to lower operating costs and improve service levels through better-designed facilities, Peter says.
This expansion comes in the context of historically low vacancy rates in major cities like Melbourne and Sydney. “The vacancy rates are still historically really low, indicating a challenge in finding suitable space. Despite this, there has been a slight easing in these rates over the past year, suggesting a gradual shift in the market.”
Looking ahead, Peter predicts significant changes in the warehouse landscape. “In the next two to three years, we’re going to start seeing a lot more knockdown-rebuild of warehouses.” This reconstruction is expected to cater to the evolving needs of the industry, including accommodating larger vehicles and incorporating advanced automation and sustainable energy solutions.
Peter elaborates on the specific requirements that are shaping the design of new warehouses. These include increased building height, facilitating the accommodation of larger interstate trucks, and the need for more robust infrastructure to support advanced automation. Moreover, the push for sustainability is evident in the design considerations for solar systems and other eco-friendly features.
Companies, Peter says, have realised that little sustainability progress can be made in the transport sector, shifting more of the onus onto warehouses. “A lot of the sustainability initiatives within the Australia-New Zealand environment are being driven by international companies,” Peter says.
“These international standards often do not align with the capabilities of the local industry, especially in the context of sustainable energy in transport. Warehouses are seen as an area where you can make real gains in sustainability. Almost every Greenfield facility now has some level of energy generation capability.”
Furthermore, Peter touches on an important aspect of workforce satisfaction and retention in this changing landscape. He likens the preference of blue-collar workers for modern, well-equipped warehouses to that of white-collar professionals who seek comfortable and appealing office spaces.
“There’s enough, new generation warehouses around for blue-collar workers to take that same mindset to their job interviews,” he states, highlighting the importance of workplace quality in attracting and retaining skilled workers.
The Supply Chain Pulse-Check Survey, Peter says, indicates a significant evolution in the warehousing and logistics sector. With an emphasis on expansion, modernisation, and sustainability, the industry is poised for substantial changes in the coming years, reflecting broader trends in business growth, technological advancement, and workforce expectations.
“Overall, it was pleasing to see a greater level of optimism around supply chains this year. The challenges are evident, but it is clear businesses have learned from past failures, and in response, we are seeing rapid upgrades in supply chain capability and investment to gain competitive advantage.”
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