The globalisation of Australia’s retail industry, particularly amongst its supermarket chains is forcing firms to rethink how they manage their supply chain processes. Frans Verheij, director at global supply chain consultancy Crimson & Co, suggests this is increasing demand for greater consultation from Europe and the US, as Australia looks to step change its skills and capabilities, in order to drive greater efficiencies and competitiveness across its supply chain networks.
Historically, Australia has been dominated by brands Woolworths and Coles – the move by German discount chain Aldi into Australia was seen as a game changer for the industry. In doing so it has forced the other brands to cull their product range to cut costs and rethink how to remain relevant for the Australian consumer against these new rivals.
According to Frans, the globalisation and heightened competition amongst retail sectors in Europe and the US provide a wealth of knowledge for Australian firms to learn from and apply across their own supply chains. The adoption of some of these learnings will prove critical in increasing their supply chain effectiveness, allowing them to remain competitive:
“The Australian supermarket industry is arguably seeing real competition for the first time. Woolworths and Coles have held a duopoly for several decades but the arrival of Aldi fundamentally changed this giving rise to a selection of new competitors with rival discount chain Lidl and Costco also entering the region.
“In light of this new players are forcing older incumbents to rethink their strategies and drive down unnecessary and excessive costs across their supply chain. The fallout from this has created a unique demand for great supply chain consultation. Those organisations are looking to invest in this through training and education, but are also actively looking for knowledge from outside their local markets.”
Frans continued: “The US and European retail sectors are heavily competitive, especially when it comes to supermarkets. If you look at the UK, Aldi and Lidl have had a huge presence there for a number of years and is increasingly breaking up the hold of the big four (Tesco, Sainsbury’s, Asda and Morrisons). The availability of quality fresh produce at a significantly lower price has been critical in driving demand amongst consumers. As a result, the big four have had to act accordingly by reducing costs amongst their produce. Central to this has been the need for great efficiencies across the supply chains and this is just one lesson Australian retailers are learning with recent spring fresh produce hitting the shelves at prices not seen in years.
“The impact of this is opening up opportunities for supply chain professionals and consultants to come into the region and apply their skills and knowledge in order to show where savings for these retailers can be made. Critically, those professionals coming into the region will need to quickly get to grips with the unique geography, scale, infrastructure and concentrated population of Australia. The market is very different to the US and Europe and it will be imperative that anyone coming in is able to adapt their skill set accordingly.
“Typically, those skills will look to address issues across the end-to-end supply chain such as procurement, advanced planning, inventory management, transport optimisation and many more. For those companies looking to leverage knowledge from Europe and the US, the opportunity to entice people to Australia is very appealing.
“Crimson & Co ANZ has recently relocated several overseas team members and blended these with our existing local supply chain team in Sydney and Melbourne. For overseas supply chain professionals moving to Australia is very popular as it provides a great working experience, lifestyle and good salaries in a strong economy with un-employment rates not seen overseas. It’s a win-win really as those in the supermarket industry can leverage their skills, knowledge and training to stay ahead in what is becoming an increasingly competitive market,” Frans concluded.