The latest survey by the Australian Food and Grocery Council (AFGC) and Argon & Co has highlighted the biggest challenges and trends shaping food and grocery supply chains.
For the first time in the survey’s history, cost reduction outranked customer satisfaction as the top priority for supply chain leaders in the industry, with 43 per cent of organisations prioritising cost reduction over the next one to two years.
Pressures since the Covid-19 period, coupled with the rising cost of production, have impacted profitability. If this trend continues, companies could be forced to increase prices and reduce pack size and quality, all of which would affect consumers, the report shows.
Nearly 80 per cent of companies reported experiencing moderate to large-scale disruptions, with international shipping delays highlighted by 68 per cent of respondents.
Many respondents described supply chain interruptions as a significant hurdle to industry productivity. Failures in key infrastructure, such as roads and rails, due to natural disasters result in costly congestions and delays, they added.
The survey also noted the increasing importance of AI in supply chain management. About 74 per cent of businesses are investing in Generative AI over the next three years, betting big on its ability to optimise routes, improve efficiency, and enhance quality control.
In terms of supply chain planning, consumer behaviour was one of the top three considerations.
Consumers are voting with their wallets, demanding more organic, sustainable, and minimally processed products. Manufacturers that anticipate and respond quickly to these shifts will benefit from brand loyalty and maintain their competitiveness, the report said.
