Almost one in four businesses are purchasing more from local Australian companies to overcome supply chain problems rather than importing from overseas, new Commonwealth Bank research shows.
The research shows most businesses are maintaining a positive outlook regarding purchasing plans, notwithstanding the major challenges of continuing supply chain issues and rising costs.
Mike Vacy-Lyle, CBA’s Group Executive, Business Banking, said many businesses were turning to innovation and investment to protect themselves and grow. “Despite difficult conditions, many businesses are planning to innovate and adapt to increase their revenue, and one in three anticipate growth in profits in the next 12 months,” said Mr Vacy-Lyle.
Mr Vacy-Lyle said one in four businesses are now purchasing more from local suppliers instead of importing from overseas. The greatest disruption to supply chains has been experienced when purchasing passenger vehicles, with around half of businesses reporting delays.
“It would appear businesses are not waiting for supply chain issues to ease, but rather are adapting with new procurement processes and asset management,” Mr Vacy-Lyle said. “Many businesses are also extending the life of current equipment or sourcing cheaper products and brands not normally considered, to overcome supply chain problems.”
The production, retail, hospitality and distribution industries have been impacted the most by supply chain issues. The construction industry was the worst affected by rising costs with 86 percent of respondents in that sector expecting increased costs over the coming year. As a result, more than any other sector, businesses in construction had plans to introduce more efficient systems and processes and reduce or restructure their costs and debt.
The research shows the top three initiatives that businesses are investing in to strengthen business activities this financial year are: reducing or restructuring operating cost and debt, adapting business strategies to increase competitiveness, and investing in new vehicles, equipment or plant.
Mr Vacy-Lyle said demand for finance remained steady, with two in five businesses predicting an increase in finance needs over the next year. “In an inflationary business environment it is not surprising that reducing costs is a key focus however, many businesses are adapting strategies to the changing operating landscape and investing in new vehicles, equipment and technologies to strengthen their businesses over the next 12 months,” he said.
By: Commonwealth Bank