New research from Commonwealth Bank reveals that almost one in four businesses are purchasing more from local Australian companies in their efforts to overcome supply chain, problems instead of importing from overseas. It also shows that most businesses are optimistic with regard to their purchasing plans, despite the major challenges of continuing supply chain issues and rising costs.
“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,” Mike Vacy-Lyle, CBA’s Group Executive of Business Banking, said.
The report also notes that the greatest disruption to supply chains has been experienced when purchasing passenger vehicles, with around half of businesses reporting delays, a factor for these companies to go local.
“It would appear businesses are not waiting for supply chain issues to ease, but rather are adapting with new procurement processes and asset management,” 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 are noted to be the most affected by supply chain issues. The construction industry was the worst affected with 86 per cent of respondents in that sector expecting increased costs over the coming year. As a result, construction businesses had plans to introduce more efficient systems and processes and reduce or restructure their costs and debt.
The research has highlighted the top three initiatives that businesses are investing in to strengthen business activities this financial year: reduction or restructuring of operating costs and debt, adapting of business strategies to increase competitiveness, and investment in new vehicles, equipment or plant.
The research also noted that the 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,” Vacy-Lyle concluded.
