I was reflecting late last year, as you do at that time of year, on what were the highlights and key achievements of 2023.
The key highlight was primarily that supply chains are starting to settle down, business is starting to return to normal, and we are starting to see some positivity. This has been a slow hard grind, and the job is not done.
The recovery has been slower than expected, exacerbated by extreme weather events, a cost-of-living crisis, a labour shortfall as we ramped up and the gates were not open, and Kiwis leaving on their OE. Net a myriad of never-ending obstacles to overcome.
In addition, many businesses learned in 2022 and 2023 just how fragile their supply chains were and how dependent NZ is on shipping lines. Many have and are investing in additional warehousing to buffer their supply chains and many products that have been offshored are suddenly viable, in this new light, to be manufactured locally.
The research continues to reflect our slide down the OECD with the grim reality that we are 30-40% less productive than our nearest neighbours and key trading partners and significantly worse versus the Irish and Scandinavian countries.
While this may seem remote, it is a key indicator of our future economic prosperity and ability to keep pace, retain talent, and provide the lifestyles and outcomes we desire for our children and future generations.
So, given all this, here are my top 5 drivers for 2024:
- The labour crunch will continue, and many businesses are leveraged so capital options may not be as attractive or possible. This will drive a few key initiatives.
- Supply chain fragility will continue to drive boards to look at business continuity planning and risk mitigation strategies.
- Procurement and strategic sourcing will be a key focus to reduce cost and risk.
- Talent retention/acquisition will become a key focus. The war for talent will ramp up.
- The rise of technology, with renewed interest in the applications for AI/RPA and industry 4.0 again to drive productivity and reduce cost.
2024 is the year of productivity and supply chain resilience.
Given the labour market, historic approaches, the overwhelming evidence of better practices adopted by our trading partners, and the significant benefits without capital spending, 2024 could well be the year that NZ goes over the tipping point in terms of adopting best practices.
Many organisations now have some awareness and real live examples in NZ and the considerable success these businesses have enjoyed. This is no longer a “nice to have” but rapidly becoming the requirement to survive and compete.
Operating in a traditional inefficient manner in 2024 against more productive trading partners will ultimately lead to business failure or acquisition.
To protect business from the vagaries of the supply chain, the need to buffer stock (RM and FG) to ensure continuity of supply or service and retention of business has come under a new spotlight.
Those who managed this through COVID performed better, retained customers, and grew their share. All businesses need to understand their supply chain, their key risk, and the required contingency to maintain continuity. This may mean a supplier review and strategic sourcing, collaboration, or buffering of the supply chain to name a few.
Many businesses were not ready and this work to shore up the supply chains will continue.
Lastly, the role of technology in providing better, faster information and data to make better decisions in real-time is accelerating and many businesses will want to know what their opportunities are and how to leverage these technologies.
We are starting to see many reach out for help and support to better understand this arena, and this need will only accelerate as the world becomes more interconnected and complex to navigate, whilst offering significant benefits to those who can steer this course.
Share:
