Links with global suppliers underpin our competitiveness. However, the complexity of global supply chains can make identifying and addressing risks difficult.
In-depth analysis found the following vulnerabilities are present in all identified product categories:
- lack of suitable alternatives for some products
- limited adaptability of manufacturing processes (notwithstanding some PPE activity during COVID-19)
- limited holding of stock by business
- lack of availability of packaging
- lack of skilled workforce
- poor end-to-end visibility across the supply chains.
There are a range of options to help address these vulnerabilities. The Australian Government prioritises options that enable industry-led solutions, acknowledging that competitive policy settings drive our resilience.
‘No regrets’ measures such as international collaboration with like-minded partners, lowering trade barriers, and providing clear information to businesses (including in relation to regulatory requirements) are appropriate actions for many of the products considered. Other ‘responsive’ measures like developing emergency protocols to expedite supply in a crisis, or ‘pre-emptive’ support such as predictive modelling or inventories of stockholdings, stockpiling, and building pivotable capabilities into existing businesses will also assist in securing supply.
As part of the integrated government work identified above, the SCRI grants program provides a vehicle by which government can assist Australian industry to target capability building to build resilience for identified critical products.
Opportunities through SCRI
Through the SCRI, Australian businesses have the opportunity to establish or scale a manufacturing capability to address a vulnerability for a critical product or input in the agricultural chemicals or medicines categories identified in this SMCP.
Businesses do not need to be operating within the identified categories, but must demonstrate their project would address an identified vulnerability.
Actions across the manufacturing smile curve will be considered for grant funding. This includes activities relating to design, commercialisation, sales, marketing and freight.
Specific activities could include:
- synthesising an alternative active ingredient for a critical product
- augmenting existing domestic manufacturing capabilities, including for packaging of critical products, by purchasing capital equipment that would allow an existing manufacturer to pivot or scale operations
- strengthening supply chain transparency which may include incentivising uptake of digital technology capability or implementing a system to track and trace chemical supplies
- building advanced manufacturing workforce capability, for example by establishing a training centre of excellence for automated pharmaceutical manufacturing.
Building a domestic manufacturing capability that can pivot is likely to be most easily achieved where manufacturing capabilities already exist and can be scaled, or added to. These products include urea, MAP, 2,4-D, trifluralin, vancomycin, sulfamethoxazole / trimethoprim, morphine and nifedipine.
Actions to address vulnerabilities
Here are 3 examples of actions businesses might take that could address supply chain vulnerabilities. This is not an exhaustive list and does not represent the full suite of eligible activities.
Augment existing domestic manufacturing capability (product and/or packaging)
Ensure availability of critical products in times of crisis and enhance the ability to pivot and provide agile manufacturing capability.
For example, a company may seek SCRI funding to purchase new equipment or update ageing infrastructure to broaden their existing manufacturing capabilities.
Example case study: ACME CropProtect is an importer, wholesaler, manufacturer and distributor of crop protection chemicals. In recent years the company has faced serious supply issues for certain active ingredients required to make crop protection chemicals critical to the Australian agriculture industry.
In partnership with local chemical manufacturer ACME AI, ACME CropProtect has developed a methodology to synthesise an alternative active ingredient to one that has been difficult to source offshore. AMCE AI will manufacture this novel active ingredient in Australia. This will shore up the domestic crop protection product supply chain while also creating a substantial export opportunity.
ACME AI seeks funding to support co-investment into a purpose built manufacturing laboratory in Echuca, Victoria.
Incentivise uptake of digital technology capability
Assist industry to create transparent and reliable data sources that monitor stock levels.
For example, a company may seek SCRI funding to invest in a stock control system that automatically identifies the cheapest and fastest suppliers. Alternatively, a digital ‘desktop’ solution may be available to show the end to end business supply chain, at the business or sector level.
Example case study: ACME Agridigital is an Australian agribusiness SME that uses blockchain technology to monitor items across the crop protection products supply chain. The technology allows the Australian supply of crop protection chemicals to be reliably traced and tracked. This provides far greater demand management and continuity of supply during times of crisis, or rapid change in climatic conditions (e.g. break in a drought).
Importantly, improved visibility across the supply chain could help industry participants better manage disruption. This would be particularly useful in responding to surges in demand, where receiving the demand signal earlier and more clearly could enable manufacturers to make better decisions. Understanding stockholdings at different points of the distribution network can also help companies to manage supply more actively in the event of shortages.
With the initial focus on the grains industry, ACME AgriDigital intends to expand into fertilisers and other agricultural markets. It also plans to export its digital technology to Canada and the US.
ACME AgriDigital seeks funding to support co-investment into the final stage commercialisation of the blockchain platform and software stack.
Build advanced manufacturing workforce capability
Address the skills gaps in what will be required to set up, operate and monitor agile manufacturing facilities, delivering a future pipeline of proficient workers.
For example, a company is poised to move ahead to establish its first commercial scale manufacturing plant in regional Australia. This will mean hiring approximately 100 full-time equivalent employees. These employees may require specific training and/or upskilling to meet the demands of these new facilities. SCRI funding may be available to support this.
Example case study: ACME WorkCape is an Industry 4.0 specialised workforce development provider that provides services to the Australian and international biopharmaceutical sector. The company enables clients to keep pace with rapid changes in advanced manufacturing by building workforce capability in automated pharmaceutical manufacturing processes. The company has designed a collaborative workforce development model which involves collaboration and partnerships with most of the pharmaceutical manufacturers in Australia.
A collaborative, whole-of-industry approach to advanced manufacturing workforce development will make the Australian biopharmaceutical manufacturing sector more sustainable and competitive. It will contribute to resilience in the supply chains of essential medicines for Australians.
ACME Workcape is seeking SCRI funding to co-fund a training centre of excellence supporting Good Manufacturing Practice (GMP) and Industry 4.0-enabled automated pharmaceutical manufacturing in Australia.
- The ‘smile curve’, sometimes called the ‘smiling curve’, is a visual representation of value added along a production cycle. Office of the Chief Economist, ‘Globalising Australia’, Industry Insights: 2/2018 Globalising Australia, 2018 edition, p.46. ↵