The Challenges Are Very Real and Will Only Grow in Time
If you were to ask an operations manager in Australia what keeps them up at night, the answer won’t likely be one specific issue but a combination of several – increasing freight costs, shrinking window periods for deliveries, an unfavourably unstable labour market, and the tyranny of distance unique to the logistics landscape in this part of the world.
According to the Department of Infrastructure, domestic freight costs in Australia increased by over 30% from 2020 to 2023. At the same time, customer expectations have remained unchanged. Next-day delivery, real-time tracking, and error-free shipment remain standard requirements now.
In this scenario, the conversation surrounding contemporary Australian supply chains is shifting, as businesses have started exploring opportunities to streamline their supply chains beyond simply partnering with better 3PLs or ensuring their ERP software stacks are top-notch. Increasingly, discussions are turning towards designing operations from a blank page perspective, with efficiency-focused solutions being the foundation of competitive advantage.
From Reactive to Intentional Operations Design
For decades now, many firms in Australia have been designing their supply chains in a reactionary manner – one change at a time as the need arises without much consideration for the big picture. Warehouse space has expanded here, a new batch of employees recruited there, additional shelves installed when the old ones became insufficient – all without an overarching strategy behind the changes.
However, modern businesses in Australia understand that their infrastructure – and, by extension, their operations capabilities – represent a strategic asset, not merely overhead. As such, many firms have gone back to the drawing board to re-examine their operations and develop a design-based approach to addressing their inefficiencies.
This has been taking place across industries in Australia – manufacturing, retail, food distribution, and e-commerce. Companies are investing heavily in workflow mapping, facility design, and proper systems architecture, and McKinsey’s Supply Chain Report for 2023 indicates that proactive efforts in redesigning supply chains can result in a reduction of operational costs by up to 20%, alongside improved service levels.
While Australia is a relatively small country compared to other parts of the world, its geographical characteristics mean that freight costs can rise significantly. Combined with the fact that labour prices in Australia are among the highest globally and metropolitan area leasing expenses remain high, designing efficient operations infrastructure has become a necessity rather than a luxury.
The Warehouse – Where Theory Meets Reality
While advanced software systems may offer an abundance of useful features for managing your supply chain in a seamless fashion, someone still has to physically handle products within your facility. Whether it be a warehouse, a manufacturing plant, or a distribution centre, the environment itself determines an essential part of your operations.
Poor design choices have been quietly eating into Australian businesses’ margins, with inefficiencies in their facilities causing companies to invest more time and resources to meet their customers’ demands. Poor space utilisation results in excess leasing; inefficient picking and storage layouts increase labour hours; handling errors lead to returns and rework. Furthermore, the fact that manual handling continues to represent one of the primary causes of workplace injury in Australia per Safe Work Australia’s 2023 report means that businesses incur additional expenses by not following safety compliance standards.
Businesses that recognise this shift are increasingly investing in operational infrastructure to improve efficiency and functionality. At a practical level, structured storage solutions such as stillage systems can support better space utilisation, contribute to safer handling practices, and help streamline warehouse workflows.
When items are stored systematically within stackable and standardised containers, your staff members spend less time searching for the products they require, damage risks decrease, and your facility remains manageable overall. This might seem like a minor adjustment; however, once multiplied by hundreds of daily activities, even a slight increase in efficiency can translate into substantial savings for your company.
Technology Cannot Replace Good Design
There is a tendency to focus exclusively on technological advancements when addressing the inefficiencies in a firm’s supply chain. However, regardless of how advanced your ERP, WMS, or IoT systems are, they will merely serve as a catalyst for your existing infrastructure. Instead, you must first ensure that your facility is optimised to handle its current throughput of goods.
In practice, businesses that invest in technology without first optimising their operations infrastructure face severe challenges as they attempt to scale. On the contrary, businesses that have prioritised redesigning their operations and then incorporated new technologies have been achieving superior returns on investment.
According to Deloitte’s Global Supply Chain Survey of 2024, 67% of supply chain leaders indicate that improvements in their operational processes have yielded better returns than investments in new technological systems. This is an interesting statistic and suggests that, when dealing with your supply chain, you must first consider its current status and identify areas for improvement before looking to invest in additional technology.
Scalability – Planning for Growth and Expansion
A final element to address in this discussion is scalability, as businesses that manage to create efficient operations designs often have the ability to scale easily and quickly. In Australia, many SMEs are striving to expand into international markets beyond their home countries; however, to achieve this objective, companies must design their facilities to accommodate the increase in throughput.
Unfortunately, facilities created through reactionary measures are highly unlikely to support scaling. In contrast, businesses that have invested significant effort in creating optimised facilities will be able to open additional branches, expand production volumes, or integrate with third-party providers much more efficiently than their counterparts.
The Characteristics of Efficient Operations Designs
The above points should paint a picture of why efficient operations designs are increasingly relevant to businesses worldwide, and Australia is no exception. Below are some common traits exhibited by companies that have managed to leverage efficient designs to improve their operations’ overall efficiency.
Space planning
Efficient designs are created based on the actual space requirements of a facility – taking into account its throughput and workflow and allocating adequate room to accommodate the entire process.
Material handling standardisation
Standardised materials and containers make it easier for employees to locate products within a facility and handle them more effectively. For example, common containers and packaging, consistent labelling, and predictable storage configurations can reduce waste and downtime.
Safety first
Efficiency should never be achieved at the cost of your employees’ wellbeing. Therefore, safety regulations should always be considered during the design process and integrated into your facility.
Documentation
Finally, a robust documentation system ensures that your business can continue operating effectively despite unforeseen personnel changes. If your operations manager leaves the company, will your operations run just as smoothly without them?
The Future of Australian Supply Chains Lies in Smarter Design
Australia’s logistics landscape is not likely to become easier in the coming years. Freight costs, distance, and customer expectations will continue to exert pressure on companies. Nevertheless, it seems that firms that can leverage efficiency-focused designs and optimise their supply chains are faring much better than others.
Therefore, when considering how to streamline your operations, you should look beyond simple automation and consider designing your processes from scratch.
