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As Earlytrade’s September and December Supply Chain Scorecards flagged, rampant inflation across sectors and under capitalised SME suppliers will continue to hamper the productivity of already disrupted Australian supply chains well into 2022 and beyond.

  • Construction: In an increasingly challenging and busy period, builders keen to collaborate up and downstream to fight a stubborn inflationary outlook
  • Food & beverage: Lack of liquidity available to SME suppliers may prevent them from joining a strategic industry shift towards ‘just-in-case’ procurement
  • Industrial services: Consolidated early payment opportunities from large customers in Earlytrade is being used as a hedge against rate rises for large and medium suppliers in the sector supply chain

With the war in Ukraine pushing up oil and fuel prices, the RBA signalling interest rate rises, and China’s zero COVID policy choking shipping freight, Australian businesses are – as they did at the start of the pandemic – turning to homegrown tech to solve old supply chain and procurement problems.

During the March quarter, new businesses registering with the Earlytrade network increased by 25% versus the prior comparable period, highlighting the need for them to gain greater flexibility on accounts receivables with large customers. Early payment volumes also continued to exhibit strong growth in Earlytrade’s working capital markets, more than doubling from the prior comparable period in FY21 (+122%), as businesses of all sizes continued to diversify their working capital options.

The degree of cost and disruption pressures differ from sector to sector. The IMF recently outlined its expectation that Australian inflation would average 3.9% this year versus 7% on building materials according to analysis of ABS figures. This was validated by the 5.1% CPI increase witnessed during the March quarter – the largest increase in 21 years.

Head contractors in the construction sector now face delivery of a once in a generation major infrastructure boom with overworked and highly cautious subbies, following the much publicised Probuild and Condev collapses. These industry solvency risks were preempted by Earlytrade’s December Scorecard: Focus on Construction edition, that flagged a 40% rise in voluntary administrations in Q2 FY2022.

In the food and beverage supply chain, industry is debating a shift from ‘just-in-time’ procurement to ‘just-in-case’. However, this will require significant capital to invest in stockpiling and warehousing which has prompted buyers to work with suppliers to provide on-demand liquidity opportunities.

The more concentrated supply chain of the industrial services sector has had a less volatile quarter in terms of cash flow demand. Medium to large suppliers have been able to hedge against interest rate rises by accessing early payments from several buyers.

Download the full Australian Supply Chain Scorecard, March Quarter

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