De-risking global supply chains in 2025

Why supply chain risk is a front-and-centre issue in 2025

Australian businesses are entering 2025 with more urgency and awareness around global supply chain risk than ever before. While COVID-19 first exposed the fragility of just-in-time logistics, ongoing global events have kept the pressure high—with geopolitical instability, climate disruptions, and tighter regulatory demands all playing a part.

Whether you import machinery components, raw materials, or finished products, de-risking your supply chain is no longer optional — it’s a business imperative.

Industries Most Exposed to Global Supply Chain Disruption

While almost every sector in Australia has felt the ripple effects, some industries face greater exposure due to their reliance on offshore manufacturing, imported raw materials, or strict regulatory timelines.

Retail and Consumer Goods

With large portions of supply chains tied to offshore production—particularly in apparel, electronics, and packaged goods—disruptions can mean stockouts, lost sales, or compliance issues.

Key risks:

• Seasonal product availability tied to global demand

• Modern Slavery Act compliance for apparel imports

• Volatile freight rates impacting margins

Response strategies:

• Better demand forecasting using AI

• Pre-positioning seasonal inventory closer to key markets

• Auditing overseas suppliers for ethical and labour standards

Logistics and Transport

Australia’s logistics sector—especially 3PL providers and fleet operators—faces upstream disruptions in vehicles, tyres, and fuel supply chains. Parts shortages for refrigerated transport and GPS systems have impacted delivery timelines.

Key risks:

• Delays in acquiring replacement vehicles and components

• Rising fuel costs and limited alternative fuels

• Labour shortages compounding delays

Response strategies:

• Expand supplier networks for parts and servicing

• Invest in route optimisation software

• Strengthen relationships with equipment lessors and OEMs

Manufacturing and Advanced Manufacturing

Manufacturers producing electronics, machinery, automotive parts, and medical devices are especially vulnerable to disruptions in Asia (e.g. China, Malaysia, South Korea).

Key risks:

• Overreliance on tier 2 & tier 3 suppliers in China

• Volatile semiconductor availability

• Energy and shipping price volatility

Response strategies:

• Invest in local component fabrication

• Create strategic safety stock

• Map sub-tier supplier dependencies

Rethinking Single-Source Dependency

Over-reliance on one supplier or region remains a top risk. Many Australian importers have traditionally leaned heavily on China—but recent events have triggered a rethink.

Risks of single sourcing:

• Factory shutdowns (e.g. COVID-19 resurgences)

• Political disputes and tariffs

• Shipping delays and port congestion

What to do:

• Invest in local manufacturing (reshoring)

• Diversify suppliers across regions (e.g. India, Vietnam, Eastern Europe)

• Create tiered supplier models

• Negotiate MOUs with alternative suppliers

• Map critical inputs and identify high-dependency nodes

According to Deloitte ANZ (2024), 67% of procurement leads say they don’t have visibility beyond tier 1 suppliers.

Meeting Compliance and Ethical Sourcing Obligations

Businesses must now meet growing legal and ethical responsibilities—with real legal consequences in Australia.

What’s changing:

• Modern Slavery Act requires labour due diligence

• Environmental restrictions on materials (e.g. plastics, timber)

• Carbon border adjustments

What you can do:

• Conduct supplier audits (human rights + environment)

• Use supplier self-assessment tools

• Document due diligence processes

• Include ethical clauses in contracts

Example: A Melbourne-based apparel importer faced reputational damage after a supplier was exposed for child labour. After switching to a WRAP-certified supplier in Bangladesh, the company restored stakeholder trust and ensured compliance.

Leveraging Digital Tools to De-risk Supply Chains

Technologies like AI, IoT, and blockchain are now essential to resilience.

How they help:

• Predictive analytics flag anomalies

• IoT sensors enable real-time tracking

• Blockchain ensures traceability

• Cloud platforms support global collaboration

McKinsey reports AI-driven supply chain planning reduces lost sales by up to 65%.

Practical tip: Start small—pilot AI on a single high-risk supply line before scaling up.

Reshoring and Nearshoring: Bringing Production Closer to Home

Global disruption is reigniting interest in domestic and nearshore manufacturing.

Why it’s smart:

• Reduces shipping time and fuel costs

• Lowers geopolitical risk

• More control over quality and compliance

Government support:

• $15B National Reconstruction Fund supports local manufacturing (DFAT, 2024)

• Grants for clean energy, medical, and advanced manufacturing

Example: A Sydney-based electronics firm began producing key circuit boards locally with a Victorian SME, cutting lead times from 8 weeks to under 2.

Embedding Risk in Supplier Contracts and Policies

Many businesses were caught off guard because supplier contracts lacked contingency clauses.

Clauses to include:

• Updated force majeure for pandemics

• SLAs with contingency protocols

• Inventory buffer requirements

• Early exit clauses for non-compliance or human rights breaches

Best practice: Collaborate across legal and procurement teams when redrafting supplier terms.

Final Thoughts: Supply Chain Risk Is the New Normal

Supply chain disruptions are no longer anomalies—they’re part of the operating environment. The businesses that thrive in 2025 will be those that embed resilience and foresight into their procurement strategies.

De-risking doesn’t mean eliminating uncertainty—it means building smart systems to adapt, respond, and grow through it.

Key Takeaways

• Geopolitical risks are reshaping decisions: 84% of Australian businesses reported disruptions from global events (Austrade, 2024).

• High-risk sectors: Manufacturing, construction, retail, logistics, and healthcare.

• Diversification is essential: Over-reliance on China is a top risk; alternatives include Vietnam, India, and Mexico.

• Visibility matters: 67% of procurement leaders lack tier 2/3 supplier visibility (Deloitte ANZ, 2024).

• Compliance pressure is rising: Modern Slavery and environmental import laws demand real due diligence.

• Digital tools are critical: AI and IoT can flag, track, and prevent disruptions.

• Local manufacturing is rebounding: Government-backed reshoring is viable for critical components.

• Risk management actions: Include multi-sourcing, local inventory, and stronger supplier contracts.