You can't predict a global conflict, canal blockage, or pandemic. But you can stop pretending that every crisis is a one-off, and instead build a proactive, resilient supply chain that doesn't buckle whenever ‘BAU’ is disrupted.

Today, rising fuel prices are doing exactly that; putting immense pressure on margins that are already razor-thin and delivery operations that are already vulnerable.

If the last half decade has taught us anything, it’s that the only certainty is uncertainty, yet most businesses are relying on the same old supply chain playbook, designed for fair weather not choppy waters.

Disruption isn't new, many businesses today are learning that disruptions are evolving from costly to existential. In the first six months of this financial year, retail insolvencies were 31% higher than FY25 and 50% higher than FY24 according to ASICs data.

In this week’s Delivered, Alex Witzke, a supply chain consultant with 25 years of experience in industrial, fashion retail, healthcare, FMCG and more, explains why reactive supply chains are an existential risk, and what a more proactive approach looks like in practice.

TL;DR

• The pandemic put supply chains on the boardroom radar, but most businesses went straight back to the same playbook.
• Cost-first supply chains work in fair weather, but they’re the first to break when disruption strikes.
• Scenario planning isn't a nice-to-have; retailers should model scenarios like a carrier collapse, a fuel cost spike, and an unexpected demand surge.

The pandemic was supposed to fix this

No single event in recent memory caused more supply chain disruption than the pandemic, but it also succeeded in elevating supply chain conversation from warehouses, loading docks and port authorities to boardrooms.

Senior leaders who'd never once uttered the words ‘container shortage’ were suddenly asking hard questions about shipping lanes, carrier networks, freight capacity and supplier concentration.

But recognition isn't the same as change, Alex explains. Some lessons were learned, but for many the enduring mindset was: ‘It couldn’t happen again’.

“People are better at understanding cost basis and risk assessments," Alex says.

“Logistics and supply chains are definitely on the radar of board members and c-suite. But change and adaptation to that is relatively slow.”

The problem isn't awareness, Alex says, it's “execution”.

Too many businesses acknowledged the fragility, then breathed a big sigh of relief when the immediate danger passed and put scenario planning in the ‘nice to have' column.

So when the Suez Canal was blocked, tariffs landed on international shipments, or bowser prices ticked past $3 a litre, the scramble started all over again.

What reactive supply chains actually cost you

In 2018, KFC learned this lesson in the most public way possible.

After switching logistics providers from Bidvest to DHL, a failure in distribution planning brought the UK operation to a halt. DHL centralised deliveries through a single warehouse. When it couldn't cope with the volumes, there was no fallback.

No secondary provider, no contingency route, no scenario plan for what happens when a single link fails. Within days, with no chicken to sell, more than 600 of its 900 UK stores closed.

Industry estimates put the cost of the crisis at £1M (~AUD$1.9M) per day.

But KFC didn't treat it as a one-off. It brought Bidvest back into its network alongside DHL, to de-risk its supply chain against further issues.

The result isn't a perfect supply chain, immune to risk. But it’s a more adaptable, resilient supply chain built expecting disruption rather than hoping it won't happen.

Most businesses don't get a recovery that clean. Many don't get a recovery at all, especially those without KFC's brand loyalty or financial firepower to absorb the hit and rebuild.

In Australian retail, particularly in fashion, clothing and apparel, the same threats are very real: razor-thin margins, heavy reliance on a handful of overseas markets, no diversification, and logistics systems with no room to flex when conditions change.

“The cost pressure is very high and the sourcing variety is relatively low," Alex says of fashion and apparel retail. “When you have a cost problem, the instinct is to negotiate further down. It's all about rate cuts rather than asking, 'Could we do something differently?'"

The instinct to squeeze harder when margins tighten rather than building a plan for when things go wrong is what turns a disruption into a crisis. When every contract is negotiated to the floor, suppliers have no reason to prioritise you when capacity gets tight.

“If you cut costs, you get what you buy,” Alex says. “For some that works. But when it comes to unforeseen disruptions, your business is in handcuffs and won’t be able to move whilst others that pay a higher price will be serviced.

“Leave a dollar in the price," Alex says, “and your supply chain supplier becomes an interested partner in your business."

What proactive actually looks like

So what does a business do if it genuinely wants to shift from reactive to prepared?

Alex says it must start with a “stock take”; an honest assessment of where the business thinks it is versus where it actually is.

This initial exploration phase means meetings with senior management, mapping current sourcing arrangements, reviewing contracts, evaluating the mix of suppliers and service providers, and mapping various scenarios to determine their likelihood, their impact, and create a playbook should they happen,

“Evaluate suppliers, the customer itself, supply chain partners, processes, systems, people," he says. “Look at where you source from, what your business model is, whether you sell urgent critical products or commodities. And then build a plan.”

“The key here is visibility tools connected real-time to suppliers in the chain. These are managed through a so-called ‘control tower’, that looks at data, dashboards, graphics etc. Decisions are based on a traffic light system that signals where an issue occurs, or is likely to occur.

“Speed and accuracy of decision-making is a real focus and has derisked their business, whilst customers receive the quality they’re used to. Underpinning it all is appropriately-worded contracts that articulate a sustainable partnership approach.”

Three scenarios to plan tomorrow

As the old adage goes, a failure to plan means planning to fail.

Map the risks you can see, model what happens when they hit, and build a response before you need one.

Here are three scenarios that could befall any retailer.

• Scenario 1: A carrier collapses. If your primary carrier went dark tomorrow, do you have a secondary provider contracted and briefed? Or are you starting from scratch? By maintaining at least two active carriers for each major lane, with volume split, you have contingency if a problem arises.
• Scenario 2: Fuel surcharges spike 30%+ in a single quarter. When fuel costs jump, as they currently are, the margin pressure cascades through every delivery. Model how long you could safely absorb different surcharge levels and how increasing your prices might impact customer volumes. If you manage your own fleet, you should be using route and fleet optimisation software to optimise efficiency, reduce fuel consumption and improve cost-per-delivery.
• Scenario 3: Demand spikes overnight. A product going viral on TikTok or peak season being bigger than you planned is great, but can you handle it? Do you have enough stock in the market, or is it sitting in overseas warehouses? Do you have backup suppliers at short notice? Can your last mile scale capacity fast enough to meet the demand? Real-time inventory visibility helps understand where your stock is (and where it needs to be), pre-existing relationships with other suppliers gives optionality, and multi-carrier platforms give you the flexibility to shift volume based on capacity and demand.

The pattern across every disruption of the last five years is the same; the businesses that planned ahead recovered. The ones that didn't scrambled, and some didn't survive.

You can't predict the next crisis. But you can stop pretending it won't come, and start building a supply chain with the contingency, flexibility and partnerships to handle it when it does.