Grow. Promote. Protect. Forum 2026. Panel: Current State of Play – Supply Chain. Import. Export. Competitors. Risks. Opportunities.

Hosted by the Australian Furnishing Industry Stewardship Council, Australian Furniture Association and RMIT University, and running over February 24 and 25, Grow. Promote. Protect. Forum 2026 built on the momentum of recent Commonwealth and State-funded research projects that have identified key recommendations for industry growth.

This episode is from a day one panel session, including guests Tom Clark, CEO, Workspace Commercial Furniture; Boaz Shiponi, CEO, Nexus Point; Arnold Jorge, CEO, Export Council of Australia . 

The moderator is Marcus Downie, Partnerships and Government Relations, The Australian Furniture Association.

Episode guide 

0:02 – introduction to the session. 

0:52 – introduction to panellists. 

3:36 – Some thoughts on supply chains and their operation.  

7:42 – The opportunity that exists relating to overcapacity in shipping and an approaching of “rock-bottom prices”. 

9:08 – If you import raw materials, now is the time to pock in prices. 

10:38 – Why the Suez Canal matters. 

11:50 – The overall cost of freight to a business, a common hidden cost,.and why companies sometimes overpay duty when importing from FTA countries. 

13:30 – Tariff concessions and duty planning. 

14:24 – Most people do not explore the costs of their freight forwarder, to their detriment. 

16:40 – What exporters should consider regarding the US market at the moment. 

17:42 – The size of the US furniture market, as well as the current risks attached to selling into that market. Customs officers are taking a “very conservative approach” at the moment, and declaration errors are being treated harshly. 

20:30 – A question from the floor on exporting to the US as a raw materials supplier to the furniture industry and the biggest barrier in this. 

21:02 – The possible usefulness of a furniture product passport to Australian exporters to the US. 

23:10 – Why Workspace Commercial Furniture deliberately decided not to go to the US. 

24:14 – Other markets that hold potential for those considering exporting.  

25:18 – The upcoming EU FTA, and some of the considerations regarding things such as waste management obligations. Features the example of Bundaberg Ginger Beer sales in Germany. 

26:40 – The importance of collecting as much data as possible throughout your supply chain to remain internationally competitive.  

27:40 – The adoption of traceability technology in Vietnam. “Almost every small farmer in Vietnam actually uses blockchain.” 

29:20 – Auditing a supply chain and the usefulness of this. Why Workspace chose to own its supply chain and why this is critically important. 

32:25 – The advantage of Workspace owning its own fleet of delivery trucks. “At the end of the day, if it’s damaged, we did it.” 

34:20 – Launching a circular economy division at Workspace and the role in their freight network in this. 

36:58 – The tyranny of distance versus export opportunities. 

37:42 – Supply chain business development work that overseas countries are doing, specifically China. 

39:20 – The skills that are needed currently. Apprentices are the biggest challenge. 

40:47 – A question from the floor on sustainability credentials and upstream suppliers. 

Transcript

SPEAKER_04 0:00

So we're here to talk about the supply chain. If you had a look at the little entry section advertising it, it's about sort of supply chain importing, exporting, competitors, risks, and opportunities, and how the global market impacts on businesses and experience in supporting local furniture and furnishing supply chain sectors. And you know, what are the influence of tariffs and trade and tyrants? So, with the competitive local market, Australian manufacturers wanting to scale their business are often advised to chase exports for business growth, so to try to widen the net. It's never as easy as it sounds. And this era has thrown up some particular challenges around geopolitics and protectionism. So, how do these and other shocks affect furniture makers and those involved in their supply chains? You know, we're going to unpack a little bit of that with our panelists this morning. So I'd like to introduce them to you. First, Boaz Shaponi from a company called Nexus Point. Boaz is the founder and managing partner of Nexus Point, a registered tax agent and licensed custom brokerage, and is the organization's managing director. He's a highly regarded customs and international trade advisor with deep expertise in international supply chain strategy, customs compliance and trade regulation. Boas is a licensed custom broker, RD tax agent, and a graduate of the Australian Institute of Company Directors. He holds a Bachelor of Economics and Management and an MBA and acts as a non-executive director, contributing strategic oversight and governance expertise. Arnold in the centre there, Arnold York, Export Council of Australia. Arnold is a value-based leader, driving organizational transformation through innovative business models, strategic clarity and trusted partnerships, delivering unique value-added solutions and diverse revenue streams. He fosters individual development and flexibility to boost team performance. Arnold has orchestrated successful business turnarounds by enhancing operational efficiency, forming strategic partnerships, and elevating brand reputation. His initiatives have influenced government policies on inclusive and sustainable trade and contributed to the empowerment of women and First Nations entrepreneurs to engage in global trade. Passionate about applying psychology in business and negotiations. We need to talk about that, Arnold. That's going to be interesting. Arnold understands human behavior to drive better outcomes, as well as connecting the dots between global events and risks, providing insights that shape strategic decisions. With over 25 years of experience as a former diplomat, trade negotiator, and consultant, Arnold specializes in international business, entrepreneurship, and marketing. He holds an MBA and excels in lean startup and agile methodologies. And finally, Tom Clark, Workplace Commercial Furniture. Tom's the CEO of Workspace Commercial Furniture, Australia's largest diversified commercial furniture manufacturer, specializing in delivering project-based solutions across office education, hospitality, health, aged care, accommodation and defence sectors, with extensive expertise in sustainable manufacturing and design. Tom represents a company with a proud Australian heritage focused on providing innovative, durable, and functional commercial furniture solutions. His involvement with the ASGFTAC committee reflects his commitment to fostering collaboration and advancing industry standards in sustainable and certified furniture design. So thanks very much, boys, for joining us. I thought I'd give a little bit of my own insight into supply chain and how I think about it, just to get people thinking. Supply chain could be considered considered as all the interconnecting entities from your customer's customer all the way through your own operations to your supplier's supplier. So you need to think of that whole diaspora when you consider supply chain activity. So it includes supply, inbound logistics, manufacturing, distribution, and finally use. So relevant concepts to me for supply chain strategies include, first of all, understanding the service level commitment that you make to your customer as a business. So lead time, quality expectations, ability of the product for fit-for-purpose performance, these things you need to really define exactly what it is you're offering your customer so that your supply chain and extended supply chain partners can collectively produce to that service level agreement. A lot of people forget that, but it's a very important aspect of supply chain. And then studying and understanding the network of entities in your extended supply chain. Actually, take a map where the product comes from in your supply chain, how you consume it and how it extends downstream. It's important to map it so that you understand it and then consider where the complexity lies in the supply chain. What are the complex bits that provide the most risk to your supply chains and how do you mitigate those risks? You know, often it can be in the manufacturing process itself. If it's a complex product with a lot of intersecting parts and the complexity is there, then focus your effort in that area. If it's distribution, as it often is with furniture manufacture, how does that distribution network work? How complex is it, and how can you control it? And again, the same with your inbound supply chain. Have you got a very complex inbound supply chain? Where are the risks associated with it? And how do you introduce strategies to deal with them? So if you do that, you then you then need to make some decisions on where to focus your effort. It's usually associated with reducing risk or volatility in your supply chain and to improve your overall resilience. You know, things these sort of strategies can include two supplier strategies. You may have a high-risk, high turnover single source supplier that you need to work on over time to help mitigate that risk in case that supplier gets into strife. You can form collaborative arrangements with certain supply chain entities and more formal agreements with the ones that count so that you can introduce KPIs and start to introduce measurement activities to try and reduce your risk. You can do simple things like halve your delivery volumes and W delivery frequency to reduce inventory and stock on hand, or you can improve the information flow. So often these days, the ability to provide a lot of information to all of the partners in your supply chain is a lot easier than it might have been 10 or 15 years ago. And often problems in the supply chain are because people across that supply chain don't share information effectively, either because of competitive risk or just laziness, and it can get people into trouble. With those sort of things in mind, I'd like to open up a few questions for our panelists today so we can unpack that. Boaz, we might start with you. So, you know, how are current global supply chain dynamics, including tariffs, trade disruptions, and logistics, how are they influencing local furniture supply chains and where do you see the biggest opportunities for Australian businesses?

SPEAKER_02 7:22

Hi, everyone. Okay, so tariff is an interesting subject. It's always in the news, like Donald Trump, never leave the news. So you heard about you know the overturn of the decision of the tariffs. Now we introduce new tariffs. So, first of all, just to make it clear, Australia never retaliates with tariff war. So we're not going to impose tariffs on the US or any other country. During COVID, China imposed new tariffs on Australia. We never retaliate, and we're not going to do anything against the US. And we do have a free trade agreement with the US. Now, the opportunity there, and you know, production and sourcing is not my speciality, but you obviously there is overcapacity now in China because of what's happened with the US, and you'll be able to probably source better. But if we're looking at the shipping line industry, obviously there is quite significant overcapacity because the US is importing less and less at the moment. The shipping line, which acting like a cartel, almost a legal cartel, try to hold the prices for the last 12 months. But we're actually looking at the point that they can't hold it anymore. They try to hold it also by reducing the supply, canceling voyages, blank sailing, and you probably had the experience of container delay in two, three, four weeks because blank sailing of different ports. But in the end of January, they reduced the PSS, the Pix season surcharge, and now we're heading to rock bottom prices. So the opportunity really for people that import raw material or products from overseas is now is the time to lock in the prices for the next 12 months. And it's it's a great opportunity. As you know, every July, August, September, October prices go up. If you're able to lock it now and the prices will get very, very competitive, you will achieve a great benefit. If you're not going to do it and your competitors will do it, you will be disadvantaged. So that's where the opportunity at the moment is an outcome of the global trade war, really, between the US and China.

SPEAKER_04 9:41

Yeah, and Bo as I understand you do that work for you know companies in our network. So uh you shouldn't miss the opportunity to explain that you do provide that service and that now's the right time to get on board.

SPEAKER_02 9:52

So, yeah, that's something we do, and we we manage freight tenders for importers, and that's the time of the year that we do it. So if you're interested, talk to us now. And it's not only about prices, and unfortunately for you guys, you know, an average container of furniture will be around 40 footer will be around $100,000. It's between 60 to 150, depends if it's flat pack or quality and so on. If you are importing cosmetics, it will be one and a half million dollars. Now I'm not telling you all move to cosmetics, I'm just saying price sensitivity is very important to your industry. And I think that's where the opportunity is. It's not straight enders, it's not only about cost. Cost is important, it's also about service. Part of the global issue we're experiencing is the Suez Canal closure. And you say, What do I care? I bring product from Vietnam or China, and what do I care about the Suez Canal? And the reason is when vessels will need to go through a longer voyage, they need to go through transshipment in Singapore. And I don't know if you experienced last year a lot of containers got stuck in Singapore because Singapore got overcapacity. So when you run a freight tender, you actually put a lot of SLA in place, you look at the operational side, why we paying the marriage, what's the SLA of dropping containers? You know, we look at the different fees, the holistic costs of deliveries, and make sure that you pay the right amount and not inflated amount. So that's what the opportunities are.

SPEAKER_04 11:33

Yeah, I know as a manufacturer, I would concentrate very hard on what the cost was for the actual freight movement, and then just assume that all the other on costs were something that you couldn't avoid. So I think you've taught me that that there's a lot more to it than that.

SPEAKER_02 11:48

Yeah, because freight, if you look at the invoice, freight is about a third of the cost. And you ask yourself, what are the other two-thirds? And I'll encourage you to go back to the office tomorrow or the day after tomorrow and and ask to see an invoice, and you'll see a fee call, for example, CMR fee or 15 to 50 dollars. Okay, it means nothing, it actually doesn't exist, and it's on every invoice we're looking at, and you know, so that's part of what we're clarifying through the process.

SPEAKER_04 12:18

Thanks, Matt. What are the key risks and opportunities around customs duty that furniture business should be actively managing?

SPEAKER_02 12:25

So you either bring uh import goods from free trade agreement country and you say, okay, we're all good, or non-free trade agreement country. If you're bringing from free trade agreement country and you think that all good, sometimes it's not because you're under the perception that you don't pay duty, but what we do, we run a four year historical report and we found out that some companies do pay duty and why it's happened. Sometimes the paperwork is incorrect or doesn't exist, you don't have the certificate of origin. The customs broker missed that. Many, many reasons. So we're able to go and do a cleanup for four years and see if you overpay duty, and that's a risk because you're relying on some kind of a cost structure that price the goods at 0% duty, and you're actually paying 5%. If you're importing from non-free trade agreement countries, goods might be misclassified and you might fall under a tariff that is duty free or tariff concession. There are about 18,000 tariff concessions. So one of those 18,000 got missed, and you don't get a duty-free applied to for your goods. Not only that, if if your goods are dutable, you might be able to apply for tariff concession moving forward. And this is part of duty planning. And if the product is not made in Australia and you bring, let's say, a component or raw material that you need for the manufacturing of goods here and it's not available in Australia, you might be able to apply for tariff concession and do a bit more planning.

SPEAKER_04 14:05

Thank you. What are the risks and opportunities in managing international freight during volatile seasons? And how can businesses turn cost pressure into advantage?

SPEAKER_02 14:15

Yeah, so it's just it of what I said before, we all know prices will go up in July, August, and sometime you'll experience space. Things like that. So setting up an agreement now, and what's amazed me is when I contact the clients for the first time and say and tell them about freight tender, and they say we got a very good relationship with our freight folder, and we check the freight price. So the freight price is third of the invoice, as I said, there is another two-thirds, and the relationship is great. It's it's really great. But do you have an agreement? Now, people go and shop around for internet connection that costs, I don't know, super duper $500 a month, and they sign a contract. And for the rubbish removal, they sign a contract, a 40-copier machine, two, three hundred dollars. But with a freight folder that moves between a few hundred thousand dollars to one million to two to five million dollars, you actually don't have an agreement, and you don't know what you're paying for. Most of you have no idea, I can tell you that. And no, you might sign an agreement that says that it's actually the terms and condition of the freight folder that says we are not a common carrier, means we don't really care. But you don't have a commercial price list that says that's what you're paying for, that and that's for that. You might have it for the domestic freight, a lot of people do, but for international freight, is that we got this great relationship, but that's fine. It's something that from corporate governance and from you know peace of mind, you actually need to know what you're paying for. And that's what we encourage people to do, and that's uh where the opportunity is.

SPEAKER_04 16:06

Yeah, I know from personal experience you just expect that it's gonna be harder to get goods in August and September when Europe go on holidays. You got the Chinese New Year period where you you know you're not quite sure what's going to happen, and your expectation is the cost is gonna go up during that. I've lived with that, with those questions for a very long time without making formal agreements with uh freight forwarders or supply chain. So it's really good point. Thank you very much. So, Arnold, we might move to you. Given the uncertainty in the United States, what practical steps should Australian furniture exporters take to enter or expand in the US market?

SPEAKER_01 16:43

Before I answer that question, can I ask anyone here actually export to the US? One, two. I'm not quite sure what your experience is at the moment with exporting in the US. So I just mentioned that been changes again in terms of the tariff rules. But uh I think again, depending on which actually applies to furniture, I think section 232, which applies to steel and aluminium and derivatives, actually applies to furniture. So in fact, you may actually still be paying the 50% that might actually apply under that particular rule. So the changes that's been imposed at the moment by the Supreme Court in the United States would not apply to that. So you may still have to be paying that. So look, I'm not an expert either in terms of the tax uh in the duties elements of it, but I guess my key advice would certainly be to seek expert legal advice, especially if you have partners within the United States, then I think you should definitely do that. The United States, I understand the market for the furniture business is about $180 billion. So despite the issues around what's going on in the United States, there in fact we feel that there are significant risks in relation to the economy. If you are actually have operations within the United States, there are issues now in terms of accessing labor simply because there seems to be a lot of deportations uh actually happening in the United States. So despite the negatives and some of the uncertainty there, I think you just need to make sure that you you manage manage uh those risks. The other thing, too, is uh separate to the tariffs, we understand that a lot of the authorities, uh customs board protection, they're taking a very conservative approach. So if you make an error in your declaration, uh people, you could pay a significant penalty. In fact, the Department of Commerce, uh, under particular law, it just escaped my mind at the moment, are actually quite prepared to take exporters or importers uh in the United States to take them to court and on the basis that you are actually seeking to undermine US industry. So we're aware of this because we actually have a network globally of what we call affiliates, and they advise us in terms of what is going on in countries, uh markets like the United States. So there's a lot of risk there at the moment, certainly outside of the furniture industry, uh say in fast-moving consumer items, a lot of the smaller exporters have actually told us that they're actually not decided to take forward in terms of going to the United States, although the other much more advanced manufacturing have decided that they're going to move into the United States in terms of their operations. So I'm not quite sure where the uh furniture industry is perspective. However, I think it it's it's really quite important to be aware of what's going on. Do the research. Again, if you are setting up operations there, there are different tax rules depending on the states. California is a lot stricter. In the context of chemicals and then recycling and and so forth, and very different, say, to Texas. Again, again, domestic tax is different as well across the different states.

SPEAKER_04 19:52

So yeah, I think that's interesting because regardless of whether local manufacturers fighting the headwinds locally, they're always considering how to diversify. And often they consider well, can we establish an export program rather? And that always includes do we manufacture here and try and export, or are we better to establish a relationship with an existing provider overseas, or do we want to go full Monty and establish a facility to manufacture furniture overseas? So I think it it's always something swirling around in manufacturers' minds, how to how to uh address those issues. So thank you for your insights on that basis. Yeah, go for it, Kevin.

SPEAKER_05 20:34

So we've we've considered export to the US as a raw material supplier into the furniture industry. One of the biggest that we've observed is the litigative nature of the US market, particularly from a public liability perspective. So, what sort of considerations should we be taking in in that particular space?

SPEAKER_01 20:52

In fact, I missed that point about how litigious the US is, at least in the private sector level. You can't really avoid it in one sense. You you just have to manage the that risk. In one sense, this initiative that um I think the industry is coming up with in terms of the passport. I'm not quite sure what coverage that you have in terms of the data you're collecting, but it's really quite important to be as agile as possible in terms of the kind of information and data that might actually help protect you in terms of any issues that might come up. So um the the reality is that um you literally just have to make sure that before you make any claims about your particular product, you have to make sure that you you it's well backed by the data and to make sure that that means you're you're not making any kind of false claims that others might might come back to you. Be aware of uh of the rules that exist. And in that context, again, to try to think ahead. So if you are able to again, we are we are a big advocate of traceability. Certainly the passport one, two product passport, uh, that might help simply because um sorry, uh this is just slightly different to. The furniture business, but in the defense sector, which we we kind of work with as well. The US Department of Defense actually asked an Australian exporter to the United States to unpack every component in the unit and actually ask them where did it come from, what is its function, and what is it made of. And they were not able to actually demonstrate exactly for a couple of the components what it is and what it's supposed to do. They were blacklisted. So the question here is how well prepared are you before you actually enter the market? And uh just to make sure that uh if you do that, hopefully I answered that question.

SPEAKER_05 22:34

I presume you're probably thinking more about I mean uh because what you're describing there is the claim space and also the and the custom declaration complex as well, but that's where everything's pulled apart. Another major concern for us is the public liability insurance side and how the US typically approaches those kind of issues. It's a big thing for an Australian manufacturer, smaller manufacturer in such a big market to take on that type of risk. Typically, our insurers won't cover the US market, so we we've got to look at how do we how do we address insurance specifically in those departments.

SPEAKER_03 23:11

Probably Kevin, I can add something to that too, just the real world example. So some of you may know workspace started its life as TH Brown, so 111 years this year, or sorry, 115 years this year, started in 1911. We still make the TH Brown mid-century stuff. We've just deliberately decided not to go into the US, even though TH Brown retail here in Australia wants to, because of all of the things you've said: litigation, supply chain, and honestly, from a warranty viewpoint, if you haven't got a great network in America, it is such a big market. You know, you've got to get the basics right. We're still looking at it, but you've just got to have your end-to-end supply chain in the world's biggest market, right, from the minute it leaves here to the minute it gets to your customer and back again. If you haven't got that, it'll become very challenging, especially for small to medium enterprise.

SPEAKER_04 24:00

Thank you, Tom. Arnold, I wouldn't mind talking about some other markets other than the US. Are there emerging markets that Australian furniture exporters should consider? And how might they position themselves to take advantage of other market openings?

SPEAKER_01 24:13

Great question. Thank you for asking that one. So free trade agreements with. So a UAE, we just recently signed uh an FTA with them. And as you know, if you see almost every anything in the media, there's a lot of construction going on, uh, not just in the UAE but in Saudi Arabia. In fact, it is booming in the context of new residential address, commercial pidouts. So we we'd uh encourage exporters generally to look at new markets because with an FTA you have those preferential rates in terms of tariff duty, so it's likely to be zero to send to the UAE. But again, it's important to identify what's the best way to enter those markets, maybe set up partnerships. But uh again, uh so many uh Westerners are actually moving there. I just heard that Brett Lee, Australian cricketer, I just moved to Dubai, relocated to Dubai.

SPEAKER_04 25:07

Probably uh Bollywood to Dubai.

SPEAKER_01 25:10

I was gonna say, probably not earning enough from India. Yeah, the other one is that uh fingers crossed, we'll get it signed by uh by this year or the end of this year, which is the FTA with the European Union. Now, the European Union though is as you know, their standards are are really at the nth level. So uh in that context, if you're able to meet European regulations, especially in relation to the environment, they they have the Green Deal and as part of the Green Deal, they actually have various legislations in relation to chemicals, for example, and disposal products. Just to very quick uh of interest, and everyone here knows Bandenberg, the drink, the ginger beer, they export to Germany for every time they sell that it's in glass, they actually have to get that glass back from whoever is consumes it. So they have to actually set up a process in terms of that uh supply chain to make sure. So imagine for uh small uh price item that you will have to make sure that there's a circular element to that. So you're not the only ones uh going through the challenge there.

SPEAKER_04 26:15

Yeah, we were. I mean, you've talked a little bit a bit about the supply chain strategies associated with staying competitive and resilience, you know, as global disruptions and uncertainty persist. Anything else you can add in terms of like a supply chain strategy?

SPEAKER_01 26:31

Yes, in fact, I think uh uh the answer uh might have covered it already. One is that certainly for resilience, but as well as for competitiveness, uh, and again, I might come back to this point about traceability, is making sure that you you try to collect as much data as you can already. I know a lot of businesses complain about governments requiring all of this data and so forth, but the reality is now is that in order for us to stay competitive internationally, you will have to start taking the taking more proactive steps in collecting that data simply because things change, the rules change. So if you actually already collect that data, when when things change, then you'd be a lot more agile. And the other thing is that if you're able to claim that Australian products are a lot more environmentally friendly, then that means you actually have evidence to back it up. One final point is that continue to look at alternative suppliers as well. So we know I think uh you might have mentioned that somebody mentioned about the China having some excess capacity, but there are other countries like Vietnam, they've told us actually that while there was an initial shift from China to Vietnam, a lot of the manufacturing have then moved back even closer to certain markets, like back the US or Canada or Mexico. So they actually have quite a lot of capability to deliver and they're quite keen. And I think in some sense, they're probably a lot more conscious of environmental issues, and they're certainly far more advanced as well in terms of the traceability. We went to Vietnam to talk about traceability, thinking that we were gonna show them how great we are. As it turns out, they're far more advanced. For example, almost every small farmer in Vietnam actually used blockchain simply because the government had told them they had to do it. And they're very conscious of environmental issues as well. So it might be a useful one to think of.

SPEAKER_04 28:22

Yeah, I mean it's very challenging. If you're a manufacturer, you can either centralize your manufacturing model, especially if the manufacturing is complex, and then work out how to distribute. But if you've got a simple manufacturing process, you might consider decentralizing your manufacturing network close to the point of consumption, and then try to navigate the different trade tariff or geopolitical situations in those other areas, or maintain two or three different ones which you can modulate your manufacturing in each one depending on the local conditions. So it is a very challenging, challenging aspect. So, Tom, we might move to you as a good Australian manufacturer that we know and love, just listening to these to the comments we've had so far. What do you see as supply chain risks in your business and what approaches do you take to overcome them?

SPEAKER_03 29:09

Yeah, so I mean, obviously, you know, and some fantastic insight. I guess to give everyone in the room a bit of an overview of what we chose to do 12 years ago. When I came into the business, it was very much do we go down a traditional model of becoming an importer or we double down on manufacturing where we get components from here in Australia, all over the world, blah, blah, blah. We decided to go down the second route. And to your point, we order our supply chain, we just actually finished our audit on freight. So, yes, very important to do. And even if it highlights that you're getting a good deal, right? That's the point. You should be checking. We made a conscious decision to be all about Australian manufacturing, and what it did in by complete coincidence, I guess, was meant that we ended up with a value proposition where meant we need to own our own supply chain to the fact that you know we were getting componentry from all over the world. And, you know, as an example, timber sourcing from Asian countries, in particular China, is almost impossible. So we reversed engineer it. We went and we've got our own factory in China, six people, it's our timber, our five axis C and C, which feeds our 110 people here in Adelaide in production. So owning your supply chain is critically important. It's not about pushing back and saying, no, we're not going to import anything because we know that not everything's made here. But owning that supply chain means that whether I get timber from, you know, someone in Tasmania or I get timber from our own factory in China, it's the same quality, it's the same standard. I can safely put a sticker on it that says that we know where it came from. So, number one, owning the supply chain is critical. We're tiny compared to big retail importers. So having a really good partnership with your freight provider is absolutely critical because when you do need their help, you want them to come and help you. And again, making sure that you can manage that inventory. Again, the traditional model in lots of FMCG, electronics, and consumables is get it in, sell it to a retailer, sell through, have a forecast, and then try and replenish. We hold way more stock of components than we should. My chairman and my board are at me all the time about the fact that it's completely the wrong business model. But at the end of the day, I can produce 500 workstations in an afternoon and I can get $500,000 fit out done in a week. So the compromise in your supply chain is hurts your balance sheet but helps your customer.

SPEAKER_04 31:27

Yeah, I think um holding inventory is a perfectly good strategy, especially in certain conditions like when COVID hits. Certainly thought the only way to deal with this is to hold a lot more inventory, otherwise the service level drops off very quickly.

SPEAKER_03 31:41

Next board meeting is the 13th of March if you're gonna come and advocate for me.

SPEAKER_04 31:46

But I do like milk runs with local suppliers, and you know, I'm an advocate for trying to double the frequency of deliveries and halving your stockholding, and then making good analysis of your existing stock, and certainly discontinuing product is a very, very important part. So you have to look at your whole product range. So we could spend a bit of time talking about that, but we won't. So you've got a really strong advantage with your distribution network. It's a look, uh struggling with third-party logistics companies is is a real challenge for furniture manufacturers. You know, you've got your own fleet, which I see is a huge advantage. What do you see as the strategic advantages that that provides?

SPEAKER_03 32:26

Yeah, I mean, running our own fleet of semis in our own local delivery trucks around the country is our strategic advantage. You know, at the end of the day, we're end-to-end. We offer a 10-year warranty on most things because at the end of the day, if it's damaged, we did it. So we can't walk away from it. Third party freight, there's some wonderful providers. It doesn't mean that we don't use third parties on occasion, but if we can put it on our semis, it means that we can go from factory to the door or factory to one of our cross-dock distribution centres in each state. And yes, it's probably the number one question I get asked in every business forum is why the hell do you want to have a freight company embedded into a manufacturing business? Strategic advantage. And we do a lot in defense. If we win a job and we need to arrive at four o'clock in the morning at Pine Gap, we can get there at four o'clock in the morning at Pine Gap and service our client. If we need to get to downtown Melbourne at four in the morning and we've got a two-hour window, then we can do that. So the flexibility it offers us is market leading, you know, as you guys know, and it's no secret for some in the room that, you know, we're just about to launch Workspace Circular Solutions, our takeback. And one of the big things is we've got the fleet. You know, our trucks are running back empty to Adelaide. The ability to defit buildings, take it back and recycle it cheaper than sending it to recycling here or Brisbane or Sydney seems like a logical fit.

SPEAKER_04 33:44

Yeah, I guess it's a challenge if people want to actually introduce their own fleet. There's a hell of a lot of capital costs.

SPEAKER_03 33:50

Uh million bucks for a semi.

SPEAKER_04 33:52

I mean just two trailers and $498,000. Yeah, so was it a conscious decision from a long way back?

SPEAKER_03 33:59

For those who know the story, when TH Brown bought Carton Commercial Furniture here in Melbourne, which was producing in Adelaide, we also bought Hughes removals. So it was really a strategic play for us to have our own end-to-end freight. We still blanket wrap everything. You know, I look at other companies and think, why the hell are we doing that? Maybe should we palletising cardboard, whatever, but it's also part of our service. We're not a transactional business, we're not dealing with 5,000 transactional customers, we're dealing with 687 repeat businesses. So yeah, it was a conscious choice. It's ended up being something which from a service line level is exceptional for us. It has a huge cost impost on the business, but you know, it's probably one of the points that makes us different. So we're going to keep it.

SPEAKER_04 34:44

Also, harping on the fact that you're introducing the circular solutions, obviously being able to quote for business on the basis that you will take away furniture as well as deliver new and then process that furniture that comes away in the clever way that you're introducing. Is that gaining any traction yet from a commercial perspective?

SPEAKER_03 35:07

Yeah, I've held back legally on, well, not legally, probably more from a marketing viewpoint on releasing it nationally. I just spent three weeks doing a roadshow of all our capital cities and branches talking to all of the builders, and I'm absolutely terrified about how many of them want this service. We won't be able to keep up. So, to the point where I've literally changed our strategic plan. So, you know, I said to Patricia, we might need to hold off on the whole AFA thing. And the property council was like, let's announce it at Parliament House. I'm like, we wouldn't have capacity to do it. There'll be hundreds of thousands of cubic tons of stuff that will come back. We like, we just can't even handle that. So we're going to go with a soft launch to market, existing clientele through our sales channels, primarily builders, obviously architects and designers and our end user clients. We'll try and build up so that we can get some more capacity in the system. We've asked for a government grant for 100 grand to try and build a specifically developed recycling center. Imagine, like a giant bottle and can recycle factoring comes off our trucks, goes on an auger, overhead lifters get sore segregated, you know, cardboard, metal, fabric, blah, blah, blah. So it's going to happen pretty quick. Putting the brakes on it is something that I hate. But if we don't get it right, it's not going to help our business. But more importantly, it's not going to help the overall industry. So it is exciting. There's absolutely no doubt about it. And that'll be the big thing for us probably in the next fortnight.

SPEAKER_04 36:31

Yeah, well, that sounds like a good problem to have to my ears. But uh, we've got a lot of very intelligent people coming up in the next session talking about circular economy, many assertive women in the room that will help you. So stick around and we might see what connections can be made. Just lastly, on export, you touched on it before, but what considerations do you find relevant? You talked about the US, but what other aspects of exporting do you consider?

SPEAKER_03 36:58

Yeah, okay. Um, so I'm probably going to bring this back to competitors and risk as well. Tyranny of distance is our problem. We are a million miles away from Europe and America. And fundamentally, that's why sometimes it's hard for us to export. Generally, it's easier for importers in big countries with big populations to penetrate our market. But fundamentally, also the negative for them is that there's only 26, 27 million of us. So for me, I come back to there's probably a situation around competitors from an export viewpoint. Our biggest challenge is really not for profit sector in this country across all building products, not just furniture. And that is a challenge that we need to face up to really, really quickly because it is a huge problem. The other thing I think is not so much the supply chain, it's the supply chain business development that overseas governments are doing. So most of you hopefully are aware that post-COVID, the Chinese government purged hundreds of billions of dollars into their manufacturing businesses to get around the world. And I've never been inundated with so many Chinese manufacturers I've never heard from. You know, they were rolling in on my door, just oh, I'm in the Melbourne showroom. I'm thinking, mate, I'm based in Adelaide, I'll be there next week. It was phenomenal. And now that we've done a bit more research on it, understanding that that's their government knowing that their economy was in the toilet, trying to get links out there is something that no trade agreement is going to deal with. Our government can't really stop it. So at an industry level, we need to be aware of it and understand it because all that happens is confusion, right? You know, we end up with a dilution of what is a wholesale product versus a retail product. Where do you get it from? Suddenly the channels are diluted, there's 20 people bringing in the same chair or table. Anyone can specify it. It means that they go into a government panel, it can be purchased. As we said in the end of the session this morning, the reality is they don't have the bandwidth to monitor all of it. So again, that's the supply chain problem I see is not so much the products, because that's established, right? There's experts that can get your product in and out. It's actually the human capital of the supply chain that's going to push more and more onto our market.

SPEAKER_04 39:06

Yeah, well, we could keep going on this for quite a while, but we might throw it open to the floor questions. Tim?

SPEAKER_05 39:12

Thanks. So where do you see the workforce skills needs in this supply chain?

SPEAKER_03 39:18

Do you want me to take that one first? Obviously, like we've got 155 staff. There's a hundred in production and logistics roughly. Apprentices are the biggest challenge that we have. It was mentioned this morning, I think, by Lisa that or someone, David, maybe that university's been it for you know the last 10 years, blah, blah, blah. The rise of new trade centers and state governments, getting people into trades and working apprenticeships is really, really good. There is absolutely no doubt about that. We found it a little bit easier for the first time in probably eight years to get apprentices this year. You know, the trade needs for us being such a diversified business is we need apprentices across all woodworking, furnishing upholstery trades. It is ridiculous that I have to fly upholsterers to Queensland to do training from South Australia when I've just fitted out all of the TAFEs for the state government. And they know it's ridiculous. Melanowskis knows it's silly, but apprenticeships is key for us. We are a cross between advanced manufacturing and very old school technology. So we need people that can work with their hands. And obviously, then AI. So AI in terms of the front end of our business, in terms of quoting and planning and those sorts of things, is going to be key because that will never take away, as I see it, the need for our sales team to have relationships. People do business with people they know and trust. So for us, it's actually multiple um levels that we need.

SPEAKER_04 40:42

Uh Esther, I have a question. Over here, Eddie.

SPEAKER_00 40:47

I was interested in any commentary you have about when that particularly the upstream supply chain is engaged in terms of kind of frequency and method, because in the work that we do, it seems very patchy, you know, it might be price-driven, but then where do the sustainability kind of credentials come through? So is there a routine, a data maturity and systems, or is it very much a kind of choose your own adventure?

SPEAKER_02 41:12

Sorry, can you refine the question? I'm not clear.

SPEAKER_00 41:15

When engaging your upstream supply, um, obviously you're interested in price. I come from a sustainability and credentials point of view. You referenced an audit. Um, I'm interested in what system um what scope and how frequently is it kind of intermittent or planned, I guess.

SPEAKER_02 41:35

So just to clarify, I'm not interested in price only. Price is one of the components. I'm more interested to have a system in place that you can verify price is one of the components, but also have service level agreement and have a clear understanding of the processes, how they work, and so on. From a sustainability point of view, and every tender we specify, we talk to the clients and see what the requirement of the clients. And some of our clients, because they supply up the chain to the major retailers, they need to provide information about emissions. So part of what we put in the tender document that the freight forder have to be able to provide that data to the client for every container, every movement. And there are already portals in place for a lot of freightfolders that capture this data. It's almost becoming a standard at the moment. And it's it's a common question that we ask, especially by wholesalers that supply, you know, the big retailers or other manufacturers up the line that have to capture all this data.

SPEAKER_04 42:47

Yeah, I would say from a manufacturer's point of view, you have to have your service level agreement, includes a strategy on sustainability, carbon footprint, and the like. You have to acknowledge that strategy, call it out, and then you have to think of the ways to flush that strategy down your internal departments. So you might consider it in your supplier selection procedures, your KPIs that you evaluate your suppliers against, and the service level agreements that you have. So it needs to be a conscious decision, followed up by concrete actions within the company, and then an audit process beyond that. We might wrap it up there because Patricia's giving me uh the wind up signal. Firstly, thank you again to my panelists, and we look forward to the next session on sustainability and going round in circles. But thanks again very much for your input this afternoon.