In preparing to host a workshop on logistics technology on behalf of the Ontario-Quebec Contin-ental Gateway recently, I spent some time thinking of what we have come to expect from our transport-ation system.
Canadian cities and resources are so geographically dispersed and we are so dependent on trade that we demand a great deal from transportation and logistics practices in this country. In fact, many of the advances in supply chain management over the past two decades have a lot to do with improvements in how we manage transportation.
Consider Just in Time delivery of freight. From 1992 to 2005, manufacturers were able to reduce inventories as a share of shipments by 15% as a result of employing a JIT strategy. Our transportation system has more kilometres of roads per person than almost any other nation. Investment in new distribution facilities in Canada increased by more than 60% from 2001-2007. The amount of freight carried by for-hire carriers from 1990 to 2003 was up 75%. And yet our transportation infrastructure was able to handle it.
Canada ranked 14th on the World Bank’s Logistics Productivity Index of 155 nations, with a total score of 3.87 out of 5. It’s rated ahead of the US and other countries such as France and Australia.
Our transportation and logistics practices have served our country well.
Yet, we cannot rest on our laurels. Trade and commerce flow like a river. And just like a river, the flow of trade and commerce finds its way around any obstacle.
Unfortunately, there are several issues that have grown into obstacles in a variety of fronts over the past 20 years of rapid growth. They may have been muted somewhat by the recession, but they will become obstacles once again when the economy kicks into gear. And we must deal with them.
Compared to the US, total supply chain management and logistics costs are 12% higher for Canadian manufacturers, 18% higher for Canadian wholesalers and 30% higher for Canadian retailers. We suffer distinct agility gaps in all sectors when compared to the US.
It’s estimated that urban traffic congestion for Canada’s nine largest urban areas leads to approximately one half billion litres of fuel being wasted annually. This amounts to 1.4 megatonnes of needless GHG emissions every year.
Our intermodal system still doesn’t operate as a system, with segments of it remaining trapped in a silo mentality that is cumbersome and costly for shippers and carriers alike.
Eight in 10 large companies cite lack of critical supply chain visibility as a top concern. Yet, more than half of Canadian firms have no supply chain management solution in place and no short-term plans to do so.
Personally, I believe that we got to where we are, in large part, by working harder. But the next steps we have to take can only be managed by working smarter. And that means investing in the right technologies at the right time and with the right processes and people.
Only by leveraging technology can we meet the challenge to reduce costs while simultaneously improving customer service and more rapidly delivering product to market.
The supply chain is a puzzle with many pieces. And it is only by leveraging technology that we can hope to be clearly informed about performance metrics and the underlying factors which shape them.
Only through the wise use of technology can we hope to impose greater discipline over total transportation spend by breaking down the silos; provide a cost-effective and intelligent approach to dealing with gridlock and maximizing energy; deal with the up to $60B cost of cargo theft in North America; integrate inbound and outbound activities to eliminate empty miles; and address many other pressing issues.
I realize, of course, this is easier to say than it is to do. But as I mentioned while addressing the recent Logistics Technology Workshop, I hope we come to the realization that, despite the challenges that lie ahead, when we work together -shippers, carriers, intermediaries, technology providers, academics and government -we can do practically anything. And we can take Canada from 14th place on that Logistics Productivity Index towards the Number One spot.
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