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IRELAND SPECIAL Trade Evolution of the Irish Supply Chain – Irelands Engagement? Notwithstanding the excellent lineage of industry trade and support bodies, albeit superintended by-in-large, with Supply Chain practitioners from the state and semi state companies. Ireland is often described as a small highly fragmented trading nation. Notwithstanding the excellent lineage of industry trade and support bodies, albeit superintended by-in-large, with Supply Chain practitioners from the state and semi state Companies. The Irish Supply Chain market in the main, remains locked in a uncoordinated sector of suppliers competing for diminishing volume; in loads, consignments, shipments, cargo, warehousing, customs clearance etc. The exception to this is the MNC’s specifically, the manufactures who excel under their own six sigma programmes. The government over the past 10-15 years has 18 Link January 2011 not helped its own significant trade sector and by default itself, with an absence of a National Supply Chain Policy. Ireland is an island and wholly dependent on its import and exports. Ironically Irish Exports are currently equal to or better than the Euro average, which highlights two key points: (1) Ireland’s private sector manufacturing and exporting services, even against the current economic back drop is doing very well (2) the need to understand how an Integrated Supply Chain can act as a catalyst for effectiveness and efficiency at a time when it is most needed for the public purse. Fig 1. 1975 – 2010 Key Supply Chain Logistics Evolution - Note: Time line is best estimate only Nigel Devenish Continuity & Change has witnessed continued improved SCM value-added solutions
Fig 2 The predominant command-andcontrol structure of regulatory policy can be, is and continues to be, restrictive and inefficient in developing a strong Irish Supply Chain position. Integrated Supply Chain management solutions, for example through the collaboration between government agencies and regulated entities has not been pursued, with continued reluctance to accept and acknowledge private sector solution design models, these programs have not gained widespread public body acceptance. The cognitive and institutional barriers to this acceptance continue to burden the Irish taxpayer. These barriers act out of force of habit, creating a resistance to change and a rejection of new forms of working for example, ‘smarter not harder’. The policy change requires a shift in how individuals think and how institutions guide that thinking. Apply this to the Irish Health System, and through an integrated supply chain the savings to the tax payer would be measured in multi millions whilst simultaneously improving service levels. But how far advanced are the Irish Logistic and Supply Chain operations /operators compared to their European / Global Rivals? (Where are Ireland’s core areas of activities in the SCM Execution of today?) Transport With weighted preponderance to owner drivers, in-cab technology is not universal; the high capital cost for implementation and poor ROI put’s off many. This is further exacerbated when small hauliers only have the security of one main contract and aggravated further by limited commercial supply chain experience by those operators. The ability to coordinate loads and volume to ease the empty running through collaboration / partnership is not in evidence. This is exacerbated by the refusal to adopt post codes throughout ROI. Over 200 Million people throughout Europe have them, but the authorities in ROI have consistently blocked and or delayed entry of post codes. There is evidence this may occur in 2011 but 30 plus years after the rest of Europe! The absence of this simple universal accepted practise, further illustrate how the Irish Government even the Green Party has failed to grasp the environmental and commercial benefits by having post codes and the direct benefit this has for the whole supply chain management and by default, Irish SME’s cost effective operations. 3PL & 4PL Operators The key 3PL / 4PL Operators further combat the perennial ‘one way traffic’ with their clients where investment is held back with ‘open book’ contracts. Managing the weekly angst of manufactured factory approach to RFQ’s is giving way to the extraordinary high contract churn rate with ever decreasing margins, we are seeing logistics being taken back in house. In part, in Ireland (excluding the MNC’s in the main) why is it so many Irish based SME enterprises have their Supply Chain Cost as a percentage of their overall operating cost, well in to double digits when it should be between 8-10%? Ireland in Supply Chain terms within the 3PL /4PL organisations have become no more than a Trade IRELAND SPECIAL cheap labour market. It has been a race to the bottom, as this critical business is seen increasingly as a commodity! Interestingly by in large and one can argue specifically within Ireland; so many SME’s still do not see Supply Chain Management as an Executive function, thus we see it as a function for Financial Directors and not by Supply Chain Directors. Surprising when you look at the overall cost of the Supply Chain to their own businesses (see above)? One criterion remains fundamental; the market has not changed: as the following illustration demonstrates, the commercial Needs and Wants of all customers and end users is universal they all want: Conclusion As Fig 1 shows the market is moving towards greater complexity. It can be argued SCM Consultants including 3 & 4 PL’s have focused on the ‘Supply’ side without much consideration for the Demand side. The time – line in Fig 1 does reflect the acceleration of change and adoption of new methodology within the industry. As part of this change the industry can expect a move towards the true value proposition being developed under ‘knowledge Capital’ to generate the optimum solution – Demand & Supply. Why? Because the current manufactured RFQ’s, commoditisation and contract churn within the industry is unsustainable. Future solution design will come from credible knowledge Capital solution design engineers. In effect they will look to integrate the supply chain. This will require getting on board early on with customers in the sales cycle and or building the bridges in confidence with customers to design the optimum solution. This will not involve high capital cost programmes, future solution design will be underpinned by Saas on a pay as go basis. This will integrate even the smallest of operators to provide the last mile optimum solution...... The benefits of SCLG are to offer practical industry advice, solutions, guidance, and training to support practitioners throughout the Middle East, Ireland, and in due course the UK. I look forward to working with the Irish members in 2011. Nigel Devenish BSc,Executive Director Jarlis Ltd, http://ie.linkedin.com/in/nigeldevenish January 2011 Link 19
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