Posts Tagged ‘Logistics’

January 13th, 2012

Why an oil spike is inevitable and how to prepare for it?

The recent economic turbulence around the world has slowed oil price increases, and this is expected to continue into 2012. However, in the long term, as the global economy recovers, oil demand is likely to grow faster than supply. According to a special feature in the November 2011 issue of the McKinsey Quarterly, at the rate things are going, an oil shock, characterized by high, volatile prices, is quite possible in the years ahead. Business leaders need to take this very seriously.

The fact is that current incentives to cut energy consumption and the move toward greener energy sources will not be enough to slow the growth of global demand for energy. On the supply side, the increase in output is not expected to be enough to meet demand because of the technological challenges and massive investments required to exploit new energy sources. Since supply will barely meet demand, expect to see oil prices climb sharply down the road, which will have a major impact on the world economy.

The price hikes will likely affect economic growth by sapping consumption and international trade and encouraging consumers and industry to implement measures or change their energy consumption habits. As such, McKinsey forecasts that supply and demand will again become balanced but not before 2020 because of the time it will take to make these adjustments and the lag between their implementation and their real impact on oil demand.
(more…)

September 20th, 2011

Logistics: a key part of the value chain and how it affects the bottom line

The “value chain” concept has been around a long time. As a matter of fact, I recently dug out of my library a book published in 1987 for the Council of Logistics Management by Ernst & Whinney (now Ernst & Young) where I was a partner in the ‘90s. This book discusses the value chain concept from the perspective of profitability. Back in 1987, there was already talk of the logistics revolution that had occurred in the previous 10 years. Since then, with globalization and the speed of technology developments, logistics has become even more important. While it may not have the same impact on the bottom line as the discovery and launch of a new product (PCs, online sales, tablets), it is nevertheless critical for the success of any new product, service or strategic initiative.

Fortunately, successful companies were quick to understand the importance of including logistics in their strategies. The 1987 study identified 10 principles of excellence that top companies incorporate in their daily operations to ensure their success and long-term survival. (more…)

September 15th, 2011

New HS codes starting January 1, 2012 – will you be ready?

As of January 1, 2012, the World Customs Organization (WCO) will implement new codes for its Harmonized Commodity Description and Coding System (HS).

The HS is an international six-digit nomenclature that includes about 5,000 groups of goods classified according to a logical legal structure. It is used in over 190 countries and more than 98% of goods traded in the world have an HS code. To learn more, I invite you to read a blog I wrote last year on the subject.

The new HS codes will take changes in technology and consumer habits into account. Environmental and social issues are the main features of the HS 2012 amendments. For the most up-to-date on already announced HS amendments for 2012, visit the WCO website.

The new codes will be available in October, three months before their implementation. That said, you won’t have a lot of time to adjust. According to an article in Les Affaires, this update will pose a major logistical challenge for importers and exporters, who will have to work hard to be ready on time. Large customs brokers, that sometimes have as many as 10,000 customers, will not be able to help each of their customers. And if you’re not ready, you’ll have to pay fines and run the risk of delivery delays of up to eight hours.

If you need more information, please call us. If we have enough requests, we’ll be more than happy to organize an information session in November.

You can also find detailed information on customs tariffs on the following sites:

- International Trade Centre

- World Integrated Trade Solution

- International Customs Tariffs Bureau

Caroline Bouchard

June 29th, 2011

A Canadian Logistics Perspective

Industry Canada recently published a report to help Canadian business leaders better understand global logistics strategies and become more competitive on local and international markets. Here are some of the key findings:

- Supply chain performance is an important competitive differentiator.

- The supply chain structure is influenced by six main factors:

o   Globalization and increased international trade;

o   The growing complexity of logistics;

o   Increased risk;

o   Rising labour costs in the developing world;

o   Sustainable development;

o   Growing volatility.

- Logistics began to play a more important role as companies worked to better manage the flow of information and products to increase supply chain efficiency.

- To remain competitive, Canadian industries have no choice but to revise their procurement and decision-making processes.

- Firms are seeking to set up dynamic, responsive, automated and cost-effective distribution centres to support their global logistics strategies.

- The top 20% of companies in terms of total landed cost and on-time shipment are those that invest the most in logistics network strategies such as e-collaboration with suppliers and clients.

- Logistics innovation is at the forefront of global value chain network integration.

The report provides other insights as well as an overview of the good practices adopted by various industries. The report is available at www.ic.gc.ca/logistics.

Samir Naoum

March 17th, 2011

How to motivate your logistics staff?

During the first meeting of the LAVAL TECHNOPOLE International Business Centre – Supply Chain Network, Albert Goodhue talked animatedly about his experience in managing logistics staff.  Here are some of the points I retained during this interesting meeting, which shed light on the importance of this often neglected but increasingly critical field for the success of our businesses.

0   Logistics has become increasingly important given today’s new competitive challenges, among others:

- Ever more demanding and better informed customers;
- Greater product variety and shorter lifecycle;
- Frequent and ongoing technology innovations;
- Growing dependence on e-business;
- New distribution networks;
- Greater market segmentation and globalization;
- Constant pressure from order givers and retailers.

0  Logistics typically comes into play at the demand planning stage and includes such physical aspects as order taking, product preparation, delivery and even returns.

0  A country’s culture and structure will dictate whether a logistics project is justified. For example, in a country where labour is cheap, automation projects will appear less relevant.

0  To ensure your staff’s motivation and productivity, you have to:

- Adequately define roles at every level;
- Make sure that each employee works in an environment suited to his or her training;
- Provide a well-defined work structure;
- Make sure that supervisors have the necessary leadership qualities;
- Communicate with and listen to your employees;
- Implement a communication plan that encourages employee input;
- Use the age-old suggestion box as a good communication and motivation tool;
- Promote ‘Kaizen’ improvement approaches;
- Offer growth opportunities within the company;
- Provide an ergonomic and safe work environment;
- Provide working conditions that place the employee at the centre of operations;
- Encourage appropriate coaching by competent supervisors;
- Implement a  quality performance-based incentive program;
- Remember to acknowledge employee contributions.

One of the challenges participants mentioned during the meeting was getting their superiors (especially owner-managers) to agree to make necessary changes to adapt to the current business environment. The speaker suggested that they mention to the people concerned how their inaction could impact the company’s survival or recommend that they conduct a benchmarking exercise and meet with other business leaders who have been through similar situations.

I hope that this overview of the logistics function and suggestions for mobilizing and motivating your staff will give you food for thought and help improve the performance of your business and ensure its survival.

Samir Naoum