Posts Tagged ‘Supply chain’

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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 (http://www.mckinseyquarterly.com/Another_oil_shock_2873), 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.
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October 25th, 2011

Global supply chains – should we go back in time?

Corporations seem to be rethinking their offshoring strategies. Thirty years ago, North American corporations decided that the best way to cut costs was to move their manufacturing to Asian and other developing countries. Now they’re rethinking the relevance of this strategy for various reasons, including rising production costs in China and India, increasingly volatile transportation costs, the higher risk of supply chain disruptions when doing business in faraway locations, and issues concerning quality control and intellectual property protection in poorly regulated markets. But there are also positive aspects to consider when contemplating whether to repatriate your manufacturing to North America such as access to skilled labour, easy adoption of automated manufacturing and access to a large transportation network. These factors are making business leaders rethink their “Invented here, made there” strategy. (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

August 24th, 2011

New Canadian legislation on product safety and labelling: what are the implications for your company?

Some of the members of LAVAL TECHNOPOLE International Business Centre’s Supply Chain network recently expressed concerns about the new Canadian consumer product labelling legislation. Here is an article (in French only) by Me Micheline Dessureault of Joli-Coeur Lacasse, Attorneys, explaining the main legal implications of this new law that came into force in June.

If you manufacture, distribute or import consumer products, make sure you comply with the new provisions throughout your product’s lifecycle, from design to disposal. Me Dessureault or another legal expert can help you understand your legal duties and obligations and assess the risks.

On the operations side, expect to have to review and adjust your internal processes and those of your partners and local or foreign suppliers across the value chain. You may have to change your labelling and the way you prepare and conserve documents. You should make these changes within the allotted transition periods to avoid unexpected costs.

For more information, please contact us. We can also organize an information session on request.

Samir Naoum

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