Transcript Presentation

Australia’s Supply Chains
– Innovate or Fail!
18 June 2008
Liesbet Spanjaard
Director, SAHA International Limited
8th BITRE Transport Colloquium
Melbourne Sydney Brisbane Wellington Johannesburg Cape Town Windhoek
Innovate or fail!
• Background and policy environment
• Key characteristics of the transport & logistics industry
• Challenges for industry
• Innovation drivers
• Barriers to innovation
• Opportunities to innovate
2
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Why is innovation important?
• Innovation is a key driver of economic growth
• Innovation is important for sustaining growth at a time
of:
– increasing costs
– increased demand for resources
– infrastructure constraints, and
– pressures to reduce carbon footprints
4
The policy environment
• The Dept. of Innovation, Industry, Science & Research
established 2007, ordered review of Australia’s innovation system
• In 2005, the Smart State strategy launched in Queensland
outlining an investments in several areas including innovation
• In 2006, NSW Premier launched innovation statement to:
– Develop an innovation strategy to support economic growth in NSW
– Focus on industries with strategic importance with the greatest potential
for innovation
• In 2007, Victoria released a proposal for a National Innovation
Agenda to develop coordinated approach to policy
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Transport and logistics – the invisible driver
Top 10 Industries by GDP
16.00%
14.50%
% Contribution to GDP
14.00%
12.00%
10.30%
10.00%
9.90%
8.00%
6.00%
5.60%
6.00%
5.20%
5.10%
4.70%
4.10%
4.00%
3.80%
2.00%
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• Freight and logistics represents
around 12% of NSW’s GDP
• The industry employs more
than 500,000 people in NSW
• It connects and supports every
community across the country
• It touches every product before
(and after) it is consumed
• The sector has a direct impact
on the cost of living
Transport and logistics – the invisible driver
However, the industry is:
• Highly fragmented
• Diverse and incorporates many varied activities
• Highly competitive
• Structured around markets and corridors not political boundaries
• About supply chains not modes
• Reliant on a relatively small number of major infrastructure gateways
• Typified by low level of publicly available data
Therefore:
• Large sections of the industry do not invest in innovation
• The cost of regulatory burden is especially important
• Planning for freight is difficult
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Supply chains are complex….
Cost
Transaction
Physical Movement
Management
Players
The movement of imported components at Electrolux
Shipper:
40 shipping Line
and consortia
Stevedore:
Patrick Terminals
DP World
Intermodal Terminal Operator:
Linfox
Maersk Logistics
Electrolux orders
refrigerator and
freezer
componentry from
overseas
Stevedore
and custom
clearance at
Port Botany
Containerised
componentary transport
by sea
Freight Forwarder (Linfox)
Container transport by
(Linfox)
Port Botany
Container is
unpacked by Linfox
Container is
collected by
Linfox
Components transported to
Toyota Tsusho Site
Blayney Intermodal
Terminal
Componentary
is discharged at
factory
Empty
container
transported
back to
Blayney
Componentary
transferred to
factory (Linfox)
Toyota
Tsusho
(Orange)
Electrolux
(Orange)
Delivery
Order from
Shipping
Company
Customer Clearance
and AQIS container
inspection
Shipping cost
$3,000 – 40ft
container
Driver
Documentation
Road and Rail Cost
$850 – 40ft container
$700 – 20 ft
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Empty container is either
Dehired at Blayney or railed to
Vehicle is
nominated empty container
discharged
park at
factory
Blayney Intermodal
Terminal
Empty container
park
The complex nature
of the Electrolux
supply chain is
typical of many, and
illustrates the need
for collaboration
and information
sharing to
maximise efficiency
Challenges for the industry
• Changing world economic geography
• Supply chains are becoming longer
• Increasing pressure from customers
• New distribution models are emerging
• Increasing energy costs
9
Challenges for the industry
• Labour and skill shortages
• Increasing compliance requirements
• Growing urban populations
• Increasing environmental awareness
10
Key drivers of innovation
• Price driven nature of operations
• Infrastructure capacity issues
• Cost of transport relative to product price
• Labour supply issues
• Service delivery constraints
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Barriers to innovation
• Limited ‘co-opetition’
• Limited interfacing
• Domination of incumbent organisations……..
• Certain supply chains in NSW have adopted innovative
approaches to overcoming these barriers
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Opportunities to innovate - information
• Successful collaboration in NSW export coal and export
grain supply chains
• Both have infrastructure capacity constraints
• Both have shared sensitive information to achieve
industry-wide benefits
• Both required ACCC approval to share information and
collaborate
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Opportunities to innovate - technology
• New technologies are emerging as a result of market
pressures and are being implemented to improve
productivity
• Change has been exponential in the development of
information and communications technology (ICT)
• Costs of systems have reduced
• Web based freight matching systems represent a good
example of innovation
• The rate of technology evolution is rapid - investment
decisions can be challenging
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What role can government play?
• Increasing efficiency of transport system though better
infrastructure planning and provision
• Improving competitiveness and productivity through
better regulations
• Helping industry make informed decisions
• Improving industry data to assist policy making
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What do you think?
• What do you think are going to be the most
revolutionary innovations in the future of transport and
logistics?
• What do you think are going to be the most important
innovations for the future?
• Who should have responsibility for making sure it
happens?
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