Logistics and Supply Chain Management (SCM) Key Pe

LogisticsandSupplyChainManagement(SCM)KeyPerformanceIndicators(KPI)AnalysisACanada/UnitedStatesPerspectiveOctober20061ThispublicationisalsoavailableelectronicallyontheWorldWideWebinHTMLformatatthefollowingaddress::[e-mail]44-35/1-2006E-PDFISBN0-662-44333-0IndustryCanadaregistrationnumber:60124AussioffertenfrançaissousletitreLogistiqueetgestiondelachaîned’approvisionnement,analysedesindicateursderendementclés:PerspectiveCanada/États-Unis.2ExecutiveSummaryAscompetitionbecomesmoreglobal,innovationismovingfromafirm-to-firmleveltoasupplychainversussupplychainperspective.Inordertocompeteagainstlowcostcountries(suchasChina),CanadianfirmsmustdevelopsupplychainagilityinaJust-In-Time(JIT)andmasscustomisationmode.Measurementoflogisticsandsupplychainmanagement(SCM)keyperformanceindicators(KPI)isanessentialpartoftheagilesupplychainconcept.Itisestimatedthat37percentofNorthAmerican(NA)firmsthathaveputinplacelogisticsandSCMKPIcorporatewidemeasurementapplicationshaveachievedadecreaseof15percentormoreinshipmentdelayscomparedtoonly7percentoffirmsthatdonotmeasurethoseKPIconsistently1.WhileinventoryturnsisthemainKPIforevaluatingsupplychainagility,logisticscostKPIallowfirmstoevaluatetheefficiencyoftheirlogisticsandSCMoperations.ThecombinationofsupplychainagilityandefficientSCMpracticesiskeytolongtermcompetitivenessandprosperityofCanadianfirmsinaglobalsupplychain(GSC)context.IntermsofproductivityandcompetitivenessKPI,CanadaisnotasefficientastheU.S.inmostinventoryturnsKPIsubgroups,andinallkeysectorsintermsoftotallogisticscost.FortheManufacturing,WholesaleandRetailsectors,theaveragelogisticscostgapwiththeU.S.is11percent2.InventoryTurnsIntermsofsupplychainagilityKPI,Canada’s2005rawmaterialinventoryturnsratiowasstillbelowtheUnitedStateslevelof1992,althoughitincreased20.77percentduringthe1992-2005period.Canadahasaproductivitygapof35percentinthatspecificKPI.Forthesameperiod,thefinishedgoodsinventoryturnsratioincreased23.91percentinCanada.Bothcountriesstartedataboutthesamelevelin1992,andtheU.S.iscurrentlyonlyabout4.3percentbehindCanadaintermsoffinishedgoodsinventoryturns.Thewholesaleandretailsectorsalsohaveasupplychainagilitygap.Theirrespectiveinventoryturnsremained17to41percentbehindtheirU.S.counterparts.Inregardstoproductivitygrowth,thefactthattheretailandwholesaleinventoryturnswerelevelledorgrowingforthe1992-2005periodmeansthatinthewholesupplychaintheinventorywasnotsolelytransferredfromthemanufacturerstothewholesalerorfromthewholesalerstotheretailers;therewasarealproductivitygrowthininventorymanagementinCanadaandintheU.S.forthatspecificperiod2.3LogisticsCostsCanadianManufacturing,WholesaleandRetailsectorshavelogisticscosts2percent,22percentand16percenthigherrespectivelythanintheU.S..ComparingthemanufacturingsectorforCanadaandtheU.S.showsthatcostsrelatedtologisticsoutsourcingarehigherintheU.S.thaninCanadaandthatintheretailsector,costsassociatedwithlogisticsoutsourcingarehigherintheU.S..Inthecaseofthewholesalesector,internallogisticscostsareslightlylowerinCanadaasapercentageoftotallogisticscosts2.ThereisnotmuchdifferencebetweenCanadaandtheU.S.withrespecttointernallogisticscostsinthewholesaleandretailsectors.Nevertheless,CanadahasaninternallogisticscostinmanufacturingthatishigherthanthatoftheU.S.Canada’sinventorycarryingcostsareslightlyhigherformanufacturingandwholesale(11percentand17percentrespectively).However,inventorycarryingcostsforretailinCanadaare31percenthigherthanintheUS2.TechnologyInorderforfirmstoachievethebenefitsoftheirrespectivelogisticsandSCMbusinessdrivers,theadoptionoflogisticsandSCMtechnologyacrosssupplychainsisakeycomponentfordevelopingefficientcollaborationnetworks.ItisestimatedthatNorthAmericanSmallandMediumSizedEnterprises(SMEs)thatwilldeploylogisticsandSCMcollaborationapplicationswillenjoya5percentto25percentdecreaseinlogisticscostsanda15percentto40percentincreaseinqualityandtime-to-marketovercompetitorsthatfailtomaketheseinvestmentsthrough20103.Asanexample,90percentofNAcompaniesthatembraceleadingedgelogisticsandSCMcollaborationapplicationsachieveanincreaseofatleast15percentoforderfillrateaccuracycomparedtoonly40percentoflowtechnologyadopters4.SCMtechnologyadoptionisstillataninfancystageinCanada.Closeto54percentofCanadianfirmsstillhavenoSCMsolutionsinplaceanddonotplantoimplementasolutionshortly5.AlthoughthelogisticsandSCMtechnologyinvestmentlevel