By TOM PETERS
December 8, 2008
A streamlined supply chain is vital to the efficiency of a global economy, says a senior official with UPS.
“A streamlined supply chain means that raw materials can be transformed into finished products quicker, leading to faster cash receipts and higher profitability,” said Ray de Rose, global LCL manager for UPS. “Improvements in efficiency can lower inventory requirements, economize transportation and other distribution costs, accelerate cash flow and strengthen receivables.”
Mr. de Rose, the keynote luncheon speaker at Halifax Port Days, told delegates that by 2020, about 80 per cent of global GDP is expected to be cross-border international trade.
But he said an inefficient supply chain and unpredictable factors have a major impact on doing business. “The effects of inefficiency ripple across the economy and affect businesses’ accounting books, government coffers and employees’ paycheques,” he said.
The UPS executive commented that companies are looking for ways to “connect more efficiently with their business partners” to increase savings in time and money.
He said UPS sees a “mega shift” in business happening over the next decade. “It will be a world in which supply chains routinely span regions and hemispheres,” he remarked. UPS sees massive consumer markets emerging in Brazil, Russia, India and China, where consumer spending in these countries will top US$9 trillion over the next 10 years. These consumers will be eager to purchase North American goods, thus increasing international trade and boosting business through North American ports.
But the trade shift will present challenges to the North American partners. “One such challenge is that of complacency,” Mr. de Rose said. A UPS survey showed only two in 10 Canadian small and mid-size businesses (of those surveyed) do business internationally. The situation is not all that different in the U.S. But why the inertia? he asked.
He said Canadian leaders of these businesses “cite regulations, border delays and customs bureaucracy as making trade more trouble than it’s worth. Congested shipping ports, overburdened airports and inadequate railway and highway services are slowing down North American supply chains. We need to elevate infrastructure on the priority list.”
But he also stated that “54 per cent of Canadian businesses that do trade internationally are optimistic about their growth prospects. In a world of synchronized value creation, the process of trade should be our focus,” Mr. de Rose said, while asking, “How can we boost North American prosperity in a synchronized world?”
His suggestions: business and government leaders need to shift the debate from a globalization agenda to a prosperity agenda; focus on helping small and mid-size businesses to overcome inertia and to take advantage of cross-border growth opportunities; and for a prosperity agenda, create a hand-in-glove public-private collaboration on standards and regulatory rules.
“Creating simple regulations that align to international standards is the path to helping North American business communities compete and prosper,” he said.
“Those are just a few priorities for us to consider. They’re tied directly to making ‘time in trade’ a key response to the shifts in the way commerce now flows around our world. They’re tied to the role that all of us have to pave the way for the future by creating a competitive North America for the 21st century.”