How tech-savvy are Canadian supply chains?

Are Canadian supply chain managers innovative enough when it comes to technology?

Several sets of data go long way towards answering the question.

Recently, Industry Canada partnered with SCL Canada’s research committee to aggregate some research on how supply chain managers use technology. The two parties consulted several studies issued by Statistics Canada and other international research organizations and analyzed the findings. The result is a set of conclusions based on feedback from more than 20,000 firms.

In November, SCL Canada launched its Technology Tour to explain the findings, stopping in six cities across the country. Philippe Richer, associate director of the service industries and consumer product branch at Industry Canada, presented the information. Here are some highlights.

Electronic usage

When it comes to using e-based systems—that is, web-based processes used to exchange and manage business information—to conduct logistics functions, the researchers found that Canadian firms are lagging.

Only 10 percent of small (one- to 19-employee) companies are using such technology; the figure is just over 20 percent for both medium (20- to 499-employee) and large companies. According to Richer, this is approximately 30 percent lower than among US firms of similar sizes.

By sector, wholesalers lead adoption among medium-to-large firms, while retailers come out ahead among small companies. Logistics and transportation service providers and manufacturers are slightly behind in companies of all sizes.

When it comes to inventory management technology, retailers and wholesalers are the leaders in usage, while manufacturers lag. Service providers are not using the technology heavily, relying instead on their supply chain partners for inventory management.

More results

The researchers found that Canadian companies' e-based systems are generally not fully integrated with those of their supply chain partners. Firms across all sectors and sizes have difficulty connecting with other systems within their own companies, as well as with those of their suppliers and customers.

Retailers are doing the best job of linking their logistics technologies with those of their suppliers, while wholesalers are doing so to a lesser degree. Service providers tend to link with other service providers to provide better visibility to customers. The manufacturing sector has the lowest rates of electronic systems integration.

This is unfortunate, Richer said, because integration is needed to really get the most out of any e-based system.

The researchers found that very few firms outsource e-based supply chain management projects. Those that do tend to be larger companies.

In addition, they found those companies that are using e-based systems are not doing it just to lower their costs; in fact, more said that better communication with suppliers and/or customers is their main motivator.

The payoff to plugging in

According to Richer, the lax adoption of e-based technology among companies in the supply chain is cause for concern. One big reason they should act, he said, is because they stand to gain so much.

He cited an Aberdeen Group report that found 90 percent of companies embracing leading-edge collaboration applications achieved gains of at least 15 percent in order fill accuracy. Only 40 percent of low technology adopters have the same results.

High adopters of the technology are also achieving comparative advantages in total delivered costs, lead-time reductions, perfect orders and increased compliance to customer mandates.

Richer challenged supply chain managers to take a close look at the systems they have in place and do everything they can to integrate them with those of other partners in the supply chain.

“Are your applications stand-alone or are they linked to other systems?” he asked. “The most important thing is being connected to your customers and suppliers.”