Address by Mr. Noel Treacy T.D., Minister for Science, Technology and Commerce at the Official Opening of the IPICS (The Supply Chain Management Institute) 16TH Annual Conference and Exhibition on Friday 7TH April, 2000, 8.45 am, at the Royal Hospital, Kilmainham, Dublin
I am pleased to have been invited here this morning to address this Conference on a topic which is recognised as a key element in business competitiveness and to welcome the distinguished panel of speakers and audience.
Effective and efficient logistics and supply chain management is already a prerequisite to success in the global marketplace. Over the past twenty years, this area has grown from a fragmented discipline, that looked at transportation, warehousing and materials handling in isolation, to a management philosophy that integrates the total supply chain.
There are a number of factors which make logistics and supply chain management particularly important in this country. As an island economy, Ireland is a disadvantaged location relative to the main European markets. The significance of our geographical location as a factor in the competitiveness of Irish business has long been recognised and highlighted. The ability of Irish exporters to supply markets, with increasingly demanding requirements, is, more and more, dependent on a much greater level of logistics expertise and skills.
By participating in international trade, an economy can learn and develop. The field of logistics and supply chain management is a very good example of this. Over the past decade, Ireland has seen the emergence of indigenous transport companies developing into third-party logistics service providers in response to changing logistics and distribution requirements from industry in Ireland. At the same time, many new non-Irish third party logistics providers have located here and are linking companies in Ireland into their global distribution networks.
The establishment of the National Institute for Transport and Logistics in 1998, was an initiative of our Department to support companies in Ireland in achieving competitive advantage and to help Ireland become a centre of logistics excellence. Its main purpose is to provide a resource to industry here by supporting the development of logistics and supply chain management expertise. It is doing this through its education and training programmes, the advice and consultancy which it offers, and the provision of world-class best practice knowledge and information. The Institute works with companies of all sizes, from small to medium to multinational.
I note from The Agenda for this Conference a particular emphasis on Information Technology related issues. In this context the use of the Internet and the world-wide-web is increasingly impacting on businesses today. As in any new technological revolution there is often a lot of hype attached and clearly not all of the high flying dot.com companies of today will survive in the future.
Nevertheless, the opportunity that the Internet can provide for the building of relationships with customers and the potential for productivity increases are very significant and it is now becoming an integral part of company operations.
The commercial applications of the Internet have been in use for less than a decade but already its growth pattern is unprecedented. According to expert forecasts, the next five years are going to see hypergrowth.
The impact of eBusiness over the next few years will predominantly be in the business-to-business arena, which many international forecasters predict will exceed $2.7 trillion by 2003. Business-to-business, representing 80% of eBusiness trade volume, dwarfs online consumer selling. Major corporations like General Electric are bringing new dimensions to the supply chain equation by listing their purchasing requirements and inviting suppliers to bid electronically for contracts.
Indeed one of the earliest applications of this new technology has been in supply chain management. The opportunities that exist for enhancing relationships and efficiencies in this and other areas are so persuasive that those who are slow to adopt will be left behind. For small to medium companies with limited eBusiness resources and limited eBusiness experience and expertise, the challenges in gaining a foothold in this increasingly competitive, innovative, and fast-moving eBusiness environment are enormous, but the prizes for success are great. This new and rapidly changing business paradigm is being and must continue to be, driven by the private sector.
However, the Government also has a significant role to play in the eBusiness area including: creating awareness, ensuring a favourable regulatory environment for business and leading by example - eGovernment.
I am delighted to say that we have been very active on these and on other fronts. We in Government see the continuation of Ireland's economic prosperity being inextricably linked to our growth as a centre for knowledge based activities and eBusiness will play a key role in this. There are considerable opportunities for Ireland to become a platform for eBusiness activities in Europe and beyond and we are actively promoting initiatives to exploit these opportunities e.g.
- the Implementation of Action Plans for the Information Society (including eCommerce);
- the de-regulation of telecommunication;
- the new e-Commerce Bill on electronic signatures, writing and contracts;
- connectivity to the global broadband telecoms networks;
- An eBusiness awareness programme including workshops and seminars on best practices in this area;
- Enterprise Ireland has recently introduced a series of eBusiness initiatives, including the establishment of a IR£10 million eBusiness fund to boost the number of Irish companies ransacting business across electronic networks.
The key to Ireland's overall success in this area will ultimately be measured by the speed of adoption of eBusiness by companies here, both indigenous and foreign owned. The challenge for us is to ensure that Ireland becomes the location of choice for eBusiness, as it is for companies in the software, and pharmaceuticals and call centre activities.
Management training is another key element in providing an efficient and cost effective supply chain structure. People development is one of the key drivers of business success. Companies are increasingly looking to human resource capability development as a means of sharpening competitiveness and are investing heavily in the upgrading the skills of management and employees. This is especially true for knowledge-based industries where the quality of personnel represents the core asset of a company.
As a result of the dramatic fall in unemployment, the Irish labour market is tight, and some key skills are in short supply. Not having the right people in place puts a brake on business growth and prevent a company from seizing market opportunities.
In Irish enterprise generally, human resource investment is low. Irish-owned companies provide less training than Irish-based multinational companies and action to address this gap is being vigorously pursued by us. The skills shortages already emerging makes this a necessity rather than an option. As we are well aware, an educated and skilled workforce is a major source of productivity growth. It is also an essential prerequisite of positioning companies for enhanced growth - moving up the high added value chain and adopting world class manufacturing techniques.
This approach requires from companies a focused strategy of continuous investment in sophisticated management practices, new skill sets for management and staff upskilling. As a result of such investment, a company will not only gain in productivity improvements but it will also be better able to recruit people of the right calibre - and retain them. Management training and development should no longer be looked upon as an 'external' activity disconnected from the business activities of the organisation. It should be considered a strategic investment in the professionalisation of the organisation. This will be critical if Ireland is to maintain dynamic business growth and where the perceived managerial wisdom of the past may no longer be relevant to the changing nature of our business environment.
The State Agencies can assist companies to build world-class management, highly skilled staff and effective business systems. Human resource development initiatives provide education, training and development programmes that are flexible, standards-based, focused on company objectives and encourage life long learning. Human resource development is not an end in itself. It is an integral part of the total development of business competitiveness and improving the company's ability to respond dynamically to new challenges.
In conclusion, I wish to congratulate the IPICS for its development and activities over the years. In the twenty years of its existence it has grown from an organisation, that was focused only on production and inventory control problems and solutions, to one that covers the full spectrum of Supply Chain Management.
I note this Conference timetable has a wide variety of topics and no doubt you will have an interesting and rewarding time ahead.
I wish this Conference and all of its participants every success.
