Speech by Minister Michael Ahern at the Annual Conference of the National Institute for Transport and Logistics,

Speech by Mr. Michael Ahern TD, Minister of State for Trade and Commerce, at the Annual Conference of the National Institute for Transport and Logistics, at Croke Park Conference Centre on Thursday 5^th October, 2006.

I am delighted to have been invited back this year to address your annual conference. Once again, your theme, ‘Global Supply Chain Trends – Threat or Opportunity’ is an apposite one.

In our integrated global economy, characterised by rapidly transforming markets, strong international competition and mobile capital, there is a requirement for Irish firms to be solution-driven and highly responsive to market developments. While the Irish economy continues to grow strongly, global competition is ever more intensive and, as a small export oriented economy, we must respond to this challenge. In doing so, we must recognize that Supply Chain Management (SCM) is a major source of competitive advantage. This is because of its focus on customer service and reducing costs.

In light of these ever evolving factors, innovative and effective supply chain management is the key to gaining competitive advantage, reducing costs and making companies more profitable. Put simply, supply chain management is concerned with the management of the physical flow of product and related flows of information from purchasing through to the production, distribution and delivery of the finished product to consumers. I believe that successful implementation of this important concept requires us to look beyond established boundaries, to strengthen linkages between supply chain functions and to find new ways to fuse them together.

There is no doubt that Ireland’s peripheral location necessitates the need for a level of excellence in SCM by Irish companies. It is only through this approach that Ireland will continue to compete on a global level.

A recent study in the United States acutely displayed the importance of SCM and how its implementation can have benefits for companies. These included a 50% reduction in inventory; a 40% improvement in on-time delivery; a 27% reduction in order cycle time and, a nine fold reduction in out-of-stock-rates. And yet, despite these obvious advantages, many Irish firms have failed to exploit SCM to its full potential, as witnessed by a recent NITL study. Indeed, the study shows us that, more often than not, it is usually large firms with foreign ownership that are putting SCM techniques into effect.

In my view, this failure of SCM adoption is characterised by inefficiencies in the supply chain, poor communication structures, excessive reliance on forecasting and stockholding, lack of an adequate utilisation of information and communication technologies and overall, a weak culture of supply chain management within many indigenous firms.

In an ongoing response to the need to support and improve the SCM capability of indigenous companies, Enterprise Ireland and NITL commenced a five-year action plan in 2001; its objectives were to increase awareness of SCM, increase the pool of skilled SCM professionals and develop SCM support tools. This has brought the key message of SCM excellence to thousands of people in industry through a range of initiatives such as training, learning programmes, seminars and regional workshops.

Technical consultancy and financial support has been provided to over 80 companies operating in Ireland, including a large number of SMEs, working through the all Ireland Supply Chain Forum which is specifically targeted at increasing the competence of SMEs in supply chain management. This logistics cluster initiative combines the joint resources and co-operation of NITL, Enterprise Ireland, IDA Ireland and InterTrade Ireland. This involves working with SME suppliers and their multinational customers to address future development needs in this area.

Targeting SMEs across the sector, Enterprise Ireland launched a new ‘Supply Chain Management’ initiative in June, 2005 to help companies identify their supply chain weakness as well as implementing productivity improvements in order to achieve best practice in supply chain management. This scheme is supported by €3 million in funding over a two-year period. Independent consultants and trainers are appointed to work alongside client companies to help them attain real productivity gains which lead in turn to increases in their competitive advantage. One of the rewards of this approach is that SCM improvement programmes can be tailor-made to suit the specific strengths and weakness of individual client firms.

As all of you are aware, every product or service produced must pass through various supply chains in order to reach their final destination. That final test is of course the consumer, who is the only source of ‘real money’ in the supply chain. And, let us not forget that this chain is only as strong as its weakest link.

Today’s conference has been specifically designed to meet the needs and address the concerns of businesses in Ireland, from multi-nationals to SMEs, as they strive to overcome the challenges of increased competition in today’s global market. I hope that it will help to inspire you all to rethink both the importance and competitive potential of supply chain management and its role in your businesses.

Finally, let me wish you all a most successful Conference.

ENDS

TC249