West lags on technology: CILT

Visiting CILT veteran Bernard Auton says developing regions are using technology to innovate in the supply chain faster than western countries

West lags on technology: CILT
We're not keeping up: CILT

By Anna Game-Lopata | February 8, 2011

Visiting Chartered Institute of Logistics and Transport (CILT) veteran Bernard Auton says developing regions are using technology to innovate in the supply chain faster than western countries

Secretary General
Auton is meeting with Australian industry bodies, stakeholders and government this week ahead of CILT’s international convention to be held in May.

It is the first time the global peak logistics organisation will hold its convention on our shores.

"Developing countries are grabbing and utilising technology faster than we do," Auton tells SupplyChain Review. "Innovation is constant."

Auton says the economies of India, China, Brazil, Mexico, Philippines and Turkey have similar potential in terms of growing their logistics and transport industries.

"They may well develop equal importance as centres in terms of volumes and their
key positioning in the international network," he says.

However, in many of these countries, industry is not following the pattern of development taken by the west because it’s simply not efficient to progress that way.

"In Cambodia there will never be a telephone network," Auton says.

"They’ve gone straight to mobile. They’ll never bother with copper wire, cables and switchboards because its inefficient.

"In India market penetration of mobile phones is more than 50 percent; that’s 500 million subscribers," he says.

According to Auton, the mobile phone is being used in ways never anticipated by the west.

"An Indian peasant farmer will get current market prices for his specific produce via a text in his own dialect on his phone, so he can determine whether or not to harvest," Auton says.

"If he can’t read, then he can call a number for a recording of the information."

"In Africa mobile phones are used for information around the transfer of money; all sorts of things we don’t use mobile phones for in other parts of the world."

"In Bangkok internet services in hotels and cafes are free- unlike in Australia, for example, where a charge of up to $75 can be exacted for use of the internet in your hotel room.

"This is remarkable as internet and email is now key to the way individuals do business globally," Auton says.

Auton says in 20 years time India wants to be the leading source of qualified people.

"While people in Australia and the UK don’t want to be warehouse supervisors, forklift operators or truck drivers, Indians are busy researching the market in order to be the leading supplier of qualified people.

"It might be that what we get from India in the near future is qualified logisticians and transport managers.

"We’ll see as much come out of India and China as we will have to contribute."

Auton also makes the observation that the Chinese and Indian markets are no longer simply
a source of low cost manufacturing.

"These regions, despite the inequity of wealth, have such fast-growing
middle class populations that they are a huge market for international business," he says.

"India and China have
gone from export-led markets to something much more balanced, with strong internal demand to be satisfied for products and services.

"For example Ug boots are popular on the streets of Mumbai and Shanghai, so there’s a huge market opportunity for Australian manufacturers of all sorts of products."

Auton who has many years of experience working overseas, says sustainability is a key global issue of today

"Twelve to fifteen percent of the world’s energy use is engaged in transport and logistics operations; that is the movement of people, goods and services," he says.

"The motivation to make operations more efficient from an energy perspective is not just about
reducing our impact on the environment, but also about reducing costs."

"The long term viability of our sector is dependant on our ability to be more and more efficient in what we do."

Auton says ‘integration’ is another key issue.

"The interaction of logistics and transport modes is key to its success. It’s all about the speed with which we can get products through the networks to satisfy our customer.

"We increasingly find that you get a sub optimal solution if you only concentrate on the efficiency of internal processes.

"There are instances where you might have a very efficient internal process but it’s sub optimal to the logistics chain as a whole. Therefore, different constituencies in the supply chain might have to compromise for the greater good."

Finally, Auton says in order for processes to be as efficient as possible, we need good people to plan and manage them and be able to respond to volatility and change.

"Finding good people is a common concern world over," Auton says.

"It is the main reason individuals join CILT and the reason organisations want to engage with us.

"There’s an underlying demand for competent people entering the profession and retaining them, so we need to make it a more attractive place to be.

"In many parts of the world, working people are declining compared to the population in their region.

"We need to be competing for good people coming out of institutions industry, both our own and others.

Asked what aspects of supply chain we could do better, Auton says there’s a general perception that people elsewhere are much better at doing
something than we are.

"I hear the same thing being said in the UK, US, Asia and Europe; we’re not very good, therefore other people must be better.

"Excellence is not limited to specific parts of the world, as we have observed being an organisation that focuses on finding pockets of excellence and celebrating benchmarks through industry awards and other programs."

Despite this, Auton points to the ports of Singapore and Rotterdam as hubs that represent world class logistics and transport operations.

"At these locations, you see integration between port, air and landside operations and the administrations of customs," Auton says.

"Labour is flexible and everything functions around making these centres really efficient and attractive to people moving goods and services.

"Logistics and transport is an international operation now. I can’t think of supply chain in the world which doesn’t have an international link.

"So these hubs are competing all the time. They don’t rest on their laurels, they’re constantly trying to innovate and be more productive.

"Singapore will never survive on internal trade, it is a hub for everybody and therefore it is always looking outside its own borders for customers and suppliers," Auton says.

"This is also the case in Rotterdam. The Dutch are traders and they’re they recognise that in order to be successful they’ve got to be thinking outside the box the whole time.

"Therefore I would say an holistic approach to logistics and transport and the ability to find
the optimal solution for an international customer is what delineates excellence from very good."

An expert in the area of disaster logistics and the role of logistics in the humanitarian response, Auton says he was immensely impressed by the state of preparedness in Australia during the recent severe Cyclone Yasi and floods in Queensland.

"It was quite clear that Australia was well prepared and had considered carefully what resources would be deployed as soon as the cyclone was over," Auton says.

"In the initial stages, the response to any natural disaster is a logistics exercise.

"Getting people, medical supplies and equipment to a place where a disaster has occurred is key to the humanitarian response."

"While no-one could anticipate the scale of floods in Queensland, you can observe planning at local, state and federal levels and the resulting government support provided," Auton adds.

This is of such importance that CILT has set up an organisation which focuses on the training, development and professional status of people who work in humanitarian logistics.

"Supply chains are very vulnerable to change. A change in one can have a significant impact in another part of the world as the floods and cyclone in Queensland have shown," Auton says.

"Queensland is the major supplier of bananas, so the devastation caused to that crop led to an increase the wholesale price of bananas on the market world wide within 48 hours."

"One of the things we’ve done worldwide is to make supply chains so efficient they have become too fragile.

"Fuel protests in the UK cut off the distribution of diesel fuel to petrol stations and
distribution centres," Auton says.

"We keep levels of inventory so low to reduce our costs that with a disruption to just in time delivery, people very quickly start to run out of product.

"Supply chain is an integral part of the response."

In Australia, Auton is hoping to achieve engagement with the CILT convention from both local and international industry leaders and to facilitate networking that might spark new ideas about supply chain productivity and professional development.

Given CILT’s strong focus on education and training, Auton will also talk to Australian executives specifically about how they educate and improve young managers and how they attract people into sector.

He also aims to liaise with Australian Skills Councils to develop transport and Logistics expertise in India where he has worked for the past couple of years.

Auton yesterday met with Sydney Ports officials, Qantas and the Toll Group and will meet with Linfox, Victoria University, and government and opposition representatives today.

Later in the week he’ll travel to Brisbane and New Zealand.

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