A Canada\United States Perspective

Introduction

Global supply chains (GSC) are driven by a customer-centric reality, global sourcing from low cost countries, smart border requirements, logistics mandates (such as Radio frequency identification (RFID)) from large corporations and mass customisation in a Just-In-Time (JIT) manner. Logistics and supply chain management (SCM) are thus expected to play a key role in GSC and contribute dramatically to productivity growth of Canadian firms within the next few years.

Although Canadian firms have used logistics performance indicators internally for decades, there has never been any tool for Canadian firms to benchmark themselves to their supply chain partners, competitors, sectors and U.S. counterparts.

Manufacturers, retailers, wholesalers and logistics service providers need quality information on logistics and SCM costs as well as performance indicators in order to provide best practices and benchmarks, justify investment and innovation, and monitor industry performance.

Industry Canada has partnered with Supply Chain and Logistics Association of Canada (SCL) Research Committee to launch a national logistics and SCM performance indicators initiative.

The objective of this study is to propose a Logistics and SCM key performance indicators (KPI) analysis that can be used as a benchmarking tool for firms and policy makers. This analysis will help firms understand where they are located with respect to leading enterprises, as well as firms within their own sector and the U.S. and what steps they must undertake in order to become more competitive.

Logistics and SCM functions can either be performed from internal activities or outsourced to a third party logistics (3PL) service provider, via wholesale distribution, or in a combination. The following report will guide supply chain managers through these different key components in order to provide them with a global view of their supply chain KPI.

Analysis is initiated by a general section on industry productivity and competitiveness indicators via logistics and SCM. This will be followed by specific sections on inventory management and Just-in-Time KPI, and a logistics and SCM cost KPI analysis that includes three components: internal logistics cost, outsourced logistics cost and inventory carrying cost.

Finally, sector specific KPI, complete with methodology, calculations and definitions will be tabled in Annexes in order to provide details to help individual firms’ policy makers develop applicable benchmarking tools.