Lou Smyrlis

Last week I had the honor of participating in the awarding of the CITA Supply Chain Executive of the Year Award.

Effective supply chain strategies are powerful drivers for a company’s financial performance. Study after study has proven so. Growth, profitability, capital utilization – these metrics are closely watched by investors. ..And all have DIRECT links to supply chain management.

This year, with a possible recession looming, supply chain professionals will also be expected to deliver bottom line savings. A task that will require them to walk the tightrope between rising customer demands for service, and shareholder expectations for returns. While at the same time making sure their executives don’t forget they are just as capable of contributing to top line growth as they are at delivering cost reductions.

Of course, there are those that will say that…in the end... all supply chain management really is …is moving boxes around in the backroom.

Maybe, but not exactly.

I recently spent a few days at the FKI Logistex Research Centre for Materials Handling in Cincinnati. Spend a few hours in world-class place like that watching pick to light systems so intelligent they can figure out every day the best way to place products so they can be picked in the most ergonomic and most efficient manner. Or watch a simulation of 8 conveyor lines (and it can be up to 16) feeding one takeaway merge to the shipping area, capable of moving more than 400 cartons a minute, spaced just two to three inches apart, and you come to understand just how many smarts are involved in making sure everything goes right.

You come to understand that if supply chain management IS about moving boxes, there sure is a heck of a lot of magic that goes with doing so.

Whether it’s the magic delivered by the latest materials handling technology or the magic delivered by supply chain managers willing to lead and to innovate global procurement, transportation and returns strategies, it’s important that these accomplishments be shared and celebrated.

And so we at CT&L feel privileged to be associated with the Supply Chain Executive of the Year Award. This special award honors supply chain managers who have shown the dedication and excellence in their careers to see solutions where others saw only problems.

The people who grace our cover every year – and it’s great to see many of them here tonight-- are those who show VISION. Those who choose to rise ABOVE every day competitive issues to contribute to the betterment of their profession. Those who make a LASTING impression on both their industry and the profession of supply chain management. And those who best understand that supply chain management is a TEAM game.

This year’s winner was a stellar example of all those qualities.

Claude Germain is a well-recognized name in the North American logistics scene. In his latest role as COO of Schenker of Canada Ltd., he leads one of the country’s largest logistics service providers with more than $1 billion in annual revenues.

Prior to his role at Schenker, Germain was CEO and founder of Cube Route, an on-demand software firm specializing in last mile logistics and named one of the Top 25 start-ups in Canada.

He was also chief operating officer and co-founder of Grocery Gateway, an online grocery retailer.

Throughout his career he has earned a reputation as an aggressive investor in new technology, notably customizable Web services to more effectively integrate shippers, carriers, and receivers.

Throughout his career, he has also gained a reputation as a self starter. As his co-workers stressed to us, he is not one to rest on his laurels and wait for the industry to change around him.

At Schenker, he is helping lead the company’s transformation from, as he puts it, “travel agent to tour operator.”

Whereas Schenker used to simply book freight from A to B, making a commission on that transaction, now it operates much like a tour operator, putting all the various aspects of the trip together, and often, being held accountable, sometimes financially, for the overall experience.
He has been instrumental in working internally, with customers and with the carrier and supplier community to work out how to bundle services and drive value into the supply chain role.

As Brian Martin, senior director, Integrated Logistics at Schenker of Canada told us: Claude rolls up his sleeves - he doesn’t fear jumping into the trenches both within the company and with customers. This gains him a lot of respect.

Schenker of Canada’s evolution also required a tremendous culture shift. The organization offered airfreight, ocean freight and ground freight, and each one of those businesses was standalone within the Canadian market, with its own profit and loss responsibilities.

But customers today want value added services that touch every aspect of Schenker, bundled together in a portfolio. And that requires a fundamental shift in thinking, away from the traditional silo approach. Claude is leading the change across Canada by communicating the strategy and vision, and figuring out how to measure and monitor the success of the new strategy with customer-centric goals.

Like all previous Supply Chain Executives of the Year, despite his demanding schedule, Claude looks to promote the industry where and when he can.

He has participated in an innovation panel for the Ontario government on attracting research and development into Canada. And he is active on the board of Supply Chain and Logistics Canada, and the Toronto Chapter of the CSCMP.

He believes that we have to push the profile and value our industry is providing to continue to attract the people we need to make our industry grow.

With the example, Claude is setting, I think we’re off to a good start towards that goal.

B.C.’s newly announced carbon tax should serve as further warning to shippers and carriers across Canada, and in fact across North America, of things to come. Carbon taxes are certain to become a reality across the continent, as they already have in Quebec, as governments are forced to deal with global warming.

And while I don’t disagree with many of the British Columbia Trucking Association’s concerns about the new tax, I think the transportation industry would be better served figuring out how to deal with this new reality than fighting against it.

The issue is beyond the point of debate simply because years of government and, to be fair, industry negligence, have left no room for maneuvering.

Between 1998 and 2007 Canadian greenhouse gas (GHG) emissions climbed relentlessly. They far exceeded the targets set for 2000 and 2005 and we are on track to be about 30% above the Kyoto target for 2010. And we can’t ignore transportation’s contribution to GHG emissions, and trucking’s in particular.

Yes, Canadian cities and resources are so geographically dispersed and we so dependent on trade that we demand a great deal from transportation, trucking in particular. Our transportation system has more kilometres of roads per person than almost any other nation. And yes, the trucking industry has made significant gains in cleaning up the pollution coming from diesel engines, with significant cuts to carbon monoxide, nitrogen oxide and volatile organic compounds emissions. In 2007 it took 60 trucks running the new diesel engines to equal the amount of soot emissions spewed by just one truck sold in 1988. That’s truly an achievement to be proud of; unfortunately it does not address emissions of carbon dioxide, which are the main contributors to global warming.

Transportation activities generate more than one quarter of Canada’s greenhouse gas emissions and they accounted for 28% of the growth in those emissions from 1990 to 2004. In fact, the transportation sector is the fastest-growing source of greenhouse gas emissions. GHG emissions from transportation are expected to exceed 1990 levels by 32% in 2010 and 53% by 2020, if current trends continue.

From 1990 to 2003, the amount of freight carried by all modes combined increased 27%. If we look at trucking on its own, the amount of freight carried by for-hire carriers from 1990 to 2003 was up 75%. Just-in-time delivery of freight was a real boon for shippers -- between 1992 and 2005 manufacturers were able to reduce inventories as a share of shipments by 15%. But to do so required a lot more frequent deliveries, mostly by truck. There are now 80,000 more medium and heavy duty trucks on our roads than there were in 1990.

Given these numbers, how can any government forced to address global warming ignore the transportation industry?

The bottom line is we’ve come to rely an awful lot on transportation, trucking in particular. The very success of our transportation system is what’s leading to its greatest challenge: its sizeable greenhouse gas emissions.