1. Melbourne Sydney Brisbane Wellington Johannesburg Cape Town Windhoek Australia’s Supply Chains – Innovate or Fail! 18 June 2008 Liesbet Spanjaard Director, SAHA International Limited 8 th BITRE Transport Colloquium

2. 2 Innovate or fail! Background and policy environment Key characteristics of the transport & logistics industry Challenges for industry Innovation drivers Barriers to innovation Opportunities to innovate

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4. 4 Why is innovation important? Innovation is a key driver of economic growth Innovation is important for sustaining growth at a time of: –increasing costs –increased demand for resources –infrastructure constraints, and –pressures to reduce carbon footprints

5. 5 The policy environment The Dept. of Innovation, Industry, Science & Research established 2007, ordered review of Australia’s innovation system In 2005, the Smart State strategy launched in Queensland outlining an investments in several areas including innovation In 2006, NSW Premier launched innovation statement to: –Develop an innovation strategy to support economic growth in NSW –Focus on industries with strategic importance with the greatest potential for innovation In 2007, Victoria released a proposal for a National Innovation Agenda to develop coordinated approach to policy

6. 6 Transport and logistics – the invisible driver Freight and logistics represents around 12% of NSW’s GDP The industry employs more than 500,000 people in NSW It connects and supports every community across the country It touches every product before (and after) it is consumed The sector has a direct impact on the cost of living

7. 7 Transport and logistics – the invisible driver However, the industry is: Highly fragmented Diverse and incorporates many varied activities Highly competitive Structured around markets and corridors not political boundaries About supply chains not modes Reliant on a relatively small number of major infrastructure gateways Typified by low level of publicly available data Therefore: Large sections of the industry do not invest in innovation The cost of regulatory burden is especially important Planning for freight is difficult

8. 8 Supply chains are complex…. The movement of imported components at Electrolux The complex nature of the Electrolux supply chain is typical of many, and illustrates the need for collaboration and information sharing to maximise efficiency

9. 9 Challenges for the industry Changing world economic geography Supply chains are becoming longer Increasing pressure from customers New distribution models are emerging Increasing energy costs

10. 10 Challenges for the industry Labour and skill shortages Increasing compliance requirements Growing urban populations Increasing environmental awareness

11. 11 Key drivers of innovation Price driven nature of operations Infrastructure capacity issues Cost of transport relative to product price Labour supply issues Service delivery constraints

12. 12 Barriers to innovation Limited ‘co-opetition’ Limited interfacing Domination of incumbent organisations…….. Certain supply chains in NSW have adopted innovative approaches to overcoming these barriers

13. 13 Opportunities to innovate - information Successful collaboration in NSW export coal and export grain supply chains Both have infrastructure capacity constraints Both have shared sensitive information to achieve industry-wide benefits Both required ACCC approval to share information and collaborate

14. 14 Opportunities to innovate - technology New technologies are emerging as a result of market pressures and are being implemented to improve productivity Change has been exponential in the development of information and communications technology (ICT) Costs of systems have reduced Web based freight matching systems represent a good example of innovation The rate of technology evolution is rapid - investment decisions can be challenging

15. 15 What role can government play? Increasing efficiency of transport system though better infrastructure planning and provision Improving competitiveness and productivity through better regulations Helping industry make informed decisions Improving industry data to assist policy making

16. 16 What do you think? What do you think are going to be the most revolutionary innovations in the future of transport and logistics? What do you think are going to be the most important innovations for the future? Who should have responsibility for making sure it happens?