life science logistics survey- december 2015 · live track and trace, and the use of a lead...
TRANSCRIPT
Megan Toher
Leading Edge Group Charter House, Harbour Row, Cobh, Co. Cork
LIFE SCIENCE LOGISTICS SURVEY- DECEMBER 2015
1
Table of Contents
Contents Table of Contents .................................................................................................................................... 1
Introduction ............................................................................................................................................ 2
Survey Methodology ............................................................................................................................... 3
Acknowledgements ................................................................................................................................. 3
Summary ................................................................................................................................................. 4
Detailed Survey Analysis ......................................................................................................................... 5
General Information ............................................................................................................................... 5
Warehousing Requirements ................................................................................................................... 9
Transport Packaging Requirements ...................................................................................................... 15
Shipping Requirements ......................................................................................................................... 18
Logistic Service Providers (LSPs) ........................................................................................................... 22
Customs Compliance ............................................................................................................................. 29
Logistics as a Discrete Skill Set .............................................................................................................. 32
Research and Development .................................................................................................................. 39
Conclusion ............................................................................................................................................. 44
References ............................................................................................................................................ 45
2
Introduction
Ireland is one of the world’s most open economies to international trade, “Irish exports represented
over 110 per cent of GDP in 2014. Reflecting a long-standing policy of attracting inward foreign direct
investment (FDI), the foreign-owned sector makes a significant contribution, accounting for a quarter
of Gross Value Added (GVA) in 2013” (Department for Finance, 2015). Ireland is located on the fringes
of Europe. This peripheral location has implications for logistical costs. Efficiency and effectiveness
of logistics in peripheral EU economies is important for competitiveness, considering transport
journeys for goods will be longer and costs of exports significantly higher (Forfás, 1996). Looking
forward, one of the keys to economic success for any country will be its managerial expertise in
advanced SCM skills (Smyth and Huber, 2005).
Previous research by Sweeney et al. (2008) identified the need for further widespread adoption and
diffusion of supply chain practices to address the location challenges. Education and training also
needs to be addressed in order to rectify the SCM skills deficiency and support the uptake of such
practices.
This survey was created to enhance understanding of logistics and supply chain activities within the
Life Science sector in the Republic of Ireland in 2015. The three core objectives of the survey were to
help identify:
1. Future industry requirements
2. Logistics capability gaps
3. Levels of satisfaction with logistics services and the industry’s attitude to outsourcing
This survey was distributed to 160 supply chain and logistics managers and professionals currently
working within the Life Science industry. There were 29 responses creating a response rate of 17.5%.
The core objectives were measured within the survey through sections on general information,
warehousing requirements, transport packaging requirements, shipping requirements, Logistic
Service Providers (LSPs), customs compliance, logistics as a discrete skill set and R&D to gain a holistic
understanding of the sector.
3
Survey Methodology Given the large level of supply chain and logistics managers and professionals employed in the Life
Science industry in the Republic of Ireland, random probability sampling was carried out. A selection
of logistics managers and professionals was sourced through LinkedIn and the IDA’s Life Science
directory. A cross sectional study was carried out through the deployment of an online survey. A mix
of open, closed, matrix and contingency questions were utilised.
Acknowledgements We would like to thank Megan Toher for her contributions. We would also like to thank Dr Eoin Plant,
Assistant Head School of Transport Engineering, Environment and Planning at the National Institute
for Transport and Logistics for his contribution to this report.
We would also like to thank the supply chain professionals from the following organisations for taking
time out to complete this survey. Please note that some organisations have multiple facilities in Ireland
and multiple responses came from some of these sister facilities.
Roche Pharmaceuticals
Design Wise Automation
Icon
Truelife
Neo Surgical
Reagecon
Life Scientific
Bio Medical Research
Serosep
Audit Diagnostics
Carl Stuart
Boston Scientific
BWT Pharma & Biotech
Becton Dickinson
Bausch and Lomb
Trinity Biotech
Pfizer
Phardiag
Ash Technologies
Marvao Medical
ID Technology
Ethicon Biosurgery
Astellas
Bristol Meyers Squibb
Siemens
Covidiens
DePuy Synthes
Baku GLS
4
Summary The following are the summary findings of the survey.
72% of total respondents have manufacturing operations in Ireland. 73% of those who
responded believed that their organisation planned to increase manufacturing activities over
the next two years.
88% forecast positive growth over the next two years, which is line with positive growth
forecasts for the economy as a whole.
Controlled Ambient (+15 to 25C) and Chilled (+2 to +8C) are key warehousing requirements.
The results show a low outsourcing rate for warehousing activities. Over the next two years
there was little planned change to current warehousing practices.
Results on warehousing trends over the next five years indicate that respondents do not
believe that warehousing is a critical logistical issue. It can be inferred that the current levels
of capacity or current practices for warehousing activities will likely not see much change over
the next five years.
The results indicate passive thermal insulation is a core requirement for transport packaging
within the Life Science industry.
Questions around packaging requirements indicate that these activities are largely performed
in-house and there is no planned change over the next two years.
Outsourcing is more prevalent in the area of shipping when compared to other logistics
activities.
The report indicates that logistics activities lend themselves to outsourcing.
Live track and trace, and the use of a lead logistics provider, are of significant importance to
respondents. Regional logistics service provider distribution centres and live carbon emission
reporting scored low to moderate in importance.
Respondents view their logistics provider as a long term strategic partner.
41% of respondent organisations utilise a Life Science competence centre in other operating
territories. 70% of respondents stated that they could utilise a centre in Ireland in the future,
but were undecided.
69% of respondents believed logistics is viewed as a core competency within their own
organisation.
56% viewed training in logistics as a long term investment in the efficiency of their
organisations.
IPICS/APICS and the Irish Institute of Purchasing and Materials Management were identified
as the two main practitioners of training in logistics and supply chain.
67% of organisations involved in R&D activities plan to continually expand their R&D activities
in Ireland over the period 2016 to 2018.
5
Detailed Survey Analysis
General Information
Q1 How would you classify your organisation within the Life Science sector?
Graph 1
Other Label Manufacturers
Plant Product (Agrochemicals)
Central Lab for Chemical Research
Commentary
Graph 1 illustrates the breakdown of organisations’ areas of activity within the Republic of Ireland. As
this was a multiple choice question, two respondents selected more than one.
Predominantly respondents were from the pharma and medical devices services (66%). This was
followed by diagnostic/instruments, human and veterinary manufacture or medical aids/finished
products (47%). 7% of respondents classified themselves as development technologies.
The high percentage of pharma and medical devices services reflects this sector’s general market
share in Ireland.
0.0%
0.0%
3%
7%
14%
14%
17%
17%
17%
66%
IT for Health
Medical Sub-Supply
Food and Drink
Development Technologies
Medical Aids/Finished Products
Chemicals
Diagnostic/Instruments
Human and Veterinary Manufacture
Other (please specify)
Pharma and Medical Devices Services
6
Q2 Please select the options that best describe your organisation. (Select all that apply) Graph 2
Commentary
65% of respondents identified themselves as multinationals. Of those 74% engaged in manufacturing
in Ireland and 26% had a supply chain function. 41% of the organisations who responded were
indigenous Irish companies. Of those, 58% engaged in manufacturing.
72% of the total number of respondent organisations have a manufacturing base in Ireland. The
results indicate that the core of the Life Science Sector’s activities in Ireland are focused on
manufacturing and the results are based on responses from large multinational organisations.
17%
17%
24%
48%
Multinational with Supply Chain Service Centre in Ireland
Indigenous Irish company with Supply Chain ServiceCentre in Ireland
Indigenous Irish company with manufacturing in Ireland
Multinational with manufacturing in Ireland
7
Q3 Please describe your organisation's commercial outlook for the next two years. Graph 3
Commentary
89% of respondents forecasted positive growth over the next two years. Only three respondents said
they foresaw low growth for their organisation. This could be a reflection on the wider positive
forecasts for the Life Science industry as well as positive growth forecasts in both the Irish and the
wider economy. This will be further reflected on later in the report when the attention is focused on
capacity.
37%
52%
11%
Significant growth
Moderate growth
Low growth
Negative growth
8
Q4 Over the next two years what does your Irish organisation plan to do?
Graph 4
Commentary
Following on from question 3, 75% of respondents expect to see an increase in manufacturing levels.
The results indicate that there will be a need for increased supply chain and logistics activities as the
respondent organisations increase production. The expected increase in manufacturing also reflects
increased output for the last two and a half years in Irish manufacturing according to the Investec
Purchasing Managers’ Index (PMI) (Markit Economics, 2015). In due course, this report will examine
training goals and potential outsourcing to understand how this increase in manufacturing will be
managed.
0%
11%
11%
22%
33%
75%
Reduce level of R&D activities in Ireland
Increase levels of outsourcing of internal activities
Maintain current levels of R&D activities
Maintain current levels of manufacturing
Increase levels of R&D activities
Increase levels of manufacturing
9
Warehousing Requirements
Q5 Please select all relevant warehousing requirements
Graph 5
Commentary
Temperature controlled and cold chain logistics are key aspects of warehousing and logistics
requirements. This result is supportive of general media reports of substantial growth in cold chain
logistics over the next 5 years. However, segregated spaces appears to be a lower priority for Life
Science companies. As with many logistics activities, security is also highlighted as an important
concern.
12.5%
25.0%
31.3%
43.8%
50.0%
56.3%
Other (please specify)
Segregated spaces
High security levels
Frozen (less than -20C)
Uncontrolled - general cargo
Chilled (+2 to +8C)
Controlled Ambient (+15 to +25C)
10
Q6 How does your organisation currently carry out the following warehouse activities?
Warehousing activities carried out in-house
Graph 6
Warehousing activities outsourced
Graph 7
11
11
12
13
14
Breakdown of inbound shipments
Finished goods storage
Finished goods pick and pack
Raw material storage/kitting
Preparation of raw materials for use in production
1
2
2
2
2
2
Preparation of raw materials for use in production
Breakdown of inbound shipments
Raw material storage/kitting
Finished goods pick and pack
Finished goods storage
Finished goods pick and pack
11
Future Changes (Next two years)
Graph 8
Commentary
The aim of this question was to assess the level of warehouse activities that are undertaken in-house
in contrast to outsourced and to assess how this will change over the short to medium term. Graphs
6, 7, and 8 examine how organisations currently perform warehousing activities and if they plan to
change their current practises.
It is evident from the respondents that most warehousing activities will remain in-house and that
respondents do not believe that there will be a change in the next two years. Only one of those
currently outsourcing plan a change in the next two years, which is to change their provider for
finished goods storage and finished goods pick and pack. Overall, respondents appear to manage
warehouse operations internally. There could be a number of factors for this e.g. control; capacity
investment and utilisation; tacit skills and competencies from many years of in house experience.
These results compare quite differently to that of PWC’s (2015) global pharmaceutical and Life Science
organisations sector specific analysis. In PWC’s study approximately 35-40% of warehousing activities
were outsourced. This potentially could be explained by local versus global supply chain decisions. It
may prove easier to maintain warehousing activities in Ireland if the organisation already has a
manufacturing operation here.
1
1
1
14
14
15
12
11
Breakdown of inbound shipments
Raw material storage/kitting
Preparation of raw materials for use in production
Finished goods storage
Finished goods pick and pack
No Change planned Changing Outsourcing provider On site outsourcing
12
Q7 Please estimate your total warehousing capacity in square meters.
The large capacity in companies 5 and 7 below aligns with the fact that they carry out their own
warehousing activities. The average warehouse capacity is 7,463 m². Given the wide variety in the size
of the organisations who responded and the low response rate, a wider study on capacity would need
to be carried out to gain a clearer understanding on the level of warehouse capacity held by Life
Science companies in Ireland.
Table 1 Warehousing capacity in m²
Company Capacity in m²
Company 1 40
Company 2 1,200
Company 3 500
Company 4 5,000
Company 5 20,000
Company 6 3,000
Company 7 22,500
13
Q8. Warehousing trends over the next five years
This question has been broken into three separate graphs for ease of understanding.
Q8.1 Over the next five years, how would you see the trends in warehousing capacity changing?
Graph 9
Q8.2 Over the next five years, how would you see the trends in the use of third party logistics and
warehousing operators changing?
Graph 10
6%
40%
27%
27% Strong Reduction
Slight Reduction
No Change
Slight Increase
Strong Increase
7%
33%
53%
7%
Strong Reduction
Slight Reduction
No Change
Slight Increase
Strong Increase
14
Q8.3 Over the next five years, how would you forecast the investment cost of real estate to create
warehousing capacity?
Graph 11
Commentary
Graphs 9, 10 and 11 illustrate the respondents’ perceptions of the demand placed on warehousing
over the next five years.
Graph 9 indicates 54% of respondents believe there will be a need for increased capacity. Graph 10
shows that 86% of respondents believe that there will be either no change or a slight increase in the
use of 3rd party operators for warehousing.
Graph 11 illustrates that 93% of respondents believe there will be no change or a slight increase in the
cost of real estate to increase warehousing capacity. This is an interesting result given the rapid
increase in prices in the property market. This can be examined in future studies to understand if this
is partially due to an abundance of existing warehousing stock.
Respondents are expecting capacity to increase over the next few years. This will probably lead to an
increase in warehousing investment, as they don’t expect to significantly increase their outsourcing
activities. It is unclear whether this increase is expected to be current activities undertaken by 3PLs or
additional activities. The following questions will examine the activities in more detail.
40%
53%
7%
Strong Reduction
Slight Reduction
No Change
Slight Increase
Strong Increase
15
Transport Packaging Requirements
Q9 Please select all relevant transport packaging requirements. Graph 12
Other Cardboard Outers
Corner Pieces Deck Boards
Pallets & Boxes
Commentary
Packaging is an important aspect of logistics and transport. However, it is even of greater importance
for protecting more fragile temperature sensitive products. The results indicate passive thermal
insulation is a core requirement for transport packaging within the Life Science sector. This is of no
great surprise as organisations attempt to balance protecting their product and cost (packaging and
transport). The choice of passive versus active usually comes down to a total costs analysis, active
being less popular in this study. This is usually due to the cost of investing in the equipment and
running costs.
25.0%
25.0%
33.3%
50.0%
Other (please specify)
Passive - gel pack
Active (Envirotainer, CSafe etc.)
Passive - thermal insulation
16
Q10 How does your organisation currently carry out the following packaging requirements?
This question has been broken into three separate graphs for ease of understanding.
Q10.1 Packaging Requirements carried out in-house
Graph 13
Q10.2 Packaging Requirements outsourced
Graph 14
Q10.3 Future changes (Next two years)
Graph 15
11
10
13
Storage of transport packaging
Preconditioning of transport packaging
Staging area for transportation packaging
2
0
1
Storage of transport packaging
Preconditioning of transport packaging
Staging area for transportation packaging
1
0
0
12
12
14
Storage of transport packaging
Preconditioning of transport packaging
Staging area for transportation packaging
No change planned Move task to third party site
17
Commentary
Question 10 identified the current packaging activities performed in-house and outsourced. The
responses provided an insight into how activities may change over the next two years. Most packaging
activities are carried out in house, with only one respondent planning any change over the next two
years.
Over the next two years respondents were given the option of moving activities to onsite outsourcing
and changing outsourcing provider - neither of which were selected. The results were similar to
warehousing activities, suggesting that these activities will remain in-house. The results mirror
previous points on respondents’ views that outsourcing of these activities will remain relatively
consistent.
18
Shipping Requirements
Q11 How does your organisation carry out the following shipping tasks?
This question has been broken into two separate graphs for ease of understanding.
Q11.1 Current activity
Graph 16
Q11.1 Future Changes (Next two years)
Graph 17
Commentary
Graphs 16 and 17 examine how respondents carry out shipping tasks currently and how they plan on
performing these tasks over the next two years.
The results suggest there is more of a willingness to outsource shipping activities and tasks. A possible
explanation for this is the need for IT infrastructure (investment) and the speciality of track and trace
services. There is a logic here that shipping is a specialist service and would not be a core competency
of the manufacturers. However, one could also speculate that the protection of the quality of products
in this sector is of upmost importance and therefore respondents may wish to maintain direct control
over these activities. Preparation of specialist shipping documentation (CoC and customs documents)
can also be viewed as a specialist task. However, most of the respondents have probably gained the
tacit knowledge to undertake these activities from years of experience.
11
11
12
7
2
1
1
4
Picking finished goods from warehouse
Packaging finished goods for transportation
Preparation of shipping documents (packing lists, CoC,commercial invoices etc)
Shipment Visibility (track and trace)
Outsource In House
11
9
10
10
1
1
2
1
1
Picking finished goods from warehouse
Packaging finished goods for transportation
Preparation of shipping documents (packing lists, CoC,commercial invoices etc)
Shipment Visibility (track and trace)
Changing outsourcing provider On-site outsourcing No change planned
19
Q12 Please estimate in tons the volume of goods transported by the following shipping
methods.
Table 2
Shipping Method Response Average
Air 16,071
Sea (Shipping Containers) 2,000,129
Rail 0
Road 1,121
Sea+ Road (ferry crossing) 780
Breakdown of estimates of shipping in tons based on individual responses.
Table 3
Air
Sea (Shipping
Containers) Road
Sea+ Road (ferry
crossing)
100 390 390 1,550
5,835 105 5,165 10
420 20 25
90,000 8,000,000 10
50 15
20
Commentary
Table 2 and 3 typically represent the breakdown of modes of transport for international exports from
Ireland. Due to the expensive cost of international air transport it is usually the exception rather than
the norm, such as to expedite critical orders etc. The majority of goods in this sector are being
transported via sea. None of the respondents indicated the use of rail freight. This is of no surprise
considering Ireland is an island country and the nature of the transport journey from the Greater
Dublin Area to Dublin port would not make rail practical for land surface transport to the port.
20
Q13 Does your organisation export?
Graph 18
Commentary
The results indicate that while all those who carry out manufacturing activities export, 57% also serve
the Irish market. This graph suggests the Life Science sector in Ireland is export orientated. Due to
economies of scale and the size of the domestic market, exporting would appear to be a necessity.
Referring the reader back to the points made in the introduction, and Ireland’s peripheral location,
logistics efficiency and effectiveness are important to maintain and increase the competitiveness of
their Irish operations. However, in relation to supply chain management, exporting is looking
downstream. What is also important is the efficiency and effectiveness of the logistics operations of
imports, raw materials etc. upstream. When viewing supply chains as a “cradle to grave” approach,
they are “only as good as their weakest link” and continuity of supply is of utmost importance.
Although inbound logistics may be the responsibility of the seller, it potentially has knock on effects
in the supply chain.
43%
57%
Yes
No
Serves both domestic andexport market
21
Q 14 Which regions does your organisation export to from Ireland?
Table 4
1 2 3 4 5 6 7 Mean
Average
Europe 8 4 0 0 1 0 0 1.25
North
America
4 4 0 1 1 1 1 2.83
Asia 0 2 5 0 1 0 0 3.00
Middle
East and
Africa
0 1 1 1 2 0 1 4.33
Austral
Asia
0 0 0 3 0 2 0 4.80
Latin
America
0 0 2 0 1 1 1 4.80
Russia 0 0 0 1 1 1 2 5.80
Commentary
Question 14 was designed to identify key destinations of product for the Life Science sector.
Respondents were asked to rank the regions in order of sales and only rank those regions to which
they export from Ireland, with 1 being the most and 7 being the least. Evidently, the traditional export
markets for Irish manufacturing, Europe and North America, lead the way in this sector. Russia scored
the lowest, therefore it is not a key export target identified in this survey. Further freight flow details
such as volumes, types of goods, etc. could be examined in a follow up study.
22
Logistic Service Providers (LSPs)
Q15. How does your organisation carry out the following logistics tasks?
This question has been broken into two separate graphs for ease of understanding.
Q15.1 Current Activity
Graph 19
10
10
10
7
14
14
10
8
7
8
8
4
4
3
6
8
1
0
0
5
0
1
1
1
Route planning and qualification services
Procurement of freight services
Ad hoc freight price
Kanban management
Customer invoicing services
Claims management
Freight invoice auditing
Shipment in transit monitoring
N/A Outsource In House
23
Q15.2 Future Changes (Next two years)
Graph 20
Commentary
Graphs 19 and 20 indicate that logistics tasks are a highly outsourced set of activities. These results
suggest that respondents are more willing to outsource activities related to transit of goods rather
than packaging and warehousing. The results fit with the traditional aspects of logistics outsourcing,
the physical movement of goods. These findings sit well with previous reports by Capgemini (2014)
on the global third party logistics market and also PWC (2015) report on the main reason for
outsourcing logistics is for cost reduction (minimisation).
1
314
17
16
14
15
16
16
16
Route planning and qualification services
Procurement of freight services
Ad hoc freight price
Kanban management
Customer invoicing services
Claims management
Freight invoice auditing
Shipment in transit monitoring
No change planned Changing outsourcing provider Move task to third party site
24
Q16 How does your organisation manage the following risk and recovery tasks?
This question has been broken into two separate graphs for ease of understanding.
Q16.1 Current activity
Graph 21
Q16.2 Future activity (Next two years)
Graph 22
Commentary
Supply chain risk management and protecting continuity of supply has become a hot topic of late.
Following on from question 15, graphs 21 and 22 examine how respondents carry out risk and
recovery tasks. A point to note on graph 21 is that 33% of those who responded to the question do
not in fact manage risk and recovery tasks. There was no expected change to how risk and recovery
tasks will be carried out over the next two years.
5
8
7
6
4
5
4
3
3
Dynamic route planning
Exception management
Emergency recovery (natural disasters)
Not managed– Managed by a third party– In House–
10
11
12
Dynamic route planning
Exception management
Emergency recovery (natural disasters)
No change planned Change outsource provider On site outsourcing Move to a third party location
25
Q17. The importance of the Logistics Services to your organisation on a scale of 1-5; with 1
being of no importance and 5 being crucially important.
Table 5
1 2 3 4 5 Mean
Average
Live track and trace 0 0 4 2 10 4.38
Use of a lead (primary)
logistics provider
0 1 3 4 8 4.19
Live Temperature control and
tracking
4 2 1 1 8 3.44
Consolidation/merge in
transit
4 3 5 2 2 2.69
Regional Logistics Service
Providers distribution centres
6 1 4 3 2 2.63
Live carbon emission
reporting
4 2 8 1 1 2.56
Commentary
Table 5 illustrates the results for question 17, the importance of logistics services. Results are
expressed on a scale of 1-5; with 1 being of no importance and 5 being crucially important.
The results show that the use of a lead logistics provider and live track and trace are the most
important logistics services. Regional logistics services provider’s distribution centres and
consolidation/merge in transit received low to medium importance scores. This is an interesting result
when investigating the potential use of third party sites for supply chain and logistics activities.
26
Q18 In general, how would you describe your relationship with Logistics Service Providers?
Graph 23
Commentary
Graph 23 clearly indicates that respondents’ view their logistics provider as a long term supplier, with
structured annual reviews. This perception was matched by the view that their logistics provider was
a strategic partner. Collaboration and close communication are essential for effective integration and
operations. Research indicates that collaboration is increasing in 3PLs (Capgemini, 2014; Plant and
McGovern, 2011)
These results would suggest that Irish Life Science companies hold a preference for building a long
term strategic partnership with logistics providers. This is an essential element of outsourcing in order
to maintain a strong and positive relationship, delivering value for money.
47%
47%
6%
A strategic partner with myorganisation; we hold regularperformance reviews
Long term supplier for myorganisation; we review costperformance annually
Routinely re-bid the businessacross all Logistics ServiceProviders to get the lowest cost
Would like to develop a strategicpartnership in the future
27
Q19 Does your organisation utilise a Life Science Logistics Competence Centre in other
operating countries?
Graph 24
Q20 Would your organisation utilise a Life Science Logistics Competence Centre if one was
located in the Rep of Ireland?
Graph 25
Commentary
This question follows on from the previous point and probes into Life Science specific logistics. Graphs
24 and 25 examine the respondent’s current use of Life Science Logistics Competence Centres in other
operating countries and potential use of one in Ireland.
The results show that 59% of respondents do not utilise a Life Science Competence Centre overseas
and 18% stated that they would utilise a Life Science Competence Centre if available in Ireland. Over
two thirds were uncertain, which suggests that more information and awareness of the benefits and
costs of utilising a Life Science Logistics Competence Centre in Ireland is needed.
41%
59%
Yes
No
18%
12%
70%
Yes
No
Maybe
28
Q 21 Please select where you believe would be the best location to establish a Life Science
Logistics Competence Centre in the Rep of Ireland?
Graph 26
Commentary
The results naturally favour the Dublin region given the location of a large port and international
airport. What is interesting is that the West was the second most selected location. Given that several
of the respondents were based in the Shannon or Galway region this could possibly be an indication
that they would like more logistics infrastructure located in the western half of the country closer to
their sites. As logistics efficiency is essential for a peripheral open economy such as Ireland, a Life
Science Competency Centre could enhance the efficiency and effectiveness on an economic level,
thereby further increasing Ireland’s ability to attract and maintain foreign direct investment in this
skilled sector.
44%
13%
25%
6%
12% 0%
Dublin
Cork
West
South East
Midlands
Other (please specify)
29
Customs Compliance
Q22 How does your organisation carry out the following custom related tasks?
This question has been broken into three separate graphs for ease of understanding.
Q22.1 Customs related tasked carried out in house
Graph 27
Q22.2 Customs related tasks outsourced
Graph 28
10
8
7
8
5
11
5
13
11
Commodity Tariff classification
Binding Tariff classification
Import Single Administration Document (SAD)
Duties and Tax advancements
Application for Processing under Custom Control (PCC)
Interstat reporting and completion
Export Single Administration Document (SAD)
Certificate of Origin
Eur1 Movement Certificate
5
4
6
7
9
2
7
2
3
2
2
0
2
3
1
Commodity Tariff classification
Binding Tariff classification
Import Single Administration Document (SAD)
Duties and Tax advancements
Application for Processing under Custom Control (PCC)
Interstat reporting and completion
Export Single Administration Document (SAD)
Certificate of Origin
Eur1 Movement Certificate
Don't Know Outsource
30
Q22.3 Future Plans (Next two years)
Graph 29
Commentary
The study now turns its attention to customs activities. Graphs 27 and 28 illustrate how respondents
currently carry out customs related tasks. There is a higher uptake in outsourcing customs activities in
comparison to shipping, transport, packaging and warehousing activities. This is quite a specialist area
with specific knowledge required. Therefore it can be perceived as not being a core competency for
manufacturing organisations.
Respondents were also asked, over the next two years if they planned to move their customs activities
to onsite outsourcing (in-plant) and if they planned to change service provider. Neither option was
selected.
1
2
12
11
11
13
13
11
10
13
12
Commodity Tariff classification
Binding Tariff classification
Import Single Administration Document (SAD)
Duties and Tax advancements
Application for Processing under Custom Control (PCC)
Interstat reporting and completion
Export Single Administration Document (SAD)
Certificate of Origin
Eur1 Movement Certificate
No change planned Move task to third party site
31
Q23 The importance of these customs classifications to your organisation.
Table 6
1 2 3 4 5 Mean
Average
Having "Known
Consignor" status
1 2 1 1 8 4.0
Having "Authorised
Economic Operator
(AEO)" status
1 2 3 2 4 3.5
ATR registration 4 1 7 1 0 2.4
A.T.A. carnets
registration
5 1 6 0 0 2.1
Commentary
The survey attempted to investigate a number of key customs classifications. Results were gathered
on a scale of 1-5, where 1 being of no importance and 5 being of crucial importance. Known Consignor
status is clearly the most important custom status that respondent organisations value. Known
Consignor status allows the consignor to ship the goods from source without additional security,
thereby helping to streamline the transportation process
Q24 Please detail any additional areas of concern in relation to customs
There was only one response to question 24. The respondent identified customs compliance across
all customs related operations as a specific area of concern.
32
Logistics as a Discrete Skill Set
Q25.1 Is logistics viewed as a core competency within your organisation?
Graph 30
Q25.2 In your opinion, is logistics viewed as a core competency within the industry?
Graph 31
Q25.3 Does your organisation regard logistics upskilling as a core training activity?
Graph 32
50%
31%
19%
Yes
No
In transition to adopting
56%25%
19%
Yes
No
In transition to adopting
25%
31%
44%Yes
No
In transition to adopting
33
Commentary
Graphs 30 and 31 compare the respondents’ understanding of how logistics is viewed within their
organisation and how it is understood in the wider industry.
In graph 32, 69% of respondents believe logistics upskilling is currently, or will soon be, a core training
activity. When compared to results for executing logistics activities and the high level of outsourcing,
it is interesting to see that respondent organisations are prioritising logistics upskilling. In many
manufacturing sectors around the globe, logistics is not reported as a core competency but more of a
specialist activity where specialist providers (3PLs) can gain better economies of scale and scope (PWC,
2015; Capgemini, 2014).
The survey’s finding are relatively comparable to the Expert Group on Future Skills Needs (2015). The
report highlights that a large skilled workforce in logistics will be required in order to protect economic
growth. They made a number of recommendations around future skills development activities in
logistics.
34
Q26 The Supply Chain Management department includes logistics as a discrete skill. Graph 33
Commentary
60% of the respondents see logistics as a discrete activity, potentially a subset of supply chain
management. The responses also indicate that these organisations are conscious of the skills required
in order to effectively complete logistics tasks in-house.
60%
40%Yes
No
35
Q27 Actively seek out supply chain staff with a strong logistics skill set.
Graph 34
Commentary
40% of respondents did not believe that logisitics as a discrete skill was present in their own supply
chain department. However, 53% of respondents said they actively seek out supply chain staff with a
strong logistics skill set. The broader economy is demanding more freight transport, distribution,
logistics skills (FTDL). AECOM (2014) cited by the Expert Group on Future Skills needs (2015) suggest,
that as the Irish economy expands and people retire, that 15,000 job vacancies in the FTDL sector
would be available between 2015-2020.
14%
33%53%
0%
Strongly DisagreeDisagreeAgreeStrongly Agree
36
Q28 Graduates in Supply Chain Management have a clear understanding of Good
Manufacturing Practices / Good Distribution Practices (GMP/GDP)
Graph 35
Commentary
Supply Chain Management is a relatively new discipline in contrast to many other management
disciplines. Logistics and supply chain management courses at undergraduate and postgraduate level
are gradually increasing their prominence in many higher level education institutions in Ireland and
overseas. However, it is interesting to note that 38% of respondents disagree with “clear
understanding of GMP/GDP”. There are some questions as to whether the respondents applied this
to all graduates or just management graduates, or SCM graduates. The term clear understanding
could be considered quite subjective. The Expert Group on Future Skills Needs (2015) also highlighted
the lack of knowledge among students in relation to career possibilities in the FTDL sector being an
issue. This will have an effect on higher education course uptake and hence higher level educated
professionals.
38%
54%
8%
Strongly Disagree
Disagree
Agree
Strongly Agree
37
Q29 Does your organisation invest in internal training for staff in logistics?
Graph 36
Commentary
Following on from organisations’ perceived importance of logistics skills, graph 36 shows an
interesting result. When asked if their organisation invests in internal training in logistics, 44% stated
that they didn’t.
There seems to be gap between providing internal training and viewing logistics as a core training
activity. In question 27, 86% of respondents stated that they actively seek out candidates with strong
logistics skills.
A positive preference for external training or pre-existing skills can be deduced, as 69% of respondents
were positive toward logistics training as a core activity in the results for question 25 but only 56%
invest in internal training.
Q30 What is the view of this training within your organisation?
Graph 37
Commentary
Training in logistics is carried out to improve efficiency and update existing skills.
50%44%
6%Yes
No
Plan to implement in the next 12months
6%
56%
38%
Necessary to fill gaps in the skillmarket
A long term investment in theefficiency of the organisation
An update of existing skills
38
Q31 Please select if employees from your organisation have received training from: Graph 38
Other Waterford Institute of Technology
Trinity College
Dublin Institute of Technology
University of Buckingham
Commentary
Following on from the previous commentary, assessment now turns to external training providers.
IPICS/APICS and the Irish Institute of Purchasing and Material Management are by far the most utilised
training providers. However, a broad base of training providers are identified from various types of
institutions (professional bodies, higher, and further education).
2
2
2
3
3
4
4
4
4
4
5
5
6
8
Solas
Life Science Ireland
Chartered Institute of Purchasing and Supply
Chartered Institute of Logistics and Transport
Irish Supply Chain Management Institute
Skillnet
University College Cork
National University of Ireland Galway
Dublin City University
University College Dublin
University of Limerick
Other (please specify)
Irish Institute of Purchasing and Materials Management(IIPMM)
IPICS/APICS
39
Research and Development
Q32 R&D spend in Ireland over the last 3 years
Graph 39
Q33 R&D spend in Ireland over next 3 years
Graph 40
Commentary
Graphs 39 and 40 illustrates respondent organisation’s spending on research and development (R&D)
in Ireland over the last three years and the plan for the next three years. 67% of organisations plan to
continually expand their R&D activities in Ireland. The reasons given for this increase is new product
development.
67%0%
33%Increased
Decreased
No Change
67%0%
33%Increased
Decreased
No Change
40
Q34 Does your organisation use/consider using Ireland as an logistics export platform
supporting R&D subsectors
Graph 41
Other Digital Magnification
Commentary
As only 31% of respondents answered this question, a wider study would need to be performed to get
a clear picture of Ireland being used as an export platform for R&D.
56%
0%
33%
0%
11%None planned
Laboratory Samples
Clinical Trials Supplies
Managed Access Programmes(individual Patient Supplies)
Hand Assembly Kits of (i.e. Lab Kits,Theatre Procedures packs etc)
Other (please specify)
41
Q35 Does your organisation believe Ireland has benefits above other European locations to
support the R&D Supply Chain?
Graph 42
Commentary
Looking beyond logistics skills and expertise, question 35 seeks to assess other factors that affect
location decisions of R&D activities. The respondents identified relative proximity to current
manufacturing locations as a key criterion, as this would assist with knowledge transfer and tacit
knowledge development in the specialist area. A skilled labour force was also highlighted, alongside
tax advantages.
29%
36%
7%
21%
7%
Skilled Labour Force
Proximity to manufacturing(administration) location
Regulatory advantages
Tax advantage
Other (please specify)
42
Q36 Is there any perceived disadvantage to locating operations associated with R&D activity
in Ireland?
Graph 43
Other No issue
Commentary
The analysis now turns from benefits to perceived disadvantages of locating R&D activities in Ireland.
Skilled labour shortage was the strongest reported disadvantage as identified by 33% of respondents.
However, this result seems somewhat contradictory in comparison to question 35 where skilled labour
force was identified as one of Ireland’s benefits. It is interpreted that Ireland has in general a skilled
labour force, however there are shortages in particular sectors. Logistics infrastructure and Ireland’s
competitiveness were also identified as disadvantages. Smyth and Huber (2005:20) state: “Transport
infrastructure has been generally identified as an over-riding constraint of the continuing development
of business in Ireland“. Infrastructure in Ireland has been identified as an issue for many years and
can have a large negative impact on efficiency. Smyth and Huber also evaluated skills levels in 2001.
The main internal supply chain challenges indicated in that report were a shortage of labour/staff
(39%), and skills shortage (18%). Many of these issues appear to still exist in the Life Science sector in
2015.
0%17%
33%
17%
33%
Financial Risk
Logistics infrastructure (airportlinks)
Access to skilled labour (shortage)
Less competitive than otherEuropean countries
Other (please specify)
43
Q37 List of activities/competencies that respondents believe are not adequately covered by
Logistics Service Providers.
Table 7
Temperature mapping of vehicles
Proactive response times when there are delays with shipments
Honesty in delivering promised service level
Temperature control end to end across the route
Fast communications
Full service from Far East
Lack of continuous improvement
Quality
Track and Trace
Challenging HAZ CHEM costs
Pricing
Shipment of small DG packs
Issues on transparency on freight charges
Customs compliance and verification
Transparency of airport activities
Temperature in airplanes
Need to improve focus on customer service
Driver training on issues of GDP, temperature failure actions etc.
Need to improve cost or time saving efficiencies proposals based on shipping lanes
Solution based services
Commentary
Quite a long and varied list of activities of improvement were identified in this open ended question.
These issues have the potential to impact the supply chain in a number of ways, from delayed
deliveries, impact on the quality of products, damage to customer service, and reputation.
Interestingly a number of these points are linked to trust and honesty in relationships, which we earlier
saw as highly important in building strategic logistics partners.
44
Conclusion
This report focused on attitudes of predominantly manufacturing multinational enterprises in the
Republic of Ireland’s Life Science sector toward logistics skills and outsourcing. The sector believes
that it is positioned for growth over the next two years, in line with the broader Irish economy, led by
an increase in manufacturing. The evidence from the survey suggests that there is little outsourcing
activity in comparison to in-house logistics activities. The main activities outsourced lie with the
physical movement of the goods (transit monitoring, procurement of freight services, route planning)
rather than warehousing activities. The anticipated increase by the respondents of current outsourced
activities and other logistical activities to outsourced partners is low. Considering the evidence from
previous literature and the primary research findings of the current study, there is relevant
justification for the outsourcing of physical transport. Respondents indicated that there would not be
a major shift toward outsourcing auxiliary logistical services such as warehousing, order picking, etc.
However, in the Leading Edge Group consulting division, more progressive attitudes to outsourcing
are being detected from some clients in a minority of instances.
This report did find strong evidence of a gap/shortage in logistics skills. Based on respondents’ views,
the evidence suggests that outsourcing activities over the next two years are expected to be
predominantly based on the physical transport of goods.
In relation to the establishment of a Life Science Logistics Competence Centre in the Republic of
Ireland, there was a very high degree of uncertainty with 70% responding ‘don’t know’ to using such
a centre’s services. However, only 12% gave a negative response. This suggests that respondents have
insufficient knowledge about the activities of such a centre and the efficiencies and cost reductions
such a centre could offer their organisations. As logistics efficiency and effectiveness is essential for a
peripheral open economy such as Ireland, a Life Science Competency Centre could further enhance
logistical efficiency and effectiveness on a national level. Future research should be conducted to
objectively quantify the benefits such a centre could offer and the likelihood of utilising such a centre.
There is also the possibility of taking a reverse approach to this. At what level of
improvement/benefit/KPIs would organisations switch their in-house logistics activities to outsourced
partners?
45
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