Canadian businesses are still gun-shy about supply chain management technology. You hear it in the way they dance around the technological issues and focus on the basic business bottom line. “”We have a vision for our company, to have a technologically enabled fleet and distribution system,”” says

Yannick Rivard, manager of delivery services at the Société des alcools du Québec, the provincial liquor board. “”But the technology itself wasn’t the goal.””

The goal was to create a system to track every shipment and every truck in the SAQ’s fleet to ensure the safety of drivers on the province’s long rural highways and make sure the booze keeps flowing to the corporation’s 400 outlets. Every truck has an onboard computer and GPS; every case of wine is followed from the warehouse to the customer’s hands. If you need to know if there’s a case of Château Lafite Rothschild 1964 in transit between Montréal and Trois Rivières, Rivard can tell you. He uses logistics management software from Waterloo, Ont.-based Descartes Systems. He just doesn’t use terms such as SCM to describe it.

“”I can distribute products without it,”” he says. “”That isn’t the point. The point is we can manage our distribution more efficiently, eliminate duplicate routes, reduce costs and improve service.””

Rivard is fairly typical of Canadian businesses that were burned when the economic asteroid of 2001 smashed into the e-commerce boom and sent the economy reeling. “”The whole industry and economy when through a major slowdown in the last two years,”” says John Kellett, Canadian general manager of Descartes Systems. “”The trend we’re seeing today is customers who are ready to take out cost and add services, even if they’re not eager to be on the technological bleeding edge.””

Better days ahead

There are hints the global eSCM market is beginning to bounce back. International Data Corp. is bullish in its projection of a 15 per cent annual growth rate in the supply chain management services market. Ben Hume, chairman of Canadian Manufacturers and Exporters, and president of Alcor Ventures, a Langley, BC-based building products manufacturer, notes “”there’s a fair whack of interest among medium and large Canadian manufacturers.””

The problem is that among the small and medium-sized companies that make up 90 per cent of the Canadian business community, SCM is only just finding its way onto the radar. “”And even then, you have to make the distinction between supply chain management and the technology that supports it,”” Hume says. “”There’s a lot of interest in improving supply chain efficiencies, and less excitement in the prospect of deploying more technology to do it.””

Always a little more conservative than their American counterparts, Canadian companies are cautious about technologies that promise so much. Hume says they’ve heard it all before. “”The big issue is electronic SCM technology is both expensive and demanding in terms of deploying it,”” he says. “”There are no real success stories that anyone can point to in Canada right now, and it’s horribly painful.””

Hume says eSCM deployments strike many Canadian enterprises as just another replay of the painful enterprise resource planning boom — or bust, depending on how you look at it. The watchword, once again, is “”integration,”” and they want to know what the benefits of integration are going to be. “”It really is like the ERP experience on steroids,”” Hume says. “”This time, though, it’s not just an internal thing, so companies want some kind of assurances. The reality is unless they have a big gun pointed at them, it’s easier to avoid.””

It may not be easy to avoid for long. “”Canada is the U.S.’s largest trading partner, so a lot of the supply chain activity in Canada is about facilitating cross-border and global trading opportunities,”” says Adrian Gonzalez, senior analyst at the ARC Advisory Group in Dedham, Mass. “”Just look at the automotive industry. There are a lot of automotive suppliers in Canada, and the manufacturers have been moving toward lean manufacturing models, so their Canadian partners have to be tied into it.””

The “”big gun,”” it turns out might not be individual companies’ ROI calculations or manufacturing requirements, but the needs of demanding partners, particularly in distribution and retail where, Gonzalez says, SCM technologies are becoming well entrenched.

Hume points to the experience of his own company.

“”Home Depot came to us and said ‘we’re going to have an electronic relationship,’ and that was that,”” he says. “”That’s where it’s all happening for us. Sixty per cent of our business is now done on an electronic ordering system, and we’re definitely heading down the SCM road.””

The SCM technology vendors are going down the same road, Gonzalez says. With market saturation setting in at the top-end, vendors have become increasingly interested in small and medium-sized manufacturers. Since smaller players such as Alco dominate Canadian manufacturing, this could represent the beginning of broad eSCM in the Great White North. “”Historically, a lot of these solutions were well out of the price-range and way too complex for mid-tier folks. But, as with ERP, the top is saturated, so a lot of the growth is going to be down-market.””

That means the focus has shifted away from many of the flashy system-to-system integration technologies that defined SCM two years ago. It’s not that collaborative design or direct-to-CAM solutions are old hat, it’s just that new SCM customers — the ones being pushed into the technology by partner pressure — are looking for something simpler and cheaper.

Sexy doesn’t always sell

“”Our hottest product this year is our Web Self-Service suite,”” says Andrew Carlson, director of product marketing, for J.D. Edwards supply chain managing and execution solutions. “”People want to open their enterprise data to the Web, but they’re looking for something that’s a little easier. It’s not sexy, but it works.””

Descartes Systems has made a similar down-market move. One of its flagship offerings is its Global Logistics and Services Network, a Web-based distribution management system designed to connect manufacturers and distributors with carriers.

“”We’re selling what companies want to buy,”” says Kellet. “”We offer solutions on the ASP model. If they have four suppliers and five carriers, that’s good. If they’re bigger, that’s good too. Before the bubble burst, companies were writing big cheques, but they don’t want to go to the board anymore and ask for $10 million to implement a SCM system.””

Canadian manufacturers are sensitive to that kind of pain, says Hume, particularly when they have to juggle relationships with multiple partners. “”It’s not as simple as just deploying an SCM system,”” he says. “”Supply chains don’t go in a single direction. A retailer with a big gun can make you go through all of the process of deployment and integration, and you end up with a relationship with one. If you have other partners, you have to do it again.””

The bottom line is however the technology is deployed or delivered, Canadian manufacturers and distributors are concerned more with information flow than automating the movement of raw materials and finished products. It’s not so much a question of managing the supplies as knowing where they are. “”That’s the main thing,”” Gonzalez says. “”The very core of all of this, even before you start talking about other applications, is transparency wherever you are in the supply chain. Until you have that, everything else can wait.””

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