The failure of Canadian businesses to automate their supply chains continues to threaten Canada’s competitiveness with the United States, the Canadian E-Business Roundtable said Tuesday.
The private-sector initiative released the results of a survey conducted with International Data Corp. and its subsidiary, IDC Canada, which examined growth rate in the sector and made projections for the next three years. While the overall outlook was positive — IDC predicts a compound annual growth rate in e-business of 63.1 per cent through 2005 compared to 62.3 per cent in the U.S. — much of the growth is coming from the business-to-consumer (B2C) side. This segment will have a compound annual growth rate of 57 per cent in Canada compared to 42 per cent in the U.S., IDC said. The more lucrative business-to-business (B2B) area, however, sees Canada trailing the States at 64.3 per cent compared to 68 per cent according to the forecast.
“Where we really are lacking is online ordering capability,” said Joe Greene, vice-president of IDC Canada. “There are also things like how integrated your Web site is with your supply chain management system, order processing and fulfillment.”
IDC’s research said only three per cent of Canadian businesses employing between 100 and 499 employees have automated supply chains, compared with 15 per cent of businesses the same size in the U.S.
The B2B side is important, Greene said, because companies that have automated their supply chains can expand their geographic reach and potentially reap the benefits of doing things for less money. This in turn means they pass things on to consumers at lower prices.
“We were so far behind the Americans in terms of B2C — we only have typically one third of Canadians that shop online compared to what the Americans do — that it’s easier to close the gap,” he said. “I think most Canadian companies do realize this is the way to go, it’s just that they don’t have the tools to do it,” he said. “It’s an education that has to take place.”
The Canadian E-Business Roundtable was launched three years ago with a mission of accelerating the country’s participation in the new economy. A year and half ago it released a report called “Fast Forward,” which was essentially a call to action. An updated version, Fast Forward 2.0, was released in February.
The Roundtable has since split up into sub-teams to focus on specific areas like Acceleration, Capital Markets, International Branding, Talent Pool and Government On-Line.
John Wetmore, former president of IBM Canada who now leads Big Blue’s IBM.com for the Americas, leads the Acceleration team. While the group’s initial efforts looked at educating the market in a broad sense, it is now focusing on tools and strategies.
“What’s consistently come back (from our focus groups and research) is that small businesses are aware of the opportunity,” he said. “It’s really a how do I do it and what do I do next kind of issue.”
Small businesses in Canada told IDC they expect around three per cent of their revenues to come over the Web. U.S. small businesses predicted 17 per cent. Canadian organizations where also finding it hard to see return-on-investment, particularly large companies.
Wetmore said the metrics businesses use to calculate ROI could change as the Internet hits its second wave.
“It has a lot to do with the early implementation of e-businesses and what you expect and what you’re set up to do,” he said. “I think we’re learning that the real goal of an e-business is integrating the Web right into your operation.”
Greene said IDC may come out with follow-up research in October. Wetmore, meanwhile, said the Acceleration team was putting together an e-business readiness toolkit document to help small businesses.