Life Science Logistics Survey- December 2015 · Live track and trace, and the use of a lead logistics provider, are of significant importance to respondents. Regional logistics service

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%


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







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






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%


Passive - gel pack

Active (Envirotainer, CSafe etc.)

Passive - thermal insulation

16

Q10 How does your organisation currently carry out the following packaging requirements?


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




1

0

0

12

12

14




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?


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?


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


29

Customs Compliance

Q22 How does your organisation carry out the following custom related tasks?


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










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










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


25%

31%

44%Yes

No


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


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)


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


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


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

References

Capgemini Consulting (2014) Third-party Logistics Study; The State of Logistics Outsourcing,

available at: https://www.capgemini.com/resource-file-

access/resource/pdf/3pl_study_report_web_version.pdf (accessed on 2nd September

2015).

Department of Finance, (2015), National Economic Dialogue: Being a Small Open Economy,

Charting our path in a changing global environment 16-17 July, available at:

http://www.budget.gov.ie/Budgets/2016/Documents/NED/Breakout%208%20Being%20a%2

0Small%20Open%20Economy.pdf (accessed on 23rd November 2015).

Expert Group on Future Skills Needs, (2015), Addressing the Demand for Skills in the Freight

Transport, Distribution and Logistics Sector in Ireland 2015-2020, Dublin: Department of

Jobs, Enterprise and Innovation.

Forfás Transport and Logistics Group (1996), World Class to Serve the World, Dublin:

Government Publications Office.

Indecon, Price Waterhouse Coopers, and NEA (1999), A Strategy for the Successful

Development of the Irish Road Haulage Industry. Dublin: Government Publication Office.

Markit Economics (2015), Investec Manufacturing Purchasing Managers’ Index for Ireland,

available at:

https://www.investec.ie/content/dam/investec/investec.ie/documents/Research/Irish-

PMIs/Investec%20Manufacturing%20PMI%20November%202015.pdf (accessed on 3rd

December 2015).

O'Riordan, A., Sweeney, E.: Outsourcing and its Role in the Supply Chain. In Perspectives on

Supply Chain Management and Logistics - Creating Competitive Organisations in the 21st

Century (Sweeney, E. ed), Dublin: Blackhall Publishing, 2007, Chapter 9, pp. 171-190.

Plant, E. and McGovern, J. (2011), “Behavioural Antecedents of Inter-firm Linkages in the

Irish Road Freight Industry”, The 43rd Annual Conference of the Universities’ Transport

Studies Group, Open University, Milton Keynes.

PWC (2015), Next-generation Supply Chains efficient, Fast and Tailored; Global Supply Chain

Survey 2013, available at: http://www.pwc.ie/media-centre/assets/publications/2015-pwc-

ireland-next-generation-supply-chain-28-01.pdf (accessed on 23rd November 2015).

Smyth, A., Huber, B. (2005), Competitive Challenges: Chain Reactions: an Analysis of Supply

Chain Management and Competitive Solutions for the Island of Ireland. Dublin, National

Institute for Transport Logistics.

https://www.capgemini.com/resource-file-access/resource/pdf/3pl_study_report_web_version.pdf

https://www.capgemini.com/resource-file-access/resource/pdf/3pl_study_report_web_version.pdf

http://www.budget.gov.ie/Budgets/2016/Documents/NED/Breakout%208%20Being%20a%20Small%20Open%20Economy.pdf

http://www.budget.gov.ie/Budgets/2016/Documents/NED/Breakout%208%20Being%20a%20Small%20Open%20Economy.pdf

https://www.investec.ie/content/dam/investec/investec.ie/documents/Research/Irish-PMIs/Investec%20Manufacturing%20PMI%20November%202015.pdf

https://www.investec.ie/content/dam/investec/investec.ie/documents/Research/Irish-PMIs/Investec%20Manufacturing%20PMI%20November%202015.pdf

http://www.pwc.ie/media-centre/assets/publications/2015-pwc-ireland-next-generation-supply-chain-28-01.pdf

http://www.pwc.ie/media-centre/assets/publications/2015-pwc-ireland-next-generation-supply-chain-28-01.pdf

46

Sweeney, E. (2011), Supply Chain Management: SCM Key to Competitiveness. Irish packaging

Yearbook and Directory, pp. 10-11

Sweeney, E., Wagner, C. & Huber, B. (2008), Supply Chain Management Diffusion Among

Firms in the Republic of Ireland. International Journal of Logistics: Research and

Applications, Vol. 11, No. 4, pp. 347-358.