The Supply Chain Management Association of the Philippines has renewed its call for intensified efforts to enhance connectivity and develop talent in supply chain as the results of the first ever Logistics Efficiency Indicators survey was released to the public.

The survey, conducted by the Department of Trade and Industry with assistance from the World Bank, served to establish an initial baseline of the performance of the country’s logistics industry, particularly with regards to cost and reliability. It was conducted to respondents across the country between March and May. SCMAP assisted in validating the questions of the survey, as well as in providing industry insights into the results.

The study analyzes logistics efficiency by region as well as by industry, and also provides a comparison with other ASEAN countries where a similar survey was conducted: Vietnam, Thailand and Indonesia. However, Dr. Ruth Banomyong, who oversaw the formulation of the survey, warned that due to differing contexts and situations per country and industry, the survey results are not meant to “compare the not comparable” and should just provide a benchmark.

Among the key takeaways of the study, which surveys manufacturers as well as logistics service providers, are as follows:

  • An average of 27.16% of sales cost in the country is devoted to logistics costs, with variations across industries and regions. Transportation costs provide the bulk of logistics costs, particularly for the food sector. Mindanao has the highest average logistics costs, at 30.32% of sales cost.
  • Manufacturers put greater importance on logistics reliability over logistics cost. In many cases the country’s logistics reliability is at par with other measurements in the region, albeit conditions per region and industry are, again, different. It is notable that reliability within the electronics and food sectors are lower than expected, with lower DIFOT percentages and higher return rates, although to determine the possible causes a closer study must be done. The Visayas also has a lower reliability, possibly because of its archipelagic nature and multiple handling points.
  • Only 31% of respondents from the manufacturing sector have a regularly updated logistics plan. On the other hand, 19% say they do not have a logistics plan, while 16% intend to implement a plan within the next twelve months.
  • Logistics in the Philippines is evenly split between inhouse operations and outsourced ones, with transportation and customs brokerage the most frequently outsourced operations. However, 38% of respondents do not have Service Level Agreements with any, or all, of their logistics providers.
  • Logistics service providers in the country’s reliability are similar to those in other surveyed countries. They consider customs processes the most problematic issue, followed by external issues such as congestion and weather.
  • Both manufacturers and logistics service providers believe skilled logistics talent are available, but most of those hired still require either in-house training or entry to a professional development program once hired.

Dr. Banomyong, who teaches at the Thammasat University in Bangkok, cites the need for the Philippines to conduct deeper studies of the country’s supply chain per industry, as well as of its main logistics corridors. He also believes the country’s supply chain industry should professionalize, particularly with regards to human resources, and for the establishment of a quality assurance scheme for logistics service providers to promote outsourcing.

Former SCMAP president Cora Curay was one of the reactors during the public unveiling of the survey results, which was held on 1 August at the Hotel Jen Manila. Citing the LEI survey’s contribution to providing a better understanding of the country’s logistics industry, she called for intensified efforts to improve logistics reliability. In particular, she noted the need to focus on more efficient ports and a stronger shipping industry, as the Philippines is heavily reliant on sea transport. She also cites the development of efficient infrastructure and establishment of streamlined processes as critical to logistics reliability.

Curay also cited the need for developing supply chain talent in all levels, particularly now that supply chain is now emerging not just as a company department, but an important part of any business.

“It is in our best interest to be fully equipped to deal with a fully-globalized world head on,” she said.

The survey is expected to be conducted every two years and forms part of the government’s National Logistics Master Plan, aiding it in tracking logistics performance and inform it of necessary reforms.