A Time of Renewal For Canada’s Supply ChainsFebruary 23, 2023
Written by Mimi Vu, Director, Supply Chain Advisory, KPMG
In today’s hyper-connected, consumer-centric digital economy, modern supply chains that ensure the rapid, efficient movement of goods and services are indispensable to economic growth. In our fast-evolving environment, supply chains are the lifeblood of our economic future.
The truth is that supply chain vulnerabilities have persisted since long before the pandemic. The pandemic heightened the impact of disruptions such as geopolitical and economic volatility, the rapid rise of technology, changing regulatory requirements, and natural disasters – coupled with the dynamic and evolving needs of customers.
Efficient supply chains are invisible to the consumer when they work well. We need only look to the global pandemic’s disruptive impact on the world’s supply chains and the sudden scarcity of goods, services and raw materials for a reminder of their profound importance.
As KPMG’s 2022 Global CEO Survey reveals:
- A total of 55 percent of leaders agreed or strongly agreed that supply chain risks will have an impact on their business over the next three years;
- A total of 82 percent say they expect and have planned for a recession, and a total of 72 percent have taken, or within six months will take, steps to diversify supply chains in anticipation of a recession;
- To mitigate issues over the next three years, 34 percent are ‘diversifying sources of input by adding new locations’ to enhance supply chain resilience, while 25 percent plan to rely on more onshore suppliers;
Key risks and the urgent need for digital solutions
As we note in KPMG’s report – A Time of Renewal for Canada’s Supply Chains – the prevailing risks and implications for governments and businesses include:
- Underinvestment in supply chain modernization;
- Continued dependence on single suppliers;
- The need to innovate amid soaring goods and services costs;
- Evolving and ever-increasing consumer expectations; and
- Ongoing labor shortages and skills gaps.
As we move into 2023, now more than ever businesses need to embrace the need for greater integration enabled by the power of technology to improve supply chain visibility and resilience, reduce operating costs, unlock data-based insights, and diversify how customer needs are being met.
The need to invest in our supply chains and innovate to truly modernize our network systems has become indispensable and inevitable. We need to foster and accelerate better collaboration and digital technology adoption if we hope to increase visibility, responsiveness and agility to overcome inefficiencies, manage rising costs and meet consumer expectations.
The future demands purpose-built supply chains
We believe that forward-looking businesses must inevitably dedicate resources and technology investment to the following areas:
- Mapping the customer-experience journey and better understanding personal preferences in order to make the supply chain a competitive differentiator;
- Better understanding today’s cost dynamics, and implementing key learnings from the pandemic-induced disruption of supply chains;
- Taking a fresh look at the value chain to understand what the current ecosystem looks like and what new capabilities are needed to source more efficiently, manage costs and risks, and deliver operational agility.
Businesses will also need to invest in employee training and upskilling and career development amid a shortage of talent possessing supply chain, technology and data analytical skills.
The challenge on the labour front includes the pressing need to retain talent once businesses acquire new skills. A total of 61 percent of businesses we surveyed agreed or strongly agreed that their ability to retain talent amid inflation pressures, and the rising cost of living, will have an impact on business over the next three years.
Modern employee experiences and workplace cultures are the order of the day as young workers enter the workforce with clear expectations of employers. Businesses need to replace traditional supply-and-demand workforce forecasting with a more agile model that includes a focus on empowering employees with the right skills, organizational structure and workplace experience.
The need to innovate and evolve is inevitable, and in our view, there is no time for Canadian businesses to lose in reshaping supply chains for a new era of competition and success.
The Ontario Chamber of Commerce is a proud contributor to KPMG’s new report, A Time for Renewal for Canada’s Supply Chains. Click here to read.