Supply delays in Canada are a warning that future disruptions could be worse

Despite growing income from his own business, Daryl Wier and his wife tried unsuccessfully to spend their money on new kitchen appliances which now face an order delay of several months.

Wier’s income and his inability to spend it may be related. For Wier, who runs 49th Apparel in Sault Ste. Marie, an Ontario town of about 70,000 where Lake Superior meets Lake Huron, her nightgown and mail order business has never been better.

“Am I really to say that my sales have increased by 360%?” Wier said over the phone last week, as if he was afraid of wooing bad luck by being too boastful.

In the discipline of supply chain management, Wier’s businesses, unlike those of appliance and auto manufacturers and many others, are seen as “resilient”.

Because its labor supply is local and its stock of imported fabrics is sufficient to get it through its busiest season, Wier can continue to manufacture and sell its product while many others await goods or essential components trapped in a remote container have no product. to offer.

The bright side of the current disruption in the exchange of labor, components and ingredients, according to supply chain experts, is that it is a warning for Canadian companies to become more resilient in procurement.

WATCH | An increase in imports is straining Canada’s supply chain:

Soaring imports are straining Canada’s supply chain

Hundreds of empty shipping containers are stacked in the Port of Vancouver and this is straining the supply chain as there is more demand for imports into Canada than exports. The backlog hurts truckers and could mean longer waits and higher prices for consumers. 2:31

Not only is resilience crucial to keeping the Canadian and North American economy moving when foreign supplies of critical components are disrupted by pandemics or bottlenecks, a growing number of advocates are also claiming that techniques such as that storing, making what we need at home, controlling transport links and having multiple sources of critical manufacturing inputs are vital safety concerns.

Those who accidentally – like Wier – or intentionally – like Winnipeg’s Precision ADM or Waterloo’s Eclipse Automation – have made themselves more resilient in procurement are now reaping the rewards.

The supply chain crisis – a term rarely spoken outside of expert circles before the pandemic – has sparked a wave of deliberation and debate in Canada, including at a conference last week, on how to face similar situations in the future.

Bringing the supply chain home

According to a report from Thomas Insights, a company that helps companies find suppliers of the components they need, 83% of North American manufacturers are looking for ways to source closer to home, up from 54% in 2020.

“No one ever understood what a supply chain was until the pandemic,” Pat Campbell said minutes later to help organize a week-long Canada supply chain conference that s ‘ended on Friday. Campbell, whose duties included booking speakers for the conference, lives and breathes supply chains, but said most people are like his grandchildren and really don’t get it.

“I used to say it was from the time the farmer picked the tomato from the field and put it on the truck to go to the market until my grandchildren picked it up. with the ketchup bottle on the shelves in the retail store, whatever happens along that path is part of the supply chain, ”Campbell said.

Canadian Tire shipping containers are located in Shanghai, China. A move towards greater supply chain resilience used by large companies is to take greater control of the transportation network. (Carlos Garcia Rawlins / Reuters)

Of course, it’s more complicated than that because a detailed examination of a supply chain would have to go back to look at the equipment used to grow tomatoes, fertilizers, pesticides, and the temporary foreign workers that brought them to life. have picked.

Johnny Rungtusantham, Canada Research Chair in Supply Management at the Schulich School of Business at York University in Toronto, points out that after years of sourcing products where the workforce is work is the cheapest, the recent disruption has come as a shock to many companies.

Rungtusantham said it was a reminder that when companies choose the cheapest price or the cheapest labor when looking for components or manufacturing locations without considering the total cost to the economy , it may cause unexpected costs down the road.

“You might end up making the wrong decision. ”

National security concerns

Another speaker at this week’s conference was Tony Clement, the former Federal Conservative Minister, who, along with former Ontario Liberal Minister Sandra Pupatello, co-chairs Reshoring Canada. Both are part of a private lobbying effort to do more of global manufacturing in Canada for the sake of the economy – and for the sake of national security.

Clement suggests that the current disruption in the supply chain is a symptom of a growing problem as more manufacturers have moved overseas.

“It is really becoming a tipping point,” Clement said in a phone conversation, noting that while the current disruption is bad, it could be much worse if China and the United States fall out.

“With the supply chain challenges that are occurring right now, we believe that these are just the tip of the iceberg, that this is going to be an ongoing trend, especially as the geopolitical situation deteriorates and states United are seeking to decouple part of their supply chain from China. ”

Clement said that not only the need for national security, but also a growing need for low-carbon manufactured goods, means the Canadian government needs to think about ways to shorten supply lines and manufacture more things at home. the House.

The on-site pharmacy of an immunization clinic at Toronto’s MaRS Center was set up to support medical innovation and national businesses, but experts say that kind of effort takes time and government commitment. (Kate Cornick / CBC)

Whether or not North America will ever survive when supplies are cut off from a hostile foreign power, Shauna Brail, of the University of Toronto’s Institute for Management and Innovation, insists the crisis current should not be wasted.

In the past, Brail has studied path addiction, the idea that decisions you made before lock you into decisions you can make now. One example is the rush of North American companies to use cheaper Chinese labor decades ago, which means Chinese factories continue to manufacture essential products despite rising labor costs. -working in China means that many workers have been replaced by robots.

Path dependency tells us that the process is difficult to reverse. But it is not impossible.

Brail said that while not everything can be made in Canada, focusing on existing specialties such as automotive, mining, and medical resources and technology can create concentrations of expertise that provide a greater chance of finding essential skills and products closer to home. But it takes time and commitment.

“There is now an opening for Canada to change direction, to do better,” said Brail. “And if we don’t take it, another country will and Canada will be left out.”

Follow Don Pittis on Twitter @don_pittis

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