Supply chains are the lifeline of the world economy—delivering the goods we rely on from food to electronics—and right now those global networks are more unstable than ever.
It's a top priority for many: Supply chain issues ranked as the 2nd biggest challenge overall for medium-sized enterprises in BDO's Midmarket Outlook Report.
Learn from experts in the field about the biggest issues facing supply chains today and best practices for managing risks and building resiliency.
“Knowledge is power and you can use that to cushion your business from unforeseen costs.”
– Charmaine Goddeeris | Senior Manager, Indirect Tax, BDO Canada
How did we get here?
Here are some of the compounding factors that have led us to the current unstable situation, and predictions for disruptions in 2022 and beyond:
“The supply chain is really not a chain, it’s a network of many companies working together to provide the products and services you buy.”
– M. Johnny Rungtusanatham | Canada Research Chair in Supply Chain Management, Schulich School of Business
Key steps to building a resilient supply chain
Unfortunately, it’s impossible to eliminate all risk when it comes to supply chain disruptions. However, there are a few key steps you can take to mitigate those risks and protect against losses.
Step 1: Conduct an in-depth risk assessment
- Visualize and map out your entire global supply chain from end to end
- Conduct systematic risk assessment of every sub-process in your
supply chain - Understand the current and possible international trade disputes that could cause additional duty costs and disruptions and have a back-up plan
- Gather historical data on previous supply disruptions to your business and similar businesses
- After your risk assessment, you should have a clear understanding of the top risk events that could impact your supply chain and which risk treatment options are best (e.g. whether you will accept, transfer, or avoid the risk)
Step 2: Invest in digital transformation
- Update and take advantage of the technology available today. Are there investments you can make in detection capabilities?
- Leverage AI and predictive analytics. Increased accuracy and agility can be achieved through enhanced forecasting models that incorporate market and consumer trends, and external market forces
- Manage your cyber risks. Prior to implementing new systems, test their resiliency to security threats. Be prepared for an increased risk of cyber incidents due to employees working from home
“Risk management is now a science. There are tricks, prototypes, and templates for managing risk from analysis all the way to mitigation.”
Step 3: Enhance supply chain competency within your organization
- Employ supply chain professionals who have business acumen, political savvy, and are technologically literate
Stay on top of current events including, international trade disputes and political unrest
Avoid a siloed approach. Risk is complex and you need to have alignment with all areas of the business including strategy, operations, tax, and finance functions
Identify an emergency response coordinator who is responsible for taking command during a crisis—allowing you to mobilize resources and respond quickly
Step 4: Diversify and strengthen your supply chain
- Diversify your suppliers. By geographically diversifying your suppliers you can evade the impacts of a disruption in one region. It can also improve your agility, cut costs, and allow you to offer more competitive prices
- Consider near or domestic shoring. You can reduce costs by avoiding international trade disputes, shortening transportation routes, and reducing complexity. However, labour costs will likely be higher, so be sure to do a cost benefit analysis
- Develop stronger relationships with your suppliers. Maintaining ongoing discussions with suppliers ensures that your company is top-of-mind during a disruption
- Vet your suppliers. Find out how they are vulnerable to disruptions and consider asking for an independent audit report for added assurance
- Take advantage of Canada’s 14 trade agreements that allow duty free entry of qualifying goods into the country
“The issue with pushing a ‘buy Canadian’ or ‘buy American’ agenda is that our supply chains are already integrated, and it can become problematic. We can look into domestic shoring, but we have to do it in conjunction with our trade partners.”
– Matt Poirier | Director, Trade Policy, Canadian Manufacturers & Exporters (CME)