Report shows foreign dominance in supply chain management

TORONTO‑Canadian manufacturers have to focus on cost and risk mitigation to stay competitive, according to a recent survey from KPMG LLP. In its report, KPMG emphasized that Canadian manufacturers will need to find new ways to compete with foreign competitors because of a strong Canadian dollar and cheaper cost jurisdictions.

“Canadian manufacturing executives are still pointing to cost minimization as the key factor in addressing supply chains,” said Jonathan Kallner, National Leader of Industrial Markets at KPMG.

Eighty-one Canadian manufacturing executives were surveyed, revealing numerous differences between how Canadian and foreign manufacturers approach supply chains. About 60 per cent of the executives claim they have been forced reduce supply chain risk by developing newer business models. Only 43 per cent of foreign manufacturers say new business model development was necessary to cut supply chain risk. Fifty-two per cent of foreign manufacturers say they have plans to increase collaboration with suppliers in research and development, while only 37 per cent of Canadian executives say they will do so.

Global producers are increasingly prepared to deal with increased risks to cut costs, improve supply chain efficiencies and access innovation. Canadian manufacturers tend to avoid high-risk jurisdictions‑ ones that would provide them with more competitive opportunities.

Eighty-two per cent of Canadian manufacturers say that a cost versus risk analysis has led them to adopt strategies that avoid areas of the world where there is risk of political and regulatory instability.

While Canadian business is, traditionally, very conservative, the new realities of globalization combined with a strong Canadian dollar will force manufacturers to develop newer strategies that drive innovation through collaborative partnerships with foreign supply chains, the report said.