How are Canada’s business leaders navigating the changing supply chain landscape?

The pandemic has shone a spotlight on the fragility of the international supply chains that play such an important behind-the-scenes role in all aspects of our day-to-day lives.

Businesses worldwide have had to adjust and adapt to try to operate with some semblance of normalcy while attempting to keep up with customer demands amid a series of challenges unique to today.

So how have Canadian business leaders fared in what has unquestionably been one of the most unique and challenging periods in global business history? And as we move further away from the worst of the global public health crisis, how have they managed to navigate the new and fast-evolving challenges brought on by supply chain disruptions in all corners of the world?

That question was at the centre of discussion for a recent Canadian Club event featuring senior leaders from HSBC Bank Canada and leading Canadian manufacturers. Below is a snapshot of that conversation.

Linda Seymour
Chief Executive Officer
HSBC Bank Canada

What have the past 18 months been like for you?

Like many, the past 18 months have been a rollercoaster for me personally. I took the CEO seat with HSBC Bank Canada right at the onset of the pandemic. I like to joke that I’m a “virtual CEO.”

The way that we’ve had to operate since the earliest days of 2020 has certainly come with its challenges, but having seen how people have responded has been inspiring. I can’t say nearly enough about the quality of the people we have in our organization, their perseverance and the devotion they have shown. It’s filled me with pride in a way that’s so unique – I couldn’t imagine it being to the same level if this timeframe had been business as usual.

So amid all of the challenges of the pandemic, I am thankful to be filled with that kind of appreciation for the people of the organization I’m privileged to lead.

What kind of impact have you been hearing from your customers since the onset of the pandemic?

I try to speak to at least one HSBC Bank Canada customer every day.

I’ve been so impressed by the agility of our customers in the face of huge adversity over the past 18 months. Seeing them diversify their supply chains, build online stores, identify and sell to new customers. Whatever they’ve had to do to survive or thrive, they’ve been up to the task.

I think the type of resiliency shown during the pandemic bodes well for the future of the Canadian economy.

What do you expect next?

The pandemic really laid bare many of the challenges and fragilities of the global supply chain, and I don’t think that those issues will be overcome overnight. However, we are seeing GDP growth at above average levels today, we’re expecting business contribution growth next year and strained global supply chains are leading to opportunities for greater production at home.

Even with strained supply chains today, there remains great opportunity for increased trade to faster-growing national markets over the coming years. Export Canada itself says we’re under-shooting our export potential by $50 billion a year, and that we’re capable of growing exports fourfold in the next 20 years.

That shows that there’s great opportunity for businesses both in strengthening our efforts at home, but also in further engaging internationally — especially if they can limit risk as they do. Working with strong partners and advisors that have on-the-ground knowledge of the markets they are considering can help businesses succeed in those next international steps.

Anna Sanchez, CPA, CMA
Executive Vice President
Metrican

What was the biggest supply chain challenge you faced during the pandemic?

Automotive always gets hit hard. We were impacted the minute China started having COVID cases.

Border closures, semiconductor shortages, long delivery times. We experienced all of it at once.

We had to decide early — how are we going to navigate? For us that meant working closely with both customers and suppliers. We had to continue to adapt to a constantly changing environment, and building strong and responsive supply chains in all countries where we operate and sell became critical.

How has the semiconductor shortage impacted your business? What other issues have you faced that have directly challenged your supply chain?

The automotive sector was faced with challenges impacting the supply chain from Day One. It started with the pandemic and the subsequent closures of businesses and manufacturing facilities.

The semiconductor shortage came next, meaning that a lot of OEMs (original equipment manufacturers) were closing periodically, and at different times based on where they were in the world and what the situation was in their location. As they closed, suppliers to them closed as well.

For us, that meant that sales were fluctuating daily, weekly and monthly. It made it nearly impossible to know what we would be selling and what we should be producing. That created scheduling issues, overtime issues and numerous delays. Sales looked like a rollercoaster.

What really helped us navigate what was nearly a series of impossible situations was the support we received from all directions — from first and foremost our employees as well as our customers, our suppliers and from HSBC. There was no way we could have navigated everything without the support of our bank.

What do you expect next?

Border closures had an outsized impact on us. A lot of equipment manufactured ahead of COVID was destined to head to our plants outside of Canada, and border closures made that nearly impossible to do.

To address demand during the pandemic and help us prepare for the future, we had to launch new programs in different markets and support them closer to home. I think that’s actually allowed us to develop different skill sets in different countries, making it easier to operate as standalone plants for a very long time and to manufacture closer to the customer.

Increased automation and working more closely with both our partners and suppliers will also help us address labour shortages in the auto sector and ensure that we are executing on strategies designed to deliver for our customers.

Martin Lieberman
Managing Partner
Lamour Group

What was the biggest supply chain challenge you faced during the pandemic?

As Canada’s largest importer of garments, our initial goal when the situation arose was not to panic. We recognized early that through a disciplined approach, we could make it through.

The biggest challenge was container problems all over the world. Our supply chain is primarily in China, and pre-COVID, our forecasting allocated 120 days from order to customer receipt. With today’s container challenges, that’s risen to 180-210 days.

Have the challenges of the past two years led you to rethink the role and importance of technology in your operation?

Absolutely, particularly as it relates to the role of technology that helps with goods in transit. It’s frightening to know that it takes almost three months for something to arrive at its destination once it has been shipped. It’s critical — especially today — to have tools that can help you better understand where your shipment is.

We’re fortunate to have a number of tools in place to help — technologies like artificial intelligence, machine learning and predictive analytics — that help us keep 24/7 insight on our cargo. Those tools are improving daily and provide us the ability to better balance between company facilities and moving freight and trying to determine where the best place to serve customers next will be.

What do you expect next?

To be honest, we don’t know exactly what will hit next. There are huge unknowns.

Port congestion? Strikes? COVID outbreaks? There are lots of issues that we’re seeing today that we didn’t even know about six months ago, meaning there hasn’t been much time to plan solutions.

What we have learned is that absolute need to have a lot of contingency plans. We recognize that today and for the foreseeable future we need to allot for longer lead times and bigger delivery windows.

As a market, we need to make it much easier for goods to get into ports today. Joe Biden has opened ports in the United States around the clock, seven days a week. We can do the same here. The government needs to realize that it’s not just the companies shipping but the country itself that is losing money daily due to supply chain issues. A task force to make things happen as quickly as possible would be welcomed by many.

Warren M. Spitz
Founder and CEO
UCS Forest Group of Companies

What was the biggest supply chain challenge you faced during the pandemic?

It was a whiplash for us. We had very few supply chain issues early because there was very little demand for our products. Construction sites had shut down, projects shut down.

In the earliest days of the pandemic, we were more concerned about being over-inventoried than anything else. However, that pivoted in the summer of 2020 because the extended lockdown changed the focus to the home, and consumers started undertaking home renovation projects that they may have been putting off for years.

Since that point, we’ve seen unprecedented demand, which has caused considerable supply chain challenges. To address this, we’ve done a lot of the same things businesses that found themselves in the right space did — we built up our inventories, we worked closely with suppliers, we took as much product as we could get and then we did everything we could do to service the customer.

Has sustainability remained a priority for your business throughout the pandemic, or has it taken a back seat to more pressing pandemic-related demands?

The pandemic has obviously been all-encompassing for most businesses, but there still has been a lot done here during that time to drive our sustainability efforts forward. We have a dedicated Vice President of Sustainability on board who is driving a number of initiatives, and as an organization, we’ve been involved in sustainable forestry since Day One.

We do believe that our product is unique in that it’s organic, sustainable and renewable, but there needs to be responsible leadership for that. In the business itself, we’ve already been adopting industry best practices and introducing electric vehicles and forklifts to further our sustainable approach.

I’d add that, from both a sustainable and operational standpoint, there’s been a tsunami of innovation in the organization since the beginning of the pandemic, with people from across the company working closely together to solve problems over the past 18 months. My expectation is that will continue forward over the next phase of our business.

What do you expect next?

In the short term, there needs to be efforts to help alleviate some of the issues that are bubbling up in the supply chain, particularly when it comes to shipping. We’re Canada- and U.S- based, and a lot of our shipping is by ocean. Right now, there are three international freight companies that dominate the market, so we find ourselves dealing with unfair charging for freight. I’m not one to advocate for regulation, but that’s one area where things need to change quickly.

In the long term, there needs to be greater emphasis on building infrastructure and supporting our rail lines. The pandemic and surge in demand for product has really exposed risks that we have in infrastructure.

Want to watch the full discussion? Click here for the on-demand version. (English only)

Have questions about how the current supply chain situation could impact your expansion internationally? Contact HSBC to find out more about your options.