A strong supply chain is much like a high-end car engine: its superior performance depends not only on its individual parts, but ensuring they all work together at optimum efficiency – producing the highest quality results at the lowest possible maintenance cost. Similarly, a fine-tuned supply chain can help save time and cut costs while improving productivity, customer satisfaction, competitiveness and profitability.
But while you can drive a car without thinking too much about what’s happening under the hood, supply chains operate in an environment where change is constant; they must be continually monitored, adjusted and managed to stay at peak performance.
In today’s increasingly complex global market, it is no longer enough to just take care of traditional supply chain activities, like order processing and shipping. Companies can also gain a competitive edge by better managing new global conditions: fluctuating currencies, rising fuel costs, opportunities to diversify as new markets emerge, new regulatory requirements, social responsibility, market impacts of political regime changes, and new technology and marketing channels, to name a few.
The challenge, of course, is that most companies are kept busy enough conducting day-to-day operations. And while every company has a supply chain – regardless of whether it has a clear strategy around it – not every company has the expertise on staff or the resources to manage it as effectively as possible. Even when a company recognizes the need for a stronger supply chain, figuring out the risks and opportunities, or even knowing where to start, can be daunting.
What’s the impact on SMEs?
This is especially true for small and medium-sized enterprises (SMEs), whose smaller size and weaker negotiating power may encourage a more short-term approach to operations, instead of looking at big-picture opportunities.
The good news, according to Jacqueline McGinn, director of EDC’s Trade Advisory Group (TAG), is that there are more and more resources available to help Canadian companies understand and optimize their supply chains. For the past three years, TAG has been working with select Canadian companies with high-growth potential to examine their supply chains and explore ideas for improvement.
“EDC has a wealth of trade information, and by harnessing this knowledge for Canadian companies, we ultimately expand Canadian trade,” says McGinn. “While our research has shown that larger businesses are fairly sophisticated at optimizing their supply chains, SMEs don’t usually have the resources to analyze or strengthen their supply chains on their own, and are looking for insight.”
Scoring for clients
McGinn explains that TAG has been proactively identifying mid-sized clients that demonstrate high growth potential. The company’s leadership team is then invited to a half-day EDC workshop to evaluate its supply chain and explore best practices that can take it to the next level.
The client can choose one of four supply chain areas to focus on: planning, sourcing, manufacturing or outbound logistics. TAG relies on a number of widely accepted frameworks, such as the Supply Chain Operations Reference (SCOR®) for evaluating and comparing supply chain activities and performance. After the workshop, EDC provides a report with key findings and potential opportunities.
“The goal is to help our high-potential clients accelerate their growth through robust supply chain management,” McGinn says. “Trade is very complex these days, with each company usually acting as both a supplier and a buyer. So if a supply chain isn’t well managed, they may be putting their key performance indicators (KPIs) at risk, like the ability to deliver on time and budget, as well as missing opportunities for cost savings and eliminating waste.”
Looking for supply chain resources?
EDC Video: Building a Better Supply Chain (Select: Episode 4)
Business Development Bank of Canada (BDC) Consulting (fee-based): www.bdc.ca/EN/consulting
If your company would like to be considered for an EDC supply chain workshop, please talk to your EDC account manager.
The Winning Combination
Some 38 clients have benefitted from EDC’s supply chain workshop, from 2010 to 2012, one recent example being The Winning Combination, Inc. (TWC).
With a state-of-the-art manufacturing facility in Winnipeg, TWC is one of North America’s leading manufacturers and distributors of private label and premium-branded health, wellness and active lifestyle products. It distributes to retailers across Canada, the United States, Japan, Australia and China.
Its rigid quality control helps the company ensure its products meet or exceed government regulations, no matter where in the world they are sold. Exports represent up to 20 per cent of its total sales, and this portion is expected to grow this year to a third.
“One of the things I really valued about the EDC workshop was having an industrial engineer to consult with,” says Derek Penner, TWC’s CEO. “It’s invaluable to have someone knowledgeable to point out our potential opportunities – for example, that re-jigging our warehouse can lead to cost savings that we can then reinvest into the growth of our business.”
Penner says the program also helped reinforce the company’s overall business strategy. “Being in a fast-growing market segment, we often have to make business decisions quickly. Knowing where our risks and opportunities lie and how to optimize our supply chain provides a strategic framework that helps guide that decision-making process.”
He adds the supply chain exercise aligns with the company’s primary business goal – customer service. “We have four strategic pillars, focused on customers, operational excellence, execution and people development. Those goals are all interrelated within the supply chain, with activities such as research and development, leadership training and mentoring, and supporting our focus on higher customer service.”
Penner was also pleased to hear insights from EDC’s supply chain expertise in the automotive sector. “It’s always great to learn from other sectors, to see if they have ideas that can be applied to your industry,” he says.
EDC senior account manager Ralf Miner adds that TWC attracted his attention with its potential for rapid growth. “They have two products about to take off, a vitamin mint and a protein drink with packaging that prolongs shelf-life, and had just landed a contract with Walgreens (U.S. pharmaceutical retail giant).
“Suddenly they were doing offshore manufacturing, logistics, shipping and trying to get financing for the packaging. While we were supplying them with a letter of credit and helping them get extended terms, it was a perfect opportunity to review their supply chain. It’s our goal to build a trusted partnership, and let Canadian companies know we can be a valuable part of their strategic dialogue.”
McGinn and her team are getting positive feedback for EDC’s program. Clients also say they gain from having the diverse insights of their entire leadership team at the table, and EDC gets to learn more about their businesses too.