Managing a supply chain through a pandemic

Globalization complicating sourcing of products

Photo of two warehouse employees.

Canada’s supply chain has not remained unscathed through the COVID-19 outbreak.

Supply and demand, like peanut butter and jelly.

Working in perfect harmony, these two elements help make up the simplest components of a supply chain. But what happens when a supply chain is disrupted?

First, let's determine what exactly is a supply chain. Simply put: a supply chain is the flow of goods from raw material to finished product to delivery of that product in order to meet customer demand. The complexities involved are myriad.

When the chain starts to unlink

Pandemics lead to uncertainty, and uncertainty disrupts supply chains. Canada’s supply chain has not remained unscathed through the COVID-19 outbreak. Nationally, our supply chain is tied to the overall world economy. It depends on globalization to function in a sustainable, consistent and reliable manner.

Any Canadian supply chain will consist of two or more of the following elements:

  • Customer demand
  • Manufacturing
  • Transportation
  • Warehousing and distribution
  • Domestic and international law
  • Retail
  • Technology

“It is fair to say that every element has been disrupted in Canada’s supply chain with the introduction of the current pandemic,” says Jason Riley, program instructor for the Supply Chain Management program with Mount Royal’s Faculty of Continuing Education and Extension.

“It is important to note that every one of these elements are dependent on skilled supply chain professionals.”

Another supply chain management professional is Mount Royal University associate professor, Rajbir Bhatti, PhD, who teaches with the Bissett School of Business’s Bachelor of Business Administration ― Supply Chain Management program.

“Canada sources most of its products from outside its geographic boundaries. Mostly from the United States and China. With global production facilities getting hit by COVID-19, products are not flowing in at the desired time, cost and location,” Bhatti says.

There are severe shortages of some critical products, which will likely lead to more such shortages going forward, Bhatti warns. Most global supply chains, if traced, go to China. So even if Canada is buying from other European, American or Asian manufacturers, they, too, generally start with China for their products.

Interestingly, as the Chinese New Year lasts nearly a full month and goes until the end of January, Canada’s supply chain managers anticipate this and store a lot of inventory that can last until the end of March in distribution centres. As it is now near the end of April, and as supply chains continue to be affected, it all depends on the type of product and strong supply chain sourcing strategies as to whether Canadians can anticipate shortages.

“Some supplies are continuing to come in from other sources,” Bhatti says. “But they, too, will dry out, we fear … soon. China has now reopened some parts of their economy and that is likely to restart the engines of consumption in most western countries.”

Mount Royal’s CN Analytics Lab

Photo of students working in the CN Supply Chain Analytics Lab.

Students can access real-time and historical business data in the CN Supply Chain Analytics Lab.

According to Riley, business intelligence (BI) is critical to every supply chain and therefore critical to every business. He points out BI allows key decision-makers the ability to respond to risk in the supply chain in near real-time. Risks such as severe weather, regional conflicts, labour disputes and political shifts are all factors that would disrupt the assurance of supply.

Digitizing records can lead to greater resiliency, and Mount Royal’s CN Analytics Lab is preparing students to work with this type of technology.

“The foundation for BI is relevant, clean digital data and the automation to access it quickly. The analysis of risk criteria and other inputs are part of the CN Analytics Lab function,” Riley says.

Sadly, some Canadian businesses have been severely impacted by the pandemic and others may never recover. The solution may be more “buying local.”

“Globalization will be considered the root cause of that damage by many and there will be an appetite to lean towards nationalism in order to reduce risk in the future,” Riley predicts. “The leaders in supply chain management will be reliant on cutting-edge technology in their effort to reduce operational costs, provide shorter lead-times and greater customer satisfaction. Blockchain technology will certainly be more pervasive in mid- to large-sized firms in our immediate future.”

As the request for consumers to stay home continues, Bhatti believes that when we return to any type of normalcy, a lot of supply chain strategies will likely change. He suggests that much of the change will arise as businesses revisit the way they look at supply chain strategy and at risk.

Canada and other countries will be interested in reexamining sourcing strategies so that as a country we can ultimately bring resilience, responsiveness and reconfigurability to supply chains. That may mean bringing businesses back home (reshoring), or more insourcing, which means relying far less on third parties for carrying out tasks or functions.

“Some countries might want to re-shore or nearshore and some might want to insource. Easier said than done, but those questions are now on the table,” Bhatti says. “How and how much is to be outsourced ― and where ― is what will be debated going forward.”

Japan has already taken a leadership position and allocated $2.2 billion for its manufacturers to reshore. Bhatti warns that Canada will not be able to insource or reshore everything, however it is a serious discussion that will need to be had.

Discover a future in supply chain management through the Supply Chain Management program with Mount Royal’s Faculty of Continuing Education and Extension and the Bissett School of Business’s Bachelor of Business Administration ― Supply Chain Management program.

April 23, 2020 ― Jonathan Anderson

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