Assessing the impact and resilience of York Region's manufacturing supply chain in response to COVID-19. The report provides insights into the impact of COVID-19 on the sector and steps that can be taken to minimize the impact of future supply chain disruptions.
‘Building Supply Chain Resilience’ Report
To facilitate economic recovery and build manufacturing capacity and overall supply chain resilience, The Regional Municipality of York, in partnership with the cities of Markham, Richmond Hill and Vaughan (study co-sponsors), sought a deeper understanding of local manufacturing supply chain constraints, particularly within key industry verticals. To facilitate this work, they collaboratively engaged the support of Canadian industry association, Supply Chain Canada, and supply chain management consulting firm, Supply Chain Alliance.
Over several months, Supply Chain Alliance conducted detailed interviews with CEOs and supply chain and procurement leaders of York Region manufacturers in key sectors to identify COVID-19’s impact on their businesses, learn how these leaders responded, assess their state of readiness to the pandemic, and uncover any move-forward plans businesses have made to address future disruptions.
When COVID-19 hit and Canada launched its lockdown strategies at the federal, provincial and municipal levels, the manufacturing industry faced immediate impact. According to a recent Supply Chain Canada survey, 70% of Canadian supply chain professionals noted their organizations experienced supply chain disruptions as a direct result of COVID-19 implications.1 This was illustrated by the inability of government and industry to secure access to personal protective equipment (PPE) such as masks, gloves and sanitizer for frontline workers. Similar issues were experienced across the manufacturing process. As borders locked down around the world, the inflexibility of industrial globalization was clear. At the same time, the world was witnessing a rise in nationalism as many countries attempted to divert critical supplies for internal use by local populations.
In Canada, we saw the closure of non-essential businesses, which deeply impacted the country given approximately 40% of all imported goods are non-essential. As these inbound containers sat burdened with inventory for months, the natural flow of containers globally slowly began to congregate in non-traditional locations, resulting in container shortages at points of global embarkation and port congestion. To keep production running, York Region manufacturers turned to airfreight to access critical components that were produced offshore. They quickly found that available airfreight capacity was severely restricted and prohibitively expensive. Most goods are shipped in the cargo hold of passenger aircrafts; with passenger flights falling 85% during the pandemic, this created severe capacity constraints.
Finally, as the pandemic hit Canada, manufacturers faced non-traditional shifts in their demand with virtually no notice. Some industries, such as automotive, shut down completely in the first few months, while others like pharma, food and paper goods saw massive upswings due to consumer stockpiling. With short notice shifts in demand and long global supply chains for many manufacturing components, York Region manufacturers faced a myriad of challenges to navigate during the first two months of the pandemic, with many forced to pivot in order to survive.
A FRAMEWORK FOR SUCCESS
The following insights provide a framework of best practices that businesses can use when confronted with future supply chain disruptions:
Review business continuity plans (BCP) in the event of unplanned disruptions
Secure systems and data against cyber attacks
Create alternative manufacturing and logistics capacity
Focus on dual sourcing or increase inventory of critical components to enable manufacturers to weather sourcing disruptions
Build strong supplier relationships and know their capabilities
Develop alternative labour plans that address backfilling massive workforce losses
Accelerate supply chain digitization; allow technology to share demand signals with trading partners and automate communications
Consider the feasibility of nearshoring
Boost your ability to rapidly reduce and/or change your offering
With respect to government recommendations, the study revealed York Region manufacturers would benefit from the following support from their different levels of government:
Continue to build strong relationships with manufacturers in the Region
Make advice available by bringing the manufacturing community together to share best practices and resources, acting as a conduit of knowledge during a disruption:
Lead BCP workshops to assess risks and preparedness
Facilitate manufacturers conference calls during disruptions
Facilitate conversations with provincial and federal governments
Facilitate the move to ecommerce and digitization
FEDERAL / PROVINCIAL GOVERNMENTS
Increase cybersecurity funding and resources for both the public and private sectors, focusing on workforce training and professional development, research and development (R&D), and technology adoption
Establish a supply chain focal point within government and a national early warning system
Introduce smart, enabling supply chain policies
Review emergency financial programs for overall effectiveness
Invest in workforce training programs aimed toward future economic activity
A FRAMEWORK FOR SUCCESS
The study provides a framework of best practices that businesses can use when confronted with future supply chain disruptions. With respect to government recommendations, the study revealed York Region manufacturers would benefit from support from their different levels of government.
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