PHOTO ILLUSTRATION BY MONICA GUAN
Whether it’s lumber for your back patio, microchips that ensure your car’s power steering works or even your new pair of running shoes, over a year and a half into the global pandemic, the resulting logistical shock wave continues to hamper manufacturers and retailers, causing months-long delays and erratic economic instability. In fact, the Delta variant has only intensified the problems; many experts expect the disruptions to persist well into 2022.
“There’s a tsunami of factors going into everything from trade restrictions to surging demand, limited capacity to shutdowns. All of that has greatly affected the supply chain and will continue to do so for a long time,” explains Jayson Myers, CEO of the industry group Next Generation Manufacturing Canada (NGen).
This scarcity has already had clear knock-on effects. According to Statistics Canada, retail sales at building material and garden equipment and supplies dealers fell 11.3 percent in March 2021 alone. And while the lumber industry is experiencing a market correction, part of the challenge going forward, says Myers, is that new bottlenecks will pop up as demand evolves and fresh logistical problems arise.
To navigate the challenges brought on by supply-chain congestion, Canadian technology companies have had to get creative. In employing such tactics as pivoting to local suppliers, providing better tracing telecommunication and working with customers to manage expectations, industry innovators Ranovus, OpenText and LED Roadway have been able to not only mitigate their potential risk but take advantage of the opportunities brought on by such a disruptive global event.
Here, they explain how they’ve adapted and what they envision for the future as global logistics strive to reset and settle into a new normal.
Mark Morley is the senior director of product marketing at OpenText, a Waterloo-based company that develops and sells enterprise information management software.
“This black swan event has forced companies to rethink their supply chains. They’ve had to restructure, potentially bringing manufacturing and sourcing back to North America rather than relying on long distance sourcing from China. What we’re seeing is a move away from what Toyota calls lean or just-in-time manufacturing to a just-in-case model, because companies need the extra stock just in case something goes wrong.
It’s also forcing the hand of CIOs — especially for small- and mid-sized companies — to accelerate the move to cloud solutions. This gives them the flexibility and the agility in their supply chains to manufacture and source anywhere and build resilience into their operations.
That’s where we come in.
We help companies digitize their supply chain and the information flowing across it; removing paper and providing a digital backbone to integrate those disparate sources of information. This allows companies to recover much more quickly from various disruptive situations.
We currently have 80 percent of Gartner’s Top 25 supply chains (an annual list of the top supply chain leaders put out by the global research and advisory firm) connected to our network. Increasingly, companies are interested in something called control towers: platforms that allow you to see where the transactions are, what state the shipment is in, whether the invoice has been paid and so on. It allows executives to leverage analytics to predict or forecast in a much better way things such as what’s likely to happen with the ordering of goods based on weather conditions or natural disasters or the social political unrest in France, for example. Particularly over the next 12 to 24 months, business leaders are going to want improved visibility and improved AI and machine learning, which will be more tightly aligned with supply chain processes.”
Hamid Arabzadeh is the chairman, president and CEO of Ranovus, an Ottawa-based company developing and manufacturing quantum dot laser technology to make data centres more energy efficient.
“Data centres are the factories of the new age in the data-driven economy. What powers the data centres are semiconductors, and what we do is provide the arteries inside the data centre. So if you don’t have a steady supply of semiconductors or the chips that we build, it could bring the entire economy to halt.
For our technology to function, we need to have a laser source and electronics that modulate the wavelength. For our semiconductor and silicon photonics, we’ve moved away from using Asian foundries in favour of U.S.-based ones. We actually started this in 2018. Once we got the signal that there would be a trade war between the U.S. and China, we quickly retrenched and started aligning ourselves with our North American customer base as well as hyperscalers and semiconductor companies in North America.
Likewise, for our laser source, a few years back we felt the need to change to a local supplier mainly due to the geopolitical environment. We partnered with the National Research Council’s CPFC foundry to build the lasers in Ottawa. However, they are in need of more capital to be able to create backup manufacturing equipment for some of their processes and, in light of the current pandemic, we experienced some delays in manufacturing. We believe more funding to go toward removing the single point of failure in a production process is money well spent and we’re working with them to make sure that the security of supply in that area is covered.
This will be an important issue for Canadian industry in the years to come. Design and manufacturing of advanced components used in critical applications is a strategic asset of a country. Imagine if there were only one country who could build steam engines or, more importantly, a key component for a steam engine. The world would be dominated and monopolized by that country, which would lead into an unstable geopolitical landscape, trade wars and maybe even real wars.
I believe you have to continuously invest in your logistical lines or they’ll move to other customers who will have more money or business. It is a constant battle to be relevant so the logistical lines favour you over others in the world. Our relevance is based on our intellectual property and our people.”
Jeff Libis is the vice-president of sales at LED Roadway Lighting Ltd., a Nova Scotia-based solution provider and manufacturer focused on smart technology applications that create safe, efficient, livable cities.
“We’re a build-to-order manufacturing company and, because we’re working in electronics and a lot of our components come from the Asian marketplace, we started getting signals from our suppliers for a host of issues right at the get-go of the pandemic, around March 2020.
As a management team we took it as an opportunity to look at things in ways that we probably wouldn’t if we hadn’t been put under duress. We made some risky decisions that ended up paying off. For example, we did have to go through a bit of a downsizing and reallocate some of the responsibilities, but that helped us become a stronger company — we really learned how to be leaner and operate more efficiently.
We’ve had some issues with regard to availability of some parts and components, but we’ve been able to find alternatives and we’ve been able to figure out ways of shuffling from one opportunity to another. We’ve also seen a realignment with Canadian customers looking to use Canadian suppliers, so that support has been great.
On the supply chain side, we really got into the weeds. We already have fairly extended lead times on some of our components — depending on the time of year it could be up to 52 weeks — so that mitigated some of the challenges because we had parts at the front of the queue. However, we turned up the volume on making sure we had ongoing conversations with anybody that was involved in any element of our supply chain that was critical to us being able to produce and ship products. There was a lot of conversation and a lot of transparency.
That’s one of the biggest things that I’ve learned through the pandemic. If everybody understands what’s going on and works through it together, then you can really reduce the tension around any challenge that arises. If you have a good relationship, your customers are usually willing to weather the storm with you.
Ultimately, it’s been a very positive learning experience. We’re going to come out the other end of this much more efficient and much more competitive in the global market.”
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