Canadian manufacturers focused on reducing costs: survey

TORONTO: Canadian manufacturers should find new ways to compete with their global counterparts when faced with a strong Canadian dollar and lower cost jurisdictions, according to a recent survey from KPMG LLP.

In a new report Reshaping the supply chain: New opportunities for Canadian manufacturers, the accounting firm said lowering costs and reducing risk remain the main concerns for Canadian companies.

“Canadian manufacturing executives are still pointing to cost minimization as the key factor in addressing supply chains,” said Jonathan Kallner, KPMG’s national leader of industrial markets. “In addition to cost management, global manufacturers are looking at their entire supply chains to establish partnerships and generate efficiencies. Canadian companies should embrace a multitude of strategies to remain competitive, including an enhanced focus on innovation and product development.”

The survey, which polled 81 Canadian manufacturing executives, highlighted differences between how Canadian manufacturers and their global counterparts approach supply chains. Almost 60 percent of Canadian executives said they had developed new business models that reduce supply chain risk, compared to 43 percent of global manufacturers. Fifty-two percent of global manufacturers planned to collaborate more with suppliers in research and development, compared to 37 percent of Canadian companies.

Global manufacturers accept more risk to achieve lower costs and improve supply chain efficiencies, while Canadian manufacturers prefer to avoid high-risk jurisdictions that may offer more competitive advantage. According to the study, 82 percent of Canadian manufacturers said a cost-versus-risk analysis had lead to them avoiding jurisdictions with more risk of political and regulatory volatility.

“Canadian business has traditionally been very conservative and more risk averse,” said Brian Smith, KPMG’s Ontario and Atlantic lead, supply chain management services. “To succeed in the new realities of increased globalization and a strong Canadian dollar, manufacturers should develop strategies that drive innovation at home and through collaborative partnerships with supply chains abroad.”