Supply Chain Delays Affecting Ontario Businesses

It’s no secret the effects of global supply chain issues continue to impact businesses and consumers worldwide. In fact, nine out of 10 companies in the manufacturing sector cite supply chain delays, which ultimately reduce production, and raise costs, according to a new survey by Canadian Manufacturers and Exporters. The impact of these disruptions is currently at the economic level.

There are a number of complexities that contribute to supply chain disruptions and delays, related to, and separate from the pandemic. Impacted supply chain entities can be identified as:

1. Origin of manufacturing
2. Transportation to warehouses
3. Exporting/importing shipping ports
4. Transportation to distribution centres and cargo facilities
5. Supply chain visibility and integration

How retail and building supply businesses are impacted

Ontario businesses, including sectors like retail and construction, face the challenge of navigating the lingering impositions of the pandemic alongside these supply chain disruptions. There is a significant increase in e-commerce, global trade, and overall demand from consumers, contrary to the early days of the pandemic. However, disruptions experienced by Ontario businesses pose significant roadblocks to meeting these needs.

To keep up with demand businesses operating in the retail and building supply sectors have made contingency plans. These measures may include ordering products further in advance, increasing inventory, and diversifying suppliers. Some may also consider how they may bring their supply chain closer to home by seeking-out sourcing options in North America.

So, how are businesses in Ontario receiving support?

Provincial and federal governments have long and short-term responsibilities to mitigate disruptions. Long term, governments are responsible for investigating supply chain issues. They must then assess a need for investing in infrastructure that will improve reliability for years to come. In the short term, governments may employ temporary support initiatives to assist businesses affected by the disruption and provide countermeasures to reduce the problem. According to the Ontario Chamber of Commerce, the following actions can be taken at the respective provincial and federal levels.

Provincial-Level Actions:

• Strike an emergency task force consisting of government and businesses to explore potential support measures, particularly for small businesses still recovering from lost revenues due to COVID, and unable to compete with larger businesses financially or logistically
• Develop a local manufacturing sector strategy and diversify procurement and sourcing of components.
• Offer loan guarantees or other temporary financial supports to help smaller businesses afford existing operations while awaiting product delivery, and where possible, to shift to more reliable shippers, supply chain strategies, and technology that helps improve visibility and predictive analytics.
• Launch government education campaigns to promote the transportation and supply chain industries as viable career paths (similar to the current campaign for skilled trades); along with other specialized education pathway programs and incentives in transportation and supply chain sector training.
• Open immigration pathways and agreements for truck driving careers as well as other occupations along the supply chain; Ontario government to reach out to countries with skilled labour forces directly, to facilitate streamlined recruitment for in-demand skilled labour
• Fund shop local campaigns to ameliorate supply chain congestion.
• Longer-term infrastructure investments: 
• Make improvements to transportation and transit infrastructure writ large, especially around airports, to relieve road congestion and free up capacity for last-mile cargo deliveries which have been exacerbated by the growth of e-commerce and expectations for same-day delivery. 
• Invest in ‘Smart Solutions’ for infrastructure, air cargo, and supply chain components.

Federal-Level Actions:

• Conduct a formal supply chain infrastructure assessment to address bottlenecks along the supply chain, especially for ports.
• Develop a national manufacturing sector strategy coupled with an evaluation of a potential Crown Corporation steamship line.

Other long-term actions: 

• Explore and implement digitization solutions to address the need for more efficiencies and communication throughout the entire supply chain. 
• Direct funding through federal infrastructure programs to help ensure the necessary capacity exists, including runway systems at airports, and expand the availability of logistics and warehousing facilities. 
• Use the Federal National Trade Corridor Fund to:
  i) Provide more funding for Canadian airports with large cargo capacity such as Toronto Pearson International Airport.
  ii) The fund is currently heavily focused on trade promotion and trade diversification, but more thought could be given to including supply chain resilience as a policy parameter as the government rethinks the program.

Have supply chain disruptions or delays affected your business operations? Speak with a local insurance broker to determine what insurance options are available to you. | Call 1.855.740.4700 to get in touch.