If there’s one thing that the pandemic has shown Québec SMEs, it’s the importance of their supply chain. In many cases, its fragility has also been revealed.
So how does an SME set about securing its supply chain? How can it tell if its practices are satisfactory or if, on the contrary, its supply chain lacks “maturity”?
In many industries, there are various standards that firms can use to measure their performance. However, according to our research, there is no benchmark for evaluating the supply chain in Québec.
This is a situation that we, here at J2, intend to remedy.
In Québec, no large-scale study of supply chains has been conducted. The only studies available have been produced by major firms who survey large multinational corporations on the world stage. To what extent do these apply to Québec? We don’t know.
We are therefore working on developing a survey of Québec SMEs so that we can give them a basis for comparison that reflects the reality here.
Assessing the state of the situation
We believe that supply chains in Québec need to increase their maturity. This was the case even before the pandemic, but COVID-19 has made businesses aware of this need.
In fact, many businesses had not even realized that they had such a thing as a supply chain. But even if you purchase nothing more than paper and other office supplies, you have a supply chain.
Supply chain management seems to pose a problem for some businesses, especially SMEs, which are particularly vulnerable. Why? Because most large businesses have specialized teams to handle purchases and logistics. This is not the case for most SMEs.
This is why we want to give Québec SMEs a basis for comparison that will help them evaluate the state of their supply chain concretely and become aware of its impact on the organization.
What do we want to measure?
Three key aspects: the state of the workforce, the performance of the supply chain, and current and future challenges.
The workforce: who takes care of your purchases?
In most businesses, the cost of purchases amounts to between 30% and 80% of the value of sales. So, if the average is 50%, you need to ask yourself: who is managing 50% of your sales figure, and how are they managing it?
What we want our survey to find out is the level of training and experience of people working in the supply chain. If purchasing staff have no training and no qualification other than resourcefulness, there is a problem. The same is true if the people handling the supply chain have very little experience. We are continually surprised at the reaction of buyers whom we train when we explain the impact that their actions can have on company performance.
Supply chain management has a substantial impact on your operations, your results and your ability to grasp business opportunities.
What would you do if one of your major customers asked you to supply it with a product that you do not currently manufacture, a product that is complementary to your own? Imagine that you say no and, six months later, you find out that this customer is transferring their orders to your competitor, who responded positively to the request.
Far-fetched, you think? But this actually happened to a business that we know.
If the people in your team responsible for purchasing do not have sufficient training or experience, you too could be turning down golden opportunities. Or – worse still – you might say yes and then be unable to meet your customer’s expectations.
Moreover, some customers will go so far as to conduct an audit of a potential supplier’s procurement chain in order to check whether that supplier will be able to “deliver the goods.”
Is your supply chain capable of seizing new business opportunities?
Here’s another potential scenario: your buyer makes choices based on price rather than on a set of crucial factors, such as quality, security of supply, and the supplier’s financial solidity. Imagine the impact this would have on your ability to deliver, and on your bottom line!
A supply chain has three links: purchasers, procurement and logistics. In Europe, each of these links is handled by different specialists, who are trained accordingly. This is not the case here.
Your supply chain’s performance
Does your supply chain perform at a high level? Are you able to answer this question?
In most SMEs, attention is focused on operations and the supply chain is virtually neglected. Who is managing the quality of your purchases? Their cost?
Of course, the supply chain is not the heart of a business. But it is the pancreas, or liver: if it does not work well, neither will your business. The way in which you structure your supply chain will have a big impact on its performance, and the performance of your business. If procurement is relegated to a secondary or peripheral activity, or if you see it as a task to be dealt with when everything else has been taken care of, your business will suffer greatly.
Current and future challenges: the future is today
The pandemic has brought the deficiencies of supply chains to the surface. Over the coming months and years, various challenges will continue to put them to the test.
Already, major businesses are divesting themselves of responsibility for procurement. They are increasingly relying on their suppliers to manage the entire supply chain.
Their suppliers? That means you. Are you strong enough to handle the requests of your biggest customers profitably and on a large scale?
Do you buy in supplies from abroad? Should you review your plans?
Do you have contingency plans ready? Are you managing your risks adequately?
A survey as a basis for comparison and to show the way forward
With the survey that we are preparing with the help of a partner, we want to give SMEs a very concrete tool for assessing their performance and their supply chain management.
Detailed benchmarks from businesses in Québec will help SMEs to move up to a higher level of efficiency and professionalism in terms of supply chain management.
We aim to conduct the survey between now and the start of next year. We can’t wait to share the results with you!
Would you like to take part in the survey? If so, let us know by writing to real.julien@j2-inc.ca.