The Supply Chain Challenge – a Closer Look at Disruptions and Fines in Canada
Supply chain management is tricky in today’s global economy where materials are usually being sourced from different regions and products are shipped across multiple areas.
Even the slightest delay in shipments of one raw material can cause a domino effect when it comes to supplying products in a timely manner.
This is particularly relevant today.
Additionally, these supply chain challenges have been exacerbated by the uncertainty when it comes to consumer demand. Demand for some essentials such as flour, cheese, butter, and similar products has seen an unprecedented increase.
According to Statistics Canada, sales at Canadian grocery stores were more than 40% above the 2019 level, in the third week of March, as many Canadians stockpiled supplies to prepare for imminent lockdowns.
Market uncertainty, volatile demand, and supply chain constraints affected production and distribution capabilities.
Manufacturers, particularly those making essential items, had to quickly evaluate the resiliency of their supply chains and make swift decisions to adjust production.
Making changes to production, in response to volatile demand, isn’t as straightforward during these times. With rising absenteeism in factories and stronger physical distancing measures, the output is quite likely to be affected.
Food, Health and Consumer Products of Canada (FHCP) shared that production capacity dropped to around 80% for manufacturers, on average, due to social distancing and other safety precautions on the factory floors.
Low production has led to another challenge for manufacturers. Fines.
Historically, retailers imposed penalties on manufacturers and suppliers if shipments arrived late or were lesser than agreed.
While most grocery chains stopped charging fines at the beginning of the pandemic, Financial Post shares that in fall 2020, this practice was resumed.
Manufacturers expressed that they were operating at maximum capacity to meet the high demand and such fines, particularly during challenging times, could negatively impact their capabilities of bringing their products to the consumers.
These supply chain challenges are not only affecting companies but also end consumers.
According to Canada’s Food Price Report for 2021, the average Canadian family will pay up to an extra $695 for food this year due to the external factors that have impacted the production and supply of these items.
The expected 3-5% increase is led by rising prices of food items such as bread, meat, and vegetables.
While there are multiple factors in play, by focusing on having secure supply chains, flexible production capabilities, and diversified product lines, manufacturers can better prepare to deal with external challenges.
At Storesupport, we are an extension of your team. We provide you the national reach you need to ensure that your products are reaching your customers and partners in a timely manner.
Our team can help you with multiple aspects of your supply chain and product placement such as:
- Inventory Management;
- Merchandising maintenance;
- Stock Replacement;
- Product Change-Outs;
- Planogram Implementation;
- And more.
With our experience in merchandising, we can not only provide you with strategic but also execution support. Contact us today to learn more. Call 1-877-421-5081 or visit www.storesupport.ca.« Back to Blog