​Over the past two years, supply chains around the world have been in turmoil. Consumer habits have changed, and the production capacity of factories has been transformed, creating many challenges. Although challenges have always been there, many of them have been exacerbated due to the pandemic.

Within the context of this instability, it has become increasingly difficult to keep supply chains fluid. Companies need to adjust to client demand and rethink their practices if they aim to become more efficient and agile. Learn how this can be achieved with Alain Sawaya, Partner, Supply Chain, Management Consulting.

Uncertain future demand

Since the beginning of the pandemic, companies are facing a new problem: uncertainty about future demand. We are faced with unprecedented disruptions, making customer demand extremely difficult to anticipate, assess and plan for. This has created a need to revise operational forecasting, which demands greater care when assessing demand. If not properly done, some products will be in short supply while others will be overstocked.

Supply chains depend on the quality of forecasts to drive orders for raw materials and finished products. In order to adequately evaluate the quantities required and resultant costs related to these raw materials, it is essential to rely on high quality data. Companies have been seeking the help of experienced consultants to ensure a reliable forecast.

Transportation and raw material costs

This uncertainty in demand has impacted the cost of raw materials, forcing retailers to raise the price of their finished products. As a result, many of them have recently acquired smaller competitors to increase their buying power through larger market share, in order to remain competitive.

As a result, companies here are trying to find similar products abroad, hoping for lower purchasing costs. As a result, there is an increase in the transfer of materials between regions and therefore, the need for companies to transport. It is now especially difficult and costly to find transporters as a result of labour shortages and demands for higher wages, combined with the exponential increase in raw material demand in recent years.

The importance of distribution networks

Globalized supply chains are becoming more vulnerable. Thus, companies must now optimize transportation and review their distribution networks in order to optimize the location of their inventories. The objective is to strategically position their distribution centers in order to optimally serve their needs.

What KPMG can do for you

In small and medium-sized companies, the same supply chain employee may be called upon to perform many diverse tasks. In reality, each supply chain role requires a depth of knowledge that few professionals have in today’s market. At KPMG, we draw upon a wealth of functional professionals who are well versed across these broad knowledge areas.

Therefore, we support and advise companies in all aspects of their supply chain and allocate appropriate resources in response to the specific challenges encountered. Thus, within the framework of our mandates, we analyze the company's supply chain from A to Z and propose corrective measures based on the most urgent problems. We offer a prioritized view for solutions which can drive immediate benefits. If necessary, we can subsequently review client challenges in greater depth and may offer concrete and actionable solutions. Our services allow companies to benefit from valuable advice, without having to hire several new talents.

The future of supply chain

To help ensure an efficient supply chain, all the steps from the purchase of the raw material and the finished product that reaches the end consumer must be taken into account. Supply chains are being automated, and Québec companies will need to focus on the types of products that are easier and more profitable to manufacture and distribute. For many, this is part of an ESG journey that is already underway.

Would a more local supply chain solve the various problems we are facing today? Not necessarily. There is still much disruption to be expected and the economic cost of shifting to local production may be high. There was disruption before the pandemic and there will be disruption after. The important thing is simply to be properly prepared and to anticipate the possibilities.

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