Improving productivity in the supply chain

As geopolitical tensions rise and tariffs reshape global trade, Canada’s traditional advantages, like proximity and stability, are no longer enough. Organizations must now focus on boosting productivity to protect margins and remain competitive.

The supply chain function is one of the most powerful levers for organizations’ productivity, enabling resources to flow efficiently from sourcing to delivery with minimal waste or delay. Aligning supply with demand through data-driven visibility and coordination, Canadian businesses stand to reduce idle time, inventory costs, and operational friction.

But while a high-performing supply chain has the potential to support better decision-making across all functions and amplify the overall output and profitability of the enterprise, establishing one has its challenges.

Read on to uncover what might be holding you back and how to engineer a supply chain that will generate meaningful value.

One major barrier to productivity when it comes to supply chains is the fragmentation of systems. Technologies used for transportation, warehousing, and forecasting often operate in silos, making it difficult to optimize the supply chain end-to-end. For example, a manufacturer might use separate platforms for procurement and logistics, missing opportunities to reduce lead times or consolidate shipments.

Cultural factors also play a role. Canadian organizations tend to be risk-averse, delaying investment in predictive analytics or automation even when the return on investment is clear. This hesitation can stall progress and leave organizations lagging behind competitors who are more willing to experiment and adapt.

Data quality is another critical issue. Many companies are working with disorganized or incomplete datasets, which leads to reactive decision-making. Without clean, structured data, such as SKU-level cost breakdowns, it becomes nearly impossible to assess profitability across products or channels.

Before creating a supply chain optimization plan begin with clarity around the desired outcome. While productivity is generally defined as improving the ratio between inputs and outputs, what that means for your specific organization in terms of your supply chain is unique. Start here, as without a clear definition of productivity success, organizations risk launching disconnected initiatives that fail to deliver strategic value.

Leaders should also assess their current operating model and data landscape. But rather than waiting for perfect data or full system integration, organizations should start by identifying where decisions are being made reactively (for example, expediting shipments due to stockouts) and where better data or collaboration could shift them toward more proactive planning.

These diagnostic steps are essential to building a roadmap that delivers compounding value over time.

Here’s what organizations could do to optimize their supply chain productivity:

1. Conduct a cost-to-serve analysis at the SKU level: For example, a food manufacturer might discover that certain low-margin products are disproportionately expensive to store and ship, prompting a rethink of their product mix or distribution strategy.
2. Begin adopting decision intelligence tools that support daily operations: A logistics provider could implement route optimization software to reduce fuel costs and improve delivery times, while a consumer electronics company might use predictive analytics to anticipate component shortages and adjust procurement plans accordingly.
3. Prioritize collaboration: A beverage distributor, for instance, could work with retail partners to align promotional calendars and reduce last-minute order changes.

Any savings identified through these efforts should be reinvested into scalable technologies, such as automated replenishment systems or integrated planning platforms, that support broader transformation. By starting with focused, high-impact initiatives, Canadian businesses can build momentum and confidence while setting the stage for more ambitious supply chain innovation.

• Don’t wait for perfect data or full system integration before acting. Supply chain decisions often rely on data that’s scattered across platforms or only partially complete. Valuable insights can still be drawn from what’s available. For instance, analyzing procurement and shipping data separately may reveal cost-saving opportunities. Delaying action in pursuit of perfect data can lead to missed efficiencies and increased risk, such as stockouts, overproduction, or poor supplier performance due to reactive planning.
• Avoid launching disconnected AI pilots. Deploying isolated tools that don’t tie back to enterprise outcomes can waste time and resources. A logistics team might automate a spreadsheet to track delivery times, but if that tool isn’t integrated with route planning or customer service systems, it won’t improve overall performance.
• Don’t focus solely on cost at the expense of resilience. Cutting costs without considering agility or enterprise resilience can leave organizations vulnerable to disruptions. For instance, a food distributor that minimizes warehouse space to save money may struggle to respond to sudden demand surges or supplier delays.
• Avoid treating collaboration as a checkbox. Simply exchanging data isn’t enough. Without coordinated planning, supply chain partners miss opportunities to reduce costs and improve flow. For example, a packaging supplier might regularly send order updates to a manufacturer, but if they don’t align on delivery schedules or packaging formats, it can lead to excess handling, inefficient truckloads, or delays at the receiving dock.
• Don’t overlook change management. Implementing new tools or processes without preparing teams can lead to poor adoption. A company that rolls out a new forecasting system without training planners risks underutilization and inconsistent results.

Canadian organizations have a significant opportunity to unlock compounding value through a more productive supply chain. By addressing system fragmentation, fostering strategic collaboration, embracing data-driven decision-making, and overcoming cultural hesitations, leaders can shift from reactive operations to proactive planning. Success starts with defining what productivity means for your business and builds through targeted, high-impact initiatives that lay the foundation for scalable transformation and resilience.

KPMG in Canada is here to help you identify productivity barriers, design self-funding improvement roadmaps, and implement decision intelligence solutions that deliver results. We work with Canadian supply chain leaders to unlock funding, optimize operating models, and empower teams to act with confidence.

If you're ready to move beyond incremental gains and architect a supply chain that delivers measurable, sustained productivity, let's work together to design and implement integrated solutions that drive real business outcomes.