Matt Weller
Founder, Naviga Supply Chain

Related links:
Parliamentary Address regarding Supply Chain, SME Manufacturing and Productivity
Parliament recommendation #1: National Reindustrialization Strategy 
Parliament recommendation #2: Realign investment and build executional knowledge

This is part 3 of 3 expanding on recommendations I recently made to our Parliament around supply chains, small and medium manufacturing, and our national productivity challenges.

Today I’ll talk about the need for an active, connected ecosystem for executives and leaders at small and medium manufacturing. 

So far, I’ve talked about the need for a reindustrialization strategy to provide coordination and focus within our manufacturing sector and our economy. And I’ve also talked about the need for changes in our education and funding models, to build executional knowledge and develop a focus on realized productivity as the primary measure of effectiveness.

But for either of these suggestions to work well, they need a feedback and adjustment mechanism within industry itself. There needs to be an active, connected ecosystem for our small and medium manufacturers where they can leverage group knowledge to solve common problems, preserving their individual time and resources to focus on competitive advantages. Or in other words, to prevent them from reinventing the wheel in disconnected silos.

This bridge can serve to map, research and aggregate the needs of these manufacturers, along with the capabilities and capacities they represent (both in terms of production and employment), and provide that information in useful ways to industry groups to foster greater collaboration, alignment and focus on realized productivity gains. These groups are all critically necessary, but individually they have failed to change the downward trajectory of our national productivity.

As such, it would be of critical necessity that such an ecosystem be industry led, independent from the influence of government and special interest groups, but at the same time be aware of the needs of our present and future population and our national sovereignty (30, 40, 50 years down the road) that only government has the vantage point to see beyond any individual industry. But just as individual industries cannot see the full view of our future needs, government cannot determine how it will meet those needs in isolation. So there is an opportunity for an active ecosystem to inform overarching national strategies and policy, with data, executional knowledge and most importantly, end customer feedback. I.e. employment, economics, and our population as the “market” to be served at a macro level at a breadth and scope that exceeds that of industry groups or government bodies. This is about finding out what our small and medium manufacturers need to be successful at the detailed levels (through enabling discussions, dialogue and learning between these companies), building that environment, and getting out of their way.

Perhaps a simpler way to put it, an active connected ecosystem can become the glue that holds it all together in a functional fashion.  

We don’t have to look too far to learn how to build an active ecosystem. Canada’s tech sector has already built one, which has yielded a burgeoning tech sector that without this ecosystem, simply would not exist. Although as of late they too are experiencing challenges, because our lack of executional knowledge and our productivity crisis is not isolated to small and medium manufacturers, and as it turns out, funding scorecards do not correlate to successful businesses. But our manufacturing sector needs tech and innovation, and as such a revitalized manufacturing sector and reindustrialization strategy, can easily be a foundation on which tech can thrive and prosper in a symbiotic relationship to everyone’s benefit.
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A future that sees a manufacturing ecosystem equal to that of tech is a future that takes advantage of collaboration, builds east-west trade in addition to our traditional north-south trade patterns, and sustains real, measurable productivity growth and prosperity for all of our economic sectors, and for our population as a whole. 

Matt Weller
Founder, Naviga Supply Chain

Related links:
Parliamentary Address regarding Supply Chain, SME Manufacturing and Productivity
Parliament recommendation #1: National Reindustrialization Strategy 
Parliament recommendation #3: Create an active, connected ecosystem for SME Manufacturers

This is part 2 of the 3-part series expanding on recommendations I recently made to our Parliament around supply chains, small and medium manufacturing, and our national productivity which is currently in crisis. Today I’ll talk about the knowledge gap, and the educational and funding opportunities to improve things. 

To understand the knowledge gap, some context is required. Generally speaking, Canada’s small and medium manufacturing was at its peak when I started my career in 2000. I watched firsthand as the internet age, and then global trade accelerated the speed of business and the leverage potential of competitive advantages very quickly. From a supply chain perspective, it seemed as though things went from just fine to broken everywhere within just a few short years. Our way of producing was no longer sufficient in the new economic environment.

The causes of our productivity decline in manufacturing

The emergence of the internet, accessibility of global markets and trade, and economic crisis (2001 and then 2008) demonstrated that ideas are not enough, talent is not enough, we needed more to compete. We introduced industry 4.0, automation, technology, and an almost religious belief that low unit costs from low-cost countries would equal increased profits. The net result is our productivity decline accelerated exponentially, and our manufacturing sector was decimated, simply because these things are accelerators. If you’re effective, they will accelerate that and make you more efficient. If you’re not effective, they will accelerate your ineffectiveness into disaster. Our problem is not lack of technology, nor is it cost-competitiveness. The real problem is a lack of explicit operational knowledge as a strategic asset at the executive level, a lack of retention and development of that same knowledge, and general skepticism from companies that have lived through this reality just to see many solutions leave them worse off then they were to begin with.

So the knowledge gap is not so much a failure to adopt new technology as much as it’s a gap in how to be effective in the first place when it comes to strategic supply chain and operations management, system thinking, and the c-suites ability to chart the course of the company based on accurate and complete information.

Our executional knowledge gap of the pasts persists into our future

You have to be effective before you can move on to become efficient at whatever you’re doing. There are no shortcuts. And all of our resources for SME Manufacturers have been based on efficiency, ignoring completely any support around how to be reliably, and repeatedly effective at producing. Yet, this is exactly what we don't do, teach or reward. Instead, we continue to assume that with the right tech, marketing and cash injection, everything will just work. When it has worked, it’s been closer to luck than the result of knowledge and skill. Luck is not a reliable strategy.

Today, we face a new set of challenges. The breakdown of globalization and new economic crises are parallels to the early 2000’s. The emergence of AI promises to be many times more disruptive than the emergence of the internet. The past 10 years have seen strong anti-competitive influences in our economy, promoting large firms and/or monopolies, and supply chain solutions suitable to them (but not at all suitable to our SME Manufacturers) at the expense of small and medium manufacturing. Today, we punish productivity with arbitrary taxes, regulations, and governmental interference at multiple levels. Amidst all of this, we find ourselves at a time with less, not more – productivity knowledge than we had previously.

This is concerning because that knowledge is our only means to ride out the storm. No other solutions can be effectively applied without it. And you do not have to try hard to find an example. During the pandemic, business leaders said Just In Time (JIT) was responsible for breaking our supply chains, showing a complete lack of understanding of what JIT is. One thing it is not, is a blind elimination of inventory that will put you at risk for any number of disruptions that may be relevant to any given business. Although blaming it is an admission that this is exactly what they’ve done, demonstrating the very lack of knowledge and strategy I’m talking about. The pandemic shortages had nothing to do with JIT and everything to do with incredibly poor demand planning and lack of strategic treatment of supply chain on a mass scale, which has been brewing for years and we’ve not seen the worst of it yet.

Those who do have the necessary knowledge are retiring, those coming up behind have neither experience nor practical knowledge because (as mentioned already) knowledge around productivity in manufacturing and supply chain is largely still not taught. In this context, our obsession with efficiency-based solutions becomes peripheral to the challenge at hand, and akin to rearranging deck chairs on the titanic for many of these firms.

Solutions to change course

Of course, in all of this, there are opportunities.

1) We can build programs and supports focused on the knowledge cycle, from tacit knowledge through to innovation. This can be done without any technological requirements.

2) We can learn to apply a system thinking approach to business challenges with an ability to test and adapt. This can build solutions that are specific to individual companies. Generic solutions aren’t helpful.

3) Build an active, connected ecosystem for executives at Small and Medium Manufacturers that is focused on productivity ahead of all else and enables (and celebrates) realized productivity gains as well practical knowledge around productivity in SME Manufacturing.

4) Expand funding to include knowledge development and retention within these firms. Currently, funding models revolve around solving a technological problem, or adopting technology. A national reindustrialization strategy (mentioned in my last post) can anchor this.
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5) We can develop programs that are accessible and affordable to SME Manufacturers that are not standardized on the practices of the 0.6% of our manufacturers (the large multi-nationals), but able to assess, understand and work within the specific realities of any given business with a focus on productivity ahead of all else. This can also be developed out of an active ecosystem.

Before you can be efficient, you have to be effective. Or to say it another way, People, Process, Technology, in that order.

Matt Weller
Founder, Naviga Supply Chain

Related links:
Parliamentary Address regarding Supply Chain, SME Manufacturing and Productivity
Parliament recommendation #2: Realign investment and build executional knowledge
Parliament recommendation #3: Create an active, connected ecosystem for SME Manufacturers

On April 30th I appeared before parliament to discuss Canada’s supply chain challenges relative to our small and medium manufacturers, and our national productivity. I brought forward several concerns and with those, three recommendations.

In this post I will talk about the first recommendation which was that we create a national reindustrialization strategy, and I will expand on the other two recommendations in separate posts.

From my remarks at Parliament:

“While industry must inform and lead the solutions to these challenges, a national reindustrialization strategy is needed to coordinate and prioritize those efforts and design a supply chain and business environment that is favourable to productivity. We need to ensure that we can understand, identify, and retain critical manufacturing resources, skills, capacity and capabilities and their complex interactions at the detailed levels which will be needed for both industry and consumers in the much longer term. Taking a whole system thinking approach, we can balance the needs of our economic system and avoid short term benefits to any particular sector or industry at the long-term expense of our overall productivity and economic stability. This is critical for us to survive the societal, economic, and geopolitical challenges that lie ahead, and the recent pandemic has already demonstrated our vulnerability.”

Our current environment - lots of effort, no gain.

In our economic environment, we have an assortment of efforts at various levels. Industry groups, industry itself, special interest groups, consumers, academia, private and government investment all exist with a disconnected or isolated view of the macro challenges at a system-wide level. They all work to solve the individual problems they were created to respond to, but they do not work to understand the integration of all these efforts collaboratively, at the interconnected macro level. In basic terms, national economic systems are “closed loop” meaning that any benefit gained in one localized area, must necessarily come at the cost of another. Without an overarching alignment or strategy, the result is a net loss to productivity and our standard of living. We are seeing this as our current reality.

Our future needs demand a new approach

Our future, regardless of if you subscribe to the ideas of a green economy or not, will absolutely require a massive industrial build out – at a magnitude we’ve never seen in this country - simply to retain our current standard of living, never mind improve on it. Yet currently, we are losing the knowledge, capacity and capability required to process resources and produce physical goods.
The solution is to create a national strategy for reindustrialization.

Such a strategy can:

1) determine what our most pressing needs will be in the future in terms of internal process capability and capacity, to preserve our way of life, national security, and sovereignty,
2) identify all players in the economic system (the organizations I listed previously) and inventory their capabilities and resources,
3) map out which groups align with the needs of the next 50 years and incentivize them to work collaboratively to fill the gaps, and
4) measure progress based on productivity and economic growth once our economic engines are driving towards the same collective goals, instead of working against each other.

To be clear, there’s a couple of things such a national strategy cannot be. It cannot be partisan or hinged on a 4 -year election cycle. The needed solutions will take years to build and execute, and we need to commit to them in the longer term. It also cannot be a set of governmental decrees, or regulatory mandates. It cannot be command and control, and this is not something that can be solved with taxes and regulations.

It must be voluntary, with collaboration among industry players. Government is necessary to give industry the macro “system wide” insights and incentives that individual industry players on their own can never have, but it’s industry itself that must solve industry’s problems. Which is far easier to do when there is a unified consensus of what needs to be worked on and some sense of how to prioritize the collaborative effort.

SME Manufacturers at the core, but benefits for all

While my focus behind this suggestion is based on our small and medium manufacturers, there’s benefit far beyond those companies. We have an emerging intangibles/innovation tech sector that is trying to find its place in Canada. Some argue that the future is the intangibles, and that tangibles (physical goods) are no longer economic drivers. The reality is that as long as there are human beings, physical products will be required, and we can either make them competitively, or be at the mercy of someone else for them. But I will argue that the physical goods economy cannot competitively or efficiently survive without the enablement that our intangibles sector can provide. They will be needed to respond to any reindustrialization strategy, to build out in ways that are competitive, efficient, clean, and robust, and enable those buildouts to iterate and ideate faster than ever before. Building a resilient economic engine both for us and for competitive export opportunities. We need our small and medium manufacturers to produce, our innovators can help them to produce better, and faster. In my view, you cannot have one, without the other.

Can it be done?

Without a doubt, what I am suggesting is a massive undertaking rife with multi-faceted complexities. But it is not impossible. In fact, the United States is already several years into their reindustrialization for all the same reasons, and they are not doing it for our benefit.
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Canada deserves to have an assured future based on its own capabilities and richness of resources. It needs to determine how to produce for itself, and not simply hope to “rent” its future needs from other nations – especially in these times of rapid de-globalization.