Canadian Economic Outlook: A Briefing for TASC Members
The Alliance of Sector Councils recently hosted a briefing for members presented by The Conference Board of Canada's Michael Burt. Unlike many other economists, Mr. Burt isn't talking all doom and gloom. The Conference Board, in an effort to offset the bleak picture being painted by many prognosticators – which has certainly contributed to a public crisis of confidence in the U.S. and elsewhere – has taken a more-positive stand in its forecast. (See "The Psychology of Recession," by the Conference Board's Senior Vice-President and Chief Economist, Glen Hodgson.)
Focusing first on the economic situation and outlook in the U.S. – noting that "it would be all but impossible to discuss what is going on in Canada without mentioning our neighbour to the south" – Mr. Burt expressed the Conference Board's view that the U.S. will experience a "slow and painful recovery," with the economy expected to contract through the first quarter of 2009.
The American consumer confidence index is currently at its lowest recorded level. With plummeting consumer confidence, consumer expenditures are falling, having negative implications for Canadian industries that make or contribute to consumer products for export into the U.S. In fact, price-adjusted consumer spending is expected to contract for five consecutive quarters. In addition, employment has fallen for 10 consecutive months.
This weak performance in the U.S. is having an impact on Canada. Export-dependent industries, particularly auto manufacturing and wood products, have taken a big hit, and prices for many commodities – a major source of growth for Canada in recent years – are down significantly from their peaks. The result is that Canada is expected to experience weak economic growth through 2008 and 2009. On the plus side, this will provide some needed relief in terms of easing the inflation and labour market pressure that Canada was experiencing.
Indicating the relative health of Canada’s economy, our unemployment rate continues to hover near a 33-year low and the share of the working-age population that is employed is at a record high of 64%. However, the pace of job creation has slowed over the course of this year and the Conference Board expects that, on net, there will be no job creation in 2009.
Fiscally we are also in better shape than the U.S. Rather than facing a large deficit, as they are in the U.S., we are starting from a position of surplus. The Conference Board expects that the federal government will enact counter-cyclical policies to support economic growth and will experience a small deficit in fiscal year 2009/2010.
Mr. Burt summed up by saying that the Conference Board expects Canada to just avoid a technical recession in 2009 (although it may seem like we're in a recession with no jobs being created). The good news is their expectation of a healthy recovery in 2010. Along with that recovery, however, will be a renewal of our long-term problem of labour shortages...and the need for innovative solutions.
The Importance of Occupational Standards in the Supply Chain
By Dale Ross
The Canadian Supply Chain Sector Council (CSCSC) has a mandate to facilitate the growth of a talented pool of supply chain human resources that is available to industry. This is a demanding task, given that the 2005 sector study identified 26 National Occupational Classification (NOC) codes or job categories employing over 730,000 people (excluding truck drivers) within the supply chain sector.
The NOC is the nationally accepted reference on occupations in Canada. It organizes over 30,000 job titles into 520 occupational groups. It is used by thousands of people to compile, analyze and communicate information about occupations, and to understand the jobs found throughout Canada’s labour market. It is updated periodically to reflect changes in such areas as technology, market conditions and required skills, in order to remain accurate and useful. The next revision is scheduled for 2011, and HRSDC is looking for input from stakeholders in order to meet the needs of the labour market.
CSCSC’s approach to addressing skills requirements in the supply chain field revolves around assisting firms and organizations recruit, develop and retain highly qualified and skilled workers who are in demand in Canada and the global marketplace. Useful tools to meet these objectives are national occupational standards. The CSCSC, with the help of the Canadian Standards Association, is working on a project to develop such standards, through a process of investigation, analysis and consultation with people who work in the sector.
Occupational standards define the main roles and responsibilities within an area of work. They may refer to training requirements, certification and the comprehension and application of work-related processes. They generally include the skills, abilities and core knowledge required to perform the job in a competent fashion. Standards of ethical practice are also included.
Employers can use occupational standards to recruit, train and evaluate their workforce. They provide recognized benchmarks for competent performance, and can be used to develop job descriptions identifying key tasks, knowledge and skills, including any statutory or legal responsibilities. They provide for a fairer and more effective recruitment process, by providing guidelines for both employers and potential candidates about what is expected in the position.
Occupational standards also provide guidelines for designing and developing training for particular occupations, as well as learning outcomes for curriculum development by learning providers. They provide a reference point against which the success of the training can be judged, and can be used to develop a gap analysis to improve course development and the resultant return on training investment. Labour mobility is enhanced by standardizing expected outcomes, and skills and abilities required to achieve those outcomes.
The result is a more highly skilled and mobile labour force, which increases productivity, employee and employer satisfaction, and Canada’s competitiveness in the global marketplace.
To participate in a focus group to assist in the development of occupational standards for your functional area, or to review and comment on draft versions of occupational standards currently being developed by the Council, go to the Occupational Standards Project page
on our website.
Dale Ross is Project Manager of the Council's Occupational Standards Development Project.
Partnerships for Profits: Forging Effective MNC-SME Value Chain Connections in the New Global Environment
Seeking Input on Conference Board of Canada Research Project
By Tim Krywulak and Vadim Kukushkin
The global business environment has changed dramatically over the past three decades. Declines in transportation, communications and information-management costs have eradicated distances, while reductions of tariff and other barriers to trade and investment have erased national boundaries. These developments have allowed businesses to reduce costs and maximize returns by strategically sourcing production across the world, and to connect with innovative partners wherever they may be found.
Today’s leading multinational corporations (MNCs) no longer operate as self-contained units that own and control most aspects of their production process; rather, they operate as the lead firms in global value chains comprising a network of other firms that contribute to everything from product design to customer service. It is the effectiveness of these value chains that now determines the success or failure of MNCs and their partners.
The MNC Perspective
MNCs can benefit from partnerships with smaller firms. By partnering with smaller operators, MNCs gain the opportunity to lower production costs and take advantage of the SMEs’ knowledge of local markets, innovative capacity and flexibility. SMEs often have specialized knowledge, innovative approaches to business, lower operating costs and the ability to make things happen quickly. These benefits can give MNCs an edge in the international market, where competition is increasingly intense.
Forging effective relationships between MNCs and SMEs is not always easy. Because the competitiveness of an MNC’s value chain affects its viability in a very direct way, MNCs must ensure that each value chain partner is carefully screened, selected and monitored on an ongoing basis. No large company can be expected to take a chance on an SME just to “help it out.” Nor will it maintain a relationship with an SME if the smaller company cannot measure up to the necessary standards for quality, price and delivery. It may, however, forge a new business relationship if the SME can provide an important innovation, resource or product on a reliable basis.
The SME Perspective
The new global environment has generated tremendous opportunities for SMEs, opening markets and creating possibilities for expansion. But garnering the benefits of these opportunities can be exceedingly difficult for SMEs. Smaller companies have limited financial, technological and human resources. Moreover, the upfront costs of tapping into international markets (e.g., market knowledge, technical expertise and linguistic skills) tend to be high. These are some of the reasons why approximately 42 per cent of Canadian firms end up leaving foreign markets within the first 12 months of entry.
Forging Global Value Chains: Opportunities and Challenges
Entering the global value chain of an MNC is one key strategy SMEs can employ to take better advantage of international opportunities. About 15 per cent of Canadian SMEs now participate in global value chains. Although it is not appropriate for all firms, more SMEs may wish to consider this option.
Compared with “going it alone,” internationalization through partnering with an MNC offers SMEs advantages such as:
- increased sales and enhanced firm reputation;
- access to new markets through the MNC’s established channels;
- leveraging the MNC’s technical knowledge and other expertise;
- improved quality and productivity to meet MNC supplier standards; and
- a stronger base for future growth.
Yet there can be several obstacles to forging effective MNC-SME value chain connections. One problem is that smaller and larger companies often find it difficult to establish the level of mutual trust necessary to form the initial business relationship. Some SMEs are unsure of where to begin, as well as what MNCs expect or require of their suppliers. Even after a relationship has been established, there can be major challenges in securing the financial and human resources necessary to maintain it. Then, there is the possibility that large and small companies may pursue different goals and have different expectations of their partners. This project seeks to help MNCs and SMEs address these barriers to success.
The Conference Board of Canada’s International Trade and Investment Centre (ITIC) has launched a new research project entitled Partnerships for Profits: Forging Effective MNC-SME Value Chain Connections in the New Global Environment.
The objectives of this project are four-fold:
- to understand what MNCs look for in their SME suppliers;
- to understand what SMEs need to do to become effective value chain partners;
- to benefit the Canadian economy by improving the performance and profitability of MNCs and SMEs;
- to assist SMEs in tapping into the global marketplace through the value chains of MNCs.
How You Can Help
The Conference Board is seeking input from the Canadian Supply Chain Sector Council and its partners on this important research. You could contribute by providing your perspective on:
- what large companies look for in their small and medium-sized suppliers;
- the opportunities and challenges for small and medium-sized suppliers in working with large multinational companies; and
- what policymakers and legislators can do to promote more effective linkages between small and large businesses.
To share your insights, please contact us by phone or email:
Preaching to the Converted?
By Chris Irwin, MBA
I was recently working with a group of purchasing professionals around effective communication of change messages. Understandably, the focus was on influencing and persuading others to buy into the value that can be created by supply chain-focused initiatives.
We were discussing the example presented by one of the members of the group, who was attempting to centralize purchasing, moving away from the status quo decentralized (ad hoc?) purchasing. Playing a combination of devil’s advocate and helpful outsider, I probed for some objective evidence. The idea that centralized purchasing was “good” and decentralized purchasing was “bad” seemed to be the crux of the argument. How far would that fly outside this group?
No small part of presenting information is providing appropriate support, and this is where the difficulty arose. What may seem “common sense” to a group of purchasing professionals will likely need a bit more behind it to garner buy-in from those in, for example, a sales function. The conundrum that many of us face in supporting to external groups is this: “I can’t understand why you don’t understand this.” We are tempted to try “dumbing it down,” but it may also simply require being ready to answer the question, “Why on Earth would I want to do that?” This question will not likely come from those already on board.
In an article on corporate social responsibility
(CSR; potentially requiring a softer sell than procurement rigour), Prof. John Peloza describes the dynamic whereby the camp of those who champion the CSR cause are often talking to each other about their importance, rather than to the finance side of the business where decisions are made. Part of the language of finance is numerical support in the form of return on investment, return on equity and return on assets. He claims that no one in the CSR camp bothers to learn this language in order to engage the finance group in discussion. (And, why bother? We’d rather talk amongst ourselves anyway…) The same may apply to those working in supply chain.
Back to the original example: in light of the current financial situation and a collective cry for more accountability, it may be getting easier to make the case for centralized versus decentralized purchasing. Nonetheless, that case will have to be made to some people who prefer having flexibility in the purchases they make. Having worked in sales, I completely understand the preference for decentralized… and how a sales person might not understand why you don’t see it their way.
Effectively putting the case forward to these “out groups” requires attaching support to what could be “common sense” arguments. It demands going beyond, “It’s just better, OK? Trust me.” Oh, and don’t forget: try to not come across as condescending.
Quick tip: If you find someone from an “out group” who has come to “get it,” ask them to tell you what brought them around. Chances are this support will be appropriate to others in that group.
Chris Irwin works with organizations undergoing change to reduce interpersonal noise in cross-functional and cross-generational communications. He is on faculty at the Schulich School of Business, and teaches in PMAC’s Strategic Supply Chain Management Leadership Program. He blogs on related issues at www.microob.com and can be reached through that website.
Consensus on the Definition of Supply Chain
By Kevin A. Maynard, CAE, Executive Director
Over the last two years, I have had the remarkable opportunity to work with a large number of people, all with diverse backgrounds, a variety of experiences and a great deal of knowledge gained through years of working in the supply chain. The one common element in their conversations with me is the complexity of the work of people in the sector, and the passion that they have for that work. Often, discussion takes place around the scope and depth of the supply chain, and the definition of our sector.
This is where consensus and collaboration come to play. In October 2005, the Canadian Logistics Skills Committee (predecessor to the Council) published the “Strategic Human Resources Study of the Supply Chain Sector
.” This study helped to define the sector, and provided a framework for detailing the seven sub-functions and 26 NOC codes that comprise our labour force. Stakeholders involved in the study agreed on a definition of "supply chain."
This defining moment and the term itself enables the Council and its partners to speak with confidence about the supply chain and its various elements. Over the last several weeks, particularly as we consult with stakeholders in the development of occupational standards, we felt it appropriate to share this definition in order that we can encourage its sector-wide application.
Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all Logistics Management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies.
Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the Logistics Management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, and finance and information technology.
Used with permission of the Council of Supply Chain Management Professionals, from page 5 of the summary report, Strategic Human Resources Study of the Supply Chain Sector, Canadian Logistics Skills Committee, 2005.
We hope you will join us in using this definition to bring clarity to our sector as we promote career development, the enhancement of skills and knowledge, and the sharing of labour market information for the sector.
Who is Going to Work for You in the Next 10 Years?
By Deborah Watson
Changing demographics are straining Ontario’s supply of skilled workers across virtually all industries. Businesses of all sizes are searching for new ways to attract, train and retain new employees. How are you addressing your business’s employment needs?
You can help to shape your future workforce...
Through programs like Co-operative Education, employers have the opportunity to meet and train their workers of the future, while providing students with real-life experience in the workplace. Employers can also get involved by offering to attend local job fairs, giving career talks, providing worksite tours for students, or offering apprenticeships.
How can your business get involved?
Employers can express interest in participating in experiential learning programs by registering on EmployerRegistry.ca
, an online community connecting businesses across Ontario with students, to provide students – and your future workforce – with a range of exciting learning opportunities. Register your company and the type of involvement you might want to offer students. These can include career talks, Co-op or the new Specialist High Skills Major programs. The site is monitored by Passport to Prosperity coordinators who work with local school board representatives and businesses to help employers connect with schools and students. Teachers in turn use the website to access the extensive employer database and provide meaningful opportunities for their students.
Employer resources, testimonials and case studies, plus an extensive library of on-line resources, can be viewed at class2careers.com
For more information, contact Deborah Watson, Program Manager of Passport to Prosperity at The Learning Partnership: 416-440-5113 or firstname.lastname@example.org
The Passport to Prosperity program is a province-wide initiative, funded by the Ontario Ministry of Education, to increase employer awareness of and participation in school-to-work programs for secondary school students.
IE Canada, Cost Saving Strategies in Your Customs Process & HS Tariff Classification
December 2, 2008: Kitchener, Ont.
December 3, 2008: Markham, Ont.
December 4, 2008: Montreal, Que.
December 8, 2008: Winnipeg, Man.
December 9, 2008: Saskatoon, Sask.
December 10, 2008: Calgary, Alta.
December 11, 2008: Vancouver, B.C.
WESTAC and Transport Canada, Freight Demand Forecasts: Is Western Canada's Transportation System Up to It?
, December 3 and 4, 2008, Vancouver, B.C.
December 11, 2008: Waterloo, Ont.
December 16, 2008: Sudbury, Ont.
January 15, 2009: Peterborough, Ont.
January 27, 2009: London, Ont.
February 5, 2009: Mississauga, Ont.
Supply-Chain Council, Supply-Chain World 2009: Define. Align. Excel.
, March 16 to 19, 2009, Houston, Texas
McMaster University, Translog 2009
, June 17 and 18, 2009, Hamilton, Ont.