Bridging the productivity gap
From the August 2023 print edition
By most accounts, Canada has a productivity problem. This is despite the fact that the country is growing in several ways. For example, our population recently hit the 40-million mark. In fact, Statistics Canada says that we saw the number of people grow by over one million in 2022. That’s the first time in our history we’ve seen such a jump.
As well, our economy has been more resilient this year than previously expected. According to RBC, both Canada and the US saw a growing GDP in Q1, bolstered by consumer spending, even in the face of higher interest rates and prices.
Yet, our productivity lags. We can define economic productivity as a measure of the rate at which the goods and services output are produced, per unit of output (like labour, capital, or raw materials). Among OECD nations, we rank 18th in terms of our productivity. That productivity also diminished nine per cent between 2000 and 2022, compared to our neighbours to the south. Which puts us at about 72 per cent of that of the US.
There are several reasons that get cited for this low productivity. Among them are a lack of business investment in buildings, machinery, and intellectual property, as well as a decline in research and development spending and the subsequent “innovation gap.” A lack of workforce upskilling is another factor.
It all sounds rather gloomy. There’s also no easy fix and whatever we do about it will take time to work. Yet supply chain can play a role in fostering an increase in productivity.
For example, many organizations are digitizing their supply chains, a critical step in upgrading and modernization. Supply chain professionals must look at what digital capabilities their organizations need in order to increase visibility, become more efficient, and otherwise foster higher productivity.
That means those organizations must also ensure their employees have the skills they need to thrive in a more digital environment. If companies are to update critical functions using technology, supply chain professionals must ensure they are improving their skills to keep pace.
There are several reasons for the skills gap facing supply chain. An aging and retiring workforce, for example, means younger workers must ramp up their abilities fast. It’s as important as ever to ensure your skills are up to date.
Another key is adopting a culture of productivity. Companies that focus on innovation, becoming more dynamic, and updating skills and infrastructure have an advantage towards success.
That’s especially important because supply chain is so embedded in organizations, rather than operating within a silo. Whatever challenges supply chains face reflect the trials of the companies they serve.
Yet, that means that any success supply chains experience can only help their organizations and, by extension, all of our success.
Supply chain leaders and their organizations must therefore work to tackle the productivity gap. Our future prosperity and quality of life depend on it.