Supply chain among top-of-mind issues for midmarket businesses: BDO Canada
TORONTO – While the COVID-19 pandemic has put significant pressure on Canadian businesses, midmarket decision-makers are pushing forward to rethink their approach and operations, according to new research by BDO Canada.
The Midmarket Outlook Report 2021 provides a snapshot of the challenges and priorities facing these businesses, including supply chain, talent attraction and retention, digital transformation and ESG.
The report compares the opinions of small (under $25 million in revenue), medium ($25 to $100 million in revenue) and large (over $100 million in revenue) enterprises in the midmarket. The data showed that medium enterprises acted as a bridge, both as a model of growth for small enterprises aspiring to accelerate, and as businesses with an eye on the priorities of larger enterprises.
“The midmarket punches well above its weight in the Canadian economy,” said Daphna Smuckler, managing partner, assurance & accounting, BDO Canada. “This research demonstrates their resilience and vision, especially during challenging times like what we’ve experienced over the past 18-plus months, while casting a much-needed light on their particular experiences and priorities.”
The COVID-19 pandemic continues to impact many aspects of supply chain management. When asked to rank their priorities for supply chain improvement, customer service was the top focus for medium enterprises, along with their smaller and larger counterparts. Additional leading priorities include their customer order cycle time and total delivered cost.
Canadian businesses of all sizes and across industry sectors are experiencing recruitment and retention challenges, a trend that is expected to continue into 2022. According to the report, 50 per cent of medium enterprises identified ‘attracting new talent’ as their biggest challenge and expect that to continue.
Businesses appear divided on work location preferences; some are keen to prioritize bringing employees back to an office, while others prefer to increase remote work options. According to the research, just over one-third of medium enterprises (35 per cent) want all employees to return to the office as soon as possible, compared to just below one-third (29 per cent) seeking increased remote work options.
Medium enterprises say they are making ESG a priority. Almost three-quarters (71 per cent) of respondents agree that their organization is doing a good job addressing environmental sustainability issues, and two-thirds (67 per cent) of their management and board consider environmental sustainability a priority.
Almost one-in-seven companies have yet to implement any steps to support environmental sustainability. Governance items rank particularly low, including creating a senior position accountable for driving ESG goals (20 per cent), implementing an ESG framework (18 per cent), and requiring suppliers and/or partners to meet sustainability criteria (16 per cent).
Digital transformation efforts were not spared by the pandemic. Fifty-four per cent of respondents indicated plans were impacted to some or a significant degree. Yet the research shows medium enterprises plan to commit more resources to their transformation efforts over the next year (64 per cent).
This figure rises to 77 per cent for companies that have either developed and implemented, or have completed, a digital transformation project. Large enterprises (54 per cent) plan to increase their spending to support digital transformations over the next 12 months and 59 per cent of small enterprises will decrease or won’t make any changes in their spending.
When asked whether they saw the return on investment they had expected from their digital transformation projects, more than two-thirds (67 per cent) of medium enterprises said they had. For those who have aligned their transformation plans to business objectives, three-quarters (75 per cent) saw a return on investment, compared to zero for those who hadn’t aligned and 44 per cent for those who were neutral.