Canadian Suppliers Refocused on Productivity

THERE WAS AN EXTENDED PERIOD OF time when Canadian suppliers regarded themselves as the pinnacle of productivity.

But results of a study conceived in 2008 and published recently confirm contrary suspicions first raised when the U.S. greenback began its historic plunge against the Canadian dollar.

“We've always tried to be competitive,” says Steve Rodgers, president of the Toronto-based Automotive Parts Manufacturers Assn. “We followed the Japanese model of kaizen continuous improvement, (with) productivity always getting better. The reality is we may have kidded ourselves just a little bit.”

A survey conducted by lean-manufacturing consultancy Operations Expertise, in conjunction with the APMA and the Ontario provincial government, rates Canadian suppliers as “marginal” in six of seven performance metrics: work environment, cost knowledge, continuous improvement, discipline, new product and lean deployment.

Their highest rating, “sufficient,” is for training. The dollar difference, which has been as high as $0.40 over the course of three decades, established false confidence among Canadian suppliers.

“When the Canadian dollar came back to par, we realized maybe the productivity hadn't been quite as good as we thought,” Rodgers tells Ward's at the APMA's conference and exhibition in Windsor, ON.

The loonie was worth $1.02 against the U.S. dollar in mid-June.

So the APMA helped devise a program to enhance productivity, using Honda's supply network as a benchmark. Operations Expertise ranks the performance of the OEM's vendors as sufficient or better.

Participating companies saw significant improvement in five to eight months. Though performance still trailed the benchmark, they recorded ratings of sufficient in all but one area — lean deployment.

Martinrea division Alfield Industries, a stamping and tube-bending supplier in Woodbridge, ON, identified opportunities to make gains in its die-change practices, among others, yielding savings in the range of $350,000 per year, the supplier says.

Process improvements at Hermatite Mfg. in Guelph, ON, saw Toyota elevate the supplier's status to Tier 1 from Tier 2. Hermatite produces acoustic insulators and other goods from recycled plastic.