The RSM Canada Supply Chain Index reached 2.31 in August, one of the highest readings since 2000, thanks to improvements across delivery time, prices, and inventory levels, signaling sufficient health of the supply chain.
This sharp increase represents a dramatic shift from just a few months ago; in May, the index showed a deficiency.
The increase can be attributed to continued improvements in delivery times and prices. Inventory levels are healthy as goods ordered late last year and early this year now have arrived, just as consumer demand slows. Similarly, some bottlenecks on the transportation system have been mitigated. This shows how tricky it is to solve the puzzle to have enough inventory to meet constantly changing demand, especially considering the convoluted global supply chain.
Full shelves, for now
Pent-up demand for consumer goods has somewhat evaporated as consumers are faced with stubborn inflation and rising interest rates, together with sliding financial markets.
The labour shortage remains a pain point due to a low labour force participation rate, and we do not expect this to change any time soon given the demographic makeup of Canada.
These last few months have shown how quickly things can change in the global and Canadian supply chain.
For now, full shelves at retailers and warehouses provide relief for businesses and households. On the flip side, if and when a recession occurs globally, consumer demand will cool and moving those inventories will be a challenge.