Over the last five years, Canadian companies have faced growing challenges in managing their global supply chains. The COVID-19 pandemic only made things worse, adding an extra layer of disruption and difficulty to their workload.
That was one of the key messages from Zeeshanali Fazal, senior account manager for the Technology Group at Export Development Canada (EDC) on a recent Let’s Talk Supply Chain podcast.
“We’ve seen this with political volatility. We hear a lot about tariffs. We hear more and more about quotas, renegotiations of free trade agreements. These are things where Canadian companies have questions and that’s what we’re here for,” says Fazal.
Other issues adding complexity to supply chain management include:
- Cybersecurity, including data theft, cyberattacks and malware.
- Natural disasters such as forest fires and flooding that can impact the accessibility of ports.
- COVID-19, which closed borders and created major supply chain disruption around the world.
- Financial risks due to everything from currency fluctuations to the ability of buyers and suppliers to pay their bills.
“The more we globalize and start dealing with foreign buyers and suppliers, the more the risks become important and increase,” especially when changing from one country to another, or from one source of suppliers to another, says Fazal.
In addition to these logistical risks, Canadian companies must be mindful about how their corporate social responsibility principles are being upheld beyond our borders.
Fortunately, Canadian companies have a good reputation in international markets as a source of innovative technologies that can improve efficiency and reduce costs.
“The world is asking for innovative solutions and flexibility,” says Fazal. Compared to what multinational companies can do, “a lot of times, it’s easier for small- to medium-sized enterprises (SMEs) to be flexible and quickly change gears to move toward solutions that are innovative, scalable and attractive to consumers,” he says.
Growing women-led companies
An increasing number of those nimble Canadian SMEs are led by women. In another recent Let’s Talk Supply Chain livestream event celebrating Women’s Entrepreneurship Day, two EDC customers discussed some of the challenges they faced and successes they achieved in growing their businesses internationally.
Laura Burget is co-founder of Three Ships Beauty, a line of natural skincare products. Shamira Jaffer is the CEO of automated retail equipment provider, Signifi Solutions. Together, they discussed a range of issues, including:
- Product certification and regulatory approvals
- Protecting intellectual property (IP)
- Logistics and shipping costs
- Hedging against foreign exchange risk
Despite the differences in the size, weight and complexity of their products, these entrepreneurs have faced common challenges when exporting. One of those challenges was finding the right logistics partners to ship their products internationally.
“We used to ship internationally to Europe and Asia and we found packages were getting lost constantly,” says Burget of her company’s beauty products. “It was such a burden because about 25% of our packages were getting lost along the way.”
Jaffer adds that fixing a 360-kilogram vending machine damaged during shipping is also “very expensive and painful” in another country.
“It comes down to finding the right relationships and the right logistics companies,” says Jaffer. “We use a different company for Asia, a different company for Europe because a lot of logistics companies have specialties. That requires a bit of work to try and find the right partner.”
Simple first steps lead to success
Both entrepreneurs were eager to dispel the idea that growing women-owned and women-led businesses internationally is a daunting, complicated process.
“It’s not as scary as you think,” says Jaffer, because demand for Canadian products is strong. “There are millions of people out there looking for opportunities. They’re looking at it the other way: ‘If only I could get this Canadian product,’ because Canada has a great reputation.”
But you don’t have to have every detail figured out before getting started, she says. “Have a direction, know where you’re going, and jump in. You’ll figure it out as you go.”
Burget urges potential exporters to begin their research by making a few phone calls to ensure there’s a market for their products in a target country.
“You might think your product will do well in a certain market, (but) more research tells you that one company owns 90% of the market, or there’s a government system in place,” she says. “If you’re a company that’s in the $100,000 to $3 million range of revenues and want to expand to another market where you think you might do well, reach out to whoever would be your buyer in that market and try to get on calls with them and ask questions.”
Once you’ve done that initial market research, she suggests taking the same approach with experts, including bankers, IP lawyers and regulatory specialists, to access their interest in working with you.
“You don’t have to bring them on retainer and do a detailed analysis. Just get on a 30-minute call.” Many professionals, she adds, will provide an initial consultation at no cost.
After you’ve done this research, it’s time to start formulating a solid strategic plan to think through the potential market risks and challenges, says EDC’s Jennifer Cooke, director of inclusive trade and corporate lead for Women in Trade.
“Think about what tools are available and how you can use them to your advantage. Protect your IP, protect against non-payment; all things that can be planned for and mitigated as you look to grow your business internationally. What resources will you need to be set up for success—both human and financial,” says Cooke. “EDC is here to support you, no matter where you are on your export journey.”
Exporting as a growth accelerator
Both Jaffer and Burget say exporting was key to taking their company sales and innovation to the next level. Jaffer admits that the Canadian market just isn’t big enough for her company’s products and Canadian buyers tend to be more conservative than in other countries. A sale in Dubai was the trigger for growing Signifi in its early days.
“(In Dubai), they’re innovative and they move fast. It really pushed us to do more than we would have done for a typical customer. We were ahead of the game because we exported. Canada is not more than 10% to 15% of our business now,” says Jaffer.
Likewise, Burget points to the availability of their products in retail chains throughout the United States (U.S.) as an important factor in getting financing.
“Large VC (venture capital) funds and parent companies that look to acquire smaller brands are based out of the U.S. They value having a presence within that market,” she says.
Cooke adds that the pandemic has only underscored the need for diversification as a natural risk mitigator. “You need to make sure you have alternatives when it comes to your suppliers and also your customers in different markets,” she says.
How EDC helps women entrepreneurs
When Three Ships Beauty got one of its first big orders from a U.S. retailer, EDC Credit Insurance provided Burget with peace of mind.
“We had a large contract come in for $250,000 that we were very worried about. It would have ended our business if they didn’t pay us,” she says.
Jaffer also credits EDC programs for giving Signifi the working capital it needed to fulfil multimillion-dollar orders with overseas customers and grow the company quickly.
“When you don’t take on that debt, you’ll get there if you’re determined, but you’ll get there way later,” says Jaffer.
Women-led businesses also need equity investors. In recognition of the challenges women entrepreneurs face in raising capital, EDC launched a $50-million Women in Trade Investment Program in 2019 for women-owned and -led companies scaling up. In early 2020, the program was doubled to $100 million.
“This program allowed EDC to invest in Canadian women-founded companies at an earlier stage than we typically would,” says Cooke, adding, “$43 million of the $100 million fund has been committed to date, and we continue to work to get capital to more women-owned and women-led businesses.”