Deloitte’s new report, Designed for stability, exposed by chaos: The new reality of global supply chains, finds that rising trade tensions, labour disruptions, and shifting sourcing strategies are pushing Canada’s supply chains into a more volatile phase.
In this environment, advantage will come less from efficiency alone and more from smarter design. The report also points to a clear upside: a chance to rebuild supply chains that are more competitive and value-creating.
Key findings include:
- Global disruptions are up 38% year over year: Canada’s supply chains have faced more than 70 labour related major disruptions since 2022, revealing the risks of single‑region, lowest‑cost sourcing.
- Risk exposure is higher because of trade concentration: Dependence on a small number of trade routes and imported finished goods leaves Canada more exposed to shocks and cascading disruptions.
- Supply chain diversification delivers real upside: A mix of onshore, nearshore, friendshore, and selective offshore sourcing is driving 133% procurement ROI, up to 30% higher margins, and 20–30% shipping savings.
SME ecosystem scaling is the unlock. Strengthening supplier ecosystems by enabling Canadian SMEs to scale, with access to technology, capital, and predictable demand translates diversification into tangible economic impact: job creation and stronger domestic capacity, not just intent.
Mahendra Dedasaniya, National Supply Chain & Network Operations Leader, discussed the issue.
Question: Your report suggests supply chain resilience is now more important than pure efficiency. What specific changes are Canadian retailers and businesses making today to balance cost control with stability and risk management?
Answer: Canadian businesses are rethinking a category based sourcing strategy and that is not a retreat from cost discipline but it’s an upgrade to total cost of ownership under volatility. Business leaders are recognizing that the ‘cheapest unit price’ can be the most expensive outcome once you factor in total landed cost and cost attributable to stockouts, expediting, lost customers, and reputational damage during volatility and disruptions.
Hence there is an increased focus on mission‑critical or high‑visibility categories being pulled closer to home i.e. onshore where continuity and compliance matter most while lower‑risk, high‑volume categories still leverage offshore scale, but with more deliberate diversification across regions to avoid single‑point failures.
We are seeing businesses typically adopting three practices in their updated sourcing playbooks i.e. (1) dual‑sourcing and regionalization to reduce dependency risk (2) supply chain visibility through multi-tier illumination, robust business planning and supply chain risks identification to monitor the business disruption beyond tier 1 supplier and create a competitive differentiator and (3) targeted buffers, not blanket inventory through more inventory everywhere’ to smarter buffers in the right nodes.
In the bottom line, Canadian businesses are not abandoning cost control but they are upgrading it into total cost of ownership under volatility where resilience spending is justified by avoided stockouts, avoided expediting, and reduced revenue-at-risk during shocks.
Q: The report cites a 38 per cent increase in global disruptions and more than 70 labour-related disruptions affecting Canada since 2022. Which sectors or product categories in Canada are currently the most vulnerable, and where are companies feeling the greatest pressure?
A: The vulnerability is concentrating where three forces overlap: dependence on imported inputs, tight service‑level expectations, and exposure to supply chain related risks. That’s why the highest pressure shows up in sectors that cannot tolerate interruptions and where substitutes are limited.
We are seeing two pressure points i.e. (1) Transportation chokepoints (ports/rail/seaway/air), where Canada has seen repeated work stoppages and disruptions across the network and (2) Deep-tier supplier blind spots, because risk often originates beyond Tier 1 and visibility beyond Tier 1 remains a recognized weakness.
At a sector level, the risk signal is strongest in advanced manufacturing and electronics‑intensive supply chains, automotive and industrial production networks, and life sciences/healthcare because those sectors are structurally more exposed to foreign production shocks, and disruptions propagate quickly through multi‑tier supply chains.
In Canada, labour actions across ports and rail create economy‑wide ripple effects: exporters lose shipment windows, importers face backlogs, and recovery can take days or weeks. That’s particularly acute for agri‑food exports and time‑sensitive replenishment categories in retail.
Q: Deloitte found that diversification strategies — including onshoring, nearshoring and friendshoring — can significantly improve margins and procurement ROI. What industries in Canada are moving fastest on diversification, and what practical barriers still stand in the way?
A: The economics are increasingly compelling. Our analysis highlights that supplier diversity programs can deliver strong procurement ROI and that nearshoring can materially lift gross margins. The point is not that every category should move, but that the right categories can create both resilience and economic upside.
There are three barriers that explain why execution lags intent and those are (1) Cost and complexity of reconfiguring networks when moving production or shifting sourcing strategies that requires large capital investment and ability to manage operations disruption (2) Multi‑tier visibility gaps since many organizations still lack deep-tier transparency beyond their tier 1 supplier and (3) Regulatory and talent constraints to manage the multiple trade offs between innovation, speed to the market, market volatility, regulatory requirements and constantly changing country’s competitiveness.
Canadian industries are moving quickly where continuity risk is existential however the winners will be those who treat diversification as disciplined ‘right‑shoring’ by category customised based on their business need.
Q: The report highlights Canada’s dependence on a small number of trade routes and imported finished goods. In light of ongoing geopolitical tensions and tariff uncertainty, how exposed is Canada compared with other developed economies?
A: We are exposed for two structural issues: trade intensity and concentration. Two‑way trade is roughly 67% of Canada’s GDP, which is comparatively higher so external shocks transmit faster into Canadian prices, availability, and growth.
As we know, our export relationship is heavily anchored with the U.S. market which is a strength in stable periods, but a vulnerability when tariffs, border friction, or demand shifts change the rules of the game. That’s why diversification is not just an operational issue; it’s a Canada’s competitiveness issue.
We also face a ‘self‑inflicted’ exposure premium since labour and logistics disruptions undermine corridor reliability and that can increase the total delivery costs regardless of what’s happening geopolitically.
Q: You describe scaling Canadian SMEs as a key “unlock” for stronger domestic supply chains. What role should governments, large retailers, and major suppliers play in helping smaller Canadian businesses gain the technology, capital, and predictable demand needed to compete at scale?
A: Scaling SMEs requires a coordinated ‘runway and pull‑through’ model: government builds the runway, and anchors create demand and capability lift. If we do only one side, we won’t get scale. Our government’s priorities and recent announcements are very strategic to improve the invest in trade through infrastructure and corridor resilience, early approvals so capacity can come online faster. This will also improve interoperable traceability and compliance standards so SMEs can qualify for large procurement ecosystems rather than being screened out.
For large retailers and major corporates, the single biggest unlock is predictable demand. Multi‑year volume commitments or ‘banded’ contracts give SMEs the confidence to invest in AI, floor automation, quality systems, and capacity. They will run the supplier development program so that local SMEs meet tier 1 performance expectations and quality requirements.
Canadian businesses are now more focused on integrating SMEs into their end to end supply chains through modularizing work packages that SMEs can win and give them an option of using dual‑sourcing to make supplier resilience a growth pathway. This transition requires some handholding by large organizations and working capital investment but helps to reduce the risk across their supply chain. That’s how we will turn ‘Buy Canadian’ intent into scalable Canadian capability.
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