The productivity of Canada's economy lags behind that of most of our key trading partners, but the good news is that small and medium-sized companies can quickly improve their competitiveness.
Canada's productivity as measured by gross domestic product produced per hour of work is 26 per cent below the productivity of Canada's largest trading partner, the United States, and 63 per cent below world leader, Norway. Our productivity has grown at one of the lowest rates among the 23 wealthiest countries over the last 20 years.
Those kind of indicators have economists worried about our standard of living. But that also means there's lots of room for improvement when Canadian companies focus on their competitiveness.
"There's so much low-hanging fruit we haven't picked yet because we were relying on the competitive advantage of the weak Canadian dollar," said Bruce McConnell, Vice President, Operations Support – Consulting Group, at the Business Development Bank of Canada (BDC).
"We've received our wake-up call with the strengthening of the dollar. Now we can do what other countries have done and improve our productivity quickly."
Companies aiming to improve their competitive position can do so either through a broad strategic-planning process or by developing a plan focused specifically on that goal. In either case, an outside consultant can provide invaluable advice and guidance.
As in any planning process, improving productivity has to start with a sincere commitment to change from the top management team, McConnell said.
The planning process begins with a rigorous analysis of where the company stands, including careful measurement of internal performance and, if possible, benchmarking the operations of competitors.
"You definitely want to try to figure out what high performing firms – particularly those that are like you – are doing," said Joel Baum, a professor at the Rotman School of Management at the University of Toronto.
Baum cautioned, however, it's often difficult to determine what makes a successful company tick. He suggested it might be equally useful for companies to look at competitors that have failed and determine where they went wrong.
Once the analysis phase is completed, a strategic roadmap and a specific action plan are created to implement change. There can be opportunities to improve competitive performance in virtually every aspect of a company's operations.
One solution that many Canadian businesses have embraced for improving productivity is lean manufacturing. Lean manufacturing is a set of tools designed to squeeze waste out of operations while boosting quality and customer satisfaction.
Many firms have achieved outstanding productivity gains through lean manufacturing and the techniques can also be used to improve efficiency in administrative functions or in delivering services to customers.
Canada's largest houseboat builder, Sicamous, B.C.-based Twin Anchors Marine, has benefited from a lean-manufacturing program undertaken this year with assistance of BDC Consulting.
An analysis of the company's factory set-up and manufacturing processes allowed it to reduce the time it needed to complete a boat to five to eight weeks from the previous eight to 12 weeks. That's permitted the company to reduce the value of its work in progress and free up about $600,000 in working capital.
Changes in manufacturing processes have also allowed the company to free-up manpower and 30 per cent of its factory floor space. Those resources are now being used to diversify the firm's business into building well-site trailers for the oil-and-gas industry.
"One of the biggest benefits has been to empower our people because they are the ones who are coming up with the ideas to improve our operations," said Twin Anchors President Greg Kyllo.
Kyllo estimates the cost of implementing the company's lean initiatives will be paid back four-fold in the first year.
For more information, call 1 877 BDC-BANX (232-2269).
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