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The SAQ: Transformation by Necessity

January 3, 2023

On December 7, Executive Education HEC Montréal hosted a webinar entitled “Supply Chains: Rolling with the Punches” as part of the Les Rendez-vous ED series. Luc Bourdeau, the SAQ’s Vice-President, Supply Chain, took advantage of the opportunity to explain how the public corporation has tackled the complex and unpredictable impacts of the pandemic.


Luc Bourdeau

Worries, worries everywhere

In March 2020, when the first wave of COVID-19 hit Quebec, and hit it hard, the government put everything, the economy included, on pause. The entire province went into lockdown. But through it all, SAQ stores remained open for their customers.

In the course of a year, the government corporation usually purchases over 25 million cases of wine. But all of sudden, there were product shortages across the globe to contend with. Some wine-exporting countries, like South Africa, imposed a ban on international sales, while places like New Zealand were all but cut off from the world, with no cargo ships travelling there or back. Warehouses in Montreal and Quebec City were seeing their supplies dry up faster than they could have ever imagined.

What’s more, at the outset of the pandemic, marine carriers were cancelling one container shipment after another and sending their vessels to the scrap heap, which did little to improve maritime transportation capacity. Add to that the shortage of qualified labour at many ports, which all but shut down sea traffic, left containers stranded and drove shipping prices skyward.

As if that weren’t enough, grapes in France and other countries succumbed to unseasonable frost. As the pandemic ripped through supply chain facilities, droves of employees were sent home to quarantine under government orders in an attempt to stop the coronavirus from spreading. Supply chain woes began to extend to other key products in Europe such as bottles (a casualty of the war in Ukraine), corks and even shipping pallets. Here at home, Canada Post stopped delivering wine to home addresses given the suspension of proof-of-age requirements.

Amid these and other complications, how on earth could the SAQ manage to keep up supply to meet the significant demand?


A quick change

“We couldn’t rely on our usual business models,” said Bourdeau. “We had to revamp everything overnight. We switched from a predictive, just-in-time approach to a just-in-case model in no time flat.”

Two things complicated matters further: online sales had exploded, while restaurant sales had come to a screeching halt. The latter would regain momentum later that year, during the summer pandemic lull, only to plummet once again during the second wave in the fall. As it currently stands, the SAQ’s sales are stronger than they were prior to the pandemic.

“We had to increase the capacity of SAQ.com to maintain our order processing turnaround times. That meant we had to reduce our product selection. We also had to keep enough aside to be ready for restaurants when they reopened, with a dwindling supply of wines and spirits that were not moving at all,” Bourdeau continued.

The SAQ also had to manage the sporadic arrivals of containers at the Montreal port.

“Normally, we have enough room to store 150 inbound containers at our facility in Montreal,” he said. “This one morning, a single ship arrived with more than 200 containers aboard!”

The SAQ scrambled to find a solution to store the extra containers at third-party sites.


Keeping specials… special!

Promotions had to constantly be readjusted based on product availability, which often changed at the last minute. Suitable substitutions had to be at the ready as a plan B, based on category, quality, region and retail price point.

“Throughout the pandemic, we’ve had to deal with ongoing uncertainty. Would people actually go to an SAQ store to stock up? Or would they opt to make their purchases online instead? Would summer tourism deliver a much-hoped-for uptick in demand for the hospitality sector? The ambiguity meant we had a lot of balls to keep in the air at all times.”


Maintaining the customer experience

To make sure the customer experience remained as seamless as possible, the SAQ had to overhaul its entire supply chain, starting with the Quebec City warehouse, the role of which was expanded. The SAQ.com grew in capacity. And Purolator took over from Canada Post for home deliveries.

In-store advisors also played a key role in directing customers toward the right products. In its dealings with producers, the SAQ had to firm up its logistics processes:

“We created a board to track each country and our producers on a weekly basis in order to keep everything straight,” said Bourdeau. “So if we couldn’t get products from somewhere in, say, France, we’d turn our focus to wines from Portugal or Argentina, for example.”


Back on solid ground

The SAQ is now steering a gradual return to its pre-pandemic modus operandi, i.e., a just-in-time model. Despite lingering worries about shipping containers, high transportation costs, inflation, labour shortages and energy problems in many areas of the world affected by the war in Ukraine, the SAQ has managed to keep its inventory stocked to meet customers’ needs.

“We have learned how to move through and beyond unpredictability, using the principles of project management and by having our internal multidisciplinary teams work hand in hand with our external stakeholders,” said Bourdeau.

While all this is going on, the SAQ is also moving forward with its long-term transformation, which involves automating and expanding its distribution centre in Montreal. Eventually, the goal is to drive online sales even higher, with a selection of up to 20,000 products:

“In a multichannel environment, where timely delivery and product availability are the norm, we remain committed to meeting our customers’ expectations every step of the way,” he concluded.


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