PurchasingB2B June 2015

JUNE 2015

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Canada’s Supply Management Magazine

THE POWER OF CONNECTIONS

Andrew Leich on Sun Life Financial’s procurement transformation

OmNI-CHANNEL EmERgES PM 40069240 $18.00

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Table of Contents

Vol. 57, No. 3 • JUNE 2015

Features 6 The New wave

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43

Purchasing cards are expanding their scope.

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moving forward Procurement’s future direction, plus best practices, among highlights at ISM2015 Conference.

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omni-channel’s influence A guide to everything omni-channel for procurement professionals.

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Expense management A look inside Sun Life Financial’s procurement transformation.

39 T he importance of relationships

Consultative selling and what it means for procurement .

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Smooth sailing Speakers, education and networking at SCMA’s National Conference.

Also inside 5 Business Front 9 Procurement Profile 12 Purchasingb2g

38 Finance Corner

18

49 product showcase 50 The Law

44

Connect With Us Online We encourage you to visit us online to stay in touch with what’s happening in your industry and to view enhanced articles.

Features CPO RISING A look at the state of procurement through research from Ardent Partners.

.ca

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@PurchasingB2B

Michael Power

HOSPITALITY AND CORPORATE TRAVEL A look at how some hospitality providers are handling today’s changing business travel landscape. www.PurchasingB2B.ca/features

Conference Coverage SCMA 2015 National Conference live coverage The Supply Chain Management Association is hosting its annual national conference this year in Halifax, NS, and PurchasingB2B is there bringing you all the highlights! Check out our live coverage of keynote speakers, networking events, education sessions and more! http://www.PurchasingB2B.ca/news/ PurchasingB2B.ca / June 2015 / 3

Up Front 80 VALLEYBROOK DRIVE TORONTO, ONTARIO M3B 2S9

www.PurchasingB2B.ca

Publisher

Dorothy Jakovina 416-510-6899, djakovina@PurchasingB2B.ca

Managing expenses

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’m having my basement finished, a process that includes having the plumbing re-routed, the walls waterproofed, the floors dug out and lowered and the whole thing framed and dry-walled. For anyone who has gone through the process, congrats! For anyone who hasn’t I can tell you it’s both exciting and stressful.

The work also costs a few bucks. These days, I have to think about where to put my limited resources, and I’m keen to find savings anywhere. But I also want to ensure that I’m getting value for what I’m paying on the project.

All of this has got me thinking about expense management (see Sourcing Value on page 12) both in my own life and in the procurement field. In both areas there’s a desired outcome and there’s no single, final tool or path that will get you there.

Certainly in procurement, expense management can involve various strategies used to help the organization curb expenses.

There are also several questions that procurement professionals can ask themselves in the process. Do we need to buy certain items? Can we buy other items that perhaps don’t cost as much? Which services do we need and which don’t we need quite so much?

Any best-in-class organization will realize the importance of procurement in helping to tame expense. Procurement can help to negotiate commercial terms with suppliers, make sure there’s compliance with contracts, policies and regulations, look for efficiencies and increase visibility into spend.

Procurement plays a strategic role in managing expenses for any organization.

The department can own the relationship with the supplier, and can therefore play a role in mitigating supply chain risks that can increase an organization’s expenses, for example.

A solid piece of advice that I’ve gleaned from speaking with procurement professionals about expense management in general is to regularly review spend patterns. That helps to provide visibility into spend that can be taken to internal stakeholders. As well, creating clear up-front goals, success metrics and selection criteria can also be instrumental in guiding supplier decisions and rankings during negotiations.

In other words, know what you’re spending and have goals that can help you reach a specific destination. Solid advice for procurement professionals, but also solid advice for those, like myself, looking to save some cash but retain value in our purchases.

Have any expense management advice? Send it to mpower@purchasingB2B.ca and I’ll either post it on our website or tweet it out to PurchasingB2B’s Twitter followers at @purchasingb2b.

EDITOR

Michael Power 416-442-5600 ext 3259, mpower@PurchasingB2B.ca Art Director

Sandy MacIsaac 416-442-5600 ext 3242, smacisaac@PurchasingB2B.ca Production Manager

Karen Samuels 416-510-5190, ksamuels@PurchasingB2B.ca Circulation Manager

Barbara Adelt 416-442-5600 x 3546, badelt@PurchasingB2B.ca Annex Publishing & PRinting Inc.

Vice-President: Tim Dimopoulos (416)510-5100, tdimopoulos@annexweb.com President & CEO: Mike Fredericks, mfredericks@annexweb.com For over 56 years, PurchasingB2B has been a trusted source of information for Canadian purchasing/supply chain management professionals in the private and public sectors. Special features and supplements include Fleet Management, Canadian Automotive Review (CAR), PurchasingB2G, and Travel Management Canada.

PurchasingB2B is published six times a year, except for occasional combined, expanded or premium issues which count as two subscription issues, by Annex Publishing & Printing Inc. © Contents of this publication are protected and may not be reproduced, in whole or in part, without the written consent of the publisher or editor.

NOTICE: PurchasingB2B accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue.

PurchasingB2B receives unsolicited materials including letters to the editor, press releases, promotional items and images from time to time.

PurchasingB2B, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort.

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ISSN: 1497-1569 (print); 1929-6479 (digital) Publications Mail Agreement No. 40069240 We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage

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Business Front

Another Bubble Set to Burst?

Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.

by Michael Hlinka

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here are very few people—outside of personal friends—that I’ll always make time for. One of them is Jeff Rubin, who transitioned his career successfully from chief economist at CIBC World Markets to best-selling author. I don’t always agree with what he says, but it almost invariably gets me thinking in ways I hadn’t thought before. For this reason alone I would recommend his latest book, The Carbon Bubble: What Happens to Us When it Bursts, which was just released.

If you’ve been reading my musings over the past while, you’ll know that I’m of the opinion that right now Canada is smack-dab in the middle of a housing bubble, fueled by historically low interest rates and historically high levels of private debt. And while I wouldn’t argue that there is a direct connection between the housing bubble and Rubin’s so-called carbon bubble, if he’s right and there actually is a carbon bubble, then this nation could face a very, very challenging generation as it struggles with the double-whammy of a housing crash and an end to the oil and gas boom.

First, a quick primer about how Canada’s carbon bubble was formed in the first place. Rubin places the blame squarely on the shoulders of Prime Minister Stephen Harper. After assuming office in 2006, he addressed the British Parliament and laid out a vision of making our country an energy super-power. Harper noted that Canada was (and is) the biggest generator of hydroelectric power in the world, the largest supplier or uranium, and was at that time third and seventh, respectively, in the production of gas and oil. But Canada’s trump card would be the oil sands, the world’s second-largest oil deposit in the world, exceeded only by Saudi Arabia.

Now, we’ve got to step back here and acknowledge something that Harper couldn’t control. That was global demand for oil and what happened to its price from 2006 to 2013. According to the U.S. Energy Information Administration, it went from about $60 to $96, a very healthy increase of 7 percent, compounded annually. And when oil is in the $90 range, it is economical to dredge the bitu-

men of Northern Alberta out of the ground and convert it to synthetic crude. As much as Harper may have wanted to turn Canada into an energy super-power, it was forces beyond our control that made that dream at least a temporary reality.

However, price fluctuations in oil aren’t what lead Rubin to conclude that there’s a carbon bubble about to burst. Rather, his argument hinges on the following: the wide-spread belief that CO2 emissions are leading to significant global warming and that sooner rather than later concerted global action will be taken to reduce them.

Full disclosure on my part: I am very, very skeptical about whether or not weather is getting more severe (seems to me a case of always was) and I don’t pretend to understand the cause-and-effect relationship between CO2 emissions and global warming. When I was in high school, a physics teacher had all of us convinced that we were headed towards a new Ice Age because of the pollution that was being spewed into the atmosphere.

“As the global population increases water, which is one of the key drivers in the production of food, will become more and more important.”

But it really doesn’t matter what I think or even what a whole bunch of people thinks. If a consensus develops among the elites that something has to be done—and quickly—then there will be incentives provided to produce cleaner energy, and in a variety of ways, resources like gas, oil and coal will be penalized.

This means that Canada will not be able to rely on petro-fuels to power economic development in the future as it has in the recent past.

But is everything hopeless? Not according to Rubin. One of the unintended—and fortunate— consequences of global warming is that areas of the globe that were previously unfavourable to agriculture will become more so. As temperatures rise around the world, crop yields from Canadian farms should increase, while other nations—particularly the United States—won’t be as lucky. There will be a huge transfer of wealth that will flow into our borders.

We’ve got one final card up our sleeve, which is water. We read about the droughts in California, and we should realize that the problem is only going to get worse over time. As the global population increases— and it’s predicted to for the forseeable future—water, which is one of the key drivers in the production of food, will become more and more important. It’s Rubin’s thesis that when the carbon bubble bursts, as he predicts it will very soon, and if we in Canada mind our p’s and q’s, we’ll do just fine, because we’re blessed with water, a clean resource that will be far more valuable than unwanted, messy oil. B2B B2B

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P-cards & e-payables

The Next Wave

Purchasing cards expand their scope

By Jacob Stoller

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hree years ago, this magazine (“Get Carded” May 30, 2012) cited a prediction from RMPG Research Corporation that p-card spending in North America would increase from 213 billion to 245 billion by 2014. According to RMPG’s 2014 study, that prediction was bang on.

Interestingly, much of this increase is coming not from first-time adoption of p-cards, but from wider use of card technology. In a nutshell, organizations with a medium-to-large annual spend — typically $3 Million and over — are expanding their p-card usage beyond the traditional area of frequently purchased goods and services to include larger ticket items.

“P-card use has expanded way beyond traditional plastic card usage by employees for the purchases of goods and services,” says Patrick Sulston, vice-president and senior business leader, commercial business development at MasterCard Canada. “We are seeing much higher adoption for p-card services between buyers and suppliers, and this is reflected on both the payables and the receivables side of the business.”

One aspect is that an employee’s entire spend can now be conveniently merged into a single account. “I think we’ve evolved into a one-card scenario,” says Don Manson, Senior Manager, Commercial Card Account Management, Scotiabank. “The majority of purchase cards are also used for travel and other things as well, such as fleet expenses.”

The most dramatic change, however, is the use of p-cards as a strategic payment method for accounts payable departments. “Organizations are using the p-card to settle purchase order-driven transactions, which are generally more expensive than everyday goods and services,” says Tracie Hasselbring, senior product manager, American Express Global Corporate Purchasing Card. Payables could fall in categories such as raw materials, advertising, lease payments or utilities.

Much of this strategic spend is being handled through virtual cards, or e-payables. “E-payables is an enhancement to the card program,” says Terri Brustad, manager of content services at NAPCP.

“It’s a way of capturing larger ticket spend.”

With e-payables, no plastic is issued. Instead, card providers give organizations a set of 16-digit virtual card numbers, each of which can be validated by the order processing system to correspond with a single purchase order, and then returned to the pool for future use.

Manson notes that adoption of e-payables lags behind the US, but has been catching up in the last 18 months, and that according to the 2014 RMPG study, 18 percent are using e-payables now, 10 percent say they will in the next year and a further 20 percent will go over the next three years.

Advantages P-card technology gives organizations the advantages of the powerful card payment infrastructure to offload administrative work that previously would have been handled internally.

“What this gives the buyer is a broad set of authorization controls and data fields that they can customize for reconciliation purposes,” says Sulston. “It provides data elements such as PO cost centre and GL accounts in addition to POS data provided by the supplier. This is globally consistent for international organizations.”

P-cards help organizations save money in a variety of ways. Having a consolidated view of the spend often allows them to reduce their number of suppliers and increase their discounts with preferred suppliers as a result.

According to a benchmark study conducted by

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P-cards & e-payables the National Association of Purchasing Card Professionals (NAPCP), card providers offer rebates to end users ranging from .5 percent to more than 1.5 percent. This is minor, however, compared with the savings from cost avoidance in areas such as requisitions, purchasing, receiving, and accounts payable. In one example cited in the report, the Washington State Department of Transportation saw their pertransaction costs drop from $63.88 to $19.85.

Abuse prevention is another advantage. “One thing that is huge is proactive compliance auditing,” says Manson. “Banks and providers have back-end systems that look on a neural network for unusual transaction activity, and things like that. We try to capture fraudulent activity before it gets away on us. But we now have tools working with our card organizations that are bolt on options where companies can actually put in rules of their own.”

Adoption issues To take full advantage of p-card data functions, an organization needs to set up data integration between their card provider’s systems and their internal ERP and financial systems. This sometimes deters organizations that have limited IT resources. Manson notes, however, that thanks to cloud-based systems and the development of pre-built adaptors, integration is now quite straightforward, even when connecting to a proprietary system, and the result is a true endto-end integration.

A larger challenge is convincing vendors, who pay for the programs, to sign on. “People identify the barriers and costs to making the change,” says Mike Patterson VP, market management— Wholesale Cards at Citi Canada. “For suppliers, its always been about the sticker price of accepting a card. However, better technology and education around the numerous benefits such as lowered working cost of capital, streamlined payment reconciliation processes and reduced operational risks are making it an easier decision.”

Vendors who accept p-cards enjoy reduced administrative costs, and because they are paid immediately, achieve better cash flow and eliminate the need to allow for bad debts.

Card providers have also sweetened the pot recently by discounting their fees for large purchases. “Something that’s helping increase the use of these cards in Canada—purchase cards and virtual cards— is the introduction by the two major payment brands of methods to discount large ticket interchange for suppliers,” says Manson. “What that’s allowing is for the size of typical card transactions to get larger because its not costing the supplier any more to accept it.”

Moving forward A p-card program, like any automation project, changes the way people work, so user adoption has to be carefully planned from the outset. “There are lots of stories of companies that adopted a purchasing card because somebody in the procurement group recognized the benefits, and then ended up not using it,” says Patterson.

Today, banks assist organizations with implementation through a variety of services, such as analyzing expenses to design the best program, providing benchmarks to compare against other firms, and convincing suppliers to accept the cards. As well, these teams provide a suite of ongoing monitoring and advisory services to ensure that the maximum benefits are achieved.

The key to a successful project is establishing the scope early on, and obtaining the sponsorship necessary to drive the level of compliance

necessary for the program’s success. “The first piece with regard to getting the program to be implemented smoothly and successfully,” says Manson, “is to involve the key stakeholders and get the support of senior management, who hopefully are vocal in their support of the initiative and the benefits to the organization. The policies and procedures have to support that end goal, for example, reduce the number of manual payments and cheques, track purchases with referred suppliers to gain supplier discounts, etc. So we’re hearing that if they get that, it’s pretty successful.”

Patterson suggests starting the assessment by looking at the biggest concentration of end users. “Where is most of the spending being done?

What are their spending profiles? A lot of high volume low value purchases? A lot of commodities? A lot of spend on indirect goods and services? The best way to get a handle on that is to take a look at their accounts payable file, and to do an analysis in order to target where cards should be used.”

One of the key decision points is whether to manage by policy, or to restrict the cards. Brustad favors the policy option, as it gives employees the flexibility they need to do their jobs.

“Programs can be over controlled or under controlled,” says Brustad. “Over controlled programs have trouble growing.” However, as Patterson points out, there should be defined measures in place to ensure proper use.

On the horizon Canadian card providers will soon be introducing mobile imaging technology, which allows a user to photograph a paper receipt with a phone, which is then automatically entered into the system. This allows travellers, for example, to go paperless. The technology is widely used in the US, and is also available as a third part application from software providers such as Concur.

The other expected arrival, also in use south of the border, is straight-through processing, which completely automates the payment process once an electronic invoice is submitted. This will significantly reduce costs for suppliers, and add an additional incentive for card adoption.

As more and more suppliers accept p-cards, the magic of the network effect will likely lower the entry bar, encouraging more suppliers and more buyers to sign on. While Canada is lagging behind the US, the p-card train has already left the station, and the same technology that transformed consumer shopping more than a generation ago is now poised to transform the way businesses pay their suppliers. B2B

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Procurement Profile

The Best You Can Be LouAnn Birkett, CSCMP, purchasing manager, The Regional Municipal of Durham, finance department, Whitby

was in that position for a couple of years and then, due to restructuring, was moved to another area. After five years there was downsizing and as I was low on the totem pole—I found myself unemployed. I soon accepted a purchasing clerk position with a faucet manufacturer, then moved to junior buyer. After the birth of my twin daughters I moved up to purchasing agent. I completed my CPP in 1995 and moved to public procurement 30 years ago.

What does a typical day look like?

What I like best about my job is that there’s no typical day. Each day brings challenges, new learnings and problems to solve. Whether that’s dealing with burning issues, providing advice and guidance to staff, finding solutions to complex issues or meeting with internal customers, there’s always something exciting waiting for me. I work with what I feel is the best procurement team—they make my job easy!

Describe your current position.

I’m purchasing manager for the Regional Municipality of Durham, the largest geographical jurisdiction in the Greater Toronto Area. With seven unique departments—corporate services, emergency management, finance, health, planning & economic development, social services and works—the scope of goods and services required is vast. The purchasing section, part of the finance department, has a full-time staff of 17. I lead and manage the purchasing staff as well as the competitive procurement processes for all goods and services, including the development of associated policies and procedures.

How did you get involved in procurement?

Like many others, procurement chose me.

My first full-time position was as a clerk in the purchasing department for a tire manufacturer. I

What would you change about Canadian procurement?

In the public sector we’re subject to many rules, regulations and laws that can sometimes limit our abilities to utilize strategic procurement processes. Developing long-term relationships with our vendors is not often possible. While the competitive bid process does provide for transparency and openness—critical in the public sector—we sometimes find that the required process doesn’t fit the organizational needs. The increased use of nonbinding RFPs opens more opportunities, but change isn’t quick in the public world. More flexibility in how goods and services are obtained would benefit not only the organization but taxpayers as well.

What are your future plans?

I’ve had many opportunities to contribute to the profession and to the Supply Chain Management Association (SCMA). As an instructor and volunteer for SCMA, I have been able to grow as a professional and hopefully have mentored others just starting out. My goal is to continue along that path. B2B B

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ISM2015 Conference

The Way Forward Procurement’s future direction, plus best practices, among highlights at ISM2015 Conference

By Michael Power

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nnovation and sustainability top the list of issues facing procurement professionals heading into the rest of 2015. That’s according to Tom Derry, chief executive officer of the Institute of Supply Management (ISM). Derry made the statement during an interview with PurchasingB2B at the organization’s annual conference in Phoenix, Arizona in early May. The ISM2015 Annual Conference was held at the Phoenix Convention Centre, and saw more than 3,000 supply chain and procurement professionals from around the world attend.

During the interview, Derry addressed a range of issues in the supply chain, including skills that procurement professionals need going forward and the growing involvement of the finance department and CFO in procurement.

This year’s event marked a special anniversary for ISM, which celebrated its 100th year in 2015. The organization boasts an impressive past, Derry said, and has created a great society of professionals and a global platform. But it can’t rest on its laurels, he added, and any business that only focuses on the present can miss out on future success.

With regards to the importance of innovation, Derry said that many have noted a recent turning point in the profession. For at least the past three decades, organizations have worked to keep up with globalization, focused on strategic outsourcing and have seen their external spend increase, he noted. “A lot of that opportunity has been captured already,” Derry noted. “So it’s natural that we turn our attention to using procurement as a source of innovation to drive topline growth. That requires a new mindset on the part of practitioners.”

If procurement professionals must rely on their supply base for innovation, they must look for a more collaborative, trusting relationship rather than the historically dominant mindset that insisted on cost reductions. “That’s a very profound change and I think it will represent where the most progressive firms begin to orient,” Derry said. “Maintaining cost discipline will never go away, but layered on top of that is this new focus on, how do we get innovation, working with our supply base so that we change those relationships so they want to bring that innovation to us?”

With regards to sustainability, it’s clear that customers are evaluating organizations’ buying decisions and making purchases that align with social values, Derry said. Smart companies recognize that purchasing criteria have shifted and now factor sustainability into their business decisions. And word gets around, Derry said. Young people are adept at sharing information about how responsible an organization’s business practices are. “The mindset has shifted—it’s not how much money you make, it’s how you make your money,” Derry said.

“That’s why sustainability is so important.”

With the dawn of a new procurement and supply management era, new skills are needed.

Derry pointed to the so-called “internet of things,” or what some call the “intelligence of things”, as a key driver fuelling the need for this new set of skills. Technology products moving through the supply chain, for example, now have the ability to carry with them financial information, data about customers and so forth.

“The ability to assess all that information and to optimize the supply chain will become a critical skill,” he said.

This shift in desirable skills has also meant a move from procurement taking on a strictly tactical role to becoming a trusted business partner within organizations. Derry noted that procurement sits at the intersection of supply and demand. That represents a deep knowledge of the markets, and with that is an understanding not only of what the market is doing today, but also where it’s headed and what new products or technologies are coming. “That in turn translates into a whole new level of business acumen,” he said.

Within procurement, the role of the chief financial officer is evolving and Derry noted the relationship between finance and supply chain will only continue to strengthen. There’s a gap between the value procurement brings and what finance sees on the bottom line, Derry noted. As well, while chief procurement officers have been happy with their inward-looking benchmarks and metrics, they must be able to tell their stories in order to further their departments within their respective organizations. “Over the last 10 years, CPOs really have gotten to that proverbial seat at the table, so the conversations they have are different now,” he says. “In the boardroom, you discuss the performance of the business in particular ways. If you’re a CPO, you have to translate your performance into those particular terms.”

Best practices Each year, the conference focuses on best practices that procurement professionals can take

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back and use in their daily work, and ISM2015 was no exception. For example, Dr. Peter O’Reilly, assistant professor at Embry-Riddle Aeronautical University, discussed during one education session how smaller procurement organizations can learn to do more with less.

O’Reilly described how, having moved to a new organization earlier in his career, he wound up with a one-person staff at a small purchasing organization. With big ideas but limited resources, he asked himself how he could improve the organization’s performance. Although small, he decided to think like a large procurement organization. He began by making a list of what could be done with the limited staff and resources he had available.

He also performed a SWOT (strength; weaknesses; opportunities; threats) analysis of the organization, he said, bringing in suppliers and other external stakeholders to ask about weak points. For any organization, he stressed, a SWOT analysis should be an honest, soulsearching procedure—and although difficult, he performed the analysis each year. O’Reilly also reviewed how much spend was processed through procurement, noting that 50 percent is the desired starting point.

For smaller procurement organizations looking to do more with less, O’Reilly recommended working to get rid of unnecessary expenses.

In terms of best practices, he recommended establishing customer councils. Through the customer council he established, those stakeholders eventually approached him looking for ways that procurement could help them save money.

This in turn helped expand spend under procurement’s control because those customers acted as agents for purchasing within the organization.

Although the idea originally comes from manufacturing, O’Reilly decided a supplier council could also work within a service organization. Suppliers want to have a relationship, he said, and through the supplier council he learned that his suppliers wanted to talk about more than just price.

O’Reilly used supplier scorecards to evaluate his suppliers’ performance, and the organization began by assessing their 14 most strategic suppliers once a year. He also began a “supplier of the year” award program and found that suppliers began showing interest in how they, too, could win the award.

As well, a major error in the negotiating process was to have the wrong level of supplier representative present. O’Reilly recommended

Tom Derry, CEO of the Institue of Supply Management, speaks during the organization’s ISM2015 Annual Conference in Phoenix in May. The event saw more than 3,000 supply chain and procurement professionals attend from around the world.

working to ensure a senior officer—rather than a more junior account manager—was present during the negotiations. Also have the more senior person attend annual supplier report card meetings, he said.

Another tip O’Reilly offered was to ask strategic suppliers how they would recommend bringing down the cost—rather than the price—of their product or service. “And they have plenty of ideas,” he said. “Some of them you can use, some we couldn’t use.”

O’Reilly advised the audience to think strategically whenever possible. That’s not always easy, he said, and procurement professionals can see resistance from superiors. Still, he recommended taking time away from procurement’s daily grind to look at the big picture. B2B To learn more about ISM, visit www.instituteforsupplymanagement.org.

For more coverage of ISM2015, visit www.PurchasingB2B.ca.

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public ProcuremenT Public procurement

Public Procurement Flexibility Answers to the top-10 negotiable RFP questions

By Eddy Jin

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he Contract A/B procurement model was introduced to the Canadian public sector with the 1981 “Ron Engineering” Supreme Court decision. Today, there’s a new procurement approach that uses a non-binding format for public procurements—the negotiable RFP (NRFP). The recent proliferation in the NRFP has interested many public sector organizations—what is this new procurement paradigm all about?

Here are some of the most common questions asked about the NRFP.

Won’t negotiations slow the process?

Limitations can be created within the NRFP process to set up a negotiations timeframe. The University of Toronto typically uses a 30 day negotiation period. This can vary based on the procurement complexity so you can maintain ‘tension’ in the process by adjusting the duration in the NRFP process rules.

What are the benefits?

It allows for flexibility through administrative allowances (e.g. rectification of unsigned submissions) and direct negotiations before contract award. The latter lets organizations refine and enhance the solution prior to award. You never have to reject a submission because it had an unsigned form; or wishing you had delayed your procurement a few months because there’s a new technology on the market.

Over-budget submissions can be negotiated so the risks of cancellations and subsequent bid shopping claims are eliminated. The NRFP eliminates the risk of lossed profit claims by unsuccessful bidders.

How do suppliers like it?

Supplier response has been very positive. It provides what most suppliers thrive on: the ability to have an interactive discussion on a project to refine how they can deliver the best solution to the potential client. Some suppliers are supporting initiatives that promote the use of more flexible procurement models like the NRFP. They prefer a process that allows them to focus on their innovative products or solutions.

I already have negotiations in my RFP, so what’s the difference?

In the Contract A/B model, negotiations following bid submission can be interpreted as unfair by an unsuccessful bidder and interpreted as bid shopping. Not with a negotiable RFP. It transparently allows negotiations without risk exposures like unfairness challenges within a Contract A award. The choice is whether one relies on the courts to determine if negotiations are fair (as in a negotiated Contract A) or to use the NRFP, a model that does not present such risks.

Has it been tested in the courts?

There are excellent summaries of recent court cases where the NRFP format was used. One source is www.procurementoffice.ca. For example, the Ontario courts ruled on a challenge that because the RFP format was not a Contract A process, lost profit claims were dismissed (search the internet for “Everything Kosher Inc. v. Joseph and Wolf Lebovic Jewish Community Campus 2013”).

Another example is the challenge faced by the Attorney General’s office when they issued an NRFP for airport scanning equipment. They ran afoul with their procurement process, as the courts found it unfair and unlawful after an unsuccessful proponent challenged their award decision (search the internet for “Rapidscan v. Canada”).

What are the problems?

As with all public sector procurements, proper due diligence is still required. NRFP procurements must be clear and transparent on its requirements, evaluation process and scope of award. Fairness and transparency must be maintained. Also, the NRFP no longer calls for irrevocable bids (i.e. bids are non-binding; see below).

If it is non-binding, can’t the suppliers just pull out?

There is no evidence that suppliers are withdrawing their submissions.

The effort/resources to put together an NRFP response is not trivial. It would be impractical for a supplier to pull their bid after committing resources in preparing a response.

Who’s using it?

Organizations across Canada at all pubic sector levels: provincial agencies; school boards; universities and colleges; municipalties; hospitals; and federal agencies.

What can be negotiated?

Typcially, anything in the scope of the original NRFP requirements.

What are the key challenges?

Having proper legal vetting of the template(s). A “Frankenstein” approach of adding or deleting clauses to templates isn’t recommended. Legal vetting will ensure you are not in Contract A. Negotiation training is vital to NRFP success. The NRFP facilitates collaboration between buyers and sellers so instead of positional negotiations, a win-win strategy is practical. b2b Eddy Jin is a procurement consultant who has implemented the NRFP model across numerous organizations. Reach him at eddy@eddyjin.ca.

12 / June 2015 / PurchasingB2B.ca

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Job order contracting at the City of Richmond

By Larry Berglund

i

t’s hard to believe, but many public buyers are too busy to save money—especially in building improvements like renovations, repairs and alterations. One municipal group, however, has adopted the leading practice of a “job order contracting” model. Consider how construction-related work is awarded.

Time can run 180 days when the activities follow sequentially and all parties are available throughout the process. At the City of Richmond, they were often running 18 to 22 months.

A budget for various projects might get approval in April 2009, based on cost estimates from 2008, and the contracting process would extend the projects until January 2010. That invited cost overruns and delays, meaning facilities would wait years for renovations or alterations.

The finance department would see that the building project budgets had not been spent and advise facility management they were reducing the budget as it didn’t seem required. Projects would backlog for years and staff frustration and morale were affected by the inefficiencies.

Rescheduling of when projects began to compromise contractors’ availability. The facility project manager was reprioritizing to appease stakeholders operating under difficult conditions.

Hiring staff wasn’t viable, as this would add costs without addressing the underlying problems. The systemic delays in conventional facility/procurement construction-related projects are inevitable.

If we accept that there can be an 18-to-22 month preparation process, we must also acknowledge the types of problems associated with renovations once the project proceeds. Already strapped budgets are exasperated as change orders pile up and contractors fight with facility staff to cover these costs. Or, contractors submit higher-priced bids to cover unknown risks. The city has few options once a wall or roof is exposed.

This means going to market for relatively low value projects, dealing with dozens of contractors, inconsistent quality and lengthy delays. Whether there are procurement templates for large sections of the documentation, or prequalified contractors for various trades, conventional practices aren’t meeting stakeholder or budget expectations.

With no better model, procurement and facility staff perpetuate the problem. This invites localized, inconsistent market responses with competi-

tive tension based on the lowest bid and results in constant change orders. The solution is found in job order contracting, or JOC (pronounced “jawk”), used extensively in the US for over 30 years.

JOC’s standardized costing methodology is like car repairs at a body shop. The insurance company uses “book prices” and will only pay a fixed rate for a specific repair. The body shop wants to be as efficient as possible. They’ll hire or train qualified tradespeople to do work that must comply with quality standards. It’s like a large manufacturer telling suppliers what their cost to supply a part should be. Negotiations happen on the mark up or the multiplier factor. The greater a supplier’s efficiency, the more profit and the more business won. Construction-related costs involve many trades, types and grades of materials, hardware and fasteners, along with the costs of demolition or repair. Projects can be complex and time is often paramount. Can these costs be standardized?

public ProcuremenT Public procurement

building Value

“Independent studies have shown that JOC can save up to 90 percent procurement time from concept to completion.”

A JOC system is based on standardization of labour and materials.

Every task has an assigned labour rate and each piece of material has an assigned cost. Each JOC price book is developed based on local market conditions and availability of trades. Peter Jansen, former facilities maintenance planner at the City of Richmond, advocated for the JOC initiative, and since 2010, Richmond has completed about 300 JOC projects for around $10 million. What does JOC do for the City of Richmond?

• A single primary contractor is competitively selected to manage all construction-related projects.

• A cycle of 30-days from concept to project start dates.

• Projects are assigned unique JOC, eliminating the typical bid package.

• Each JOC for a project is issued as a fixed, firm price contract.

• Competitive tension comes from having local contractors bid on a multi-year value for construction rather than multiple small projects.

• All change orders are handled under the JOC with each change order being at an additional fixed cost.

• Construction costs and related activities are reduced by 8-15 percent.

• Joint scoping reduces frequency of change orders.

Independent studies have shown that JOC can save up to 90 percent procurement time from concept to completion. Stephen Bauld, a supply chain professional focusing on construction, says that total cost of construction could be reduced by roughly 25 percent in Ontario.

The City of Richmond has introduced a leading practice. Syd Stowe, purchasing manager for the City of Richmond, stands behind JOC’s value. The City can run conventional bid processes and often does for major new construction. Procurement and facilities no longer have to monitor dozens of small contractors. JOC is innovative and cost effective—building greater value for taxpayers. b2b PurchasingB2B.ca / June 2015 / 13

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Omni-channel

A Guide To Omni-channel

Everything you need to know but are afraid to ask

By Bruce Winder and Suthamie Poologasingham

O

ne of the most important changes to the way retailers and manufacturers sell goods and services to customers is what the industry calls omni-channel selling. As its namesake suggests, it involves selling to customers the way they want.

Customers want options to research, buy and receive their products from one or multiple channels (physical, digital, virtual) or touch points (mobile, catalogue, store, online) for a single purchase journey. For select businesses, omni-channel selling provides an opportunity to compete with smart e-commerce retailers and international competition by leveraging your physical presence.

Just as important, there are immense cost savings in omni-channel over the long term. Syncing data in order to communicate with customers and retail staff about product knowledge, pricing, promotions, inventory availability, and so forth enables better decisionmaking and inventory planning.

Omni-channel as a capability has gained momentum in the US and UK but will be coming to Canada shortly. Retailers will move from single- or double-channel selling now—for example, bricks-andmortor will add online, online may add a few bricks stores, and most firms will start to leverage mobile. It will be a multi-year journey to complete omni- or multi-channel selling. It can’t and shouldn’t happen overnight.

So what does it all mean for the procurement professional? Take a deep breath and consider the following thought starters.

Process—get ready for some re-engineering Omni-channel will require you to build new processes as you procure and move product or transact services through new avenues. It’s like adding new stores or warehouses except they behave differently— like playing three-dimensional chess. Take the time to map current state and proposed future state carefully.

Resources—you may need more people Depending on how many additional channels you add and when you add them, you may need some incremental people to manage day-today procurement activities’ steady state. Inventory must be managed in several locations and with significantly different and unknown demand profiles. Returns can be trickier. Omni-channel selling has no tolerance for out-of-stocks, wrong prices or slow response.

Inventory accuracy will be paramount Because you will be managing inventory in a variety of new and unique channels within different formats, the accuracy of real-time, on-hand inventory is mandatory. Customers will want to know exactly where stock is at any given moment when they are ready to buy.

Bin capacities will be smaller in some cases and transit lead times will vary. Companies will soon have rampant out-of-stocks or bal-

looning inventory if not managed proactively.

A 360-degree visibility of inventory allows retailers to transfer desired stock from one “fulfillment store” to another. Merchandisers are able to transfer out items that are selling poorly at the Toronto store but are in high demand at the Winnipeg location. Customers can also see stock availability and request an item if it is not available at their closest store. This results in less clearance inventory and greater customer accessibility to desired products.

Inventory accuracy starts at procurement and better inventory visibility leads to accurate forecasting and sourcing, higher ROI and lower costs.

Vendors will be expected to do more Vendors will need to be nimble and flexible with lower minimum order quantities, ship direct to customer capabilities, digital content development and more resources to manage this new complexity. Make sure you bring your key vendors along on the journey as you build this capability. Get their concerns out early and watch for sudden cost increases to offset the effort. They will win too, as your customer engagement increases and sales grow.

Products under management could increase Have you heard of the endless aisle? Sounds great from a sales person’s perspective but it can be a nightmare for others. You may be forced to add numerous low volume products online.

Make sure you push back to keep the 80/20 rule on the table. Managing hundreds or thousands of low volume SKUs burns up scarce time and money on your team and your vendors.

Data A lot of new data will be available. Make sure to obtain and analyze data in real time to help you forecast future requirements. Data intelligence enables you to make smarter purchasing decisions.

You need to sit at the table in a cross-channel team. Real-time data allows organizations to test out products and stock the “endless aisle” intelligently, cutting back on SKU variations that aren’t in sync with customer pur-

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chasing and beefing up the SKUs that are gaining traction.

Retail is detail If you sell to retail, much of the information once kept in-house is now requested by buyers on the front end to educate customers online and in-store. Online research is a key component of omni-channel selling. This means that data needs to be accessible and understandable.

Codes for SKU variations must sync with the meaning. Product X in variation 10010 must be “translated” for consumption by the average consumer and store associate. This not only includes high-level product information but also includes raw material details as consumers and retailers require more information to display in all their channels. Will this information be on a sales tag? Not likely. But it will be available online for customers to look up while they are standing in a store.

Changing manufacturing models Lastly, a trend that may seem far off but impacts procurement specialists significantly is 3D

printing. A few large retailers like Nike and some small ones already offer customization by using 3D technology for insoles of their shoes.

Customers and even businesses can order an item in-store and have it delivered to their home, as we see an increase in demand for raw supplies by retailers in order to manufacture closer to the customer instead of in factories abroad. Customization creates a new retail model that will be accelerated by omni-channel selling, as consumers get comfortable with research, buying and receiving products through multiple channels for one purchase. Understanding how raw materials translate into final product can be an advantage to specialists in an increasingly customized world.

Omni-channel, if done correctly, will delight customers but make the jobs of others a little more complex—at least in the short run. Make sure you’re at the table with other leaders within your organization to be part of this new capability build. You may need incremental resources so ensure your business case includes these. Also, negotiate a careful test and learn phase as you start to roll omni-channel out. It will be here shortly, so prepare now. B2B Bruce Winder (416-705-5627; bwinder@jcwg.com) is senior advisor, procurement and supply chain; and Suthamie Poologasingham (416-9214181; spoolo@jcwg.com) is senior advisor, digital and omni-channel at J.C. Williams Group.

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Expense Management

Sourcing Value Procurement transformation at Sun Life Financial yields savings and deeper relationships

By Michael Power A leading international financial services company, Sun Life Financial has international headquarters in Toronto and Canadian headquarters in Waterloo, Ontario. The company has a range of products that cover financial planning, health insurance and coverage through benefits programs, life insurance, investment options and more. Established in 1865, the company celebrates its 150th anniversary this year.

Sun Life Financial’s procurement department services internal business partners across North America, says Leich. The department touches all spend categories within the organization, including marketing, legal, IT spend, business consulting and more. Procurement also takes on an advisory and consulting role with clients outside of North America. As of 2014, the department had over 250 different internal business partners that it works with.

Andrew Leich, Sun Life Financial’s assistant vice-presidents, sourcing and contracting.

G

enerating savings is one of the cornerstone activities that procurement and sourcing organizations engage in.

With some procurement departments, once the socalled low-hanging fruit has been picked, finding more value for business partners can be a challenge. To ensure that the search for value remained sustainable, Sun Life Financial’s procurement and sourcing department began to transform itself beginning in mid-2009. The organization saw the process as an opportunity not only to address issues in the short term, but the chance to establish a new, sustainable business model for the long term, says Andrew Leich, assistant vice-president of sourcing and contracting.

That led Sun Life Financial to initiate two separate procurement transformations over the following few years.

Internal shuffle An initial step in the transformation was to reorganize the procurement team, says Leich. Individual teams were created with responsibility for sourcing and procurement in specific categories, he notes. Sun Life Financial had done spend analytics and identified major areas of spend. The next step was to reorganize the team as well as hire new staff in order to align with those newly created categories. Each team now uses that spend data to identify savings opportunities. It didn’t take long, Leich says, before the system began to see some real success.

“When we noticed that we were really successful was when we were able to make connections back to those business partners and customers—getting in there and understanding the relationships, getting aligned to their business— we had more success helping them manage their expenses,” Leich says.

Based on that success, procurement performed another transformation. This time, the department worked to align itself more strongly with the interests and values of individual busi-

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ness groups, Leich notes. While still important, category management and best practices were shifted behind the scenes. The department still did all the same work, but aligning to business units’ values made it easier to connect with them regarding their businesses and illustrate the impact and value procurement could bring.

With that approach, relationships with those business partners become easier to maintain, Leich adds. For example, with print, if procurement and sourcing think in terms of the business partner and how they view print—their concerns, interests and thoughts—it’s easier to align with those views. That means greater influence.

Leich notes that procurement and sourcing could maintain best practices—analyzing spend, reviewing the supplier base—behind the scenes.

But when face-to-face with Canadian business partners, they could discuss how various opportunities would impact them.

“That really helped get buy in,” Leich notes.

“They’re then willing to bring you in earlier in the process, you could influence things more.

Of course, you had to make sure you were always providing value and doing a great job, but when you can go in and talk to somebody about what you can do for them, it’s much more powerful.”

Support from the C-suite was also crucial to the transformation, Leich notes. In 2012, Sun Life Financial’s new CEO, Dean Connor, established a four-pillar enterprise strategy that included: to become a leader in financial protection and wealth solutions in Canada; a premier global asset manager; a leader in US group benefits and international high net worth solutions; and growing in Asia through distribution excellence in higher growth markets. Expense discipline is a main area of focus within that strategy, Leich notes. “That focus at the top of the house is certainly very helpful for my team as we go out and talk about spend and expenses and opportunities to save money,” he says. “It aligned quite nicely with what we were trying to do.”

A key priority is ensuring the transformation’s changes, and the benefits, are sustainable, Leich adds. That comes from talking to business units in their own terms. If procurement and sourcing is able to speak with business partners about their businesses and present ideas that get acted on, it can influence planning. The conversation is no longer just about print, for example. Rather, procurement becomes a one-stop shop for myriad sourcing ideas. It’s a relationship that’s designed to bring value to the operations of those business partners, Leich says.

“Making it sustainable was really what was behind that second transformation,” he says. “The deeper those relationships were, at budgeting time the doors were open to come in and talk about opportunities. A lot of what we do is about selling those ideas that we come up with that they might not be thinking about to impact their expenses.”

The results Procurement’s table stakes is always savings, says Leich, and savings were definitely part of the results from the transformations.

The return on investment has been a nine-to-one ratio of expenses to savings, he says. Procurement surveys customers and business partners regularly and gets plenty of feedback, he adds. The average scores in those surveys have improved dramatically over the last three years.

As well, the department’s spend under influence has jumped from a previous 65 percent to 85 percent today. In travel, online adoption has gone from almost non-existent to 70 percent on average. Procurement keeps track of when it gets involved in projects or transactions, and the department is getting involved earlier, Leich says. In 2010-11, procurement was engaged at an optimal point around 50 percent of the time. Today, that figure stands at over 80 percent. “We’re seeing more and we’re getting involved earlier, which actually gives us an opportunity to influence cost and expense,” he says. “So there have been quite a few successes.”

While there are no plans for another change on the scale of another transformation, the department continuously seeks to improve its processes. Procurement and sourcing is a service business, Leich stresses. The department is constantly looking to ensure it’s as efficient as possible, turnaround times meet client expectations, opportunities get closed and projected savings are realized.

As well, more internal customers now come to procurement rather than procurement seeking them out, and Leich points to the department’s larger spend-under-influence as an indicator. Procurement’s goal is to be a sought-after partner for its clients and—through strengthened relationships—more clients now approach them. “We’re seeing more and more of that, and from a wider range in the company,” he says. “Our law department has come to us, which is pretty groundbreaking for us.”

In terms of advice to organizations looking to undergo a similar expense management transformation, Leich advised gaining an understanding of spend. That has opened several doors. “I see it very much as a service,” he says. “Someone has to buy the service. Making sure you’re producing value in the eyes of your customer is key. That’s true of any business and you shouldn’t think of procurement as any different than any other business.”

Also, having great talent on board is crucial, Leich notes. He also credits his team with contributing to success, noting that talent should reside not only in sourcing, but also in building relationships and maintaining partnerships. “The people part is really important in procurement and sourcing,” he says.

At the end of the day, both Sun Life Financial’s transformations have proven a win-win, bringing partnerships to the procurement and sourcing team while at the same time delivering value to business partners. B2B PurchasingB2B.ca / June 2015 / 17

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June 2015

30

20 G OOD THINGS IN SMALL PACKAGES A look at the Mazda CX-3

22 KEEPING IT GREEN

32

20

Highlights from the 2015 AJAC Eco Run

26 DECISIONS, DECISIONS

Tips for choosing vehicles that meet a company’s requirements

30 LOGGING ROAD CHALLENGE The 2015 Mercedes Benz Sprinter 4x4

32 A TOTAL WRECK

Behind the scenes at IIHA

36 NAFA INSTITUTE & EXPO

Learning and networking opportunities abound at Orlando conference

Fleet Management is a special section of PurchasingB2B magazine, running in the February, June, August, and December issues. It is an important resource for Canadian procurement professionals who recommend, select and manage fleet vendors and service providers. Editorial inquiries: Michael Power, MPower@PurchasingB2B.ca. Advertising inquiries: Dorothy Jakovina, 416.510.6899, djakovina@PurchasingB2B.ca.

Bridgestone Ecopia EP422 Plus a “fuel-saver” Launched in 2009, Bridgestone’s Ecopia is a “fuel-saver” tire that meets customer demand for greater efficiency, and car manufacturers’ need to comply with upcoming CAFE (Corporate Average Fuel Economy) regulations.

A vehicle that has to work harder to overcome inertia, or resistance to moving, consumes more fuel. Low rollingresistance tires are designed to initiate movement with less energy, by their light-weight construction using thinner sidewalls and generally shallower tread depth.

Low rolling-resistance tires can improve fuel economy by as much as four percent, depending on road surface and weather conditions. That may not sound like much, but could save you hundreds at the pumps each year—almost enough to pay for the tires.

The problem with rolling-resistance tires is that they tend to be a compromise; the money saved in fuel comes at the cost of decreased performance. Shallower treads, more flexible sidewalls and different composites generally resulted in poor performance and less grip. They wore out faster too, which pretty much cancelled out any fuel savings.

Ecopia tires consist of Bridgestone’s patented NanoPro-Tech compound.

This process binds the ingredients (silica, carbon and polymers) in a more evenly distributed blend for better handling consistency. It’s then molded into an all-season tread design using notched shoulders for better cornering and independent centre blocks for improved dry grip. “Fuel saver sidewalls” help return energy to the tire, and generate less heat.

Bridgestone claims they do this by quickly regaining their original shape, a process called hysteresis. Circumferential grooves channel water away for better grip on wet roads and help prevent hydroplaning, while the consistent use of silica helps improve traction by increasing the tire’s flexibility.

Its latest iteration, the EP 422 Plus, reportedly returns a 35percent improvement in fuel reduction over the previous Ecopia.

Available now in 43 different sizes, the EP422 fits 80 percent of the coupes, wagons and sedans currently on sale. It comes with a 70,000-mile tread wear warranty.

Chris Conroy appointed ARI president ARI has named Chris Conroy as president. Appointed earlier this year, he replaces Carl Ortell and now oversees all of ARI’s global operations.

Conroy joined ARI in 1994 as part of the Canadian client services team and served in several roles in the US and Canada. A Canadian himself, Conroy eventually became senior vice-president and COO of ARI’s Canadian business.

“In the fleet management space, the ARI Canadian business is a significant piece of our business and it’s something that we’re going to continue to invest in,” he said.

Prior to his appointment as president, Conroy was executive vice-president, Global Operations and oversaw ARI’s operating divisions in Canada, Mexico, the UK, and continental Europe and was responsible for ARI’s sales, client relations, and marketing efforts globally. He attended the University of Ottawa and the Queen’s School of Business.

FLEET MANAGEMENT / PurchasingB2B.ca / June 2015 / 19

The ToTal Package Mazda excels in a growing segment

By David Miller

M

azda has not had a misstep recently. The Mazda3 and Mazda6 have won numerous awards, while the CX-5 has started to climb the charts of mid-size SUVs. The only thing stopping this Japanese-brand are sales numbers that can equal the accolades received.

Enter stage right—the all-new 2016 Mazda CX-3. Just like the previous three vehicles aforementioned, the CX-3 has been created with Mazda’s Kodo style of motion design and has been fitted with Skyactiv technology.

What differs for the CX-3 is that it enters one of the fastest growing segments in the automotive industry. One that doesn’t have a history of being dominated by the likes of a Honda Civic, Ford Escape, or Ford F-150. The compact crossover segment is still fairly new, and is being led by the Chevrolet Trax and the adventurous-looking Subaru XV Crosstrek.

Mazda is one of four brand-new major players in this field that are looking to take the reins. The CX-3 joins Honda’s HR-V, the Jeep Renegade, and it’s cousin, the Fiat 500X. The growing segment is up for grabs, and it looks like Mazda might just have the winning ticket.

Mazda’s Kodo style of motion adds a cool touch to its other vehicles, but the motion silhouette seems tailor-made for this little ute. Looking at it from the front and back, the CX-3 can appear elevated and bold in stature due to its extended hood and longer wheelbase. However, from the side view, it shows its compact curvy and cute structure, deviating from the larger CX-5. Overall, it’s a masterpiece of dynamic lines and motion that really come to life in one small package.

As nice as the exterior is, it’s the insides that blow the rest of this segment away. It all starts with an attention to detail that has been neglected by many of its competitors. Mazda has put some nice touches of refinement, highlighted by a dark accented red colour that contains a hint of blue found in the air vent, stitching on the seats and dashboard, as well as on the door panels. Fine craftsmanship is rounded out by clean stitching that directly falls into the groove and hard materials.

A horizontal design allows the cockpit to appear more open. The only thing sitting atop the dash is a standard seven-inch touchscreen that can be controlled by the HMI Commander Rotary knob found behind the gearshift. To toggle between the radio and other settings is straightforward, just keep in mind that navigation only comes with the GT trim (it can be added in others) and Satellite Radio on the GT Technology package.

As I parked myself in the driver seat, I was immediately taken aback by how bolstered the seats were. It’s rare to have this sports-type, strap-you-in feel. The interesting part is that the feeling comes from the alcantara fabric found on the seats and not from a specialized Recaro-type addition. The headroom and legroom are ample in the front, but in the rear, the headroom seems to be lacking due to the roofline sloping downward. At 6ft tall, I still sat comfortably without crouching, but anyone taller might have an issue.

Young families without the need for tons of cargo space will get by with room for two suitcases and a couple other bags on top. The CX-3 allows you to increase space, but

20 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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2016 Mazda CX-3 (As Tested)

Price: $20,695-$30,495 Engine: 2.0L inline four-cylinder Skyactiv-G Power: 146 hp, 146 lb-ft of torque Transmission: 6-speed Automatic Fuel Economy (L/100km): City 8.2/Hwy 6.7 (FWD); City 8.8/Hwy 7.3 (AWD)

Its extended hood and longer wheelbase can make the CX-3 look elevated.

versatility is not its strongest suit. What I would like to see is a completely flat surface when the rear seats are folded down to prevent any sliding bags.

As much as the look and feel of the CX-3 will get you interested, it’s performance and comfort that adds the cherry on top to seal the deal.

Under the hood is a 2.0-litre inline four-cylinder Skyactiv-G engine that produces 146 horsepower and 146 lb.-ft. of torque.

The only transmission offered is a six-speed automatic transmission, but there’s still a choice of either front- or all-wheel drive.

Mazda had no fears creating a drive route that would take us through some of the more exciting roads north of Scottsdale. For what it lacks in power from larger SUVs, it makes up for in steering and handling. The electric power assist steering helps quicken the reaction of the tires to your hand movements.

In a town called Jerome, this compact crossover was able to gently weave its way through the twisty bends of the road for close to five kilometres. This was an ideal spot to test it in sport mode, as I shifted my way up the mountain in manual mode with the use of paddle shifters. The gears were held longer with higher RPMs that aided in a more composed

The car allows you to increase space, although versatility isn’t its strongest feature.

drive without erratic gear swings.

Pushing a vehicle to its limits can be fun, but not the most practical test for an everyday transporter. On regular roads and highways, the CX-3 in normal mode accelerated smoothly without much engine or road noise. It glided over many bumps on the road, creating a peaceful and quiet journey through the desert.

One of the more exciting attributes of the Skyactiv engine is its fuel economy numbers. The CX-3 matches up well with other competitors with a low rating of 8.8L/100km in the city and 7.3L/100km on the highway for the all-wheel drive version. The front-wheel drive options gets lower with an 8.2 in the city and a tiny 6.7 on the highway. Both ratings are in a dead heat for best-in-class with the all-new Honda HR-V. The Mazda CX-3 is truly the total package with exceptional styling, handling and fuel economy. And if that wasn’t enough, it has a competitive starting price of 20,695 for the base GX front-wheel drive and the cheapest starting price of any all-wheel drive crossover at $22,695, eventually topping out at $30,495 for the GT Technology version.

The 2016 Mazda CX-3 is available in early June.

B2B FLEET MANAGEMENT / PurchasingB2B.ca / June 2015 / 21

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Green Alternatives Fuel economy highlighted at the 2015 AJAC EcoRun

By David Miller

F

or the past number of years, fuel economy has been brought to the forefront of the automotive sales process.

Consumers and fleets are looking for more efficient vehicles to deal with erratic gas prices that tend to trend towards the high side.

Automakers have adapted to fulfill these desires by coming up with not only alternative powertrains such as diesels, hybrids and pure electrics; but many have taken its gasoline options and scientifically worked at bettering them for the environment. The outcome has brought about engine and system technology names such as Skyactiv and EcoBoost.

All of these powertrains and technologies come together each year for one event run by the Automobile Journalists Association of Canada (AJAC) called EcoRun. The EcoRun, in its fourth year, showcases a variety of engine alternatives, as well as highly efficient gasoline options through a range of compact and mid-size sedans, premium sports crossovers, SUVS and pickup trucks. Regardless of what type of vehicle you’re looking for, there’s something for you to follow at this event.

The 2015 AJAC EcoRun hit the streets of British Columbia, for the second straight year, but this time with a special route via ferry onto Vancouver Island. There were 20 vehicles in total driven by 20 AJAC journalists representing 13 different automakers. The route went from Vancouver to Nanaimo, Duncan, Langford, Victoria, Sidney and Steveston until touching the finish line back in Vancouver to conclude the two-day journey.

A data logger from FleetCarma (a division of CrossChasm Technologies) tracked 19 of the 20 vehicles entered. The Hyundai Tucson Fuel Cell Vehicle was the only one without a data logger. With it running on hydrogen, Hyundai elected to have fuel economy monitored by the vehicle itself due to its more complicated system. The data from each vehicle comes in real-time, collecting accurate fuel efficiency numbers second-by-second based on engine parameters, vehicle speed, as well as many other components.

With a new government-approved, five-cycle fuel economy test from Natural Resources Canada (NRCan) set-up in 2014, many of the AJAC journalists expected combined ratings to be beaten. What they didn’t expect was for 11 of the 19 vehicles to have its highway ratings be bested throughout the EcoRun drive. All, except for one vehicle, the Chevrolet Volt, shattered its NRCan combined fuel economy rating. The Volt exception is an anomaly due to it being driven for stretches in full gas mode, otherwise, it would have slotted in with the others.

Taking a more in-depth look at the numbers, there are four vehicles that are at least 2.0L/100 km less than its combined NRCan rating. The Jeep Grand Cherokee 3.0-litre EcoDiesel (2.41), Mazda3 Sport 2.5-litre (2.25), Nissan Micra 1.6-litre (2.16) and the Chevrolet Colorado 2.5-litre (2.11) all managed eye-popping numbers. Additionally, the Volkswagen Golf TDI 2.0-litre diesel had an impressive showing with a 1.54L/100 km improvement, considering it had the lowest non-electric or plug-in NRCan combined rating of 6.6.

These statistics are the true reason behind AJAC’s EcoRun. They provide a chance to compare similar vehicles under real-life road conditions with the use of reliable data. It should be noted that these findings are only a small sample size of six different driving legs in British Columbia, but the outcomes can give an edge in the buying process when comparing the Volkswagen Golf TDI (5.06L/100 km) to a Chevrolet Cruze Diesel (6.70L/100 km), or for that matter a Mazda3 Sport (5.75L/100 km) to the Subaru Legacy (6.85L/100 km).

When it comes to environmentally friendly vehicles, plenty of talk centres around exceptional “green” cars like the Nissan Leaf and Toyota Prius for its electric and batterypowered technologies. What’s fascinating about these EcoRun stats is how efficient all of the gasoline options were.

The aforementioned Mazda’s Skyactiv technology used in the CX-5, Mazda3 and Mazda6 showed its true worth, along with the Nissan Micra, Ford Focus 1.0-litre and Subaru Legacy. All of these gasoline engines performed exceptionally with consistent low fuel ratings—a true testament of a changing landscape in the automotive industry.

At first, these findings seemed too good to be true. I reached out to the source of the data, FleetCarma, to see how accurate its data loggers are, and came away impressed.

“FleetCarma uses specialized hardware and software in order to accurately measure real-world energy consumption,” said Matt Stevens, CEO of FleetCarma. “Since the system reads many more signals than standard loggers, it is able to capture rich second-by-second data from the various powertrain controllers to produce high-accuracy energy measurements on conventional, hybrid, and plug-in vehicles alike.”

So if the statistics are accurate, the question still remains, how can these ratings be beaten so easily?

There are two logical reasons for this. First of all, the five-cycle test averages its data with not only highway and city driving, but with the addition of air conditioner use, driving in cold temperatures, and driving at high speeds with

22 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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The full-size Explorer excels in comfort for up to 7 passengers, and with cargo space^ too. Across our lineup, you’ll also find available EcoBoost® engines, available SYNC®* in-vehicle connectivity and much more. Make Ford Fleet the team behind your team. Visit www.fleet.ford.ca or contact us at 1.800.668.5515

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2015 Hyundai Tucson FCEV lined up with the other tested vehicles.

Blair Qualey, President and CEO of the New Car Dealers Association of BC, waves the Green Flag.

quick acceleration and braking inputs. All of this has been added for a more accurate fuel economy reading to help everyone make a more real-world decision. This partially was put in place after many automakers were found to be misleading consumers with inaccurate low-ball numbers, highlighted by a compensation plan that Hyundai and Kia gave back after an Environmental Protection Agency audit.

Secondly, average fuel economy numbers can be lowered with the use of simple changes to one’s driving style and awareness. Every driver can adopt eco-friendly driving habits, such as accelerating gently after a stop sign or streetlight, maintain a steady speed, and anticipate any situation by observing the road. Furthermore, if you see a red light ahead, simply coast to decelerate, as there’s no point to accelerate hard just to brake with force.

With this newfound knowledge, you don’t have to wait to buy a new Nissan Leaf. You can put these practices in play right now with your own vehicle, regardless if it’s a hybrid, diesel-fuelled powertrain, or a Land Rover LR4.

Beyond the real-life showcase of eco-friendly vehicles, the EcoRun aligned itself with the 2015 Vancouver International Auto Show and a new rebate program for clean energy vehicles in the province of British Columbia.

You might recall that British Columbia dropped its incentive program last year, but with help from Clean Energy Vehicles for British Columbia and the New Car Dealers Association of BC, a new agreement was reached.

The announcement took place outside of the Parliament Buildings in Victoria, as Bill Bennett, Minister of Energy and Mines and Mary Polak, Minister of the Environment joined the EcoRun co-chairs Clare Dear and myself to re-introduce the program.

British Columbians can now purchase alternative powertrain vehicles and receive up to $5,000 off the MSRP and $6,000 for a hydrogen fuel cell vehicle. This incentive program helps people on the west coast, similar to the incentives in Ontario and Quebec. Currently, Ontario kicks back $8,500 for purchased or leased electric vehicles; while Quebec shells out $8,000.

In the end, the AJAC EcoRun is all about gathering information. Where else can you get 13 different automakers to come together to show off their latest and greatest fuelefficient vehicles in one event? Sure, there are auto shows throughout the country that have these vehicles on display, but they don’t test them against each other under the exact same conditions.

Outside of the automakers, the true winners of the EcoRun are the consumers. They’re provided not only a list of gas-saving offerings, but real-world statistics that have been achieved on regular roads and not with the use of machines under perfect conditions. The automotive industry has placed lowering fuel economy goals as a top priority, leading to a massive improvement on all offerings across the board.

It’s now the consumer’s job to take advantage and choose which powertrain is best suited for your home and work situation. B2B

24 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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‡Ratings are awarded by the Insurance Institute for Highway Safety (IIHS). Please visit iihs.org for testing methods. †EyeSight® is a driver-assist system, which may not operate optimally under all driving conditions. EyeSight® is not designed as a substitute for due care and attention to the road. The system may not react in every situation. The driver is always responsible for safe and attentive driving. System effectiveness depends on many factors such as vehicle maintenance, weather and road conditions. Finally, even with the advanced technology activated, a driver with good vision and who is paying attention will always be the best safety system. See Owner’s Manual for complete details on system operation and limitations. §2015 ALG Canadian Residual Value Award for the 2015 Subaru Impreza in the Compact Car segment, the 2015 Subaru Outback in the Midsize Utility segment – 2 row, the 2015 Subaru Legacy in the Midsize Car segment, the Subaru BRZ in the Sports Car category, as well as for the brand in the Maintream Brand category. ALG is the industry benchmark for residual values and depreciation data, alg.com. ø 2015 Canadian Black Book Best Retained Value Award winner - Midsize Car category. Based on value retained from original MSRP for 2011 model year vehicles as published by CBB, as of January 1, 2015. See CanadianBlackBook.com for complete details.

PBB03_22-25_EcoRun.indd 25

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The Right Fit

Tips for choosing the vehicle that meets a company’s requirements

By Kara Kuryllowicz

A

cross the board, the quality and range of vehicles available to fleets today is the best it’s ever been, yet those who are looking to purchase fleet vehicles still have to consider which are most suitable for their respective firms and businesses. Fleets now need to reflect the corporation’s identity and values whether the firm is a multinational with a global reach and presence, a Canadian entity with offices coast to coast or a smaller local firm.

As a result, fleet purchasers strategically customize and tailor their selectors to their companies’ financial, functional and social responsibility requirements, but in general, they want safe, comfortable, well-equipped, late-model vehicles with an acceptable total cost of ownership that includes reasonable operating costs and its resale value.

“There is an abundance of truly excellent vehicles available to fleet buyers today and in the car space, we no longer have the stripped down, obviously fleet cars that were so much less stylish than their retail cousins,” says Peter Nogalo, marketing manager, ARI Canada, Mississauga, Ont., which currently manages over 166,000 Canadian vehicles.

The Big Three domestic manufacturers, Ford, Chrysler and General Motors, still hold the majority of the fleet market due in large part to their fleet programming and pricing as well as their incentives and concessions, but also because purchasers must consider their firms’ positions on the importance of supporting their national economies and local employment while also recognizing and accepting their customers’ points of view.

“Every year, there is plenty of new product being released earlier and earlier in the model year cycle. The challenge for fleet managers; however, is when perennial favorites are discontinued or when a vehicle’s production is delayed due to a redesign. In both cases, the fleet manager must find an appropriate replacement for that vehicle on their selector.

There is also a reluctance by fleet managers to invest heavily in a brand new vehicle that has not yet been proven,” says Suzanne Benzion, manager, strategic consulting, Element Fleet Management, Sparks, Maryland, which manages 229,898 units in Canada and 457,000 in the US. “The fleet managers are struggling with the timing around model releases as they create their selectors—it may be a question of how much they desire that particular vehicle balanced against how flexible they’re prepared to be with replacement timing.”

Fleet managers like that they can order from the domestic automakers’ domestic factories and schedule delivery, says Nogalo. At ARI, domestic orders make up anywhere from 70 to 80 percent of the total orders depending on the year.

26 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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“It really depends—every situation is different based on the company’s culture and client base,” says Scott Singsank, senior global account manager, Wheels, Des Plaines, Illinois, which manages over 12,000 vehicles in Canada and 300,000 in North America.

For example, if a large pharmaceutical firm has a major brand name drug coming off patent, which means revenue will be down 33 percent, that Wheels client may go from several mid-level models to a single, basic vehicle in the selector. Or, a Wheels client knows that rolling into a farmer’s yard in a Toyota or Nissan pickup instead of a Ford, GM or Chrysler doesn’t send an acceptable message to that demographic regardless of vehicle cost and performance.

Organizations may look beyond the Big Three to alternatives that reflect their parent companies’ Japanese, Swedish or German heritage, but that appetite for other manufacturers also exists because there is always interest in what’s perceived as a “nicer” vehicle, for example, an Audi or a Volvo.

“Some firms are past that focus on the Big Three, but it’s fairly unusual and it’s not that the non-domestics are necessarily better vehicles, it’s just that they’re relatively new to the fleet market which enhances their appeal,” says Singsank.

In Canada, the top five cars, which includes retail, fleet and daily rental, are the Corolla, Civic, Jetta, Sentra and Mazda 3, and since resale is a key component of lifecycle cost, Ryan D’Souza, director, fleet services, Jim Pattison Lease, Calgary, which currently manages 30,000 vehicles in Canada, recommends considering these models.

Fuel costs are second only to depreciation and while fuel is currently more affordable than it’s been in years, fuel efficiency is as important as ever from a cost and a sustainability perspective, because the question is when prices will rise and by how much. D’Souza suggests true fuel efficiency should start with “right-sizing” the fleet: determining the number of vehicles required and selecting the engine size and drive that fit the applications.

Sustainability is part of many organizations’ corporate social responsibility policies, which often positions environmental initiatives as a priority with the fleet expected to play its part in reducing overall greenhouse gas emissions and fuel consumption. ARI includes annual C02 emissions as part of a vehicle’s lifecycle analysis in advance of developing a vehicle selector. Nogalo notes this is another tool with which to choose green vehicles with some clients implementing even more comprehensive programs. “Emissions are directly linked to fuel usage and fuel spend, so in that very basic sense, it is relevant to many clients,” says Nogalo.

Continued on page 47 15-05-25 10:02 AM

In This Issue  President’s Message 

More selection.

Helping businesses succeed.

        

page Unique Needs page Not Your Average Office page Supplying the Tech-Enabled Office page Changing Look of Canadian Offices page Taking a Part in a Sustainable Future page Leveraging the Power of e-Commerce page Serving the Point of Care page Building Trust page Personal Protection Equipment page Product Focus page

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President’s Corner Michael Zahra, President, Staples Advantage Canada If I was pressed to pick a single factor

that makes a company great, I would choose an engaging vision that people can really understand and rally around.

When such a vision is top of mind for all employees, a lot of the right activity falls into place naturally, without being forced.

Our vision is really quite simple. We exist to help Canadian businesses succeed. This idea, basic as it may sound, provides our guiding light for the thousands of events that have to occur between receiving an order and delivering accurately and on time to a customer. The vision guides us not only day-by-day, but over the course of the long-term mutual relationships that we develop with our customers.

This vision hasn’t changed in the past few years, and we don’t expect it to anytime soon. We’re in this for the long haul.

Our customers have told us that they want to consolidate vendors, and we are attacking this on many fronts.

To have a significant role in helping Canadian businesses succeed, we know that we have to be more than a supplier of papers and pencils. Papers and pencils are important, but businesses also need cleaning supplies, snack foods and coffee makers, fire extinguishers, computers, and furniture.

Our customers need services as well, and we are expanding our capabilities to accommodate that. If they are furnishing their office, they need designers, installers, and experts who can advise them on factors ranging from the latest colour trends, the right fabrics for furniture in a nursery school, or guidance on the latest ergonomic chairs. If they are printing brochures, annual reports, or signs, they might need a print broker.

This year, we added travel to our service portfolio through a partnership with The Flight Network. This means that our customers can now book flights, rental cars, and hotels through our online ordering site eway.ca—again another example of seeking ways to meet our customer’s needs.

Our vision to help Canadian businesses succeed takes us far beyond the traditional office. One of our customers is the Victorian Order of Nurses (VON). They need masks, gloves, syringes, and other consumables related to non-intensive care.

To serve customers with these requirements, we became certified by Health Canada to provide medical and surgical supplies. Now, a growing number of doctor’s offices, dental

offices, and seniors’ homes rely on Staples Advantage to deliver these products, sometimes in the same delivery as their paper, toner, and other traditional office supplies.

Often, customers are in remote areas, such as the oil fields in Fort McMurray, Alberta.

Here, the office is likely a trailer, and in addition to paper, printers, and computers, we might see an order that includes protective clothing, gloves, hard hats, or a defibrillator.

As you can imagine, responding to requirements like these across the country takes a substantial organization. With our nine distribution centres, we have a logistics infrastructure that is unequalled in Canada. And as a subsidiary of a major global corporation, we have the technology infrastructure to compete shoulder to shoulder with other world leaders in e-commerce.

And while we need breadth to meet these commitments, we also need depth. Consequently, our activity is twofold—we are adding thousands of SKUs every month, and we are constantly improving our organization in order to ensure that we meet the same standards that customers have come to expect. Often, this means bringing in new team members with specific expertise and experience, or adding new training programs to bring our customer-supporting employees up to speed.

Our people are clearly the most important aspect of our depth. We are fortunate to be in a position to hire the best talent at all levels based on our reputation as an award-winning employer with high engagement. The quality of our team has allowed us to create a customer service culture that actively pursues our vision of helping Canadian companies succeed.

Our vision allows every associate at Staples Advantage to understand exactly what their role is in helping our customers.

If the associate is a picker in the warehouse, it’s about being conscious that the customer needs it the next day. If we are supplying cleaning chemicals for an organization’s maintenance department, it’s being aware of the legality of using that chemical in every province, or whether that product is the best choice to meet the customer’s sustainability goals.

Every day, our people listen to our customers and bring us new challenges from the field. Our continuous improvement culture is part of our DNA, and our vision keeps us on course, whether we’re delivering to a downtown bank, a remote clinic, or an industrial facility.

Staples Advantage Advertorial Feature

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Listening to the Unique Needs of Canadian Customers

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cknowledging that every customer is unique is easy. Using that as a guideline for operations is much more difficult. Yet the mandate to help Canadian businesses succeed requires that meeting specific customer needs, however diverse, is the yardstick by which success at Staples Advantage is measured.

Part of the answer is found through intelligence—being able to crunch the numbers and understand the needs of particular market segments. “We’re leveraging a lot more big data today,” says Scott D’Cunha, VP of Marketing, eCommerce and Communications, “so we have more insights around customer preferences.”

There are general guidelines that hint at what customers may be looking for. “Obviously we understand that the landscape is changing, that people are starting to buy in a different way,” says Suhayl Muhtaseb, National VP, Line of Business Sales. People are looking to buy in a way that is more convenient to them. Businesses are looking to increase cash flow without having to carry inventory of products that are not deep in their end and part of their core business.”

But the real understanding of unique customer needs can only come from direct contact. Learning to see from the customer’s perspective, therefore, is one of the key areas in the Staples Way training that account managers receive. Subject areas there include how to be an active listener, how to set up a contract, and how to become a trusted advisor for the customer.

The real boot camp for new employees is the customer interaction point. “When we hire a new person into the organization, there is an expectation of what that person has to do in the first week,” says D’Cunha. “They need to be on the road with a driver, looking to see drivers making critical deliveries, and understanding that imperative last mile of the customer journey.”

The organization recognizes that serving customers isn’t just about prices and SKU numbers— it’s understanding how this all fits in with the customer’s business. To learn this, people have to see for themselves. “You can’t just say the customer’s important,” says D’Cunha, “you have to look at how customers are responding to the products we bring, and see that we have the products and services that people are asking for.”

Staples Advantage Advertorial Feature

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Not Your Average Office

T

he Canadian landscape poses some unique challenges for any vendor that delivers to customer locations across the country. And when, like Staples Advantage, the goal is to provide whatever a business needs to succeed, you are going to see some challenging situations.

For the Hebron Gravity Based structure oilrig project, the “office” was a field camp where an oilrig was being constructed. Staples Advantage provided the construction team with all the amenities—small appliances for the cafeteria, breakroom products, printers, safety products, office furniture, cleaning supplies, even chemicals to manufacture concrete.

Once the oilrig was floated out to sea, it became a marine vessel, subject to all the applicable security regulations and logistics. Orders, now delivered by barge, began to include nautical equipment such as captain’s bridge fixtures, binoculars, and navigation aids. What did not change was their vendor—Staples Advantage.

Michael Zahra, President, Staples Advantage Canada, describes a typical delivery. “They might have, for example, 20 engineers coming for a training event. To

6

Staples Advantage Advertorial Feature

support this, they’ll need hard hats, gloves, tablets, a projector, highlighters and markers, all in a single order.

They have no time for multiple vendors, and their business cannot accommodate a vendor who says “sorry, we are out of stock.”

Zahra admits that he takes special pride in this project. “I have family roots in Newfoundland, so it’s very satisfying for me to see us support a project like this,” he says. “This is a great Canadian success story, and the customer really got it in terms of what we could do.”

The situation is not unique. As the exclusive office supplies vendor for the Government of British Columbia, Staples Advantage is committed to taking on anything the geography of that province might throw at it. The location can be anywhere from Victoria to Prince George. The facility might be a government office, an ambulance depot, a police headquarters, a hospital, or a provincial park.

According to Suhayl Muhtaseb, National VP, Line of Business Sales, handling this range of locales is what Canada is all about. “It’s a little harder to get the

product to a customer in Canada,” he says. “We’ve done such an amazing job of putting distribution in the right places across the country. In my opinion, the big advantage we have is as a logistics player in Canada.

Nobody else has the same type of delivery model that we provide our customers.”

This means that a small facility in a remote region doesn’t have to overburden their limited storage space with large amounts of supplies. “We keep minimums down so customers don’t have to order huge quantities to do business with us, and they get zero-cost shipping as long as their order is over $50.00,” says Muhtaseb.

Canada’s diversity, however, isn’t just geographic— people in different regions have their own particular styles of doing business. Sandra Vyse, National Director of Business Interiors by Staples, notes that in Fort McMurray, for example, there is a very particular style of doing business. “People are very proud there,” says Vyse, “and there is also this urgency about everything they do.” Halifax is different again. “On the East Coast, the atmosphere is very intimate. People talk about their families during the first meeting.”

One of the challenges, of course, is that with the comprehensive breadth that Staples Advantage covers, the account manager never knows exactly what the customer is going to want to discuss. If the customer is a seniors’ home, they might be looking at medical supplies, a large-screen TV, an overhead projector, or a ride-on floor scrubber.

That’s where the specialty teams come in. The Staples Advantage account manager who visits the home on a regular basis has access to dozens of category specialists, providing expert guidance whether the subject is technology, cleaning supplies, personal protection equipment, cafeteria supplies, or sustainable paper.

For the Staples Advantage account manager, however, there is one factor that is pretty predictable—Canadian buyers are looking for a reliable vendor that they can trust over the long term.

“I think relationship in Canada really means a lot, and people want to be able to trust you,” says Munawar Quraishi, National Director, Facility Solutions. “People want to buy from us because there’s a history of providing excellent service.”

Staples Advantage Advertorial Feature

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Supplying the Tech-Enabled Office

A

s technology becomes ubiquitous in the everyday office, it is less frequently considered a specialty area. Consequently, Staples Advantage has greatly increased the number of available tech products to help buyers bring their technology spend into their mainstream purchasing.

“We’ve added over 50,000 tech SKUs, so our tech offering is much more than our additional source guide,” says Shane Garcia, Category Manager, Technology Products. “Now customers can get tablets,

network switches, and hard drives,” he says, “and they can order them online just the way they order paper.”

The additional SKUs is welcomed news for buyers who want to monitor and control their technology spend. A notebook computer can be tracked along with the desk, chair, and filing cabinet that were ordered for the same employee. And if the customer is moving into a new facility, Staples Advantage can provide a single source for the entire facility, including furniture, computers, copy machines, and even floor-cleaning equipment.

Having Staples Advantage as a technology supplier also helps customers align their technology choices with their overall sustainability strategy. Energy-efficient products are clearly identified, and data is readily available to help assess the impact of a purchase on a company’s LEED certification, or calculate the ROI from electricity savings. Two-sided printers are also a frequent part of the picture, and when it comes time to discard empty toner cartridges, the Staples Advantage driver will conveniently pick them up.

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Source: Kline & Company, The U.S. Professional Market for Batteries: 2014, March 2015.

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For the Staples Advantage team, technology products are just one more side of the same story—businesses buy them because they need them to succeed, and it’s the job of the Staples Advantage team to make that as easy as possible.

The Changing Look of Canadian Offices

T

he familiar Canadian office appears to be getting more intimate. According to Sandra Vyse, National Director, Furniture at Business Interiors by Staples, people are spending more off-hours time in the office, and they want an office environment that reflects that. This trend is changing the visual environment found in the typical Canadian office.

“We’re seeing more influence from residential,” says Vyse. “Furniture is less office-like and more appealing because you’re going to spend more time there.”

The trend also means there’s more diversity.

Instead of spending the entire day in a cubicle, an employee might be found consulting with colleagues in an impromptu meeting area, watching a video in a large gathering space, or catching up with an associate in an informal lounge area.

Layering is another trend that is making modern offices look less monolithic—a person walking into an office area now often sees a layered “skyline” of workstations of different heights. The result is a more friendly, less structured atmosphere. According to Vyse, there is quite a contrast between the look and feel of a workstation today and what companies had 10 years ago.

Vyse leads a team of specialists who not only advise on and sell furniture, but conduct office surveys and assessments, create CAD layouts, and provide complete installation services, including the removal

and disposal of old furniture.

“For our team, this is really about understanding the customer’s business,” says Vyse. The businesses are highly varied. The furniture requirements for a national fitness company are very different than they would be for a standard office. And the growing need coming from healthcare is providing lots of new scenarios for Vyse’s team to work with.

“Healthcare has drastically changed,” says Vyse.

“A lot of things that were treated in hospitals before are now handled by clinics. How do we understand their business and provide the right solutions?”

Part of the answer, says Vyse, is that Business Interiors by Staples is part of a team already serving that customer. A clinic turning to Business Interiors for the first time to furnish a waiting room might already have been ordering office supplies from Staples Advantage for years, and have an account manager that knows their people and their preferences.

“Long term partnership is really what we look for,” says Vyse. “We’re not a cookie cutter provider—we really emphasize the dialogue with the customer. We’ll come to them and ask, ‘what about this solution?’”

Ultimately it is not about furniture, but the environment that the customer’s people need to help their company succeed. “I look at the space, not the furniture,” says Vyse. “How is this going to integrate into the overall vision?”

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Taking a Part in a Sustainable Future

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t Staples Advantage Canada, sustainability is about much more than product specifications. To Susan D’Souza, Senior National Manager, Quality and Sustainability, it is about a whole approach to doing business.

“The environment is a hot topic for us,” says D’Souza. “There’s a strong interest in the environment in Canada. People believe that when products are made in Canada, environment will be a focus in terms of how that product is made, how it is packaged, and how is it delivered.”

Staples Advantage continues to grow its portfolio of environmental products, such as the Sustainable Earth Brand. The company is also continually seeking out the latest and greatest, keeping a keen eye on the various certifications that products achieve.

“Sustainability is certainly the direction we’re headed in,” says Margaret Blake, Vice President, Merchandising and Purchasing. “Almost all customers have some aspect of sustainability in their purchasing. Our biggest paper SKU has a certification on it. It gets quite complex, but most customers will

“Staples Advantage continues to grow its portfolio of environmental products, such as the Sustainable Earth Brand.”

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buy products that have positive environmental attributes. So we sell thousands of environmentally preferred products.”

D’Souza is responsible for compliance with ISO 14001, the environmental standard to which all Staples Advantage facilities are certified. Many Staples Advantage customers seek this level of certification, and D’Souza often advises them on that, and on measures that they need to achieve LEED certification.

“For us, it’s helping customers achieve those goals, not just selling them product,” says D’Souza. “If you sell something, you have the customer for a day, but if you help them go where they want to go, you have a customer for life. That’s our goal, to move from a more transactional role to a long-term one.”

Given the large scale of its business and its broad mandate to help businesses succeed, D’Souza is mindful that Staples Advantage can have a significant impact on the environment.

“If we promote sustainable business practices with our customers, it is going to have a direct impact with their performance and their results,” says D’Souza. “There are so many advantages—cost savings, operational efficiencies, regulatory compliance to manage risk, and an improved bottom line.”

D’Souza notes that it is important for Staples Advantage to practice what they preach, and the internal activity is expanding. Last year, there were three sustainability teams across the country at Staples Advantage. Today, there is one in every province.

Always recruiting, D’Souza notes that new hires are often quick to jump on the bandwagon.

“We have a continuous improvement mindset,” says D’Souza. “We are always looking to raise the bar higher. Sustainability is a never-ending journey.”

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Leveraging the Power of e-Commerce

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or the past decade, the rise of e-commerce has been changing the game in procurement, and buyers have become accustomed to the speed and eye-popping selection that this provides.

Staples Advantage has been a global leader in this trend, bringing the power of e-commerce into the B2B world.

Over the past few years, Staples Advantage has been enhancing it’s powerful e-commerce infrastructure that allows the company to compete shoulder to shoulder with the e-commerce giants.

“The IT investment over the past few years has been considerable,” says Scott D’Cunha, VP of Marketing, eCommerce and Communications, “and we’ve got an e-commerce group that has come to us from all over the globe from e-commerce leaders like Amazon and e-Bay. They really bolster the ranks and make those differences. So it’s exciting, because we understand that the landscape has changed.”

This capability supports the large increase in product selection that’s required to meet the company’s growing mandate. “As we expand into areas like maintenance, we made some fairly major additions to our product offering,” says D’Cunha. “Last year, we added 100,000 SKUs, and we will do the

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same this year. The point is, this technology platform gives us amazing leverage.”

This new capability is allowing the company to build a global network of suppliers and partners, shortening the roll-out time for new products, expanding the range of options, and improving the company’s ability to buy competitively. It has also allowed the company to understand buying trends in order to anticipate customer needs. This new degree of market intelligence has steered the company’s strategy in leading edge areas like mobile development.

The sophistication shows up on eway.ca, the customer procurement portal, as well. Search capabilities are getting stronger, making it easier for buyers to search by category, locate difficult-to-find products, and make product comparisons. The expanded electronic capability also makes it possible for a buyer to make travel arrangements through the Staples Advantage alliance with The Flight Network.

An important new feature is group ordering, which was introduced as a way to eliminate the headache of creating complex orders that serve multiple users. “Group ordering allows each user in the office to send an email out, and everybody in the office can

“The expanded electronic capability also makes it possible for a buyer to make travel arrangements through the Staples Advantage alliance with The Flight Network.” go online and place their requests,” says D’Cunha. phone account managers with information they need “The group ordering function groups all those reto support customers on the first call. “The quality quests together into a single shopping basket that of the call is fundamental to how we address the can be processed as a consolidated order. So there customer concern,” says D’Cunha. “We don’t want is a consolidated bill, which makes it easy for the billcustomers bouncing around. We look, we track, we ing side. Everything arrives in a single shipment, and measure, we try to be proactive when we’re rolling everything is identified according to the end user.” something out.” Indications are that the strategy is The system also allows managers to help highworking. “We do get rave reviews,” says D’Cunha. light what people are allowed to order.

For example, some SKUs might be identified as environmentally certified products in order to maintain the company’s sustainability targets. Or there may be some safeguards, such as restrictions on who can order a projector or a large-screen TV. “So a customer can say with great precision, ‘I have a contract with Staples Advantage and I want to manage my purchases accordingly,’” says D’Cunha.

The powerful IT infrastructure has also helped Staples Advantage gain unique ability to execute the complex process of a product recall. A large experience effortless writing bank, for example, recently had purchased thousands of defective extension cords from another supplier. Even though we hadn’t sold the products 300 RT Available at to the customer, Staples Advantage See Page# 187 Item # Description was engaged to identify the cords and PAP1781490 InkJoy 300 RT, 1.0 mm, Black communicate the deficiency, based PAP1781561 InkJoy 300 RT, 1.0 mm, Blue Call: 1.877.272.2121 PAP1781562 InkJoy 300 RT, 1.0 mm, Red on our superior logistics system. That Online: www.eway.ca PAP1806754 InkJoy 300 RT, 1.0 mm, Asst., 8/cd same system gives Staples Advantage ©Newell Rubbermaid Office Products Group www.papermate.com the ability to act quickly if an unsafe product winds up on customers sites.

Online intelligence also arms teleStaples Advantage Advertorial Feature

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Serving the Point of Care

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s health services continue to move outside of large hospitals into smaller facilities and homecare situations, non-intensive medical supplies are needed in more and more locations. Staples Advantage, with an unmatched B2B logistics infrastructure, was the ideal candidate to fill this void, and having achieved Health Canada certification to deliver medical and dental supplies for non-acute care, has stepped up to the plate.

Today, Staples Advantage Canada delivery trucks are becoming familiar to a growing number of care facilities. Often, these facilities have limited staff to place orders, and limited space to store inventory.

Staples Advantage makes their job easy by providing a single point of contact for all orders, and providing regular deliveries in small, manageable quantities.

The advantage is particularly strong in remote areas that few suppliers are willing to service. A small clinic in northern Saskatchewan can receive their surgical gloves, printer toner, and cleaning products all the next day in a single delivery.

Of course, the added responsibility of providing supplies used in patient care environments is not one to be taken lightly. Margaret Blake, Vice President, Merchandising and Purchasing, oversees compliance with Health Canada regulations, and ensures that vendors meet Staples Advantage’s stringent requirements.

“We want to give customers this enhanced assortment, “says Blake, “but we have to make sure that we don’t bring in a lower quality product particularly when it comes to medical devices. We’re pretty careful about screening our vendors.

We also have strict requirements in terms of vendor performance, and we hold them accountable to that.”

Consistently Outstanding Image Quality The bottom line is that a care facility, whether in a major center or a remote region, is in the Long-life System Reliability | business of patient care. The Amazing Sustainability less they have to worry about automated external defibrillators (AEDs), syringes, wheelchairs, or stethoscopes, the more energy they can devote to their patients. © 2015 Lexmark and the Lexmark logo are trademarks of Lexmark International, Inc., registered in the Job one for the Staples AdvanUnited States and/or other countries. All other trademarks are the property of their respective owners. tage team is to help them succeed at this vital task.

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Building Trust

T

he expanding of the Staples Advantage mandate unique needs. “It’s extremely important for us to learn into new areas places a significant responsibilabout our customers from our people in the field on ity on all members of the team. Customers who a day-to-day basis,” says Quraishi. “A lot of the great know Staples Advantage have built their expectations ideas that we get about where we’re going, come from around the flawless program execution, so it’s everyour associates.” Quraishi points out that many new dibody’s job to ensure that the level of performance is rections, such as medical-surgical, began with queries sustained, regardless of the new product areas being from customers.

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If these standards cannot be met, the relationship comes first. “It’s super easy for salespeople to say ‘we are a multibillion dollar company and we can do anything for you,’” says Munawar Quraishi, National Director, Facility Solutions, “but it takes a tremendous amount of responsibility and character to let the customer know when we’re not their best option. So I tell my reps that unless you can look the customer in the eye and say that we really can deliver consistently on the expectations that they have, we won’t go after that business.”

What this does is give customers the confidence to call Staples first.

“When we have that trust, customers call us right off the bat,” says Suhayl Muhtaseb, National VP, Line of Business Sales. “They might say, ‘by the way, I’m looking for product “x” or service “y”. Do you know anything about it? I thought I’d call you first.’ That to me is a partnership at a high level.”

It is this level of honest dialogue where Staples Advantage gains a true understanding of each customer’s

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Personal Protection Equipment

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s businesses look to Staples Advantage for office products.” all their needs, a growing number of orders Here’s where the critical mass comes into play— are coming from beyond the traditional office. the Staples Advantage procurement team, IT Businesses no longer need a separate supplier for infrastructure, and the most powerful B2B delivery their warehouse, factory, construction site, or office. network in Canada.

Staples Advantage provides all the personal protection equipment to serve employees in these industrial settings.

Along with this range comes the convenience that comes with receiving delivery from a trusted supplier. There’s no need to be stuck without safety glasses, gloves, or 29737 Mod* Towel Mod* Electronic reflective vests—when ordered HRT Dispenser Dispenser Systems: through Staples Advantage, they • Combine touchless technology will arrive the next day, along with with bacteria-reducing benefits the printer paper and other office of drying with paper towels supplies. which decreases bacteria on fingertips by up to 77%1 Of course, adding personal protection equipment to the product mix is • Use compostable Scott® and 36034 Mod* Slimroll* Kleenex® brand towels2 about a lot more than adding SKU Towel Dispenser 34830 numbers to a catalogue—the infraMod* Slimfold* Towel Dispenser structure has to be in place as well to support it.

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17

Everything your business needs to succeed.

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Ball Chair • Durable mesh fabric cover over 17.5’’ anti-burst inflatable exercise ball.

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There is interest in hybrid electric vehicles but even the greenest companies can shy away from all-electric vehicles, due to high acquisition cost combined with a continued lack of easily accessible infrastructure, notes Benzion, who has seen select clients commit to greener fleets regardless of cost.

Jim Pattison’s D’Souza is seeing organizations commit to both hybrid and diesel vehicles and the use of telematics to monitor driver behavior that most affects fuel consumption, including excessive idling, speeding and jack rabbit starts.

Quality and reliability expectations are high and it’s accepted that while vehicle quality is at its peak, the preponderance of more complex technology means there is more that can go wrong. Thanks to improved investigative techniques and diagnostics, the issues are resolved and the solutions rolled out as required, but it’s only a matter of time before the next recall makes headlines.

“Recalls aren’t specific to any one manufacturer—everyone is spending time in the penalty box,” says Singsank. “You’re just going to have to roll the dice because what appears to be the right answer today could be the wrong answer tomorrow.”

In the past, particularly in the pharmaceutical industry, vehicles were used to attract prospective employees as well as to retain existing employees, but more than ever vehicles are considered a work tool. The fact that so many of the features once considered options are now standard even on mid-level models has also affected how selectors are created and positioned with drivers. There are so many good vehicles on the market it’s possible, even relatively easy, to create a cost-effective selector that’s still appealing to drivers.

“Our customers’ annual driver surveys solicit feedback but you have to ask right questions, then take that data into account as you create the selector,” says Singsank, who says that less than 10 percent of fleet managers and local reps take to the road to personally experience the demo vehicles.

“Email and social media has made it much easier for drivers to tell you what’s working for them and what’s not.”

Ask drivers to name a preferred vehicle and chances are they’ll say they want a Maserati or something equally exotic.

A more specific and relevant question might be, “Does the vehicle have the features you need to do your job?” or “Select the features you need to do your job.”

A spacious trunk might be key for a sales rep, but beyond the size of the trunk, does it provide easy access and lift all the way up to maximize the size of the opening? Will taller employees hit their heads on the trunk? Will shorter employees end up with mud or salt-smeared clothes?

“We highly recommend fleet managers get drivers involved to do a drive-around because it’s really the only way you can be sure the vehicle can do the tasks required of it and is as comfortable as it needs to be,” adds Benzion.

Sales employees spend so much time in their vehicles they’re considered rolling offices where comfort is paramount. Benzion notes fleet managers are paying more attention to in-vehicle ergonomics like adjustable lumbar support and power seats and D’Souza sees growing interest

in creature comforts such as heated seats and heated mirrors.

Protecting assets, human and vehicular, is also of paramount importance, so safety remains a hot topic. After driver behavior, safety technology, such as blind-spot monitors, backup cameras/sensors, crash avoidance systems and lane departure warnings, is believed to have the most significant impact on collision reduction. So it’s considered worth the additional cost when the newest safety technology has yet to trickle down to the base from the mid-level model.

“No one likes having to buy a higher trim level to get a safer vehicle or pay for an add-on safety feature, but that may be the only option,” says Singsank. “In my opinion, drivers will rely on the technology rather than looking over their shoulder or further ahead, which may have a negative effect.”

“While vehicle quality is at its peak, the preponderance of more complex technology means there is more that can go wrong.”

Do such high-tech safety features really keep drivers safer?

At this point, most of these features are too new to the market to have been tracked over a sufficient period of time.

“As much as fleet managers are challenged to toe the bottom line, many are opting to commit the extra dollars and cents to the state of the art safety equipment that can help prevent collisions now that equipment such as airbags are required in all vehicles,” says Benzion. Generally airbags are standard, but D’Souza notes additional driver and passenger side airbags are an option that many fleets consider to minimize head injuries in the event of side collisions.

While communications technology, such as Bluetooth and GPS, may be considered safety devices as well as a productivity-enhancing work tool, companies and their fleet managers are wrestling with distracted driving policies while paying attention to local legislation around device use. Some do everything possible to eliminate the possibility of distracted driving due to device usage by stipulating an “equipment delete” on Bluetooth in RFPs, says Benzion—but they’re still very much in the minority. Others ask drivers to rely exclusively on hands-free technology while in motion and there are still those who trust drivers to use their devices only when the vehicle is stationery as per company policies.

Geography and weather also affect safety strategies with AWD and winter tires considered a must-have in some areas.

Across Canada, employees and their firms will continue to benefit from the range of safe, well-equipped and fuel-efficient vehicles that deliver superior reliability and quality in an exciting, evolving and competitive market.

B2B FLEET MANAGEMENT / PurchasingB2B.ca / June 2015 / 27

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Advertorial

Fleet and Procurement

Sustainabil

What Soucing Professionals Need to Know . . .

W

hile representing a significant annual spend, fleet has historically been far removed from procurement. Over the past several years, this has begun to change, with procurement professionals becoming more involved with fleet management throughout the sourcing process. And while standardized strategies can bring some clarity to the fleet procurement process, there are a number of considerations to manage when sourcing for the right fleet management partner.

As a leading fleet provider in Canada, ARI has worked closely with hundreds of procurement professionals. Part of that involves sharing just what makes fleet so different.

“While every supplier likely says ‘but our business and

segment is different,’ I truly believe that with fleet there are some unique considerations,” says Peter Nogalo, Marketing Manager at ARI. “We’re talking about hundreds, sometimes thousands vehicles, across dozens of suppliers, whether they be manufacturers, fuel companies, maintenance vendors, technology providers, and of course fleet management companies.”

The Trend Towards Outsourcing Not surprisingly, procurement’s involvement with fleet coincided with a general trend towards fleet outsourcing.

“Well over a decade ago, companies began to focus on

Sustainability:

Can I really save on fuel, mainteance and acquisition costs, and still be green?

ARI B2B November 2014.indd 1 PBB03_26-29_VehicleSelect.indd 28

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How can I manage down fleet costs, while ensuring business value and a total cost of ownership approach?

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Innovation:

What fleet innovations has your company introduced?

15-05-25 10:02 AM

Advertorial

Business Value

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Analytics

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what they do best, and in most cases, that does not involve managing vehicles,” says Nogalo.

As organizations began to look for outside expertise, it was natural that procurement would take a leading role in managing that process.

The Pursuit of Business Value The advent of procurement may have been met with some initial suspicion, both internally and on the supplier side, says Nogalo, but this has since changed.

“Looking at total costs and the push towards true business value by procurement professionals has really changed the game,” says Nogalo. ‘It has allowed companies like ARI to better explain the true value of what we offer.”

For example, fleet management fees typically make up less than 3% of the total fleet spend. At such a small percentage, from a business value perspective it is often more strategic to focus on what value is being delivered from those fees.

“At ARI, we have focused on the 97% of fleet costs that can be managed down. Our role is to work with our clients to identify potential cost savings through process improvements, best practices and most recently through predictive analytics. We report on those targets and return the savings back to our clients, which often exceed the fees themselves,” says Nogalo.

PBB03_26-29_VehicleSelect.indd 29

What to Know With so many moving parts, fleet can be complex, says Nogalo, particularly for people who are new to it. Like with any product or service, it is critical to engage with user groups and experts within the organization.

When sourcing for a fleet management partner, another challenge can be in how best to standardize the process while still measuring true business value.

“There is always the challenge of comparing apples to apples, especially when managing a leasing and services contract,” says Nogalo.

Beyond the actual services provided, as important is how they are delivered. What investments have been made in leading edge reporting and analytics tools? How is downtime measured? Are there truck and equipment experts on staff?

Is there a record of delivering quantifiable savings to clients?

In fact, what do current clients say about the partnership?

These answers can help procurement professionals find the right fleet partner to drive total business value.

About ARI ® ARI is a leading provider of fleet management services, and operates in Mississauga, Laval, Ottawa, Calgary, Edmonton, and Burnaby. ARI manages over 1,000,000 cars, trucks and equipment globally, including 166,000 in Canada. ARI has been providing fleet management solutions for over 65 years.

For a comprehensive analysis of your existing fleet spend, visit Booth 14 at the SCMA Conference or contact ARI at 1-800-361-5882 or visit www.arifleet.ca.

5/22/2015 11:29:25 AM 15-05-25 10:02 AM

Tough Mudder The 2015 Mercedes Benz Sprinter 4x4 hits the BC logging roads

By Howard Elmer

T

he Mercedes Benz Sprinter is a contender each time the next purchase or lease program comes up. For many outfits, a good product misses the mark for a number of reasons—most of which have to do with after-purchase support.

Mercedes is aware of these issues and is aggressively tackling them.

At the same time, they are striving to cast the Sprinter in a lead role and in the case of the new 4WD system offered in 2015, 2500 and 3500 Sprinters, they’re doing just that by going one better than the competition.

Showing off this newest mechanical option to the lineup is why I found myself in the mountains of British Columbia recently on a logging road that only 4WD pickups would normally take.

The first thing to know about the 4WD Sprinter is that it’s a factory designed and built system—this isn’t an add-on or dealer installed option. The truck comes from Germany already assembled and its specifications include not only the 4WD components but also a lifted body; up to 3.9-in. (100 mm) at the front and 3-in. (75 mm) in the rear. Suspension is also modified accordingly.

The 4WD passenger van version may be of particular interest to many as it has comfortable seating for as many as 10 and still offers lots of cargo space. That’s why the BC location was so apt for this test. Moving crews of workers along with all their gear in often foul, nasty weather has been a job that 4WD trucks have always taken on. The idea that a van could do this job has no doubt occurred to fleet managers and site bosses—particularly in light of the need for large dry, warm spaces—but with 4WD that just wasn’t happening.

Now it can.

The Sprinter test took place north of the town of Revelstoke in the BC interior on a travelled, in-use logging road.

This particular operation had built over 20km of road from pavement to the summit of the operation; with a rise of over 1,000m in-between. Luckily (or unluckily, depending on your point of view), rain and rising temperatures had softened the frozen road surface and created exactly the kind of challenging conditions that would have stopped a RWD van dead in its tracks. Frankly, the only time we stopped was for guys who flagged me down to ask how I’d gotten a van that far up the mountain.

Two systems are available for the Sprinter—the key difference is one has a low-range setting while the other doesn’t. However, while the Sprinter does offer two different diesel engines, the 4WD systems are available only with the larger OM642 V6 turbodiesel (188 hp, 325 lb-ft of torque) equipped ones.

Both 4WD systems work with a simple dash-mounted push-button. When engaged, the engine torque is distributed 35:65 between front and rear axles. The system adds 271lb to the GVWR of the truck.

Called 4ETS, this is actually an electronic traction control system as it has no mechanical differential locks—certainly a different method of getting up the hill. At this point, I was thinking that open differentials in really muddy conditions are not ideal—so why build it this way? In part, the advantage of this system is that it eliminates weight and also the binding that comes with differential locks. As for traction, Mercedes has applied a different solution to spinning wheels common in this situation.

Named AdaptiveESP, this electronic traction control, uses the ABS sensors to detect wheel spin then brake individual

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wheels, forcing torque back to the wheel with traction. This system is automatic and requires the driver only to keep the accelerator depressed.

While it sounded good on paper, up the mountain, it required a bit of a learning curve. My experience with locked differentials is a constant sense of motion—even when all four wheels are churning—and it’s intuitive to keep the accelerator depressed while those wheels are spinning. On the Sprinter I found that on the rutted inclines, as the van began to slip, I’d momentarily lose momentum as the wheels were braked and I’d want to lift my foot. This is exactly the wrong thing to do with the 4ESP/4ETS system. Lift, and everything comes to a halt. Instead, wheel slippage is what the computer needs to send the braking command to the churning wheel. After a few failed attempts I learned to allow the slippage, the braking and still keep my foot in it. The van slows for a moment, you feel the brake, and then it starts to dig through the slop. It’s this braking of the spinning wheels individually that increases the power to the wheels that aren’t spinning.

The sensation is different, but give it a few seconds and it works.

The second 4WD system comes with the low range option.

It’s called ZG3. This is a manually selectable reduction gear.

The truck needs to be at a standstill for it to be engaged. This feature lowers the ratio between the engine and wheels by about 40 percent, which then increases the corresponding torque. This option works well in difficult terrain and at particularly slow speeds.

Another option that can be added to the ZG3 drive train is Downhill Speed Regulation (Code ZH4). Utilizing the low-range transfer case gearing, this system is in effect a slow-speed cruise control. I had a chance to use this coming down the mountain during my test. As I said, the logging road I was on dropped more than 1,000m over 20km of switchbacks. At least half of the run was more than 10 degrees of grade. This system is manually controlled with a pushbutton beside the low-range setting. Once engaged, the

transmission holds the van at a speed between four and 18 km/h. The driver can set it by braking to the desired speed and then not touching the accelerator. If the accelerator is depressed the DSR is over-ridden until the accelerator is once again not touched. If the speed climbs above 45 km/h it automatically switches off.

The beauty of this is that during long, slow descents attention can be focused on steering the best line through rough roads while also saving the brakes.

But, back to those other concerns that fleet managers have to look at as part of the whole purchase package. For 2015, whether you order 4WD or not, the Sprinter has upped its maintenance intervals to 30,000km. That’s up from 25,000km. Mercedes also continues to outfit more and more of its dealerships to cover the Sprinter’s service needs—which with this new interval will require even less time in the shop.

That’s a bonus.

In a purchase situation fleet managers must also factor in the upfitting cost, but almost as important, finding the right installer to do the work, an outfit familiar with the Sprinter.

According to Mercedes, fully 75 percent of all Sprinters are modified after purchase in some way. To assist the end user they have a program that ensures the quality and safety of all modifications by vetting these companies. There are currently over 25 approved upfitters operating in Canada and Mercedes can act in concert with them and customers to create a final professional product.

Also worth noting for this coming model year is a new safety system called Crosswind Assist. This safety system will always be active at speeds of 80 km/h and over. Using the same AdaptiveESP computer system that brakes spinning wheels to push torque to the 4WD system; it intervenes (with braking) when the track of the vehicle is pushed off course by heavy crosswinds.

All versions of the new van are now available; however the 2015 Sprinter Cargo Van 4x4 starts at $49,900 and the Passenger Van 4x4 at $57,300. B2B FLEET MANAGEMENT / PurchasingB2B.ca / June 2015 / 31

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A total wreck Behind the scenes at IIHS Story and photos by Emily Atkins

The mangled 1959 Bel Air is the first thing you see in the IIHS lobby. (At right) Note the pedals are almost even with the driver’s seat.

Y

ou’d never guess as you turn down the quiet country road in Ruckersville, Virginia that lurking around the bend, past the cows and barns, is a centre dedicated to a unique form of violence.

Subaru Canada recently arranged for the very first group of Canadian auto journalists to get an in-depth look at what they do at the Insurance Institute for Highway Safety’s (IIHS) Vehicle Research Center.

You may be aware of the Institute from car ads touting various models’ achievement of good ratings. Read on to learn what they do, how and why.

It’s a violent place. The first hint appears the moment you walk through the doors. The lobby is dominated by the hulking wrecks of two cars. To celebrate the Institute’s 50th anniversary in 2009, they crashed a 1959 Chevrolet Bel Air into a 2009 Chevrolet Malibu.

The results of this smash-up are dramatic. The land-yacht Bel Air has suffered badly; its front end is crumpled, the windshield gone, steering wheel pushed up to the roof, and the steering column pointing like a jagged knife right where the driver’s head would have been. Its dummy occupant would not have survived.

The Malibu, although looking rough, is in much better shape. The windscreen remains in place, and behind the crushed hood and engine, the driver’s footwell remains untouched. This car’s dummy would have walked away from the scene.

It’s a great reminder of how far automotive safety has advanced, and a tribute to the work the IIHS does to let car manufacturers know what works and what doesn’t.

Raul Arbelaez, the Institute’s vice-president of operations and our guide for the day, is proud of the record. “We’ve not only improved safety in North America, we’ve had a big global influence,” he said.

The Institute’s goal is to reduce injuries and fatalities resulting from traffic collisions. It’s a private, not-for-profit organization, entirely funded by its member insurance companies.

It ranks cars based on the results of five crash tests: small overlap front, moderate overlap front, side, roof strength, and head restraints and seats. Based on the extent of injuries sustained by the crash test dummy, cars are rated as Good, Acceptable, Marginal or Poor.

Top Safety Pick ratings are awarded to cars that achieve Good ratings in the moderate overlap front, side, roof strength and head restraint tests, as well as a Good or Acceptable rating in the small overlap front test.

The Top Safety Pick + rating is achieved when a vehicle meets the Top Safety Pick criteria, and earns an advanced or superior rating for front crash prevention. This is based on new technologies that intervene when a collision is imminent and assist the driver in braking.

The Institute tests about US$4 million worth of vehicles each year. But it only spends about US$2.5 million a year buying cars, SUVs and light trucks to crash. The extra US$1.5 million comes from vehicles the Institute is specifically asked to test.

For the most part the Institute selects the vehicles it will test. But a manufacturer can request a test, provided it’s willing to pay for the car purchased by the Institute. In both cases, they are purchased by the Institute; the manufacturer never supplies the cars.

This arms-length relationship between the Institute and carmakers is what makes the ratings so valuable. Subaru Canada, for example, is so proud of its IIHS ratings—five of its seven models have achieve the Top Safety Pick +, and the remaining two are Top Safety Picks—that it arranged the facility tour so journalists could see how the tests are done.

32 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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THE 2015 NISSAN ROGUE With its agile performance and versatile interior, the 2015 Nissan Rogue makes conquering the road comfortable. Whether driving through snow, rain-covered pavement or tight turns, the available intuitive All-Wheel Drive makes getting a grip easier than ever. And with the EZ Flex™ Seating System, a sliding 2nd row and 50/50 split folding 3rd-row seat gives you the flexibility to create as much cargo space or legroom you desire.1 Plus, with the added cargo configurations afforded by the Divide-N-Hide storage feature, versatility is always right behind you.2

Nissan. Innovation that excites.

For more information, visit nissan.ca or contact us at fleet@nissancanada.com

1

Slide function should not be performed with the child restraint system occupied. Passengers should not ride in the reclined position while the vehicle is in motion. 2Cargo and load capacity limited by weight and distribution. Always secure all cargo. The Nissan names, logos, product names, feature names, and slogans are trademarks owned by or licensed to Nissan Canada Inc. And/or its North American subsidiaries.

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The IIHS museum where the results of previous tests are on display. (At right) A Mazda engineer records damage after the 2016 Mazda6 crash test.

Watching a crash The 2015 Mazda 6 was put through its small frontal overlap test the day we visited.

Guests stand in a mezzanine above a hockey-rink-sized test area. The impact barrier sits alone in the middle of the space.

High-intensity lights click on, making the crash zone super-bright so the high-speed cameras can capture every detail of the crash. The room hushes, and a loud warning beeper sounds.

In a few moments we can hear the car being pulled towards the barrier, and a second later it appears from behind us, whizzing along at 40mph. The cable releases and BANG, the car strikes the barrier. It spins off to the right and the driver’s-side wheel breaks away. Parts fly like shrapnel.

The instant things stop moving the test crew is on scene.

One man sweeps the worst of the debris to the side, while a group of others rush to inspect the dummy and the 150lbs of measuring equipment that rides in the trunk.

Two Mazda engineers take notes and confer quietly. The Institute informs the manufacturers when tests will be done so they can be there to observe if they wish.

And after only a couple minutes, the guests are invited to come down from the gallery and get into the action.

It’s pretty amazing to see the details of such a crash. Forget the broken bits spread in a wide scatter pattern; the dummy gets all the attention.

The dummy’s heads are coated in greasepaint beforehand so the points where they impact the airbag or car structures will leave a mark. A big, red swatch stains the airbag in this crash.

The dummy is the key player in the testing process. More important than even the engineers who crunch the numbers, the dummy is wired to record 40 data channels.

And they don’t come cheap, either. They can run up to US$250,000, with the most expensive dummy at IIHS priced at US$600,000, Arbelaez said. Rib sets for the side impact crash cost US$15,000 each, and need to be replaced fairly often, depending on the damage inflicted.

Most represent an idealized average male, although in the side impact crash the dummy represents a small female, or 12-year-old child.

Although the dummies are not sophisticated enough to mimic the split second of anticipation that a human may have before a crash, Arbelaez points out that “what benefits

the dummies tends to benefit occupants in the real world.”

That premise is the cornerstone of the testing program.

And over the time the Institute has been performing crash tests, the benefits to the dummies—and humans—have been consistently growing.

The moderate frontal overlap test began in 1995. At that time about half of the vehicles earned marginal or poor ratings, and more received poor ratings than good. Now, almost all vehicles tested earn a good rating.

Likewise, in the side impact test, which was first conducted in 2003, few vehicles got a good rating. Now most do.

The Institute maintains a museum of crashes to show oldversus new-car results, and how automotive safety has improved over the years.

It’s shocking to see the dramatic differences between vehicles of the same model year subjected to the same test. A Kia Sportage and Volkswagen Tiguan sit side-by-side, having undergone the roof strength test. Although it’s not a rollover test, it shows the likelihood of roof deflection should the vehicle roll. The Kia’s roof is crushed, while the Tiguan has only a dent that looks like someone might have dropped a bicycle on it.

Another favourite of the Institute’s engineers is pitting two cars from the same manufacturer against one another. The lobby mash up of Bel Air and Malibu is just one such example.

Particularly arresting is the Mercedes-Benz pairing of a smart fortwo against a C-Class sedan. Although the smart had a good rating on the small overlap crash, when it met the C300 in the same collision at 40 mph its rating fell to poor.

“With a small car the laws of physics always apply,” says Arbelaez. “The heavier object always wins.”

But the Institute is doing what it can to make sure the occupants of both large and small vehicles have the best possible chance of avoiding injury.

Next time you are choosing a vehicle, whether for fleet or family, take a closer look at the IIHS safety rating. If it’s not advertised, ask yourself why. There are only a few vehicles out there that the Institute doesn’t test, so if you don’t see the rating in the ad, look it up at www.iihs.org. Their website has all the ratings and comprehensive information about the tests and what they all mean.

And if you ever get the chance, take the Research Institute tour. It will make you think twice about the car you drive. B2B

34 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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Gets the work done.

No matter which road you take.

Our family of Sprinter Cargo Vans is growing.

From ice to asphalt, Mercedes-Benz has the right cargo van for any situation. With the addition of Canada’s only 4-wheel drive commercial van, the Sprinter 4x4, we’ve added a go-anywhere work van that can safely keep you on the job – no matter the season, the site, or the conditions. See what they’re made of at Mercedes-Benz-Vans.ca. /MercedesBenzVansCA

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©2015 Mercedes-Benz Canada Inc.

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Sunshine State Welcomes NAFA

Learning and networking opportunities abound at I&E in Orlando

N

By Michael Power

orth American fleet managers gathered in Orlando’s April heat for the annual I&E (Institute and Expo), hosted by the North American Fleet Association (NAFA). Attendees exchanged ideas, networked and learned more about the profession.

This year, the “OEM Fireside Chat” featured top executives from leading manufacturers who shared their views on the industry’s pressing issues. On the panel were: Fritz Ahadi; general manager commercial and government operations, Ford Fleet; Frank Dankovich, director fleet sales, FCA USA LLC.; Paul Jontig, national fleet sales manager, Toyota Motor Sales, USA; and Ed Peper, US vice-president, fleet and commercial sales at GM. The panel was asked about safety packages, with Peper citing overwhelming feedback from customers on driver safety. The new Malibu, for instance, will have a backup camera in the entry-level fleet model. “It’s not cheap but it’s required in many cases,” he said.

The mid-series Fusion includes safety features, said Ahadi, and the next generation of Super Duty will offer safety packages as well. Dankovich said that FCA has dedicated four employees to the task, noting it’s easier if done in early stages. The Jeep Cherokee, for example, has successfully included safety features from early on. Timing is everything, said Jontig. His company announced the Toyota safety package, which has an offering for compact cars, mid-sized models and another for large models. It’s low-cost and Toyota wants to expand its availability, he noted.

The panel discussed battery electric vehicles, with Ahadi citing the Ford Focus’s electric motor and battery pack. Ford also offers two plug-in hybrids—the Fusion Energi and the CMax Energi—and wants to reduce costs and expand the range.

Dankovich noted that FCA has a targeted strategy in terms of electric vehicles. The company successfully introduced the 500e in California and has more electric vehicle announcements in the mini-van space next year.

Toyota also has a zero-emission fuel cell model, said Jontig, and will offer something suitable for shorter travel with a similar driving experience to combustion engine vehicles.

Meanwhile, GM released the Volt several years ago, said Peper. Since drivers want the vehicle to be more affordable with more range, GM will release a new Volt with better range and handling. GM debuted the next-generation Volt at the Detroit Auto Show—an all-electric car with a 200-mile range. The company is working on making the car affordable for fleets, he said.

With regards to the higher price points for hybrid vehicles, Jontig noted they have more components and technology than combustible engine cars. But there’s a payback, he

added. Those benefits include reduced emissions, lower fuel spend and reduced maintenance costs. Dankovich noted hybrid technology is improving and getting more affordable, and FCA plans to have a 200-mile range vehicle available for $30,000. Meanwhile, Ahadi noted the reason hybrid vehicles cost more is they contain two engines plus a battery pack. But technology is advancing and prices dropping, he added.

The conversation also included a discussion of hacking which, Jontig said, has gained visibility recently. Toyota has joined an industrial Internet consortium working on approaches to security for inter-connected machines. Although he has yet to witness hacking, Jontig said the company is mindful of the possibility.

Ahadi noted that Ford Fleet required customer consent before wirelessly transmitting data from vehicles. The customer owns the data and the company is the steward of that information. Ford Fleet is investing in security solutions, he noted, although the company is unaware of any hacking instances. Dankovich noted that FCA was doing much of the same work. The company has a cyber security department and is looking closely at the issue, although he said he’s unaware of any documented cases.

When asked about autonomous vehicles and collision avoidance technologies, Jontig said Toyota doesn’t plan to develop a driverless car. Drivers will maintain control of vehicles, which will control certain inputs through eye technology showing the driver is paying attention. Toyota is also working with technology designed to predict traffic flows.

The technology is cutting edge, he said, and the company will roll out some features in the 2017 Lexus models.

Meanwhile, Peper noted that the Cadillac has “super cruise” technology and other features exist like lane keeping assist, forward collision alerts, adaptive cruise control that slows a vehicle as it approaches another vehicle. B2B

2015 NAFA Fleet Excellence Award winners Two Canadian organizations were honored at the Fleet Excellence Awards. Michael Cole and Sandy Hand, Fleet Management Centre/Ontario Ministry of Transportation, accepted the Excellence in Fleet Leadership Award. The Award for Excellence in Public Fleet Safety went to Christie Boone and Jason Allan (not pictured), City of Edmonton.

36 / June 2015 / PurchasingB2B.ca / FLEET MANAGEMENT

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BOLDLY GO WHERE YOUR COMPANY’S NEVER GONE BEFORE. Take your company in the new direction by making Camry your fleet vehicle.

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Finance Corner

Going Global The financial impact of sourcing internationally

Jeff Russell, SCMP, CSMP, MCIPS—CIPS, is director of procurement for Crane Supply.

by Jeff Russell

T

he recent weakening of the Canadian dollar has caused concern for those Canadian companies that rely on imports as a means of doing business. Considering the vast majority of commercial products are imported from Asia, the impact of a weak Canadian dollar is evidenced every time we purchase products, with higher prices being charged for items today than in prior years.

All global business is done primarily in US dollars. Every aspect of global trade is conducted in the US dollar—the raw material is purchased in US dollars, the purchase price of the material, the ocean freight and the value for customs before any duty is applied—all have a significant impact on the total cost of ownership that’s usually valued in Canadian dollars.

Procurement professionals should have a greater understanding of the financial impact of importing and how the exchange rate impacts the total cost of the material purchased. A weak Canadian dollar hurts Canadian companies that import, but helps those companies that export; and conversely, a strong Canadian currency hurts companies that export, but helps companies that import.

“Procurement professionals should have a greater understanding of the financial impact of importing and how the exchange rate impacts the total cost of the material purchased.”

With global sourcing, timing is everything in terms of the exchange rate’s impact. As strategic sourcing specialists are importing material from low cost countries, decisions to buy materials are based on today’s information—however, it will take another three months or more for the material to arrive and it’s unknown what the exchange rate will be at time of receipt. It may improve or decline, and the procurement professional has little control over its direction. Any potential savings can be eroded due to changes in the exchange rate, and such changes will hit multiple places of the supply chain: upon receipt of the material, ocean freight (which is in US currency), and at customs entry. A further impact may be on the duty amount, if its applicable.

When the B3 Customs entry is submitted, the broker will convert the invoice from US to Canadian dollars, then if necessary apply applicable duty rates based on the Canadian amount—which could be higher.

Consider this scenario: there’s a decision to purchase an oscillating table fan from China for delivery in August: 3,000 fans at a unit cost of US$20 each for a total purchase price of US$60,000. The freight is US$2,500 for a standard 20ft container.

If the current exchange rate is 1.2088 (1US=1.2088CDN), then the total landed cost of the material is $60,000 x 1.2088 = $72,528 + 8% duty + $3022 = $81,352.24.

The value for the B3 customs entry is CDN$72,528. The applicable duty is based on the $72,528 amount, which is $3,022. The freight amount is $2,500 x 1.2088, CDN$3022, and is not a part of the customs value. Freight is excluded from the value submitted for the Customs B3.

In August, when the fans are received, the US/Canadian exchange rate suddenly dips $1.28—a 5.8-percent swing—causing the total landed cost of the material to change as follows: $60,000 x 1.28 = $76,800 + 8-percent duty + $3,200 = $86,144. The value for customs has increased to $76,800 and the new applicable duty amount is $76,800 x 8 percent = $6,144. On top of that, the freight has also increased to $3,200 ($2,500 x 1.28).

The exchange rate change has added another $4,272 to the material cost, bringing the new landed cost to $76,800 for the material.

The total impact (after all points in the financial supply is converted to Canadian dollars) is an additional $4,791.76. Conversely, the opposite could have happened and the exchange rate could have improved from $1.28 to $1.2088 and the procurement professional would then have saved an extra $4,791.76.

A strategic tool is to hedge to protect our purchase decision—a hedge is a financial investment to protect against future gains or losses. The negative impact of a hedge is that it ties up current assets (cash), and the company can’t use that cash for anything else.

The positive impact is the ability to protect the company from future losses if the exchange rate changes substantially enough to make today’s purchase decision look bad.

But if you don’t hedge enough, you will still take a financial loss at time of receipt.

The question is, how much should you hedge? With global purchasing growing, the timing of when to buy, and how much, is a crucial factor in the decision-making process, just as is understanding the impact of currency fluctuations on the procurement professional’s total landed cost. B2B

38 / June 2015 / PurchasingB2B.ca

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Consultative Selling

Building Relationships The return of consultative selling and what it means for procurement

I

By Robert Kravitz t’s interesting to note the connection between content marketing—all the rage right now for many organizations—and consultative selling, which appears to be coming back into vogue among astute and successful distributors.

Content marketing is the placement of quality, credible content on a company website that educates B2B purchasers. The goal is to build a bond between purchasers and the company so they feel comfortable working and purchasing from an organization.

Consultative selling is also known as valueadded selling, need-satisfaction selling, or professional selling. The process is a departure from traditional “product push” selling. Instead, similar to content marketing, consultative selling involves educating the customer. This helps build trust and a bond so that the purchaser views the company as an integral part of their business operation.

Probably the most important similarity between these two concepts, is the building of trust between purchaser and company. Other similarities include: • Neither is new; content marketing dates to the late 1890s. While consultative selling is not that old, forms of it first appeared shortly after The Second World War. • Neither process involves product pushing. As soon as the visitor/customer begins to feel they are being “sold” something or that a product is being promoted (within a blog, for instance) credibility starts to dissipate and, with it, the customer and the sale.

• Both processes can be slow. But as the purchaser returns to a website to gain more information and a distributor returns to provide purchasers with information specific to their needs, the bond strengthens.

Key to consultative selling is communication, according to Leah Waldrop, marketing manager for the eLev8 process, a web-based dashboard developed by AFFLINK used in consultative selling with building owners and managers. “It’s an exchange of information in which the salesperson uncovers and develops a true understanding of a facility’s needs. In some cases, managers and purchasers are not even sure exactly what their needs are, so the process can be very revealing.”

The next step is building trust and respect be-

tween the parties. The salesperson—for instance, a janitorial distributor—acts as consultant, listening to the client and understanding the client’s needs. With the inventory completed and an understanding of the purchaser’s facility maintenance needs in place, the distributor can begin her role as a consultant and make product selections and recommendations specific to the organization. However, this can require the distributor to be well versed in scores of products—usually not possible. According to Waldrop, this is where technology helps.

“The ultimate benefit of consultative selling is that purchasers not only are more comfortable with the distributor, but can make ‘thought-based’ purchasing decisions.”

Let’s consider a scenario. Electronic dashboards are more commonplace and used to measure and monitor inputs, from energy consumption to cleaning products. In our scenario, let’s suppose that: • A multi-tenant office building wishes to transfer from traditional cleaning products to environmentally preferable ones. However, purchasers in the facility aren’t well versed in selecting green cleaning products or even understand what makes them green.

• The distributor listens to the client, explains green cleaning and what makes a cleaning product environmentally preferable.

• Because the consultant/distributor has inventoried all the products used in the facility, she can turn to the dashboard system and look for alternatives that meet the following criteria: green formulation, comparable in costs and as effective as the traditional products.

• Aware that green cleaning involves such things as using paper products and liners as well as certain types of cleaning equipment, she can also make recommendations here.

Purchasers may not realize the role this technology plays in the consultative process because of the array of products available. “For instance, there are literally hundreds of floor care products, finishes and glosses available,” says Waldrop. “Many are green but not all work the same, are designed to be used on the same type of floors, and some may produce a high-gloss shine, while others are designed more to protect the floor with less luster. The dashboard can help identify what will work best with this customer.”

The ultimate benefit of consultative selling is that purchasers not only are more comfortable with the distributor, but can make “thought-based” purchasing decisions. The guesswork has been eliminated. Not all salespeople/distributors use consultative selling. But many distributors believe it’s the wave of the future. As distributors realize the benefits, it’s expected many more will adopt this approach and the technologies that go with them. B2B Robert Kravitz is a frequent writer for the professional cleaning and building industries. He can be reached at rkravitz@rcn.com.

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Professional Directory

Upcoming Events

http://www.purchasingb2b.ca/topic/events/ GBTA Convention 2015

CPPC Forum 2015

Attend GBTA Convention 2015 to share in an experience where the world’s largest group of business travel industry professionals come together to achieve shared success.

Buyers and suppliers listen to industry leaders and veterans share ideas, engage in shared learning during educational programming, and find opportunities on the business travel industry’s largest expo floor.

The Canadian Public Procurement Council Forum allows public procurement practitioners to engage in workshops, seminars and networking. The program focuses on value and results, with workshops featuring takeaways to bring back to the office and breakout sessions full of fresh perspectives and new ideas. This year’s forum is co-chaired by the cities of Edmonton, Red Deer and Calgary.

July 25-29, Orlando, FL

Procurement Fair 2015

September 15, Mississauga, ON Join us for this one-day only buyer/supplier tabletop event, produced by PurchasingB2B in partnership with FRASERS. com. To register and for further information, visit www.ProcurementFair.ca (website launched June 15, 2015).

November 2-4, Edmonton, AB

ACTE Global Corporate Travel Conference Canada November 15-17, Montreal, QC

A premier education and networking event for the corporate travel community. The 2015 conference returns to Montreal to celebrate a decade of learning, networking and leadership.

PurchasingB2B is on Twitter! Our team now tweets in real time to bring you coverage of conferences, seminars and other industry events. Check us out at @PurchasingB2B and join the conversation as it happens.

Are You Getting Enough Greens?

Find out by participating in the 2015 Annual Survey of the Canadian Supply Chain Professional! Watch your inbox for the Survey invitation, which will be sent out this coming June.

The Annual Survey of the Canadian Supply Chain Professional is conducted in partnership with

Shipper CANADIAN

40 / June 2015 / PurchasingB2B.ca

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Professional Directory

18th annual SCMAO conference

navigating change October 22–23, 2015 Mississauga Convention Centre

Join us for Ontario’s premier event for supply chain professionals! Navigating Change brings you two full days of quality education, networking, and the most up-to-date information on industry trends and best practices.

SPEAKER Jennifer Jones Olympic Gold Medalist

CHOOSE FROM OVER 18 SESSIONS TO:

• Learn from the leading professionals in supply chain management • Network with over 500 of your industry peers • Discover how the latest research, innovation and technology can help you and your company achieve success

Register today at www.scmao.ca

Calling All Shutterbugs!

Have a recent Canadian landscape photo that you’d like to share with your fellow PurchasingB2B readers?

Canada’s magazine for procurement and supply chain management professionals

OCTOBER 2013

If so, we’d love to receive it! It may be chosen for the October 2015 PurchasingB2B survey issue.

2013

The talented entrants whose photos are selected will receive a $50 Tim Horton’s gift card!

ANNUAL SURVEY OF THE CANADIAN OCTOBER 2014 SUPPLY CHAIN PROFESSIONAL

Canada’s magazine for procurement and supply chain management professionals

Focus On Professional Development

So Canadian, eh?

PM 40069240

2014

Submission guidelines are provided on this page: http://goo.gl/GZUGs6 PM 40069240 $18.00

ANNUAL SURVEY OF THE CANADIAN SUPPLY CHAIN PROFESSIONAL

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A one-day buyer + supplier extravaganza presented by PurchasingB2B and FRASERS.com

September 15, 2015

Mississauga Convention Centre Network… Source products and services… Gather information… Exchange ideas and advice at this tabletop event that will connect YOU with suppliers from across ALL industries!

Registration is open June 15th No charge admission for qualified buyers

www.ProcurementFair.ca Suppliers: Reserve your tabletop today!

Look for the Procurement Fair Show Guide in the August issue of PurchasingB2B! Your integrated content marketing solutions partner…where the serious buyer goes.

CONTACT: Dorothy Jakovina, publisher PurchasingB2B magazine DJakovina@PurchasingB2B.ca 416-510-6899

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Derek Morrison, publisher FRASERS.com DMorrison@FRASERS.com 905-409-6976

15-05-21 2:01 PM 15-05-25 10:08 AM

SCMA National Conference

Sailing to New Horizons National conference offers range of speakers, education sessions and networking events

By PurchasingB2B Staff

T

he Supply Chain Management Association 2015 National Conference, is taking place this year in Halifax, Nova Scotia from June 10-12. SCMA is holdng the conference at the World Trade and Convention Centre. The event begins each year with the Conference Kick-Off, an evening of dining and entertainment that showcases the character and heritage of the host city while setting the stage for the days to come. On June 10, 6pm-12am, the kick-off event is held at Pier 21, the gateway to Canada for one million immigrants between 1928 and 1971. The pier was also the departure point for Canadian military personnel during the Second World War. Keynotes speakers As always, the conference features a wide array of education sessions and keynote speakers. On June 11 from 8:15am-9:15am, attendees can join leadership expert Michelle Ray, founder and CEO of Lead Yourself First Institute, for her keynote talk on energizing supply chain relationships. More senior leaders recognize the importance of including the perspectives of supply chain professionals in the overall business strategy. During this session, attendees will learn how to communicate their vision in a way that gets noticed.

Also on June 11, from 1:30pm-3:30pm, join keynote speaker Ed Rigsbee, president at Rigsbee Research, as he discusses the value of SCMA membership. As SCMA grows, so does the organization’s ability to deliver products, services and activities that help grow members’ careers and businesses.

On June 12, from 8am to 9am, Lt. General (ret) Andrew Leslie will discuss the shifts that are forcing organizations to transform themselves. In a keynote on disrupting the supply chain, General Leslie will offer a fascinating talk as he reveals important lessons learned for organizations that need to change internally to thrive in the new normal. Also on June 12, from 2:15pm-3:15pm, president at Workplace Dynamix Barb Fry talks about the

evolution of today’s workplaces, driven by economic and technological factors and compounded by the multi-generational workforce. This keynote will describe the knowledge, skills and attitudes for managers while offering tips for managing and bridging the generation gap.

Education sessions The education seminars offered at the national conference boast a wide range of topics that touch on all aspects of the supply chain.

One panel, for example, touches on 3D printing. Among other topics, attendees of the session called 3D Printing as an Enabling Technology for the Spare-Part Supply Chain ( June 11; 9:25-10:40am) can learn about how to create a digital inventory library for spare parts that would reduce inventory carrying costs.

In a session called Extreme Procurement: International Procurement Challenges in a War Zone ( June 11; 11:25am-12:40pm), attendees will be guided through the challenges faced by Defence Construction Canada in its multi-year goal of procuring for the Canadian Armed Forces and its allies.

PurchasingB2B is hosting a session ( June 12; 11am-12pm) entitled Safe Passage: Procurement, Risk and the Business Traveller, looking at how to mitigate risks for a company and its travellers.

Topics include best practices, legal obligations, and the role of travel management companies in keeping travellers safe.

Other education session topics range from e-Procurement, drafting RFPs, the debate between Contract A and Negotiable RFPs, e-Tendering and more.

Awards Gala No SCMA National Conference is complete without the Awards Gala, which this year takes place at the Halifax World Trade & Convention Centre on June 11, 5:30pm-12:30am. Formerly the Board Chair Gala, the event begins with an elegant cocktail reception followed by entertainment and multi-course dinner. The SCMA Awards of Distinction, recognizing individuals and organizations that have advanced supply chain management, are presented and the event recognizes the work and dedication of the host conference committee.

DELEGATES! Your Passport answer to PurchasingB2B’s question is: MODERN PURCHASING

Plus! PurchasingB2B Twitter ‘Show & Tell’

Drop by our booth to show, or tell us, any @purchasingb2b #SCMA2015 message for your chance to WIN a $300 Apple Gift Card!

PurchasingB2B.ca / June 2015 / 43

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15-05-26 3:41 PM

The Art Of Strategy Strategic meetings management and the importance of supplier relationships

By Betsy Bondurant

T

he relationship between the supplier and client is a crucial component of a successful strategic meetings management (SMM) program.

These relationships are becoming increasingly important with the continuous mergers and acquisitions in the meeting and travel management sector, the convergence of group and transient travel management on the hotel side and with the consolidation of meeting and business travel teams into single organizations.

But first, what is SMM? The Global Business Travel Association (GBTA) defines strategic meetings management as a disciplined approach to managing enterprise-wide meeting and event activities, processes, suppliers and data to get measurable business objectives that align with organizations’ strategic goals/vision, and deliver value in the form of quantitative savings, risk mitigation, and service quality.

I agree with this definition. Fundamentally, SMM is a centralized way to manage meeting and event spend for your organization, which results in: • Visibility into all meeting and event spend; • Promoting cost savings and risk mitigation; • Ensuring quality and consistency of meetings and events; and • The ability to leverage spend more effectively.

As a result of the mergers and consolidations mentioned previously, corporate buyers may be working with new supplier categories, and suppliers are likely working with buyers who are unfamiliar with their products or services. Now more than ever, it is important for suppliers to transition from a “one of many” vendor into the critically important role of a trusted advisor. Achieving this role with valued clients is paramount to building a long-term relationship. Proven ways to develop into a trusted advisor include frequent communication; collaborative discussions to help solve problems; and honest (positive and negative) feedback regarding your products and services. In fact, I have heard stories involving suppliers providing negative feedback about one of their hotels, and as a result of that honesty, the supplier lost a piece of business in the short term. However, they were able to develop a lasting relationship with their client in the long term.

In addition to positive supplier relationships, most successful SMM programs have embraced procurement’s influence through using strategic sourcing methods. Initiatives such as service level agreements (SLA) and quarterly business reviews (QBR) have helped to evolve new SMM programs into more mature arrangements.

Service level agreements (SLAs) are strategic and intended to be living documents that are consulted periodically to ensure that the agree-

ment is still relevant to the business. SLAs are not a useful tool if they are only referenced at the start and end of the year. The operative word in the SLA is agreement, meaning there has been discussion and agreement by supplier and client as to the document’s service and management elements. The service elements should include the services that are and are not provided, as well as the responsibilities of both parties. The management elements should include how service effectiveness will be tracked and reported and the resolution process for service-related disagreements.

To be useful, the SLA components need to be tracked and measured, thus the “less is more” principal is important when developing the SLA. Include enough detail so that the services can be measured, but not so much that it is an arduous project to evaluate at the end of the year.

The quarterly business review (QBR) is a consistently scheduled meeting between key suppliers and clients on a periodic basis. Although we use the term “quarterly”, these meetings may not need to be quarterly—they may be annual or semi-annual, depending on the supplier’s importance to your business. A typical agenda for a QBR includes a review of accomplishments and comparison of outcomes to the service level agreement, reporting on volume and spend details, and a discussion regarding any changes in process for the supplier or client that would affect how business is done. Additionally, the client should provide a forecast for the future so that the supplier gets a good understanding of potential increases or decreases in business. For those suppliers who desire to become a trusted advisor, providing an update on the latest industry trends and sharing novel ideas that provide creative solutions or solve problems puts you ahead of the competition.

In summary, developing successful supplier relationships, implementing realistic service level agreements and conducting quarterly business reviews are some of the key components that put the “strategic” component into strategic meetings management. B2B Betsy Bondurant, CMM, CTE has over 30 years of industry expertise in SMM, hotel sales, meeting, travel & trade show management.

44 / June 2015 / PurchasingB2B.ca / TRAVEL MANAGEMENT CANADA

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15-05-25 10:13 AM

The Gap Between Buyers and Sales The impact of the informed buyer on today’s sales role

By Tammy Gillis

tell me how you can help. It seems like common sense, but talk to any buyer who has had a “product dumping” presentation from one of their sales contacts and they will quickly tell you it’s not common practice. Buyers are looking for sales people to connect with them in a more relevant way that addresses their specific business needs.

In fairness to the sales profession, the rules of engagement have changed and what has traditionally worked in the past no longer serves clients today. Sales people have been trained to sell their product so there is shift in mindset that needs to happen for sales people to start looking at the process through the eyes of the client. Traditional sales people are faced with an identity crisis and are trying to understand what their new role is. It’s like the parent who is faced with their son or daughter going off to university. Although they are still needed, they are no longer needed in the same way.

A

ccording to Daniel Pink, bestselling author of To Sell is Human, sales has changed more in the past 10 years than the previous 100.

Technology and the availability of information are driving this change and sales people are no longer the gatekeepers of information about their product or service. Buyers are more informed than ever before and no longer need sales people for information. Because of technology, buyers can be 60 percent through their buying journey before they ever engage with a sales person. Sales people are entering conversations with clients later in the buying cycle, making it difficult to differentiate themselves from the competition.

Although the buying process has evolved, sales is having a hard time catching up and is still selling like it was 1980. According to a study by Forrester Research that asked clients whether they valued their conversations with sales people, only 15 percent of those surveyed said yes. This exposes a major gap between what buyers are expecting versus what they are actually receiving during their buying process.

I recently moderated a panel discussion at the Global Business Travel Association (GBTA) Conference in Toronto in April to engage buyers and sellers in a discussion on how to bridge this gap. What was the result? Well a big message from the buyers in the session was: Do your homework, understand my business and

“Buyers are looking for sales people to connect with them in a more relevant way that addresses their specific business needs.”

And although it is absolutely the responsibility of the sales person to do their homework and understand their client’s business, as buyers, there are things you can also do to help bridge the gap that exists today between buyers and sellers: • Be clear on your expectations about what you value and don’t value from a sales person; • Be transparent about how you prefer to communicate, for example face-to-face meetings, email or by phone; • Provide details of your purchasing process so sales people better understand how to manage your account to provide you with the best solution; • The more information you can provide about your decision-making process (i.e. criteria, timelines, budget), the more relevant their solution will be to meet your needs; and • Don’t treat the buying process like a transaction. Building strong relationships with sellers (the client-centric ones) will only help you do your job better.

It is a time of transition for sales people as they try to figure out how to sell to this new, highly informed buyer. One thing that was clear from my recent GBTA session: sales people want to get it right and understand how to add value and clients are waiting in anticipation. Bridging this gap so that clients get what they need out of the buying process is a win for everyone. B2B Tammy Gillis is the principal owner of Gillis Consulting & Training Inc. which provides customized sales training solutions designed to increase the sales performance of hospitality professionals. Reach her at tgillis@tgillisconsulting.com.

TRAVEL MANAGEMENT CANADA / PurchasingB2B.ca / June 2015 / 45

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15-05-25 10:13 AM

Travel Bugs

Education session discusses the threat micro-organisms present to business traveller health

C

By Michael Power

orporate travellers and the organizations they work for may think terrorism, crime, or natural disasters like floods or earthquakes represent the main threats to traveller safety. Indeed, the 2010 eruption of the Icelandic volcano Eyjafjallajökull saw air travel cancelled throughout the world and passengers stranded. But according to a discussion at the GBTA Conference 2015 | Toronto in April, threats to traveller safety can come in a much smaller form.

During a panel entitled Micro-Terrorism, Health Intelligence Combat Zone, iJet International CEO Bruce McIndoe and the organization’s director of health intelligence Katherine Harmon, participated onstage in several fictional scenarios illustrating how microorganisms can present health risks to business travellers.

In the first scenario, moderated by Shelly Lewchuk, manager, corporate travel at Canadian Natural Resources, a fictional traveller from Freetown, Sierra Leone develops a headache while attending a company regional meeting in Holland.

He attributes the pain to jetlag, but after three days he gets a fever, Lewchuk told the audience. By day four, he is quite ill. His condition worsens, and he’s hospitalized on suspicion of having the Ebola virus.

During the mock set up, McIndoe played an HR manager for the fictional traveller’s company and contacted Harmon, who played a travel risk consultant. McIndoe explained that the traveller felt fine when leaving the country and passed through screening. “The employee may have had any number of diseases coming from that area of the world,” Harmon replied. “But if he does have Ebola, this is when he would be first considered symptomatic and [colleagues at the meeting] would be considered low contagion for exposure—remember that Ebola is not easily spread like other diseases.”

The employee should have gone to the nearest hospital once his fever began, giving his travel and risk history so he could be put in isolation, she said. The fictional employee would then be tested for Ebola and, if positive, conference attendees in contact with him would need to self-monitor and potentially be isolated for up to 21 days, Harmon explained. “Can our travellers can be prevented from returning home?” McIndoe asked.

“Yes, under international health regulations— those laws set by the UN World Health Organization—they can be prevented from travelling back home,” Harmon responded. “These nations can set up their own laws and regulations when it comes to protecting personal health against any lethal infectious disease.”

Internal and external communication remains important in such situations. Harmon recommended gathering the organization’s stakeholders for a crisis meeting. If nothing is planned, it’s a good time to meet to decide what will be communicated immediately, and then long term.

Consider employee privacy, the organization’s reputational risk and multiple outcomes, Harmon said. With so many factors to consider, consulting an outside organization can help.

Such situations can affect an organization’s bottom line, Harmon warned. In 2003, SARS cost airlines in Asia close to $6 billion in losses, while Kenya Airways alone lost $140 million through September 2014 alone due to the Ebola outbreak. Many insurance policies aren’t covering Ebola-

46 / June 2015 / PurchasingB2B.ca / TRAVEL MANAGEMENT CANADA

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related damages to people or property. Treatment can cost over $500,000 and evacuation or repatriation by medical ambulance can run into the hundreds of thousands of dollars. McIndoe noted that pre-planning and having a solid business continuity plan is important, especially one that has a comprehensive health approach.

Touch of the flu In a second scenario that Lewchuk set up, a fictional hotel reported numerous instances of stomach flu over a week. The hotel’s property manager wants answers to several questions, including how to handle employee absenteeism, along with what he should communicate to guests. McIndoe, in the role of that manager, asked Harmon (playing a risk management department employee), for more information.

With the victims reporting nausea, vomiting and diarrhea, Harmon pointed to norovirus as a likely culprit. The virus is extremely contagious and circulates widely, especially during Canada’s winter months, she said. Public Health Canada estimates that norovirus causes up to 65 percent of food poisoning cases and over one million illnesses in Canadians annually. The virus usually makes people feel very bad for a day or two, with an average length of time 44 hours.

“As long as the individual keeps taking in fluids and doesn’t have any other significant health problems affected by fluid balance, they should recover just fine,” she said.

Using bleach and water solutions to clean surfaces such as hand rails, door handles, the hotel’s front desk, and especially elevator buttons can help reduce the spread, Harmon advised.

And while encouraging personal hygiene is always advisable, alcohol-based hand sanitizers don’t stop the norovirus. “The only measures to prevent getting this is to keep washing your hands with soap and water, avoid those people who are ill, keep well hydrated, in good general health and be prudent about your food and beverage choices,” Harmon said.

But while most people don’t end up seriously ill from norovirus, the financial impact is often more devastating, Harmon cautioned. During outbreaks, schools have closed, hospitals shut down and general business interruptions can be immense—in 2007, a norovirus outbreak at Johns Hopkins Hospital cost the facility $650,000.

“Norovirus can be quite costly for businesses that are unprepared,” Harmon said.

Human resources policy as related to risk management also came into play during the session. In third fictional scenario presented to the audience, a woman returning from a trip to New Zealand comes down with a neck rash, along with other symptoms consistent with measles. Harmon, again as a risk management advisor, noted that in Canada personal health information (PHI) remains confidential unless an employee offers it—employers can’t come out and ask about an illness. “Every country makes their own PHI laws, but here, her right to medical privacy is protected,” Harmon said.

“Many insurance policies aren’t covering Ebola-related damages to people or property— Treatment can cost over $500,000 and evacuation or repatriation by medical ambulance can run into the hundreds of thousands of dollars.”

Employers are only privy to specific types of medical information, such as those involving occupational health or injury claim, family medical leave, information relating to the disabilities act or drug testing. “Even then, there are limits to what you’re allowed to ask,” she said. But employers have the right and obligation to protect employees from sick people, and many companies opt for an infectious disease policy as part of their HR onboarding or employee handbook.

In the scenario, the employee was potentially exposed to measles during personal travel the company isn’t responsible for her illness, Harmon said. If other employees get ill from her, there’s debate over culpability of workplace exposure. Most employees who want compensation as a workplace compensation claim are denied, she said, as it’s tough to prove definitively that the exposure took place at work.

As well, travel tracking methods can help monitor travellers and infectious disease, she said. Travel management companies also keep track of what’s happening in terms of global outbreaks and create alerts that are pushed out to anyone who has travelled to risky areas.

Takeaways The session offered attendees several takeaways for managing the risk of illness among employees and corporate travellers. Harmon noted the importance of understanding what resources exist for health intelligence not only before and during trips, but also after, since many diseases have an incubation period of a month or more.

Illness can have financial and morale impacts due to interrupted business continuity, productivity and an affected working environment. “Direct and indirect costs can linger for a substantial periods of time—it’s not just that first hit that a company can take,” she said.

Harmon also recommended knowing what an organization can and should communicate internally and externally. An external partner can help with pandemic planning as well as with designing a tool kit to communicate out so reputation remains intact. B2B TRAVEL MANAGEMENT CANADA / PurchasingB2B.ca / June 2015 / 47

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15-05-25 3:31 PM

Product Showcase

Multi-functional Magic

Recent printers and MFPs boost quality and efficiency

T

he new generation of printers and multi-functional devices are designed to help organizations of all sizes. Delivering productivity, lower printing costs and high-quality output, today’s MFPs truly provide something that addresses the needs of every organization.

HP Earlier this year, HP announced a new portfolio of HP P a g eW i d e XL printers, offering fast large-format HP PageWideXL4500 pr o duc t ion printing available in colour and black and white. The portfolio of printers enable reprographic houses, print service providers, enterprise central reprographic departments and print corners to produce computer-aided design drawings allow for geographic information system maps, pointof-sale applications and posters.

“The HP PageWide XL Printers announced today deliver what our customers have been seeking for years and will revolutionize the production printing market, offering affordable, high-quality black-and-white and color output in a single device at the fastest speeds available,” said Stephen Nigro, HP’s senior VP, imaging and printing. The portfolio includes: • HP PageWide XL 8000 printer • HP PageWide XL 5000 printer • HP PageWide XL 4500 Printer • HP PageWide XL 4000 Printer Brother Brother has also worked to redefine the small business inkjet all-in-one device with the launch of the MFCJ5620DW, the new Business Smart Plus coBrother MFC-J5620DW

lour inkjet for small offices. The MFC-J5620DW enables lower cost per page by offering a yield of up to 2,400 page (black and white) and 1,200 colour pages—up to four times the output of high-yield ink cartridges. Automatic double-sided printing helps reduce overall printing budge by lowering paper consumption and costs when compared to single-sided printing.

It has an adjustable paper tray that holds up to 250 sheets, and multi-purpose tray that allows easy printing on specialty paper or envelopes. The MFC-J5620DW also boasts a space-saving design while offering several ways to connect to mobile devices, cloud services and Ethernet and wireless networks.

Xerox From Xerox comes the Xerox WorkCentre 3215 multifunction laser printer, which the company says puts powerful tools in the hands of users and small work teams. It improves office workflow by combining print, copy, scan, email and fax in one compact device. The device has a print speed of 27ppm and a duty cycle of up to 30,000 images per month. Its maximum print resolution is 600x600dpi with up to 4800x600 Xerox WorkCentre 3215 enhanced image quality.

The WorkCentre 3215 comes with a print cartridge that has a capacity of 1,500 pages and a drum cartridge with a 10,000-page capacity. A power cable, USB cable, a fax cord and software and documentation are also included.

Lexmark Lexmark offers the CS410 Series Colour Laser Printer, delivering PANTONE colour matching and smart print capabilities, the company said. The CS410 Series produces output consistent enough to be used for branded materials in-house, with the ability to print documents with graphics and images with 256MB of upgradable memory and a dual-core processor.

The printers have 1200x1200dpi resolution and can print 32ppm in Lexmark CS410 black and colour.

The CS410 Series handles up to 6,000 pages per month and has an input capacity of 1,450 sheets and high yield toner cartridge options. The 2.4in colour display makes view ing easier, while users can print from either desktops or mobile devices.

B2B PurchasingB2B.ca / June 2015 / 49

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15-05-25 3:47 PM

The Law

The volcano’s edge Mitigating major project meltdowns in a tough economy

Paul Emanuelli

W

hile it’s tempting to dismiss recent high-profile procurement failures as random isolated incidents, the reality is the negative news reports, adverse audit findings and costly legal entanglements are early warning tremors, symptomatic of deeper tectonic tensions within the depths of many public procurement operations.

With major project meltdowns becoming the new normal, this article will discuss a three-point crisis control plan for senior-level governments, individual institutions and project teams to build winning conditions.

Evolving a statutory spine After creating open competition duties under various trade treaties, most senior level governments in Canada have failed to establish clear and uniform operating systems to help public institutions run their major procurement projects. In contrast to the statutory procurement frameworks in place at the national and local levels in the UK, across Europe, in the US, and in most other Commonwealth jurisdictions, Canada is an outlier, lacking the statutory spine of uniform operating procedures. Thousands of Canadian institutions are currently fending for themselves, operating on the fringes of frontier-style procurement, with a patchwork of do-it-yourself local systems full of duplication, inefficiency and unnecessary complexity. For the most part, these local systems lack proper internal governance frameworks or adequate dispute resolution procedures. In fact, the vast majority of Canadian public institutions, particularly at sub-federal levels, have no experience navigating the headwinds of full treaty compliance in the highly regulated and litigious environment of international bid disputes. They would be in for a rude awakening if they tested the waters of treaty compliance on a major project based on their current practices. With the Canada-EU trade treaty looming, this is a recipe for disaster. Before implementing the Comprehensive Economic and Trade Agreement (CETA), senior-level governments should, at minimum, first ensure that they have the proper statutory operating systems in place to deal with the bid disputes that will inevitably become the new normal.

After creating open competition duties under various trade treaties, most senior level governments in Canada have failed to establish clear and uniform operating systems to help public institutions run their major procurement projects.

Building local governance frameworks The absence of a statutory spine at the jurisdictional level underscores the importance of implementing a proper procurement governance framework at the local level. This requires senior-level budget approvals and clear delegations to project teams at the very beginning of a 50 / June 2015 / PurchasingB2B.ca

Paul Emanuelli is the General Counsel of the Procurement Law Office. He can be reached at paul. emanuelli@procurementoffice.ca.

project. Those approvals should be based on a project design plan with clear contract scoping, pricing and award criteria, along with clearly defined project roles and responsibilities. Yet, most public institutions in Canada have not established clear local governance frameworks for major projects. Instead, they improvise based on ill-fitting routine procurement procedures. This leads to indecision, delay and second-guessing. Building a proactive local governance framework should be the first priority for all Canadian institutions to reduce the risk of major project meltdowns.

Deploying flexible formats If project teams want more success, they need updated tendering procedures aligned with international standards and complex project demands.

Yet, many Canadian institutions remain trapped in a tendering time warp, using inflexible formats embedded with antiquated, high-risk process rules that haven’t been updated in decades. The US has gone through two rounds of reforms led by the American Bar Association. The ABA’s Model Procurement Code sets uniform statutory standards for bidding procedures across state and local governments that have been adopted throughout the US. The UN has followed a similar path with the UN Model Procurement Law. Procedures based on the UN rules have been adopted by many countries, including our soon-to-be trading partners in the UK and Europe. These codes have long recognized the use of flexible tendering formats for major procurement projects and have recognized, and mandated, electronic bidding to promote supplier competition across borders. Electronic tendering platforms and flexible tendering formats tailored to Canadian legal requirements would give procurement the tools to succeed.

Trying to succeed with a system lacking clear statutory rules, solid local governance frameworks and updated tendering procedures is like trying to roll a rock up the side of a live volcano—you have to be lucky, and good, to suceed. The public interest demands that we improve those odds for our project teams if we want to avoid even more major project meltdowns in the years to come. B2B B2B

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MITIGATE YOUR RISK WHILE MANAGING YOUR FUEL SPEND.

Backed by more than 50 years of experience, one of the nation’s most extensive service networks and customized reporting to fit your needs, the Shell Fleet Navigator Card, with our eTRAC® program, delivers unprecedented control and customization over the information you receive to better manage your fleet program. You can use it almost anywhere - with universal access to over 1,200 Shell stations and most other service stations in Canada - wherever MasterCard is accepted.

Plus, our enhanced fraud protection with Chip and PIN ensure security with every transaction. And earn AIR MILES®† reward miles too. All of which gives you the power to improve your bottom line.

TO FIND OUT MORE AND SIGN UP, CALL 888-212-8916 OR VISIT WWW.SHELL.CA/FLEETNAVIGATOR. The Shell Fleet Navigator MasterCard Corporate Fleet Card is issued by Comerica Bank pursuant to a license by MasterCard International Incorporated. MasterCard and MasterCard Corporate Card are registered trademarks of MasterCard International Incorporated. ®†™† Trademarks of AIR MILES International Trading B.V. Used under license by LoyaltyOne, Co. and Shell Canada Products. ®

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Shell, Canada

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15-05-25 10:14 AM