Canada’s magazine for procurement and supply chain management professionals
MAY 2014
EYE ON THE BALL Juggling procurement standards at Cirque du Soleil
Also inside: Paying suppliers faster SCMA National Conference preview Negotiating telecom contracts PM 40069240
Professional Development PBB03_01_OFC.v2.indd 1
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Dorothy Jakovina 416-510-6899, djakovina@bizinfogroup.ca Addressing issues affecting Canada’s public procurement professionals EDITOR
Michael Power 416-442-5600 ext 3259, mpower@bizinfogroup.ca Fleet Management/CAR Editor
Emily Atkins 416-510-5130, eatkins@bizinfogroup.ca Art Director
Sandy MacIsaac 416-442-5600 ext 3242, smacisaac@bizinfogroup.ca Production Manager
Kim Collins 416-510-6779, kcollins@bizinfogroup.ca Circulation Manager
Barbara Adelt 416-442-5600 x 3546, badelt@bizinfogroup.ca BIG MAGAZINES LP
Executive Publisher: Tim Dimopoulos Vice-President of Canadian Publishing: Alex Papanou President of Business Information Group: Bruce Creighton For over 55 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 eight times a year, except for occasional combined, expanded or premium issues which count as two subscription issues, by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. © 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. SUBSCRIPTION SERVICES: To subscribe, renew your subscription, or to change your address or information, contact us at 416-442-5600 or 1-866-543-7888, ext 3258, apotal@bizinfogroup.ca, or visit us at www. PurchasingB2B.ca. Subscription price per year: $99.95 CDN; Outside Canada per year: $172.95 US; Single issue Canada: $18 CDN. Annual Supply Chain Survey issue, Canada: $45; Outside Canada: $70 US. Taxes extra. From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374, Fax: 416-442-2200 E-Mail: jhunter@bizinfogroup.ca Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, ON M3B 2S9 Printed in Canada. 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
Vol. 56, No. 3 • MAY 2014
12 studying strategy Strategic and technical know-how.
p.8
14 SCMA Conference preview Feel the energy in Edmonton.
15 camsc diversity fair Tips for diverse suppliers and procurement organizations alike.
16 cirque du soleil Procurement policy at the world’s biggest and best-known circus.
50 t echnology
p.16
Telecom negotiations.
also inside
departments 4 Online News
8 Procurement Profile
5 Ask The Expert
52 Le professionnel
6 Business Front
53 the Professional
7 Finance Corner
54 The Law
18 39
Staying in school
Editorial
A
s I’ve written here before, there’s a shift afoot in procurement. The field is drifting from the tactical towards a more strategic approach. This means the procurement practitioner must stay in school, so to speak, for the duration of his or her career. Much of this issue of PurchasingB2B is dedicated to professional development. We’ve asked an experienced and knowledgable practitioner, Lori Benson of Ernst & Young, what she recommends for those looking to advance professionally. Not surprisingly, in her profile on page 8, Benson recommends seeking educational and networking opportunities. She’s involved in a number of professional associations like CAMSC and SCMA, which she notes helps her develop skills such as public speaking. We also feature a professional development report on page 12. Again no surprise: a major theme is the shift in procurement and supply chain from the purely tactical towards a strategic positioning. Several sources in that report note this move. As well, the report notes, employers now search out candidates who can balance the hard skills procurement requires with softer skills and leadership qualities. Just to keep it interesting, Business Front columnist Michael Hlinka offers a different view on page 6. He suggests there’s wisdom in limiting enrolment in programs like history and English—and even business degrees—to a more select number. This would encourage efficiency and actually be in the best interests of students, he says. Education is clearly important. But what type—and what skills are stressed—morphs along with changes to the economy and advances in technology. Hopefully we’ve given you food for thought on what professional development activities are right for you. MAY 2014 | 3
Cover and inside photo courtesy of Cirque Du Soleil
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Ask The Expert
Vendor Relations Tips for mending fences with your suppliers By Bruce Winder
V
endors or suppliers are a key part of your business. Since the concepts of backward and forward integration fell out of vogue in the 1980s, your vendor’s success largely equates to your success. But sometimes things go wrong and you and your vendor experience strained relationships. A missed ship date, quality problem or payment issue and you’re in fight-orflight mode. Usually, this is the “carton that broke the trailers axle”. Somehow the once great relationship is gone. What can we do to get things back on track? There are ways to right the ship. But it requires work, self awareness, potentially some forgiveness, compromise and communication. It takes time and because actions speak louder than words you both must walk the talk. Here’s what I recommend: • Get the facts about what’s happened with your relationship with your vendor. This could be purchases, costing, supply chain performance, quality performance and other metrics that are common for your business or industry. • Have a meeting with your group and put yourselves in their shoes. Be honest. How would you feel if you where them? It goes both ways. If they haven’t delivered and have had problems, write them down and have a discussion internally on how its effected your business and what must change. • Define where you want the relationship to go. Are things so dire that you need to sever ties completely? You may not be able to, even if you want to. Better to paint a picture of where you want to take them over three-to-five years, with some key performance metrics and behaviours spelled out. What should our relationship look like next year, or three years from now? • Have a meeting among the heads of your vendor and your company—just one or two from the vendor and the same from your company. Invite them to your office. If you have really “dropped the ball” ask if you can come to theirs. This meeting is when you diplomatically discuss where you have both been and where you want to go in the short term and potentially long term. Ac-
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knowledge what you can do better but get their understanding and agreement on how their performance has impacted you. Gain understanding and alignment and ensure you get it all on the table now, as negative undercurrents will persist. Agree to the point below as a next step. • Create a tracking document that spells out specifically what and who will change (as well as when and how). It’s best to draft it and send to the other party to edit and sign off on, or do together in a workshop. This must be realistic and attainable or you’ll be back in the same meeting soon. • Book periodic top-to-top meetings. Check what has changed and why, progress made and other signs as to whether things are on the right track. The details will dictate how the situation is proceeding. • Decide if you must look for a new vendor. If the vendor’s performance has affected your business severely, you may need to start now. Sometimes people and companies don’t or can’t change. Be prepared for this. It should be part of your vendor management strategy and portfolio. If you don’t have one you need to build one. B2B Bruce Winder, MBA has 20+ years experience in procurement and global sourcing with several tier-1 companies. He owns and operates a boutique consulting firm specializing in procurement and quality management. Reach him at bwinder@brucewinder.com or 416-705-5627.
MAY 2014 | 5
Business Front
Graduation Blues by Michael Hlinka
I
t’s springtime—when hope is supposed to spring eternal. After a long, brutally cold winter (where’s global warming when you want it?), most of the people with whom I deal professionally (I instruct at one of Toronto’s community colleges) are young students, ready to enter the workforce, bright-eyed and bushy tailed. Except what students are facing these days is a very difficult job market—even as the economy is “allegedly” expanding in North America. I remember television commercials from the 1960s and 1970s: “To get a good job, get a good education.” And for most of my lifetime, a college or university degree has guaranteed a brighter future. There have been numerous studies (always conducted by academics, mind you!) that have quantified the value of those three or four years out of the workforce. The number I’ve heard bandied about suggest that a low-ball estimate is a cool $1 million which, when you think about it, is the difference between a comfortable retirement and one where you’d struggle to get by on your Canada pension plan benefits and old age security.
“What we’re doing now is good for those like me who are part of the education establishment—it doesn’t serve our youth.” As someone who is within the belly of the post-secondary education beast, I am more frequently having serious doubts whether Good Education=Good Job anymore. There’s a simple reason for this. It’s supply and demand. When I was growing up, fewer of us went on to college and university. I reflect back on my personal experience with my master’s degree in business administration, the degree that got me to where I am today and that’s cocooning very comfortably in the world of academia. My recollection was that there were about 100 students in the University of Toronto graduating class of 1986. This year, the 6 | MAY 2014
Rotman School will emit around 275. When I left grad school, Canada’s population was 26 million. Today it’s 35 million. You don’t need an MBA to see that the math doesn’t add up! I know one current grad quite well and he told me that as of the end of March, only about one-quarter of his classmates had found work. This is not what they bargained for when each of them ponied up $8,000+ in tuition. I was in my local pub last night, enjoying beer and wings, and roughing out a draft of this column when I overheard an interesting conversation. One of the servers (a lovely young lady who graduated from a very reputable university with an arts degree several years ago) was approached by a happily animated customer/friend who had some great news to share! I’m guessing that the other young lady was in her late 20s or early 30s. She had just started on a career trajectory that would eventually one day make her a fully certified school bus driver, a profession (according to her), that could mean that one day she’d enjoy a six-figure salary. Driving a bus is a honourable profession. I was surprised that it’s that lucrative—and perhaps it’s not—I’m just relaying an anecdote. Because what the customer/friend said after that is what really piqued my interest and here I’m able to quote almost verbatim: “After all that university…after two undergraduate degrees…this is what I’m going to end up doing!” I couldn’t help but note the irony. Here is someone who spent years in school, learning about things that have no connection with her eventual career…now she’s part of the system leading this generation down that (perhaps) same road! On one hand, it’s funny. On the other hand, there is something a bit tragic about it. I see too many students leaving school burdened with debt that will take years to pay off. Another story: a couple of Christmases ago, my nephew brought his girlfriend at the time to dinner. She had graduated two years earlier from the University of Toronto with an English degree…and $27,000 of student debt. She was working in a sandwich shop making $13.50 an hour. How does anyone get by on that wage, let alone retire debt? I know what the solution is: reduce the number of students admitted into programs like history and English—and even commerce. If there were fewer positions, it would first of all encourage excellence in the public school system, rather than the mediocrity that masquerades itself as “inclusiveness”. The truly gifted students—and by that I mean the top 10 percent in programs that lead directly to employment—should go to school on full scholarships. Everyone else should be required to pay half, with the state picking up the other half. This would encourage efficiency in what’s currently a bloated system. Because what we’re doing now is good for those like me who are part of the education establishment—it doesn’t serve our youth. B2B Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network. PurchasingB2B.ca
Finance Corner
Open Account Finance
Organizations can ensure suppliers are paid as soon as goods leave the warehouse By Ben Arber
O
ver 90 percent of Canadian cross-border trade is conducted without any form of payment protection. That’s the vast majority of nearly $1 trillion. A reasonable question is, why? With such a high proportion of Canadian exports going to the US (over 70 percent, according to the HSBC Global Connections) and much of this going to large trustworthy buyers, concerns about not being paid are low. Risk remains a key driver, but so are other considerations: given that every industry outside the service sector has to deal with both transit times and commercial payment terms, a more commonly asked question is: how can companies engaging in open-account, cross-border trade make sure they get paid as soon as goods leave their warehouse? Supply chain finance has long held promise for importers and exporters. The good news is it has certainly arrived. If you’re a small Canadian business, waiting 90 days to receive payment for a sale to a large US multinational can be painful. Discounting that invoice at a bank can not only eliminate that pain but also takes the receivable off the balance sheet, thereby improving the company’s ability to borrow—and in turn to buy more raw materials and increase sales. While this basic concept unjustifiably gained a poor reputation in Canada 15 years ago, as factoring, it has returned to the benefit of Canadian small businesses. Now it’s common for farmers, auto parts manufacturers and oil refiners to take invoices to a bank for up to 100 percent early payment. This is a straightforward and relatively cheap way to enhance working capital. Operationally, it’s light: simply send invoices and shipping proof of sale to a provider, and get paid up to 100 percent of the invoice value. Timing is often vital for small businesses. Waiting until the end of the month to submit a margin card, detailing receivables to be financed can be an issue; sending invoices in to be financed as soon as a sale is completed saves several days or even weeks. In turn, access to capital earlier—particularly in a business where sales terms can be up to a year, such as auto parts or the manufacture of industrial equipment—is a genuine way to boost sales by giving the company the ability to spend on raw materials and manufacturing early and hence fulfil more orders. Balance sheet management is naturally a priority for CFOs and small business owners. Selling receivables in this way often generates a balance sheet benefit. Depending on how the finance is structured, an invoice discounting or factoring line may qualify as off-balance sheet, once the receivable has been sold to the bank. Finally, back to where we started: even where sales to North American corporations are a high proportion of total turnover, insuring receivables is worth considering. This also better positions the factoring options with the bank, whose credit assessment changes with this risk mitigant in place. Large buyers or importers at the other end of the supply chain
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are increasingly launching programs to provide finance—via a bank or a nonbank—to trusted suppliers. The effect is the same as those suppliers using a factor: they get paid early on sales to the specific buyer. These programs are of course not selfless acts of altruism by the investment grade companies that have pioneered this form of supply chain finance. They are used for commercial purposes, to push payment terms with suppliers (say from 90 days to 120 days) or negotiate a lower price for their purchases while giving the supplier the benefit of being paid early against a lower cost of borrowing. Large retailers and consumer goods firms were trailblazers in this space. Such companies, with large and sometimes complex supply chains in Asia, needed originally to build resilience so that they had options if an act of God or a cash flow crunch put suppliers out of business—and simplify their sourcing operations by, for example, using electronic documents. Now companies in Canada view the opportunity as a commercial one. Supply chain finance is slowly becoming an option for companies that are not blue chip or investment grade. Insurance options—both public and private—are again helping banks to take on the risk of financing. A key feature both of factoring and buyerled supply chain finance is the cost of this finance. The risk to the bank or provider of the finance is short term. It involves smalland medium-sized companies paying interest at rates commanded by their large buyers, not themselves. Therefore it’s a cost-effective way of helping corporations of all sizes do more business. The net effect is that manufacturers and traders alike can commit to more sales contracts, increasing growth and in turn passing on benefits to employees and owners, ultimately raising standards of living—the principal goal of open cross-border trade. B2B Ben Arber is head of global trade and receivables finance, HSBC Bank Canada. MAY 2014 | 7
Procurement Profile
Life Is An Adventure Lori Benson, strategic sourcing director, Ernst & Young
Describe your educational background and work history. I studied at Ryerson University obtaining the advanced purchasing certificate in 1992, continued studies through the Supply Chain Management Association (SCMA) for my SCMP designation in 1994, CPSM in 2010. I started my supply chain career at Coopers & Lybrand in 1982, later transitioning as Canadian purchasing manager at PwC. In 2007 I moved to Ernst & Young as the Canadian procurement leader.
How did you get involved in procurement and supply chain? I wished to work in a business environment where what I did helped a company succeed. I held a clerical roll and as I was gaining business experience found that buying was a place I could cultivate opportunities. Initially, I struggled to apply some of the supply chain learning to professional services, though as the education programs matured it became easier to apply the techniques and theories to services spend. I remember using EOQ on office supplies just to keep practicing the theories from class. Describe your current role. My role as Canadian procurement leader is to provide management of spend, keep direction for sourcing focused on cost-saving activities and reduce potential risks. I work in a collaborative global team where the Canadian team supports strategies and goals with in-depth knowledge and experience.
What does a typical day look like? A typical day is filled with analysis of spending, meetings with internal clients and suppliers, with a keen focus on reducing costs and streamlining processes. We find the time to meet with our clients and listen to their needs. We need their subject matter expertise to ensure we’re applying our sourcing strategies effectively and in the right direction. By applying emphasis on demand levers I look for any opportunities to eliminate and simplify while we perform the traditional procurement of consolidation, RFx’s contract compliance and rationalizing. What do you like most about your position? This career provides me with the best networking opportunities with business people from various industries and I learn new things almost every day. I’ve always found myself questioning, what is the meaning of value to the internal clients, suppliers and how does this support the stakeholders? In a negotiation, I found the goal is different for each player and finding a sweet spot is critical to success. You don’t always get a win-win for everyone though striving for 8 | MAY 2014
Photo by Dorothy Jakovina
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quality, transparency and integrity in the negotiation process often brings existing value you may not be aware of. A book I read a few years back, Negotiating with Giants by Peter D. Johnston resonated with me to find value in the deal for the suppliers. The ideas were practical, especially when negotiating with large organizations. Ultimately, negotiating is what makes this career so much fun. Build exceptional relationships so that when you really need help and make a call you have people you can rely on to provide innovation solutions and opportunities. I like that what I do provides sustainable value. There are benefits for the firm, supplier and our internal clients. I enjoy meeting with as many people as I do. What’s your proudest moment? My proudest moment was receiving my SCMP designation. It expanded my knowledge and led to opportunities.
What are your future plans? I work in a global procurement environment so my future is filled with finding ways to connect with people across the globe. We’re all learning together to build the procurement brand which increases our involvement in interesting projects. It’s exciting, as our procurement organization is at the leadership table. What extracurricular groups/activities are you involved in? EY culture is one of inclusiveness, so in procurement practice we are able to deliver strategic value with visibility in supplier diversity. Supplier diversity momentum in Canada is growing fast and my involvement with organizations like GCLCC-LGBT, CAMSC and WeConnect as a board member and advocate, supports the inclusion of diverse suppliers in our supply chain. This is a key component that advances my learning opportunities while increasing the supplier network. I also have a passion for mentoring young students so I I’m involved as a volunteer for Junior Achievement. What’s the value of those affiliations? Diverse suppliers add tremendous value for any supply chain. Often, they deliver unique and cost effective solutions for businesses. The entrepreneurial spirit of a diverse supplier leads to building and growing the economy. Experiencing the growth of supplier diversity first hand provides me with deeper insight into the endless capabilities of minority suppliers. Junior Achievement brings business close to students at a young age. I often learn from students as they build a business or share a new view of the economy. Both of these affiliations constantly test my public speaking ability. PurchasingB2B.ca
What skills will procurement/supply management require in the future? A valuable future skill in procurement/ supply management is having the skill to foresee owners and suppliers risks/challenges and putting context around them to best protect and serve those needs when sourcing goods or services.
What advice would you give those looking to advance professionally? Continue to seek out educational and networking opportunities from multiple sources. Gain a deeper knowledge of mature and emerging supply markets. Know the key players, industry trends and most important, think differently. Supply practitioners are a bit competitive don’t you think? All you need to hear is “no that can’t be done” or “we haven’t had an increase for years”. It’s amazing the energy a supply manager can put into resolving this kind of situation in a satisfactory way for their client. I recall once being told it can’t be done and the example was purchasing of computer peripherals from an office supplies vendor. At the time they weren’t actually selling cables, mice, keyboards etc. So we got together, rolled up our sleeves and within a year, and many bumps along the way, we had a process that worked for everyone. It ended up cheap, cheerful and efficient. Another example is the process we used to manage our credit card delinquencies. We built a simple automated system that sends internal reminder notices to corporate cardholders. The delinquencies dropped significantly within a year of implementation and the benefit is good for everyone. I think you need to look for the impossible and make it possible— just keep it simple. Tell us something about yourself that’s unrelated to procurement/supply management I don’t ask for directions. I would rather get lost and discover new things as I find my way. I believe life is an adventure. B2B
MAY 2014 | 9
Head Professional Development Directory
Have You Signed Up? The Purchasing Management Association of Canada (PMAC) and the Supply Chain & Logistics Association Canada (SCL) joined forces to create the robust, highly focused Supply Chain Management Association (SCMA). The Ontario Institute of PMAC is now known as Supply Chain Management Association Ontario (SCMAO).
byline
WE’VE JOINED FORCES
Become part of a network of over 3,000 members in Ontario and 7,000 across Canada. Imagine how this professional network can help you reach your career goals! Whether you are working in the industry or considering a career in supply chain management, with SCMAO membership the sky’s the limit! To apply for membership visit www.scmao.ca
SCMO_Membership Ad_7x4.875.indd 1
2014-03-27 3:44 PM
Your invitation for Canada’s Annual Survey of the Canadian Supply Chain Professional will be arriving in your Inbox soon.
With your participation, this will continue to be the most comprehensive benchmark study of the Canadian supply chain profession! Results of the survey will be featured in the October 2014 issues of PurchasingB2B, MM&D, Canadian Shipper, and online. Thank you in advance for your contribution!
10 | MAY 2014
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Professional Development Directory Advertorial
What has the biggest impact on the profitability of your supply chain? You do On top of negotiating Total Landed Cost, many purchasing pros are now managing the flow of goods or materials, and are sometimes even responsible for ensuring uninterrupted supply chain operations. That’s a lot of responsibility. And it can have a big effect on your bottom line. After all, studies prove that uninterrupted supply chains are more closely linked to corporate financial performance than any other operational factor.1 What’s more, a recent study from MIT found that supply chain performance is more sensitive to mature skill-set and expertise of logistics-related supply chain professionals than any other operational factor – including commodity and fuel costs.2 So there’s a lot of opportunity for profitability. But chances are if you’re taking on more responsibility for your supply chain, you’re doing so without the benefit of specialized, logistics-specific professional education. That might be intimidating. But CITT can help you. You can complement your purchasing knowledge with CITT’s expert-level, 5-course suite of specialized logistics courses.
The CCLP® (CITT-Certified Logistics Professional) online course of study will equip you with a depth of understanding that is more complete and comprehensive than any other logistics designation program offered in Canada. Take our 5-course suite of specialized logistics courses and you’ll have the best technical foundation for profitably managing stable, reliable supply chain and logistics operations. Then you’ll be eligible to complete your professional certification from CITT and carry industry’s most widely-held and relevant designation in logistics: CCLP. No other professional credential says “Logistics Expert” as decisively as CCLP Because supply chain logistics has become such a specialized and sophisticated field, cross-functional certification is becoming increasingly more common among highly committed pros. And most certified procurement professionals qualify for advanced standing towards the CCLP designation. Visit www.citt.ca/logisticsprofitability for more information. Or contact us at info@citt.ca or 416-363-5696.
Add “Logistics Expert” to your professional credentials. And more profitability to your supply chain logistics. CITT’s fall semester starts September 2nd. Register now at www.citt.ca to guarantee your spot. ® CCLP is a registered trademark of CITT 1 Henricks, K, Richard Ivey School of Business, University of Western Ontario, Singhal VR, DuPress College of Management, Georgia Institute of Technology. Supply Chain Disruptions and Shareholder Value, 2005. 2 Simchi-Levi, D, Kyratzoglou IM, Vassiliadis CG, Supply Chain and Risk Management: Making the Right Decisions to Strengthen Operations Performance, Study by MIT Forum for Supply Chain Innovation and PwC, 2013.
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MAY 2014 | 11
Professional Development
Strategic Leap As procurement and supply chain moves from tactical to strategic, practitioners would do well to hone their soft skills By Michael Power
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hose navigating today’s economy and employment landscape are no longer able simply to rest on existing education and professional experience. Procurement and supply chain practitioners must continually upgrade those skills and credentials, survey the job market and stay abreast of employers’ needs. To help readers chart the professional development waters, PurchasingB2B looked at trends in skills development and how to acquire and develop the attributes that employers want. Employers often look not only for attributes that are procurement or supply chain specific, but also for general leadership skills, says Supply Chain Management Association (SCMA) president Cheryl Paradowski. Supply chain is still transitioning from an operational/tactical pursuit to a contributor to an organization’s strategic vision. “It tends to be not the functional skills that are preventing the leap over that gap, but the leadership and managerial skills,” Paradowski says. “If you’re trying to make that strategic leap there are a lot of skills involved that are not supply chain specific.”
“If you’re trying to make that strategic leap there are a lot of skills involved that are not supply chain specific.” —Cheryl Paradowski
Those skills include problem solving, the ability to enact plans that both drive the bottom line and link to an organization’s overall objectives. “That’s a very different skills set from pure supply chain management,” she says.
12 | MAY 2014
Hard vs. soft skills In response to this need, SCMA’s designation—the Supply Chain Management Professional (SCMP)—includes workshops re-
lated to so-called “soft skills” alongside functional areas, Paradowski notes. The association recently surveyed Canadian employers regarding what skills they look for, along with the challenges or barriers they face regarding supply chain management. SCMA has a content review committee within its governance structure comprised of subject matter experts who meet twice a year to look at the designation at a “30,000-ft level,” Paradowski says. The committee then comments on what the designation includes, what’s missing and what could be removed. A feedback loop also exists between instructors and students to ensure readings and case study references are up to date. SCMA has also combined its annual national conference and symposium to generate more interaction between academics and practitioners, Paradowski notes. Paul Larson, the CN professor of supply chain management at the University of Manitoba, also breaks skills into groups: technical skills and soft skills (such as communication, teamwork and leadership). Some employers have told him that while new graduates often have solid technical skills, they sometimes lack the soft ones. Perhaps frustrating for new entrants to the field, while it’s possible to teach skills like communication they must be acquired on the job. “Tips can be learned, but ultimately it’s the type of thing where you just have to start doing it,” says Larson. “At our campus, it’s been many years since I taught a course where I didn’t have a fairly significant communication component to it.” But the focus on the soft skills doesn’t render other areas obsolete. Larson notes sustainability and risk management have become subjects that practitioners must know about. Awareness of sustainability is now demanded of those downstream in the supply chain. Consumers, says Larson, are more environmentally aware than in the past and therefore some organizations rigorously screen suppliers. Regarding risk management, he notes, the global environment means supply chains are exposed to more risk from terrorism, political unrest, natural disasters and so forth. What other skills are employers looking for, and what professional areas should practitioners seek to develop? “It really does depend on what level they’re at,” says Adrian Harrison, senior consultant at Hays Procurement. According to Harrison, skills can be split into either an activities section that includes negotiations, strategic sourcing and other areas, and knowledge of different categories. Employers are asking for sector or category background more often than before, rather than looking for more granular skills like negotiations, Harrison says. That can be frustrating to some candidates who have expertise in areas like negotiations but lack category-specific experience. Recently, Harrison has seen an increase in candidates searching for opportunities at new organizations rather than with their current employers. In recent years, most candidates had been
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displaced and, by necessity, either unemployed or had taken jobs unrelated to their previous positions. But with the market heating up, candidates are more often looking for opportunities to break out of their current employment voluntarily. “Generally the market is up and last year was a great one,” he says. “So it’s positive but it’s very, very specific.” Some category areas that are currently hot include information technology as well as indirect or corporate spend. At least in markets such as Toronto, construction, facilities and professional services are also on the rise. Paradowski has also noticed this trend. The field went through a period—especially while the sector was downsizing—where employers were looking for generalists in supply chain management. Rather than practitioners working in silos, many took on end-to-end responsibilities across areas like purchasing, logistics and so on. “The pendulum swing that we’re seeing coming back is a desire for more [category] specialization,” she says. Where will these recent trends and emerging skill sets lead the field? The practitioner of the future will have higher education levels than previously, says Paradowski. These days, there are people entering the field post-secondary degrees—this wasn’t always the case in the past. Going forward, professional development and credentials will be factors in career success, and practitioners are seeing more promotions, more hiring and more bonuses based on those credentials, she says.
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And while many people aren’t aware of supply chain as a profession while in school, Paradowski notes, with people realizing how fulfilling the field as only after they fall into it. Getting involved with professional associations like SCMA helps show employers a practitioner is willing to hone their skills and invest in their careers, she says. Harrison encourages practitioners to get a designation such as the SCMP as a way to upgrade their careers. He also recommendes that procurement and supply chain professionals get involved with internal projects to show enthusiasm for professional development. “I’m getting quite a lot of recruiting managers asking me for people who’ve been involved in change and implementation rather than the status quo,” he says. The opportunities to both advance one’s career in procurement and provide value to an organization continues to grow as the field matures. To do so, practitioners must continue to develop skills, keep abreast of industry developments and stay connected to industry associations such as SCMA. B2B
Our financial supply chain management solutions can help manage working capital more effectively while reducing risk and increasing productivity at all stages of the supply chain. Wherever you do business, we’ve got the worldwide expertise to help your organization compete on a global scale. Visit our team of Supply Chain Management Specialists at the SCMA National Conference from June 11 – 13 in Edmonton, Alberta.
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MAY 2014 | 13
SCMA 2014 National Conference
Feel The Energy In Edmonton Supply chain professionals gain a competitive advantage at SCMA 2014 national conference
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rom the oil sands to the northern lights, to the people that call the province home, Alberta is awash in the kind of vibrant energy that drives business success. Join your SCM colleagues from across Canada to harness the power of collective knowledge and feel the energy that drives today’s most prosperous companies. Optional Pre-Conference Seminars How To Avoid Service Contract Disasters Wednesday June 11, 8:30am-4:30pm Maureen Sullivan, president of NECI National Education Consulting Inc, looks at managing service levels with contractors already selected via competitive procurement or direct award. Building the Lean Fulfillment Stream: Supply Chain and Logistics Management Workshop Wednesay June 11, 8:30am-4:30pm This workshop teaches how to apply lean to the supply chain and logistics.
Thursday, June 12, KEYNOTE SPEAKER—8:15-9:15am Ferio Pugliese is president of WestJet Encore, a new low-cost, regional carrier that began operations in June, 2013. Previously, he was executive vice-president, people, culture and inflight services at WestJet where he oversaw all aspects of core people management programs.
Education Sessions—10am-11am • CASE STUDY—Improving Productivity and Efficiency: The Never-Ending Journey • SRM a Differentiated Strategy • Taking Control of Public Procurement! • Is Your Organization’s Supply Department “Fully” Legitimate? KEYNOTE SPEAKER—1:30-2:30pm Dr. Kimberley Amirault-Ryan is the Canadian Olympic Committee lead of sport psychology for the 2014 Sochi Winter Olympics; the performance consultant for the Edmonton Oilers and the Canadian Women’s Olympic soccer team. 14 | MAY 2014
Education Sessions—3pm-4pm • Proactive Integration of RFID into Your Material Management Strategy • Managing a Multi-generational Workforce • CASE STUDY—Creating Supply Chain Visibility in the Commercial Construction Industry • Building Sustainable Supply Chains as Drivers for Development and Risk Mitigation • Supply Chain Success Factors in Project Centric/Project Manufacturing Companies Friday June 13 KEYNOTE PANEL DISCUSSION—8-9am Evaluating Alberta’s disaster relief supply chain strategy preparedness and deployment in the 2013 flood relief effort. SCMA has assembled an expert panel of supply chain disaster relief professionals who managed disaster relief efforts during the 2013 Alberta flood. EXTENDED EDUCATION SESSIONS—9:15am-10:15am • The New Rail Legislation—What it Means for Shippers • Optimizing the Freight and Transportation Supply Chain through the Use of Collaborative Tools • Improving the Cash Conversion Cycle—How to Optimize Your Supply Chain Processes • Innovative Strategies to Improve Inventory Management and Capitalize on Obsolete Assets • Procurement Analytics: The Art of the Possible
EXTENDED EDUCATION SESSIONS—11am-12:30pm • The Role of Rail in Supporting and Enabling Supply Chain Excellence • Meeting the Demand of Supply Chain Professionals • Value Based Project Delivery—ASU Best Value: Increase Your Leadership and Management Success • Sustainable Purchasing—Evaluation Score Cards 101 • Best Practices for Inclusion: Establishing a Supplier Diversity Program—Hosted by PurchasingB2B KEYNOTE SPEAKER—1:30-2:30pm Money, Wealth and the Pursuit of Genuine Happiness Mark Anielski What makes us happy? Mark Anielski, author of The Economics of Happiness: Building Genuine Wealth, will explore the relationship we have with money and wealth and how it relates to happiness. Beginning with the earliest Greek philosophers, he will weave a story that leads to the question: can we orient our lives, organizations and nations towards well-being and enduring happiness? PurchasingB2B.ca
2014 CAMSC Diversity Fair
Diversity And Connection Advice for buyers and suppliers alike offered during the 2014 CAMSC Supplier Diversity Fair By Michael Power
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he story of supplier diversity in Canada is the story of growth. That was one of the messages from Cassandra Dorrington, president of the Canadian Aboriginal Minority & Supplier Council (CAMSC), during her welcome remarks at the organization’s 2014 Supplier Diversity Fair, held April 15-16 at the Allstream Centre in Toronto. For example, said Dorrington, the number of diverse suppliers listed with CAMSC has increased since the organization began 10 years ago and now stands at 450. “That says there’s an incredible talent in this Canadian environment that we can draw from, that we can grow with,” she told the crowd of both suppliers and large buying organizations represented at the fair. Each year, the Diversity Procurement Fair aims to support supply chain diversity by connecting aboriginal- and minority-owned business to major corporations through the delivery of ‘access to success’ and best practice workshops, strategic sourcing roundtables and one-on-one meetings between suppliers and purchasing managers. The event featured best practice workshops, strategic sourcing roundtables and one-on-one supplier meetings. For example, the fair featured a panel called Accelerating Opportunities: Stories of Success. Supplier diversity means partnership, growth and competitiveness, according to Paula Nedeljkovic, director of MRO at Flex-N-Gate, who sat on the panel. “It’s truly a partnership and it’s about helping our minority suppliers grow and become a part of Flex-N-Gate’s strength—that makes us a strong, diverse supplier for the big three,” said Nedeljkovic, one of three participants on the panel, which was moderated by Lori Benson, strategic sourcing director at Ernst & Young. Nedeljkovic outlined her organization’s supplier diversity program. She noted that Flex-N-Gate looked at their supplier base about five years ago to determine who among those suppliers qualified as diverse. From there, the organization investigated what they needed from those suppliers. “Once we had the needs, then it was a matter of, ‘let’s set the goals,’” she said. “How are we going to achieve the needs that we’ve identified?” For her organization, involvement with CAMSC has meant exposure and opportunity, said panelist Simmi Sakhuja, owner of Stelfast. Although that involvement hasn’t translated into a “laundry list of quotes and lots of pricing going out and lots of grabbing of orders”, it has meant several opportunities to get to know the Canadian marketplace, she noted. Fellow panelist Poonam Kathura, owner of Trillium Talent Resources Group, offered advice to diverse suppliers and purchasing organizations looking to use them. For suppliers, networking is key, she said. From there, patience and persistence are important as it can take over a year to get business even when organizations express interest in a diverse supplier’s goods and services. “Make sure that you’re conveying the challenges that you’re facing to the corporation itself, sharing with them, and creating that part-
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nership,” Kathura said. “Making sure that we understand their business and that they understand our business is important.” Conversely, a major challenge that diverse suppliers face is learning about opportunities at large corporations, Kathura said. She encouraged corporations to list opportunities with CAMSC so that it could be promoted among diverse suppliers. Sakhuja added that it’s helpful when corporations are able to bring diverse suppliers up to speed on what the company’s expectations are. That allows those suppliers to put their best foot forward. “With any new supplier or any new opportunity there’s a learning curve,” she said. “The more time that we get to gather some of the information, that becomes really beneficial. The amount of time you spend up front will lead to a lot more gain.”
“With any new supplier or any new opportunity there’s a learning curve.” ~ Simmi Sakhuja
The panel wasn’t the only example during the fair that either suppliers or buyers got advice on how to deal with each other. During an education session on strategic sourcing of logistics and transportation, Debra Quade, supplier diversity manager for The Kellogg Company, noted that while some decisions are cost-driven, the organization looks for innovation in potential suppliers. Diverse suppliers can register in Kellogg’s system, as well as attend networking events or trade shows to raise awareness of their goods or services. “If you’re not letting us know you’re out there you’re not going to be recognized because we don’t know you’re there.” B2B
MAY 2014 | 15
Head Procurement Policy
Balancing Act byline
Cirque du Soleil introduces policy to its procurement and supply chain functions By Michael Power
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t the best of times, procurement can be a balancing act. The needs of the organization, internal clients, suppliers and others can all play a staring role in the way practitioners deploy their craft. But is the process more challenging when trying to implement procurement standards and procedures in an unconventional environment where creative freedom is the rule? That’s the job for Nadia Malek, senior director of supply chain at Cirque du Soleil. Malek, who manages 25 people in areas that include customs compliance, logistics, travel management, strategic sourcing and procurement, described how she is in the midst of deploying policies and procedures at the company during the Procurecon Canada conference, held in Toronto March 17-19. The conference featured a range of topics and brought together speakers from across Canada. Malek spoke during the first day of the three-day event. Practically an institution in entertainment mega-hubs like Las Vegas, Cirque du Soleil is as large and well-known as it is unconventional in what it procures. The entertainment company sees about 45,000 spectators each day, or 270,000 per week, Malek told the Procurecon audience. The company employs about 4,000 people from over 40 countries and generates about US$810 million in annual revenue, she said. Based in Montreal, it was founded in 1984 by Guy Laliberte and Gilles SteCroix, two former street performers. During her Procurecon presentation, Malek broke down the offerings from Cirque du Soleil into three types of shows: arena shows, big top shows, and resident shows. Each has a different P&L and runs its operations separately, Malek said, however there is a shared services approach—with HR, IT and in some instances procurement—featuring this shared approach. At this point, procurement at Cirque du Soleil was experiencing the awkwardness of puberty, Malek told the audience. When she began working there, Malek noted that she was hit with something of a culture
shock. The company lacked a formal vision for procurement and supply chain, so her team had to write one. “It was important for us to sit down as a team and say, what do we stand for? If we’re going to deploy policy, if we’re going to go out and meet everybody in the organization and say ‘hey, procurement’s here,’ what are we going to tell them?” So Malek and her team sat down together and wrote a vision. The vision noted that “supply chain, procurement, strat sourcing—all of our teams—want to provide a strategic, ethical and service-driven approach,” Malek said. As well, those teams would provide not only good service but also value for money that extended beyond simply acquiring the least expensive goods. Rather, the vision focused on providing best value possible for clients and enabling the organization to reach its goals. At the same time, the vision had to include a risk management component. Once they had a vision in place, Malek and her team were able to write a policy. Although Cirque du Soleil had a 17-page policy already in place, it “had no teeth,” Malek said. The non-mandatory policy was not well known within the c omp a ny, and
although some knew it existed many assumed it didn’t apply to them, she said. Three departments owned the policy, with finance, procurement and social responsibility all signing off on it. At the same time, Cirque du Soleil had 172 people who had access to creating suppliers in the company’s database. That database also included 42,000 suppliers, although Malek pointed out that not all of those were active and some were “duplication and bad data.” There were no standardized forms, no standard templates for request for quotes and no policy or governance surrounding how and when to use them.
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Head
This time, when the team worked to formulate a procurement policy, they decided it had to be a one-page document. “How are we going to put 27 pages into a one-page procurement policy?” Malek said. “So we said, everything that has to go on that page has to be mandatory. You will, you shall, and if you don’t, something is going to happen. So we wrote it very high level.” The policy states that purchases over $250,000 must go through procurement. For those doing purchases themselves, anything over $10,000 requires three bids (with the budget owner deciding which one gets chosen). If a budget owner chooses a bidder potentially not the best value for the organization, then that choice must be justified.
with the policy. Malek then arranged to attend staff meetings for all the senior executives’ departments. As well, each VP explained to their staff that the procurement policy was corporate policy coming from the top of the organization. Throughout the process, communication was essential. “We had to talk their language and that’s what the story is really about—talking their language and sharing your vision and making sure they understand why you’re doing this.” For the next component of the policy deployment—collaborating with peers— Malek began not only giving presentations but meeting with members of the organization to talk and get to know them. She stress ed that she respected their expertise in their fields, Malek told the audience. But she also explained to those stakeholders that she was an expert in pro—Nadia Malek curement areas like contracting and negotiating. “So have us work together so we can sit at a table and get it done together,” she said. “It was a whole experience of developing those relationships that made a huge difference.” The third part of the deployment, engaging the masses, Malek said that if people believe in your vision and know its value, there’s a better chance they’ll want to work with you. There was resistance within the organization, she noted, and communication remained important. Some expressed concern that procurement would get involved and then leave, effectively leaving the stakeholder “stuck” with a supplier. Or, others said they had done just fine without procurement’s involvement. While the deployment hasn’t been perfect, Malek said she has learned skills like developing the ability to influence. “So spend more time trying to deploy it (the policy) and getting the buy-in than writing it,” she advised. B2B
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Three-pronged approach From there, the procurement policy had to be deployed, Malek said. Although Malek expected that Cirque du Soleil would be open to adopting the new policy, this wasn’t necessarily the case. People within the organization could be resistant to change. Malek’s approach to getting the policy adopted had three parts, she noted. Those parts were: align the company’s executives, collaborate with peers, and engage the masses. To get the company’s executives on board with the policy, Malek met with Cirque du Soleil’s senior management team. To explain procurement’s value to the organization, Malek asked the executives how many tickets needed to be sold to hit a certain amount of gross profit margin. She then explained that that amount was the same as what procurement saves re-negotiating certain contracts. She also stressed the importance of the entire executive team being aligned with the plan. After some discussion the executives agreed to move forward
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Cover and inside photos: Courtesy of Cirque du Soleil
“That’s what the story is really about—talking their language and sharing your vision and making sure they understand why you’re doing this.”
MAY 2014 | 17
Addressing issues affecting Canada’s public procurement professionals
Going Public Argentus offers advice for those looking to break into the public procurement realm By Sam White
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s a specialty procurement recruitment firm, Argentus works with a wide variety of public sector clients. Every day we give advice to procurement professionals about how to break into a career in the public sector, and how to advance once they’re in it. In this article, we share some of that advice with PurchasingB2B. Public sector procurement is a different animal from procurement in the private sector, especially in Canada. There is more protocol and regulation around public sector procurement, and this has implications when it comes to your job search. The Broader Public Sector Procurement (BPS) Directive of 2011 is the government’s attempt to ensure a fair, open and competitive procurement process with taxpayer dollars. Many public sector procurement departments are looking for experience specific to the BPS when they are doing their hiring. They want to see that you have an understanding of how to avoid conflicts of interest and how to follow a specific procurement process that
18 | MAY 2014
allows competition. Experience with BPS is the biggest challenge when trying to make the switch from private to public. Try looking for webinars that provide an overview of BPS, and research government documentation to get a sense of what BPS is all about.
“Organizations value people who can act strategically to reduce a vendor list or centralize a procurement department while following BPS.”
Beyond general background research, there aren’t any courses or certifications that you can take independently to learn BPS—but don’t despair. It’s worthwhile to target organizations that work at an arms-length from the government. Corporations such as hospitals, universities, WSIB, and the Alcohol & Gaming Commission of Ontario are less stringent about having BPS as required experience. They’re more willing to train it, and are generally less formal in terms of their hiring processes. Once you’ve gotten that BPS experience under your belt you can make the move into government and municipal procurement. The combination of BPS and private sector experience is a very strong asset. Organizations value people who can act strategically to reduce a vendor list or centralize a procurement department while following BPS.
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Consider contract One huge trend we’ve noticed in public sector procurement is a move towards a contingent staffing model. Lots of organizations are bringing on temporary, skilled procurement professionals on a project-by-project basis, for example to help clear RFP backlogs, to help develop new key performance indicators or new ways of measuring vendors against a statement of work. Often, the hourly pay rate is higher for these roles than for permanent positions. It’s not quite as secure as full-time, but contracts can be a great way to make the move from private to public because they tend to be less stringent about BPS experience. And it can also be a great stepping-stone to a permanent role.
Key skills Whether it’s for a permanent or contract role, there are a few key skills that public sector organizations are looking for. Business writing is key, specifically the ability to write RFI’s (Requests for Information), and RFQ’s (Requests for Quotation), and RFP’s (Requests for Proposal). Experience with contracts and vendor management are strong assets. As well, public sector procurement
The Canadian Public Procurement Council
Our Mission
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organizations are also looking for proficiency with software used to issue and evaluate bids and responses, for example Biddingo and MERX.
Public sector transparency as a resource Public sector procurement is more transparent, and that’s something you can use to your advantage when you’re interviewing for a role. It’s always a good idea to research an organization before you interview, but if you’re interviewing for public sector procurement you can use publically available information to get a leg up. For example, go to the organization’s website and find examples of previous RFPs to get a sense of their procurement needs and processes. Find a project that’s similar to one you’ve done in the past and reference it during your interview. How were the projects similar? What cost savings or efficiencies did you identify? This gives the organization specific evidence of your expertise. B2B Sam White is research and marketing manager at Argentus Talent Acquisition, a Toronto-based boutique recruitment firm that specializes in supply chain management, procurement, logistics, operations and planning.
The CPPC is the leading voice for professionals involved in public procurement in Canada. Our members are organizations at the federal, provincial/territorial, and municipal levels of government, and in the health care and education sectors and Crown Corporations. • • • •
Promote dialogue and networking; Facilitate information and knowledge exchange; Develop approaches to common issues; Provide Leadership for the resolution of shared challenge. MAY 2014 | 19
The Multi-Stage Procurement In the public sector, the multi-stage procurement process means price evaluation is only between the highest technically scoring bidders shortlisted in the RFQ by Mairi Curran
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s a procurement professional, why would you put your client, industry and yourself through the long and arduous multi-stage procurement process? One reason might be when the project is very complex—for example, an enterprise-wide transformation project or when there is a risk of bidders who may have low-cost, low-compliance offerings, or when the market is not fully known. It can be very difficult for a high scoring technical proposal to overcome a very low cost proposal in the usual evaluation of technical vs. price, in which lowest cost sets the bar against which all other price proposals are measured. In most public sector RFP processes, the division of price and technical is normally 40/60 or 50/50. The price envelope is opened last, the numbers calculated and the highest scoring bidder wins. If a bidder has grossly underestimated their price due to lack of experience, they can easily overcome a low technical score by establishing the benchmark upon which all other price proposals are measured and overcome bidders with high technical scores. The potential risk to the buyer’s business outcome is high.
20 | MAY 2014
Narrowing the gap A multi-stage procurement process can narrow the actual end result competition to those bidders with proven capability to undertake the project. A stage 1 request for qualification (RFQ) process can create a shortlist of bidders based solely on capabilities and experience. There is no evaluation of cost in the RFQ process. Therefore, the RFQ narrows the subsequent request for proposals (RFP) competition of technical and price to only the top scoring technical proposals. It’s important not to duplicate evaluation criteria in the RFQ and RFP. The RFQ should look backwards—evaluating past experience, corporate knowledge and capability, tools, processes and methodologies, centres of excellence, certifications, accreditations and so forth. Only evaluate the prime contractor in the RFQ. In the RFP, look forward, evaluating their proposal to meet the actual requirement, for example their approach, solution (e.g. technology), their project team, implementation plan, technology blueprint, proposed services such as transition-in, training etc. In the RFP, subcontractors can also be evaluated. This is a key distinction as to what differentiates an RFQ from an RFP. In a public sector procurement process, where
the last thing to be evaluated is price, this multistage procurement process means that the evaluation of price is only between the highest technically scoring bidders who were shortlisted in the RFQ process. This minimizes the risk of the baseline price score skewing the evaluation by being set unreasonably by a low cost bidder with a technically inferior proposal. A good example of where the multi-stage process is beneficial to both the bidding community and to the client is on highly complex initiatives, where the effort involved by both parties is significant. On the one hand, a bidder has better odds of being successful if it has been shortlisted to a subset of potential participants. Being one of, say, four qualified bidders means the vendors tend to be more committed to participation in a complex RFP response that may include product demonstrations and vendor interviews and that has a real cost in terms of committing resources to respond and participate. Within their internal organization, it’s seen as a better opportunity and more likely to have executive backing. From the buyer’s perspective, not only is there a benefit to creating a shortlist of only the highest technically scoring bids from which there will be a successful bidder, but the buyer will be better able to manage the not insignificant planning and scheduling of evaluation activities that take place once the bid open period closes. Structuring the RFQ to solicit focused responses that are manageable to evaluate and which results in a top few qualified bidders is way more efficient for all concerned, especially when product demonstrations and vendor interviews are included in the selection process. In addition, the RFQ uses 100 points to evaluate the quality and experience of the shortlisted bidders, allowing these evaluation criteria to be excluded from the RFP points where the 100 points has to include a percentage for the written proposal, price proposal and perhaps product demonstrations and interviews. In summary, by shortlisting who can actually be successful in the RFP process to the top scoring bidders from the RFQ stage, the risk to the actual business outcome is managed within the bounds of a fair, open and transparent procurement process. It can also be a useful and defensible way of managing a complex initiative. B2B Mairi Curran is a management consultant at PPI Consulting Limited in Ottawa.
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More choices. Everything your business needs to succeed.
In This Issue President’s Message Making more happen Behind the scenes Building workspaces Sustainability Office supply variety Product focus
page page page page page page page
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Long-Life System Reliability Unison Toner’s unique low-friction qualities increase toner flow, and contribute to its ability to transfer efficiently to the page. Unison Toner reduces internal wear on long-life components and protects the print system.
Amazing Sustainability Unison Toner takes a revolutionary leap forward in sustainability. According to a Life Cycle Study by an independent firm, Unison’s cartridge technology has a per-page carbon footprint that is as much as 46% smaller than Lexmark’s largest competitor.*
Innovative Shake-Free Print System Design Unison Toner is technologically advanced. It has a unique formulation with special characteristics and performance attributes. Unison delivers consistent print results without shaking—and less toner waste.
President’s Message Michael Zahra, President, Staples Advantage Canada
2014
is a very exciting time for Staples Advantage Canada. We are six months into a major reinvention. This has two components. First, there is a rebranding under the tagline “Make More Happen”, which delivers the message that we’re here to provide not just office products, but all of the products that businesses need to succeed in their own evolution. Secondly, we are engaged in what we call Fund the Future, which is all about ensuring, through redeployment and reinvestment, that we continue to invest in capabilities that drive value for our customers and deliver on our brand promise. Organizations today are doing a growing portion of their procurement online, and the virtually unlimited choice that e-commerce affords has become a reality of our business. So we will be using the web to dramatically expand our product choices, especially in areas where we’re seeing high growth, including cleaning and maintenance, technology, healthcare, and personal protection equipment. We will have hundreds of thousands of products easily available online for our customers. We will expand our product categories to include items that people never dreamed they’d find at Staples—power tools, cleaning equipment, medical/surgical supplies , industrial supplies, MRO (maintenance, repair, and operations) products —as I like to say, everything including the kitchen sink. In Canada, we’re off to a great start. We’ve been expanding our product range for several years under our Beyond Office Supplies Sales (BOSS) initiative. Collectively in Canada, our online procurement platform, eway.ca is the largest ecommerce platform in Canada. But our real advantage, which puts us in a unique position, is that we have teams of people that back up the products that we sell. This is where we differ from a company like Amazon, which is what people often think of when they buy online. Amazon is strictly in the business of selling and shipping product. Consumer needs are very different from the needs of businesses. We’re going to differentiate on the basis of great account management and customer service. Our approach is more hands on and consultative.
We have people across Canada who will come and visit you, do an audit of your needs, advise you on sustainable options, handle your support issues, or respond to special requests. We have expertise in technology, cleaning products, office furniture, and health and safety products, and our teams are fully in tune with the needs of Canadian businesses. We have our own delivery infrastructure, which means our people will already know where your loading dock and your elevators are. All this has positioned us to expand into areas where businesses expect their vendors to provide support in addition to product. We provide safety gear for the oil and gas industry and equipment for the mailroom and loading dock. Last year we became licensed by Health Canada to provide surgical and medical supplies to hospitals, clinics, and other healthcare facilities. None of this would be possible without having a team of experts that can back up these products. Of course, this is not a static environment for our associates, and we are an organization that is constantly evolving. We support associate development through a series of programs that we call associate engagement. These are delivered through online tools, mentoring, and coaching. Diversity has been part of our culture for many years, and we continue to develop our programs there as well. Recently we’ve incorporated programs to help introduce our newest generation, the Millennials, into the workforce. And we continue to encourage more women to move into management positions—a program that has had a lot of success. Sustainability is another pillar of our company culture that we have nurtured for some time. This isn’t just about learning about sustainable product choices—we encourage our associates to engage in activities that support sustainability and community improvement. Therefore, the reinvention of Staples Advantage Canada, in many respects, involves things we’ve been doing for a while. And as I have emphasized in the past, it’s all made possible by the excellent team of people that we are fortunate to have, and the culture that we’ve created in the organization. Staples Advantage Advertorial Feature
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Making more happen for Canadian businesses
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magine an online sales giant with literally hundreds of thousands of product choices to meet every possible business supply need, combined with a strong local presence that includes dedicated account representatives, delivery teams, and customer support. While this might sound a little too good to be true, this is the vision for Staples Advantage Canada, and many of the pieces are already in place. As a growing number of Canadian businesses turn to Staples Advantage as their single source, the product range will help ensure that customers will continue to be able to meet all of their needs through one business relationship. The range extends far beyond traditional office consumables, and now includes furniture, facilities products, surgical and medical supplies, and a rapidly growing range of technology products. “We’re going through a very exciting period in our evolution,” says National Director, Marketing, eCommerce & Communications Scott D’Cunha. “What we’re doing is positioning ourselves as a business that can enable other businesses to achieve their own goals by providing a single, reliable source for all their business needs.” Why so many? “As we move to millions of SKUs, that’s virtually everything you can imagine,” says D’Cunha, “and you can find it at a good price at Staples Advantage. I think that’s a huge benefit as organizations become leaner, and as procurement and payment processes need to be simplified.” With this vast online offering, it is tempting to compare Staples Advantage with Amazon. As D’Cunha points out, that comparison tells only part of the story. “The big difference in our value proposition is we not only have a vast number of SKUs available online—we’re also providing things that other retailers don’t provide. For example, we provide the account management components. We have real people who work on your account and help you identify your needs, and then procure and source those needs for you.” The Staples Advantage online system also creates customized reports that allow managers to monitor and control their spend. For example, managers can track their spending in various product categories, making it easier to allocate
spending. Sustainability targets can be tracked as well—a company seeking LEED certification could track their compliance in all their areas of purchasing and access a single report. The emphasis, says D’Cunha, is on optimizing the online buying experience to suit the needs of businesses. With thousands of personal relationships, Staples understands the needs of purchasing professionals, and has been able to evolve a system that’s ideal for Canadian businesses. The numbers tell the story—customer satisfaction is high, and the company boasts a lower return rate than its competitors. D’Cunha expects that as organizations become more aggressive about consolidating their purchases, Staples Advantage will be ready to meet their exacting requirements. “We have to continue to build on what we have—we’re not resting on our laurels,” says D’Cunha.
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Staples works behind the scenes to serve a wider range of businesses
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hen a new customer signs on with Staples Advantage, internal procurement teams immediately get to work, ensuring that the new customer will be able to order 100 percent of the products they need in a timely manner and at a competitive price. In this fashion, the company takes on thousands of new SKUs every year. This reflects the new reality as Staples Advantage moves forward with its reinvention. “The new way is at a much faster pace, so there’s more immediacy,” says Margaret Blake, National Director of Merchandising & Procurement. “When we take on a new customer, for instance, we have an onboarding timeframe, and the expectation is that we’ll execute flawlessly—all the products we said we’ll have will be available for the customer on day one.” Many new additions are the result of the wider mandate that Staples Advantage has assumed—to be
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able to supply the needs of virtually any workspace in Canada. Instead of a traditional office, a new customer could be a long-term care facility, a dental office, or a building maintenance company. “Yesterday’s office environment was somebody sitting at a desk or a cubicle, but today’s office environment has changed,” says Munawar Quraishi, National Director of Specialty Products. “We have people who have offices in the field—for example, a site manager in Ft. McMurray. He drives around in a truck all day, and likely needs a tablet and laptop for mobility. The keys to success here are e-commerce and collaborating partnerships. With Staples Advantage’s powerful e-commerce platform, the addition of necessary SKUs occurs rapidly and seamlessly, and integrates with the e-commerce infrastructure of partners like Ingram Micro, recently signed on as a Staples Advantage technology partner. This gives Staples Advantage’s customers an unprecedented range of technology options. “In the consumer world you’ve got Amazon, but there’s a great opportunity in the B2B markets for someone that can provide an extensive assortment,” says Quraishi. “We’re the people that can find the product that you want in the B2B space.” All this means that Staples Advantage Canada has become an evolving organization. For example, the process of getting licensed under Health Canada to provide healthcare products has helped teams get up to speed on items such as defibrillators, hospital beds, dental equipment, and surgical supplies. Then there’s the longer-term picture, where more traditional
methods come into play. Blake, a 30-year procurement veteran, works tirelessly with the vendor community to build strong par tnerships that provide the best outcomes for Staples Advantage’s customers. “I’m ver y big on relationships, and on win-wins with vendors,” says Blake. “They readily invest in us through seeing what the long term return will be for them.” Blake ensures that there are no compromises when it comes to getting the price levels that customers rely on. “I’m very results oriented,” says Blake. “My job is to negotiate the best deal on behalf of our customers. Our global purchasing power helps us to do that.”
“In the consumer world you’ve got Amazon, but there’s a great opportunity in the B2B markets for someone that can provide an extensive assortment.”
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Building workspaces that work
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tudy after study has shown that people are most productive when they work in environments that are safe, comfortable, and visually pleasing. Taking all the steps to furnish an office properly, however, can be stressful, especially when timelines are tight, plans are not solidified, and opinions are all over the map. At times like this, the last thing an office manager needs is to count on a vendor that he or she has never worked with before. The need for continuity encouraged Staples Advantage to become a national supplier of commercial-grade furniture. Today, many people are surprised to learn that Business Interiors by Staples, Staples’ dedicated furniture division, is Canada’s largest full service office furniture distributor. Commercial-grade furniture is, unlike its retail counterpart, made to order, and has to be carefully specified in advance. Getting all the materials, colours, and ergonomics right is a professional job, not to mention the importance of matching the furniture to space and workflow conditions. To meet this need, Business Interiors by Staples has a dedicated staff of furniture specialists. Sandra Vyse, National Director, Furniture at Business Interiors by Staples, heads up the Canadian furniture team. A trained designer who now sits on the Program Advisory Committee of her alma mater, Fanshawe College, Vyse brings her designer’s eye to workspaces across Canada. The key to building workspaces where people can succeed, says Vyse, is having a consistent approach that takes into account not only the customer’s current situation, but their future direction. “For me it’s about understanding the space, how it’s going to be used, and how it might change over the time that they’re going to have the furniture,” says Vyse. “The one constant is that every situation is different. There
can’t be a cookie-cutter approach.” For example, Business Interiors by Staples works with the Loblaw companies, and recently furnished two subsidiaries, PC Banking Group and Joe Fresh. As Vyse points out, the business environments were completely different. “You can’t put the same kind of furniture that would go in their corporate banking office as their clothing retail division,” says Vyse. “In each case, you have to look at the workflow, and what employees have to do to remain as productive as possible.” Even the conventional office is changing. Many workers no longer remain in a stationary workspace for the entire day, but move around the office, from a cubicle, to a casual meeting space, to a common work area with large tables. All these create more questions that have to be asked before even considering product options. And it’s not just about functional requirements—the customer’s preferences for style, colour, and ambience are also critical. Often the conversation includes architects or designers. For Vyse, this is all part of the customer conversation. “You’re taking their ideas, their needs, and their requirements and putting it all together into a logical plan,” she says. “It’s a dialogue— often we’ll say ‘if you want this, you should consider this.’ It’s about listening carefully and making sure they’re going to be able to do what they need to do within that space.” After all is said in done, the end result is what matters to customers. “Our customers look to us for that, so we take this responsibility very seriously,” says Vyse. What are the trends for office décor in 2014? “Walls are coming down, lots of glass, white, clean lines and clean finishes, but with pops of fun and colour. So you might get a collaborative area in cobalt blue or an interactive area with a bright pop of colour.”
Photo: AllSteel
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Staples Advantage provides leadership on the sustainability path
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hen it comes to formulating a sustainability strategy, it is easy to get confused. What with green product mixes, recycling, energy use, compliance and certifications, and employee involvement, sustainability is not something you can turn on like a switch.
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Susan D’Souza, Senior National Manager, Quality and Sustainability at Staples Advantage, knows these complexities inside out. A passionate sustainability advocate, D’Souza has helped navigate the company’s sustainability journey, which has won the company numerous awards, including the Canadian Office Products Association (COPA) Community Leadership Award of Excellence for the past four consecutive years and the Excellence In Corporate Responsibility (ECR) Award by Green Living Enterprises. The work here is essentially about people. “What I do is two-fold,” says D’Souza.
“I make sure we leverage our associate engagement, because our associates are the ones who really drive our initiatives. And the second key is looking for ways in which we can partner with our customers, and how we can maximize our efforts together.” This is a natural for Staples Advantage, which operates under the belief that selling products to customers is only part of a long-term relationship, and that the key deliverers of the benefits from that relationship are Staples Advantage’s employees. Staples Advantage provides thousands of sustainability product choices for the entire facility, from paper to recycled toner to non-toxic cleaning fluids which can all be found in their Green Guide. IRIS™, an online interactive tracking tool used to track progress and monitor purchases that meet environmental standards, help companies keep their use of consumable products in line with their sustainability goals. Over the years, the IRIS™ will provide a visual narrative of the company’s progress towards sustainability. However, the customer relationship goes much further than products. “We go beyond the transactional relationship,” says D’Souza, “and partner with our customers on a long-term basis”. The key to making a real impact is going beyond the walls of Staples and aligning sustainability efforts with those of their customers. “When I go out on customer visits, I look at what community and environmental initiatives they are doing, how they are making an impact, and how can we assist or partner with them,” says D’Souza. “Often we get our associates personally involved, working side-by-side with customer employees in community and environmental initiatives, such as building green roofs, planting trees, or creating green playgrounds.” D’Souza also shares best practices with customers around competing for environmental awards, achieving ISO 14001 environmental registration, or simply taking the first steps to get started on a sustainability campaign. “There are a lot of customers that are pretty Sta-
new to going down the environmental journey,” says D’Souza. “So we help them start their sustainability committees - a great first step.” Sustainability is not just a program at Staples, but an integral part of the work that the company does, the values Staples associates live by, and how Staples interacts with customers.
“We go beyond the transactional relationship and partner with our customers on a long-term basis.”
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Variety is key to traditional office supplies
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lthough we live in a world dominated by technology, traditional office products are still very present in the average Canadian business. Today, however there’s a new twist—companies are offering more personal choice to their employees. “We’re seeing more individual preferences in terms of these traditional products,” says Steve Hamilton, Category Manager, Office Products. “Instead of standardizing, companies are letting their employees choose. This could be a lot of things – brands, colours, sizes, and styles. Everyone has different tastes and preferences, and we seek to meet all these needs.” L086_14_Quartet_PurchasingB2B_ACCO copy.pdf 1 03/04/14
Multi-packs, which contain variety assortments, allow companies to order in quantity while satisfying individual preferences. Another trend is innovative new products that serve more than one function. Some examples are a 1:47 PM pen that has a stylus on the other end, a pencil sharpener with an eraser attached, and a binder that can serve as a clipboard. Regardless of the product type and category, there is the constant attention to sustainability. “For everything we carry, there has to be a recyclable version for people who want green,” says Hamilton, echoing a theme that is central to the Staples Advantage mandate. Introducing New Prestige 2 Whiteboards!
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• Available in a wide range of sizes and finishes to compliment any décor • The full length tray provides additional access to dry-erase markers and other accessories. • Prestige 2® Connects™ Accessories provide the right tool for any need
“If you go through a typical office, you’ll never see two people using the same pen.”
* Accessories sold separately
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gazillions of new products everyday
luding c n i Everything but the kitchen sink. You might be surprised at what you can buy at Staples Advantage. Every product your business needs to succeed. We’re adding new products every day. Visit staplesadvantage.ca Look for exclusive offers when you visit staplesadvantage.ca/purchasingb2b
Above Board Fairness services can help ensure openness and transparency in the procurement process By Bill Moscan
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his article provides an overview of fairness services including what fairness means, the fairness commissioner’s role, the advantages of fairness in procurement and motivating factors behind the use of a fairness commissioner. First, let’s understand what fairness means and what it involves. It refers to three fundamental elements: • Openness: procurement documents are readily accessible to bidders and written in an unbiased and inclusive manner. This attracts bidders and helps them determine if they’re qualified to provide the goods or services; • Transparency: the disclosure of facts, background and requirements associated with the procurement documents and process. Clearly articulating the procurement objective, deliverables and how they’re weighted; how responses will be evaluated and scored helps bidders determine if they can compete and what information they need; • Fairness: application of fair, consistent and unbiased treatment of bidders. The documents, evaluation of proposals and sub-processes have the goal of being open, fair and transparent. A fairness commissioner is an independent, neutral observer who monitors the process from document development to the announcement of a successful proponent. They are advisors to the procurement process whose goal is to ensure the buying agent does the process with integrity, free from bias in an open, fair and transparent manner. There are different categories of fairness services. Each has a different responsibility level and some will say that a main differentiation is when the consultant is introduced. Fairness monitor • Basic level of service, usually engaged after issuing the RFx and provides high-level oversight and advice during the procurement process. Once the process is complete, a fairness monitor usually provides a letter outlining what they witnessed and confirming that the process met an acceptable standard of due diligence.
Fairness advisor • Mid-level service; more involved in the procurement process; acts as advisor to the process. • Services start during document (RFx) preparation and continue through evaluation to award notice. • Advice focuses on problems stemming from deviations from the process prescribed in the RFx. • Advice provided as the process unfolds; the client
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is wise to address any concerns raised. • A fairness advisor provides a letter outlining observations and what measures were taken to ensure compliance with established protocols.
Fairness commissioner • Comprehensive level of service; plays a more active role in the procurement process and participation usually begins before the release of the RFx and continues through all procurement stages. • Observes interactions with bidders during the process including correspondence, addenda, questions and answers, site tours and vendor briefings. • Reviews evaluation materials and attends the consensus scoring. • Attends and observe interviews or demonstrations and price evaluation. • The reason for this hands-on approach is at the end, a fairness commissioner provides an attest statement affirming the procurement process was open, fair, transparent and unbiased. Reasons to use a fairness consultant include: • Procurement risk: we tend to get involved in procurements where some risk exists. This might include the presence of an incumbent, an unusually large or complex procurement, increased scrutiny of the buying organization by their board, the media or the public and disputatious vendors. • Procurement responsiveness: likelihood of bidder participation is greater if the process is monitored by an independent observer who’s helping to ensure the process is fair, open and transparent. • More competition: the greater the bidder participation the greater the competition and the better the outcome for the buyer. Organizations often hire fairness consultants to show they’re taking measures to ensure best practices are followed. • Legal: Buying agents have a legal obligation to the bidders and a fair and transparent process protects buyers by helping ensure legal obligations. • Embarrassment: some organizations use fairness consultants to help avoid the embarrassment from a flaw in the procurement process. • Enforcement: fairness consultant can minimize the potential for corrupt practices. B2B Bill Mocsan is vice-president of Knowles Canada in Mississauga. Knowles provides a range of procurement and fairness services across Canada to all sectors including the public and broader public sector, the construction industry, the health sector plus P3 and AFP projects. Reach him at: bill.mocsan@jrknowles.com.
MAY 2014 | 37
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In this edition 42 road test
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42
Hybrids that work
46 Walmart concept
Putting sustainability on the road
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48 technology catch-up
The Infotainment challenge
Fleet Management is a special section of PurchasingB2B magazine, running in the January-February, March-April, May, July-August, October and November-December issues. It is an important resource for Canadian procurement professionals who recommend, select and manage fleet vendors and service providers. Editorial inquiries: Emily Atkins, 416.510.5130, eatkins@bizinfogroup.ca. Advertising inquiries: Dorothy Jakovina, 416.510.6899, djakovina@bizinfgroup.ca.
Excellence and opportunity NAFA’s 2014 Institute and Expo
NAFA’s Flexy and member of the year winners, left to right: Kevin Schlangen, CAFM, Jonathan Kamanns, Tracy McCann, Janice Sutton, Bruce Donovan, Keith Leech
By Emily Atkins
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n the evening of April 8, the winners of the 2014 Fleet Excellence Awards ascended the stage at the Minneapolis Convention Center in Minneapolis, Minnesota, to claim their awards. NAFA’s Fleet Excellence Awards, or the FLEXYs for short, concluded the first full day of the Association’s yearly conference, the Institute & Expo. Close to 1,400 fleet professionals enjoyed the industry awards presentation and reception following. “You are representatives of the best of the fleet profes-
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sion,” noted NAFA CEO Phillip E. Russo, CAE, as he extended his congratulations to all of the 2014 FLEXY nominees and winners. “NAFA thanks you for your commitment, dedication, and desire to move fleet and business forward.” The FLEXYs are open to all fleet professionals, whether they are members of NAFA or not. Industry leaders, acting as judges in the selection process for finalists and winners, never saw the names of nominees or the organizations they work for. Voting was 100 percent blind; based solely upon the actions and ideas listed by the nominees on their submission forms. This allowed for unbiased selection based strictly on the quality of nominee accomplishments. The winners of the 2014 FLEXY Awards are: • Outstanding Achievement in Corporate Fleet Management: Jonathan Kamanns, Ingersoll-Rand • Outstanding Achievement in Public Fleet Management: Kevin Schlangen, CAFM, Dakota County • E xcellence in Corporate Fleet Sustainability: Bruce Donovan, DeAngelo Brothers Incorporated • E xcellence in Public Fleet Sustainability: Keith Leech, City of Sacramento • E xcellence in Corporate Fleet Safety: Andy Sacha, Nestlé • E xcellence in Public Fleet Safety: Jacquie Deitch, City of Calgary • E xcellence in Fleet Leadership: Keith Leech, City of Sacramento NAFA’s Member of the Year and Affiliate of the Year were also recognized for their outstanding service and contributions to the Association. Tracy McCann,Mylan Inc was named NAFA Member of the Year. The NAFA MAY 2014 | 39
News continued from pg 23
Affiliate of the Year is Janice Sutton, Fleet Management Weekly at AIN. Fleet Management’s editor, Emily Atkins, presented the award for Excellence in Public Fleet Leadership alongside top association leaders.
Canadian update A highlight at each NAFA I&E is the dedicated Canadian session. This year Huw Williams, president of Impact Public Affairs in Ottawa, presented the Canadian legislative update. He shared his insights into the political scene, noting that history suggests the current government is not likely to get re-elected next time around, and with the Conservatives polling at minority numbers now, the prediction is probably accurate. In the automotive realm, Williams noted the federal government is introducing legislation to address the price gap between goods sold in the US and Canada. This would aim to address discrimination that’s not accounted for by higher input prices in Canada, and would apply to consumer items including cars and books, two commonly cited examples. He also mentioned the recently announced Automotive Innovation Fund, a $500 million program to support significant new strategic research. Williams highlighted two free trade deals, with Korea and Europe. The Korean deal has some Canadian automakers and stakeholders upset, with Ford of Canada and Unifor opposing it. Part of the issue with the Canadian deal is that it doesn’t include protections that were part of the US-Korea deal. The European deal, by contrast, is seen to hold promise for Canada’s automotive sector. On the green fleet side, Williams noted the Canadian government is aligning GHG emission standards with the US Tier 3 standards. These provide an 80 percent reduction in emissions over Tier 2 regulations. Analysts believe this will be good for auto prices as it will allow for standardization of equipment across the Canada-US border. As well, NRCan is shifting to five-cycle testing of new vehicles for fuel consumption with the 2015 model year. The new methodology takes into account more factors in average usage such as AC and heaters. Manufacturers have agreed to introduce more accurate window sticker labels on new vehicles after the government looked into mandatory labeling similar to the US standard. The voluntary new labels will come into effect with the 2016 MY.
Conference sessions The I&E is so rich with learning opportunities that choosing which sessions to attend is a challenge. A must-see is the annual Foreside Chat where representatives of the major automakers sit down together with NAFA president Claude Masters to discuss the state of the industry. This year Fritz Ahadi from Ford, Frank Dankovitch of Chrysler, Paul Jontig from Toyota and Ed Peper of GM made up the panel. 40 | FLEET MANAGEMENT | MAY 2014
All four were optimistic about market growth in the coming months, with expectations of good commercial demand thanks to needed vehicle replacements and pent up demand resulting from the long, hard winter. On the topic of green technologies, all four highlighted their own models and efforts to offer fuel-efficient technologies. Ed Peper from GM pointed out the growth of alternatives like CNG and bi-fuel vehicles, diesel and plug-in electrics. Chrysler’s Dankovitch pointed out his company is leveraging Fiat’s European CNG technology. For Ford’s Ahadi, an important focus is on lightweighting vehicles like the new F-150. He said “democratizing” technology to make it available to average consumers is their aim, so Ford plans to double its hybrid offerings by 2020, for example. At Toyota, it’s consumer choice that’s dictating actions, said Jontig. He said green fleets will continue to be the focus as fuel costs are the number one concern for buyers. Hybrid powertrains are the sweet spot for Toyota as far as technology is concerned. Other sessions worth noting were on right-sizing fleets, telematics and best practices for smaller fleets. Watch future issues of Fleet Management for more stories on these important topics.
Also announced at the I&E NAFA is developing a Sustainable Fleet Standard Program, which aims to increase efficiency, while reducing emissions and fuel use. “The importance of sustainable practices becomes more evident each day,” said NAFA president Claude Masters, CAFM. “By becoming more energy independent and efficient our members will extend benefits to their bottom line and their customer base.” The program will allow member organizations to assess how to enhance their practices to decrease fuel dependence and emissions, while increasing the efficiency of their vehicles, improving performance, and reducing harmful pollutants. The ability to assess and strip waste on this front will pave a road to improve performance and reduce harmful pollutants, while often also reducing costs. The new Sustainable Fleet Standard Program is being designed for two purposes: to encourage and make it easy for fleets to take the first steps, while also setting a strong framework to reward those fleets already taking real action. CALSTART, a US non-profit clean transportation organization, is collaborating with NAFA to structure the groundbreaking program. “NAFA’s central role in the f leet industry will help this program create a tipping point for sustainable transportation,” said John Boesel, president and CEO of CALSTART. “We’re working with NAFA to make sure the standard is strong, but easy to use by any f leet, whether just starting out or far down the road on sustainable operations.” PurchasingB2B.ca
MEET THE TEAM BEHIND YOUR TEAM. Behind every Ford vehicle are experienced men and women who understand the challenges of managing a fleet. Whether it’s having the right vehicle for the job, helping keep fuel and maintenance costs low, or helping ensure your employees are safe and productive, Ford Fleet is the team behind your team. Contact us at focfhq@ford.com or 1.800.668.5515
Vehicles may be shown with optional features. Š2014 Ford Motor Company of Canada, Limited. All rights reserved.
A happy union
Hybrids that make the partnership work
By Tony Whitney
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ybrids bring together two different power sources into one powertrain. We drive a sampling to see how the state of the technological union.
2014 SUBARU XV CROSSTREK HYBRID When Subaru introduced its XV Crosstrek in the compact crossover market, nobody would have complained if it had delivered a ‘watered-down’ version of what we usually expect from this automaker. As it happens, the Crosstrek is a ‘proper’ Subaru in every way, complete with the company’s horizontally-opposed ‘boxer’ engine and one of the best AWD systems in the industry. The vehicle is based on an Impreza platform, and was introduced as a 2013 model in North America. For 2014, a hybrid variant was added. It’s the first hybrid offered by Subaru. It’s also claimed to be the first hybrid vehicle in its class in North America. Crosstrek has some interestingly creative work around its quite muscular body, and probably ranks in the top two or three in this segment as far as looks go. The XV Crosstrek Hybrid uses the same 2.0-litre, 4-cylinder, boxer engine as its gasoline-only stablemate, but it benefits from an integrated electric motor, which adds useful torque and provides the fuel economy hybrid buyers expect. The powertrain uses a continuously variable transmission to enhance fuel economy and reduce pollution. The engine, motor and battery pack are located low in the vehicle, 42 | FLEET MANAGEMENT | MAY 2014
contributing to the XV Crosstrek’s excellent handling and stability. The base vehicle delivers 148 horsepower but Hybrid owners get 160 horsepower and more torque. The interior of the XV Crosstrek is very well done and not surprisingly, looks a lot like that of the Impreza. Everything’s where it should be and a large central screen provides a substantial amount of information—especially if navigation is opted for. It’s spacious and comfortable too and with the 60/40 rear seatbacks folded down, cargo room is very generous. Natural Resources Canada (NRC) lists figures for the non-hybrid of 8.9-litres/100 km city and 6.7-litres/100 km highway (manual transmission). Neither NRC nor Subaru lists figures for the Hybrid yet, but it’s expected to deliver a 10 percent economy gain over the conventionally powered model. It remains to be seen whether this economy gain brings the buyers flocking in. At an MSRP of $29,994, the Hybrid costs $5,500 more than its gas-only equivalent in basic form, but it should be pointed out that it boasts more equipment and convenience features than the entry-level XV Crosstrek. The only snag with the XV Crosstrek Hybrid is likely to be actually getting one. One major Subaru dealer told us that the allocation of vehicles to Canada this year will be quite small, but it’s certainly a crossover worth waiting for.
Toyota Camry Toyota’s Camry Hybrid has been with us for some time now, but each year new features and safety benefits are added as part of a ‘continuous improvement’ policy. Toyota has also worked hard to bring hybrid ownership within the reach of more buyers and that is no easy task, given the bewildering amount of technology involved. Our most recent Camry Hybrid tester was a top-of-the-line XLE, but it still costs less than $30,000, though options in profusion boosted the final sticker to over $37,000. An entry level Camry Hybrid LE costs $27,760. PurchasingB2B.ca
North America’s top-selling sedan is an excellent basis for a hybrid powertrain. It’s a fairly large car with lots of room for business chores, even when several passengers may be involved. The Hybrid is perfect for long trips where costs have to be kept in line and fuel economy is surprising. A while ago, we drove a Camry Hybrid all the way from Banff, Alberta, to Vancouver, BC—over 1,000-km—on one tank of gas, which is quite an achievement for a car in this size class. The current car is obviously based on the gasoline-powered Camry sedan, which was completely updated for the 2011 model year, although it will be superceded by the newly redesigned 2015. As with all Toyotas, the build quality is outstanding and every component—inside and out—fits perfectly. The Camry Hybrid is very well equipped “out of the box” but XLE adds details like a leather-wrapped steering wheel and shift knob, a power-adjustable driver’s seat, fog lamps, aluminum wheels with wheel locks and more. Option packages for the XLE include a power moonroof, integrated XM radio, navigation system, backup camera, anti-theft system, premium audio, a 7-inch monitor with video, heated front seats and Ultrasuede seat surfaces with leather. Both variants have the same engine—a Hybrid Synergy Drive 2.5-litre 4-cylinder unit mated to a high torque electric motor combining to deliver 200-horsepower. The transmission is an automatic CVT. Various driving modes are available - basically, you can opt for economy priority or performance priority. Economy is rated at 4.5-litres/100 km city and 4.9-litres/100 km highway. Safety is enhanced by a class-leading 10 air bags, something usually associated with more expensive automobiles. The front head restraints feature a whiplash prevention system. General features on all Camry Hybrid models include air conditioning, USB and auxiliary input jacks for the sound system, Bluetooth hookup, power adjustable heated mirrors and other useful items. The Camry Hybrid is a great car to drive, especially on a long trip. Quite apart from impressive fuel economy, you can really feel the torque of the electric motor on long hills. Driven on a winding road, the car handles extremely well and gives a great feeling of safety and stability. On a smooth freeway, the car feels as silky as a luxury sedan costing twice its price.
PurchasingB2B.ca
INFINITI Q70 HYBRID
The M series has long sat at the pinnacle of Infiniti’s sedan range and as such, has gone head-to-head with various import and domestic upscale rivals. Recently, Infiniti switched to a new alpha-numeric model designation and what we’ve known as the M now carries a Q70 badge. The lineup was enhanced by the addition of an M35h hybrid version, now dubbed Q70 Hybrid. Like some of its competition, the Q70 is handsome and appealing without being overdone and flashy. It has that subtle elegance buyers of cars in this class usually prefer and might have considerable executive fleet appeal. From some angles it has a flowing, almost feline and Jaguar-like, look about it. It’s a fairly big car and has lots of “road presence” when you see one pass by. The base MSRP for the Hybrid is $68,500. Power for the Q70 Hybrid comes from a 3.7-litre V-6 (a fine engine in its own right) that gets an extra boost from the powerful electric motor. With IC engine and electric motor, output adds up to a very impressive 360-horsepower. The official zero to 100 km/h figure is 5.5-seconds Expectedly, this is a very fuel-efficient car and is rated around 6.9-litres/100 km, combined. The transmission is a 7-speed automatic with paddle shifters for manual operation. The interior of the car is up to Infiniti’s usual excellent standard. It’s roomy and the rear seats can easily accommodate three adults. A large multi-role display on the instrument panel shows the electric motor working in unison with the engine and indicates when the battery is receiving a charge. Technology available with these cars includes a blind spot warning system, lane departure warning, Active Noise Control and even an air freshening device that cuts intrusive odors. All models come with superb leather seating and trim, plus push-button startup, Bluetooth compatibility, a power moonroof and other goodies. The Q70 is handsome, technologically advanced, superbly equipped even in basic form, fast and agile. It has a great feel and combines a high level of comfort with almost sports coupe handling. B2B MAY 2014 | 43
Advertorial
Breaking Down Your Fleet Spend.
Knowing your fleet costs is the first step in controlling them. espite being a significant annual expenditure,
D
“Only by identifying each element that goes into the fleet
many organizations still struggle to get a clear
spend, can you focus on containing the individual items
handle on just what goes into their fleet spend and how
as well as overall costs,” says Peter Nogalo, marketing
best to manage it, let alone contain it. As Canada’s largest
manager at ARI.
provider of fleet management services, ARI collects operating and expense information on over 150,000 Canadian vehicles, and over 950,000 across North America.
From that, ARI has been able to develop a
profile and breakdown of the typical Canadian fleet spend, which includes depreciation, fuel, maintenance, license and taxes, interest, tires, management fees, and accidents.
Typical Fleet Spend
Depreciation Depreciation is really just the fixed cost of owning or leasing vehicles. Whether it is leased or owned, it is essentially your fixed cost of ownership from the time the vehicle is purchased until it is sold. “Many organizations focus on the up front costs when looking at depreciation, but actually what happens on the back end can have as much or more impact on the total depreciation,” says Nogalo. Determining market conditions and what a used vehicle will be worth several years out can be challenging, says Nogalo. “This is where the role of your fleet management company becomes critical. While it may seem like there is some sort of alchemy involved, at ARI we actually use historical, regional, published and internal benchmarks to determine the future value of the vehicle and set depreciation rates accordingly.’
Fuel and Maintenance Fuel has historically been the second largest fleet expense, but over the past few years it has actually challenged depreciation for top
E T SI 11 A NC VI TH CM RE O S FE BO HE ON T C AT AL N O TI NA
Advertorial
“Only by identifying each element that goes into the fleet spend, can you focus on containing the individual items as well as overall costs.” spot. “The situation with fuel has been very interesting,” says Nogalo. “Of course, we all know that higher fuel costs are the new normal, but the fact that depreciation costs have not risen
Fleet Management Fees While often the focus of sourcing professionals, fleet management fees typically make up less than 3% of the total fleet spend. In many ways, fleet management fees
is what’s also affecting that balance.
are one of the most interesting line items, says Nogalo.
According to Nogalo, the used vehicle market has been at
“In some ways, they receive disproportionate attention,
historic highs over the past several years, which has taken the pressure off of depreciation. “The more a vehicle is
and other ways not enough.” At such a small percentage of the fleet spend, the attention should be focused on
worth on the backend, the less your depreciation will be.”
what value is being delivered from those fees.
One piece of good news on the fuel front is the introduction
“At ARI, we have focused on the 97% of fleet costs that
of new, much more efficient technologies. While you can’t control the cost of fuel, you can control how much of it
can be managed down. Our role is to work with our clients to identify potential cost savings through process
you use, at least to a certain extent, says Nogalo.
improvements and best practices. We report on those
“By replacing older, less efficient technology with newer
are often more than the fees themselves,” says Nogalo.
models, you can benefit from a strong used vehicle market; reduced maintenance expenses on newer, warranted vehicles; and reduced fuel expenses, not to mention improving the overall environmental performance of your fleet,” says Nogalo. Once again, your fleet management partner should be able to help you with a comprehensive fleet replacement schedule that includes a lifecycle analysis, standardization options, fuel usage and green performance, as well as all associated costs and potential savings.
targets and return the savings back to our clients, which
About ARI ® ARI is the largest vehicle fleet management provider in Canada. ARI operates in Mississauga, Laval, Ottawa, Calgary, Edmonton, and Burnaby. ARI manages over 1,000,000 cars, trucks and equipment globally, including 160,000 in Canada. ARI has been providing fleet management solutions for over 65 years.
For a comprehensive analysis of your existing fleet spend contact ARI at 1-800-361-5882, visit www.arifleet.ca or stop by booth 11 at the SCMA National Conference.
By Kara Kuryllowicz
Advancing Sustainability Walmart’s concept truck goes the extra mile
W
almart Advanced Vehicle Experience is a tractor-trailer combination designed to further improve the mega-retailer’s operational efficiency and reduce fuel consumption. Walmart collaborated with its many vendor partners, including Peterbilt, Rousch Engineering, Great Dane Trailers and Capstone Turbine on the concept truck. In fact, Walmart shared its commitment to a bold innovative concept vehicle with the project leads, Peterbilt for the tractor and Great Dane for the trailer, and included a list of criteria and specific technologies it wanted to see in the vehicle. “The Walmart Advanced Vehicle Experience is a bold step in transportation technologies that, although not on the road in its current form, will serve as a learning platform for the future that will accelerate our progress toward our goals,” said Tracy Rosser, senior vice president of transportation, Walmart. Like the futuristic, attention-grabbing concept cars that make their presence known at automotive shows worldwide, the Walmart Advanced Vehicle Experience prototype will continue its evolution before it’s seen on the open road. While it will likely be 10 to 15 years before such advanced body styling makes it to the street, other technologies such as the electronic dash, cameras and electrified components could be on the market much sooner. “It’s exciting to think about how any one of the new features might become an industry standard in the future,” says Elizabeth Fretheim, Walmart’s director of business strategy and sustainability. “The important thing is that we find
46 | FLEET MANAGEMENT | MAY 2014
incremental improvements while also challenging ourselves to look at fleet efficiency in new and different ways.” As one of North America’s largest private fleet owners and operators, Walmart is committed to delivering more merchandise while driving fewer miles on the most efficient equipment. In the US alone, the company employs 7,200 drivers and has 6,000 tractors, 53,500 trailers and 5,600 refrigerated trailers that travelled about 700 million miles between its 4,800 locations last year. In Canada, Walmart does have trailers but doesn’t own its tractors or directly employ drivers. As of 2013, the company had improved its fleet efficiency 84 percent over its 2005 baseline and since 2007, Walmart has delivered 658 million more cases while driving 298 million fewer miles. “Our goal is to create trucking advancements that deliver more savings to our customers and cleaner air,” said Fretheim. “We’re aiming to make our fleet 100 percent more energy efficient by 2015 as compared to 2005.” This summer, additional testing will give Walmart definitive and measurable results. However, since the tractor is 20 percent more aerodynamic and the trailer is 4,000 pounds lighter, Walmart expects a fuel consumption reduction of at least 10 percent or the ability to carry heavier loads, which could also deliver savings by reducing the number of loads. “The tractor is fully functional but will be tested on a track as it is not yet approved for real road use,” says Freitheim. “The intended duty cycle is a mix of highway and urban driving, which we will be simulating.” PurchasingB2B.ca
A few of the AVE’s key components Tractor: Walmart and Peterbilt have collaborated on aerodynamic, hybrid, electrification and alternative fuel projects in the past, each of which offered incremental gains in fuel efficiency and emission reductions. The Walmart Advanced Vehicle Experience tractor brings many of those technologies together in this single vehicle. “Peterbilt’s goals of producing the most fuel-efficient, aerodynamic, and lightweight trucks in the industry mirror those of Walmart,” said Landon Sproull, chief engineer, Peterbilt. “Our combined efforts help build a business case for these technologies in the future, as well as support one of our best customers.” AVE’s shape represents a 20 percent reduction in aerodynamic drag over Walmart’s current Peterbilt Model 386. “We work every day with customers from the automotive and aerospace industries, all of whom have a laser focus on maximizing efficiencies through improved aerodynamics,” said Tom Topper, Roush’s executive director of prototype services. “This design is revolutionary and truly world class.” Because the cab sits over the engine, the truck’s wheelbase was shortened and the weight reduced, while maneuverability was enhanced. The AVE prototype currently runs on diesel, but can run on compressed or liquid natural gas, biofuels or other fuels. It has an advanced turbine-powered range-extending series hybrid powertrain, which is a synergy between electric trucks and series hybrids. It has a battery storage system and an electric motor. Capstone Turbine Corporation developed the AVE’s microturbine Range Extender generator and engineered its integrated hybrid drivetrain solution, which lets the turbine remain at optimum operating revolutions per minute (RPM), while the electric motor/energy storage handles acceleration and deceleration. The turbine produces very low emissions without the need for after treatment. The turbine is also lightweight, and with few moving parts, it tends to require less maintenance. Walmart’s distribution centres are being located closer to metropolitan areas, so the vehicles travel shorter distances and with less highway time, they recover more energy through regenerative braking. The truck’s generator and energy storage are scalable based on the range desired. When operational and in charge mode, the tractor PurchasingB2B.ca
automatically detects the batteries’ charge and will use the turbine engine to recharge them if required. If the operator wants to top up the batteries before shutting down, the charge mode can be selected manually. In urban areas, the tractor runs exclusively on its electric batteries until the charge hits 50 percent, at which point the turbine automatically kicks in to recharge the batteries. In Walmart’s prototype AVE tractor, scaled-up electrified systems run the power steering, air-conditioning and other components. Previously, those systems were parasitic loads on the main engine and as a result, they required fuel to run. Now that they are electrified, they run off the battery and can be turned off and on as needed, rather than running whenever the engine runs. The tractor also boasts features that provide a range of operational and driver benefits. For instance, the electronic dashboard has customizable gauges that deliver a range of performance data. To increase the tractor’s aerodynamics, the driver’s seat was placed in the centre. When the trailer is parked, the seat can be rotated 180 degree to improve access to the back of the cab and open up that area. Always seeking new solutions and opportunities for improvement, Walmart is soliciting driver feedback on the new sliding driver’s door, while the foldout step makes it easier and safer for the driver when entering or exiting the tractor. The bulk of the Walmart fleet has sleeper cabs with beds and the AVE is no exception, with a foldout bed in the Flex Studio which can be set up with different amenities to suit each driver/owner.
Trailer:
Built almost exclusively of carbon fibre, single-piece 53-foot panels are used in the roof and sidewalls. The one-piece, solid, fiberglass-reinforced floor panel weighs less but offers both strength and performance with a standard 16,000-pound forklift rating. The trailer skirts are also manufactured from composite materials. As well, advanced adhesives were used, which eliminated the need for most rivets and further reduces weight. The trailer’s convex nose offers enhanced aerodynamics without sacrificing any cargo space inside. Next-generation, low-profile LED lighting is more energy efficient and less prone to damage. The trailer features aerodynamic disc wheel coverings and a Posi-lift suspension, so that when it isn’t loaded or is only lightly loaded, the forward rear axle lifts to eliminate additional rolling resistance. “Walmart was engaged throughout the design and development process and we have received very positive feedback from our drivers who are very proud to be part of pushing technology forward and testing technologies that help save money and the environment,” says Fretheim. B2B MAY 2014 | 47
Keeping up with technology GENIVI Alliance has IVI makers working together By Dave Cramer
T
he automobile of today and tomorrow is connected to the world in many ways. The basic stereo is still there, but now we have cell phones, email, Internet, maps, movies, backup cameras, blind spot cameras and more new apps every day. All of these make up what is collectively known as In Vehicle Infotainment, or IVI. Infotainment refers to entertainment functions such as your music, and video, and others being information such as email, Internet, maps; as well as safety functions which include backup cameras and blind-spot cameras. Keeping up with the advances in technology presents many challenges to the automotive industry. Technology is increasing at an unprecedented pace. We see new personal devices appearing almost daily, our ability to get information from the Internet is moving at an ever-increasing pace. It is impossible to predict what will be available in the future. For manufacturers, the cost of keeping up with this ever-changing world is huge. To meet this challenge, the GENIVI Alliance, non-profit industry association comprising more than 170 membercompanies, was formed in 2009 to leverage the strengths of various technology developers to provide a common platform for infotainment systems. These companies include OEM vehicle manufacturers, software vendors and hardware vendors. GENIVI’s mission is to drive the broad adoption of an IVI open source development platform. It plans to accomplish this by aligning requirements, delivering reference implementations, offering certification programs and fostering a vibrant open source IVI community. GENIVI’s work will result in shortened development cycles, quicker time-to-market, and reduced costs for companies developing IVI equipment and software. By sharing the development software and hardware components of modern automotive infotainment with experts in the specific technology, whether it be mobile phones, the internet, automotive needs; the members of the GENIVI consortium will be able to provide building blocks for automotive manufacturers which are compatible with the 48 | FLEET MANAGEMENT | MAY 2014
latest technical advance, be it the newest cell phone or a self driving vehicle. This compatibility will enable a future where you are able to access your digital profile in any vehicle you are driving. Imagine a future where you get in the car, your email pops up on the dash, your song lists are on the entertainment system, your calendar is available at the push of a button. In keeping with its mission, GENIVI is hosting a series of one-day conferences in 2014 that will explore—with automakers, suppliers, automotive consortia and analysts—the relationship between automotive connectivity and the so-called “Internet of Things” (IoT). “With more than 279 million connected vehicles projected to be on the roads by 2021, and with technology and services for the the Internet of Things forecasted to generate global revenues in excess of US$8 trillion by 2020, ‘automotive within IoT’ is rapidly gaining a lot of attention within the automotive industry,” said Joel Hoffmann, director of Marketing, GENIVI Alliance and Automotive Strategist, Intel. The year’s first conference will centre on how “automotive within IoT” will have a dramatic impact on smart device integration, infotainment services, embedded solutions, big data, interoperability, monitoring and security for automakers, service providers, regulators and consumers. Topics will include: “IoT Open Standard - Open Source Technology for the Connected Car”; “How Does Automotive Plug into IoT?”; “Cars are Connected. Where are the Applications?”; “The Connected Car - Big Opportunity or Big Headache?”; “OPEN and Security - Do Opposites Attract?”; and, “The Supply Chain - Collaborate or Die!” Held in conjunction with GENIVI’s bi-annual All-Member meeting, Open Automotive ‘14 is taking take place May 21, in Gothenburg, Sweden. Later in the year, Open Automotive will appear in Las Vegas, Tokyo and Detroit, as well as live webinars. B2B Dave Cramer is Managing Director, credativ ltd (Canada). credativ provides consulting and support for open source projects. www.credativ.ca.
PurchasingB2B.ca
Including those not yet asked.
2014
+ performance
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Subaru. The only three-time winner of Motor Trend’s Sport/Utility of the Year® award
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Choose PZEV technology, the affordable eco-friendly alternative without the compromise.
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Transmission
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+ wider 15mm + taller 20mm + longer 35mm
2,115 L
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Fuel consumption 2 6.3L / 100km
(highway) for the 170 hp., 2.5 litre version.
3
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Subaru BOXER Engine
Innovation meets technology. The Subaru BOXER® engine produces dynamic low-end response. Available on the 170 hp/2.5L or 250 hp/2.0L turbocharged versions.
Hands-free system
Fonction SI-DRIVE6
2014 FORESTER
To consult our Fleet ordering guide or for more information please visit www.fleet.subaru.ca or call 1 877 293-7272 for the National Fleet Sales department.
1. Only on Limited models. 2. Fuel consumption figure rating posted by Natural Resources Canada of 6.3L/100 km (highway) for a 2014 2.5i Forester equipped with continuously variable automatic transmission and a 60L fuel tank capacity. Fuel consumption figure should only be used for vehicle comparison purposes. Actual fuel consumption will vary based on driving conditions, driver habits and vehicle load. 3. Available on the 2.0XT model. 4. Automatic transmission only. 5. Not available on the 2.5i (EJ1-X0) model. 6. Available on the 2.0XT model. 7. To qualify for « 2014 TOP SAFETY PICK+ » a vehicle must earn «good» ratings in the moderate overlap front, side, roof strength and head restraint tests; a «good» or «acceptable» rating in the small overlap front test; and a «basic», «advanced» or «superior» rating for front crash prevention. Technical specifications are subject to change without any prior notice. Vehicles shown for illustration purposes only.
THE ANSWER TO ALL YOUR QUESTIONS
Technology
Telecom contracts Switching providers isn’t easy, so take care drafting initial contracts By Phil Downe
O
ne of the advantages of being a freelance IT contract negotiator is the number of different views you get regarding the pitfalls in vendor contracts and the various ways buyers can fall into them. Some contract clauses have different effects depending on which phase the agreement is in, the initial term, a renewal term or perhaps an extended term. Many of these clauses are getting particularly onerous—especially those unrelated to the services being rendered, (termination fees, late fees, automatic renewal terms, etc.) and anything remotely connected to the vendors’ future ability to recognize revenue. Let’s focus on one area that’s experiencing rapid growth: telecommunications. We’re in the era of big data and you need to be able to move that data around on secure, reliable and fast networks. No one lays wire for private external networks, so pretty much everyone needs a telecom agreement. Switching isn’t easy, so extra care should be taken when drafting the initial contract.
“These deals go bad in the beginning— not the end—so think about the end when you start. What are you going to do near the end-of-term?”
50 | MAY 2014
These deals go bad in the beginning—not the end—so think about the end when you start. What are you going to do near the end-of-term? Assume everything is working fine, are you going to pull up the lines and replace the node equipment to change to another service provider? No, so negotiate some favorable contract extension terms. You might ask your vendor to try and come up with any examples where telecommunications costs have risen over time. Get some loyalty price breaks depending on the length of term for the renewal or at least price caps and some volume-related discounts for additional lines or capacity.
Give yourself some time to re-negotiate and avoid automatic renewals without notice. Typically, the buyer has to give the vendor notice of intentions 30 days before the end of the agreement but the vendor provides no warning that the contract is coming up for renewal. The loss of leverage due to timing issues leaves you in a captive state. Those that have a great vendor contract management team would have re-negotiated the extensions 90 days ago, while you still had options and leverage. Most don’t have the time. You likely found your contract went into automatic renewal when the invoice arrives and you’re committed for another 12 months at the same price. Why not include some wording to have the vendor notify you of the impending end of the agreement and allow time to maintain some negotiating power. Vendors have a much better contract management system than you because their internal forecasts, quota allocations, revenue and quarterly bonuses depend on it. Vendors like automatic renewals because it’s revenue recognition for another term of a year or more with no effort on their part. If you’re surprised with an automatic renewal, it’s already too late to do anything about it without incurring a termination fee. These clauses have a place in some agreements but typically only in the original term; and then only when the vendor would suffer some loss besides the retained revenue if the agreement ends prematurely. The exception is when there are downstream financial commitments to 3rd-party subcontractors. Say the initial term is three years. The telecom vendor came in with the required service at a competitive rate and now must make an upfront investment in node-equipment and technical services. The upfront costs are amortized over the term of the agreement, which contributes to the recurring monthly charge in addition to the carrying costs and profit margin. If you wish to leave your vendor before the end of the initial term you should pay a termination fee to cover their unrecovered costs and stranded assets. These termination fees are usually 50 to 75 percent of the monthly charge up to the end of the agreement. What purpose do they serve if you are into a renewal term? None. It becomes a captivity clause, which adds to the cost of any alternatives and reduces your leverage. What lessons can we take from this? Insist that the vendor provides notice when contracts are coming to term and ensure it’s enough time to act. Build in automatic price reductions, moreso for an increase in the number of lines or increased bandwidth for future renewals. Have the termination fee clause expire at the end of the initial term and replace it with 30 days notice to terminate. Don’t permit outlandish interest rates for late payments and just in case your switch to a new service provider doesn’t go as smooth as anticipated, work in some 30-day, no-penalty, extensions at the end of the agreement. B2B
Phil Downe (phil.downe@itnegotiations.com) is an independent IT contract negotiator and founder of Relations Management Group, Inc. Reach him at (416) 920-2228.
PurchasingB2B.ca
Early Bird Deadline: June 30, 2014
September 18-19 Fallsview Casino Resort, Niagara Falls, ON
Whether you’re a procurement practitioner new to the travel portfolio or a seasoned veteran looking to enhance an established program, the 2014 Travel Procurement Symposium is designed to help you take your program to The Next Level! PurchasingB2B magazine, in partnership with the Global Business Travel Association (GBTA), is pleased to present Travel Procurement Symposium —a high-level event that has been developed specifically to address the needs of Canadian senior procurement and supply chain management professionals with responsibility for their companies’ meetings, events, and business travel spend. This symposium features up-to-date insights, tools and strategies to optimize travel and meetings spend while aligning procurement with overall business performance. The event brings together buyers and suppliers in the procurement and business travel spaces, and offers both groups the opportunity to network with peers and leading industry experts.
To discuss sponsorship and speaker opportunities, please contact Dorothy Jakovina, Publisher djakovina@bizinfogroup.ca 416-510-6899 Produced by
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Featuring Keynote Speakers: Hal Johnson & Joanne McLeod
Thank you to our sponsors for their generous support! GOLD
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le professionnel
Par Cheryl Paradowski
Félicitations aux lauréats des Prix de distinction 2014 de l’AGCA
C
haque année, l’AGCA rend hommage à des leaders de la chaîne d’approvisionnement qui ont contribué de façon exceptionnelle à la réussite de leur entreprise et à l’avancement de la gestion de la chaîne d’approvisionnement. Cette année, deux personnes seront récompensées pour leurs réalisations exceptionnelles.
Titre honorifique de Fellow de l’AGCA Ce titre, la plus haute distinction accordée par l’association, est décerné à une personne qui a démontré un niveau élevé d’excellence en gestion de la chaîne d’approvisionnement, un engagement et une Martin Montanti fierté à l’égard de l’AGCA, ainsi qu’un civisme qui attire le respect de la communauté envers le membre et, par le fait même, envers la profession de gestionnaire de la chaîne d’approvisionnement. Ce prix est décerné selon des critères très élevés et, par conséquent, il n’est pas nécessairement remis chaque année. Depuis 1919, il a été décerné à 51 personnes seulement. Décerné à Martin Montanti, SCMP, FSCMA, le titre honorifique de Fellow salue sa contribution exceptionnelle envers l’AGCA et la GCA M. Montanti possède plus de 30 ans d’expérience en GCA, dont plus de 15 ans dans des postes de haute direction. Il est actuellement vice-président des services généraux de Southern Health; à ce titre, il supervise 8 services totalisant 700 employés et gère un budget annuel de 75 millions de dollars. Sa carrière est jalonnée de succès retentissants et de précieuses contributions à l’AGCA. Parmi ses réalisations, mentionnons, chez Shmidtke Millwork, la réduction des dommages de transport de 10 à pratiquement 0 % et, chez Standard Aero Ltd. la diminution des stocks de 30 % en moins de deux ans tout en augmentant les ventes de 100 %. Membre actif de l’AGCA depuis son
52 | MAY 2014
adhésion en 1985, M. Montanti a été, notamment, président de l’AGCA Manitoba, membre du comité organisateur du congrès national et responsable de l’équipe d’ambassadeurs de l’AGCA. Il est également instructeur à l’AGCA depuis 1992. M. Montanti attribue son succès à son engagement envers l’AGCA et à son titre de professionnel en gestion de la chaîne d’approvisionnement (p.g.c.a.) qui, selon lui, lui ont permis de faire avancer sa carrière, de parfaire ses connaissances de la GCA et de tisser un réseau professionnel solide. Il a terminé dernièrement un MBA à l’Université de Liverpool, en partie en raison de la qualité et de la réputation du programme menant au titre de p.g.c.a. de l’AGCA.
Prix pour réalisation exceptionnelle Ce prix est décerné à un membre de l’AGCA qui a fait preuve de leadership et d’innovation en gestion de la chaîne d’approvisionnement et qui a grandement contribué à l’avancement de la Randhir Sanghera profession grâce à ses réalisations professionnelles. Le lauréat du Prix pour réalisation exceptionnelle, Randhir Sanghera, SCMP, s’est démarqué à titre de leader stratégique de la chaîne d’approvisionnement, d’innovateur et de partisan l’AGCA et du domaine de la GCA. Originaire du Royaume-Uni où il était membre du Chartered Institute of Purchasing and Supply (CIPS), M. Sanghera possède plus de 20 ans d’expérience dans le domaine. Il est très actif au sein de l’AGCA Colombie-Britannique et a été élu à son conseil d’administration en octobre 2013. M. Sanghera assure le leadership de la chaîne d’approvisionnement du British Columbia Institute of Technology (BCIT) depuis son entrée en service en 2011 et occupe actuellement le poste de directeur de la gestion de l’approvisionnement. À
son arrivée, la chaîne d’approvisionnement était dysfonctionnelle (les politiques et les processus n’étaient pas toujours respectés) et plutôt tactique (volume élevé de bons de commande, de livraisons et de factures indiquant un manque de relations stratégiques avec les fournisseurs). Après une analyse détaillée qui a nécessité la participation du personnel, M. Sanghera a préparé un plan quinquennal qui a transformé la chaîne d’approvisionnement et qui a fait de BCIT un modèle à l’égard des pratiques d’excellence en GCA au sein des établissements d’enseignement postsecondaires. Ce plan quinquennal est en place depuis deux ans et M. Sanghera est en voie de réaliser une solide fondation pour assurer le succès de BCIT. Il a conçu des formations professionnelles adaptées à son équipe pour renforcer les compétences et planifie en fonction des besoins à venir. Le manque de données fiables ne permettait pas de faire de bonnes analyses statistiques des besoins des clients. M. Sanghera a donc ouvert un poste d’analyste afin de pouvoir effectuer des analyses des dépenses et des tendances, en plus de normaliser des feuilles de calcul pour tous les acheteurs en vue de favoriser le suivi des activités.
Prix de la durabilité de l’AGCA Au Gala de remise des prix de cette année, nous décernerons le premier Prix de la durabilité de l’AGCA, qui est remis à des entreprises méritantes. Issu en partie de notre processus de fusion, ce prix a été lancé un peu plus tard et le résultat n’est pas encore connu au moment de publier cet article. Surveillez les nouvelles de l’AGCA pour connaître les lauréats! Félicitations aux lauréats pour leur dévouement au sein de l’AGCA et leur contribution envers la gestion stratégique de la chaîne d’approvisionnement. On leur rendra hommage le 12 juin lors du Gala de remise des prix dans le cadre du congrès national de l’AGCA à Edmonton, en Alberta. B2B
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the professional By Cheryl Paradowski
Congratulations to the 2014 SCMA Awards of Distinction winners
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Every year, SCMA recognizes supply chain leaders who have demonstrated outstanding achievement and celebrates their contributions to their organizations and their work in advancing the field of supply chain. First, we will be recognizing two individuals this year for their outstanding contributions and achievements in supply chain.
SCMA Fellow Award The SCMA Fellow is the highest honour that the association can bestow on its members. As such, the recipient is recognized to have demonstrated the highest excellence in supply chain manMartin Montanti agement, commitment to and pride in SCMA, and a civic mindedness which earns the community’s respect of the member and, through the member, of the supply chain management profession. This award is based on the highest selection standards and therefore may not be awarded every year. Since 1919, the award has only been awarded to 51 recipients. Conferred to Martin Montanti, SCMP, FSCMA, the SCMA Fellow Award recognizes his outstanding contributions to SCMA and to the field of supply chain management. Martin has over 30 years of supply chain experience – which includes over 15 years in senior management roles – and is currently Vice President, Corporate Services at Southern Health where he oversees eight departments with a staff complement of 700 and an annual operating budget of $75 million. His list of career accomplishments is a glowing reflection of his incredible success as a supply chain professional and his valuable contributions to SCMA. A couple of examples of his professional accomplishments include his work at Shmidtke Millwork where Martin reduced freight damage from 10 per cent to virtually zero per cent and at Standard Aero Ltd. where he
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reduced inventories by 30 per cent in less than two years while increasing sales by 100 per cent. Since joining SCMA in 1985, Martin has been an active member who has served in numerous roles such as: President of SCMA Manitoba, SCMA National Conference committee member, and Chair of the SCMA Taskforce of Champions. Martin has also been an SCMA instructor since 1992. Martin directly attributes his success to his involvement with SCMA and his Supply Chain Management Professional (SCMP) designation. He feels that the association and his SCMP have given him opportunities to advance his career, his knowledge of SCM and to build his professional network for lifelong success. Martin recently completed an MBA at the University of Liverpool which was made possible, in part, due to the quality and reputation of the SCMP designation program.
Outstanding Achievement Award The Outstanding Achievement Award is awarded to an SCMA member who has provided innovative strategic leadership in supply chain management and has made a significant contribution to the Randhir Sanghera advancement of the profession through business and professional achievements. The winner of our Outstanding Achievement Award, Randhir Sanghera, SCMP, has distinguish himself as a strategic supply chain leader, innovator, and supporter of SCMA and the field of supply chain management. Originally from the United Kingdom, where he was a member of the Chartered Institute of Purchasing and Supply (CIPS), Randhir has over 20 years of experience in supply chain. Randhir is a very active and supportive member of SCMA British Columbia and was elected to the SCMA BC Board of Directors in October 2013. Currently the Manager, Supply Man-
agement at the British Columbia Institute of Technology (BCIT), Randhir has been tasked, since he joined BCIT in 2011, with providing strategic leadership to BCIT’s supply chain. When he arrived, the organization’s supply chain was highly dysfunctional – where purchasing policies and processes weren’t always followed – and tactical in nature; as demonstrated by the high annual purchase order volumes, deliveries, and invoices indicating few strategic relationships with suppliers. After a detailed analysis of the existing supply chain at BCIT, which included the participation of departmental staff, he formulated a five-year plan to transform BCIT into a model of best practices in strategic supply chain management among post-secondary educational institutions. Now just over two years into his fiveyear plan, Randhir is well on his way to building a foundation for success at BCIT. He has created tailored professional development opportunities for his team that strengthen current skills and plan for future needs. A lack of reliable metrics hindered any reasonable statistical analysis of customer needs, so Randhir developed a data analyst position to aid in spend and trend analyses, and standardized spreadsheets for all buyers to help track activities.
SCMA Sustainability Award At this year’s Awards Gala we will also be conferring the first SCMA Sustainability Award, which is a corporate award. As a new award that was driven, in part, by our amalgamation process, it was launched after our usual awards cycle and the results are not yet available at the time of publication. Watch for news of the successful recipients in subsequent SCMA communications vehicles! Congratulations to our winners for their dedication to SCMA and their contributions to the field of strategic supply chain management. They will be honoured on June 12 during the Awards Gala at SCMA National Conference in Edmonton, Alberta. B2B
MAY 2014 | 53
The Law
Behind the Curtain Imposing personal liability on corporate officers, directors and shareholders By Marvin J. Huberman
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54 | MAY 2014
t’s a fundamental, but not absolute, principle of corporate law that a corporation has a separate legal personality. Hence, a court should not “pierce the corporate veil” and impose personal liability on people, including officers, directors and shareholders, associated with a corporate entity, except in exceptional cases. This well-established common law principle is reflected in modern day corporation statutes, such as the Ontario Business Corporations Act, R.S.O. 1990, c.B-16, which in section 15 provides that “a corporation has the capacity and the rights, powers and privileges of a natural person.” In many corporate veil cases, a plaintiff asks the court to look behind the corporate curtain and require the principals to personally pay for the obligations of the corporation. In other cases, the claimant looks to the corporation to pay the obligation of its principal and often sole officer, director or shareholder. So what are the circumstances that justify going behind the company and attaching personal liability to associated persons? A brief summary of this important principle—a corporation has a highly-respected separate legal personality—and its limits is as follows: The law relating to when the corporate veil may be pierced does not follow a consistent principle. That said, the court will not enforce the “separate personality” principle when: • It would be flagrantly unjust or unfair not to go behind the company and impose personal liability; • W hen the company is incorporated for an illegal, fraudulent or improper purpose; • W hen the corporation is subject to the complete control of the shareholder and the company is being used to insulate the shareholder from responsibility from fraudulent or illegal conduct; • If when incorporated, those in control of the corporation—not just shareholders but also officers and directors—expressly direct a wrongful act to be done; and • W hen the corporation is “completely dominated and controlled and being used
as a shield for fraudulent or improper conduct” including fraud, deceit, dishonesty or lack of proper authority. This is critically important to corporations that have only one officer, director and shareholder. In this case, there can be no doubt that the individual associated with the company, and acting as its agent/representative, would be in control of the corporation, directing and causing it to act, and perhaps justifying the piercing of the corporate veil. That’s what happened in Shoppers Drugmart Inc. v. 6470360 Canada Inc., a recent decision of the Court of Appeal for Ontario, which imposed personal liability on Michael Wayne Beamish (“Beamish”). The Court of Appeal clarified the test for piercing of the corporate veil as follows: “Fleischer is the appropriate test to apply to piercing the corporate veil in Ontario. In Fleischer, Laskin J.A. stated that only exceptional cases that result in flagrant injustice warrant going behind the corporate veil. It can be pierced if those in control expressly direct a wrongful act to be done. At para. 68, he stated: Typically, the corporate veil is pierced when the company is incorporated for an illegal, fraudulent or improper purpose. But it can also be pierced if when incorporated ‘those in control expressly direct a wrongful thing to be done’: Clarkson Co. v. Zhelka at p. 578. Sharpe J. set out a useful statement of the guiding principle in Transamerica Life Insurance Co. of Canada v. Canada Life Assurance Co. 1996 CanLII 7979 (ON SC), (1996), 28 O.R. (3d) 423 at pp. 433-34 (Gen. Div.), affd [1997] O.J. No. 3754 (C.A.): “the courts will disregard the separate legal personality of a corporate entity where it is completely dominated and controlled and being used as a shield for fraudulent or improper conduct.” The Court of Appeal then concluded that Beamish, as the sole officer, director and shareholder of a corporation, had sole signing authority of the accounts in question and had authorized the transfer of $970,000 to an operating account in his own name and the name of a company of which he was the sole shareholder, instead of paying utility bills. Because he directed and caused the misappropriation of funds, the Court of Appeal held that there was an unjust enrichment that justified piercing of the corporate veil and the imposition of personal liability on Beamish for over $1,800,000, plus legal costs. While it is true that courts should hesitate to ignore the corporate structure under which business is conducted, there is and will always be circumstances that warrant piercing the corporate veil. Be aware of these circumstances or run the risk of being personally liable. B2B Marvin J. Huberman, LLM, (www.marvinhuberman. com) is a Toronto trial and appellate lawyer, mediator and arbitrator. PurchasingB2B.ca
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