PurchasingB2B June 2014

Canada’s magazine for procurement and supply chain management professionals

JUNE 2014

BEYOND GREEN

Moving towards a wholistic approach to sustainability

Also inside: ISM Conference 2014 Negotiated RFPs Energy Game Changer PM 40069240 $18.00

FOCUS ON SUSTAINABILITY

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Canada’s magazine for procurement and supply chain management professionals

features

Contents Vol. 56, No. 4 • JUNE 2014

80 VALLEYBROOK DRIVE TORONTO, ONTARIO M3B 2S9

www.PurchasingB2B.ca

PUBLISHER

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

p.16

12 T OP TO BOTTOM SUSTAINABILITY

16 I SM2014 CONFERENCE

A wholistic view dominates the CPO sustainability agenda.

14 S HOWCASING SUSTAINABILITY

ISM hits the strip in Las Vegas for its annual conference.

22 S USTAINABILITY BEST PRACTICES

Green products, big and small.

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.

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

also inside

departments 4 Online News

Tips for incorporating sustainability at your organization.

7 Procurement Profile

5 Business Front

20 Le professionnel

6 Ask The Expert

21 The Professional

10 C1

Beyond Green

Editorial

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ow, in 2014, sustainability is firmly embedded among procurement practices for many Canadian companies. For the most part, organizations realize that there is reputational risk brought on by not adhering to sustainable practices. Whether tainted milk or toxic toys, there are recent examples of companies penalized by public opinion for being seen as failing to adhere to ethical or sustainable principles.

This has raised the importance of organizations knowing what’s going on in their supply chains. A vivid example comes from last year’s Rana Plaza collapse in Bangladesh. In that tragedy, an eight-story building collapsed, killing more than 1,000 people. The building housed a number of garment factories that exported products to Western countries.

In response to this disaster, some companies that were exporting those goods reacted quickly to compensate the families of victims, as well as working to improve standards in Bangladesh.

In our feature article on sustainability (see page 12), we look at how the focus and definition of sustainability has changed in recent years. No longer is the concept tied only to protecting the environment. Sustaining and preserving other areas such as the economic viability of an organization and the wellbeing of the communities affected along the supply chain. Larry Berglund, principal at Presentations Plus Training & Consulting Inc., calls this “going beyond green.”

A year on, the response to the Rana Plaza collapse and other incidents shows that many companies now understand the importance of engaging with suppliers to ensure supply chains include a focus on ethics. This in turn promotes the sustainability of the communities involved as well as the economic sustainability of the companies—truly a vision that ventures beyond green.

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See what’s new online!

Understanding Total Cost of Ownership and Sustainability

.ca Travel

www.PurchasingB2B.ca/features

Travel Procurement Symposium

Photo: New Flyer

Take your travel program to The Next Level! Whether you’re a procurement practitioner new to travel or a seasoned veteran looking to enhance your program, join us for the 2014 Travel Procurement Symposium! Topics include procurement expense management, hotel trends, risk management and more.

http://www.TravelProcurementSymposium.com

Travel Procurement Survey Results

Opinions

www.PurchasingB2B.ca/features

Balancing technology and relationships Procurement and supply chain management are changing at a pace equal to technology advances—faster, better pricing and more efficiency are desirable. But balancing technological advances with relationships isn’t easy. This article by Pam Paquet offers tips on achieving that balance.

http://www.PurchasingB2B.ca/opinions

Upcoming Coverage

Submissions

GBTA Energy, Resources & Marine Symposium 2014 | Calgary

Canada’s magazine for procurement and supply chain management professionals

GBTA Canada brings you the GBTA Energy, Resources & Marine Symposium 2014 located in Calgary on June 25, 2014 at the WestJet Campus in Calgary. Our Western correspondent Jessica Patterson offers coverage of this inaugural Canadian event.

OCTOBER 2013

2013

http://www.gbta.org/canada/ERM/Pages/default.aspx

ANNUAL SURVEY OF THE CANADIAN SUPPLY CHAIN PROFESSIONAL

PM 40069240 $18.00

Social Media Stay informed and maybe even join the conversation by checking out PurchasingB2B on social media.

You can follow us on Twitter (@PurchasingB2B) to learn about industry events, conference highlights and more.

We love connecting with our readers. Check out editor Michael Power on LinkedIn, send an invitation to connect or just see what we’re posting online.

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Photo Contest!

Travelling for summer vacation?

Please keep us in mind as we’re looking for photo submissions again for our October 2014 issue. Please send your high-resolution images to PurchasingB2B art director Sandy MacIsaac at smacisaac@bizinfogroup.ca.

PurchasingB2B.ca/news PurchasingB2B.ca

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Business Front

An Energy Game Changer

by Michael Hlinka

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he International Energy Agency (IEA) released a report that predicts that over the next five years, the US will account for one-third of new oil supplies globally, and that it’s poised to change from being the world’s top importer of oil, to a net exporter. The IEA isn’t alone in this view. Several months ago, British Petroleum (BP) made a similar call. It said that by the year 2030—which isn’t that far away—America would no longer rely on states like Saudi Arabia…and, oh boy, even Canada…to make up the shortfall between what it produces and what it consumes.

Make no mistake, the US is a huge oil consumer: 320 million Americans use about 19 million barrels a day. China is a distant second: Its 1.4 billion citizens consume about 9.5 million barrels every 24 hours—just half what the US does even while it has four times the population. As of last year, daily production in the US was 8.5 million barrels, which leaves a daily shortfall of 10 million barrels. That’s a river of Texas tea! And at $100 a barrel, it’s also a lot of money—about $1 billion dollars of value, each and every day, flows out of the United States to support its energy habit.

It’s no secret how the US will achieve self-sufficiency: It’s through the procedure known as fracking. This involves drilling into the earth and then shooting at very high speeds a mixture of water, sand and chemicals into rock formations to help free the gas trapped within, allowing it to flow to the head of the well. It’s not a procedure without some surrounding controversy. Environmentalists worry that carcinogenic chemicals may escape and contaminate groundwater and that the fracking process may actually initiate earth tremors.

Yet it seems that, on balance, the benefits far outweigh the costs. The US still suffers from stubbornly high unemployment— it hasn’t been below 6 percent since the summer of 2008. What should be an even greater concern is the participation rate that measures the number of people of working age who are actually participating (or trying to participate) in the labour force. It’s generally understood that 67 percent is what we see in a “healthy” economy. Right now, the participation rate in the States is an anemic 62.8 percent and has been trending down in the past two years, even while the recovery is supposedly taking hold.

The bottom line, it seems to me, is that no mainstream political party can afford to oppose fracking, given the tangible economic benefits.

So what would an energy-independent United States of America mean? Well, for one thing, it would go a long way towards solving the current trade imbalance. In 2013, the US imported $471.5 billion more in goods and services than it exported. This is a huge number, but it is down sharply from the previous year’s $534.7 billion. One of the key contributing factors was the shrinking deficit in energy products—it was $232 billion, which pretty much explained half of the total deficit. If the US could eliminate that—and then become a net exporter of energy products—it could come very close to swinging from a

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trade deficit to a trade surplus, which would have a calming effect on US-China relations.

Let’s assume the US didn’t need anyone else’s oil. Surely, this would impact its foreign policy. The US—completely contrary to its revolutionary roots—has been a staunch supporter of Saudi Arabia and its royal family for as long as I can remember. Even after the 9/11 attacks (remember, 15 out of the 19 hijackers carried Saudi passports), the US continues to cozy up to the Saudis.

There are a lot of men and women—on both sides of the aisle—who find this more than a little bit distasteful. There are currently five American military bases in Saudi Arabia, there to support “American interests”.

What’s the rationale for keeping them if the US no longer requires the region’s oil?

“The US is a huge oil consumer: 320 million Americans use about 19 million barrels a day.”

Finally, we have to consider how US-Canadian relations might be affected. The US currently takes about 99 percent of our oil exports, which is to say that the US currently takes all of our oil exports. If they no longer needed us, then we’d have to find other trading partners. China is a logical choice. However, it’s far more expensive to float barges to China than it is to run pipelines to the US. It’s likely that in an integrated North American energy market, there would still be a place for Canadian oil in US markets—but it wouldn’t be the same cozy situation that we enjoy today. American energy self-sufficiency has the potential to make many things very interesting.

B2B

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

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Ask The Expert

Executional Excellence

Setting the supply chain management organization up for success

By Patrick Etokudo

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uccessful supply chain organizations are those with a strategic approach, but also those that flawlessly execute the resultant short-term and complimentary tactics. Success comes from: • Being an integral part of the organizational strategy; • Sourcing and developing a high performing team; • Building and sustaining a good foundation; • Cultivating a long-term view, but having a flawless immediate term execution; and • Effectiveness first, efficiencies later.

This article will look at these five areas, not just theoretically but with a practitioner’s application.

To be successful and a respected business partner, supply chain management must have a direct link between its objectives and the organization’s strategic vision. A seat at the table requires that we demonstrate the value of effective management of the supply chain and how that impacts the organization’s goals and, ultimately, the bottom line. We must develop strategies that support those objectives, and to execute those strategies singlemindedly. It’s crucial to be nimble enough to change with the business environment.

Although bits and pieces have always existed, supply chain management is relatively young. Even younger is the strategic component. Old approaches continue to exist even as new people join the discipline. Changing habits and winning the hearts and minds of people can be testing. Clearly define and communicate your mandate; give it teeth with a policy that reflects that mandate and articulate a roadmap to the desired goal.

Inconsistent messaging between mandate, policy, vision and roadmap can be confusing for supply chain management insiders and stakeholders. Hit the road, meet with your customers, share ideas and seek inputs from supply chain, and engage senior leaders in your organization.

Structure your team to execute strategies catering to the long term while sustaining and improving capabilities to respond to what’s needed now. Pursue category management, demand planning, market analysis and supplier relationship management.

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Supply chain practitioners must be empowered and their work needs to be enabled by appropriate tools and governance. Crafting and maintaining a solid foundation is the key to success. Having a common policy, strengthening processes, enforcing compliance, getting the appropriate tools, establishing the right organization, and having and tracking a scorecard are building blocks. But taking these on all at once is a recipe for disaster, especially for young supply chain organizations.

Building a high-performing organization A critical component of a sustainable and thriving supply chain organization is the quantity, mix and quality of skills and competencies. Cultivating professionalism makes people a true asset.

Identify core competencies your team needs to be successful and do a skills assessment of your people against that list. It’s from that gap analysis that you’re able to implement measures to close the gaps, improve professionalism and deliver on promises. Don’t forget to develop onboarding processes to help people joining your team.

Supply chain management is the link between your organization and product and service providers. Never forget about them as part of your high performing organization—this is the concept of an extended enterprise. A good supply chain professional must act as internal advocate for their suppliers. Create the avenues to engage and listen to your suppliers, as it will serve you well.

Most people, inside of supply chain management teams but even more the internal customers and leaders we serve, want to measure the success of supply chain in terms of efficiencies: how long a process took, how many purchase orders or contracts were created, how many people were involved in the processes and so on.

Avoid the temptation to go down this road. While those measures are important and we should monitor them, they should be secondary to effectiveness measures. Effectiveness measures indicate the function’s health, show the path forward and, most important, drives behaviors. Such measures include: value creation, spend/FTE and relationships actively managed.

It’s important to pursue effectiveness first and get to efficiencies later, and this should be reflected in your team’s scorecard. Your customers are unlikely to reward you for efficiencies if they feel you’ve dropped the ball on effectiveness. Continuing to deliver the same service level—or better—to business partners while you transform is almost your license to operate.

This is my recipe for a successful supply chain management organization based on strategic fit, people, governance and flawless execution. While organizations are at different stages, focusing on these five areas will help create a roadmap to the desired end state.

B2B Patrick Etokudo is director, Supply Chain Management, at Enbridge Pipelines Inc. PurchasingB2B.ca

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Procurement Profile

A Working Life In Procurement Larry Foley, CSCMP, CPM, supplier enablement, MTS Allstream

Q: How did you get into the procurement/supply chain field?

I got involved in supply chain over 30 years ago, starting in procurement purchasing goods and materials for a paperboard printing company. Other than one opportunity to become a financial controller, my career has been in procurement/supply chain. I’ve remained on in procurement because I like the art of negotiation and strategy development. The success and financial rewards of organizations reflect on my contributions a skill that I’ve come by easily.

Q: Describe a typical workday.

I‘m in my second career as a supply chain consultant working on procurement technology software deployment (Ariba’s P2P).

It’s a change from the standard category strategy management, but in a lot of ways it’s the same. I’m better equipped to understand the technology process because of my procurement and systems experience. Satisfaction comes from making the technology work, reducing the tactical transaction and improving process flow. Embracing technology is rewarding. My experience and skillset now include dealing with global suppliers, corporate spend management and technology implementation.

Q: What do you like most about your job?

My experience and knowledge have allowed me too engage Fortune 100 companies to create or be the architect of supply chain functions in their organization. These companies include Dell Canada Inc., Johnson & Johnson, Sealed Air Corporation and Kodak Canada. What I like best about this area is that one’s performance is quantifiable and measurable by financial objectives.

Q: What event/highlight of your career stands out the most?

I’m proud of the opportunity given by the organizations that I have had the experience of working for because I set up the supply chain function—primarily in the front office (indirect cor-

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porate spend) where the function didn’t exist and had to gain acceptance to be successful and garner cost savings. Satisfaction and achievement has been the career reward from these experiences.

Q: What are your future plans?

I’m engaged with PMI Durham-Highlands Chapter hoping to take my exam pretest and write my PMP exam. This is after getting my CompTIA Project+ IT Certification in 2013. I believe that obtaining my Project Management Professional designation will help me manage clients’ requirements in my second career and working on a consulting basis and not as an employee. A trend for supply chain practitioners is to be strategic developers, using best practices, technology and resources to be open to trends.

Who would have thought that data storage would be in a cloud environment?

Q: What advice would you give those new to the field of planning to enter it soon?

As vice-president, membership, ISM—Canada, a York University professor asked me to speak with his graduating third-year supply chain students my career experiences and offer advise. The experience was easy but advice was more difficult. Three things to work on are: continued education, public speaking and networking, whether using social media like LinkedIn or involvement with professional associations. Be dogmatic and develop your profile, which differentiates you from your peers.

B2B

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Head Professional Development Directory

Take adv Early Bir antage of d regis Only ava tration. until Au ilable gust 15 th!

byline

The 17th Annual SCMAO Conference SPEAKER James Cunningham Host of Eat St. Topic: The Logistics of Food Trucks

Mississauga Convention Centre | 75 Derry Rd West, Mississauga, ON October 24 – 25, 2014 Join us for Ontario’s premier event for supply chain professionals! Partner for Performance brings you two full days of quality education, networking, and the most up-to-date information on industry trends and best practices.

This year’s theme, Partner for Performance will focus on the necessity and value of collaboration in the supply chain industry.

Network with over 350 of your industry peers Learn from the leading professionals in supply chain management

SPEAKER Jennifer Botterill Three-Time Olympic Gold Medalist Canadian Women’s Hockey Team

Register today at www.scmao.ca Join the conversation on twitter #SCPP14

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Your participation will ensure an accurate benchmark of salaries in the supply chain sector.

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follow the link to the survey.

Results of the survey will be featured in the October issues of PurchasingB2B, Thank you in advance for your contribution!

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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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Addressing issues affecting Canada’s public procurement professionals

Maintaining Due Process Negotiated RFPs in the public procurement realm remain subject to legal challenge

By Paul Emanuelli

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he past ten years has seen a rapid expansion in the use of flexible negotiated RFPs (NRFPs) in the Canadian public sector as a means of increasing flexibility in the bidding process while reducing the financial risk of lost profit lawsuits. However, as the recent decision in Rapiscan Systems Inc. v. Canada (Attorney General) shows, when using flexible formats public institutions must still follow due process rules or face legal challenges that can result in unfair contract award decisions being struck down by courts.

“As the Rapiscan case illustrates, public sector procurement remains subject to legal challenge even when the tendering process does not create Contract A.”

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A case study in undue process If properly drafted, NRFPs operate under traditional contract law rules instead of the high-risk and inflexible fixed-bid “Contract A” tendering model. This enables greater flexibility in evaluating creative solutions and in fine-tuning contract terms to reflect unique solution-based performance terms. It also helps protect against the financial exposures of lost profit claims from losing bidders. However, this does not mean that a public institution can now part ways with due process. As the recent Federal Court of Canada decision in Rapiscan Systems Inc. v. Canada (Attorney General) illustrates, running an unreasonable or unfair competition with hidden preferences and providing misleading information to those

responsible for making the ultimate contract award decision can get you sued even if you are not in Contract A. In the case, the Canadian Air Transport Security Authority (“CATSA”) issued a non-Contract A solicitation for airport security screening equipment. After submitting an unsuccessful proposal, Rapiscan Systems launched a legal challenge alleging that CATSA had conducted an improper process. The court agreed, granting Rapiscan’s application and declaring that the award to its competitor was invalid, unlawful and unfair. By way of remedy, the court directed CATSA to redo its future procurement process for the required equipment.

In its lengthy decision the court found: (a) that the evaluation “was not a fair or competitive process” since there was “the concealment of minimum requirements and performance standards” which unfairly favoured the applicant’s competitor and constituted bad faith on the part of CATSA; (b) that CATSA’s management failed to advise its board “that it had derogated drastically from the Contracting Procedures during the procurement process”; and (c) that “management did not provide the Board with accurate information upon which to base its decision” and that this conduct undermined “the integrity of the government’s tendering processes”. Based on these findings, the court determined that the board’s decision “was unfair, unreasonable, made without proper consideration of relevant factors and in bad faith.”

The legal test for judicial review challenges of NRFPs As the Rapiscan case illustrates, public sector procurement remains subject to legal challenge even when the tendering process does not create Contract A. While lost profit damages were not available as a remedy for the unfair process, the unfairly treated bidder still had legal recourse through the administrative law remedy of judicial review.

This remedy gives the courts broad powers, in-

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cluding the ability to strike down government decisions when those decisions constitute an unreasonable exercise of statutory powers. The Rapiscan case is just one example in a long line of recent judicial review judgments that have established the following four-part legal test for reviewing government procurement decisions: 1. Does the procurement process involve a public institution? The judicial review remedy only applies to public institutions and does not apply to private sector purchasers.

2. A re there alternative remedies available? If the process is subject to legal challenge based on Contract A lost profit claims or trade treatybased challenges at the Canadian International Trade Tribunal, then the courts may not entertain a judicial review application.

3. Did the decision involve the exercise of statutory power in a manner that attracts public interest concerns? While the courts will not generally review policy or budgetary decisions, they may review specific procurement decisions made under statutory powers (which captures most public procurement decisions) if the specific procurement decision is signifi-

The Canadian Public Procurement Council

Our Mission

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cant enough to attract public interest concerns.

While the “public interest test” may be met by the size of the contract, it can also be informed by the gravity of the alleged misconduct even in smaller value contracts.

4. W as the challenged decision unreasonable? If the court finds that the decision was unfair, absurd, made in bad faith, or made arbitrary or in a procedurally unsound manner then it may order a reconsideration or strike down the decision.

Public institutions must follow the rules As recent judicial review decisions illustrate, public institutions cannot escape judicial scrutiny simply by contracting out of Contract A. In government procurement, the duty to follow due process is an inherent condition of exercising statutory powers.

Using NRFPS and other flexible formats may offer some significant advantages, but breaking the rules with impunity is not one of them.

B2B Paul Emanuelli is the general counsel of the Procurement Law Office. He can be reached by email at paul.emanuelli@procurementoffice.ca

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.

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Sustainability

Redefining Sustainability A wholistic view dominates the CPO sustainability agenda

By Michael Power

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hose involved in procurement and the supply chain have witnessed sustainability evolve into a major part of the agenda for many organizations. Chief procurement officers and others in senior leadership now count sustainability issues among their top priorities. And the benefits of focusing on sustainability include not only risk management and brand protection—the related benefits can also extend to an organization’s bottom line and even its longevity.

The role of the senior procurement practitioner is crucial to realizing those benefits, a point noted in a recent whitepaper from Accenture, entitled The Sustainable Organization: Lessons From Leaders Series, The Chief Procurement Officer’s Perspective.

“Chief procurement officers play a crucial role in the implementation of sustainability today,” the paper says. “Most fundamentally, they need to work out how to translate the organization’s high-level goals on sustainability into concrete buying decisions, in order to deliver on such objectives, but without losing their competitive edge on cost.”

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The importance of vision For Larry Berglund, principal at Presentations Plus Training & Consulting Inc., the CPO’s role in promoting sustainability must reflect the company’s overall vision first.

“The supply chain leadership in an organization has to align with whatever the corporate vision is for sustainability,” he says.

In other words, supply chain organizations aren’t able to set out to lead their industry in sustainable practices if the organization’s CEO’s focus is, for example, maintaining costs while growing business, Berglund says. But if the commitment exists to focus on sustainability, then supply chain leadership must take into account sourcing practices across the chain. To make that process manageable Berglund recommended going by the assumption that 20 percent of suppliers accounts for 80 percent of either the challenges, benefits or solutions.

“Those are the ones that you really focus on,” he notes. “If you can eventually get into the other 80 percent, great. But you need to focus on the value proposition that you’re getting from

the top 20 percent of your suppliers—that’s where you start.”

Berglund stresses that organizations have done a remarkable job over the past 40 years in dealing with environmental issues.

The push in supply chain now involves what he called “going beyond green.” That involves considering the inclusivity of communities affected by those supply chains. “Supply chain folks need to look at strategies that provide a good balance of competitive pricing and contribute to the social and economic benefits of the community or the society that they serve,” he notes. For example, if an organization outsources everything it possibly can, costs may go down sharply. But that business model is likely unsustainable because it doesn’t reflect strong local economic development.

Enabling that economic development through sourcing strategies is a challenge for supply chain leadership, Berglund says. The past 10 years has seen more and more organizations focus their corporate strategies on economic and social development, and supply chains have been drawn into that view. The shift has opened the door to new strategies to affect social and economic development, for example ensuring feasible opportunities to participate in business opportunities. “We’re going to continue to outsource, but does it need to be 100 percent?” he asks. “Can we not find some balance so we ensure we have a healthy local economy and that we’re competitive on a global basis?”

Procurement and supply chain education must also reflect the need for local economic development, Berglund adds. While curricula have focused on producing well-versed international sourcing specialists, educators are beginning to realize the necessity of ensuring that development occurs locally.

Bob Purdy, director of external relations for the Fraser Basin Council BuySmart Network, says that defining sustainability is an essential step for procurement leadership to take towards meeting goals. While environmental stewardship is an essential component of that definition, sustainability overall includes social wellbeing supported by a vibrant economy.

Sustainability, Purdy notes, is a journey rather than a final destination and there has been a shift taking place from considering these components in isolation to thinking of them as integrated sections of the same thing. Although some talk about balance in sustainability, synergy is a more apt word, Purdy says.

“Sustainability is a way of thinking about our challenges and opportunities in a more integrated way,” he says. “It’s really integrated consideration of the economic, social, environmental—and even cultural factors—in decision making.”

One example of how procurement can contribute to that integration comes from events such as the 2013 Rana Plaza collapse in Bangladesh, Purdy notes. In that tragedy, an eight-story commercial building collapsed killing 1,129 people. The building contained a number of garment factories used by companies to manufacture products exported to Western countries.

Rather than looking at sourcing simply through an economic lens, procurement must take into account social license risk, work-

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Vol. 16 No. 1 JUNE

DIESEL DOES IT

News and reviews of the latest clean “oil-burners”

INSIDE: 4 Diesel in the News 8 Tundra goes North 11 Safety 14 Roadwork

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LIKE A GOOD COMPANY, A GOOD CAR AGES WELL.

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DIESEL IN THE NEWS Fuel economy winners Consumer Reports fuel economy tests found the Honda Accord Hybrid delivered impressive overall fuel economy, tying the smaller Honda Civic Hybrid and just below the topperforming Toyota Prius hatchback.

The Accord Hybrid’s 40-mpg performance on Consumer Reports combined city and highway tests make it a class leader for fuel economy among midsized sedans. Testers found the Accord Hybrid has a very impressive hybrid system that smoothly transitions between battery and engine power. To save fuel, even at highway speeds, the engine shuts off as soon as drivers lift their foot off the gas pedal.

But Consumer Reports’ engineers caution that buyers expecting their car to the EPA’s figure of 47 mpg posted on the window sticker might be disappointed.

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Vol. 16, No. 01

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EDITOR: Emily Atkins (416) 510-5130, eatkins@bizinfogroup.ca ART DIRECTOR: Sandy MacIsaac (416) 442-5600 ext. 3242, smacisaac@bizinfogroup.ca PUBLISHER: Dorothy Jakovina (416) 510-6899, djakovina@bizinfogroup.ca PRODUCTION MANAGER: Kimberly 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 CAR, established 1991, is published twice annually (June and September), 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: CAR accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. CAR receives unsolicited materials including letters to the editor, press releases, promotional items and images from time to time. CAR, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort.

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“We’ve found that the EPA tests often exaggerate the fuel-economy of hybrids,” said Jake Fisher, director of automotive testing at Consumer Reports.

Jeep Grand Cherokee and BMW 328 diesels turned in an impressive showing in Consumer Reports tests. Compared with their gasoline counterparts, they boosted fuel economy by a significant 6 and 7 mpg overall to 24 and 35 mpg, respectively—without a significant compromise in performance or refinement. With their excellent highway efficiency of 32 and 49 mpg, they provide lengthy cruising ranges of 785 and 735 miles. Both vehicles scored near the top of their classes in Consumer Reports testing. (see the CAR’s review of these two vehicles on page 4)

Road vehicles are not diesel particulate culprits UN says A new paper issued by the United Nations Economic Commission for Europe (UNECE) concluded diesel road vehicles were the cause of only a small percentage of particulate matter in Europe and the United States compared to economic sectors like the commercial, institutional and household sectors.

UNECE is one of five regional commissions of the United Nations.

“From the data and facts mentioned above, we conclude with a high degree of reliability that it is misleading to claim that people’s exposure to diesel engines of road motor vehicles is the cause of increased risk of lung cancer,” UNECO concluded in the new paper entitled “Diesel Engine Exhausts: Myths and Realities”.

“Eighty three percent of particulate matters emissions in European Union countries (EEA, 2012a) and 97 percent in the US (EPA 2013) and Canada is generated by other economic sectors, mainly the commercial, institutional and household sector.

“Therefore, the claim that emissions from diesel engine exhausts from road transport

are the main cause of lung cancer in humans needs to be seriously challenged. It does not mean however, that measures to improve the environmental performance of the transport sector can stop. On the contrary, they must continue and in an aggressively well targeted way,” the UNECE paper stated.

The UNECE paper also states: “Diesel engines are currently at the heart of economic growth and off all economic activity and, therefore, it is not feasible to replace and eliminate them at this stage.”

“The development of new clean diesel technology for passenger vehicles, trucks, buses, construction and farm engines have reduced particulate matter and nitrogen oxide emissions by more than 90 percent in the past two decades,” said Allen Schaeffer, Executive Director of the Diesel Technology Forum.

“The UNECE paper provides an important perspective often overlooked in the environmental debate that diesel vehicle engines have dramatically improved their emissions and are not a significant cause of PM emissions in developed countries,” Schaeffer said.

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DIESELS

by the (half) Dozen Oil-burners for every budget BRAWNY SUVS 2014 Jeep Grand Cherokee Summit 4X4 EcoDiesel V-6

By Tony Whitney

The current Jeep Grand Cherokee is the fourth generation version. For 2014, the product benefits from a ‘refresh’ with various styling and equipment upgrades.

We tested a top-of-the-range Summit 4X4 equipped with Chrysler’s new 3.0-litre V-6 EcoDiesel. This turbo diesel unit, built in Italy, produces 240-horsepower and perhaps more importantly, 420 lb-ft of torque. It’s mated to an 8-speed automatic transmission with manual override paddle shifters. The SUV uses Jeep’s Quadra-Drive 4WD system, which has three modes and is probably the best all-round ‘go anywhere’ option in the industry.

A base Summit costs $62,445 MSRP, and our test model with all its added features was priced at $69,995, including destination charge and ‘green’ levies. The EcoDiesel is part of an options package listed at just under $5,000, which includes Quadra-Drive and other beneficial features.

Fuel consumption figures tag the Grand Cherokee Summit EcoDiesel at 9.8 L/100 km in the city and 7 on the highway.

This Jeep is very comfortable to ride long distances in and all occupants get lots of head- and leg-room in the cabin. Cargo space is also outstanding—folding down the rear seatbacks creates a huge load area. The noise normally associated with diesel engines is certainly present with this SUV, but it’s not that intrusive.

The EcoDiesel is no ‘barn burner’ in the acceleration stakes, but its lavish reserves of torque are nice to have when things get rough. Most of this luxury product’s appeal lies in its fuel economy, powerplant durability and impressive range.

2014 Porsche Cayenne Diesel

By Emily Atkins

Naturally, the Porsche entry in the diesel class lands in the executive/ luxury end of the range, and at $75,415 (as tested) this is the most pricey of the diesels we drove. Its base price, however, is comparable to the Jeep, at $65,500.

What you get with the Porsche is not just the name brand, but also a larger power plant than most of the vehicles we’ve reviewed here. Its 3-L, 6-cylinder motor makes 240 HP and 406 lb/ft of torque through an 8-speed Tiptronic automatic. This falls in line with the Jeep, although it’s a bit less torquey. The Porsche delivers 10.8 L/100km city and 6.7 highway, versus the Jeep’s 9.8 city and 7 highway.

Inside, the luxury-package equipped Porsche offers a true luxury

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ride with lots of details like heated steering wheel, 14-way power seats, and 10-speaker sound system. It’s also loaded with safety and tech features and came with 18-inch wheels and nice big brakes. It’s a comfortable ride for four adults, and cargo capacity is adequate, although not expansive.

This SUV drives like a Porsche—meaning it handles like a sports car, and goes like the wind—and once you get inside you don’t need to come out for a very long time. On the highway, our test drive extended over 800 km on a single tank, which is a true luxury. If you like to drive, and have places to go, this diesel could be your faithful companion.

MSRP: $65,500; As tested: $75,415 Fuel Economy: 10.8 city, 6.7 hwy

Controls are in the right places and easy to read, with the exception of a gas gauge that seemed to be upside down, always necessitating a second glance each time to be sure of the level.

There’s plenty of room for four people in the Cruze, accommodated in relatively comfortable seats. Trunk space is ample, and easy to access, although shallow.

Of all the ‘oil burners’ we tested, the Cruze emitted the most ‘diesely’ engine note. It’s loud and GM should be proud.

MSRP: $24,945; As tested: $26,525 Fuel Economy: 7.5 city; 4.2 highway; 6 combined

FLEET-FRIENDLY FUEL MISERS

2014 VW Golf Wagon TDI

By Emily Atkins

2014 Chevy Cruze Diesel

By Emily Atkins

GM has made a lot of noise about the diesel Cruze and its fuel economy, and with good reason. In our test drive of 750 km the Cruze managed 6 L/100 km, in mostly (fairly quick) highway driving, right on the advertised spec. This is a pleasant finding for a car that is the least expensive of our diesel testers.

The car’s 2-L, 4-cylinder turbo diesel motor turns out 151 HP with 264 lb/ft of torque. With the 6-speed automatic transmission the Cruze is not exactly quick, but accelerates well both from a stop and at highway speeds. It has an overboost feature which will goose the torque up to 280 lb/ft for a 10-second period.

The Cruze handles very well; a relatively firm suspension lends it a sporty feel, and it takes corners confidently. It’s also got good visibility and aided by a back up camera, is easy to reverse and park in tight spaces. On the highway, its truly responsive cruise control—operated from buttons on the left face of the steering wheel—can be adjusted using just your left thumb. This makes a long drive much more relaxing.

Inside, the Cruze is nicely designed and well appointed.

VW’s Golf wagon TDI is a stealth highway cruiser. Not quick off the line by any means, at cruising speed this car really finds its niche. Its autobahn heritage shows through as it rolls along sipping the diesel at well over Canadian posted speed limits. For long distance driving the Golf wagon combines the fuel economy of a small car with the roominess of a wagon.

Its design is plain, and the interior is uncluttered. Dials and controls are simple, while the nav and communications are intuitive to learn. The controls on the steering wheel are well located and also easy to use. Connectivity with the smart phone was average, and the car lacked a USB port for charging, an oversight in today’s connected world.

This Golf wagon is comfortable to drive and ride in, and offers excellent visibility all around, with practically no blind spot. It handles extremely well, and offers good city maneuverability alongside its highway chops. According to VW, the car delivers 7 L/100km city and 4.9 highway with its 2-L, 4-cylinder 140-HP turbo diesel motor mated to a 6-speed automatic DSG transmission with tiptronic shifting. The base model comes with a 6-speed manual.

MSRP: $33,185; As tested: $34,075 JUNE 2014 CANADIAN AUTOMOTIVE REVIEW | 5

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HIGHWAY-HAPPY SEDANS

2014 Mercedes Benz BlueTEC E250

By Emily Atkins

2014 BMW 328d xDrive

By Emily Atkins

The BMW 328d xDrive is the sportiest of the cars tested in our diesel review and it definitely delivers the best driving experience of the group. It also comes in at the top of the price range, making it more of an executive level vehicle.

The car offers a cleanly designed interior, with plenty of room for both front and rear passengers. Fit and finish are impeccable, the controls are ergonomically well-placed, and the multi-adjustable power seats are very comfortable. The trunk is shallow but spacious, and has a pass-through feature for skis or long items. Visibility is excellent, aided by great wipers, lights and back-up cameras. From a comfort point of view the car suffers only from poor aerodynamics with the windows open—like so many cars these days, it seems designed to be driven sealed up.

On the connectivity side, this BMW offered all the bells and whistles, and excellent interface with smart phones. However, the ‘mouse’ dial used to select and control the computer leaves this driver confused and frustrated. Fortunately, the voice control works rather well, rendering the mouse less important for getting things done.

You won’t forget the 328d is a diesel—its 2L, 4-cylinder, 181-HP motor quietly shares that diesel chug with the world—but it handles with all the aplomb expected of its pedigree and all-wheel drive configuration. In sport mode it’s reasonably peppy; in normal driving mode the automatic transmission feels a little sluggish, and there’s a heartbeat of delay in waking up from auto-off mode when you need to start out from a stop light. Shifts from the seven-speed (optional) sport automatic transmission were a bit rough, both on full auto and when using the paddle shifters.

Fuel Economy: 6.4 city, 4.5hwy, 5.5 combined; Our test returned 6.5 L/100km MSRP: $47,700; As tested: $56,200

The BlueTEC E250 is a solidly built, clean-lined sedan that’s firmly in the executive class of cars. It offers the typical teutonic tidiness and substance you’d expect from a Mercedes Benz, but with a more economical cost of operation thanks to the 4-cylinder, 174-HP diesel motor. And, as you might expect from this car maker, this diesel is quiet, but the requisite “chuga-chuga” can stil be heard—from outside the cabin.

This Benz cruises very nicely on the highway, but lacks a little pizzazz in the acceleration department. Its 7-speed automatic can be run in eco, regular or sport modes, and when the paddle shifters are used, the car will hustle along a little more quickly, but at the expense of fuel economy, of course. In our relatively short test we averaged 7.6 L/100km of aggressive city-only driving.

This aligns well with the advertised mileage specs.

It handles very well, and is equipped with an above average braking system that brings this sedan to a halt crisply every time.

On the highway particularly, this car is extremely well-mannered, and would be pleasant to take on a long road trip.

Inside, the car is equipped with comfortable seating for four adults, and there’s lots of room for their luggage in the trunk. Fit and finish is excellent—the E250 has a definite luxury feel to it.

The driver is well-cared for with easy-to-use controls, a fat, grippy steering wheel and decent all-round visibility. The audio system sounds superb in this car, and smartphone connectivity is seamless. Alas, however, the interface is not intuitive, leaving the poor driver fumbling with the mouse controller on numerous occasions.

MSRP: $57,800; As tested: $63,900 City: 7.4; Highway: 4.6; Combined: 6.1

Did you know?

Diesel fuel has a higher energy density than gasoline. A gallon of diesel contains 147,000 BTUs, while a gallon of gasoline contains 125,000 BTUs. That’s why diesel motors get better fuel economy than gas engines.

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Taking the Tundra North

Toyota’s pickup tackles Labrador’s worst highway

Toyota has been trying to break into the big leagues of the Detroitdominated pickup truck business ever since the T-100 was introduced back in 1993. That statement is both old news and the cast-iron base-plate of the story I’m about to tell.

For 2014 the Tundra was freshened, but not really changed in any substantial way, and this is what led to the challenge I laid on Toyota at its truck introduction at the San Antonio, Texas production plant.

This new truck offered us a run on a dirt track around the truck plant and one “hill climb”. Pathetic is a nice way of describing this test track.

At dinner that night Eric Descarries and I sat with some engineers and Stephen Beatty, VP of the Canadian Toyota operation. Eric and I launched into a colourful evaluation of what we called their Tercel Track, much to the annoyance of the San Antonio guys. However, Stephen asked us straight out: “So, where would you two drive the Tundra?”

“How about Labrador?” we said, “In the spring, when the road turns into 1,100 km of mud.” Toyota agreed and offered us two new Tundras. But to test the truck properly I asked for a 2014, plus an original 2007 Tundra. This second truck was a one-owner 2007 Limited Tundra with 120,000 km on the odometer.

We towed a 24-foot United Expressline trailer with twin axles and a GVWR of 7,700 lb, hauling gear with a gross weight of around 4,500 lb.

We set out from Toronto on April 2, heading northeast 1,200 km to Baie Comeau, Quebec. This is pavement all the way and good four-lane highway to Quebec City. There it turns to two-lane

blacktop, but more interestingly, the mountains begin. A constant climb and drop of a thousand feet and more was the order of the day with the big 5.7L V8 alternately screaming and hushed while the transmission held the trailer on the 10- to 13-percent downhills.

During this leg we found that wind noise is substantially reduced in the new generation Tundra. The drive (mostly between 100 and 120 kmh) also highlighted the steering feel, which has been made lighter and easier to handle in this latest generation.

At Labrador City we were already 1,600 km from Toronto, so we had a good handle on fuel economy. At that point our consumption was between 14 and 17 L/100 km. That number puts Toyota’s V8 on par with Ram’s HEMI V8. As both trucks ran the 5.7L V8 engine, the old truck turned out to have the same fuel consumption as the 2014 model with or without the trailer.

While towing though, the trailer sucked an extra 12 to 14 L/100 km. No wonder we ran out of gas (at this point I invested in three 20L gas cans that we kept full in the trailer). It’s also why every Toyota owner we saw in Labrador pleaded with us to convince the manufacturer to offer a larger fuel tank. After all, Labrador isn’t called the Big Land for nothing.

We had left a balmy spring-like Toronto three days earlier, but now we were back into full-blown winter. Temperatures dropped to well below zero and there was snow—lots of snow.

It’s here that I got a call from the Newfoundland & Labrador ferry service. Ice had jammed the Straits of Labrador and the Canadian Navy icebreaker was not available for our crossing to Newfoundland.

When I asked the lady when they’d be running again, she giggled.

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By Howard J Elmer

At the end of the road. L to R: Stephen Elmer, Howard Elmer, Eric Descarries, Dan Bailey “When, she’s good and ready to give up the straits” was the response. In this part of the world you can plan; but Mother Nature trumps all.

We packed up and pushed on eastward to Goose Bay, hoping the ice would break up in the next day or two.

This 260-km stretch of the Trans-Labrador gets rougher as you cross a mountain range and there is more gravel. When we arrived in Goose Bay we had done about 75 percent of the highway and decided if the ferry still wasn’t running the following day we’d have to head back to Toronto. Next day the lady at the ferry office told me to stop calling her—she’d call me. The ferry was no longer an option, however we hadn’t driven this far to not finish the road to the coast. We decided to go.

While the highway had been a mix of pavement and gravel to this point, the last leg from Goose Bay to Red Bay was all gravel. This is the newest section of the road, open only since 2011. Known as the south coast section of the Trans-Labrador, it is 600 km of the most gnarly, potholed, mud-bogged road I have ever driven. And while someday in the future it will be paved, for now it is torture on trucks, and the real reason we came here in the first place.

It was not helped by the fact that the temperature suddenly shot up to 5C. What had been a solid ice road started to melt at an alarming rate. How bad the road gets was brought home to us. The first day frost was still in the road, so it was mostly surface water.

The second day, running back to Goose Bay, the mud was already six to 10 inches deep in places and water-filled potholes over 18 inches deep pocked the surface. On the morning of the third day, pulling out of Goose Bay and passing the entry to the south coast road, a large emergency sign flashed “ROAD CLOSED” at anyone dumb enough to attempt the run.

The planned route, the team turned back at ‘E’ We made it to Red Bay on the Atlantic Coast, and it was a welcome sight. A patch of ocean blue mixed with bobbing ice. And while this should have been the end, it now simply marked the half-way point. We stopped just long enough to shoot some photos and then began the 3,000 km slog all the way back to Toronto.

We had brought the Tundra to Labrador to see how it fared on some of the worst roads in North America. In the end, we found it wasn’t better or worse than the Detroit iron. Instead, I can now say with sincerity—it’s a contender, as good as any of the other trucks in the Big Land. c.a.r.

JUNE 2014 CANADIAN AUTOMOTIVE REVIEW | 9

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By Kara Kuryllowicz

Keeping your employees safe Part I: Managing the people Think carefully before you give your employees the keys to a company car. A single vehicle crash can costs an employer about $16,000 (in direct and indirect costs), which gives corporations thousands of tangible reasons to manage their drivers.

As a result, companies are targeting everything from safety policies and driver training, to the vehicle’s onboard safety features.

Safety policies can help create a safety culture and influence both attitudes and behavior while defining the employer’s expectations of its employees.

“Right now, safety is the most rapidly evolving aspect of the fleet industry as technology evolves, laws change, costs increase and corporations are more aware of the impact of doing the right or the wrong thing,” says Ted Lewin, senior manager, risk management services for Wheels in Des Plaines, Illinois. “Firms are becoming more proactive around prevention once they learn that 93 percent of crashes are preventable.”

Element Fleet Management’s FleetOptimize team found that five years ago just 15 percent of firms with fleets had safety policies, but today, 75 percent have a safety program.

“Virtually every pharmaceutical firm has a safety policy and we have identified that they also have the lowest average preventable accident rate compared to other industries,” says Sumair Mirza, vice-president, marketing and strategic consulting at Element Fleet Management in Mississauga, Ontario.

Evidently, certain sectors have a deep commitment to safety, but David Thornton, director of client services – Eastern Region for Foss National Leasing in Thornhill, Ontario, has found that half of the firms operating fleets don’t have any safety policy, and many of those with safety policies haven’t updated them in five or six years.

“At the very least, your safety policies have to reflect changes in technology and legislation pertaining to everything from snow tires in Quebec to laws around hands-free and handheld devices,” says Thornton.

Not surprisingly, the debate continues around policies that target the use of hands-free and handheld devices. So far, only the most leading-edge firms insist drivers park their vehicles for all phone calls, although science supports the fact that chatting on a handsfree or handheld device while driving is a cognitive distraction.

“Monitoring and enforcing your mobile phone policies presents a significant pragmatic challenge,” says Mirza.

Because past behaviour is the best predictor of future behavior, corporations have increased the frequency with which they look at drivers’ histories and pull abstracts as often as 24 to 12 months, with some committing to quarterly reports. It helps firms identify at-risk behaviours, deliver remedial training and can indicate a proactive, responsible approach to safety.

“Statistics show that five percent of the high-risk drivers account for 45 percent of the major collisions, so a strategy to identify and target that segment of drivers can yield the most positive results,” says Mirza, who also notes that 63 percent of firms now charge employees tiered fines of $100 to $200 for at-fault accidents, up from 40 percent in 2008.

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Of course, driver behaviour has the most dramatic impact on collision frequency and severity, but it also presents the most challenging variable. How do you modify, monitor and control driver actions and behaviours?

Telematics systems do play a role in monitoring, identifying risky behaviour, alerting managers and even directing drivers to relevant training, but it’s still early days. Drivers and HR departments still see privacy as a concern, particularly if personal use is involved, but corporations tend to focus on the fact a company vehicle is as much a work tool as a computer or smart phone.

“A broader range of fleet types has started asking more questions around telematics, and we anticipate this trend will continue over the next five to six years,” says Mirza.

At $35 to $50 per vehicle each month, telematics costs may have a cumulative impact, with data transmission often accounting for a significant percentage. For the most accurate look at an employee’s driving, employers need to watch for patterns as opposed to one-time infractions when it comes to speed, seatbelt use, hard

braking/stops, quick turns and cornering.

“The Hawthorne effect—simply knowing that your actions are being monitored—does change behaviour, so install it, tell your drivers and you’ll recover on that investment,” says Thornton.

To truly reap the benefits of telematics monitoring for safety’s sake, fleets must act on the information they receive, because data collection is pointless unless something is done with it. It’s generally agreed that rewarding good behaviour is the most effective strategy, with peer recognition, safety awards and small monetary gifts ($50) having a noticeable impact.

“I’d like to see more positive reinforcement,” says Thornton.

Telematics systems can generate automated warnings and even direct drivers to specific, related training modules, but it’s generally agreed that a personal note or call from the immediate manager or that manager’s boss will make the most indelible impression.

“As a company in business today, you need to show that you are committed to due diligence around every aspect of safety,” Thornton says.

B L

A

S i b o f

Part II: Technology – Option or aftermarket?

Do you remember when seatbelts were an option, not a standard feature? What about ABS? Driver-side airbags, and then passengerside airbags?

Whether or not you remember those changes, today’s fleet managers are talking about a wide and impressive range of new electronic safety features designed to help drivers avoid or minimize the effects of collisions. Included in the array are goodies like exterior airbags, lane indicators, rear- and side-view sensors or cameras and adaptive cruise control.

“Right now, these features are generally standard on higher-end nameplates such as Mercedes and BMW, but where governments mandate them as standard equipment you’ll start seeing them across the board in two to five years,” says David Thornton, director of client services – Eastern Region for Foss National Leasing in Thornhill, Ontario.

As Ted Lewin, senior manager of risk management services at Wheels in Des Plaines, Illinois, points out, in the US, all passenger sedans will be required to have back-up cameras starting in 2018. If government is looking at it, it’s likely that at some point the feature will become mandatory standard equipment.

The technology is slick, but right now you still have to pay for most of it. In most cases, opting for a package that includes these safety features means committing to the more expensive trim package with perks that also include luxuries such as leather seats. At $2,500 to $3,000 per vehicle, most fleets consider that additional cost prohibitive, as it takes the vehicle into the next selector category.

“A similar, third-party aftermarket package might run about $1,000 and although it may perform a little differently, they do essentially the same thing,” says Lewin. “Some of our customers have adopted the more expensive technologies, however the majority are still investigating their options.”

Most of the devices haven’t been in the market long enough to

accurately gauge the ROI, but Lewin expects that since the devices do reduce collision rates by 10 to 40 percent, if you crunch the numbers you’ll see a return on investment thanks to fewer collisions and gains at resale.

Given the preponderance of little dings and slight scratches that require cosmetic repairs before resale, fleets recognize that rear- and side-view cameras and/or sensors could actually pay for themselves.

“These devices do exactly what they say they’ll do, but there is the risk that being human, drivers will rely too much on the devices and get a little complacent,” says Lewin.

Before investing in electronic safety devices, always test them and include your employees in the pilot project. Lewin says the number of test drivers is less important than ensuring a broad cross-section of drivers across functions (sales, management, service) and geographies (urban, rural, combination).

Vehicle systems may offer auditory (beeps), visual (lights) or haptic (seat or steering wheel vibration) alerts, or a combination thereof, but in most cases, the onus is on the driver to make the adjustment.

While the vehicle could take the initiative and reduce the speed, limit speed to a certain maximum or brake, it’s seen as an issue.

“There is a reluctance to make a blanket decision on the driver’s behalf,” says Sumair Mirza, vice-president of marketing and strategic consulting at Element Fleet Management in Mississauga, Ontario.

“What if accelerating was the only way to avoid an accident?”

As Element has seen, driver demographics, specific situations and vehicle types all come together to affect collision rates. For example, a consumer packaged goods firm hired 19- to 25-year-olds to demo products and deliver point-of-sale materials. Analytics showed a spike in the spend on repairs to the mini-vans’ rear quarter panels.

“They weren’t used to driving mini-vans in underground parking garages, so we offered relevant training and switched to vehicles with less of a blind spot,” says Mirza. c.a.r.

* Ba co

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2672 TCI-04

BUSINESSES LOVE US. ALMOST AS MUCH AS THEY LOVE SAVING MONEY.

Style, safety, fuel efficiency, advanced technology and a spacious, comfortable interior. With all of that and more, the all-new 2014 Corolla is perfect for your business. Combine all of its features with the fact that it has the lowest cost of ownership in its class* and you’ve got a fleet vehicle you and your business can feel good about – today and tomorrow.

fleet.toyota.ca * Based upon 2014 independent 3rd party automotive research company study looking at fuel costs, depreciation costs and maintenance costs for base model Corolla and comparative in market compact segment vehicles over a 10-year period (2004-2013). The study includes competitive models that have been available in Canada for 10 years. Actual cost of ownership may vary.

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By Alan Sidorov

Roadwork

Rubber and reality

The message on my answering machine was intriguing. No specifics, just a woman inquiring whether I was able to do tire testing. The call was from Kal Tire, a major independent retailer with its roots here in Western Canada.

I have done quite a bit of testing of all sorts in the past, for vehicle manufacturers, accessory makers, and tire companies. I love the precision of both the driving and the technical feedback that testing involves.

Tracy Cobb, Kal Tire’s director of communications, explained the goal was consumer information, demonstrating whether there was a significant difference in performance and safety between tires with different speed ratings. Still marketing, but useful as well, in that if you trust your tire retailer, and he or she helps you make better choices, you are likely to shop there more often.

Speed ratings originated with the Autobahn, where tires had to be matched to the top speed of the vehicle. S means good to 180 kmh, V to 240, etc.

That may not seem to make sense in North America, but the ratings are still a good indicator of the tire’s construction and performance potential. Better performance also means a higher safety margin.

I set four main course elements, which would then be duplicated at each venue: A decreasing radius turn, simulating perhaps a freeway off-ramp that tightens up more than the driver expected, to provide both pucker factor and a test of the tire’s predictability; an emergency lane change, dodging an obstacle or something that has run out on the road in front of you; a slalom, as a general test of handling; and finally, an emergency stop.

We used two identical Mazda6 sedans for the benchmark testing. The comparison was between an S-rated tire, two speed ratings lower than the vehicle’s original equipment, and a V-rated tire, the proper choice for this car.

Our Mazdas bristled with camera equipment, while inside my test gear took up a lot of space.

Accurate instrumentation and measurement is critical to a legitimate testing programme. So is precision driving. I had to get my marks right, exactly the same speed in each vehicle, same brake input, application of power, cornering line, etc.

I was pleased with, but not surprised by the first

test numbers. The V-rated tire consistently performed better than the S-rated example, with more predictable cornering, better emergency response, and perhaps most important, shorter stopping distances.

In this case, performance could clearly be equated to safety. Armed with the information, our team hit the road, and we ran test days in four major cities.

“At the very least, you should buy replacement rubber with the speed rating that matches the vehicle’s original equipment.”

Even though vehicles and tire brands varied at each test track, the results followed the same pattern. Along with better cornering, the V rated radials had a big advantage in emergency braking, with stopping distances that were between 10- and 20-percent shorter than the S-rated variant, depending on vehicle, road surface, and temperature. That could easily be the difference between a safe stop and a crash. The higher-rated tires were also less susceptible to heat build-up—overheated tires are more likely to suffer catastrophic failure.

The message here is that at the very least, you should buy replacement rubber with the speed rating that matches the vehicle’s original equipment.

Beyond that, a higher-rated tire is an easy way to improve the performance of any vehicle. Not larger tires, better tires.

By the way, we weren’t using the most expensive rubber in the shop—both the lower and higher speed ratings were mid-range in terms of price, with only about a $20 price difference between the two. If money were tight, I would rather go a week living on cold oatmeal than compromise on tires.

As a rule, tires with higher speed ratings will wear somewhat more quickly. Unfortunately, you can’t have it all. However, knowing that the four small contact patches of your tires are the only things holding you to the road, a little more tread wear in exchange for better performance and safety might seem a fair trade. c.a.r.

14 | CANADIAN AUTOMOTIVE REVIEW JUNE 2014

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Fleet Digest 04-

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4/4/2014 3:45:53 PM 14-06-09 1:57 PM

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BY OR LICENSED TO NISSAN CANADA INC. AND/OR ITS NORTH AMERICAN SUBSIDIARIES.

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place standards, environmental risks, the potential regulatory penalties for non-compliance and so on in order to make more integrated sourcing decisions about how to do offshore manufacturing. That in turn has the potential to improve business performance, enhance an organization’s brand and attract a younger, more sustainability-minded workforce, Purdy says.

“At the end of the day, that improves business performance,” he notes. “It protects and enhances brand. Younger employees especially want to work with a company that has strong values and principles around sustainability so it even delivers benefits in terms of employee loyalty and productivity. That’s an example of where integrated consideration of economic, social and environmental factors—including risks and opportunities—delivers a different decision than if you look at just one, single element of the sustainability sphere.”

The role of senior supply chain practitioners in driving sustainability is critical, Purdy notes. Procurement is in a position to take what can seem like lofty sustainability goals and put them into effect in meaningful, measurable and practical ways—how those purchasing decisions are made represent a powerful point of leverage for positive change, he says.

“If you imagine money as a form of concentrated energy, how you decide about how and where and who to deploy that concentrated energy to, it represents an enormous point of leverage,” he says.

But to actually put that into practice, several things are needed, Purdy says. For example, a compelling business case for embracing sustainability is key: those within the organization must know why sustainability is important to meeting that company’s objectives. There must also be senior-level buy in and an awareness of what sustainability is, Purdy says. “Is it a $500 word for environment or is it something else?”

Clear and agreed upon corporate values and principles are essential, he adds. Purdy notes that he’s worked in the past with organizations trying to incorporate sustainability without that supporting policy. “That’s tough, because at the end of the day, when you have to ask for resources to make things happen then the senior executive may look at the policy and say ‘nothing you’re proposing has anything to do with what we’ve said is important to us through our overall corporate policies.’”

That means that CPOs and other senior procurement leadership need a seat at the table when an organization formulates policies to help ensure sustainability is incorporated into that vision, Purdy agrees. Next comes establishing goals, he says, and procurement must know what the key performance indicators are with regards to sustainability. Those goals must reach across all functions within an organization, he stresses.

Collaboration is key Procurement can work with strategic suppliers to not only communicate what buyers’ interests are, but also learn from suppliers what innovations they can offer, he says. In some cases, the suppliers can actually help purchasers implement their sustainability policies, he says, because those suppliers have been hearing demands from other buyers. But often, those suppliers don’t offer imput simply because they haven’t been asked.

“Buyer-supplier collaboration is really important and it’s kind of a new area of focus for companies wanting to advance sustainability,” he says.

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Monica Ospina, director of socio-economic development firm O Trade, also stresses that sustainability doesn’t simply offer benefits to the environment. Rather, sustainable practices help organizations maintain a well-managed operation that allows them to stay in the market longer. That, in turn, creates wealth and opportunities along the supply chain. “It’s not only because it’s in fashion, it’s not only that green is cool, and it’s not that philanthropy within communities will make you look good,” she says. “It’s that, basically, you want to have a company for tomorrow—it’s about economic sustainability.”

“Supply chain folks need to look at strategies that provide a good balance of competitive pricing and contribute to the social and economic benefits of the community or the society that they serve.”

Larry Berglund

Sustainable sourcing policies help push that value for organizations because companies can’t continue buying goods from cheap sources if those goods will cost money later in the form of a damaged reputation or products that needs to be returned, Ospina says. Procurement is poised to help the process as it moves away from simply being a tactical operation to a strategic partner at an organization’s highest levels, she notes.

“Procurement leadership’s role is to understand what the market is out there,” she says. “It’s no longer the time to be super cheap; it’s the time to be super smart. And it’s not philanthropy, it’s simply having a good, well-managed operation.”

Ospina recommends a code of conduct for suppliers, or at least engaging suppliers in the process. In the past, many organizations spent little time communicating with suppliers. But sustainability policies and processes only work if procurement leaders are open to engaging with those suppliers. For example, if a company requires a product be made with proven sustainable components or raw materials, the only way to get that is to talk with a supplier around that requirement.

“It’s a call for collaboration, but that collaboration can only be done if senior management are open enough to work with the supply chain,” she says.

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Sustainability Showcase

Sustainability In All Sizes

While good things can come in small packages, large items need attention, too. The following products cover both large and small office items that are easy on the environment.

VisionMax double-reach architect task lamp This lamp comes with a 13W bulb and features a fully adjustable arm. It has a weighted organizer base or side-mounting clamp, rocker switch and sports a black finish. www.officemaxcanada.com

Global NuCas series high black multi-tilter chair If you’re looking to recline a little at work, this high back, multi-tilter chair provides button control features, back angle adjustment and tilt-lock. There’s also pneumatic seat height adjustment. The chair also features 100-percent recycled polyester fabric. www.eway.ca

Wilson Jones recycled round ring fashion binder HP 61XL, black original ink cartridge Available at Office Depot, this ink cartridge yields up to 480 pages. With the ability to produce high-quality text documents and provide colour images, this ink cartridge makes printing easy and provides great value. www.eway.ca www.officemaxcanada.com

VisionMax 18W fluorescent natural light bulb With up to 10,000 hours life, this 120V, 1,200 lumens bulb has an A19 base size.

The bulb is for use with the VisionMax 18W lamp (product code: 16485-000), sold separately. www.officemaxcanada.com

These binders feature 100-percent recycled chipboard covers and the outer material is made from recyclable, environmentally friendly 100-percent wood pulp.

They are PVC free and round ring.

The outer material has a textured “fine linen” look and feel. www.eway.ca

Pilot BeGreen B2P retractable pen

Made from 94-percent post-consumer waste and recycled plastic water bottles. The pen features a medium, 1mm tip. www.eway.ca

Global Zira series package with Delta Top This office set is GREENGUARD indoor air quality certified and made in Canada. It features high-performance, thermally infused laminate surfaces and components, 1.5inch thick tops and 12inch high transition with pigeonhole shelves, as well as 41inch high unit and open-end shelf. www.officemaxcanada.com

Greenside group chair mat Made of bamboo, this mat’s non-slip backing keeps the chair mat in place. Rounded edges provide for easy movement on and off. The mat is anti-static and easily rolled up and moved. www.eway.ca 14 | JUNE 2014

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Human nature carpet and tile collection Carpets from Interface are 100-percent recycled content nylon yarn. The product is manufactured in factories that are, on average, 39-percent more energy efficient and consume 83-percent less water. Manufacturing facilities get an average of 35 percent of their energy from renewable sources. www.interface.com

Wheat sheet office copier paper FSC-certified, this paper is an environmental choice and the best alternative to not printing, the company said.

Each package preserves 11lbs of wood of wood fibre. The paper is 8.5x11 with 92 brightness.

Each 20lb package contains 500 sheets. www.officemaxcanada.com

Sustainable Earth by Staples whiteboard cleaner The product provides powerful cleaning that’s safer for you and the environment. The 8oz bottle contains bio-based cleaning agents and has a low odor. It’s formulated in partnership with EPA Design for the Environment Formulator Initiative. www.eway.ca

Eco Hard Floor Mat Glide your chair with ease and feel good about the environment at the same time. This floor mat, made from eco polycarbonate, is extremely durable and protects from chair wheel scuffs. www.eway.ca

Harmonize & Groundwaves carpet tiles Also from Interface, this carpet is designed in the company’s 25cm x 1m skinny plank format. Mix and match colours for a custom composition or use an ashlar installation in monochromatic hues for a seamless broadloom look. The carpet features up to 61-percent recycled content, including 100-percent recycled content fiber combining reclaimed carpet fibre with salvaged fishing nets. www.interface.com

Nightingale LXO task chair This GREENGUARD indoor air quality certified chair features a swiveltilt, synchronous tilt mechanism with four-position seat lock and pneumatic seat-height adjustment.

Tension control and an Enersorb foam seat add comfort. www.officemaxcanada.com

Post-it notes Keep track of tasks while remaining environmentally friendly at the same time. These 1.5”x2” notes (note size is approximate) are part of the sunwashed pier collection. There are 100 sheets per pad and the product comes in packs of 12. www.officemaxcanada.com

Motivate stacking chairs These four-legged stacking chairs are contoured to move with the body, reducing user pressure points. The chairs feature a one-piece backrest and seat and stack up to 12 high on the floor. They are sold in cartons of two and are warranted for users up to 300lbs. www.eway.ca

Find these products and more at: www.eway.ca | www.officemaxcanada.com | www.interface.com

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ISM 2014 Conference

The Focus Is You The ISM2014 Conference hits the Las Vegas strip, putting practitioners in the spotlight

by Michael Power

S

upply management practitioners themselves took centre stage during the International ISM2014 Conference in Las Vegas, from May 5 to 7. “The Focus Is You” was the theme for the event, bringing together more than 2,500 sourcing and supply management professionals from the US, Canada and other countries.

The three-day event featured nine mega-sessions and 10 learning tracks that comprised more than 50 education sessions overall. Those sessions hit a wide range of topics, including: talent development; supply management and finance; risk management; global sourcing and travel procurement, among many others. What follows is an overview of several of the conference’s education sessions.

BOARDROOM FINANCE Among the major themes at the conference was the growing relationship between the financial and supply chain functions within organizations. How do supply chain practitioners communicate the value of their organizations to those in finance and the Csuite? During a presentation entitled Boardroom Financials: Translating the Supply Chain Results Upstream, Craig Reed, managing director of MCD, LLC, encouraged the audience to put supply chain’s contribution to an organization into three categories: revenue; direct cost; and operating expenses. But supply chain functions can be put into more than one category, depending on the circumstances, he said.

“It’s ultimately important for you to understand your business, first and foremost,” he said.

Two themes arise when speaking with finance, Reed noted: value creation and value protection, and procurement must be

able to show value to the CFO or other members of the C-suite.

But that’s not always straightforward, cautioned his fellow presenter James Ezell, VP & CFO, Performance Foodservice-VA. “Value is like beauty—it’s in the eye of the beholder,” he said.

Finance can sometimes undervalue cost avoidance, Ezell noted, since the concept can be difficult to put a dollar value on.

He’s measured by earnings growth when he meets with senior management and cost avoidance doesn’t fit into that. Proving the amount the company saved through cost avoidance can help show finance the value of the process, he said.

To communicate effectively with finance, it’s important to understand boardroom language, said Reed and Ezell. They shared a list of commonly used financial terms like shareholder value, earnings per share and cash flow position. Supply management professionals must be businesspeople first and foremost, Ezell said, and must be able to show their value as best they can using financial language.

Reed noted that supply chain can articulate its value in several ways. Cost savings is often what supply chain does and how it gets measured, he said, and it can appear in various places. And when it comes to cost avoidance, it’s good if supply chain can get the credit for mitigating supplier requests for raised prices and market turbulence.

“The finance organization also needs to be educated,” he said. “So being able to articulate that value and educate your finance folks will help drive more synergy, will help get more traction and support from that organization.”

Photo: Las Vegas News Bureau

16 | SEPTEMBER 2013

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Most companies must work towards excellence when it comes to stakeholder relations—and Google is no exception.

During their presentation, entitled The Search for Excellence in Procurement Stakeholder Relationship Mangement, Dr. Bernd Huber, Google’s manager, Sourcing Center of Excellence, Google Germany, and David Natoff, manager of the company’s procureto-pay process, spoke about how Google transformed itself from an RFP shop—doing a high volume of competitive bids— to a business partner and advisor focusing on the customer. Natoff described what makes Google’s procurement process unique, including its extremely non-mandated, high-speed environment. With so much work and limited sourcing staff, prioritization is important.

Google has seen “phenomenal growth,” he said, with revenue going from $3 billion in 2006 to $20 billion over the last few years. “A lot of the challenge is about what do we work on, when do we work on it and how do we work on it,” he said.

The sourcing team is embedded within finance, Huber said, with 35 team members dispersed across 11 offices.

“Since we don’t have a mandate we have to actively sell our services to our stakeholders,” he said.

Those stakeholders can source without procurement’s help, so to offer value the procurement team must do it better. The good news, Huber said, is that life gets easier when stakeholders see that value and want to work with procurement.

To get to the point where that was the case, procurement did an analysis investigating their strengths and weaknesses, as well as opportunities and threats. While the team was strong due to its single, global integrated team and process, weaknesses included lack of investment in category knowledge and RFP fatigue, Huber said. While opportunities included untapped team member potential and key stakeholders asking for a larger role, threats included too much focus on price reductions and the need for focus on relationship management.

The analysis provided key takeaways, Natoff noted, including a

SEARCH FOR EXCELLENCE

focus on stakeholders who have an impact on business, he said, not necessarily the biggest spenders or those with the largest rate reductions. He recommended taking an inventory of services that the procurement team provides. A team can’t be good at everything, he said, so focus on the services that stakeholders want.

Google began stakeholder surveys about two-and-a-half years ago, Huber noted.

Those surveys include two questions: what’s the satisfaction level and how can sourcing improve its performance? As well, the department hosts virtual “hangout parties” where stakeholders can discuss sourcing and offer feedback online. “It’s very interactive and opens up a lot of transparency as well, which is good,” Huber said.

Procurement conducts business relationship management interviews with their platinum and gold stakholders. The department does attribute mapping in which those stakeholders are asked what services they want and how sourcing is delivering.

Among the advice the pair gave was to measure progress. Data is king, Natoff said.

As well, incorporate risk into the prioritization process. Develop joint business plans with stakeholders, he advised, and fund the important tasks and stop doing the rest.

DEVELOPING SKILL SETS Gaining experience across several supply chain functions is important, but doing so can be tough. A panel focused on skills needed to transition back and forth from logistics, operations, procurement and other supply chain areas.

Some companies want employees to focus on one area for several years before moving to another, said panelist Gary Stoddard, partner at procurement services firm Nitor Partners.

While procurement and supply chain are broad the separate areas can sometimes lack integration.

Practitioners tend to work to become experts in one functional area without developing knowledge of other areas, Stoddard said—but more practitioners workign across areas helps drive an integrated and wholistic procurement environment. He identified eight categories that practitioners can work to work to develop skills in: spend analytics; category management; strategic sourcing; transactions; contract management; suppli-

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ISM 2014 Conference

er management; supply chain; and logistics.

“There are some common skills across those eight areas,” he said. For example, influencing people is a good skill across all categories, Stoddard noted, adding that those who can’t influence others have difficulty enabling change, especially in large companies. Since some of the eight functional areas are more related than others, he advised looking for natural leaps first to aid role transition.

Stoddard noted sales and customer-facing experience helps practitioners, since skills like negotiations, project management and stakeholder management transfer well while offering experience across the business spectrum.

Fellow panelist Anthony Humphrey, former director of talent acquisition at MeadWestvaco, also recommended understanding other supply chain areas in order to make good decisions. And endto-end understanding of the business process is useful, Humphrey said, since

more supply chain organizations are now asked to show value rather than just procure goods. The shift from value protection to also include value creation means practitioners must understand functional areas across an organization.

Humphrey recommended seeking assignments that allow practitioners to explore other areas, including non-work related activities. As well, good mentors can help in building a skill set that can be taken into other areas or occupations.

Panelist Andrew Bartolini noted a transformation in which more organizations have a CPO than before. He noted a study by research firm Ardent Partners stating that during the recession of 2008-2009, many organizations began looking to procurement to defend the bottom line. The study noted that 18 percent of respondents considered procurement a “top collaborator,” while another 25 percent said it was a “significant influencer.”

As well, 58 percent of CPOs think their staff is too small, while 55 percent said that skills need improvement.

Many CPOs have a technical background rather than, for example, an MBA degree, Bartolini said. Their background is often process-oriented. The trend among recruiters, Bartolini noted, was searching for CPOs from the outside who have worked for companies of similar size. Bartolini noted that Tim Cook, Apple’s current CEO, was CPO of the company previous to his current position.

CYBER RISK MANAGEMENT

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Cyber security risk management will become one of the big business topics in the next five years, predicted Timothy Hall, president of AZORCA Cyber Security. During his presentation, Hall noted that most people think of such risks as an IT problem rather than supply chain issue, supply chain is often the main target: 40 percent of cyber attacks are associated with, or go through, the supply chain, Hall said.

Although many people will associate cyber risks with stealing, there are several threats organizations must deal with. For example, corporate espionage can involve those looking for intellectual property, while nation states may look to a company’s system to gather intelligence. So-called hacktivists— using computers or computer networks to promote political ends—will also operate differently from others who pose a cyber risk.

Finally, Hall said, insiders can pose a threat to an organization’s IT security.

“And there’s no better place to go than the supply chain,” he said.

To add to the situation, cyber risk is messy, Hall noted. It covers a lot of areas and it’s hard to know whether to be con-

cerned about it. The issue is further complicated by current business realities, he said. For example, while organizations may say that they will “protect, detect and respond,” to cyber risk, that’s made difficult by the fact that organizations possess existing infrastructure. Most companies simply can’t buy all new IT equipment. The question is, Hall said, what can companies do immediately to protect themselves?

Current technology and business trends put the advantage firmly in the hands of the adversary, Hall said. While organizations must protect everything from cyber risk, those looking to perpetrate crime need only break into one thing. An organization can be vulnerable to a zero-day attack—a cyber attack that exploits a previously unknown vulnerability in a computer application. As well, management can lack a common perspective and understanding of the risks in the cyber world. Bring-yourown-device policies can also present vulnerabilities, Hall said.

So how can you make the situation better? Some short-term steps include establishing both a common ground and understanding of the risks among the C-suite, Hall said. Let those in the organization know that it’s a senior management problem.

He also recommended evaluating an organization’s current state to understand where the company is in terms of cyber risk management.

To conclude, Hall told the audience that dealing with cyber risk involved deciding how much risk an organization is willing to tolerate. And while it’s a difficult process, it’s important for organizations to identify what they’re trying to protect.

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Supply management has a large impact on competitive advantage, according to Rene Rendon, associate professor at the U.S. Naval Postgraduate School. During a session entitled The Case of Auditability in Supply Management Organizations, Rendon made the case for auditability in supply management. Those supply chains are becoming more complex and expanding their reach globally and with that comes risk, he told the audience. At the same time, organizations are relying more on supply management for competitive advantage and focusing on supply chain performance and accountability.

Auditability, Rendon said, reflects how well an organization follows the decision trail during the process. And the auditability of a supply chain is reflected in three functions, or an auditability triangle: competent people; capable processes; and effective internal controls.

In speaking about competent people, Rendon asked the audience to consider whether the people within an organization had the skills and knowledge to perform their tasks. One of the biggest recent shifts in supply management is that practitioners now work more often in cross-functional teams. Supply management, he said, is broader than the purchasing function and those in supply management may end up working with engineering, finance or other organizations.

For the second point—capable processes—Rendon noted that supply management was a broad area that included not just pur-

SUPPLY CHAIN AUDITABILITY

chasing, but also distribution, logistics, manufacturing, materials management and other areas. In these areas, look at whether processes are institutionalized and whether there is continual improvement, he advised.

Fellow presenter Juanita Rendon, lecturer of accounting, U.S. Naval Postgraduate School, told the audience that internal controls should be an ongoing process rather than a one-time action. For risk assessment, organizations should think about not only what could go wrong, but also what the objectives are regarding areas such as financial, compliance and operations.

Overall, the ISM2014 Conference offered a range of topics covering several aspects of supply management. Delegates left with both ideas and best practices to put into action when they returned to their organizations.

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FOR ONE. FOR MANY. Institute for Supply Management ÂŽ From seminars, online courses, conferences and mentoring for you to sharpen your skills, to competency assessments, current-state analysis, or a performance check to measure, design and deliver custom skill development for entire teams or consulting for your organization, ISM can help you draw personalized supply chain plans

for one or for many.

Visit www.ism.ws/3972 to write your plan. Connect with our Canadian affiliate at www.ism-canada.org.

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JUNE 2014 | 19

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LE PROFESSIONNEL

Par Cheryl Paradowski

Plus de 500 employeurs interviewés par l’AGCA

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fin de savoir ce qu’ils connaissent de l’AGCA et de la gestion stratégique de la chaîne d’approvisionnement et afin de mieux comprendre les attentes des employeurs à l’égard des services de gestion de la chaîne d’approvisionnement, l’AGCA a réalisé plus tôt cette année des entrevues téléphoniques avec des décideurs de haut niveau d’entreprises privées et publiques.

Cette étude est très précieuse puisqu’elle nous permet de déterminer les besoins et la perception des employeurs et des membres, puis d’établir les plans d’action appropriés. Voici les principaux objectifs de l’étude : • Comprendre la valeur des spécialistes de la chaîne d’approvisionnement et leur contribution au succès de l’employeur • Déterminer si l’ACGA, CAL et la fusion de ces associations pour former l’AGCA sont connues • Évaluer la qualification des professionnels de l’AGCA et l’importance de l’obtention du titre • Évaluer la perception de la profession Nous avons interviewé des chefs de la direction, des directeurs financiers, des directeurs de l’exploitation, des vice-présidents, des directeurs des ressources humaines et des hauts dirigeants de la gestion des approvisionnements de 531 entreprises de divers secteurs partout au pays.

Résultats principaux Dans 43 % des cas, les principaux défis liés à la chaîne d’approvisionnement touchaient les achats et la gestion de l’approvisionnement suivis, avec 37 %, par les défis associés à la logistique et aux transports. Les compétences en finances ont été mentionnées dans 22 % des cas, tandis que la fidélisation des employés et la conformité aux règlements sont les principaux défis de 10 % des répondants.

La plupart des entreprises interrogées ont affirmé qu’elles accordent beaucoup d’importance aux activités liées à la chaîne d’approvisionnement; 80 % d’entre elles ont dit qu’il est important ou très important qu’elles

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deviennent plus stratégiques et qu’elles considèrent la gestion de la chaîne d’approvisionnement (GCA) comme une activité professionnelle contribuant à l’efficacité et à la compétitivité de l’entreprise. Ceci correspond au grand pourcentage de répondants qui ont affirmé que le service de la GCA a beaucoup d’influence sur les éléments suivants : • Réduction des frais d’exploitation (58 %) • Contribution au succès global de l’entreprise (55 %) • Augmentation de la satisfaction de la clientèle (53 %) • Source d’efficacité au sein de l’organisation (47 %) • Optimisation des relations avec les fournisseurs (46 %) • Accroissement de la compétitivité (42 %) • Participation à la gestion efficace du risque (34 %) Nous sommes heureux de l’importance élevée accordée à la GCA, mais l’accent est surtout mis sur l’aspect « traditionnel » de la chaîne d’approvisionnement, soit la réduction des frais d’exploitation. Il faudra redoubler d’efforts pour mieux faire comprendre l’aspect stratégique de la gestion de la chaîne d’approvisionnement et son incidence sur la satisfaction de la clientèle, la gestion du risque, etc.

Bien des employeurs ont affirmé vouloir que leurs spécialistes de la chaîne d’approvisionnement soient plus stratégiques, mais nous n’avons pas observé la même volonté d’investir dans la formation qui permettrait à ces employés d’atteindre cet objectif.

Seulement 54 % des entreprises ont indiqué qu’elles encouragent dans une certaine mesure leurs employés à poursuivre leur formation professionnelle ou à obtenir un titre professionnel.

Parmi les employeurs qui disposent d’un budget de formation, 73 % ont consacré moins de 100 000 $ à la formation de tout le personnel en approvisionnement dans tous leurs établissements. Malgré le peu d’insistance mis sur la formation, 35 % des employeurs seraient prêts à payer plus pour engager un détenteur du titre de p.g.c.a. En fait, 37 % seraient

davantage disposés à engager un p.g.c.a qu’un spécialiste qui ne possède pas ce titre, 34 % accorderaient davantage une promotion à un détenteur du titre et, reconnaissant l’avantage d’engager des professionnels formés à gérer de façon stratégique les chaînes d’approvisionnement, 28 % des employeurs favoriseraient un p.g.c.a. ayant moins d’expérience par rapport à un candidat ayant plus d’expérience, mais non le titre professionnel.

Des deux associations fusionnées pour former l’AGCA, l’Association canadienne de gestion des achats (ACGA) était la plus connue (44 %) comparativement à l’Association chaîne d’approvisionnement et logistique (CAL) (21 %). Dans l’ensemble, 26 % des répondants avaient une certaine connaissance de l’AGCA, et cette reconnaissance était beaucoup plus élevée dans les entreprises dont les revenus bruts dépassent 500 millions de dollars (59 %) et qui ont un budget de formation de plus de 100 000 $ (58 %).

Ces statistiques ne sont pas surprenantes seulement sept mois après le lancement de notre nouvelle marque, mais elles dénotent le besoin d’une stratégie particulière auprès des PME. L’AGCA a recueilli des données précieuses sur le marché de l’emploi et sur la valeur accordée à la gestion de la chaîne d’approvisionnement et à la profession en général. De nombreux défis et occasions s’offrent à l’AGCA qui souhaite tisser des liens plus solides avec les employeurs. L’un des plus grands défis sera de mieux faire connaître la nouvelle association issue de la fusion. Le nom de l’AGCA est peu connu actuellement, mais il est évident que les employeurs sont vivement intéressés par notre association. La moitié des répondants souhaitait recevoir plus d’information sur l’AGCA et a demandé qu’un exemplaire du rapport final lui soit envoyé. J’ai confiance que nous serons en mesure d’utiliser les résultats de cette étude et les relations établies avec les employeurs qui y ont répondu afin de promouvoir l’importance de la gestion stratégique de la chaîne d’approvisionnement et la place de l’AGCA à titre de chef de file du domaine.

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THE PROFESSIONAL By Cheryl Paradowski

SCMA conducts interviews with over 500 employers to gauge their awareness of the association and of the importance of strategic supply chain management

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arlier this year, SCMA conducted telephone interviews with a representative set of senior decision makers in private and public sector organizations to better understand the needs and expectations of employers with respect to the supply chain management function within their respective organizations.

This market research is invaluable as it allows us to accurately determine the needs and perceptions of employers and members, and in turn establish action plans to meet those needs. The primary objectives were to: • Understand the value of professionals in supply chain management and their contribution to the employer’s success.

• Identify awareness of PMAC and SCL and our amalgamation into SCMA. • Assess the qualifications of the SCMA professional including the emphasis on certification.

• Gauge perceptions of the profession.

We successfully interviewed 531 organizations in various sectors across the country and were able to speak with CEOs, CFOs, CAOs, vice presidents, human resource directors, and senior management in supply chain areas.

Key Findings The primary supply chain challenges identified by 43 per cent of employers were related to procurement and supply management, followed by 37 per cent who indicated logistics and transportation. Financial skills was reported by 22 per cent, and 10 per cent indicated employee retention and regulatory compliance were among their primary challenges.

Most organizations interviewed communicated a high level of importance for supply chain activities in their companies, with 80 per cent indicating that they believed it was important or very important that their organizations become more strategic in thinking about supply chain management as a profession contributing to corporate efficiencies and competitiveness. This correlates with the large per-

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centage who stated that supply chain functions have a significant impact on: • Reducing operating costs (58 per cent) • Contributing to the overall success of their organization (55 per cent) • Improving customer or client satisfaction (53 per cent) • Creating more efficiencies within their organization (47 per cent) • Optimizing supplier relationships (46 per cent) • Increasing competitiveness (42 per cent) • Contributing to effective risk management (34 per cent) While we are encouraged by the high level of importance that is placed on supply chain management, the continued focus of supply chain is still largely placed on the “traditional” supply chain contribution of reducing operating costs. A greater effort will be needed to broaden the understanding of strategic supply chain management and its implications for areas such as customer satisfaction, risk management, etc.

While many employers did acknowledge that they would like their supply chain employees to be more strategic, we did not find a matching emphasis on the need to invest in training to get their employees to that level. Only 54 per cent of organizations indicated at least some emphasis on encouraging employees to pursue professional development training or a professional designation. Of the employers that had employee training budgets, 73 percent indicated less than $100,000 had been allocated to train all their supply chain staff at all locations.

Even with the low priority that was placed on training, 35 per cent of employers indicated that they would be willing to pay more to hire an employee who was an SCMP designation holder over one who wasn’t. In fact, 37 per cent indicated that they are more likely to hire an employee with an SCMP designation than without, 34 per cent were more likely to promote an employee with the SCMP designation than one without, and in an enthusiastic acknowledgement of the ad-

vantage that employers enjoy with a strategically trained professional managing their supply chains, 28 per cent reported that they would choose an external candidate with the SCMP designation and less experience over one who had more experience and no designation.

Of the two legacy associations that make up the amalgamated SCMA, the Purchasing Management Association of Canada (PMAC) had the highest level of awareness among employers with 44 per cent knowing at least something about the organization compared with 21 per cent for the Supply Chain and Logistics Association of Canada (SCL).

Overall, 26 per cent of respondents had at least some knowledge of the Supply Chain Management Association (SCMA) with recognition being considerably higher in organizations with over $500 million in gross revenue (59 per cent) and a training budget of more than $100,000 (58 per cent). This was not a surprising statistic only seven months after the re-branding, but it does demonstrate that some specific strategies need to be developed to reach small and medium-sized enterprises.

SCMA has learned a great deal of valuable information about the employer market and the value employers place on the supply chain function and on the profession as a whole. There are many challenges and opportunities for SCMA as we forge stronger links with employers. One of our biggest is increasing the awareness of the new amalgamated association. While name recognition of SCMA is limited at this time, there is definitely strong evidence that employers are interested in our association. Half of our respondents indicated they were interested in receiving more information about SCMA and requested a copy of the final survey report. I am very hopeful that we will be able to leverage the findings of this research and the relationships we’ve started to form with these participating employers to raise awareness in the marketplace of the importance of strategic supply chain management and position SCMA as a leader in the field.

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Sustainability Best Practices

Practicing Green Procurement Tips and best practices for those looking to initiate green procurement practices

By Frances Edmonds

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22 | JUNE 2014

hat is green procurement? For the past decade, many companies have implemented initiatives to reduce their environmental impact. With these initiatives as a foundation, they are now transitioning from these “random acts of green” to centrally driven, best-in-class environmental sustainability programs and policies. These are designed to help protect companies and the environment by integrating environmental performance considerations into the procurement decision-making process, improving operational environmental performance, and creating value for money. Bottom line: green procurement is ensuring responsibility in what we buy and whom we buy from.

Green procurement requires the integration of environmental performance considerations deeply into the procurement process.

This includes planning, sourcing, use and end-of-life disposal. Green procurement requires an understanding of the environmental aspects, potential impacts and costs associated with the complete life cycle of the goods and services being acquired from a third party. Additionally, administrative processes and procurement procedures can also offer opportunities to reduce environmental impacts. For example, implementing electronic signatures to support low-cost and low-risk contractual agreements can help reduce carbon emissions, waste and cost.

Environmentally preferable goods and services are defined as having a lesser or reduced impact on the environment over the complete lifecycle of the good or service, when compared with competing goods or services used for the same purpose. Environmental performance considerations can include the reduction of greenhouse gas emissions; use of less energy and water both in manufacturing and usage of the good or service; waste reduction and end-of-life strategy; use of renewable resources; hazardous waste reduction; and toxic and hazardous substances reduction.

Take a “simple” device like a printer. Sure you have a wide array of choices to make, but once you know the basics, such as speeds, color and paper sizes there are a number of environmental attributes you

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should ask your vendor to provide. These attributes include: • A calculation of the costs to operate that printer over its working life in the province in which it will operate and how the consumables (cartridges) and the printer itself will be managed at end of life (not forgetting that data privacy is not just for PCs any more).

• Information on the environmental impacts of the product.

Given that there are many, you can assess these in a comparable way using the EPEAT eco label. Now available on PCs and printers, this label gives you a quick and easy way to assess 23 required and 28 optional environmental criteria in one simple way. In addition, you can pick the level of sustainability you want: bronze, silver or gold. (We know which you want!)

Another example is rental cars. By shifting to hybrid and fuelefficient cars, you can dramatically reduce greenhouse gas emissions and cost. Our experience is that rental companies can work to set this as a requirement.

Why should I do this?

There are many benefits to practicing green procurement.

Aside from the obvious of “it’s the right thing to do,” here are five key benefits you can achieve: 1. Increased employee engagement 2. Increased brand image 3. Increased customer satisfaction 4. Reduced risk 5. Reduced costs 6. Increased shareholder value

Great: where do I start?

Green sourcing does not call for the adoption of completely new procedures. By leveraging existing sourcing techniques, you can capitalize on the new and expanding set of opportunities by: 1. Executive commitment 2. Measurement and opportunity assessment 3. Materiality and stakeholder engagement 4. Assessment of the supply base 5. Development of green sourcing strategy 6. Sourcing 7. Tracking and performance reporting 8. Sustainable development Follow these ideas, or set a goal of true leadership. Corporations today often lead the charge to change the way business is done. Why not recognize companies for setting ambitious goals to reduce their footprint; being transparent about their supply chain; and how they take back, recycle and design for the environment? Doing all this in measurable ways is integral to our battle with climate change.

Good luck on your climb up Mount Sustainability..

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Frances Edmonds is director of environmental programs at HP Canada.

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14-06-09 4:13 PM

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