Supply Professional December 2023

DECEMBER 2023

THE ART OF TAKING RISKS Matthew Zarzycki advocates for the logistics profession The future of manufacturing

Supplier diversity Warehouse management systems The Hyundai IONIQ 6 Net-zero supply chains

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VOL.65 No.6 DECEMBER 2023 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN

@SupplyProMag facebook.com/supplyprofessional linkedin.com/company/supplyprofessional

COVER: DANIEL EHRENWORTH PHOTOGRAPHY

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FEATURES 8 MANUFACTURING’S FUTURE Technology is enabling manufacturing growth.

10 TAKING CHANCES Matthew Zarzycki on advocating for logistics.

14 THE RIGHT BALANCE Consolidation can reduce the number of MRO suppliers.

ALSO INSIDE 16 WAREHOUSE MANAGEMENT SYSTEMS New technologies in WMS are helping to improve warehouse efficiency.

18 THE RACE TO NET-ZERO What’s a net-zero supply chain, and what does it take to actually get there?

20 DIVERSE APPROACHES Supplier diversity in the public and private sectors.

4 UP FRONT 5 BUSINESS FRONT 6 IN THE FIELD 7 INDUSTRY NEWS 30 THE LAW

22 THE MAGIC TOUCH Performance tips for supply chain professionals.

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UP FRONT

HEADING OFF LABOUR SHORTAGES The December issue of Supply Professional – the last one of the year – is always a good place to review what’s happened over the past 12 months, as well as what’s likely in store for the field going into the New Year.

And while some of the turmoil of the past few years has abated, it’s been another interesting year for supply chains. Many of the more prominent trends from previous years, like the rise of technology and digitization, will likely continue over the next 12 months.

One of those trends, and similarly one that we’ll continue to grapple with for some time, is the ongoing labour shortage. On that front, it’s not all bad news. According to a Statistics Canada analysis from earlier this year, the proportion of businesses expecting a shortage of labour to be a problem fell over the last year or so – from 37 per cent to 30.4 per cent in the first quarter of 2023. This year, job vacancies were at their lowest since 2021.

Still, over half (50.5 per cent) of businesses with 20 to 99 employees anticipated a labour shortage to be an obstacle, while more than two-fifths of businesses with 5 to 19 employees (43.6 per cent) and 100 or more employees (42.0 per cent) expected the same.

Labour shortages remain a challenge across multiple industries and fields, like manufacturing, construction, and hospitality, to name a few.

There are various reasons for this, among them the knock-on effects of the COVID-19 pandemic. Also, an aging workforce, with many of those older workers taking an early retirement around the time of the pandemic.

There’s a multifaceted impact to this shortage, including slower delivery times and rising costs. Fortunately, there are also numerous actions that organizations can take to address that shortage.

One challenge facing employees, that may be part of the solution to the above, is advancing technologies like artificial intelligence (AI) and robotics. Some fear a loss of human employment, as technology is able to do more and more of the functions humans traditionally perform.

Ironically, quite the opposite might happen. In many instances, technology like robotics is helping those aging workers stay in their positions longer. Cobots, or robots that work alongside human colleagues, are helping aging workers with tasks they may increasingly find too taxing to do themselves. Organizations must ensure their workforces are trained to use the kinds of technology that will be prevalent going forward.

There are innovative ways to engage younger workers as well. Of course, educating younger people about how great it is to work in supply chain helps. High schools, post-secondary institutions, and industry organizations are already doing this.

As another example, Amplify Logistics seeks younger drivers and workers, offering perks like weekend time off that appeal especially to their demographic. In this issue’s profile, Amplify’s Matthew Zarzycki talks about the benefits of this strategy. You can read about their efforts starting on page 10.

Labour shortages will likely remain a challenge for some time. Having strategies to deal with those shortages is vital for organizations as they head into the New Year.

EDITOR MICHAEL POWER 416-441-2085 x7 michael@supplypro.ca PUBLISHER FARIA AHMED 416-441-2085 x 5 faria@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY

EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management— City of Toronto JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc.

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BUSINESS FRONT—BY MICHAEL HLINKA

THE CUSP OF SOMETHING SPECIAL HUMANITY SITS ON THE EVE OF PRODUCTION, NOT DESTRUCTION I was talking with several friends who are very knowledgeable about all things political and economic.

I was struck by their pessimism on both fronts. Politically, they are concerned that the upcoming US election will pit Joe Biden against Donald Trump, and their reading is that this will be a case of, heads we lose, tails we don’t win. Or vice-versa. They point to the strife in Gaza and Ukraine, and the fear that China may be tempted to make an aggressive move on Taiwan.

Economically, they worry about the size of the US debt. It exceeds $23 trillion right now and will balloon to a projected $36 trillion by 2031. It brings back echoes of the protest song, Eve of Destruction, and its classic lyrics: “But you tell me / Over and over and over again, my friend / How you don’t believe / We’re on the eve of destruction.”

You know what? I don’t think that we’re on the eve of destruction. Rather, I honestly believe that we are on the cusp of the greatest productivity boom that mankind has ever experienced, and I’ve got two distinct reasons for this optimism: Artificial Intelligence (AI) and robotics.

Let me start with AI. As you are reading this, driverless cars are commonplace in California cities like San Francisco. A friend told me about visiting that city this past summer. He said that you see them all the time. He got into an Uber that was piloted by an energetic, but somewhat crazy young lady.

She asked him if he wanted to see something funny. He replied, ‘why not?’ She started cutting in front of driverless cars and then slamming on her brakes.

Not a single collision. The AI program reacted so quickly, faster than any human could. The implications are that soon it will never be safer to drive, resulting in fewer traffic fatalities. These vehicles will be programmed to minimize energy consumption, whether that be gasoline or electricity. Moreover, literally millions of hours of labour will be freed to put to use in other ways.

THE RISE OF ONSHORING Then there’s robotics. This will lead to an onshoring of manufacturing all over the world. This will allow North America to produce what it needs. In a short time, we will never again have to be concerned with supply chains or other related issues we suffered through during the COVID-19 pandemic.

This is not to say that there will not be challenges. There are currently approximately 325,000 men and women employed as truck drivers in Canada.

This could very easily decline to zero within a generation. I would not be surprised in the future if it will be illegal for a human to operate a vehicle on public streets. Just as we don’t allow individuals to drive impaired (because of heightened risk), it’s conceivable that when driverless vehicles are perfected, the right to manually operate a motor vehicle will be taken away from citizens. Lots of good will come of this new technology, but what are those people going to do to earn a living?

The loss of driving jobs will almost literally be the iceberg’s tip compared to 1.75 million manufacturing jobs that will disappear over time. It seems that these losses

would be more gradual, continuing a secular trend we’ve seen over the past 45 years. But this doesn’t mean the losses will be painful and permanent.

I’ve been focusing so far on blue-collar jobs, but with the perfection of AI there will be a plethora of white-collar/professional occupations that would be eliminated. What we will see is the counter-intuitive combination of exploding wealth at the same time that unemployment is soaring.

INCOME FOR ALL This will require public policy adjustments. I have written about universal basic income (UBI) here before, and I can’t think of a better reaction to what will be the new employment reality. I suspect this will eventually evolve into something that seems very much like China’s social credit policy. There will be different tiers of UBI, depending on certain behaviours.

If you keep your nose clean and are not involved in the criminal justice system, you will receive more money than the career criminal. If you get vaccinated as per public health guidelines, you will benefit with a higher monthly payment. This might sound a little bit like a cross between Aldous Huxley’s Brave New World and George Orwell’s 1984, and I won’t argue that point. But balanced against it will be the individual freedom and ability to self-actualize that’s unprecedented in human history.

It won’t be a road without bumps, but we’re on the eve of, I’m not exactly sure what, but my gut tells me it will be something truly special. SP

Toronto-based Michael Hlinka is a tenured professor at George Brown College. He hosts a weekly podcast about wagering on professional football.

His website is www. michaelhlinka.com

“What we will see is the counter-intuitive combination of exploding wealth at the same time that unemployment is soaring.”

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IN THE FIELD—BY STÉPHANIE DION

STRENGTH IN NUMBERS GROUP PURCHASING HAS SURGED IN PUBLIC PROCUREMENT Stéphanie Dion is Procurement Manager, Canoe Procurement of Canada.

Public procurement is evolving quickly. The pandemic provided an avenue for procurement to gain attention and a seat at the table.

This is an amazing opportunity.

My colleague, Sean Carrol, former CPO from the State of New York, said in an open letter to members of the National Institute of Government Purchasing dated March 2020, the pandemic would be our opportunity to raise our profile and shine. Was he ever right.

This spotlight means more is expected of us, as procurement is considered a strategic function in many public entities.

Public entities are facing challenges like never before, with evolving and heightened regulatory requirements, workforce, and supply shortages and pricing volatility having to do more with less, from microchips, to fleet, to lumber, to tampons. As practitioners, we must be agile, creative, and flexible.

Public entities must rethink how to provide their services strategically, do more with less. This is where group purchasing comes in.

Group purchasing has seen a significant surge in popularity and use in the last 10 years in Canadian public procurement. While it may be a new tool in the procurement toolbox for many, collaboration is well established in Canadian public procurement. Collaboration has been used for decades for various sector-specific groups like the provincial, municipal, health, and education, often in defined geographical locations in proximity such as 6 DECEMBER 2023

Alberta, Ontario, and the Maritimes. Some not-for-profit municipal associations such as rural municipalities of Alberta were created for the function to do group purchasing 100 years ago.

Group purchasing organizations (GPO), known as cooperatives in the US, are used extensively south of the border. The pandemic, supply chain, and workforce challenges have contributed to the Canadian surge in popularity.

In addition, the Canadian Free Trade Agreement (CFTA) now permits the use of buying groups in procurement. Public entities can utilize GPOs, bringing opportunities for entities to enhance their performance. When used strategically, cooperation in procurement can bring significant benefits to public entities, including shorter production and delivery timelines, access to alternative equipment in high demand, administrative efficiencies, contributing to optimization of operations.

DUE DILIGENCE While CFTA allows for the use of buying groups, it’s silent on implementation. Therefore, it is critical for public entities considering the use of any buying group such as Medbuy or Canoe to do their due diligence before using them.

Not all GPO s are the same. For example, the level of disclosure of information may vary between them while some are public entities, others are for profit. Similarly, not all public entities have the same

policies or obligations and are subject to various trade agreements.

Entities would therefore benefit from reviewing information and processes from a GPO they are considering utilizing.

Something for public entities to consider is the importance of compliance for GPOs. Executing solicitations in a compliant manner is the basis for GPO’s existence. Following the rules is mandatory for anyone involved in public procurement, GPOs included. To be compliant, GPOs must adhere to the same rigorous processes and procedures as public entities or better. Entities considering using GPOs can access multiple resources from the National Cooperative Procurement Partners (NCPP), with thought leader Tammy Rimes at the helm. The NCPP is the voice for cooperative procurement through legislative advocacy, training, sharing member success stories, and educating public procurement teams across North America. Membership is free to public sector practitioners at www. ncppassociation.org.

There are many success stories from entities using GPOs. The value levers available through GPOs will differ depending on the goods or services in question, each entity’s challenges, and the driver behind their decision to use GPO contracts. Some entities have been able to reduce the backlog of requisitions, often eliminating delays in accessing critical goods and services, and were able to re-allocate their procurement expertise to

“Collaboration has been used for decades for various sector-specific groups like the provincial, municipal, health and education.”

complex and high-risk solicitations.

Others reduced the wait time in the production queue for high-demand fleet equipment by eliminating the three-to-six-month tendering process they would have had to issue had they not leveraged a GPO contract. Multiple smaller entities could access a better value proposition (for example compliance to regulatory requirements, better pricing, enhanced level of service, better product) by leveraging the buying power from joining forces under a GPO. Finally, many public entities have turned to GPO contracts to plan sourcing strategy should a public emergency occur.

Challenges can have some positive or “less bad” outcomes. SP SUPPLY PROFESSIONAL

NEWS

Trigon to repurpose land for LPG propane exports

Tescys announces 2023 Supply Chain Excellence Awards winners

Trigon Pacific Terminals Ltd. (Trigon) plans to redevelop part of its existing coal facilities for liquid petroleum gas (LPG) exports, also referred to as propane and butane.

The project will create a diversified, open-market LPG supply chain and additional export capacity, the company said, without needing to develop new land or build a berth.

Trigon will add upwards of 120,000 cubic metres of LPG storage capacity and provide export opportunity for Canadian propane producers, while maintaining steelmaking coal export volumes.

Trigon has finished preliminary design work and anticipates being ready to start operations by late 2027.

The company will use the terminal’s railyard, coupled with new rail unloading facilities, to provide unit train unloading. With Trigon gaining full use of the LPG loading arms on its existing berth in January 2024, there will be no need to build more marine loading infrastructure. This will leave Trigon’s second berth available for other commodities, like low-carbon hydrogen-as-ammonia.

Montreal-based supply chain management software company Tecsys Inc. announced the winners of its 2023 Supply Chain Excellence Awards at the 2023 Tecsys User Conference. The winners have shown exceptional commitment to leveraging the Tecsys environment and advancing supply chain best practices, the company said.

The winners were selected from nominations by industry peers: Operational Excellence Award: Anwar Williams from McLeod Health was celebrated for efforts in integrating Tecsys and the health organization’s Epic EMR system.

Strategic Leadership Award: Mike Brown, vice-president, supply chain and environmental services at Texas Children’s Hospital, was recognized for his visionary leadership. He has been instrumental in transitioning his organization from a siloed supply chain practice to a hub-and-spoke consolidated service centre.

Innovation Award: Werner Electric received this award for their pioneering approach to supply chain management.

DHL Supply Chain introduces green transport policy DHL Supply Chain is rolling out a global green transport policy, signaling a move in its future investments towards decarbonized transport solutions.

The goal is to reduce carbon emissions in line with the group’s sustainability roadmap. The company said that transport services are one of the key contributors to its emissions footprint. The policy provides guidance on the most suitable greener alternative based on factors like availability, infrastructure, and cost per market.

DHL Supply Chain will transition around 2,000 of its vehicles from

combustion engines to greener alternatives, including hydrotreated vegetable oil, biogas, electric or hydrogen.

DHL Supply Chain recently announced its plan to deploy a substantial fleet of biomethane trucks throughout Ireland as part of its Green Transport Policy. They have also committed to a decadelong agreement for investment in domestic biomethane energy production. DHL is poised to unveil additional upcoming projects and announcements soon.

Vancouver Airport gets funding to reduce environmental footprint

We Pack Logistics chooses Nulogy to digitally enable co-pack growth and agility

The Vancouver International Airport plans to improve its main terminal’s building performance and reduce emissions, using $3.5 million from the governments of Canada and British Columbia.

The project will reduce the main terminal building’s emissions by switching from natural gas to electricity for domestic water heating.

The project will also decarbonize three hot water loops by installing air-source heat pumps.

“To reach our target of net zero by 2030, we must prioritize innovation and collaboration to reduce carbon emissions and strengthen the green economy for generations to come,” said Christoph Rufenacht, the airport’s VP of airport development and asset optimization. “We are grateful to both the Governments of Canada and British Columbia for their partnership as we strive to become an organization that sets the bar for sustainability, and a hub of innovation which supports the local economy and environment.”

The improvements are expected to reduce the facility’s GHG emissions by 855 tonnes annually.

We Pack Logistics has chosen supply chain collaboration solutions company Nulogy to digitally enable its operations. The company will now run its operations and network on Nulogy.

We Pack Logistics said the objectives of using Nulogy’s platform are to manage increasingly complex orders for new and existing FMCG customers, gain visibility and control over shop floor costs while automating and realizing efficiency gains, and standardizing its co-pack workflows across several sites.

Nulogy is a multi-enterprise collaboration platform for supplier networks and digitally enables manufacturers and their external supplier networks to collaborate on an AI-enabled platform.

(CNW Group/Nulogy Corporation)

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BY MATTHEW CHANG

THE FUTURE OF MANUFACTURING NEW TECHNOLOGIES ARE ENABLING MANUFACTURING CAPACITY ACROSS NORTH AMERICA The future of manufacturing is that we will make things once again.

North America is adjusting to the rebalancing of global trade and supply chains. This includes the three manufacturing power houses of Canada, the United States, and Mexico – each of which are reclaiming manufacturing capacity that had been sourced overseas for the last several decades.

New production is emerging in North America around fabricated metals production, technology hardware, final assembly, and retail goods. The three nations are beginning to expand their trade as a block, which also means more manufacturing in North America. North America is making again, and this begins a virtuous cycle where the more we make, the more we will look to make.

In 2022, USA-Mexico Trade of goods accounted for $779 billion and USA-Canada trade accounted for $793 billion of goods. From 2009 to 2022, US manufacturing capacity has grown from $1.9 trillion to $2.3 trillion, Canada from $175 trillion to $204 billion, and 8 DECEMBER 2023

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Mexico from $160 billion to $222 billion. The overall growth between the three countries is 22 per cent and $491 billion over 13 years, with inflation removed from the figures.

Given the lag between demand and increasing capacity, I expect the pace of expansion of the manufacturing sector in North America to expand at a more rapid pace. The supply chain, shipping, and manufacturing capacity problems of the COVID-19 pandemic time period are just now being addressed with new CAPEX spending for projects. Expanding capacity in 2023, 2024, and 2025 will create more options to fulfill orders at the local, regional, and national levels, thereby decreasing our dependence on goods shipped over the seas.

WORKERS The central question around manufacturing capacity is the ability of labour to meet the demand. At the same time, we see manufacturing capacity increasing year over year, labour is becoming tighter. In 2023, five per cent of US manufacturing jobs are open, companies

are looking for skilled labour. With increasing manufacturing capacity and hundreds of thousands of job openings we must identify solutions to the labour shortage.

Technology solutions are rising to assist with the labour shortage.

Upskilling workers to achieve more production per person allows for higher wage growth among manufacturing workers. A host of new technologies are working through the pilot stage of development, soon to be headed for industry deployment at scale. Those technologies include artificial intelligence (AI), robotics, and blockchain. More specifically, large language models, generative AI, collaborative robots, industrial Internet of Things, cloud-based software, autonomous vehicles, and advanced sensing. There are soonto-be-here technologies that are transitioning from academia to industry and will be available in the next 5-to-10 years to continue expanding each worker’s productivity.

ARTIFICIAL INTELLIGENCE Certainly, this topic has claimed its fair share of the headlines this year,

as well as accounting for a large amount of the growth in the stock market. AI comes in many forms, some of which have been in everyday use for a long time. The early beginnings of AI date back to the 1950s and include military applications. However, the emergence of ChatGPT was an introduction to AI for the lay person, because now you can talk to an AI product, and it can talk back. AI will have several major impacts on increasing productivity and decreasing labour requirements in the use of autonomous navigation, machine learning, and generative AI that can talk about or paint a picture of an idea. These tools will allow workers to be physically more productive when aided with intelligent machines.

It will also allow for workers to be more productive when dealing with information and managing data.

ROBOTICS Robotics come from nearly everywhere in the world. Almost every major region of the globe has carved out a robotic specialty for itself. Robots today come in many form factors, including aerial drones, vehicles, robotic arms, and many that imitate animals (spiders, dogs, birds, and so on). Robotics are divided into two primary categories, which are: 1) high precision, high speed; and 2) human friendly, collaborative.

High-precision and high-speed robots usually work as part of a larger automated system and are closed off from direct contact with humans.

To envision this type of work, imagine a high-speed beverage bottling facility or an automated automotive manufacturing centre.

These types of robotic implementations are increasing in number year after year, but they do require a stable set of products to manufacture and retooling can be complicated and expensive. Human friendly robots are being upgraded with advanced sensors and machine learning to collaborate with humans in the work – collaborative robots, or cobots for short. Cobots are enabling the automation of everyday tasks in a wider variety of workplaces, especially smaller workplaces with varied production requirements. Cobots excel SUPPLY PROFESSIONAL

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“Given the lag between demand and increasing capacity, I expect the pace of expansion of the BLOCKCHAIN Blockchain’s use in manufacturing manufacturing sector in promises to clear up many of the inefficiencies and ambiguities of North America to expand our global supply chains. Currently, there are entire commodity markets at a more rapid pace.” in working safely around humans, aiding humans, and navigating in pedestrian environments. Robotics in general will continue to increase production capacity faster than labour growth.

of goods (gold, corn, oil, timber) where the origin of the raw material cannot be identified and the conditions of mining, growing, and manufacturing cannot be identified.

The data demands were far too complex for systems of the past.

Layer on top of this new economy desires, such as tracking carbon scores, or recyclability, and the system is broken.

Prior to blockchain, there was no organized and cost-effective way to track all of the contributory data

required to understand the mark-up and origins of manufactured goods.

Blockchain pairs well with low-cost and low-power sensing, for example, the Industrial Internet of Things (IIoT). Now, data can be recorded at various points along the supply chain to track efficiency, environmental conditions, and geospatial data. This increased amount of information, kept automatically,

and with very low cost of acquisition increases the quality of goods, the social aspects of manufacturing, and creates transparency into on-time performance. Polygon and Algorand are some of my favourite blockchains that are used in supply chain that might not yet be household names.

The landscape is changing with a growing manufacturing sector and a tightening workforce. A cadre of technologies are coming online to fill the gap. Early adopters are pushing projects forward that are powered by artificial intelligence, robotics, and blockchain technology. The push to upskill workers with more technology tools will lead to higher productivity. Education, training, and university curricula must be adapted to further reinforce the flow of skilled labour into the manufacturing sector, especially with rising technology demands.

Manufacturing companies must continue to choose North American

Matthew Chang is principal at Chang Industrial.

expansion as a strategic priority. Commodity supplies must be stabilized in supply and pricing. With these structural changes, the future of manufacturing is very bright. As workers are armed with a set of high-tech tools, working in manufacturing will be considered very cool SP

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THE ART OF TAKING RISKS

FROM AFGHANISTAN TO CANADA, MATTHEW ZARZYCKI CHAMPIONS LOGISTICS It’s common for people to work in supply chain by starting in other business areas, like operations or finance. It’s rare, however, to enter the field through the civilian logistical operations of the US military in Afghanistan. Yet that’s the route Matthew Zarzycki took when he started his supply chain career in 2010.

“I don’t know too many people that actually went to school and said, ‘I want to get into logistics,’ or ‘I want to do transportation,’ or anything like that,” says Zarzycki, now chief operating officer with Amplify Logistics. “Once they do, they kind of fall in love with it because they didn’t realize how interesting it is. But I went to school for political science and wanted to do foreign affairs.”

The St. Catharines, Ontario-native began looking for a position in foreign affairs after completing his Bachelor of Arts in international relations and affairs at Ottawa’s Carlton University in 2009. During his job search, someone asked whether Zarzycki was interested in a logis10 DECEMBER 2023

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tics position. At first, he had limited enthusiasm for the field, but decided to give it a shot.

That first job proved more interesting than Zarzycki had expected and started what he calls his ‘addiction’ to logistics. The position was as a coordinator, and he was quickly promoted to logistics supervisor, for Fluor, a global engineering and construction company. He was located at the Bagram Air Base, in the Parwan Province of Afghanistan. Zarzycki worked on a project called LOGCAP IV – the civilian component of logistics for the US military.

Zarzycki worked on freight forwarding, logistics, and various other projects during his tenure there. He was also able to do ‘some pretty cool stuff,’ he notes, like riding in C-130 Hercules military transport aircraft or flying in CH-47 Chinook helicopters to pick up containers and take them back to bases.

The year-long experience in Afghanistan set the tone for much of Zarzycki’s career in logistics, he says.

“It also set the path for my work ethic and realization that small things in life matter most, and the simplicity of things, because what you learn and do and how you live over there changes your perspective,” he says.

While he worked in Afghanistan, Zarzycki and his wife decided they wanted to start a family. Yet his career overseas made that difficult, so he returned to Canada in 2011. Due to his colourful and varied career until then, he thought finding employment in the field would be straight forward.

“It didn’t work out that way,” he says of his renewed job search. “A lot of people didn’t know how to take that experience, because it’s so unique and not very typical. A lot of people said, ‘this is interesting. I love it. But it’s hard to use you.’”

Zarzycki briefly considered becoming a police officer, figuring his Afghanistan experience would help him land employment. He went to a job fair in Toronto, but no police forces attended. But representatives from Bison Transport were there, and Zarzycki spoke to Grant Naslund, the director of the Toronto terminal for the company. Naslund ended up offering Zarzycki a job. “So that’s how I got started in the transportation-logistics business here in Canada,” he says. “It kind of went from there.”

Zarzycki joined Bison Transport in March 2012 and worked there until 2017. He was responsible for a variety of tasks and moved up quickly. But he also realized that he wanted to get back into project freight rather than staying in trucking. He then joined another company for about three months.

At this point, Zarzycki found the pace of project freight too slow. Working on long-term projects, then waiting for those projects to roll out, had become difficult after several years doing faster-paced work at Bison. From there, Zarzycki joined Fuel Transport Inc., reporting to the CEO and VP of operations as he helped to set up the company’s Toronto office. After about five months, he made the switch to Traffix, a logistics solutions specialist.

The company asked Zarzycki to take on a project in Kingsville, near Leamington, Ontario. It was also at Traffix that he developed an interest in food and cold chain logistics.

The niche is fast-paced and fits his personality and love of variety.

Zarzycki worked at Traffix for over two-anda-half years. By that time, he had known Pawel Sandhu, CEO of Amplify Logistics and Cargo County, for some time.

“We knew Matthew from Fuel Transport and he would always be willing to help carriers and build relationships instead of just SUPPLY PROFESSIONAL

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DANIEL EHRENWORTH PHOTOGRAPHY

BY MICHAEL POWER

DANIEL EHRENWORTH PHOTOGRAPHY

transactional loads,” says Sandhu of Zarzycki.

“We became friends from there, and always talked about the industry. Over time, we decided it would be good to work together and tackle some challenges together.”

ALWAYS DIFFERENT Zarzycki, who completed the CITT-Certified Logistics Professional designation in 2017, is now the chief operating officer with Amplify Logistics and Cargo County. The company is split into asset and non-asset divisions, with logistics the non-asset division and the warehouse under the Amplify banner. The company’s trucks fall under the Cargo County banner.

Like most logistics professionals, Zarzycki rarely has what he can describe as a typical day. That’s especially true in a fast-growing company, he says. Everyone in Amplify’s senior leadership wears different hats, depending on what needs to be done. Some days,

Zarzycki has had to hop on a forklift. Other days, he has helped to load and unload trailers.

“There was a time when we did that, at the beginning when I joined, because we were shorthanded or we didn’t have personnel able to do it,” he says. “Other times, I’m helping to find trucks to cover loads. So, the typical day is always rapidly changing. One thing is, it really centres around coaching and developing, both internally and externally – having conversations with our managers or supervisors about how they can approach different things, and how they can see it from a different perspective. A lot of our team is on the younger side. Our average age of our office workers is 28 years old, and our average age for drivers is 29, 30 years old. I’m one of the older people in the office.”

It pays to stay nimble in such a setting, Zarzycki says. Some days, he may plan to focus on sales, customer development, or marketing.

But if the team needs help, he adds, he’ll dive into the trenches and lend a hand. On those days, it pays to review afterwards to look for ways to streamline the process and avoid spending all day putting out fires.

Yet a varied, fast-paced, and unpredictable environment suits Zarzycki. A position with a set routine wouldn’t work well for how he organizes his thoughts and tasks.

“I enjoy jumping into the middle of things and helping sort them out, straighten them out and get them back on track,” he says.

Zarzycki notes that he’s lucky he can review his career so far with satisfaction. “Every aspect, every little piece, every change that I’ve done throughout my journey, I’ve really

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“The awareness is something that we in the industry enjoyed,” he says. “Maybe not in the moment, but when I look back at it, I have a sense of could be better at doing accomplishment.”

One career highlight for Zarzycki was workto help attract younger ing at the Milton facility for Target, during his time at Bison Transport. The assignment helped people and get them into him see operations from the perspective of both the customer and the retailer. Helping to set up supply chain.” the Toronto office for Fuel Transport also stands out, as Zarzycki enjoyed the start-up mentality the company fostered.

Zarzycki credits his wife’s support for helping him progress in his career. That support was especially important working in Afghanistan, as the couple were newlyweds at the time.

“She’s been really kind of the rock in supporting me,” he says. The first few months working overseas were tough, and Zarzycki wondered sometimes if he had made the right decision accepting the job. “But once I broke through that mental wall, I realized you can really accomplish anything in life. It put things in perspective and helped me shape what I wanted to do going forward. Since then, looking at the brighter side and taking on challenges as they come have been very successful for me.”

MEETING CHALLENGES These days, one of the biggest challenges companies face is diversifying their offerings, Zarzycki notes. Organizations can get stuck with the same things, simply because they’ve always operated that way. Those companies struggle the most. To meet that demand, Amplify Logistics has worked to move away from being only a truckload, dry, or reefer carrier towards diversifying their offerings, including a warehouse component.

Another challenge across logistics involves driver recruitment and retention. Amplify Logistics, which has a young leadership team, works to hire younger drivers while focusing on training. The company often gives drivers the weekends off, which appeals to younger drivers.

These policies signal to clients that Amplify Logistics plans to be around for the long haul.

“When you have a company where the average age is mid-50s, a lot of companies are going ‘Well, what are you guys doing with your retiring population?’” Zarzycki says. “Lots of truck companies don’t know what to do. They have no succession plan. That’s a lot of the challenge right now, where you’re seeing mergers and acquisitions in the marketplace.”

Going forward, the company plans to shift towards a direct-to-store distribution model, as it takes on more smaller parcels, Zarzycki says.

There is opportunity in the cold chain warehousing space, as well as cold chain LTL, he notes.

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Amplify is also working to reduce its emissions footprint. The company is focusing on multi-temperature reefers to provide multiple temperatures on a single trailer. Retailers can then have dry, frozen, and fresh goods delivered simultaneously.

As a pilot project, the company has begun taking on the supply chain functions of SMEs, from end to end, a project that Zarzycki notes has been successful.

On a personal note, Zarzycki is considering a master’s degree in business and supply chain.

At the same time, he would also like to get his Professional Freight Forwarder designation from CIFFA. He is active on social media and advocates for logistics professionals to have a more active role on sites like LinkedIn. “I find a lot of people in logistics don’t use social media, at least in Canada, as well as they should,” he says. “There are a few that do, but the vast majority kind of shy away from it, and so I’d love to have more exposure for the industry on social media – how interesting things are done in logistics that are beyond the reach of the regular person. I’m going to continue focusing on that kind of marketing of how do we, as an industry, become more observed.”

In his free time, Zarzycki enjoys travelling with his family. He also enjoys reading, and his interests span fiction and non-fiction.

“I also don’t see work as work,” he says.

“It’s a bit of a hobby so when I’m not working on Amplify things, I tend to read a lot of what’s going on in logistics, different things that are happening in the world or different segments of the business.”

Zarzycki has recently become interested in artificial intelligence (AI). He’s learning about its use, what it’s capable of, and how AI might change society. Despite some foreboding predictions about the technology, Zarzycki likens AI’s rise to the spread of personal computers: it’s simply a tool that people can use.

Yet, it has limitations and will always need people to guide it. Hopefully, the technology will bring more opportunities for regular people

to work less while still making a decent living.

“But it’s not going to be the end of dispatching,” Zarzycki says of AI’s logistics role.

“It might not be the end of the routing person.

You still need people in the end for a lot of different things in life. You still need people to buy things. You still need people to do and experience things and not just function. I think AI is just a functioning tool. Without experiences, it’s hard to make it the omni-person that everybody is making it out to be.”

A PLACE FOR EVERYONE Regarding advice for those interested in a supply chain career, Zarzycki says he now wishes that he had known about the field earlier.

There’s so much opportunity in supply chain and logistics. Entrepreneurs, software developers, logistics specialists, and other professionals can all find a place. Zarzycki notes that his career has focused on his interest in foreign affairs. He can travel, visit ports, meet interesting people, negotiate trade agreements, and create contracts – a combination of pursuits potentially impossible outside of supply chain.

Opportunities in the field are growing.

Young people can, for example, drive a truck for a few years to save money. Along with the cash, doing so provides travel opportunities and work experience. One of Zarzycki’s acquaintances, an airplane pilot, drove a truck to earn extra money in a way that fit his schedule.

“And it isn’t just trucking,” he says. “You can go work on the ocean liner ships and travel the oceans for a couple of years. You can go on planes and be a load master. There are so many different avenues. You can go work on the railroads. There are so many cool, different things that we touch in supply chain that people aren’t aware of that they could do that, I think, is super exciting. The awareness is something that we in the industry could be better at doing to help attract younger people and get them into supply chain.”

Above all, those in the profession should embrace taking risks, Zarzycki says. Canadians are sometimes wary of such daring action. Yet, the notion of avoiding reasonable risks needs to be put aside to pursue the possibility of success.

“It’s OK to fail. I’ve failed a whole bunch of times in my career. That doesn’t mean that I didn’t get up as many times as I failed. Failure is part of that experience.” SP

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BY GERALD FORD

CONSOLIDATION IS KEY

Gerald Ford is chief visionary officer at QCsolver, The Software Solution.

SUPPLIER CONSOLIDATION LETS YOU REDUCE THE NUMBER OF MRO SUPPLIERS The world of supply chain is filled with acronyms. MRO stands for ‘maintenance, repair and operations,’ or as I like to call it, ‘miscellaneous is rarely optimized.’

And the world of MRO is a daily challenge of finding the right balance between fiscal prudence and operational efficiency. It’s important to identify the underlying gaps and pain points specific to your company before you can easily implement the solutions I’m offering.

CHALLENGES Spend amounts are tracked by budget code.

Purchases are delegated to the end user departments. Negotiated contracts don’t cover everything that the departments need as the list of items needs a refresh to account for actual usage patterns. Items that are ordered from different suppliers will have a different part number and description. Category codes are not in use, or they are not widely used and with poor accuracy and standardization. Staff often lack the technical skills that are needed to do a proper analysis and the MRO spend amount doesn’t seem to justify time spent on reporting.

You know you have a problem when you hear “I can’t wait, I need it right now.” Instead of determining what is needed ahead, it is easier to simply go to the local store and pick up what you need. The comments I have heard is that it is “cheaper” or “more convenient.” We often 14 DECEMBER 2023

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overlook the time spent going from the job location and back, and the costs associated with the transaction.

Please note that not all the issues outlined above apply to every review that I have done recently. My observations may be enough so that you might think and start to wonder how many are applicable to your organization.

SPEND ANALYSIS The analysis and business case for change is difficult, as organizations have difficulty using category management effectively throughout their various departments. The first step is to determine if the exercise is worth doing.

It will depend on what is bought, how often, the quantity, and your stocking methodology. I would suggest that you consider doing a review if the annual spend or the inventory is greater than $100,000.

INVENTORY REVIEW When looking at inventory, you will go from either having too much (dead stock or slow moving) or not enough (just in time) or just ran out (JRO).

To stabilize your inventory on hand, you will need to review the usage over a long period of time and consider getting rid of some excess stock.

The reality is, one person’s junk is often another person’s treasure. Reach out to an online auction house to determine if what you

have is a candidate for disposal. This is much easier than trying to do a live auction and you might be surprised by how much money you can get for something you consider scrap. You could approach your existing suppliers to determine if they are willing to buy back or provide you with a credit for items that you will not use and where the supplier can still sell the product to their other customers at a discount.

It’s a winning scenario for both sides. Consider that if you have $200,000 in inventory then it is likely that $40,000 of this amount could be obsolete. Getting rid of these items would allow the organization to use the money for other purchases. Even if it takes 10 hours to complete the task from start to finish, the return on investment would be almost 1,000 per cent.

SUPPLIER CONSOLIDATION There is an age-old adage that you can only improve what you can measure. Over the last two years, I have had completed a number of in-depth reviews of MRO spending. MRO is often miscellaneous, which means there are more items in this category than any other. In some cases, an organization may have over 20,000 stock keeping units (SKU). Normally, I see about seven to 10 different suppliers that could be subject to consolidation. Keep in mind that if one supplier has 90 per cent of the business then it isn’t likely that your organization needs to consolidate. If there SUPPLY PROFESSIONAL

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are seven suppliers and no one has more than 25 per cent of the business, then your organization should consider consolidation.

I recommend that you start with an export of your data and at a high level to determine which of the many suppliers sell MRO items. Savings are possible as MRO purchases are often not fully scrutinized. In fact, when I did my analysis, I found that savings were possible with the right supplier. Remember that MRO items often have a low purchase price and are not consumed in large quantities. When I look back on all the reviews that I have done, I have noticed a specific trend: daily deliveries across many suppliers.

If this happens in your operation, there is a good chance that supplier consolidation is possible.

Supplier consolidation allows your company to reduce the number of suppliers used for

“MRO review and supplier consolidation isn’t just a cost-cutting measure; it creates efficiencies which lead to other types of savings.”

MRO items, which reduces associated costs such as product sourcing and selecting, purchase orders prepared and issued, and receiving transactions. In addition, by leveraging additional usage volume, additional price reductions could be achieved.

Marty Luciw, who works for Grainger, shared that companies should be able to average a 12-15 per cent cost savings when they consolidate. This target is realistic if you have never done this type of exercise. Additionally, with the right service levels established you can ensure that you get next-day service. The feedback that I got from Marty is that online ordering is the way to go and its use ensures that about 97 per cent of the customers have the stock the next day.

In conclusion, MRO review and supplier consolidation isn’t just a cost-cutting measure; it creates efficiencies which lead to other types of savings. The biggest impacts when you embrace consolidation are that your company is spared the headache, and your MRO operations hit all the right targets. SP

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BY NOELLE STAPINSKY

MOVING TARGET

SUPPLY CHAIN PROFESSIONALS DIAL-IN WAREHOUSE MANAGEMENT

BY ENHANCING OPERATIONS WITH ADVANCING TECHNOLOGIES It’s an extraordinary time for the supply chain and commerce worlds. In the wake of a pandemic, there has been dramatic uncertainty in demand and supply, trending inflation fluctuations, labour shortages and rising shipping costs.

If that’s not enough, e-commerce put the pedal to the metal, consumers want shorter lead times, better service and effortless refunds and returns, and they want all this along with a company’s strong commitment to sustainability. Supply chain professionals have a hyper-focus on warehouse management and are leaning on emerging technologies such as artificial intelligence (AI), robotics, and advanced analytics to enhance and expand on their management systems.

“What COVID did was create a lot of challenges and opportunities, especially with labour,” says Ramu Pannala, vice-president of supply chain technology, Penske Logistics.

“The trend that we see within warehousing in general is that both warehouse management and warehouse management systems have a heavy focus on automation – whether it’s robotics within the warehouse or automating tasks in the office. And we’re also seeing a lot of machine learning and AI-based tools that automate tasks in the warehouse.”

Penske uses Blue Yonder, a tier-one warehouse management system (WMS) which is designed to unify data, the supply chain and 16 DECEMBER 2023

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commerce operations. And working with Blue Yonder, Penske is bringing in AI and machine learning to work alongside its WMS. “Two big trends are automation and incorporating AI and machine learning within the WMS platform. We have done a few projects where we have an Each-Picking Robotics solution that was implemented at one of our larger regional distribution centres (RDCs). We have implemented machine learning AI-based tasking or prioritization of tasks within the warehouse, such as tasks based on the due date,” says Pannala. “The process itself has the intelligence built in that will eliminate the need for someone to manually go in and change the priority. The third thing we’re working on is automating the yard, which closely relates to automating the warehouse.”

Walmart Canada is a people-led, tech-powered omnichannel retailer, according to Matt Kelly, the company’s vice-president of supply chain planning and design. “We continue to invest in and expand the use of technology throughout our supply chain to get products into the hands of our customers faster,” he says. “We are leaning into AI and machine learning across our supply chain to support inventory management, forecasting, storage profiling and routing optimizsations.”

“The use of unified WMS solutions supports seamless omni-integration across the supply chain and enhanced integration with automation and

robotics providers, including picking optimization, multi-channel inventory management, and faster order processing,” adds Kelly. “Other technologies that work alongside our WMS include blockchain, integration layers for robotics and automation warehouse control systems (WCS), microservices platforms, and the Internet of Things (IoT).”

ENSURING AUTOMATION WORKS Bard Critoph, a professional engineer with over 35 years of supply chain industry experience and a managing partner of Critoph Consulting Inc. (CCI), says that he has seen companies invest in automation and can’t seem to get it working properly. It’s quite common and definitely the kind of thing you want to avoid.

In the past year, CCI launched a real-time 3D simulation platform that brings warehousing automation design and optimization projects to life. It’s designed to help companies improve efficiencies, add to a production line, or build a new facility.

For those who invested in automation that isn’t working for them, Critoph says, “It might be worth doing a simulation to see if you can fix the issue before tearing it out and starting from scratch. Without a simulation all you have is drawings and some data, which makes it hard to visualize. But when you see the pieces moving and integrating, it opens your eyes to what’s really going to happen.”

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This simulation platform uses real data.

Along with the warehouse design, which can be provided by the client or designed by Critoph, data on production peaks and surges, schedules, sequencing logic, and inventory movement to and from a facility will all be built into the simulation for evaluation.

“We will look at how the sequencing logic impacts the size of the equipment. There can be pick waves, and how will you generate those? How are you doing the slotting of the product? There are all kinds of options to test,” says Critoph.

“If there’s an expensive proposal for automated warehouse operations, this platform can simulate it and help senior management with the decision of approving such a capital investment.”

“The trend that we see within warehousing in general is that both warehouse management and warehouse management systems have a heavy focus on automation.”

According to Pannala, software companies are making it easier to integrate new solutions within an existing WMS. “It’s considered an integration hub, or soft hub. Not one solution will be able to

do all the things you want it to,” he says. “When it comes to incorporating AI and machine learning, task automation was the first one we saw. The other big one is dynamic slotting, which is based on seasonality and fast and slow movers. It can enable you to find optimal storage space for specific SKUs to meet demand. It optimizes warehouse processes by eliminating travel time, et cetera.”

AI is also being used for office automation for shipping and receiving tasks. Based on previous learnings and the demand AI sees, it can automatically prioritize and disseminate tasks. And Penske is using drones for cycle counting.

“The drone can read the label, but it needs to understand how to read it, so there are variations that you tweak with AI so that it’s more accurate in reading the data,” says Pannala.

“To automate the yard, we’re using cameras.

When the camera reads the trailer number it needs to know where it’s located, how to read it with text processing and then what to do with the data. This is all based on AI.” GAINS IN EFFICIENCY With all of this technology generating copious data, companies can leverage it for unprecedented efficiency gains. It not only gives them insights into the operation, but using such data helps predict future demands, maintain inventory levels, and optimize storage layouts.

“What Penske has done is we use a cloudbased system. We take all of the data in real time from our WMS and we have a robust analytics layer that is deployed in the cloud so that people can get a near real-time visibility to what’s happening on the site and how labour is performing,” says Pannala. “We use a labour management system that’s integrated into the analytics platform, and it has been a game changer for Penske. On day one we got our KPIs up and running—you’re not spending so much time in the office gathering data from different sources. By getting the data directly from the analytics platform layer, you can manage productivity and provide real-time performance visibility to the customer.”

Kelly says, “Advanced data analytics and business intelligence tools have provided us with actionable insights that help optimize our warehouse processes, predict demand, and improve our overall decision making.”

As more companies invest in automation, robotics, AI and predictive analytics, warehouses are becoming more efficient with faster delivery times, lower costs, and decreased dependency on human labour. As these technologies continue to evolve, the future of warehouse operations is bright as they continue to reach new heights. SP SUPPLYPRO.CA 17

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BY MICHAEL POWER

THE RACE TO ZERO

WORKING TOWARDS A NET-ZERO SUPPLY CHAIN MEANS TRACEABILITY, DATA, AND PARTNERING WITH SUPPLIERS Whether it’s alternative home heating sources, electric vehicles, or reconsidering air travel, people face multiple choices – and challenges – if they’re looking to reduce their emissions. Governments are also working towards emissions reductions, with some having released plans to achieve ‘net-zero’ supply chains by 2050 or sooner.

Companies are taking on similar projects.

Some organizations have ambitiously set carbon-neutral goals five or 10 years into the future.

That’s an important move, given many consider a company’s environmental, social, and corporate governance (ESG) positions before purchasing its products or services.

Put simply, net-zero supply chain involves a balance between the amount of greenhouse gas (GHG) produced and the amount that’s removed from the atmosphere at the same time. There’s an equilibrium involved in trying not to emit more than what’s being taken out.

Emissions are divided into three categories: Scopes 1, 2 and 3. Scope 1 refers to emissions directly controlled and generated by an organization, like furnaces or company vehicles, notes Larry Berglund, principal at Presentations Plus Training and Consulting Inc. “Scope 2 emissions are indirectly attributed to purchased energy, transportation, waste, business travel, employee commuting, and chemicals incurred by suppliers,” Berglund says. “Coalfired versus hydropower GHGs would be vastly different in volumes, as an example.”

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Scope 3 encompasses emissions not produced by a company and don’t result from activities from assets it owns or controls, rather by those that it’s indirectly responsible for, up and down the supply chain. An example is products from suppliers. Scope 3 is the area of most concern for supply chain professionals.

Tackling emissions requires proper reporting, visibility, and traceability across the supply chain. It also means developing a plan for, if not reaching net zero, getting as close as possible.

That’s a daunting goal. Within Scope 3, 60 per cent of the risk lies in the supply chain, says Abe Eshkenazi, CEO of the Association for Supply Chain Management (ASCM).

“The unfortunate part is that, irrespective of the majority of it being in supply chain, just about 50 per cent of companies assess how Scope 3 emissions are going to impact their supply chain,” says Eshkenazi. “And less than half, about 40 per cent, have even benchmarked what the impact is going to be to their organization.”

With sustainability, appearances matter. Delta Airlines recently faced a class-action lawsuit over carbon neutral claims, Eshkenazi points out.

The suit centred around the company’s use of carbon credits to offset emissions, which plaintiffs claimed were misleading. Delta says it has since moved away from the practice.

“The unfortunate part is that, within industries, we don’t have alignment on what appropriate metrics or reporting responsibilities are,” he notes.

TRACEABILITY AND DATA Traceability of goods and access to proper data are keys to improving this. Supply chains often have multiple tiers of suppliers, with lower tiers closer to the final product and higher tiers further away. Many companies are mostly familiar with their Tier 1 suppliers which, according to Accenture, account for 36 per cent of Scope 3 emissions, says Pauline S. God, head of policy and partnerships at TrusTrace.

“In other words, 64 per cent of Scope 3 carbon emissions come from Tiers 2 and 3 and beyond, where brands tend to have little to zero visibility,” says God. “Hence, decarbonizing company operations should begin with improving visibility into the deeper tiers in the supply chain.”

Getting started on GHG reporting typically involves basic supply chain mapping of facilities, locations, and the distances between them, she says. Companies then use average emissions data to set a benchmark. While this is a starting point, gathering accurate data on actual supply chain emissions involves a structured process. Understanding emissions beyond simple averages means substantial sets of the raw data generated from each supplier involved in production and ensuring their data quality and integrity.

“Organizations must move away from secondary data and industry averages and start collecting the precise data directly from the supply chain, also known as primary data,” says God. “With primary data collected through a trace-

ability program, they can calculate Scope 3 emissions accurately. This will help you know where your biggest decarbonization challenges are, as well as stay audit ready. Traceability provides the first step necessary for organizations to move toward a ‘net-zero’ supply chain.”

Organizations must work with their suppliers on focus areas and solutions to reduce emissions, she adds. But suppliers can’t bear the costs alone.

Some options for organizations to consider include establishing clear sustainability guidelines so suppliers know what’s expected; auditing and assessing supplier practices to ensure compliance and identify areas for improvement; collaborating on sustainable materials and encouraging use of materials with lower environmental impact; and providing incentives and support.

“The more companies can enable suppliers, the easier it will be for them to accelerate their sustainable transformation,” God says.

LOOKING FOR HOTSPOTS While all three emissions scopes must be measured and dealt with, Scope 3 is the most challenging to reduce, says Michelle Albanese, director, ESG and responsible supply chain at Upswing Solutions. To move towards net-zero, companies must seek out their Scope 3 emissions “hotspots” along the value chain that contribute to the highest emissions. Only after an organiza-

“It’s about understanding where your emissions are and then deciding for scope 3, the supply chain emissions, ‘what do we want to do?’” tion knows where to focus its Scope 3 efforts can it set targets and begin reducing emissions.

“First of all, it’s about understanding where your emissions are among the 15 categories of Scope 3, ‘where do we focus based on our biggest impacts?’ and ‘what do we want to do?’”

Albanese says. “‘What Scope 3 target do we want to set?’ For most companies, supply chain and purchased goods and services is usually a focus on Scope 3. Essentially, you’re engaging your supply chain to reduce their emissions as part of your target and then hopefully these suppliers reach out to their suppliers for the same reasons. So, it’s this cascading, ripple-down effect from buyer to supplier.”

Suppliers face decarbonization challenges of their own, Albanese says. Some are privately held SMEs and may lack resources; others may have no clear plan and must start from scratch. Other

suppliers are larger, publicly traded companies with knowledge and resources, and you only need to collect data from them, she says.

Albanese cites the World Economic Forum (WEF), which notes a minimal increase to endconsumer costs from the process. Around 40 per cent of supply chain emissions could be abated with readily available and affordable methods, like circularity and renewable power. At most, end-consumer costs would increase by about one to four per cent in the medium term.

“There’s no reason we shouldn’t be able to do this, because four per cent is not high,” Albanese says. “It’s not like it’s 20 per cent. It’s not like it’s a reason to say, ‘it’s just not doable or feasible.’”

An organization’s leadership should adopt a mindset that looks at how to make this transition work, says Berglund of Presentations Plus. Supply chain professionals should use a total cost of ownership approach to sustainability, measuring and monitoring not only GHG emissions, but also freshwater consumption, resource circularity, waste management, and energy consumption.

“Any player in a market can’t achieve the emission reductions on its own,” Berglund says.

“It requires the supply chain and value chain players to be in sync. Every action contributes to some form of emission – even breathing has an impact. The message is to control what you can within your sphere of influence.” SP

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BY KIRUBA SANKAR

DIVERSE STRENGTHS

THE PUBLIC AND PRIVATE SECTORS TAKE DIFFERENT APPROACHES TO SUPPLIER DIVERSITY During the Richard Nixon administration, in 1968, there was a notable effort to incorporate minority-owned businesses into the United States federal government’s supply chain. In response, the government made a significant decision to allocate five per cent of its procurement spending for minority-owned enterprises in the US. However, this initiative encountered challenges, including the emergence of corrupt practices such as creating fictitious business partnerships.

To address these issues, the National Minority Supplier Development Council (NMSDC) was established in 1972. Its primary purpose was to initiate the verification of supplier ownership and certification procedures within the US. Interestingly, despite the passage of over five decades, the fundamental rules governing diverse supplier certification in the US have remained largely unchanged. While numerous governments around the world have undergone transformations in various aspects, the certification requirements in the US have remained relatively stable.

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women-owned, LGBTQ-owned, veteran-owned, and disabled-owned businesses. In the corporate world, procurement professionals closely consider risk management. Businesses often begin with a single product or service, but as they evolve, they typically diversify their offerings.

This strategy allows them to mitigate the risk associated with potential failures in one area by maintaining other viable products or services.

Similarly, supply chain structures are designed with redundancy, incorporating dual or multi-channel approaches. If one supplier encounters challenges or disruptions, alternate suppliers can step in to ensure the continuity of operations.

As this multi-channel approach has gained prominence, customer segments have also expanded.

To cater to diverse demographic populations, companies have diversified their supply chains, enabling supplier diversity to flourish. These strategies are commonly employed in the private sector’s procurement practices.

CANADIAN COMPARISON In contrast, the public sector in Canada appears to have different priorities. While Canada benefits from a rich tapestry of immigration from various

countries, the government’s focus has primarily been on providing opportunities for immigrants to find employment in the country. The immigration process is structured to meet the nation’s skill demands and foster its growth. However, there is no explicit goal within the public sector to actively foster the success and growth of diverse business owners or suppliers. Business owners in both the private and public sectors adhere to similar tax rules and credit policies.

In the private sector, there is a clear emphasis on attracting a diverse customer base. This approach aims to support the prosperity of diverse customers, which, in turn, contributes to the private sector’s business stability and growth prospects. This commitment to an inclusive economy serves as a catalyst for private sector expansion, as they help suppliers in diversifying their operations.

Conversely, the public sector’s primary objective is to promote the social good. This involves allocating grants and community support services through various programs, including those targeted at underserved communities.

In the public sector, procurement decisions are often based on suppliers meeting specific requirements and offering the lowest price to secure tenders. For procurement transactions exceeding $100,000 in value, the majority of processes are competitively posted and open to all potential suppliers. This stands in contrast to the private sector, where competitive procurement processes are typically conducted through invitation and not publicly posted. Moreover, in the private sector, supplier proposals are evaluated based on factors beyond just the lowest price, including overall value, risk assessment, and compliance considerations.

In the realm of private sector procurement, particularly in industries subject to regulatory oversight, a significant emphasis is placed on ensuring that suppliers meet the stringent requirements set by industry regulators. This regulatory compliance is a critical factor in supplier evaluation, and suppliers who are wellversed in adhering to these regulations tend to have a competitive advantage. Awareness and adherence to industry regulations greatly enhance a supplier’s prospects in securing business within these sectors.

Conversely, the public sector approaches supplier evaluations from a different angle. The evaluation criteria typically encompass a broader spectrum, including compliance with requirements, competitive pricing, adherence to policies, and legal considerations. This comprehensive approach can result in evaluators placing a heavy focus on strict rule adherence.

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organization. This may include cost reduction, increased customer value, or other performance enhancements. This incentivizes evaluators to seek innovative solutions and alternative options that can improve overall business outcomes.

However, the public sector’s evaluators are primarily driven by the imperative of rule-following and compliance. This can discourage suppliers from presenting innovative solutions or suggesting alternative approaches, as the primary objective is to meet established rules and regulations.

Many large private sector organizations have adopted a centralized approach to their operations as they mature. This centralization often results in strategic sourcing teams having the capacity to advance their category management practices. They can leverage their buying power to negotiate more favorable costs for high-volume purchases. Furthermore, strong vendor relationships are cultivated, leading to improved service quality, innovation, and a more reliable supply chain with fewer disruptions.

DECENTRALIZED STRUCTURE In contrast, many large public sector organizations operate in a more decentralized manner.

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“To cater to diverse demographic populations, companies have diversified their supply chains, enabling supplier diversity to flourish.”

Different divisions within these entities often act autonomously to meet their specific needs.

This decentralization can place substantial pressure on the purchasing teams, requiring them to manage numerous transactions with multiple suppliers, often on short-term contracts. This decentralized structure can make it challenging to implement robust category management practices and establish effective vendor management relationships.

In summary, while both private and public sectors engage in supplier evaluations, they do so with different focuses and incentives. The

Kiruba Sankar is a global supply chain executive and a recent graduate of the Kellogg Schulich global executive MBA.

private sector tends to emphasize regulatory compliance and the value added by evaluators, fostering innovation and strong vendor relationships.

Conversely, the public sector prioritizes rule adherence, which can sometimes stifle innovation and create challenges in procurement practices, especially within decentralized organizations. SP

2023-12-04 3:21 PM

BY IAN SEUNARINE

“To tackle today’s complex challenges, there must be a paradigm shift on the A NEW LIMELIGHT part of supply chain Pre-pandemic, we were leaning out our inventory, rationalizing supply professionals.” ongoing and improving, it seems that supply chain is the most convenient excuse for all that ails most industries. Let’s face it, the pandemic caught us off guard. Not exactly the spotlight we hoped for.

DO YOU BELIEVE IN MAGIC? PERFORMANCE TIPS FOR TODAY’S SUPPLY CHAIN PROFESSIONAL Years ago, while volunteering for a nonprofit, I managed logistics for their disaster response team.

At the time, a new director met the local team and when he asked me about my role, I explained, I was responsible for the logistics part of supply chain.

You can imagine my surprise when he exclaimed, “You guys are awesome! You’re like magicians, I don’t know how you do it, but somehow you get everything we need, right when we need it.” While it was a great compliment to the team, it made me realize the general lack of understanding about supply chain management. I wish it was magic, but we all know the hard work it takes to keep our supply chains efficient.

Fast forward to today. The words supply chain have been in the media and on everyone’s radar since the pandemic. While recovery has been 22 DECEMBER 2023

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bases, and enjoying relative standard shipping times (and costs) without too much thought on our extended supply chains. Then, reality hit us as businesses coped with rising costs and a lack of materials and labour.

Just like magic, our profession was suddenly thrust onto the main stage, highlighting the new challenges we face with the complexity of supply and the fragility of chains.

For today’s young professional, navigating the field of supply chain can be exciting but also turbulent.

To tackle today’s complex challenges, there must be a paradigm shift on the part of supply chain professionals. Traditionally, we have provided value through tasks like sourcing, price reductions, long-term contracts, just-in-time inventory, consignment, or vendor-managed programs. We were measured on metrics like the total cost of ownership, inventory turns, supplier performance, and lead times. While these tasks and metrics are still relevant, we need to move beyond being task managers to strategy leaders.

Organizations are looking for supply chain professionals to answer strategic questions and provide solutions to complex issues such as, ‘how do we leverage the supply chain to provide value to external customers?’ ‘Do we understand the market trends that might impact supply decisions in the future?’ ‘How can our supply chain create not only competitive advantages but also tackle macro goals such as environmental and social governance, circularity, and even diversity, equity, and inclusion?’

The new supply chain professional needs to understand sales, marketing, operations, and human resourc-

es. Shifting our thinking to provide strategic value, we must look at the supply chain holistically. We need to engage with other functional areas to gain insight as to what is required.

Siloed thinking and isolated decision making will only provide short term benefits (if any) but cannot sustain an organization’s future.

It’s daunting to think all this falls on our shoulders. Even the word “strategic” can be intimidating. Fortunately, strategic thinking is not innate. It is something we can learn. The first step is to understand what it really means. The second step is to know if we are thinking that way or not.

It’s impossible to explain the nuance of strategy in a short article.

However, strategic thinking is understanding how decisions impact your organization and customers in the long term and aligning it with your company’s vision, mission statement and values. That implies, you understand where your company is going, who your customers are, and what your organization’s vision is. If you’re not sure about any of this, welcome to strategy.

PRACTICE MAKES PROGRESS It takes time and practice, but once you get into the habit it’s second nature. Below are a few suggestions to get you thinking strategically.

Follow your company, competitors, suppliers, and customers on social feeds such as LinkedIn. That will give you information on your industry and what’s happening in the market. Schedule regular “coffee chats” with leads in different areas to understand their pain

Ian Seunarine is president of the Supply Chain Canada, Manitoba Institute, and global sales director at The Duha Group.

points and those of your customers. Seek updates from suppliers on market conditions to understand how those trends can impact your supply. Keep current with supply chain trends, specific in technology and areas relevant to your industry.

You will soon start asking more questions than you thought possible, and that inquisitive mind will help you shift from thinking about tasks to strategy.

At this point, I’m sure you’re wondering ‘Why Us?’ As supply chain professionals, we’re one of the few departments that intersect all functional areas. It makes sense for us to bring the other teams together, to plan, discuss, and action ideas. To do this, organization and implementation are essential. Don’t forget your basics: be prepared (have agendas for meetings), follow up (assign ownership and establish timelines), establish trust (let everyone speak, ensure you hear different points of view), and be objective (where possible, use tools to help brainstorm, establish root cause or make decisions).

It’s not that difficult. Once you establish yourself in the role, you’ll be surprised how many people look to you for guidance, leadership, and decision making. And so, when that last-minute shipment makes a sudden appearance, some people might think it’s magic. But we know better. SP SUPPLY PROFESSIONAL

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Fleet Management

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Holman Drive Holman’s signature event highlights fleet trends.

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All charged up The latest in electric truck and van offerings.

Fleet Management is a special section of Supply Professional magazine. It is an important resource for Canadian supply professionals who recommend, select and manage fleet vendors and service providers.

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Road test Test driving the Hyundai IONIQ 6.

EDITORIAL INQUIRIES: Michael Power 416-441-2085 x7 michael@supplypro.ca

ADVERTISING INQUIRIES: Faria Ahmed 416-441-2085 x5 faria@supplypro.ca

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2023-12-05 11:02 AM

Fleet Management Left: Moderator Craig Pierce with panelists during a digital transformation discussion. From left: Craig Pierce, Holman; Jarrod Phipps, Holman; Phil Nanus, Salesforce; Chad Saliba, Geotab; and Michael Stallone, Holman.

By Michael Power

1.

Driving the fleet agenda

Holman Drive event highlights trends shaping fleet management Like other fields, fleet management faces rapid change. Technology and the post-pandemic business landscape are forcing quick adaptation. To tackle these and other trends, automotive services and management company Holman held its annual Fleet Forum in Boca Raton Florida in November.

The agenda included how electrification, the digital transformation, and technology like AI are affecting fleet management.

Holman’s new CEO, Chris Conroy, started the first day with a keynote address. Business is now relatively complex, Conroy told the audience, so ease of transactions counts. Products and services will evolve. Meanwhile, advancing technology is helping businesses improve performance.

Companies must be easy to work with and for, Conroy said. Customers now look for an experience similar to what Apple, Amazon, and 24 DECEMBER 2023

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others offer. “We want to make it as frictionless as possible, and there are technologies today that are allowing us to do that,” he said.

The event featured several panels, including one focused on digital transformation trends. The discussion highlighted the impact of these trends on businesses and fleet operations. Jarrod Phipps, Holman’s executive vice-president and chief information officer, echoed the point that many expect business-to-business technology to work similar to social media apps.

Digitalization is crucial to Holman’s operations, Phipps noted.

“And digital to me means simplified, easy, and you can pick it up and know how to use it,” he said.

Fellow panelist Phil Nanus, executive VP, customer success, at Salesforce, stressed data’s importance. Companies have an enormous amount of data, but 71 per cent of it is disconnected on

servers, apps, spreadsheets, and other places. “The biggest challenge is, how do you aggregate that data to take advantage of some of these new, AI-based models?”

Geotab collects 75 billion points a day across four million subscriptions, said the company’s AVP of solution marketing and panelist, Chad Saliba. The company is looking at what to do with that data, and how to manage fleets more effectively in the moment. “We’re looking at a ton of data that doesn’t get utilized unless we help the customers, through our partners, help them understand how best to use it,” he said.

Panelist Michael Stallone, Holman’s vice-president of application development, said that generative AI has arrived as a tool. Organizations will begin adding it to their products.

They must be ready, understand how it will be used, and ensure the technology gives relevant feedback.

Ted Davis, Holman’s senior VP and chief operating officer, spoke about vehicle supply chains. Production and sales were good in 2023, with 15.8 million vehicles sold this year. The situation should stabilize in 2024, with just under 16 million vehicle sales expected.

But the figure depends on factors like interest rates and what happens with the UAW strike.

Prices will fall next year, Davis noted. At the same time, labour costs will be higher due to the UAW strike. There’s been about a 25 per cent increase in fleet costs from four years ago. Overall, there’s a slow and steady market rebound, Davis said, with more normal conditions next spring.

On the event’s second day keynote speaker Jeff Immelt, former president and CEO of GE, highlighted the challenges facing organizations, and how to embrace change. It’s never been tougher to be a manager, Immelt said. He listed characteristics good leaders need, including acting with purpose. Good companies have a bias for action, Immelt said. In today’s technology-based society, it also pays to focus on speed.

Businesses must keep moving, Immelt stressed. During crises, organizations have gotten trapped by hunkering down in conference rooms, rather than taking action.

He gave advice on working with a team during difficult times: “You only know the team you’re working with on the worst days, not the best days.” Accept that during a crisis and you can get through it, he said.

Overall, the event showed the trends affecting fleet management today, while offering a window into what to expect going forward. Fleet professionals would benefit from embracing the event’s themes, among them using technology effectively, focusing on people, and improving the client and partner experience going into the New Year. FM/S FM/SP SUPPLY PROFESSIONAL

2023-12-04 3:21 PM

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2023-12-04 3:21 PM

Fleet Management

By Howard J Elmer

Mercedes e-Sprinter On the heals of the Ford Transit we have the other big van player – Mercedes launching its own electric van. The all-new 2024 eSprinter will arrive in Canada in the second half of 2023. This long cargo van comes with a high roof. It is equipped with the largest battery available, which has a usable capacity of 113Kwh. The

load capacity is 495 cubic feet, while the GVWR is 9,500lbs. The electric range, according to Mercedes testing, will be up to 400km (248 miles). The simulated range based on a city cycle will be up to 500km (311 miles). From the middle of this decade, MercedesBenz Vans will implement the next stage of its electrification strategy with VAN.EA (MB Vans Electric Architecture): From 2025 on, all new models will be all-electric.

RAM REV

Charged up work horses What’s new in electric truck and van offerings For 2023, electric trucks and vans are no longer a future proposition.

This market is being fast populated by models that appeal to consumers – and business in particular. As for the size of this market, according to the World Economic Forum, demand for urban last-mile delivery is expected to grow by 78 per cent by 2030, leading to a 36 per cent increase in electric delivery vehicles in the world’s top 100 cities. From a service vehicle standpoint, the rise of electric offers some sharp business opportunities.

Electric trucks run all day and charge all night. The electricity cost per kilometre versus gasoline is a fraction of your current fuel expense.

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At the New York Auto Show RAM showed off its REV pickup truck. Last of the Detroit Three to introduce an electric pickup, it seems the best might have been left to last. In range alone the REV is estimated to offer over 800km (500 miles) of range with the optional 229Kwh battery pack. Other targeted performance figures include a 0-100km/h time of 4.4 seconds, 654hp and 620lbs-ft. of torque. Up to 6,350kg (14,000lbs) towing and a maximum payload capacity of 1,225kg (2,700lbs). The REV is built on a unique chassis and is powered by dual 250-kilowatt electric drive modules. This truck can also send power to a home during a storm, or run the power at a camp or jobsite. An on-board power panel in the bed can provide up to 7.2kW while an available on-board power panel in the frunk provides up to 3.6kW.

FM/SP SUPPLY PROFESSIONAL

2023-12-04 3:21 PM

GM’s BrightDrop A home-grown Canadian success story is taking place in Ingersoll, Ontario. The CAMI auto plant, that has produced a variety of GM vehicles over the past 40 years, has been retooled and relaunched as the home factory of BrightDrop.

Producing the EV600 — an electric light commercial vehicle purpose-built for the delivery of goods and services. Powered by the Ultium battery system, the EV600 has an estimated range of up to 402km (250 miles) on a full charge. The body of the EV600 is purposely square to offer a usable 600 cubic feet of cargo

area. It is rated at a GVWR of less than 10,000lbs. On the heels of the EV 600 (which has already been sold to companies like DHL and FedEx) comes a smaller version of the EV 600. The EV410 has more than 400 cubic feet of cargo area and a shorter wheelbase. In fact, the EV410 will fit in a standard parking space. You may have already heard of some of the other electric vans and trucks from the likes of Rivan, Lordstown motors, Canoo, and of course, Tesla. If anything, this just shows off the large wave of product that is still to come. However, as of today, real purchase options do exist.

Ford Lightning Ford was first off the mark, and it’s Lightning has been on sale since last year. Note that Ford pegged its work level F-150 Lightning, (Pro Series) as it’s volume seller – at the lowest price-point. They are encouraging fleet sales. Today, the F-150 Lightning maximum available payload capacity has increased from original targets. Properly equipped F-150 Lightning pickups can now haul an extra 107kg (235lbs) for a total 1,014kg (2,235lbs) of maximum hauling capability. With the smaller 98.0-kWh battery, Ford claims a driving range of 370km (230 miles) per charge. Upgrade to the larger 131.0kWh pack and it boosts the driving range to 514km (320 miles).

This extended-range battery pack produces 580hp. The standard-range battery delivers 452hp.

Both packs can produce 775lbs-ft of torque, more than any other F-150 pickup ever.

Ford E-Transit Ford says the E-Transit is the only all-electric cargo van available in eight different configurations, including three roof heights and three body lengths, plus cutaway and chassis cab versions. The E-Transit offers the same interior cargo dimensions and same mounting points as Ford Transit. So, moving existing racks and shelving from your old Transit to a new E-Transit should be easy. Other built-for-business features on E-Transit include optional Pro Power Onboard, which provides up to 2.4Kw of power for customers to transform the vehicle into a mobile generator.

Chevy Silverado EV Unlike the Ford F-150 Lightning, which shares many of its body panels with its gas-fed counterpart, the 2024 Chevrolet Silverado EV looks almost nothing like the regular Silverado. The all-wheel-drive Silverado EV uses GM’s Ultium electric vehicle components, giving it a manufacturer-estimated 650km (400 miles) on a full charge. There is

also a Silverado EV Work Truck edition. At the same time, GMC has released the Hummer EV, in both SUV and truck body styles. This vehicle is not aimed at the work market – however, it’s also built on the Ultium platform, and much of what the Hummer has could migrate to other GM electric cars, trucks and vans.

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2023-12-04 3:21 PM

Fleet Management

By Stephanie Wallcraft

The race toward electrification Test driving the Hyundai IONIQ 6 If you’re not already considering a transition to electric as a fleet manager, you’ll surely need to soon.

The EV revolution is firmly underway, and a flurry of new vehicles is arriving that can meet a variety of needs and range demands.

When sedans will fit the bill and you’re far enough down the road to have a vehicle charging plan, Hyundai’s IONIQ 6 is well worth a look.

This is the second electric vehicle released by Hyundai since the standalone IONIQ nameplate launched. Unlike the boxy IONIQ 5 crossover that came before it, the IONIQ 6 is all sleek curves and elongated lines. Whether these features will appeal on the IONIQ 6 is entirely in the eye of the beholder.

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(Automotive writers like to call this type of styling “polarizing”).

Here, though, it serves an important function. The IONIQ 6 has a ridiculously low drag coefficient of 0.22, which is one factor that contributes to it being the most efficient EV currently available in Canada. That efficiency means the IONIQ 6 can be the most affordable EV to keep charged, depending on the model you choose.

Configurations

Two different configurations are offered. The most efficient is the base model, the Preferred Long Range, which comes with a 77.4kWh battery and rear-wheel drive. (A standard-range version

with a 53kWh battery was initially offered in Canada but has since been dropped). This version has a single motor mounted at the rear axle producing 225hp and 258lbsft of torque. With the standard 18-inch wheels, its range is estimated at 581km, and it uses 14.9kWh to go 100km.

Opting to upgrade to the Preferred Long Range AWD adds a second motor to the front axle and increases available power to 320hp and 446lbs-ft of torque. When equipped with 18-inch wheels, the estimated range is 509km, and driving for 100km takes 17.4kWh. This is the version we tested, and while we expect most Canadians will choose it for the all-wheel

drive factor, the truth is the AWD configuration offers more power than most drivers truly need for daily driving. If your fleet’s driving conditions make rear-wheel drive feasible, that model is worth serious consideration.

For 2023, an Ultimate package is available with the Preferred Long Range AWD. For 2024, it’s offered on both models. It adds a long list of desirable-looking features such as a panoramic sunroof, a Bose premium audio system, leatherette seats, a driver’s seat memory function, and more. However, it also adds 20-inch wheels, which look nice but affect the efficiency of the IONIQ 6 dramatically. On the RWD version, range FM/SP SUPPLY PROFESSIONAL

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1. The IONIQ 5 has features such as a Bose premium audio system, leatherette seats, a driver’s seat memory function, and more.

2. With the standard 18-inch wheels, the vehicle’s range is estimated at 581km, and it uses 14.9kWh to go 100km.

Unlike the boxy IONIQ 5 crossover that came before it, the IONIQ 6 is all sleek curves and elongated lines.

1.

2. drops to 491km, while on the AWD version range drops to 435km and power use goes up to 20.5kWh/ 100km. As a result, this add-on removes more benefit than it adds for fleet usage.

Electric drive system

Hyundai’s electric drive system is one of the best on today’s market. Five levels of regenerative braking are built in and can be easily adjusted with a pair of paddles on the back of the steering wheel. These range from a zeroresistance coast to full one-pedal driving. This level of customization becomes especially helpful in situations where an IONIQ 6 will have more than one driver.

For those with access to Level 3 DC fast charging at 350kW, the IONIQ 6 can recover a charge from 10 to 80 per cent in 18 minutes. At the more common speed of 50kW, it takes 73 minutes to charge the same amount. Considering, though, that every version of the IONIQ 6 has more than 400km of range, most fleets can count on using the 10.9kW onboard charging for their daily needs. This can accept a Level 2 charge and take the IONIQ 6 from 10 to 100 per cent in seven hours and 10 minutes.

In 2023, pricing starts at $57,652 including fees for the RWD version and $60,652 for AWD. As tested with the Ultimate package equipped, which costs $6,000 on this model

year, the fees-in price comes to $66,902. Both versions qualify for the full $5,000 value of the federal iZEV rebate program as well as provincial programs where they exist, meaning you can expect to pay $5,000 to $12,000 less depending on where you live in Canada.

Businesses can also access a tax incentive on eligible zero-emission vehicles, though this is not available in combination with consumer-level rebates.

That makes the IONIQ 6 more affordable than it appears at first glance. Add in the reputation Hyundai is building for reliability, and the brand is clearly at the forefront of the race toward electrification. FM/SP

As Tested (Hyundai IONIQ 6 Preferred Long Range AWD Ultimate) Price (incl. freight and PDI): $66,902 Engine: Dual electric motors, 77.4kWh battery Power: 320hp, 446lbs-ft of torque Transmission: Single-speed reduction gear Rated Fuel Economy (L/100km): .1/2.5/2.3 | 18.8/22.4/20.5 city/ hwy/comb Observed Combined Fuel Economy (L/100km): 18.2kWh/100km

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THE LAW—BY PAUL EMANUELLI

CURING COMPLIANCE IRREGULARITIES RECTIFICATIONS REMAIN SUBJECT TO DUE PROCESS To avoid bid compliance disputes, public institutions are increasingly adopting post-bid compliance rectification procedures. However, to be legally defensible, rectification procedures must operate outside of the “bid repair” restrictions of Contract A bidding rules. Further, rectifications must be administered in a fair and procedurally correct manner.

For example, in its May 2019 determination in Accipiter Radar Technologies Inc. v. Department of Public Works and Government Services, the Canadian International Trade Tribunal determined that the government’s unequal application of rectification and clarification procedures resulted in a biased evaluation process.

The dispute dealt with a request for proposal for coastal radar equipment for the Canadian Coast Guard.

The complainant alleged that the government gave preferential treatment to competing bidders during a rectification period and biased the evaluation process through the unequal use of clarifications. While the Tribunal found that the government did not apply biased procedures in its rectification process, it agreed with the complainant that the use of clarifications unfairly favoured competing bidders and biased the evaluation.

The Tribunal determined that the inconsistent use of clarifications prior to engaging in a rectification process gave the other bidders a material advantage in responding to the compliance requirements and placed the complainant at a disadvantage. As this case illustrates, post-bid compliance rectifications must be administered in a fair and procedurally correct manner and should be distinguished from the 30 DECEMBER 2023

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broader clarification rights that may also apply to various aspects of an evaluation process, including the scoring of bids.

FLAWED EVALUATION Similarly, in its October 2020 determination in Falcon Environmental Inc. v. Canada, the Canadian International Trade Tribunal ordered the cancellation of a contract and ordered that the contract be awarded to the complainant after concluding that the original award was based on a flawed evaluation process. The dispute dealt with a request for proposals for aerodrome wildlife control services at Canadian Forces Base Trenton and Canadian Forces Detachment Mountain View. While the Tribunal accepted the government’s use of a post-bid rectification process to allow bidders to rectify and cure non-compliance issues in their initial bids, it found that the tender call rules did not permit the government to use information collected through the rectification process to also score the bids.

The Tribunal therefore ruled that the original contract award was invalid and that the contract should be awarded to the complainant. As this case illustrates, evaluators should draw a clear distinction between post-bid cure procedures that permit bidders to rectify areas of non-compliance in their initial bid submissions, and other post-bid procedures that may allow bidders to refine their original scores through multi-stage bidding procedures. Unless the solicitation rules specifically allow for the post-bid collection of information for scoring purposes, evaluators should not use information collected for compliance rectifica-

tion purposes for the subsequent scoring of compliant proposals.

Finally, in its February 2021 determination in Marine Recycling Corporation and Canadian Maritime Engineering Ltd. v. Canada, the Tribunal recognized the government’s phased approach to bid compliance. The case dealt with a request for proposal (RFP) for vessel disposal services. The RFP included a phased bid compliance process where bids were first reviewed for pricing irregularities to determine whether any information required to be included in the financial bid was missing so that bidders could remedy any identified deficiencies.

Once pricing issues were addressed, the phased rectification process moved to a second technical review phase to identify any instances where the bid failed to meet any other mandatory criteria. As the Tribunal explained, after the technical compliance review, bidders were issued a compliance assessment report identifying any mandatory criteria that the bid failed to meet.

After receiving those reports, bidders were then provided a period in which they could provide additional information to achieve compliance with the identified criteria.

The Tribunal found no issue with the phased compliance process used by the government. In fact, it overruled the government’s decision to cancel the RFP over other issues relating to the subsequent scoring of those compliant proposals. The Tribunal determined that the cancellation decision was unnecessary and ordered the government to proceed with re-evaluating the proposals that had passed the phased compliance screening process.

Paul Emanuelli is the general counsel of The Procurement Office and can be reached at paul.emanuelli@ procurementoffice. com.

“Unless the solicitation rules specifically allow for the post-bid collection of information for scoring purposes, evaluators should not use information collected for compliance rectification purposes for the subsequent scoring of compliant proposals.”

As these cases illustrate, recent decisions are increasingly recognizing the validity of transparent rectification processes that allow bidders to cure compliance irregularities so that a larger number of submissions remain eligible for scoring in the subsequent stages of the evaluation process. While rectifications can help resolve bid compliance issues and avoid unnecessary litigation, these procedures must be properly administered to be defensible against legal challenge. SP SUPPLY PROFESSIONAL

2023-12-04 3:21 PM

SUPPLY CHAIN

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