PurchasingB2B December 2017 by IQ Business Media

DECEMBER 2017

CANADA’S SUPPLY MANAGEMENT MAGAZINE

THE DIVERSITY CHAMPION RBC’s Kiruba Sankar on the benefits of supplier diversity

NEGOTIATION TIPS SOCIAL PROCUREMENT EXECUTIVE RIDES

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Table of Contents

Vol. 59, No. 6 • DECEMBER 2017

Features

7 DISRUPTING THE CHAIN 2017 SCMAO conference highlights.

8 CULTIVATING SUSTAINABILITY Reaping the benefits of sustainability and CSR.

NEGOTIATIONS The benefits of knowing your industry.

10 SOCIAL PROCUREMENT The social impacts of public purchasing. 2 SUPPLIER DIVERSITY 1 Awareness of supplier diversity continues to grow.

32 THE DIVERSITY EDGE Kiruba Sankar on the benefits of supplier diversity.

Also inside

4 5

UP FRONT

IN THE FIELD

BUSINESS FRONT

3 8

THE LAW

32 Cover: Joel Robertson Photography

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

Connect With Us Online .ca

PurchasingB2B.ca

@PurchasingB2B

Michael Power

Features OMNICHANNEL EXPLAINED

This article offers a look at what omnichannel means to procurement and supply chain professionals. http://bit.ly/2ngtoqH

LESSONS IN SUCCESS A Canadian business owner shares the diverse supplier experience. http://bit.ly/2AHIRWu

PURCHASINGB2B ENEWSLETTER

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Up Front 302-101 DUNCAN MILL ROAD TORONTO, ONTARIO M3B 1Z3

www.PurchasingB2B.ca

Looking ahead

PUBLISHER/ADVERTISING SALES

EDITOR

here’s nothing like the end of the year and the beginning of a new one to put me in the mood for making lists. To me, whether it’s a Christmas wish list or things to try (or give up) in the New Year, December means committing items to paper. To indulge this, below is a list of trends I’ve noticed in procurement and supply chain during the past year. It’s by no means comprehensive—and in no particular order—but provides a snapshot of what I’ve noticed over the last 12 months that we’ll likely see more of in 2018.

Dorothy Jakovina 416-441-2085 ext 110, djakovina@PurchasingB2B.ca Michael Power 416-441-2085 ext 111, mpower@PurchasingB2B.ca ART DIRECTOR

Roy Gaiot

CUSTOMER SERVICE/PRODUCTION

Laura Moffatt 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com CIRCULATION

Technology: Everywhere I turned this year, I heard about the disruptive yet transformative effects of technology. Whether it’s data, artificial intelligence or robotics, everyone seems to be talking about how these shifts will affect the purchasing function. Supplier diversity: As Canada’s demographics shift, and as diversity becomes even more the reality for the country’s population, organizations will increasingly realize the benefits supplier diversity offers. So much so, that having a supplier base that’s diverse in many ways will, hopefully, cease to be the exception one day. Soft skills: Knowledge of and proficiency in core procurement skills will, of course, remain important for any procurement professional going forward. But in the future, skills like communication and collaboration will gain in importance. Those looking for a job in procurement and the supply chain should combine these skills with a solid understanding of technology. Risk: Supply chains (and economies generally) will continue to globalize. While this leads to opportunities, it can also present risks. This means that uncertainty and volatility will remain the new norm for procurement, as will working with internal risk experts. Innovation: Procurement will also continue to look to suppliers as sources of innovation. In 2017, I’ve heard procurement professionals say that they ask key suppliers to identify what they will deploy in the next three to five years. As globalization continues and technology moves forward, this practice will continue. There you have it, a look at a few of the trends I’ve seen over the past year that will continue in 2018. Speaking of looking ahead, we at PurchasingB2B magazine are delighted to announce that we have a new owner. Toronto-based iQ Business Media has acquired the magazine. We’re very excited about this, as PurchasingB2B aligns well with iQ Business Media’s existing publications. With some magazines that have served their industries since 1955, the company has no shortage of expertise and experience. It’s a great way to start 2018, which coincidentally is also our 60th year of publication. This is a landmark anniversary for which we have a number of exciting events lined up to celebrate. Nothing like hitting two milestones in one year!

circulation@PurchasingB2B.ca

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For over 59 years, PurchasingB2B has been a trusted source of source of information information for Canadian for Canadian purchasing/supply purchasing/supply chain management chain professionals inprofessionals management the private in andthepublic private sectors. and public Specialsectors. features and supplements Special features include and supplements includeCanadian Fleet Management, Fleet Management, Automotive Review Canadian (CAR), PurchasingB2G, Automotive Review (CAR), PurchasingB2G, and Travel Management Canada. and Travel Management Canada. PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569MAIL (print); 1929-6479 PUBLICATION AGREEMENT NO.(digital) 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com CIRCULATION Mail: 302-101 Duncan Road, TORONTO, ONTARIO M3B 1Z3 416-441-2085, ext 104,Milllmoffatt@iqbusinessmedia.com Mail: 302-101 Duncan Mill Road, TORONTO, ONTARIO M3B 1Z3 SUBSCRIPTION RATES Published six times per year SUBSCRIPTION RATES Canada —six1times Year $per99.95 Published year CDN Outside — Canada —$199.95 Year $CDN 172.95 USD Canada 1 Year Outside Canada — 1 Year $ 172.95 USD Occasionally, PurchasingB2B will mail information on behalf of Occasionally, PurchasingB2B industry-related groups whosewill products and services believe mail information onwe behalf of may be of interest to groups you. If you prefer not toand receive this we information, industry-related whose products services believe may please contacttoouryou. circulation department in any this of the three ways be of interest If you prefer not to receive information, listed above. please contact our circulation department in any of the three ways listed above. Opinions expressed in this magazine are not necessarily those of the editorexpressed or the publisher. No liabilityare is assumed for errors or of Opinions in this magazine not necessarily those omissions. advertising subject to the publisher’s approval. the editor orAllthe publisher.isNo liability is assumed for errors or Such approval does not imply any endorsement of the products or services omissions. All advertising is subject to the publisher’s approval. Such advertised. Publisher reserves the right to refuse does approval does not imply any endorsement of the advertising products or that services not meet thePublisher standardsreserves of the publication. advertised. the right to refuse advertising that does No part thestandards editorial content of this publication may be reprinted not meetofthe of the publication. without thethe publisher’s written permission. No part of editorial content of this publication may be reprinted © 2017the IQ publisher’s Business Media Inc.permission. All rights reserved. Printed in Canada. without written © 2017 IQ Business Media Inc. All rights reserved. Printed in Canada. Funded by the Government of Canada. Funded by the Government of Canada.

| December 2017 | PurchasingB2B.ca

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Business Front

The Skinny On Pot Legalize it. Don’t criticize it. But Invest in it?

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

By Michael Hlinka

n addition to writing for PurchasingB2B magazine, I instruct in a variety of investment and financial planning courses with both the University of Toronto School of Continuing Studies and George Brown College. A question I’ve been getting a lot lately—in particular from my George Brown College students—is what do you think about marijuana? No, the students are not asking about my personal preferences when it comes to vice. What they are inquiring about is what I think of this sector as an asset class to invest in.

value for shares of companies that are currently losing money and are cash flow negative as they try to ramp up to meet demand? At this point, we don’t know exactly how marijuana will be both regulated and taxed, which means that we don’t know whether the government will allow the industry to be profitable in Canada. And there’s one more wild card, which I’ll reveal later in this column. I have been investing seriously for the past 25 years and I’ve found that the most reliable way to ensure that my hard-earned money isn’t flushed down the drain is to go through rigorous cash flow analysis. When you buy shares, you know with certainty what they cost you today. What you don’t know with precision is what dividends you will receive in the future, and what you might sell those shares for down the road. But unless you can make these “History tells us that investing in “sin” projections with some accuracy, it stocks has been quite lucrative.” seems to me that you’re not investing. You’re speculating. Very shortly, it will be fully legal to own these prePreviously, I explained the reason why so many people have come viously banned products in this country. According around on the idea of legalizing marijuana. But this isn’t what’s motito a recent report from Deloitte, the market value of vating governments around the world. If the retail market for marirecreational marijuana approaches $9 billion. And juana is (let’s round off ) $10 billion in Canada and the government can this is the recreational value only. One of the pricapture a significant chunk of that…well, that’s not chump change! mary reasons, it seems to me, why some who were And traditionally “sin taxes” have been easier to justify that somepreviously opposed to legalizing marijuana is that thing like HST or higher income tax rates. Then the question is what many people who are chronically in pain find trewill remain for investors after government gouges out its share? That’s mendous relief from the active ingredient in marione more risk factor. juana. This means that the $9 billion figure should Finally, and this is the decisive reason why I’m skeptical about the be understood as a low-ball estimate. long-term profitability of marijuana stocks, is that it’s so easy to grow! History tells us that investing in “sin” stocks Once there is widespread acceptance, I can envisage that in backyards has been quite lucrative. While it is true that the across Canada there will be marijuana plants beside tomato plants. tobacco companies are under siege from governThe growth of marijuana will be a thriving cottage industry. There ments around the world, a company like Altria is will be an active market in selling seeds, specialty fertilizers, and a able to churn out dividend after dividend. Over variety of garden products. And this will put pressure on the margins the past generation, we have seen consolidation in that the big producers will receive. You can almost think of it as the the beer industry with the mergers of Coors and impact that Uber has had on the traditional taxi industry. Molson, and In Bev and Budweiser. Fewer players All this said, I think it’s not unlikely that there are at least a few commean economies of scale and less competition which panies whose shares will see meteoric increases over the next decade are not so great for consumers, but something that with the legalization of marijuana. And if I had the time and expertise investors appreciate. That suggests that investing in to dedicate hundreds of hours researching this category, then I might marijuana may be a very good idea. feel confident enough to invest. But I don’t. And what that means is I’ll Yet I have not taken the plunge and there are stick with drinking beer (when it comes to my personal vice) and stick a few reasons for that. This is an industry in its with investing in companies that make beer (when it comes to investinfancy. It is difficult to project cash flows with any ing in personal vices) even if it means missing the possibility of a big accuracy, so how can I possibly guess what is fair payday from marijuana down the road. B2B PurchasingB2B.ca | December 2017 |

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Image: Dorothy Jakovina

Duncan Stewart of Deloitte shares views on technology and the supply chain.

Disrupting THE CHAIN The 2017 SCMAO conference offered a 20/20 vision of the supply chain’s future By Michael Power

hile the Supply Chain Management Association of Ontario (SCMAO) hit a milestone by holding its 20th-annual conference in Brampton in October, the organization didn’t simply rest on its laurels. The association offered a forward-looking event focused on the impact that disruptive technologies are having on the supply chain, as well as what skills those in the field will need to thrive. Using the tagline 20/20 Vision, the conference opened with Duncan Stewart, director of research, technology, media and telecommunications trends at Deloitte, who shared views on some of the directions that technology is taking and how they will affect the supply chain. Stewart identified himself as a “de-motivational speaker,” noting that some of what’s viewed as trending technology today either defies the laws of physics or won’t happen for 10 or 20 years. Virtual reality, for example, is sometimes billed as the next big thing in disruptive technologies. But while virtual reality is effective for gaming it won’t become the next smart phone. “This is not going to be a thing,” Stewart said. “People are not going to be wearing their headsets while out and about.” Many people feel sick while using a virtual reality headset, he noted. They also don’t want to block their ears and eyes as they go about their daily life, akin to wearing “computers on their face,” Stewart said. In discussing the concept of the “next big thing,” no new technology will cross over for a while. He described the phase that the world is in now as a “tech pause.” “We’re in the middle of a multi-year deceleration in consumer hardware,” Stewart said. “What we’re looking at is a general slowdown in buying new things.” However, as consumers spend less on hardware they are spending more on software, services and content, he noted. Wired for volatility How is technology impacting the economy? When asking this question we often miss the forest for the trees, said Karl Schamotta, director of global market strategy at Cambridge Global Payments, who also presented during the conference. To illustrate this, he gave the example of fishing villages in the Indian state of Kerala.

At one time, if everyone offloaded fish at markets simultaneously, the price dropped. Some fishermen would then throw their catch overboard. But when cellphone towers were installed along the coast, price volatility dropped due to less uncertainty. The bigger impact: no fish thrown overboard. “What you’re seeing here is a more effective way of connecting demand and supply in the global market,” Schamotta said. Globally, online giant Amazon is an example of connecting buyers and sellers on different parts of the planet. “You literally are changing the world by moving goods more effectively and efficiently.” That connectivity is increasing constantly, with 80 devices per second connecting to the Internet, Schamotta said. By 2020 there will be 50 billion connected devices globally. At the same time, processing power continues to increase and people around the world get more access to information. Deindustrialization is a trend that Schamotta sees in emerging economies such as China. That country is looking to rebalance its economy and move away from manufacturing. And while industrial workers remain inexpensive in China, many companies there are replacing people with robots. “This is a phenomenal shift,” he said. At the same time, emerging economies are performing better. As supply chains and communications improve so does wealth— that means falling global inequality, Schamotta said. “The reality is that for most people in the world, they’re doing far better,” he noted. But costs in many countries for things like medical care and tuition are rising, which can lead to dissatisfaction. This has contributed to the rise of populist politicians like US President Donald Trump, which can add to political risk. But there’s opportunity for growth, Schamotta added. Fears that trade is declining are unfounded, with growth increasing in emerging markets—what he called an “almost unstoppable trend.” Volatility is good, said Schamotta, since it’s a chance for action. Conference speakers and attendees alike explored the ways in which disruptive technology is shaping the supply chain. The two-day event truly offered a 20/20 vision of the supply chain world to come. B2B PurchasingB2B.ca | December 2017 |

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Thriving with SUSTAINABILITY Sustainability is core to running your business

By Susan D’Souza

orporate social responsibility (CSR) is increasingly important to businesses to not only survive but thrive. Companies need to ensure their business objectives and targets incorporate a sustainability component so it becomes a way of doing business. Cultivate a true sustainability culture and I promise that you will reap the benefits. This was my message to those who attended the National American Society of Quality (ASQ) Conference in Ottawa this past September. Sustainability must be engrained in every part of your organization, every department and every job function. In essence sustainability should be integral to every activity and become part of the DNA of your organization. You will see the results when sustainability is inherent in all you do and it

tainability plan that is tailored for your business. One size does not fit all. By identifying the areas of your business that are most important and prioritizing them you can decide which ones you want to pursue to make the biggest impact. Sustainability initiatives must be aligned with the company’s overall goals and have well defined objectives and targets that are tracked continuously. What gets measured, gets managed and what gets managed gets improved upon. The goals you set must be ambitious, but achievable. Employee Engagement: Leadership is important but never underestimate the power of your employees. Employee engagement is critical to the success of your sustainability plan. Employees can either make or break your plan. Leaders can set the high-level objectives and tar-

Cultivate a true sustainability culture and I promise that you will reap the benefits. will add immense value to your business. Increased operational efficiencies, reduced waste, cost savings, innovation, and strong customer loyalty are all fueled by engaged employees who help position your company for longevity and success. Less turnover and developing internal talent will breed internal subject matter experts who become your future leaders. Attending sessions and presenting at the National ASQ conference was an eye opening experience. It was a great opportunity to collaborate with leading quality professionals from across the country that view sustainability as a key enabler to achieving business goals. Sustainability is a journey, not a destination. In my presentation I talked about the three mandatory pillars for a successful sustainability journey. Strategy: It is critical to create a sus8

gets but if we fail to get the buy-in from employees then our sustainability efforts are destined to fail. Engaged employees not only implement your programs and get them off the ground but they help sustain them. Invest the time upfront to educate, engage and empower your employees on your sustainability strategy and initiatives so they understand what you are trying to implement, why it’s important to the business and how they can each contribute to make it happen. Once you have their attention and they are motivated to contribute, remember to empower them with the tools they need to be successful so they can and will deliver the results. These engaged employees will become self motivated, loyal and often generate new sustainability ideas for the business to implement, hence innovation

becomes a driving force. Continuous Improvement: By instilling a continuous improvement mindset, your sustainability plan will gain momentum and longevity. Raise the bar to always improve so you do not become complacent. Complacency leads to extinction. By embedding continuous improvement into your organization you will reap many benefits to enhance your business and maintain your competitive advantage. Having these three pillars top of mind in 2017 definitely helped our company succeed in our sustainability journey. In November, Staples Business Advantage received the Corporate Social Responsibility Leadership Award-Leading with Intention from the Canadian Office Products Association (COPA). This award was attributed to our engaged employees, particularly our local and national sustainability team members who are our sustainability champions and inspire those around them to make a difference and get involved. I believe the vast majority of employees do not come to work just for the paycheque but also want to make a difference. Having a robust sustainability/CSR strategy enables them to do so. That ultimately creates a ripple effect of collaboration, teamwork and commitment. CSR is not always easy and it has its unique challenges, however by embracing these opportunities and being innovative you will achieve success. Leverage employee engagement to drive sustainable business and you will accelerate your company’s growth and performance. B2B Susan D’Souza is senior national manager, quality, sustainability & regulatory, Staples Business Advantage.

| December 2017 | PurchasingB2B.ca

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KNOW THY INDUSTRY Professional buyers should understand the details of what they are buying

art of everyday life is resolving issues, and these issues vary in complexity. Easy issues can be solved expeditiously where complex ones are solved in time. Procurement issues that are complex are normally solved through negotiations. When required, an organizational team consisting of stakeholders is assembled—the issues then examined by the members—and solutions proposed. Sounds simple enough, but from experience we know that the hard part of any procurement process is to define clearly what we want to buy—for example, clear and concise specifications, a statement of work or statement of requirement. The product or services are normally outlined at the beginning of the buying cycle, so there should be no disagreement by the time a purchase order is issued. That’s so in many cases, but in many other situations parties to the agreement resort to negotiations. But this article is not about repeating volumes on this subject. It’s about one small aspect that affects most procurement negotiations. We call it “Know Thy Industry”. This means that professional buyers should know the details of what they are buying as well as the seller. Buyers that learn about the product, how it’s made, what makes it unique, the distribution channels, transportation and warehousing requirements, and the complete costs from raw material to the point of use can negotiate the best value. Buying a familiar product or service can be repetitive if there’s no change in the specifications from one procurement cycle to the next. But the only constant is change. Products evolve when new regulations and standards are introduced. Procurement teams together with their stakeholders, such as engineers, will review all of these changes. This will then

Fotolia

By Boris Tsinman

“Good procurement staff have many tools in their arsenal which they have learned through experience and continual education.” be reflected in amendments to the specifications and, if this doesn’t happen, the result will be a situation where complex procurement negotiations are required. But knowing what you buy is not enough to serve your organization well. Procurement staff will also benefit from participating early on and fully in specification redesign. Buyers bring valuable experience and knowledge to the team and will be able to affect any future issues that might require negotiations. Good procurement staff have many tools that they have learned through experience and continual education. By being involved in many aspects of the organizational buying process, a buyer might be able to suggest a new and innovative way of resolving issues. For example, many departments buy products or services that are similar in nature but used for various applications. The procurement method might be different for each client, but the experience of buying a familiar product and all the complexities associated with it—if shared with other departments within the organization—will save significant effort and costs. Complex negotiations might be downgraded to simple or routine price verifications upon suggestions proposed by the buyer.

Procurement, as a central department in many organizations, creates value by connecting the dots, i.e. by having a corporate memory as to what method the organization used to buy the product or service through previous cycles for various end users, what was done well and what lessons were learned. Equipped with that knowledge procurement is well suited to negotiate the best solution for the organization because they have facts and figures at their disposal. For example, a professional buyer will suggest aggregation of volumes to reduce the costs if that is the target for negotiations. Or, if the organization requires service, negotiations might focus on the number of hours the supplier proposes to complete the task stated in the specifications. In both cases, knowledge of the subject matter and access to analytics play a significant role. Buyers are subject matter experts when it comes to procurement. Specifications have a direct correlation to how much negotiation will be needed to sign an agreement. A well-defined statement of work will mean much less effort from all parties. Procurement departments serve as connectors to all client departments and hold key knowledge and expertise in resolving procurement-related issues. Any organization that taps into such knowledge will benefit in terms of reduced costs, reduced organizational effort and increased supplier performance. B2B Boris Tsinman is principal at Novus Incorporated.

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PUBLIC PROCUREMENT

SOCIAL

PROCUREMENT Public-sector buyers are considering the social impact of how and what they buy

By Michael Power

etting the most from a public sector purchase can mean Municipalities have already begun to do this, LePage adds. more than simply finding the lowest bid price. Many For example, social procurement was a consideration during the Canadian governments and their agencies now also development of the Parq Vancouver Casino in that city’s downlook for greater value from their purchasing by adding a social town core. The municipality worked with the casino’s developelement to the process. Enter social procurement, a process that ers to ensure that, during the construction and operation of the takes into account the social benefits of buying practices along- facility, at least 10 percent of the employees would come from side more traditional considerations like the quality of goods and inner-city communities. As well, 10 percent of the goods and serlowest bid price. vices purchased during the development would originate from How can governments and public agencies begin to see their those areas. The 2010 Winter Olympics—also in Vancouver— purchasing practices through a social lens? The process can be was another major initiative for which purchasing saw the intenbroken down into two main methods, says David LePage, man- tional addition of social value. “The spend is going to happen, aging partner with Vancouver-based Buy Social Canada. The so how can we use the existing spend to be a bit more creative first is through purchasing goods and serand innovative,” he said. “Rather than vices. When deciding what needs to be just letting the ripple happen, how can we “Whether intentional procured, organizations can look at the design the ripple?” type of social value or community outSocial procurement is gaining traction or unintentional, major come can result from a particular purat the federal level as well. Bill C-344 is developments have a chase, LePage says. currently before parliament, has finished a For example, purchasing services like reading and is headed to commitripple effect, an economic, second landscaping or catering has the potentee. The legislation would make it mandatial to create social value in the form environmental and social tory to attach community benefits to any of entry-level jobs within a particular major infrastructure project in Canada. impact in the community community, LePage notes. To pursue The benefits of social procurement this, public agencies can work to add a depend on the community that’s affected, where they happen.” social criteria or evaluation component says LePage. Regarding Parq Vancouver, David LePage to RFPs. A second method involves the the benefits involved inner city ecouse of community benefit agreements. nomic and employment opportunities. When a municipality, government, hospital or other public Community benefit agreements at the City of Toronto have body undertakes a major development effort, they can consult revolved around building skills capacity in the development with the developer, the community and other stakeholders to and construction industry. Manitoba Housing has used social identify specific social impacts, such as employment, that will purchasing in Winnipeg to create employment opportunities result from the development. In Canada, such agreements have for youth at risk while Fort McMurray has helped small- and been a part of discussions surrounding resource development medium-sized businesses participate in the city’s reconstruction and Aboriginal communities. “Whether intentional or uninten- following wildfires in May 2016. “It depends on what the comtional, major developments have a ripple effect, an economic, munity need is and how do you match community need with environmental and social impact in the community where they that particular purchase or development,” he says. happen,” says LePage. “So, rather than unintended, we can actually plan and create the ripple we want.” Social procurement in action Social procurement might include supplier diversity, for exam- The City of Toronto adopted its social procurement program in ple, but differs in that supplier diversity is one potential consid- May of 2016, says Mike Pacholok, director of purchasing and eration in the larger picture of social procurement. Supplier material management division at the municipality. The City diversity involves company ownership, not necessarily the down- spent most of 2016 preparing training materials and putting in stream social impact (although it might). place templates and other information. The program launched 10

| December 2017 | PurchasingB2B.ca | PURCHASINGB2G

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For other municipalities and public organizations looking to embrace social procurement, or supplier diversity as a component of social purchasing, Pacholok recommends analyzing existing purchasing practices to see if a base of diverse suppliers exists that an organization may be unaware of. Work with CASMC, WE Connect Canada and similar groups as well, he notes. Embracing social procurement and supplier diversity means change, and it pays to have a change champion or inter-departmental team to help push initiatives across the organization. In Toronto’s case, change didn’t come from the procurement department alone and other departments were also involved. Although difficult to arrange for many organizations, it pays to have a person dedicated to working on the program. As well, organizations can begin with pilot projects before pursuing a program full time, as Toronto did. “Sometimes you need to show some successes on a small scale to get the buy in,” Pacholok says. “That way, you also get to learn some best practices that fit in with your organization.” Social procurement and supplier diversity also let organizations give the small business community the chance to succeed in public-sector procurement, especially when it’s so often seen as bureaucratic, Pacholok says. “It’s a great opportunity and the City of Toronto is always willing to help talk through this with any municipality or any government that’s seriously considering social procurement,” he says. B2B

PUBLIC PROCUREMENT

more officially at the beginning of 2017. The municipality designated supplier diversity and workforce development as the two main components of the program, Pacholok notes. For supplier diversity, when making purchases between $3,000 and $100,000 (that are allowed to be invitational quotations) the municipality requires City divisions or the purchasing department to consult a certified diverse supplier list. If there are any certified diverse suppliers in the area for which the City is purchasing, those diverse suppliers are contacted. “We’re trying to improve access to these certified diverse vendors,” Pacholok says. Providing better access to contracts for equity-seeking groups also boosts competition, has downstream benefits to local communities, helps to bolster innovation and builds a better qualified supplier pool, Pacholok says. But there are also challenges, including simply getting a large organization like the City of Toronto to embrace change. The municipality trained roughly 600 staff earlier this year and is now monitoring results. “We’re trying to make sure it’s becoming engrained in our culture that this is the approach on this policy,” Pacholok says. Other challenges involve not only the relatively small pool of certified diverse suppliers but also ensuring the City has the proper data to support the right kind of metrics. Ensuring the City has measurable data is among the targets the municipality has set for its social procurement program going forward.

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GROWING

DIVERSITY

t’s hard to live or work in Canada— or even visit—and not notice diversity. The majority of people living in Toronto, for example, now identify themselves as visible minorities, according to data from Canada’s 2016 census. Canadian corporations have recognized the strengths this offers and have worked to make their workforces more diverse. Many organizations have also worked to make their pool of suppliers more diverse through supplier diversity—a term referring to suppliers that are at least 51-percent owned, operated and controlled by women, Indigenous groups or members of a visible minority group or the lesbian, gay, bisexual and transgender (LGBT) community. Supplier diversity has gained ground in 12

Canada over the past several years, with groups like the Canadian Aboriginal & Minority Supplier Council (CAMSC), WEConnect Canada and the Women Business Enterprises Canada Council (WBE) promoting supplier diversity. In fact, CAMSC, WBE, the Canadian Gay & Lesbian Chamber of Commerce recently formed the Supplier Diversity Alliance Canada (SCAC) to build partnerships and advance supplier diversity in Canadian markets. But while supplier diversity has deep roots in the US, dating back to the 1960s civil rights movement, it’s been slower to catch on here, according to a report from the Conference Board of Canada, entitled The Business Case for Supplier Diversity. The report, released earlier this year, sites a lack of regulatory requirements for sup-

By Michael Power

plier diversity in Canada. Contrast that to the US, which has long had supplier diversity legislation in place. Changing demographics But awareness in Canada is growing, says Paul Larson, professor of supply chain management at the University of Manitoba’s Asper School of Business. In the near term, the country’s ongoing demographic shifts will most likely put the concept of supplier diversity more on the radar screen, he said, as will organizations like CAMSC and others. But Canada’s shifting demographics have also led to another phenomenon: “Especially in the GTA, it’s becoming so diverse that the logical end game is that the whole concept of supplier diversity is outgrown because then it’s just a matter of people

Images: Fotolia

Increasing awareness of supplier diversity means purchasers and vendors alike are reaping the benefits

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Images: Fotolia

doing business with each other. We’re certainly not there yet,” Larson says. Still, those in Canadian corporations with whom Larson broaches supplier diversity can seem bewildered. Some cite Canada’s already diverse nature, or appear defensive, as if there’s a suggestion that their procurement practices might discriminate against certain groups. “And then I try to explain that it’s not really about that per se, it’s really about making sure everybody has awareness and access to opportunities,” Larson notes. Corporations may not realize that culture or language can inhibit capable suppliers from participating in procurements. But must corporations accommodate these challenges on behalf of diverse suppliers? There’s certainly a business case for doing so, notes Larson. “The wider you cast the net the more interesting ideas that you’ll get, and probably the better deal you’ll end up with, if you’re playing the entire field,” he says. Larson also encourages corporations interested in supplier diversity to investigate the material organizations like CAMSC and WEConnect offer regarding best practices. It’s about engagement and ensuring all possible suppliers are aware of opportunities, he adds. There also seems to be a strong connection between a company’s size and the resources it can dedicate to supplier diversity efforts, Larson notes. Larger corporations often have the budget or talent for supplier diversity efforts, while smaller organizations sometimes say they don’t have the resources. Large organizations often employ a diversity officer and most organizations with a supplier diversity initiative have strong workforce diversity. For diverse suppliers themselves, connecting with corporations can be daunting. Some corporations are good at supporting diversity within their supplier base, says Anila Dada, VP of strategic sourcing at Amyantek, a CAMSC-certified provider of end-toend IT staffing services. But it can also be challenging to get the attention of those making decisions surrounding diverse suppliers. Dada noted the importance of grit. “Don’t give up and be persistent in reaching out to corporations,” she advises other diverse suppliers. Supplier diversity crosses all barri-

“The wider you cast the net the more interesting ideas that you’ll get, and probably the better deal you’ll end up with.” Paul Larson ers and suits companies both large and small, says CAMSC president and CEO Cassandra Dorrington. For any organization that buys products or services, there are opportunities to ensure the supply chain is inclusive. Supplier diversity is therefore an important part of the strategy of any business, large or small. “Create a policy statement, identify procedures that allow you to ask and track ownership questions and then undertake outreach or communication internally and externally, such that suppliers and internal buyers are aware of how to be a part of the process,” she advises. For organizations without a supplier diversity program, several factors might be holding them back, Dorrington says. Questions such as where to start, what resources are available—or even what supplier diversity is—can all delay ambitions. But for those who don’t know where to begin, Dorrington recommends contacting one of the certifying councils (CAMSC, WEB Canada, CGLCC, IWSCC, CCAB and WEConnect International in Canada) for help. “There are a variety of potential issues, but if your organization wishes to take full advantage of the innovation, flexibility and potential savings, why would

you not take advantage of something that could and will impact your bottom line?” she asks. Despite challenges, supplier diversity continues to grow as a strategy as organizations include a broader sector of the business community, Dorrington says. Corporations in larger cities are aware of the benefits and the practice is also spreading to smaller centres. As supplier diversity grows and becomes a larger part of the business environment, Dorrington predicts diverse suppliers will partner and spread into the US, eventually going global. For Mary Anderson, president of WBE Canada, the progress that supplier diversity has made in Canada was evident during a recent event that the Supplier Diversity Alliance Canada (SCAC) held on November 2, the third-annual Connect, Collaborate, Succeed event in Toronto. The event served to connect diverse suppliers with corporations through a half-day of panels, roundtables, and other activities. “What really struck me was how far our Canadian corporations have advanced in their implementation of supplier diversity in the last few years,” she says. The SCAC is working to develop tierone and tier-two programs, granting diverse suppliers more access to different levels of the supply chain. And with the maturing of the programs of corporations practicing supplier diversity, there are more options than ever. “That’s something to celebrate in 2017,” Anderson says. But obstacles remain. For example, there’s an ongoing issue of how to create more visibility of the value that supplier diversity brings to corporations, Anderson notes. But even this area has seen progress, she says, noting the public sector has shown interest in developing supplier diversity models. As part of its social procurement initiative, the City of Toronto recently held an event dedicated to connecting buyers and suppliers. Also this year, a supplier advisory committee to which WeConnect belongs presented the concept of inclusive procurement to a senior official at Public Services and Procurement Canada. “I think there’s been momentum and a better understanding of inclusive procurement and what it could look like,” Anderson says. PurchasingB2B.ca | December 2017 |

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It’s important not only to explain and demystify supplier diversity, but also show how to customize programs for different organizations, she adds. Supplier diversity doesn’t have to be one-sizefits-all. For organizations looking to get involved in supplier diversity, Anderson points out that there is lots of information available; she recommends connecting with corporations that have supplier diversity practices.

The bank’s tier-two spend program provides further opportunities for suppliers of all sizes. To succeed, supplier diversity should be integrated into an organization’s broader goals, Seymour notes. Procurement professionals must be able to answer questions like, ‘why should we have a supplier diversity program?’ It helps to consider the drivers for diversity for employees, customers and the community, as well as the benefits for the organi-

“Diverse suppliers bring incredibly innovative ideas that come from different perspectives and that’s incredibly valuable to you. So structure yourself so that you actively work on it.” Lloyd Switzer

Spreading awareness Marcia Seymour, senior manager, procurement corporate responsibility, strategic sourcing group, TD Bank Group, agrees that while supplier diversity has progressed in recent years, barriers remain to its growth. The lack of broad awareness of the topic and its benefits remains a challenge for both organizations considering a program and suppliers looking to certification. Seymour recommends communication to overcome this barrier. “Most people involved in supplier diversity are very willing to share their experiences,” she says. “Speak with organizations involved in supplier diversity and ask them to share best practices and connect you with others who can provide insight. Don’t hesitate to ask supplier diversity professionals what worked for them and what they would do differently. For suppliers, seek out your peers who decided to take the leap and get certified and ask them to share what they have done and what it has meant to them.” For its part, TD focuses on finding opportunities for certified diverse suppliers to compete for the bank’s business and educating suppliers on doing business with a large corporation, says Seymour. 14

zation, Seymour says. Two main factors make supplier diversity worthwhile, says Lloyd Switzer, senior vice-president and chief procurement officer at Telus. The first involves the value of new perspectives, he notes. Diverse voices from suppliers and others lead to more innovation, new ideas and new ways to tackle problems—all of which results in growth opportunities and savings. “We see it all the time that innovation comes from having diverse businesses that we interact with, diverse team members on our team, it drives innovation which leads to cost savings and growth and improved customer experiences,” Switzer notes. The second factor is that diversity and inclusion are important to Telus’s culture. “We give where we live” is a mindset that Telus takes seriously and believes that it’s the right thing to do to engage with the communities with which it does business, he notes. “It’s a virtuous circle and we see it in everything we do, and it’s the right thing to do,” Switzer says. “We get better outcomes for us as a business and we get better outcomes as we strengthen Canadian communities.” Among Telus’s supplier diversity initiatives is a scorecard item illustrating how

much spend goes to diverse suppliers and the company sets a target to grow that each year, Switzer says. Rather than setting absolute targets, Telus works towards “significant growth”. Telus also updated its supplier code of conduct to include language on diversity that the company expects suppliers to follow. The company targets specific procurement events like RFPs to ensure that at least one diverse supplier is included, provided that a diverse vendor is available in that category (not always the case). The company runs webinars, as well as hosting and mentoring events, to help diverse suppliers interact with Telus and other large organizations. For small vendors, the company runs a “procurement light” process to ensure those vendors aren’t bogged down by the challenges of dealing with a large organization. “Having a small company face off against us is not our intent,” he said. “It isn’t to create a roadblock, it’s actually to enable them.” Telus procurement leaders also become board members with organizations like CAMSC and WBE. The company also matches its procurement leaders with diverse vendors as mentors, helping them meet their business development goals. Along with those informal relationships, there are monthly mentoring sessions with the intent to share expertise. “We want to help spread to Canadian companies and spread to more diverse suppliers the whole notion of inclusion and how you can work with large organizations like ours,” Switzer notes. Switzer suggests that, to get the most from a supplier diversity program, organizations make that program both explicit and formal. “It’s the right thing to do but I’ll go back to, you’ll get the most benefit from it,” he says. “Diverse suppliers bring incredibly innovative ideas that come from different perspectives and that’s incredibly valuable to you. So structure yourself so that you actively work on it.” Going forward, the concept of supplier diversity and inclusive procurement may look different but the concept will remain important, says Anderson. There’s value in creating access to diverse suppliers, not only to organizations that engage in supplier diversity but also to Canada’s economy. B2B

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DECEMBER 2017

16 TECHNOLOGY TRENDS

What’s new in tech at ARI’s Best In Fleet conference.

18 EXECUTIVE RIDES

Vehicles that befit the boss.

22 DRIVING DIVERSITY

Automotive manufacturers take the lead in supplier diversity. 28

24 FLEET MAKEOVER

Manitoba Hydro revamps its fleet management.

28 TRUCK KING CHALLENGE

See how the HD 2500 series trucks have faired.

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

Autonomous vehicles are a great opportunity for the auto industry and will transform society, according to Larry Hutchinson, President and CEO of Toyota Canada Inc. (TCI. Hutchinson shared his thoughts on mobility’s future as a keynote speaker at the 2017 TalkAUTO conference in Toronto. While the revolution won’t come tomorrow, the industry has never seen the current pace of change, Hutchinson said. “I don’t think there’s ever been a better, more exciting time to be a part of the automotive industry,” he said. “Automated vehicle technology is going to revolutionize mobility—and transform society—in ways more profound than the move from the horse-drawn carriage to the Model T.” While safety is a major benefit of AVs, it’s just one, he said. More fluid traffic flow, less congestion, and increased mobility are also perks. “Think about the life-changing impact autonomous vehicles will have on the millions of people who have mobility challenges: older people, people with disabilities and people who can’t afford their own car,” he said. While autonomous vehicles are coming, they won’t arrive as fast as we think, he said. For the foreseeable future, there will be an increasing mix of conventional, automated and eventually autonomous vehicles.

Collisions on the rise: study Collisions are rising across Canada despite improvements in some regions, according to the latest Allstate Insurance Company of Canada’s Safe Driving Study. There has been a 2.5-percent increase since the previous study, with the most severe collisions involving pedestrians and cyclists and the second-most severe being head-on collisions. The ninth-annual study examines the collision data of Allstate Canada customers in Alberta, New Brunswick, Nova Scotia, and Ontario. The data ranks communities according to collision frequency. Of the 93 communities included in the report, Northern Ontario’s Hanmer is the safest, with a collision frequency rate of 3.65 percent. For the third consecutive year, Halifax is the community with the highest collision frequency, at 7.9 percent.

Alberta EV charging coming Alberta energy and infrastructure provider ATCO and electric vehicle charging solutions provider FLO have deployed three fastcharging stations in Alberta. This initiative is a partnership with Canadian Tire Corporation and Natural Resources Canada. Chargers are being installed at Canadian Tire Gas+ locations in Calgary, Red Deer and greater Edmonton. The stations will be operational early next year. Each location will be equipped with a Level 3 fast-charging station and a dual Level 2 charging station. FLEET MANAGEMENT | PurchasingB2B.ca | December 2017 |

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Fotolia

AVs revolutionizing mobility: Toyota Canada president

2017-12-12 8:21 AM

By Michael Power

TECHNOLOGY L

The future is closer than you think at ARI’s Best In Fleet event

ike many industries, fleets face myriad what-ifs regarding how technology might transform their operations. According to two industry insiders, that future may be closer than it appears and looking 20 years down the road might be too long to wait. “I challenge it could be different in five years, the technology is changing that rapidly,” noted Don Woods, director of information technology at ARI. Woods made the statement during a Best In Fleet event organized by ARI Global Fleet Management Services in Florida last November. Woods, along with ARI director of development Mike Stallone, was among presenters during the event. The two focused on technology trends with a focus on applications for the fleet industry. While it may sound cliché, technology is transforming the world and the way organizations do business, Woods said. Business leaders face the challenge of how to use technology in a way that creates value for their companies while also increasing efficiency. “How do we leverage that? How do we look ahead and see what are the trends that are out there? There are a lot of changing things that are coming along the pipe,” he told the audience. The first trend Stallone introduced was virtual reality (VI) and augmented reality (AR). While augmented reality is familiar to many through mobile games like Pokemon Go, questions remain regarding how to use the technology in business, Stallone said. Ikea, for example, lets customers build living rooms online using AR on their smartphones before buying furniture. Some companies are also building “digital twins” of a process in the real world so employees can simulate, experiment and work with a digital device to see how that process will run when adopted in the real world. Car companies, for example, are using this technology to construct a virtual dashboard before manufacturing prototypes. Machine learning Machine learning is also gaining relevance in many industries, Stallone said. One pharmaceutical company, for example, has used machine learning to deal with customers fearful of vaccinations. Rather than a generic marketing campaign, the com-

Mike Stallone

pany used machine learning to buy millions of Twitter posts and other social media. From there, they were able to discover what was behind those fears and build a marketing campaign around that information. A potential use for machine learning for ARI involves taking data connected to weather, the economy and other fields and combining it with marketing information the company could then use to predict when, where and what vehicles to buy. Machine learning may be able to uncover benefits of moving vehicles to another location based on the time of week or weather patterns, Stallone said. “There’s a lot of applicability for machine learning across the board,” he said. Woods picked up the discussion by focusing on the Internet of Things (IoT) and its applications for fleet. Telematics represents the first stage in connecting vehicles, which will eventually communicate with stop signs, traffic lights and other elements. “It’s really about connecting everything to the Internet,” he said. “There are predictions that by 2020 there will be 30 million devices connected to the Internet.” ARI plans to introduce the intelligent personal assistant Amazon Alexa app, said Stallone. That will allow fleet managers to ask questions or get information (out loud) about suspicious fuel events and other topics. ARI is also investing heavily in data security and privacy, Woods noted. The company employs a risk and security team that builds on existing processes, as well as a risk oversight committee. Whether it involves creation, storage, use or destruction, ARI focuses on keeping data safe, Woods said. Another concept the company is introducing is called ARI Everywhere, which lets customers engage with the company whenever, wherever and through whichever channel they prefer. The system uses AI and machine learning to provide service through conversation systems, text messages, Alexa and other channels, said Stallone. Reducing email volume and the amount of data that fleet professionals experience is important, said Woods. Truly, the audience left with ideas of how their workday can be streamlined and some of the “noise” taken from their routines. B2B

Image: Dorothy Jakovina

Don Woods

TRANSFORMATION

| December 2017 | PurchasingB2B.ca | FLEET MANAGEMENT

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Executive

A look at what’s new in executive-level vehicles

A RIDE ROUNDUP

By Lesley Wimbush

s the year winds to a close, many automakers are either gearing up to release their brand-new 2018 models, or busy getting them onto the showroom floors. Considerations for many of these vehicles include the comfort, luxury and versatility for the executive driver. Here’s a selection of new executive-level vehicles we can expect to see as 2018 draws closer.

Photo: Tesla

Photo: BMW

Tesla The Model S is the flagship luxury sedan of this controversial boutique automaker. New for 2018 is an optional 100kWh battery that reportedly delivers 540km range and gives performance P100D models the ability to sprint from 0-100 in 2.5 seconds. Tesla’s Autopilot technology has been improved with more sensors, cameras and better processing ability. All Model S vehicles come with this tech—but activating the autonomous driving ability is optional.

2018 Buick Lacrosse Buick’s flagship—and only—sedan returns with wider AWD availability, standard eAssist light hybrid power train and a bigger exterior colour palette. Standard is a 2.5L four-cylinder paired with a small electric motor and six-speed automatic, or optional 310hp V6 which gets a nine-speed automatic in AWD versions. Apple CarPlay/Android Auto, 4G LTE wifi, HID headlights and Quiet Tuning are standard, optional are continuous damping, massaging front seats, heated steering wheel and head-up display. 18

BMW 5 Series One of BMW’s top-sellers, the all-new 5 Series, receives the technology of the larger, more expensive 7 Series, and a pair of brand new engines that debuted with the recently doneover 3 Series. Lighter and stiffer, the new 5 Series slightly larger than its predecessor and can be had with all-wheeldrive. Under hood is either a 248hp inline four cylinder in the 530i, or a 335hp inline six cylinder for the 540i, both paired to an eight-speed auto. The performance-oriented M5 should arrive by early 2018.

Photo: Buick

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Photo: Subaru

2018 Subaru Legacy For 2018, Subaru’s mid-size sedan gets revised front and rear styling, a higher level of standard interior features and more premium materials, new colours inside and out, better cabin insulation, new Starlink connectivity system, and upgraded “Eyesight” driver assistance package. Engines remain the 175hp four cylinder, and 256hp six-cylinder, paired to a continuously variable transmission and standard all-wheel-drive with torque vectoring.

Photo: Infiniti

2018 Infiniti QX30 The QX30 combines coupe, hatchback and crossover elements in one compact package. Enthusiasts will appreciate its sporty character, and optional all-wheel-drive with extra clearance make it an attractive choice for Canadian drivers. Unchanged for 2018, the QX3 is powered by a 208hp turbo-charged four-cylinder and seven-speed dual-clutch automatic. AWD is available on upper trim levels. Standard are rearview camera, Bluetooth, seven-inch touchscreen, and a variety of safety and connectivity features is available.

Photo: Hyundai

Photo: Lincoln

2018 Lincoln Continental Lincoln’s reborn flagship now boasts elegant styling, luxurious features and a powerful 400hp twin-turbo V6. The Continental is more of a driver’s car than ever before, thanks to available all-wheel-drive with torque vectoring, and Drive Control with three settings that alter suspension and steering response depending on conditions. Also available is adaptive steering—which helps the car respond more accurately to driver inputs, and adaptive cruise control.

Photo: Lexus

2018 Lexus RX 350 The newly redesigned Lexus RX 350 eschewed its former safe, rounded jelly-bean styling in favour of modern edginess. The F-Sport inspired sheet metal is polarizing with knife-sharp angles and deep slashes. The RX 350 is offered in front, or allwheel-drive, or as an AWD-only RX 450h hybrid. A 295hp V6 engine is found in all models, with an auxiliary electric motor in the hybrid for a total output of 308hp. Lexus Safety System is standard with pre-collision system, adaptive cruise, lane departure warning and auto high beams.

Hyundai Genesis During the process of reinventing itself, Hyundai established a separate premium brand known as Genesis. The G90 is Genesis’s flagship rear-wheel drive sedan, and targets the BMW 7 Series, Lexus LS and Audi A8 as its main competitors. There are two trims: 3.3T Premium with 365hp twin-turbo V6, or the 5.0 Ultimate with a 420hp V8. All wheel drive is available on both trims. New for 2018 is standard adaptive cornering LED headlights, and rear seat entertainment system on 5.0 Ultimate models. FLEET MANAGEMENT | PurchasingB2B.ca | December 2017 |

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Photo: Porsche

2018 Porsche Macan Porsche’s best-selling compact crossover returns with a mild facelift: including new front and rear fascia with restyled air ducts, new LED headlight graphics, and full-width tailgate reflector. Inside is a pair of seven-inch interment displays and 12.3 touch screen, WIFI hotspot, Apple CarPlay and Android Auto and new embedded SIM card. The performance choice in the segment, the Macan offers a 252hp turbo-4, or a 340hp turbo V6 that jumps to 360hp in the GTS, 400hp in the Turbo, and 440hp in the Turbo with Performance Package. Standard is a seven-speed dual-clutch automatic and AWD. Air suspension with adaptive dampers (standard on GTS ) is available on most models.

Photo: Lesley Wimbush

2018 Cadillac CT6 Sedan Cadillac’s luxury sedan straddles the line between the full and mid-size segments. Sleek styling, high-tech features and voluminous cabin space are hallmarks of a full-size premium four-door— but its price point and standard turbo-charged four-cylinder engine set it apart from its European competitors. For 2018, the CT6 gets an updated version of the CUE interface, automatic parking assist system with pedal operation, rear view camera wiper. Apple CarPlay, Android Auto and 4G LTE are standard. All-wheel-drive CT6s get either a 335hp V6 or 404hp twin-turbo V6, and all models have an eight-speed automatic transmission.

Photo: Jaguar

2018 Jaguar E-Pace Hot on the heels of Jaguar’s top-selling F Pace comes a brand-new crossover from the iconic British marque. While the name suggests it’s an EV, the E-Pace is a turbo-charged crossover that will compete with the more expensive Porsche Macan and Audi Q3. The entry level P250 will come with 246hp turbo-charged four-cylinder, and the P300 comes with active all-wheeldrive, and 296hp from a turbo-charged four. Both are paired to a nine-speed automatic transmission. The interior features premium materials and a 12.3” virtual display replacing traditional instrumentation. A full suite of safety systems is available, and top spec R-Dynamic models can opt for adaptive suspension.

Photo: Lesley Wimbush

2018 Mercedes Benz GLC Mercedes reworked their crossover lineup to align with its corresponding sedan counterpart; therefore the GLC receives the same level of luxury features as the C-Class sedan. New are a plug-in hybrid, and high-performance 503 hp AMG 63 variant. Available in either SUV or Coupe configuration, the five-passenger GLC has a standard four-cylinder, and the only V8 in the segment. GLC300 gets a new AMG appearance package, while the AMG GLC43 and GLC63 now wear the wide, 50s endurance racer-inspired Panamerica grille from the GT sports car. B2B

Vehicles m

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DRIVING DIVERSITY By Kara Kuryllowicz

n Canada, across North America and around the world, the global automotive industry continues to require, support and encourage supplier diversity because it consistently delivers such a wide range of tangible benefits. When assessing the business case for supplier diversity, the auto industry recognizes the reality that the minority population is growing exponentially, women influence 85 percent of all vehicle purchases and the purchasing power and customer loyalty of the LGBT group is also on the rise. As well, veterans are bringing a disciplined leadership and work ethic to the industry. “To champion a diversified extended enterprise, we must have a supply chain that mirrors our employees and customer base,” says Gary Roehring, FCA Diversity Program Manager, FCA Group. “We have found that diverse suppliers have a more diverse workforce than non-diverse suppliers. In the end, they are all potential consumers so by sourcing diverse suppliers it creates opportunities for diverse consumers to buy our products.” Says Reginald Humphrey, global purchasing and supply chain, senior manager, supplier diversity, General Motors: “It is a business imperative that our supply base reflects the diverse make-up of our current and future customers.” General Motors, which is celebrating 49 years with the auto industry’s most historic supplier diversity program, has made tier 1 purchases of more than $90 billion from its capable, competi22

Auto manufacturers have long been behind the wheel of supplier diversity

tive, innovative and diverse suppliers in that five decades. As GM sees it, supplier diversity is a comprehensive and inclusive process that’s designed to connect, develop and advocate for traditionally underutilized and disadvantaged businesses. To pursue business opportunities with GM, one or more of GM’s approved advocacy partners such as the Canadian Aboriginal and Minority Supplier Council (CAMSC) WBE Canada must certify those suppliers. “Diversity makes good sense, and it makes good business sense too,” says Humphrey. “In today’s multicultural and increasingly interconnected marketplace, we believe a diverse supply base helps us design, build and sell vehicles that best meet the needs of unique and individual consumers around the globe.” Meanwhile, FCA US, which has been at the forefront of supplier diversity since 1983, continues to implement new and innovative approaches to include minority, women and veteran-owned businesses into the supply chain. “The choice to emphasize diversity is a practical one for FCA US and in 2017, the target is to source 25 percent of its combined tier 1 and tier II spend with diverse suppliers,” says Roehring. “We have found that diverse suppliers deliver inno-

vative products, services and solutions and also offer additional sources from which to procure goods and services.” OEMs work with CAMSC as well as National Minority Supplier Development Council, Women’s Business Enterprise National Council, Women Business Enterprise Canada and National Veteran Business Development Council and their regional affiliates. Together, they access an abundance of suppliers that meet the automotive requirements as both tier 1 and tier 2 automotive suppliers. FCA US also requires all tier 1-supplier partners to participate in diverse sourcing. Their diversity goal status is identified on the FCA external balance scorecard that the company uses to measure its supplier base performance. “Performance with regards to supplier diversity is an integral part of the purchasing decision-making process,” says Roehring. “As a result, all of our supplier partners embrace our diversity initiatives.” For the past 18 years, the FCA US diversity supplier development team has hosted an annual matchmaker event to bring minority-, women- and veteran-owned businesses together with FCA US leadership, buyers, large suppliers and advocacy organizations to foster new partnerships.

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Fotolia

OEMs such as GM rely on supplier diversity program managers and a designated group of purchasing team members to lead the initial supplier vetting process. After confirming the diversity, they tackle the due diligence required to confirm prospective suppliers are financially viable, offer a relevant value proposition, and consistently deliver on quantifiable key performance indicators that are product and service specific. At GM, the GM supplier diversity team is available to help all buyers identify, evaluate and engage with diverse suppliers. The company maintains a database of diverse suppliers for sharing with purchasing teams and tier 1 suppliers, many of which have their own diversity programs and commitments. In 2017, GM sponsored 30 diverse business owners and executives at a weeklong program that GM reports most participants refer to as a “life changing” busi-

Dollar Roundtable, a not-for-profit advocacy group that includes 28 corporations with a proven track record of excellence in supplier diversity. These companies have demonstrated a commitment to the inclusion of diverse suppliers beginning with an independently validated annual spend of $1 billion or more. These thought-leaders are considered subject matter experts and collaborate annually to share best practices, engage with world-class suppliers and host an annual summit to teach and celebrate the progress of supplier diversity. The NMSDC Automotive Industry Group is comprised of 16 OEMs, including GM and FCA Group, that are corporate members of the National Minority Supplier Development Council. The organizations’ core objectives are to share world-class suppliers and enhance members’ skill sets and related processes. Meanwhile, organizations such as

“We have found that diverse suppliers deliver innovative products, services and solutions and also offer additional sources from which to procure goods and services.” Gary Roehring, FCA Diversity Program Manager ness retreat. Also in 2017, GM hosted its 8th-annual Supplier Connections event in Sterling Heights, Michigan, to connect internal purchasing teams, engineers, tier 1 suppliers and other OEMs with the diverse supplier base. GM’s formal executive mentoring program, which launched in 2015, pairs a select group of diverse business owners with an assigned purchasing executive to meet quarterly over a two-year period with key deliverables for each session. GM Supplier Diversity Council members also meet quarterly to review the metrics, share supplier concerns and share best practices. In addition, the company supports 20 advocacy groups with various memberships, sponsorships, direct training and philanthropic initiative each year. Both GM (a founding member) and FCA Group are part of the Billion

Magna that supply auto manufacturers with parts also engage in supplier diversity. Aurora, Ontario-based Magna International invites minority suppliers in the automotive field in Canada and the US to complete a supplier profile and attach a minority certificate. Diverse suppliers in the US must be certified by the National Minority Supplier Development Council (NMSDC) or a regional council; Women’s Business Enterprise National Council (WBENC); or National Veteran Business Development Council (NVDC). Here in Canada, minority suppliers must be certified by CAMSC; WBE Canada; or WEConnect International. Diverse supplier challenges Kim Thiara, the owner, president and CEO of AceTronic Industrial Controls, became aware of supplier diversity in the automotive industry just four years ago

despite the fact the auto sector accounts for about 40 percent of her company’s revenue. “A long-time client, ABC Group, a tier 1 supplier to the automotive sector, brought supplier diversity to my attention because their OEMs and other customers demand it,” says Thiara, who purchased AceTronic from the founder, her father, in 2008. “After 30+ years supplying ABC Group, I recognize and trust their experience and expertise and acting on their suggestion to pursue our ISO certifications has paid off.” AceTronic has been CAMSC-certified for the past four years and as Thiara describes it, the process is relatively simple. It focuses primarily on providing the documentation that proves the person applying for the certification owns, manages or controls at least 51 percent of the company and is actively involved in the company’s day-to-day operations as well as the strategic decision-making. “Initially, I really struggled with whether I wanted AceTronic certified as a diverse supplier because my father built this company solely on its merits and everything it brought to the table from an innovation, quality and service perspective,” says Thiara. “Ethnicity and gender didn’t come into play then and I wasn’t sure that I wanted them to do so now or in the future.” However, Thiara’s business coach helped her see that the certification opens doors and expands the available opportunities. She realized that the certification was the only way to either maintain or grow volume with existing suppliers such as ABC Group. “AceTronic ultimately gets the business because of our manufacturing capability, precision, quality and market competitiveness not because I’m a woman and not white, although that might drive the initial introduction,” says Thiara, who is using her certification to help her access the US market and target consumer goods multinationals such as Procter & Gamble and Coca-Cola. “The certification doesn’t automatically bring new customers to your door—you have to invest time and effort to make the contacts then nurture and develop the relationships that lead to orders.” B2B

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By Michael Power

A FLEET TRANSFORMED Manitoba Hydro undertakes a supply chain performance enhancement program

ransforming how an organization works is never an easy or quick process; but often it’s necessary to ensure that organization runs effectively. Beginning in 2014, Manitoba Hydro began a supply chain performance enhancement program with the goal of enhancing business processes and realizing cost reductions across three areas: procurement, materials management and fleet. In those few years, the program has become a top strategic priority for the organization to improve its financial performance, said Kevin Berry, manager of supply chain management at Manitoba Hydro. Berry spoke at the 2017 SCMA National Conference in Winnipeg, describing for an audience during an education session the organization’s transformation journey. Specifically, Berry addressed changes to Manitoba Hydro’s fleet services. When Manitoba Hydro began its transformation, the organization had four work streams, including one for fleet services, Berry said. The overarching objective of that work stream was to reduce the total cost of ownership of the organization’s fleet of about 4,000 vehicles used to deliver services, maintain infrastructure and other functions. Manitoba Hydro’s fleet has increased by 40 percent over the past 15 years, said Berry, and 25 percent during the past decade. During that time budgets have remained constant while financial pressures have grown. To stay within budget

If you look at it from a KPI perspective, you want to increase the utilization of your assets, you want to decrease the downtime of your assets, you want to rationalize your assets so that if there are assets that are underutilized, you can have fewer assets in your fleet. Kevin Berry 24

during that time, what Manitoba Hydro’s fleet did was make decisions not to replace vehicles that had reached or surpassed the end of their useful life. The organization took a “stage-gated” approach to the multi-year program, with dates ranging from fiscal year 201415 out to 2018-19, Berry said. At each stage gate, a steering committee looks to see if objectives have been achieved and to give support to move forward. “We envisioned the entire multiyear program, but there was no commitment to the additional stages until we demonstrated value,” Berry said. To improve the situation, Manitoba Hydro arrived at a three-pronged strategy to work towards making the fleet sustainable, said Berry. The organization concluded that, in the short term, no major changes were necessary to the architecture of fleet services. But there were opportunities to do things better at an operational level, he added. As well, what are the levers to reduce the total cost of ownership of fleet? “If you look at it from a KPI perspective, you want to increase the utilization of your assets, you want to decrease the downtime of your assets, you want to rationalize your assets so that if there are assets that are underutilized, you can have fewer assets in your fleet,” he said. An approach to that involves coming up with greater standardization so that there’s more versatility of fleet vehicles. There also needed to be governance around capital allocation and how the fleet budget was spent. Berry noted that good governance includes who in the organization makes which decisions, along with how those decisions are made. As well, governance is about the policies, organizational structure and process. “Good governance doesn’t mean that you make good decisions,” he said. “Good governance sets you up to make good decisions and is hopefully the outcome of a good governance process.” Fleet services is responsible for buying and maintaining vehicles but doesn’t really use them, Berry said. But in the past, through a lack of governance, internal customers would approach fleet services ad hoc to address their desired priorities and changes. “There was no structure, no process and no formal organization around that,” he said. As well, processes and decisions weren’t supported by information. No clear assignment for decision-making existed. Fleet council To remedy this, an entity called fleet council was created, Berry said. The council is made up of about eight directors from across the organization that between them represent over

| December 2017 | PurchasingB2B.ca | FLEET MANAGEMENT 1851-1854

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P S

A 1

C T

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T 8

TOYOTA TRUCKS

B 8

M N

Objective:

Ingeniously capable to help you handle the challenging projects that come your way.

Experience: Over 80 years of tested and proven dependability on the world’s most demanding roads.

C N

Skills:

A L

Standard Toyota Safety SenseTM – P1 including Dynamic Radar Cruise Control.

E B

Tundra and Tacoma’s max. payload of 1,500 lbs2 help you take on the toughest loads.

P B

Smart power allows Tundra to tow up to 10,000 lbs3 and Tacoma up to 6,500 lbs 3. Availability:

Tundra – Choice of powerful 4.6L or 5.7L V8 engines. Double Cab, CrewMax with short, regular and long bed options. Tacoma – 4-cyl and V6 options. Choice of Access Cab and Double Cab configurations.

References: Available at fleet.toyota.ca

Looking for new team members who can get the job done? Meet the 2018 Tundra and 2018 Tacoma. 1 TSSTM-P is standard on all Tundra and Tacoma models. Drivers should always be responsible for their own safe driving. Please always pay attention to your surroundings and drive safely. Depending on the conditions of roads, vehicles, weather, etc., the TSS systems may not work as intended. Please see toyota.ca, your local Toyota Dealer or Owner’s Manual for details. 2Tundra 4x4 Double Cab Standard Bed with a standard 5.7L V8 has a payload of 1,500 lbs. Tacoma 4x2 Access Cab has a payload capacity of up to 1,500 lbs. 3Tundra 4x2 Double Cab Long Bed with a standard 5.7L V8 has a towing capacity of up to 10,000 lbs. Tacoma 4X4 Access Cab V6 TRD Off-Road and SR5 with a standard 3.5L V6 have a towing capacity of up to 6,500 lbs. The maximum you can tow depends on the total weight of any cargo, occupants and available equipment. Payload = Passengers, Equipment, Luggage and Cargo.

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90 percent of vehicles in Manitoba Hydro’s fleet. Fleet council is a decision-making body with responsibility for reviewing information, Berry said. Council members get information about the state of the fleet and make decisions regarding how to spend the budget. To come up with that design, Manitoba Hydro did extensive data mining, going through and getting all the information characterizing fleet against utilization, downtime and other KPIs. Stakeholders were also identified. The fleet council has a charter, or terms of reference, governing its actions, Berry said. The council also has a meetings schedule, with each quarterly meeting having a unique and defined agenda. The council approves 85 percent of the following year’s capital allocation, with 75 percent of that a committed plan and 10 percent is stock—buying vehicles through a stock program so that if they’re needed they can be deployed immediately. That leaves 15 percent of the budget unallocated, Berry said. “In each of the three remaining quarters we allocated whatever is unused of that reserve fund,” he noted. “For the whole year, we’ve planned what our reserve fund looks like at any point in the year and how we’re going to release money from that reserve fund.” A benefit of the improved structure is a very high level of stakeholder engagement, Berry said. Since those who show up to meetings are the ones that decide how the organization’s $15 million fleet capital budget gets spent, council members have a vested interest in attending meetings. “So if you miss the meeting you don’t get a vote in who is getting the $15 million,” he said. “So I’d say the stakes are pretty high. We made it important and meaningful to attend the meeting.” This approach has also boosted collaboration and standardization on fleet staff assets, Berry said. Departments within the company now discuss how they can work together to increase that standardization. There’s recognition that decisions must be made as a team. “We have better control over the capital budget. In fact, I’d say we’ve optimized it,” he said. “And the decisions are being made based on data, which is another reason that people are coming to the table—they get to talk about something with substance and meaning. We don’t have perfect data, but the fact that we’re generating the reports, and even identifying issues within the data, gives people confidence and gives people an approach for going forward.” Manitoba Hydro also changed its evaluation process for vehicles, Berry said. The previous method was problematic and had risks inherent in its mandatory requirements. For example, if the purchase of light-duty pickup trucks included the mandatory requirement that they have rubber floor mats, but an OEM supplies them with carpet, that OEM loses out on the bid—a situation that might not benefit Manitoba Hydro. So the organization took some of the preferred specs and monetized any differences in getting to its preferred specs. “So if an OEM proposed a vehicle with carpet floor mats and we needed rubber, we just simply added to the cost of their proposal our costs to add an aftermarket rubber floor mat,” Berry said. “That leveled the bidding.” 26

We don’t have perfect data, but the fact that we’re generating the reports, and even identifying issues within the data, gives people confidence. Kevin Berry Total cost of ownership Manitoba Hydro also adopted an evaluation approach whereby the evaluation was done based solely on total cost of ownership, which meant everything in the final evaluation was monetized, he said. Manitoba Hydro has vehicles distributed all through the province, Berry noted, and some of those locations have high vehicle concentration but may lack dealerships where those vehicles can get warranty service. So another component of the evaluation was to ask in the RFP, ‘where are all your dealerships that provide warranty service?’ The organization has historical data showing how often vehicles must be towed to a dealership providing warranty service. So by knowing the locations of the dealerships for each of the proponents, Manitoba Hydro was able to model how much towing would cost for each of those proponents. The organization even took into consideration factors like remote diagnostics. In certain areas of the province, it’s a problem if no support exists from the OEM through remote diagnostics, Berry said. “We needed to confirm that they do have that capability, and then, what it costs us to acquire that capability and use that capability with them,” he said. For a particular proposal, the organization looked at the 10-year service life and added up what it would cost, thereby monetizing what may have been treated as a qualitative factor in the past. “What we did instead was say, if they didn’t have remote diagnostics, then every time we need to service a vehicle in this location we need to tow it to the dealership,” Berry said. “Here’s where the dealership is, and here’s the cost to tow it. So we monetized it and looked at it from a total cost of ownership point of view instead of from a qualitative point of view.” Manitoba Hydro ended up receiving high-quality proposals through this approach, Berry said. Focusing on lowest price—rather than total cost of ownership—would have led to the organization purchasing a completely different vehicle. By taking this approach, Berry said, Manitoba Hydro was able to drive a lot of value out of the procurement process. B2B

| December 2017 | PurchasingB2B.ca | FLEET MANAGEMENT

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S:7”

S:10”

As a Mercedes-Benz Corporate Sales customer, you benefit from the high levels of safety and quality that are hallmarks of all Mercedes-Benz vehicles. That, paired with competitive pricing, proper guidance and incomparable service, results in your fleet running smoothly every day. Visit mercedes-benz.ca/corporatesales today.

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T:10.875”

We give our best for your fleet.

2018 CANADIAN TRUCK KING CHALLENGE

Results of the 2500 series matchup

By Howard J. Elmer

he first real snow of the season was pelting the HD Silverado I had just picked up from the General Motors plant in Oshawa, Ontario. This diesel powered 2500 had only 1,500km on the clock and it had been shiny and clean—but was now splattered with freezing salty slush. It was now just another dirty pickup truck heading north through the back roads of South-Central Ontario’s Oak Ridges Moraine. This was just one of the three HD pickups my colleagues and I were driving to IronWood in the Kawartha Lakes region where we do testing for the annual Canadian Truck King Challenge and if I could, I’d have picked a nicer day. The weather, as I said, was nasty but not unusual for late November and I remember thinking that for truck testing, in Canada, it was actually appropriate. That’s because, unlike the magazine awards that come out of the deserts of California or Texas, Truck King is homegrown, tattooed red and white and very often frozen. Heading to the Head Lake region of Central Ontario marked the 11th year we had assembled and tested pickup trucks head to head; and this year we started with the three 2500-series HD diesel-powered trucks from the Big Three. On hand we had: 2017 Ford F250 FX4 Lariat

(*there are no changes for 2018)

Torque:

Drive: 4WD with selectable two-speed transfer case Wheelbase: Cab: Box:

159.8 ´´

Crew Cab—4-door 6´9 ´´

Rear axle ratio: 3.55 with electronic differential locker switch GVWR:

9,900 lb

Payload limit:

3,350 lb

Bumper Tow limit: 17,600 lb Special feature: FX4 adds off-road tires and underbody protection Base MSRP:

$62,249.00

Price as tested:

$92,364.00

2018 Chevrolet Silverado 2500 LTZ Z71 Engine:

Duramax 6.6L V8 turbo-diesel

Horsepower:

445

Torque:

910

Transmission:

Allison six-speed automatic

Drive: 4WD with two-speed transfer case with hill descent control

Engine:

Power Stroke 6.7L V8 turbo-diesel

Wheelbase:

Horsepower:

440

Cab:

925

Transmission: TorqShift, six-speed, SelectShift automatic

153.7 ´´

Crew Cab 4-door

| December 2017 | PurchasingB2B.ca | FLEET MANAGEMENT

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Images: Howard J. Elmer

The author stands with a 2018 Chevrolet Silverado 2500 LTZ Z71. The trucks arrive at the IronWood test site days before the judges so they can be prepared for hauling and towing.

Box: Rear axle ratio:

6´6´´

3:73 with auto-lock differential

GVWR:

10,000 lb

Payload limit:

2,513 lb

Bumper Tow limit: 13,000 lb Special feature: Z71 adds off-road tires, skid plates & Ranchero shocks Base MSRP:

$62,865.00

Price as tested:

$79,805.00

2018 Ram 2500 Limited Tungsten Edition Engine:

Cummins 6.7L I6 turbo-diesel

Horsepower:

370

Torque: 800 Transmission: 6-speed automatic *note Ram still offers a six-speed manual Drive: Wheelbase: Cab: Box: Rear axle ratio:

4WD with two-speed transfer case 149.5´´

Crew Cab—4-door 6.4´´

3.42 with anti-spin differential

GVWR:

9,900 lb

Payload limit:

N/A

Bumper Tow limit: N/A Special feature:

auto-leveling rear air suspension

Base MSRP:

$69,995.00

Price as tested:

$92,105.00

Normally, the entries arrive at the 70-acre IronWood test site days before the judges so we can prepare them for hauling and towing, as well as shoot video for our YouTube channel, Truck King TV. In the meantime, they are all outfitted with digital data collectors. These gadgets plug into the OBDII readers on each vehicle and transmit fuel consumption data to a company in Kitchener, ON, (MyCarma) who records, compiles and translates those readings into fuel economy results from all the test kilometres we run. These results are as real world as it gets. We collect fuel consumption numbers for the empty runs, then loaded with payload (1,500lbs) and also consumption while towing (10,000lbs). Each segment is measured during repeated test loops with the trucks being driven by the judges—one after the other. The complete fuel consumption report will be available on our website (www.canadiantruckkingchallenge.ca) early in 2018. The Head River test loop itself is a combination of road surfaces and speed limits. At 17km long it runs on gravel, secondary paved road and highway. There are three full stops and a five-minute idle period between loops. Speed limits vary from 50 km/h to 80 km/h and the road climbs and drops 90 meters off an escapement–like ridgeline several times; plus it crosses the Head River twice at its lowest elevation. The judges score the trucks across 19 different categories— covering styling, occupant environment, noise/vibration/ harshness, powertrain performance, vehicle dynamics and performance while empty, with payload and while towing. It’s these averaged scores that lead to an overall number. And this is how the trucks faired during testing. Final scores are shown as total out of a possible perfect 100. • 2018 Ram 2500 – 72.4 • 2017 Ford F250 – 75.3 • 2018 Chevy Silverado 2500 – 80.7 Congratulations to the Chevrolet Silverado for winning the 2500 HD segment at this year’s Challenge. FLEET MANAGEMENT | PurchasingB2B.ca | December 2017 |

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The Dodge Ram 2500 Limited Tungsten Edition hauls a trailer during testing. The Ram has excellent trailer safety chain hookups.

Testing of the 1500-series trucks continues at the time of this printing—so we won’t announce an overall winner (highest score across all segments) till that is completed early in the New Year. So, while numbers often tell the tale, what follows are some comments that the judges recorded during testing. I ask them to record short comments/impressions on whatever strikes them as they are driving — good and bad — for each of these trucks. What follows is a cross-section of comments from all the judges on each one of the entries.

located and the steering feel, under load, is good. On the negative side, the suspension washes out in hard corners. There are no tow mirrors (which have to be ordered separately) and the standard bedliner is very slippery when wet. As well, the DEF tank hangs too low and is in real danger of getting cracked. B2B

2018 Ram 2500 Limited Tungsten Edition The rear air suspension is great—auto levels. Ram has the best trailer safety chain hook-ups and it’s the only truck that has an analog DEF gauge in the dash. The seating and interior design still hold up well after several years without change. It has excellent exhaust brake and rarely needs brakes on long grades. The manual flip-up tow mirrors are very nice. However, the cabin is noisy and the steering feedback chatters. The ride is stiff and noisier than the others. Cummins has the most turbo lag of the three. The brakes can feel slightly spongy and there’s still no damped tailgate from Ram. The passenger foot well is very constricted. The control buttons in centre stack are small and very low and it does not pull as well as Ford or Chevy when towing. 2017 Ford F250 FX4 Lariat The transmission shifts are smooth and when towing it pulls strong and the transmission doesn’t falter. The Power Stroke has massive torque. The variable steering ratio works well— high speed and low speed. The tow mirrors are powered, heated and large while the flat floor in the rear seat area is an excellent design feature. It has an electronic DEF gauge and the multiple cameras offer good visibility and help hooking up. On the other hand, I felt more body-roll than I’d like when driving empty and when towing the front end seems light. It’s very busy with buttons, controls and screens. The trailer safety chain hookups at the hitch are small and too far under the bumper, while the power tailgate with the integrated pull-out step makes it heavy to close. 2018 Chevrolet Silverado 2500 LTZ Z71 Having Wifi in the truck is sweet, and the overall handling can be described as nimble. The cabin noise level is very low while the exhaust brake and gear downshifts (while towing) worked well together. Allison transmission is so solid. The interior layout is simple, functional, neat and bright. The rear bumper step is smartly designed and there’s a damped tailgate. The towing switches (trailer brake controller, 4WD, etc.) are well 30

| December 2017 | PurchasingB2B.ca | FLEET MANAGEMENT

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A friendly tip, don’t be Bill. A friendly tip, don’t be Bill. Pinpoint areas of cost escalation and what to do about them—ahead of time.

SeenItComing.ca

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THE DIVERSITY E

ach year, the Canadian Aboriginal and Minority Supplier Council (CAMSC) hosts its Business Achievement Awards, celebrating the achievements of those involved in supplier diversity in Canada. For 2017, the winner of the Procurement Business Advocate of the Year Award is Kiruba Sankar, director of corporate social responsibility, RBC Global Procurement. Sankar was also named Corporate Leader by WBE Canada. PurchasingB2B spoke with Sankar on his career and supplier diversity.

What’s your background and current role? I joined RBC procurement in 2010 and since 2015 I’ve been the procurement global lead for corporate social responsibility, developing the strategy and program execution plan for CSR. That includes our supplier diversity program, responsible procurement practices and community involvement activities. Working with procurement category managers we support the organization’s overall supplier diversity goals. I’m a proud advocate for CSR across RBC procurement, and externally with stakeholders and suppliers. Before that I was responsible for the IT professional service category supporting technology & operations across all businesses at RBC. Before joining RBC I was managing the system and server product distribution for Tech Data Canada. Prior to immigrating to Canada, as a general manager, I introduced Emachine PCs and servers into the Dubai market. I was also a regional manager of Middle East operations for Taiwan’s largest systems manufacturer, First International Computers. I set up MegaPlus International, a systems inte32

EDGE

grator company in Dubai and Sydney, Australia. I’m an electrical and electronics engineer with certification in computer applications and business management.

Why did you get involved in supplier diversity? Diversity and inclusion are at the core of innovation and mean you are drawing on everyone’s talents—that gives you a competitive edge and is the socially responsible thing to do. I’ve advocated for supplier diversity since 2012, having conversations within my network of IT suppliers. I volunteered to mentor certified diverse suppliers and also supported the person who was then the lead of RBC’s CSR program through a reciprocal mentorship initiative. My passion was noticed as I was balancing my volunteerism with my day job as director of the IT professional services category. I was drawn to Canada because the importance we place as a country on diversity aligns with my values. Once I joined RBC in 2010 I decided to chip away at the idea that only large suppliers are a good fit for large corporations.

What does your organization do in terms of supplier diversity? RBC has a formal supplier diversity program, and we encourage diverse suppliers to connect with RBC if they are interested. We explain the benefits and connect them with certifying organizations. We measure success by tracking increases in the number of diverse suppliers and diverse supplier spend, and whether RBC suppliers become corporate sponsors or achieve certification. RBC Procurement launched the Reciprocal Mentorship Program (RMP) in 2012, offering mentorship to a limited number of diverse,

certified suppliers. A questionnaire is distributed to CAMSC, CGLCC and WBE Canada members giving certified suppliers the opportunity to apply for the program. Our flagship initiative is our Supplier Diversity Mentorship program. In 2012, we sponsored our first mentorship workshop sharing ideas and best practices to help suppliers grow their business, network and secure business with large organizations. We recently expanded the workshops to include more suppliers and included an in-depth understanding of how RBC handles sourcing for specific category.

What’s your involvement with CAMSC and why is the organization important? RBC is a founding member of CAMSC and has been an sponsor since its inception in 2004. RBC has sponsored, and our employees have engaged in, several CAMSC organized events, including the annual Procurement Fair and Business Achievement Awards Gala. At the Fair, I’ve been a panelist and speaker discussing technology innovation and how fintechs can participate in RBC’s procurement process. We participate in CAMSC’s Inclusive Procurement Leadership Summit and participated in a case study on RBC’s corporate policy and executive support, which helps companies launch supplier diversity programs. We include CAMSC representatives at RBCled supplier diversity initiatives. I’ve travelled across Canada to support CAMSC outreach events and invite our business partners to attend—translating into discussions with suppliers and commercial clients who may qualify and benefit from certification. I encourage large suppli-

Joel Robertson Photography

Kiruba Sankar won Procurement Business Advocate of the Year Award from CAMSC and Corporate Leader from WBE Canada

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diverse suppliers and increase the number of diverse suppliers in our supplier chain. My goal is to help RBC grow this program in Canada and expand into other regions where we have procurement operations. In the last 13 years we have seen significant growth in Indigenous, visible minority, women-owned and LGBTowned suppliers and we’ll continue to focus on building relationships with these groups. We still have much more work to do towards persons with disabilities and veteran-owned businesses.

What advice would you give organizations looking to get involved in supplier diversity? I’d encourage them to reference the RBC case study on inclusive procurement on the CAMSC website. It’s full of helpful advice to get started. For ongoing support I’d ask people to get involved and support Canadian Supplier Diversity councils.

Q ers to not only support, but to consider being corporate sponsors of CAMSC and the other councils. I engage with the other councils, participating as a panelist at the CGLCC Supplier Diversity Forum in 2016, hosting the panel presentation at the Summit of the Americas 2017, participating in WBE Canada’s Breakfast with Brands and hosting the Toronto launch of the Supplier Diversity Alliance Council (SDAC) in 2016. Diversity is a fact, inclusion is a choice—that’s why organizations like CAMSC and others are to be acknowledged for their commitment to change. By harnessing everyone’s talents we not only create an inclusive culture but foster innovation and generate prosperity.

What does it mean to win a CAMSC Award? It was a great honour to win the CAMSC 2017 Advocacy award and I’m thankful to the many amazing colleagues at RBC who supported the success of our program—I’m humbled by council’s recogni-

tion of my contribution towards building a diverse supplier community. I want to encourage other Canadian procurement leaders to support supplier diversity.

Why is supplier diversity important? Supplier diversity adds economic value because it encourages the growth of businesses across a wider spectrum. As diverse businesses grow, our local and national economies benefit. It’s not just about doing the right thing and being a responsible corporate citizen. Supplier diversity helps drive business value—by including diverse suppliers in sourcing processes, corporations gain access to competitive offerings, more innovation and culturally diverse business interactions. All of which helps organizations serve the diverse marketplace in which we all work and live.

What are your future supplier diversity plans? We want to increase our spend with

Why were you named 2017 Corporate Leader by WBE Canada and what does the award mean to you? I educate suppliers about supplier diversity and its benefits, and I’m always encouraging large suppliers to not only support supplier diversity but to become corporate sponsors of WBE and the other councils. As a regular corporate table host for marketplace meetings since 2014, I promote RBC’s supplier diversity program to expand opportunities for women-owned suppliers. I network and nurture relationships with diverse suppliers to improve and enhance the supplier diversity ecosystem. I’m thankful to WBE Canada for honouring me with the 2017 Corporate Leader Award and for recognizing my support for women-owned businesses. This award would not be possible without support from RBC and the colleagues who have supported the program. I’d like to thank and ask corporate members of the supplier diversity program to continue their support of women entrepreneurs, for managers to recruit women employees to their teams, and for business leaders to mentor and support our incredible Canadian women entrepreneurs. B2B PurchasingB2B.ca | December 2017 |

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Age of Disrupt Image: Dorothy Jakovina

By Michael Power

ACTE Global Conference looks at change in the technology rich business travel world

The Future Of The Industry Three Toronto students hit the spotlight during the ACTE Global Conference. Andrik Ludavicius and Brenda Xia spoke about industry changes. Ludavicius focused on the future of flight, noting innovations like a “smart tunnel” using biometric identification and other technology to screen air passengers. Xia discussed collaboration. Hologram technology will allow businesses to exchange ideas and information while building engagement. Imagine flying to one city while teleporting to a meeting in another city, Xia said. Helen Acri spoke during a breakout session on the airline industry. From left: Ryerson professor Christopher Gibbs; Helen Acri; Andrik Ludavicius; Brenda Xia; and Ryerson professor Judy Healy.

hange was in the air in Toronto during the ACTE Global Conference last November, as members of the Association of Corporate Travel Executives gathered to discuss what’s new in the world of corporate travel. The organization’s executive director Greeley Koch kicked off the event with a discussion of where the corporate travel industry is heading over the next several years. That world of travel is changing, Koch told the audience. There is lots of disruption and travel managers can wake up on any day to news including natural 34

disasters, political unrest or an immigration ban that can suddenly affect travellers’ mobility. The demands of corporate travellers are also changing, Koch noted. ACTE recently completed a research paper, entitled Managing The Modern Business Traveller, which noted that modern business travel buyers are looking for flexibility, work/life balance, along with an on-demand and consumer-like experience. Travel policies need to support these areas. The use of technology among business travellers is also expanding, Koch noted. In 2016, a total of 67 percent of travellers

used mobile apps for booking. This year, that number is 89 percent. Organizations need to allow travellers to perform these tasks from their mobile devices. “This is growing,” he said. “This is clearly a focus area in ways we never thought of before.” Today’s travel program has also become increasingly complex, he said. The study asked travel buyers to rate their priorities and, as a result, 88 percent cited cost reduction as the most important factor in their programs. Data security came in second at 84 percent, while 47 percent of respondents are looking to improve duty of care as their first priority. Overall, 33 percent of candidates ask to see an organization’s travel policy while 31 percent of policy exceptions are linked to retention, Koch said. Airline payments Shifts in technology and the way in which business travel is done are also affecting payment methods, said fellow speaker Anthony Doyle, senior director of global sales, corporate development and operations, at Air Canada. From an airline perspective, Doyle predicted several changes in this area in the coming years, with several of those changes already underway. For its part, Air Canada introduced seven alternative forms of payment early in 2018 and in the coming year Doyle expects virtual accounts to gain prominence. One caution he gave in this area was that merchants will continue to monitor closely the situation with alternative payment forms to see how they affect payments overall. Beyond 2018, Doyle noted that new and disruptive technologies like blockchain will also affect payments. Blockchain, he said, has the ability to revolutionize the

| December 2017 | PurchasingB2B.ca | TRAVEL MANAGEMENT

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ption way in which data flows. Speakers at the conference also discussed duty of care, with Michael Thompson, CEO of ISB Canada, citing several reasons the topic has gotten attention recently. Legislation and liability are major factors, with governments around the world tightening rules surrounding duty of care. In Canada, for example, Bill C-45 established new legal duties for workplace health and safety and imposed serious penalties for violations that result in injury or death. Another reason for duty of care hitting the spotlight is an increased frequency of events, Thompson noted. At one time, it was noteworthy if FocusPoint dealt with one or two major events a year. Recently, there have been 60 a day—which means two an hour. The variety of incidents has also increased, he said. Medical mishaps once accounted for the majority of adverse events his company dealt with. But today those incidents also include pandemics, political crime and terrorism. Finally, the proximity of incidents has changed, Thompson added. While locations like Iraq and Africa once dominated the list of hot spots, risk has come closer to home. Countries such as France, Belgium and the UK have also seen risk due to terrorist attacks. “These are not far away places,” he said. Travel tracking is central in designing a best-in-class duty of care program, Thompson said. Start with a consistent policy, which should be documented, communicated and enforced. Since it’s a company’s responsibility that travellers understand risks, those employees should also sign off that they have read the policy. Pre-trip intelligence, risk ratings and recent alerts can help travellers understand the risks of the location they’re travelling to. Ensure travellers can receive alerts in real time, Thompson advised. And while

geo-tracking is important it has shortcomings. The “next big thing” in terms of knowing where employees are is most likely satellite tracking. While costs are coming down, they remain a serious consideration for many companies when putting together a duty of care program, Thompson said. But that cost must be balanced with moral and legal obligations to safeguard the safety of employees. Confusion also sometimes crops up regarding who owns duty of care, so having a duty of care committee—as well as executive-level champion—can help keep the issue top of mind, Thompson said. Cutting-edge technology The theme of technology’s effects on the travel world continued throughout the conference, with Johnny Thorsen, VP of global travel strategy & partnership at chatbot startup Mezi. Thorsen discussed how advanced technology was becoming a part not only of travel programs but

“[With blockchain] we move away from trust to proof.” Johnny Thorsen

also of people’s daily lives. Travel, communication, pay, expense management and other aspects of the modern world are being disrupted by technology developments. Thorsen cited examples like Amazon Go, a new kind of cashless store in which shoppers select items and walk out without paying. The store’s items have been tagged with ID chips that connect to a shopper’s prime ID—shoppers are then billed for their items. As another example, nations like Estonia allow e-citizenship, where foreigners can run a company without having to live there. Other examples Thorsen provided, including

roll-up mobile phones and self-driving cars, were once strictly the realm of science fiction. “Those solutions are arriving,” Thorsen said. A prediction Thorsen made during his discussion was that crypto-currencies would continue to gain in importance. Today, those currencies are growing fast, he noted. The coins have capabilities that traditional currencies don’t, such as the ability to be divided into more units than the 100 units a traditional dollar can be divided into. The money can also be tracked constantly. “We move away from trust to proof,” Thorsen noted. While banks favour the crypto-currency provided by Ethereum, IOTA is also an interesting example due to its ability to create endless lists of transactions. Still, Thorsen noted, the names of most crypto-currencies remain unknown in the travel world. However, he added that travel was such a large category that crypto-currencies would likely make inroads into the industry. Some Swiss bankers have even started a blockchain bank that exists only in the digital world, although Switzerland is currently the only country that allows this. In the US and the EU blockchain has yet to gain as much ground because politicians have yet to grasp the concept and focus on other issues, he said. Arizona is currently the only US state that allows e-contracts in crypto-currencies and blockchain. Why are crypto-currencies based on blockchain gaining ground? One reason is the transparency and accessibility that the technology offers, Thorsen notes, with all parties able to see the same data at the same time. With blockchain, data are everywhere rather than stored on a single server. Security is another factor—while new blockchain records can be created, existing ones can’t be changed or hacked like a traditional database. “Those are some really compelling reasons to say my new project will be on blockchain,” Thorsen said. While the ACTE Global Conference focused on core travel management skills, the curriculum remained forward-looking and technology focused. Travel managers and buyers alike would do well to verse themselves in both. B2B

TRAVEL MANAGEMENT | PurchasingB2B.ca | December 2017 |

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In the Field

Analytics To Combat Rising Costs Applying analytics to inventory and products can free up cash and maximize profit

Tracey Smith is the president of Numerical Insights LLC

By Tracey Smith

f most of your parts and supplies are sourced from Canada or the US, you’re currently seeing the impact of inflation reflected in rising prices. As prices rise, it becomes even more important to put strategies in place to offset these cost increases. Analytics can be applied to help you determine actions you can take. Consider the following scenario. You work for a global company that, over the years, has acquired several smaller companies. As each smaller company is merged into the larger one, the list of products you offer to your customers increases. A consequence of this is that the number of unique parts that procurement is responsible for sourcing also goes up. The result is an increased workload for procurement in sourcing and contract management activities.

used by customer orders each month and how stable or volatile that usage level is over time. Analytics can determine which parts are “high runners,” which parts have stable order patterns and which ones are highly volatile in terms of order and usage quantities. As a real example from a manufacturing company, basic analytics determined that roughly one third of the parts they stocked were only used once a year, yet they were carrying inventory for all parts. This company re-evaluated the parts it chose to stock based on the usage data, the cost of the part and whether the part was subject to degradation.

Analytics to consolidate product offerings In our first example, we illustrated how to use analytics to re-evaluate your inventory stocking decisions to free up cash flow. In this second example, we will illustrate how a re-evaluation of your product offerings can consolidate your product portfolio and maximize profit. We saw that as a company grows, its list of product offerings grows. Product “Whether your parts list grew through teams excel at the creation of “the next great thing,” but rarely is anyacquisition or organically over time, analytics can one responsible for “cleaning up” the help you reduce that list and save money.” product portfolio. People love to work on new products. It’s far less exciting to What many merging companies fail to do is to take analyze the overall portfolio, but this is where procurement professionthe time to examine the current list of product offerals, in combination with engineering teams, have a chance to really ings to see if they now have duplicate or overlapping impact the business by using product analytics. offerings. This happens frequently in manufacturing. Product analytics is an area of data analysis which helps companies Performing this activity is the perfect opportunity to focus their efforts on the products that generate the majority of their consolidate the product list and reduce the number of profit. A simple analysis of each product’s overall contribution to total unique parts that procurement needs to source and profit will do the trick. This contribution is a product of the profit margin manage. Whether your parts list grew through acquifor each product combined with the volume of product that is ordered. sition or organically over time, analytics can help you Analytics can show you which products are growing your bottom line, reduce that list and save money. Let’s take a look at which are tapering off and which ones are costing you more to manage inventory as the first example. than the profit they generate. Evaluating the list of products that are low-volume and low-profit Analytics to reduce inventory is key. Can you migrate these customers over to an alternate prodIf you provide physical products to your customers, uct in your portfolio? Is it worth it to continue to offer this product or you undoubtedly stock inventory. From a financial should it be eliminated? If you choose to keep it, can your engineers point of view, inventory ties up cash and prevents you modify the designs to use common parts that are being used for highfrom using it for other company initiatives. If you can er-profit products? reduce your inventory, you can free up cash flow. Taking the time to apply basic analytics to your inventory usage By studying customer ordering patterns over time, and product offerings on a regular basis can help free up cash flow data analytics can be used to help determine how and maximize your profit. These are two examples of where procuremuch inventory you should stock of each product or ment and supply chain professionals can utilize their skills to impact part. Data can show you how many of each part is the bottom line. B2B PurchasingB2B.ca | December 2017 |

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The Law

Guiding Principles For Government Evaluators

Paul Emanuelli is the general counsel of the Procurement Law Office.

Six guiding principles for lowering the temperature in evaluation rooms By Paul Emanuelli

hether it’s a formal bid protest, a public audit review or a newsreel report, government evaluators often find themselves under a spotlight of scrutiny over their evaluation and award decisions. Given the glare of second-guessing that follows the public tendering process, this article offers six guiding principles for lowering the temperature in evaluation rooms. No volunteers: In almost all cases, evaluation groups are made up of individuals who are moonlighted from their day jobs and assigned to evaluation teams; however, notwithstanding this double duty, evaluators don’t get a free pass on meeting fairness standards. Claiming, “We did our best with lim-

est in the result. Furthermore, while expert evaluators may come to the table with past knowledge of the various suppliers vying for the contract award, they should also come to the evaluation process with an open mind regarding the merits of each competing proposal. Potential evaluators who are unable to meet these impartiality standards should remove themselves from an evaluation to avoid tainting the integrity of the process. No records means no defense: Keeping inadequate records can result in re-evaluation orders and voided contracts. The days of jotting down cryptic shorthand on sticky notes or showing up to evaluation meetings with incomplete work and hoping that someone else will prepare a consolidated evaluation record are over. Evaluators are not anonymous in the public procurement process. Team members are accountable for maintaining their own notes and scores and responsible for recording why they made any changes to their scores during group scoring sessions. Peer review, not peer pressure: Group-scoring sessions should not be a “Emerging enhanced consensus scoring procedures forum for fudging results or pressuring now typically include detailed protocols for ensuring evaluators into changing their scores. In fact, emerging enhanced consenthat each group member exercises independent sus scoring procedures now typically judgement as part of the evaluation.” include detailed protocols for ensuring that each group member exercises indeited resources,” is not an adequate defense for failing pendent judgment as part of the evaluation. While group-scoring sessions to meet your due process duties. Evaluators need to should enable peer review and discussion, each evaluator is a potential set aside sufficient time to independently review, evalwitness in a legal challenge and should therefore exercise unfettered judguate and score each proposal. They also need to priment and be ready to stand behind his or her individual score, even under oritize their participation in group-evaluation sessions cross-examination. since no-shows are a no-go that cause rescheduling No executive privilege: No one involved in a government evaluadelays or trigger the need to remove evaluators from tion decision is above the law. When it comes to protecting the integrity the team. of the tendering process, there is no executive privilege. This means that No free styling: Defending a legal challenge is senior officials cannot simultaneously delegate responsibility for the evalno substitute for doing things properly the first time. uation process and then reserve the right to arbitrarily second-guess and The evaluation process is not a freestyle competition override an outcome they disagree with. Senior officials should therefore or an opportunity to second-guess established evaleither formally delegate the power to make evaluation and award deciuation rules and criteria. Embarking on procedural sions or they should be prepared to actively participate according to the deviations and employing hidden criteria can result in same due process standards that apply to everyone else. re-evaluation orders or the nullification of a contract Future considerations: While your institution may have a long award. Evaluators should therefore take the time to track record of taking liberties with the due process of its evaluation properly review the evaluation rules and criteria and decisions and not being challenged, you should never confuse poor but then stick to the script. untested past practice with proper practice. In the face of a legal chalNo conflicts or bias: Conflicts of interest and bias lenge, denial of the rules is not a winning defense. When it comes to proare bad news for the defensibility of an evaluation. tecting the integrity of the evaluation process, it’s never too late to rectify Evaluators should have no personal or financial interyour procedures to establish defensible practices. B2B 38

| December 2017 | PurchasingB2B.ca

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Epic Awa PB2B_Ep

Who Said Conferences Can’t Be Fun?

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The Premier Celebration of Professional Achievement for Indirect Procurement The EPIC Awards are an annual celebration to recognize and celebrate the most innovative, dynamic, and accomplished procurement leaders. ProcureCon is pleased to announce that we’ve partnered with PurchasingB2B to bring the awards to Canada. The 2018 EPIC Awards categories are for individual and team innovation, rising star, lifetime achievement, and supplier excellence. The awards are a great opportunity to motivate your team and recognize their hard work, while also celebrating your sourcing success. The winners of each category will be announced and showcased at the ProcureCon Canada conference in April.

The call for nominations is now open! Visit www.PurchasingB2B.ca/Awards for more information and nomination forms. The EPIC Awards are brought to you by CANADA’S SUPPLY MANAGEMENT MAGAZINE

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