OCTOBER 2018 CANADA’S SUPPLY MANAGEMENT MAGAZINE
2018 ANNUAL PURCHASING & SUPPLY CHAIN PROFESSIONAL SURVEY
adapting to
CHANGE
Patrick Etokudo on his SCMA Fellowship
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Table of Contents
Vol. 60, No. 5 • OCTOBER 2018
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Features 6
DIVERSITY EXCELLENCE Highlights from the 14th-annual CAMSC awards gala.
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NO DULL DAYS Enbridge’s Patrick Etokudo named SCMA Fellow.
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MOVING MEALS Blockchain and food transportation.
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JOB PERSPECTIVES Experts weigh in on supply chain employment.
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HOLDING STEADY The 2018 Annual Survey of the Canadian Supply Chain Professional.
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Also inside 4 5 1 0
UP FRONT BUSINESS FRONT
4 5 46
IN THE FIELD THE LAW
FINANCE CORNER
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40
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Connect With Us Online
Cover: Brett Gilmour/Gilmour Photography
.ca
www.purchasingb2b.ca
www.linkedin.com/company/ purchasingb2b
Features
@purchasingb2b
RECENT TWEETS “Diversity is a fact, but inclusion is a choice.” President & CEO, Mohamed Fakih of @paramountFineFoods, inspires the audience at @camsc_org Business Achievement Awards Gala and provides tips on leadership. #DiversityandInclusion #diversity #supplychain Canada, US reach deal to stay in trade pact with Mexico @purchasingB2B #trade #NAFTA #USMCA https://bit.ly/2P3zjsu Digital leaders in finance have lower costs, less staff: The Hackett Group @purchasingB2B #finance https://bit.ly/2zqIQVp
A WAREHOUSE MANAGER’S BEST FRIEND
How can you grow your business while managing risks and costs and boosting profitability? https://bit.ly/2DSWQeB
Public procurement tech firm Bonfire acquired by US company. Bonfire will merge with five other “Govtech” SaaS/cloud platforms @purchasingB2B #GovTech #technology #procurement DIGITAL EDITION Want to read PurchasingB2B on the go? Whether it’s on a tablet, smart phone or simply on your desktop or laptop, you can check out our digital edition. Simply visit https://www.purchasingb2b.ca/digital-edition. PurchasingB2B.ca | October 2018 |
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Up Front 302-101 DUNCAN MILL ROAD TORONTO, ONTARIO M3B 1Z3
www.PurchasingB2B.ca
Avoiding Tariff Chaos
PUBLISHER/ADVERTISING SALES
Dorothy Jakovina 416-441-2085 ext 111, djakovina@PurchasingB2B.ca EDITOR
Michael Power 416-441-2085 ext 110, mpower@PurchasingB2B.ca
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espite all the nastiness surrounding the now-concluded NAFTA negotiations—especially between Prime Minister Justin Trudeau and US President Donald Trump—the continent has emerged with an updated version of the trade deal. The new arrangement, which has been dubbed the US Mexico Canada Agreement (USMCA), came into being on September 30. And despite the acrimony involved in its birth, the preamble to the new agreement is quite cheery. The arrangement, the preamble says, is poised to replace the original 1994 agreement with a “21st Century, high standard new agreement to support mutually beneficial trade leading to freer, fairer markets, and to robust economic growth in the region.” It goes on to discuss how the deal will expand regional trade and production, promote small-to-medium-sized businesses and pave the way to a “clear and transparent legal and commercial framework for business planning.” Who can argue with that? Especially since, for a while, the outcome looked as though it could have been much worse. No trade deal at all and a 25-per cent automotive tariff, for example, could have led to more dire outcomes for Canada than what’s now in place. Some have described the USMCA as a “tweaked NAFTA.” Yet there are some significant changes within the deal. For example, the access that the US dairy industry has gained to Canada, now up to 3.6 per cent of the Canadian market, will change the supply chain in that field. There’s also an increase to 75 per cent—up from 62.5 per cent under NAFTA—for regional content on vehicle parts. But that’s certainly better than the 25 per cent tariff President Donald Trump threatened on any vehicle or auto part entering the US. That, some say, will raise the price of vehicles. The new deal may also lead to unexpected opportunities. Tim Moore of Tim Moore & Associates points out in this issue (see page 13) that some companies are looking to hire supply chain professionals who are knowledgeable of geo-political issues. That, at least in part, is driven by the uncertainty that has surrounded the trade negotiations. This affords new opportunities to supply chain professionals knowledgeable of world affairs and able to advice their organizations on them. It also shows the importance of supply chain to today’s businesses and the strategic position it’s taken in many companies. Competent professionals may be comforted to know that their expertise is sought to help navigate international instability. But perhaps the biggest win surrounding USMCA is that life for supply chain professionals, as well as much of the business world, can continue without the threat of looming tariff chaos. That is definitely something to be grateful for.
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ART DIRECTOR
Barb Burrows
CUSTOMER SERVICE/PRODUCTION
Laura Moffatt 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com CIRCULATION
circulation@PurchasingB2B.ca IQ BUSINESS MEDIA INC. VICE-PRESIDENT: Steve Wilson, swilson@iqbusinessmedia.com PRESIDENT: Alex Papanou, apapanou@iqbusinessmedia.com EDITORIAL ADVISORY BOARD
Lori Benson, EY Procurement Leader, Enablement; Thomas Hudel, Manager, Purchasing and AP, Esri Canada Ltd. Wael Safwat, Procurement Director, Black & McDonald Sherry Marshall, Senior Manager, Meetings, Travel & Card Service, PwC Management Services Kiruba Sankar, Director, Corporate Social Responsibility— RBC Global Procurement Jeff Russell, Director of Procurement, Crane Supply For 60 years, PurchasingB2B has been a trusted source of information for Canadian purchasing/supply chain management professionals in the private and public sectors. Special features and supplements include Fleet Management, Canadian Automotive Review (CAR), PurchasingB2G, and Travel Management Canada. PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION circulation@PurchasingB2B.ca Mail: 302-101 Duncan Mill Road, TORONTO, ONTARIO M3B 1Z3 SUBSCRIPTION RATES Published six times per year Canada — 1 Year $ 99.95 CDN Outside Canada — 1 Year $ 172.95 USD Occasionally, PurchasingB2B will mail information on behalf of industry-related groups whose products and services we believe may be of interest to you. If you prefer not to receive this information, please contact our circulation department in any of the three ways listed above. Opinions expressed in this magazine are not necessarily those of the editor or the publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. No part of the editorial content of this publication may be reprinted without the publisher’s written permission. © 2018 IQ Business Media Inc. All rights reserved. Printed in Canada.
| October 2018 | PurchasingB2B.ca
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Business Front
Guaranteed Income Is it an idea whose time has come?
Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network
By Michael Hlinka
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bout two-and-a-half years ago, the Ontario Provincial Government under Kathleen Wynne announced a Basic Income Pilot Project. It involved 4,000 citizens in three different areas of the province: Hamilton, Thunder Bay and Lindsay. Individuals received, at a minimum, just under $17,000 a year, less 50 per cent of any earned income, while couples received just a little bit more than $24,000, less 50 per cent of any earned income. According to the government, it differed from social assistance in that it was given to anyone who met the eligibility requirement, it was given to those who were working but below this income threshold, and it was simpler to administer. The newly elected Conservative government under Doug Ford cancelled the project prior to the threeyear promised test period. I think that it’s legitimate to criticize this decision; however I also think it’s equally
obligation to take care of our poorer brethren, with essentially no questions asked or nothing required from that less wealthy cohort of society. And once this is established as principle, then it seems difficult to argue with the logic of a guaranteed income and it could be administered very much like Old Age Security (OAS). If you are 65 or older and you meet the Canadian legal and status requirements, you’re getting a check every month. There is an appealing simplicity. It’s relatively easy to apply for OAS. The benefit, per se, is not means-tested; however if your income reaches approximately $75,000 annually, then some of the benefit is clawed back, and if your income exceeds approximately $125,000 annually, then all of it is taxed back, so it’s like you really never received it in the first place. And this could be a viable model for guaranteed income: Everyone receives that monthly check from the government that gets you to the required threshold, with claw-back provisions in place. The danger is the incentive system—or perhaps more exactly—disincentive. It would be very tempting for, in particular young people, with little sense of direction, to keep their lives on cruise control, live in their parents’ house for as long as they could, and prolong their adolescence past what is seemly. “The idea of a guaranteed income isn’t going away By the way, I see this going on all around me soon, and if it is implemented, it should have a with college and university programs that provide students with absolutely no useful or marprofound impact on society, economic growth” ketable skills, but provide an easy excuse for not legitimate to justify what was done because of how getting up in the morning and doing something useful. A guaranteed badly flawed the project was. For one, enrolment income program would surely exacerbate this problem. And this would required a 40-page application that would suggest to be an inevitable consequence. Young people who don’t have someone to me there was an important self-selection process about guide them, or who possess a particularly short time horizon, would delay who received the benefit. Then there is the simple fact entering the workforce in a serious way, and they would fall behind their of geography: It is far different to live on $17,000 a more focused peers. year in Thunder Bay than it is to live in Toronto. It may be unpopular to point out the obvious, but this would be very But the idea of a guaranteed income isn’t going away much “class-based.” Children from intact households with successful soon, and if it is implemented, it should have a profamilies would understand that you only build your career long term by found impact on society, economic growth, and—quite putting in the hours, because if someone is working 2,000 hours a year ominously—the seemingly growing divide between the (50 weeks at 40 hours), then as long as the wage is $8.50 or greater, you’re have-a-lots and have-a-littles in this country. exceeding the $17,000 threshold where presumably the claw back proviBefore I go any further—and this is because I sion would kick in. hope that we can have an adult discussion here—it’s However, there is no perfect way to construct a social safety net. If important to recognize that poverty does not exist in the guaranteed income is the way to go, then it’s incumbent upon the any meaningful way in Canada. Which is a very good political classes to end all other programs. No more old age security. No thing. Obesity is a more serious health problem for more employment insurance, at least not as it’s currently constructed. lower income Canadians than a lack of calories. No more welfare payments. But the problem with the pilot program is Yet there seems to be a consensus, at least among that guaranteed income was piled on top of an already very generous the ruling elites, that wealthier Canadians have an system. B2B
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Celebrating SUCCESS
By Michael Power
CAMSC hosts its 14th-annual Business Achievement Awards Gala
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Clockwise from top: Keynote speaker Mohamad Fakih, president and CEO of Paramount Fine Foods. CAMSC CEO Cassandra Dorrington (left) with this year’s awards winners. Brandon Gonez, co-host and reporter for CTV Your Morning, MC’d the gala. emergiTEL’s founder Aneela Zaib accepted the Supplier of the Year Award.
degree from Ryerson University and the 2018 Employer Award for Newcomer Employment from Immigration, Refugees and Citizenship Canada. He has also received several awards for business achievement and charitable work. CAMSC president and CEO Cassandra Dorrington also spoke, lauding the achievements of nominees and winners. “We’re all honoured to recognize these leaders who represent the core foundation of greater representation that’s behind CAMSC’s mission,” Dorrington said. “This year’s winners are an impressive group of first, second and third generation Canadians who exemplify the abilities found in so many diverse and minority-owned businesses in the country.”
Supplier of the Year
This year, emergiTEL won the Supplier of the Year award. The company is a staffing agency that specializes in the placement of IT and business professionals. The company has seen double-digit revenue growth with a client portfolio including telecom, CPG, banking, insurance, management consulting, data warehousing, IT reseller channel and software solution industries. emergiTEL’s founder Aneela Zaib accepted the award, thanking the company’s staff. “This award is dedicated to you,” she said. A CAMSC member since 2015, emergiTEL was recently recognized as a Canada’s Best Managed Company & TechConnex—Technology Enabler of the Year.
Images: CAMSC
y and large, Canada’s story is one of immigrants. It’s fitting then, that the keynote speaker at this year’s CAMSC business achievement awards gala was Mohamad Fakih, the president and CEO of Paramount Fine Foods. Himself an immigrant who came to Canada from Lebanon in 2006, Fakih has gone on to build a successful Middle Eastern Halal restaurant chain. CAMSC (the Canadian Aboriginal & Minorities Supplier Council) held its 14th-annual Business Achievement Awards Gala in Toronto on September 27. The event honours and recognizes leaders in supplier diversity and showcases successful certified Aboriginal and minority suppliers. The event celebrates accomplishments including growth in sales, innovative solutions, employment opportunities and community development. This year, Brandon Gonez, co-host and reporter for CTV Your Morning, acted as MC for the gala. Fakih encouraged the audience to support diversity. He came to Canada for a better future for his family, he told the audience. But the road to success wasn’t smooth. He didn’t speak the language, wasn’t familiar with Canadian customs, looked different, had a Middle Eastern name and he was Muslim. “Things were pretty much stacked against me,” he said. “But today, I’m the president and CEO of Paramount Fine Foods, with an honorary degree from Ryerson (University).” Fakih offered advice to immigrants on succeeding. “We’ve all heard it: if it is to be, it’s up to me,” he said. “If you want something to happen, just do it yourself.” Today, Paramount Fine Foods employs over 2,000 people across 54 restaurants in Canada and internationally. This year, Fakih received an honorary doctor of law
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Procurement Business Advocate of the Year
the organization’s B2B event in Windsor.
Reggie Humphrey, senior manager, supplier diversity at General Motors, promotes diversity and inclusivity through outreach activities. At GM, he supports 22 regional and national advocacy organizations and volunteers as a board member for three organizations, including CAMSC. He is a chair of the Tuck Executive Education Program’s Advisory Board that sponsors over 20 scholarships, two of which go to CAMSC suppliers annually. Humphrey challenged the audience on their purpose and abilities surrounding supplier diversity: “My question to you is, ‘what are you going to do with it?’”
Technology Innovation Award
Small Business of the Year
AceTronic Industrial Controls Inc., a manufacturer, distributer and servicer of products used by plastics manufacturers, won the Small Business of the Year Award. An ISO 9001-certified facility, AceTronic is also an A2LA-accredited repair and calibration centre. It is CAMSC-certified and recently spoke at
LA Metal Stamping Co. designs, patents and manufactures metal stamped parts. The company invested last year in R&D project reviews and a robotic machine that allows precision and quality with large volume productions. Such production initiatives created a savings of over $2 million for a client and led to its nomination in 2017 as Supplier of the Year. Collaboration Award
Collaboration Award winner the City of Toronto implemented social procurement program 2017, using the organization’s procurement to create positive social and economic outcomes. The City spends $1.8 billion in procurement contracts annually. Its program has two streams: supply chain diversity and workforce development. City staff invites certified diverse suppliers to quote when making lower dollar value purchases. For workforce development, the City included targeted hiring requirements in 17 large-scale projects. Mike
are you ready to enhance your skills?
Pocholok, Toronto’s chief purchasing officer, accepted the award. Tier 1 Champion of Supplier Diversity
Dana Incorporated provides engineered solutions to improve the efficiency and sustainability of powered vehicles and machinery. Since 2010, the company has supported diverse suppliers and has recently expanded diverse supplier development by 76 per cent. Dana hosts diverse supplier matchmaking events and has used its diversity analytics and reporting to track and monitor their diversity progress. Corporation of the Year
Toyota, winner of the Corporation of the Year award, works with diverse companies—Tier 1 or Tier 2 suppliers. Toyota builds relationships with suppliers through mentorship and two annual networking events. As a CAMSC corporate member, Toyota uses insights gained from those networking events to build a corporate culture reflective of the communities in which the company has a presence. B2B
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Patrick Etokudo
is one of three winners of the 2018 SCMA Fellow Award
NO DULL DAYS
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ach year, the supply Chain Management Association (SCMA) recognizes those who have contributed to the field. The SCMA Awards of Distinction are presented at the association’s national conference, held this year in St. John’s, NL. Patrick Etokudo, FSCMP, was one of three winners of the 2018 SCMA Fellow, the highest honour the association bestows on its members. Fellows are recognized for demonstrating the highest excellence in supply chain management and dedication to promoting the profession.
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How did your career in supply chain start? After graduating as a mechanical engineer, I started working in the electric power and food & beverage industries, and about six years later re-skilled and worked as an industrial engineer in the tire industry. It was in the tire industry that I had the fortune of being accountable for work optimization and job post design within the materials management and logistics department of Michelin. I guess you could say that was my introduction to and entry into the world of supply chain management. I hate to confess this, but it is actually the story of most SCM professionals of my generation that I stumbled into supply chain management from my earlier profession. I was hired from the industrial engineering All photos: Brett Gilmour Photography
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role by Royal Dutch Shell, more than 25 years ago, into their SCM practice where I worked in all areas of SCM—transportation, materials management, procurement, governance, contracting, systems and so on. I had to upgrade my knowledge through further studies, obtaining a Master’s degree in Procurement in the UK. I have taken on several, increasingly senior, roles since then at Shell, Petro-Canada, Suncor and now at Enbridge.
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What does a typical day look like for you? In my current role as director, SCM transformation, there is no typical day. From the moment I step into the office (and that could be anywhere really) until I go home, I spend my days thinking about, engaging in, designing and building strategies that will help SCM at Enbridge approach industry-leading performance and implementing them. This means working across organizational boundaries vertically and horizontally to involve customers, other functions such as finance and IT, and senior leadership, including the C-suite. It means searching for, evaluating and adopting leading thought and best practices. And it means robust change management to understand the various stakeholders and address their specific needs in ways that make sense to them. I am currently focused on materials management and logistics and there is never a dull day! I look at operating models, capabilities, tools and systems, network optimization and governance.
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What career highlights stand out for you? A few of them stand out. I have been blessed to work with and lead extraordinary professionals who put in their best every day to make a difference. I have also worked for some really amazing companies with outstanding cultures and an interest in developing and challenging employees. Together, good companies and great professionals have created amazing experiences for me. I worked to help Shell move to a centralized governance from a decentralized, country-based structure. I led the logistics design of the SAP (ERP) blueprint for all Shell companies and went on to implement same in three operating companies. I took part in two mega-mergers between Suncor Energy
and Petro-Canada between 2009 and 2011, and between Enbridge and Spectra Energy in 2016/2017. I am equally proud of the work that I have done, with my colleagues, to reposition SCM at Enbridge from a tactical and administrative function to a strategic one. The conferment of the award in 2017 as the Alberta Supply Chain Management Executive of the Year by the Alberta Oil Magazine and the investiture this year as a Fellow of the SCMA, I have to say, are great testaments to those accomplishments and they are the greatest highlights of my career.
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What does receiving the 2018 SCMA Fellow Award mean to you? Receiving the 2018 fellowship means a lot to me. I consider it, first and foremost, as an affirmation that I must have done a few things right in the more than 25 years in the supply chain management profession. But even more important, it has a special place in my heart because it is an honor from my peers in the profession. It is also a shot in the arm: it means that I need to continue to contribute, maybe even more, to the rise of the strategic importance of the profession that we have witnessed in recent years, to its advocacy and to help younger entrants excel. It is the reason that I intend to continue my work and engagement with the SCMA and post-secondary institutions to achieve their goals. On the flip side, it also means that I can’t screw up now!
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What future plans do you have in the field? I like building great organizations and teams, turning around suboptimal performance and developing people and capabilities. I will continue to find the opportunities to do so. Equally, I still have some runway left and intend to remain in SCM practice for the foreseeable future. Longer term, I keep thinking about more ways to transfer my knowledge and experiences to others (while continuing to acquire more) through coaching, training, mentoring and, potentially, teaching. That is probably what happens to you if your parents were both educators. Growing the SCM talent pipeline in Canada and beyond, and thus guaranteeing the future of the profession, is dear to my heart.
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Tell us something about yourself that most people in supply chain wouldn’t know. There are two fun facts that I keep in my back pocket. Firstly, I have lived or worked in seven countries across four continents: The Netherlands, Malaysia, Brunei, Oman, Gabon and, of course, my home country Nigeria. The second fun fact is that in my high school and college years I played soccer, cricket and field hockey at competitive levels. I wonder if anyone would imagine it and it would be no surprise because in North America these are not very popular sports. But I back in Nigeria these are regular and popular sports.
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What advice would you give those considering a supply chain career? Without bias, I can honestly say that such will be one of the best career decisions they would ever make. Supply chain management has come a long way, even during the span of my career. It has evolved from the order-pushing, tactical function of the purchasing department of yesteryears to the strategic business enabler of today. It has morphed from an all-comers playground to a body of well-trained professionals who know how to tap the resources of an organization and understand the dynamics in the market place, to create a network of external resources that best serve its performance. Supply chain management has become a competitive differentiator to businesses and governments. The survival of organizations will increasingly be determined by how well they understand and manage their supply chains. SCM professionals’ ability to manage risks, keep cost pressures down, drive supplier innovation and procure responsibly in a sustainable fashion will continue to help address the challenges businesses face. The demand for SCM professionals at all levels of organization up to and including the C-suite will only grow. Folks thinking of a SCM career should be willing to learn and adapt to change, as there are many disruptors on the horizon. They should be innovative, be willing to think out of the box and be creative. They should develop good analytical, communication and conflict resolution skills, get schooled in managing relationships and working cross-functionally. B2B
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Finance Corner
Smooth Road Ahead Cutting the friction between procurement and finance
Johan-Peter Teppala is CEO of Sievo, a procurement analytics company
by Johan-Peter Teppala, CEO, Sievo
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rocurement and finance work for the same goal— to save the organization money. That said, friction between the CFO and CPO is real in many organizations, and often, the misalignment directly impacts the bottom line. It all comes down to trust, transparency and mutual understanding and respect for the other’s needs. Let’s look at the causes of tension between CFOs and CPOs, and how procurement can work to overcome them to deliver more value. At the core of the misalignment between CPOs and CFOs is a lack of common language and terminology around savings. While both departments need to showcase savings and deliver value, they often have different perspectives on what savings look like. Procurement typically focuses on KPIs like spend under management and contracted savings, while finance focuses on profit and loss. This creates a gap between what procurement claims it has saved and what finance sees impacting the profit and loss statement. To avoid these breakdowns, procurement can measure and define their contribution differently, specifically
Moving to a procurement model that measures realized savings instead of contracted requires a shift around how procurement teams analyze data. The key lies within building a team—people, processes and technology— that can forecast the future and is analytically mature enough to align potential future profitability outcomes with “what-if” variabilities. Effectively projecting profit begins with visibility into and control over spend data and profit projections. When projected savings don’t hit the mark, procurement must be able to identify what happened. This is where our third point of tension comes in—projecting savings without jointly taking into consideration non-controllable drivers like volume, currency fluctuations and commodities swings. By isolating these external factors, procurement teams can successfully showcase to finance how they contribute value. How? Here’s an example: An international company purchased chemicals worth 23.1M€ in a previous year and sees its total spend in this category rise to 26.4M€ in the current year. By reading the profit and loss statement, finance deducts that spending increase by 3.3M€. From the 3.3M€ cost increase, there is a need to isolate external, non-controllable drivers that hide procurement’s actual contribution. By assessing the spend further, one observes the following: • Market prices of the purchased commodity went up from a one-year average of 18.0K€/tonne in the previous year to 20.0K€/tonne in the current year. Moving to a procurement model that measures • Purchases were made at an average price realized savings instead of contracted requires a shift of 21.0K€ / tonne in the previous year around how procurement teams analyze data. and 22.0K€/tonne current year. • Those purchases were actually made in in regard to one-off purchases, recurring purchases, USD at a USD: EUR exchange rate that had risen from 0.7 in the preOPEX and CAPEX. When it comes to one-off purvious year to 0.8 current year. chases, for example, procurement’s contribution lies in • Total quantities also increased from 1,100 tonnes in the previous year to cost avoidance. But, because these purchases can’t be 1,200 tonnes current year. measured year-over-year, the value isn’t always recogOne can deduce that procurement savings are 5.2M€ for the current nized by finance. This makes tracking cost avoidance year. Purchasing launched a substitution strategy that consisted in a rediswith verification from finance crucial. tribution of volume from the original purchased product to a new prodAnother root of tension is contracted versus realuct that will progressively take over the old one. In the current year, 400 ized savings. Traditionally, procurement looks at spend tonnes of the new product was purchased with the price of 21.2K€ per from a category point of view: travel, IT, logistics, martonne, whereas the original product price in the previous year was 22.4K€ keting and so on. While this focus has its advantages, per tonne. By isolating the substitution impact, one can determine a 480K€ it’s limiting, especially from a CFO’s point of view. P&L cost decrease due to the substitution strategy. Accounting for isolaThe primary reason: the environment constantly tion, one can determine the actual price impact of procurement actions— changes—orders, currencies, fulfillment and more— in our case 4.72M€ in savings. and those changes, which are rarely accounted for in Procurement and finance can work to establish a financial competitive the upfront sourcing initiative, can have a measurable advantage. The secret is transparency, trust, communication and a mature impact on the balance sheet. approach to managing, analyzing and leveraging procurement data. B2B
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By Fabio Frassani Alonso
CONTRACT in a cloud How blockchain technology stands to revolutionize food transportation
©123rf.com/Wutthichai Luemuang
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lockchain has been one of the hottest topics in procurement recently and is likely to remain so throughout 2019. The blockchain is and will continue to be a key tool in shaping the transparency of the supply chain. Through blockchain technology, information is shared and transmitted safely, enforcing contract compliance and improving controls. It allows business processes and data to be viewed across multiple organizations, which eliminates back-and-forth discussions, reduces the risk of fraud and creates new revenue and business opportunities. Traditional methods of contract management require manual inspections, after-the-fact audits and record reconciliation, which are expensive, time-consuming and error-prone. Modern supply chains demand better solutions and visibility. How can organizations increase operational efficiency while balancing that
with the need for better risk management? The world is set to face major changes in the year ahead. These include the likes of further geopolitical turmoil, global trade wars and increased tariffs—all of which have the potential to disrupt supply chains. During this time, procurement will wield greater responsibility and power within their corporations. Organizational and decision-making processes will play a big role in the strategic actions that companies might take. In line with blockchain’s digital influence, there is also a predictable rise in digital adoption and use of cloud services. In fact, the research and advisory company Gartner estimates that by 2020, the “cloud shift” will affect more than $1 trillion in IT spend as organizations try to make their services agile. Smart contracts
One of the areas that might receive a lot
of traction in the year ahead in respect to combating or mitigating supply chain risks are smart contracts. But what are smart contracts and how can they benefit an organization? Without diving too deeply into the technical details, smart contracts are translations of an agreement—including its terms and conditions—into a computational code, or script. Blockchain developers write the script in such a way that it is void of ambiguity and excludes the possibility of different interpretations. The rules are automatically executed and validated when those criteria are met with no manual inputs required to enforce a contract term. For example, let’s look at companies that transport food or pharmaceuticals. If certain goods are not kept at the right temperature or humidity, there are risks to consumer health and safety, as well as
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CONTRACT IN A CLOUD,
continued from page 11
damage to the manufacturer’s reputation and brand. Just to give a picture of how important this is, every year, about 200 million tons of food spoils before reaching the market, due in large part to insufficient cold transport technology. In 2017, one of the UK’s top chicken suppliers had safety records that led consumers to buy expired chicken. The manufacturer’s contract with the transport carrier could thus include blockchain technology with IoT sensors, RFID tags and remote temperature monitoring to ensure that products are kept in agreedupon conditions. That contract could also encourage immediate action to fix any inconsistency outside stated parameters. All these readings and variables are recorded on the blockchain, with information visible to regulatory bodies on a shared ledger to promote transparency. The smart contract detects any failure to
help Walmart quickly and easily monitor suppliers that are committed to the contractual terms. Another group of nine food giants are also teaming up with IBM to explore the technology and data management process to their food supply chains and will certainly push the implementation of the technology. A Chinese e-commerce giant, JD.com, is also implementing a monitoring system in conjunction with a beef producer in Australia by this spring where customers will be able to check how the meat was raised, butchered, and transported. It not only will improve their customer confidence but will use the system to track the origin of foodborne illnesses like salmonella. This tracking method improves food safety, as it will allow suppliers to quickly locate the source of contaminated products. The blockchain is undoubtedly a
Enforcing on-time delivery through blockchain technology will help Walmart quickly and easily monitor suppliers that are committed to the contractual terms. comply with the agreed terms and automatically triggers compensation or fines, revokes payments or pauses production before the affected products get to customers. The parties can also use the shared data transparency to resolve disputes, but with all the transport readings promptly available, discussions (if necessary) are based on hard data. Tracking the food chain
One company that is about to start enforcing smart contracts is Walmart, after two successful pilots suggested high scalability and flexibility of the technology. The company tracked the transportation of mangoes from a Mexican farm through US stores. In that experiment, the time required to determine the origin of any given product was shortened from almost a week to a mere two seconds. As of last spring, the company wants their suppliers to deliver products on time at least 85 per cent of the time. Enforcing on-time delivery through blockchain technology will
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powerful technology in its infancy. One impediment to succeeding with this new technology is that it requires full participation from everyone within the supply chain system. However, it is evolving to become a more viable application, with fewer limitations as a technology that serves as an incorruptible ledger, and one that can trace every interaction. It is extremely valuable in areas where accountability is key. Nonetheless, it is still far from being widely adopted by the supply chains of big companies. Innovators include Maersk and IBM who are using smart contracts at more than 20 ports (including Halifax); Fleet Complete is using smart contracts to develop standard frameworks for the trucking industry. Another technology venue explored by a company named Kwikxchange, focuses on supply chain financing and invoice financing for SMEs applying for a loan. An important addition to the current process is the proper creation of
the contract itself. Flaws in the creation of some contracts have allowed hackers to drain money from some companies, Decentralized Autonomous Organization (The DAO) being the worst case so far. Auditing and verification of smart contracts from experienced companies represents a new solution. Just as the legal department currently verifies a written agreement, some “bug finders” will also scrutinize the code of the contract and ensure that there is no compromise on funds, sensitive data or breaches. The most curious part of this is that some companies in this arena rely on an overly labour-intensive source code revision and testing performed manually by humans. A team blending academic and corporate verification experience—led by Yale and Columbia University professors and backed by software engineers from Facebook and Google—has created a system that uses automatic modular verification to break tasks down into smaller ones, allowing them to be solved in a decentralized fashion. It will mathematically prove that any contract is free of bugs and hacker-resistant. Blockchain technology improves the quality of business and cuts out the middleman, providing compliance while increasing transparency. Aside from developing a plan to identify, assess and monitor the various risks impacting your organisation’s supply chain, putting a blockchain plan in place to address them proactively in anticipation can ensure the health of your bottom-line and provide competitive advantage. It is comparable to the Internet, a technology that changed everything about business during the decades that followed its invention. Companies that position themselves at the beginning stages of this technological revolution will need to adapt fast but will be poised to experience great success. B2B Fabio Frassani Alonso is coordinator of finance administration for the Public Service Commission at the Nova Scotia government
| October 2018 | PurchasingB2B.ca
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By Michael Power
THE SHIFTING WORK WORLD
Challenges and opportunities in supply chain employment
©123rf.com/Marina Putilova
A
s the world of business evolves and new technologies, industries and skills emerge, supply chain professionals must also change to align with these developments. An ability to adapt to a developing business and employment world can affect a person’s salary, where they work, what type of industry they choose and so on. To look at trends in supply chain employment, and to discuss the results of PurchasingB2B’s 2018 Annual Survey of the Canadian Supply Chain Professional, we asked several procurement and supply chain employment experts to weigh in on the survey results, employment trends and more. In discussing the survey results Neil Drew, director at the recruitment company Winchesters, noted that salaries have increased in Ontario, where the organization does the majority of its business. Winchesters has also seen companies in Atlantic Canada seeking qualified candidates, Drew noted. While PurchasingB2B’s survey saw the overall supply chain salary decrease from 2017 (see page 16), Drew had seen salaries increase in the regions that Winchesters does business—but
recruiters often deal with larger companies that can afford to pay their recruits higher salaries, he pointed out. A healthy overall economy and labour shortages can help account for the increase that he’s seen in the industry, Drew said. “People are investing more and more in procurement and there are more and
been increases in manufacturing, CPG and public sectors. Wage gap persists
In 2018, as in previous years, women reported lower average salaries as compared to men. But while that gap appears in PurchasingB2B’s survey each year, it’s not
I’m starting to see a shift to work-life balance being the main reason why (candidates) are looking to make a change, rather than looking to make more money. —SAM MANNA, ALEXANDER HUGHES EXECUTIVE SEARCH CONSULTANTS
more people retiring and not many people looking,” he says. “If you look at your stats (in the salary survey), only 13 per cent are expecting to be in a different job in the next two years. So, high demand and lower supply equals high salaries just to get people to leave their companies.” Predominantly, the services and financial services industries in Ontario are doing well, Drew noted. There have also
reflected in what he sees male and female candidates making, Drew says. “I still don’t see it,” he says. “It’s not a recruitment thing. We don’t see companies offering men more money than women. If it’s out there, it’s happening within the role, for example salary increases and things. But even then, we don’t see significant differences when people come to us and tell us what their salaries are.”
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There could perhaps still be more male procurement heads than females, leading to the highest salaries still drawn by men, Drew speculated. “But there are some very senior female procurement professionals out there, including heads of procurement, who are well, well paid,” he says. When it comes to procurement skills, Drew notes that while hard skills remain important, softer skills are even more crucial when searching for new opportunities. “The most important thing is those soft skills—communication with stakeholders, communication with vendors and obviously projecting information to CFOs and CEOs and that side versus just being able to procure a contract,” he says. The slightly lower salary reported this year comes as a bit of a surprise, says Sean Naidu, principal consultant, procurement and purchasing at Hays Recruiting Experts Worldwide. From his experience, salaries haven’t increased and companies are looking for cheaper options. This is being driven by recent changes in government, for example in Ontario, trends
south of the border and similar factors. “We’re having to negotiate with companies to try to up their numbers from where the norm is in the market and what people should be getting paid versus what they want to pay,” he says. Organizations are also looking at procurement and supply chain professionals who are new to Ontario and other parts of Canada as a less expensive option for hiring, Naidu says. That means newcomers can enter supply chain positions in Canada at a lower level with opportunities to advance, rather than advancing internal staff to higher positions with more salary. Naidu also stressed that the gender-based wage gap that survey respondents reported wasn’t reflected in what he saw among those looking either for employment or companies seeking candidates. Companies don’t ask for male or female candidates and employers stress that they provide the same salary for both. As well, many employers are looking for equal numbers of men and women, Naidu adds. “But from a recruitment standpoint I don’t see it at all.”
Market movement
Naidu noted that he has seen people looking to move from sales and administrative positions into purchasing. At the same time, there’s some movement from purchasing into sales or vendor management, which tends to be more people-focused. But the job market remains about the same with somewhat more opportunity at senior levels than junior, Naidu says. Many organizations are looking to boost efficiency and see a role for procurement in getting that done. “They’re looking for someone to come into the business with a consultative approach, but driving procurement to identify the gaps and to look at cost savings and how to be more efficient. Procurement is driving a lot of those initiatives and working with other stakeholders in the business,” he says. Naidu echoed Drew’s comment’s regarding what skills supply chain and procurement professionals should cultivate going forward. Personality and communication skills remain paramount—with the
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| October 2018 | PurchasingB2B.ca
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ability to interact well with vendors and stakeholders—along with a roll-up-yoursleeve attitude. “Personality traits trump everything,” he says. “Strategic thinking, thinking outside the box, versus being a very transactional individual, creative ideas, innovation and innovative thinking is probably the key.” Regarding categories that are seeing hiring activity, Naidu points to technology and IT. There’s also a lack of available talent in marketing, including advertising and promotional agencies, along with communications organizations. Sam Manna, a partner at Alexander Hughes Executive Search Consultants, also expressed surprise at the dip in salaries in this year’s survey, particularly in Western Canada. The hardships that the oil and gas sectors have suffered recently would help to explain the salary decrease there, Manna says. Another unexpected drop occurred in British Columbia, he adds, pointing out that natural resources, particularly lumber, has taken a hit recently in that province in recent years. “But I’m surprised to see that their average salaries fell lower than Ontario’s, given that BC has a higher cost of living than we do here (in Ontario),” Manna says. Manna also predicted that the wage gap between men and women would likely shrink as more senior supply chain professionals retire and those roles are filled with the best available talent. “A lot of the best talent out there is female, so it’s almost gender blind,” he says. “Moving forward I’m hoping that I’ll see that (gap) less and less within supply chain.” While jobseekers still look to improve their salary or title, many are also interested in intangible benefits like an improved work-life balance, the flexibility to work from home, more control over when and how they work, more vacation time and so on, Manna says. More candidates recently are willing to relocate to places such as BC, where the lifestyle is more laid back. “I’m starting to see a shift to work-life balance being the main reason why they’re looking to make a change, rather than looking to make more money,” Manna says. This year has seen a more active job market than 2017, he adds. The opportunities available are for those who offer a more strategic approach. For example, more candidates are enrolling to earn the
Supply Chain Management Association’s SCMP designation, working towards an MBA or doing an engineering degree depending on their field. More companies are encouraging their employees to pursue such education by providing tuition fees. Tim Moore, president and owner of Tim Moore Associates, also notes the salary decline in 2018 across Canada. He noted several factors potentially contributing to that drop, including a long-awaited correction in the tightening labour market, recent North American trade renegotiations and increasing fears of trade wars and tariffs. While Moore notes that men show a 12-per cent higher mean salary than women, female supply chain professionals
for jobs elsewhere while family stayed behind, Moore says. Now, with strengthening prices, many are looking to return to Alberta. “Yes, we’ve noticed a strong market out there, with manufacturers scaling up and adding production and capabilities,” he says. “It’s a great time to be a supply chain professional.” Geopolitical specialists
Moore also touts the importance of soft skills. People, social and communication skills, along with emotional intelligence all help supply chain professionals achieve their goals. As well, the ability to assess global risk in the supply chain is gaining importance, Moore adds. Currently the
It’s a great time to be a supply chain professional. —TIM MOORE, TIM MOORE ASSOCIATES
have also seen a larger gain over the past three years than men. In fact, women’s average salary actually increased three per cent over the past year compared to the five-per cent drop that men saw. Much of the salary dilemma is due to where candidates start from in their current or last position, whether they disclose this to a potential employer and how diligently they negotiate and promote the ‘value add’ they provide. Still, several other factors can negatively affect salary progression, including downsizing, budget cuts, the recession, or simply having a long tenure with a low-paying company. “It all goes back to an adage I’ve been saying for years: “You never get paid how much you’re worth, you always get paid how well you interview, and then negotiate an employment agreement,” Moore says. Canadian supply chain professionals are still changing jobs in an effort to increase their salaries, improve their proximity to home and work towards future career growth, he says. Regarding relocating, most candidates do so due to a particular industry fit, to work for a noteworthy employer or personal motivation and life changes. When the oil and gas industry suffered from falling commodity prices, layoffs and instability many professionals left Alberta
largest trend he sees is the rise of the geopolitical supply chain specialist. Increased protectionism, North American free trade talks, instability in the UK and the expansion and rise of China have all contributed to the ascent of this role, Moore says. “More and more clients are coming to us to find them a seasoned veteran that can help them navigate new developments and strategically strengthen the stability in their global supply chain,” he says. “Trade wars, increased tariffs, taxes and restrictive quotas can all have an impact on the flow of materials and ultimately on production and process costs as well.” Supply chain professionals must adapt to other risks as well, Moore says, including risks posed by technology such as utilizing Big Data and maintaining cyber security. “Artificial intelligence will pose a monumental risk to organizations who are slow to adjust and adopt the new technologies instead of embracing them,” Moore says. With so many shifts in the supply chain field, it’s never been more important for supply chain professionals to stay on top of advancing technologies and skill sets. Fortunately, the opportunities to improve those skills have never been more available. Truly, it’s a great time to be a supply chain professional. B2B
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HOLDING STEADY ©123rf.com/Jozef Micic
The 2018 Annual Survey of the Canadian Supply Chain Professional shows a slight dip in average salary
A
slight overall dip in salary, women still earning less than male counterparts and a well-paying natural resource sector are just some of the trends in the 2018 Annual Purchasing and Supply Chain Professional Survey. Every year, PurchasingB2B surveys readers regarding their salaries as well as topics related to education, job satisfaction, as well as challenges and trends in the industry. Overall, the supply chain professionals we surveyed reported an average salary of $89,334, down just slightly from last year’s $92,689. That’s worth noting, considering that last year’s average salary represented a 10-per cent jump from the previous survey in 2016.
SALARY BY REGION
$89,063
$74,973
British Columbia
$93,694 Alberta
Atlantic Canada*
$89,560 Manitoba/ Saskatchewan
$91,991
$83,581 Quebec
Ontario
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SATISFACTION WITH SALARY
$92,349 ©123rf.com/Jakub Jirsak
very/somewhat satisfied
$69,636 YOU SAID A focus on ethical and sustainable supply chains– anti-corruption will be a major focus for many organizations within North America as the laws are enforced.”
not very/not at all satisfied
TYPE OF POSITION Executive $119,770 Managerial $97,612 Consultant $80,697
Salary by region
The survey also breaks out salary information by province. The largest drop was in Alberta, where the average salary fell from $107,879 last year to $93,694—a 13 per cent drop. British Columbia also saw a decline, falling to $89,063 in 2018 from a high of $96,615 last year. The average supply chain salary in Ontario remained essentially the same: $91,991, which is a very slight increase from $91,845 in 2017. Quebec supply chain professionals saw an average salary of $83,581 (down from last year’s $87,793) while Manitoba/Saskatchewan reported a salary of $89,560—also down from $93,097 in 2017.
Strategic $88,805 Engineering/ professional* $86,721 Supervisor $93,146 Analyst $80,169 Operations/ tactical $79,810 Clerical/ administration $69,345
Portrait of our respondents
This year, the average survey respondent is 49.7 years old; 57 per cent of respondents are male while 41 per cent are female. Respondents work an average of 43.5 hours a week—a number unchanged from last year. They supervise an average of 5.3 people and their department’s overall supply chain budget is $58.3 million. The percentage of the total organizational spend under their department’s control is 55.4 per cent. Their departments place an annual sourcing volume of $52 million, while they personally place $23.5 million.
Other positions* $84,820
GENDER n=372
Gender gap persists
Over the years that PurchasingB2B has performed the survey, a consistent result has been that women report making less than their male counterparts. This year is no different, with female supply chain professionals reporting that they earned roughly $12,000 less per year than males. But while women saw their
$82,657
$94,257
Female
Male
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AGE n=372
$85,385
$97,135 $87,622
$86,125
$80,881 $62,000
Under 26*
26 to 35 36 to 45
46 to 55 56 to 65
YOU SAID Amazon and the likes are changing the landscape of distribution. Buyers are using these platforms to determine the cost they are willing to pay and ignoring value-added propositions”
over 65*
EDUCATION LEVEL salaries increase in 2018 to $82,657 (up from $80,474 in 2017), men reported an average salary of $94,257, which is down from last year’s $98,796. High School or less*
$77,962
Some university
$84,712
Trade/technical diploma*
College diploma/ CEGEP
$76,410
$90,636
University Bachelor’s degree
MBA*
$93,113
Other Masters*
PhD*
$107,586
n/a
$104,698
Univ. Degree/MBA/ Masters/PhD (Net)
$95,509
Salaries by company
Not surprisingly, the position that respondents hold within their organizations corresponds to whether they received larger or smaller pay packets. Those at the executive level reported an average salary of $119,770—up from $116,241 last year. Those with engineering/professional job titles saw an even larger jump, earning $86,721 on average. That’s up a whopping 18 per cent over last year’s reported average of $72,906. Consultants saw their salaries fall to $80,697, down 13 per cent from $93,241 last year. Other fields to see a decrease in 2018 included those with managerial, strategic and analyst positions. Salaries by age Age matters when it comes to how much a supply chain professional makes, with salaries generally climbing as years of experience increase. Respondents under 26 reported earning $62,000 while those 26 to 35 taking home $80,881. Between the ages of 36 and 45, respondents earn an average of $85,385, while those 46 to 55 earn $87,622. The largest jump occurred among respondents between 56 and 65, with a reported average of $97,135. Those over 65 saw their salaries decrease to $86,125, down about nine percent from last year’s average of $94,485. Salaries by education
COMPANY REVENUE
$74,240 $99,260 $112,883 Up to $50 million
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$51 million to $1 billion
Greater than $1 billion
Generally, those with the most education receive the best pay. Those with a Masters degree earn an average of $107,586— the highest reported salary by education—while someone with an MBA received $104,698. Those with a Bachelor degree see an average of $93,113, while holders of a college diploma earned $90,636. At least some university education means an average of $84,712. Overall, those with a university degree (MBA/masters/PhD) earn a net average salary of $95,509. How many respondents have a post-secondary education? Overall, 37 per cent said they have a university degree of some
| October 2018 | PurchasingB2B.ca
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YOU SAID I see a general need for public sector procurement practices to evolve to be more agile and efficient. I also see a need for public sector procurement professionals to improve their skills beyond purchasing and RFx management and into more advanced organizational procurement approaches, like category management.”
sort, which is down from 41 per cent last year. However, most respondents (61 per cent) felt the need for further education or professional development to progress in their careers, while 39 per cent did not. As well, 62 per cent said they plan to register for further education in the next 12 months—that’s up 59 per cent from 2017. What education were respondents looking for? A total of 43 per cent said they needed industry-specific training to progress in their careers, while 38 per cent felt a professional designation was necessary. A total of 23 per cent felt they needed an MBA while another 22 per cent were looking for a Bachelor’s degree. Overall, 88 per cent of respondents felt the SCMP designation was relevant to their jobs.
NUMBER OF COMPANY EMPLOYEES n=372 1 to 99
$72,911 $93,160 $94,898
100 to 499
500 or more
ORGANIZATION PAYS FOR…
81%
66%
60%
Education courses & other continuing professional development
Membership in professional associations
Professional certification programs
12%
1%
None of these
NS/REF
Soft skills rule
The survey asks about what skills supply chain professionals feel they need to do their jobs. The top skills cited weighed heavily towards the so-called “soft skills,” indicating that procurement and supply chain professionals no longer work in isolation in back-office positions. Among respondents, 87 per cent said they felt interpersonal skills were critical in their jobs. That was followed by communication skills, with 86 per cent feeling that these skills were critical. Decision-making (83 per cent), negotiation (74 per cent) and analysis (73 per cent) were the next most-critical skills on the list. Salaries by industry
Not all industries are equal when it comes to supply chain salaries and how much respondents make depends in part on what sector they work in. The natural resources sector came out on top and also saw an increase over 2017. Those in public administration earned the survey’s second-highest salaries, at $94,591. Educational services professionals took home an average of $92,10, a figure that was down from last year’s average of $97,121. Salaries by company size
Companies with higher revenue also paid their supply chain
GROSS SALARY INCLUDING BONUSES & INCENTIVES, THAT IS, BEFORE TAXES OR OTHER DEDUCTIONS, FOR 2017
2% | Less than $40,000 3% | $40,000 to $49,000 8% | $50,000 to $59,000 21% | Prefer not to say 9% | $60,000 to $69,000
13% | $120,000 & higher
11% | $70,000 to $69,000
14% | $100,000 to $119,000
19% | $80,000 to $99,000
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TOTAL COMPENSATION INCREASED, DECREASED OR REMAINED THE SAME OVER LAST YEAR n=396
4%
38%
Increased
Decreased Remained the same
3% NS/REF
YOU SAID Trade agreements, including CETA, affect the length of time for conducting RFxs, awarding, and getting agreements. Therefore, the supply chain needs a reasonable electronic process to facilitate the processes.”
AVERAGE NUMBER OF HOURS WORKED PER WEEK n=396
NS
/RE
F
Le s s
tha
n3
5
5 n5
t ha M o re
3%
30% 40
55 51-
20%
3% 19% 45 41-
46-
50
20
-3 9
7%
35
4% 2%
©123rf.com/alexandersikov
55%
professionals more. At an average of $112,883, employees at organizations with revenues greater than $1 billion earned the most. Those at companies with an annual revenue of $51 million to $1 billion earned $99,260 while companies with revenue of up to $50 million paid $74,240. Similarly, companies with more employees offered larger salaries, and organizations with 500 or more paid an average of $94,898. An organization with 100 to 499 employees paid $93,160 while companies with one to 99 employees paid $72,911. Job satisfaction
At 60 percent, the majority of respondents said their compensation had kept up with their job responsibilities. At the same time, 92 percent said they were satisfied with their job overall, while eight per cent said they weren’t satisfied. A total of 85 per cent said they were satisfied with their salaries. The majority of respondents reported that they had seen salary increases—63 per cent noted a rise in their compensation, while only two per cent saw a decrease. A total of 34 per cent said that their pay has remained the same. Among respondents, 46 per cent saw an increase of two per cent or less, while 33 per cent received a raise between 2.1 and four per cent. At 64 per cent, the majority of respondents anticipated an increase next year, while 35 per cent did not. PurchasingB2B fielded the survey between June 6 and July 27 this year and received about 400 responses, giving the survey a margin of error of plus or minus 4.9 per cent, 19 times out of 20. Bramm Research Inc. conducted the survey. B2B
| October 2018 | PurchasingB2B.ca
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22 News 24 2019 Car Previews 26 Distracted driving 30 2019 Truck Previews 32 Winter Driving Tips 34 Rise Of The Mobility Manager 36 Road test: Ford Transit 150 38 Fleet Challenges
HEAD IN THE GAME
Combating distracted driving means more than putting down the phone
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36
Š123rf.com/dolgachov
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AVs won’t derail truckers yet: report Despite concerns that automated vehicles will displace truck drivers, only a modest number of truck driver jobs, if any, will be affected, according to a new report commissioned by the American Center for Mobility, led by Michigan State University. While large numbers of AVs won’t deploy until the late 2020s, some displacement of passenger car-based driving jobs could occur then, mainly among taxis, according to the researchers. Due to truck driver shortages, and the belief that automation will support truck drivers instead of replacing them, truck drivers aren’t likely to be displaced in large numbers during the next 10 years the study covered.
ANDY launches company: Tristan Fleet Management
Quebec-based Andy, a transportation, logistics and warehousing group of companies, has launched Tristan Fleet Management. The new company operates several heavy truck and trailer maintenance centres and provides personalized fleet management services, including preventive maintenance; equipment inspection; and mechanic and collision repairs. Tristan’s customers include small- and medium-sized fleets and nearly 200 clients have signed on with Tristan for the planning of their fleet’s preventive maintenance and repairs, road assistance, towing and road services, the company said.
ARI and Ford provide telematics solution
Fleet services provider ARI has announced a data integration service with Ford Commercial Solutions to provide a telematics solution for fleet customers. The agreement combines Ford Commercial Solutions’ Data Services with ARI insights, the company’s fleet management portal, to deliver visibility into the operating conditions of fleet vehicles. By the end of 2019 most Ford vehicles will be connected—these vehicles will include a built-in telematics unit to transmit data from the vehicle to the transportation mobility cloud (TMC). The information flows from the TMC into ARI’s data warehouse where it’s integrated with fleet data and available for analysis.
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Element Fleet Management Corp. has announced plans it says will improve financial performance, strengthen and de-risk the company’s balance sheet and position it for growth. “We have embarked on a transformational reset of Element’s business, with a renewed focus on our customers and on improving productivity,” said Jay Forbes, Element’s CEO. The company plans to transform its fleet business, based on a recent assessment of the its operations. Element’s management and board of directors have also examined topics that it says include customer retention; rebate management; people and culture; IT systems; allocation of capital expenditures; and more. Element has also realigned its executive team, including naming Jim Halliday as chief operating officer.
Photo: Dorothy Jakovina
©123rf.Tomasz Wyszolmirski
Element hits the reset button
NAFA Ontario hosts ride and drive
The Ontario chapter of NAFA hosted a ride and drive event in Toronto on September 20. Attendees had the chance to test drive several vehicles, and 13 OEMs were on site, including Nissan, Fiat Chrysler Automobiles, General Motors, Ford, MercedesBenz, Hyundai, BMW Mini, Mazda, Mitsubishi, Volkswagon, Toyota, Subaru and Volvo. The event showcased 107 vehicles and 20 vendor partners, the organization reported. The ride and drive attracted close to 350 attendees, exceeding the organization’s goals for attendance.
Distracted driving still prevalent
While distractions while driving are a reality, many Canadians still don’t recognize them, according to a survey by Desjardins. While 8 in 10 respondents (79 per cent) say they see other drivers using smartphones behind the wheel, only 38 percent admit to having driven distracted. Another 21 per cent admit using their phone while driving within the past year. Smartphone-related distractions are more common among younger drivers, with 11 per cent aged 16-24 admitting to using one. Other distractions include the external environment, other passengers, the entertainment system and eating and drinking.
| October 2018 | PurchasingB2B.ca
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T:8” S:7”
We’re in the safety that never rests business. REAR VISION CAMERA SAFETY ALERT SEAT
PARK ASSIST
FORWARD COLLISION ALERT
LANE KEEP ASSIST WITH LANE DEPARTURE WARNING
S:10”
2018
AVAILABLE SAFETY TECHNOLOGIES Your fleet is carrying more than just equipment. It’s also carrying the most important asset: your work crews. That’s why our engineers have developed a suite of available safety features that can help your crews stay safe on their way to and from the worksite. TO LEARN MORE VISIT
gmfleet.ca/safety
Safety or driver assistance features are no substitute for the driver’s responsibility to operate the vehicle in a safe manner. The driver should remain attentive to traffic, surroundings and road conditions at all times. Visibility, weather, and road conditions may affect feature performance. Read the vehicle’s owner’s manual for more important feature limitations and information.
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T:10.875”
Photo: Dorothy Jakovina
LOW SPEED FORWARD AUTOMATIC BRAKING
Autumn’s crop Highlights from the 2019 model year
Crisp fall mornings suggest that while the summer of 2018 may be over, there’s a bountiful crop of 2019 models on the way. Changing consumer tastes have upended the automotive industry; and the latest models reflect that shift with crossovers outnumbering sedans in nearly every segment. Some automakers have decided to discontinue their passenger car production entirely. There are still plenty of new coupes, sedans and hatchbacks arriving however, and competition for a dwindling market share means
Image: Toyota
Image: Mitsubishi
unprecedented safety, fuel economy and alternative hybrid energy technology.
Toyota An all-new RAV4 arrives for 2019. The fifth-generation RAV4 returns on a longer, lower, wider platform, with a new 40 per cent more efficient 2.5L four-cylinder engine and more powerful hybrid powertrain option. Standard on all trims is TSS (Toyota Safety Sense) suite of driver safety tech, featuring adaptive cruise control, emergency braking, auto high beams, lane departure warning and lane keeping assist. New versions of Camry and Avalon sedans feature bolder styling and list of interior amenities.
Honda Completely revised for 2018, the tenth-generation Accord received the North American Car of the Year award for its striking design, long list of interior features and excellent handling. Two turbo-charged four cylinders are offered, and three available transmissions. Honda’s hybrid Insight never attained the success of Toyota’s Prius and was consequently cancelled in 2014, but now returns with an all-new 151hp powertrain boasting 55mpg (4.3L/100 km) and attractive new styling.
Nissan The new, sixth-generation Altima has an option you can’t get on any version of the other two: all-wheel-drive. It’s available on all trims with the 2.5L 188hp base engine, but not the new 248hp turbo four cylinder replacing the previous V6. ProPilot, a full suite of advanced safety features, is standard on the top-three trims, but not on base S or SR models. Even the entry-level S has standard push-button start, eight-way power driver seat, 8.0-inch touchscreen with Apple CarPlay or Android Auto and four USB ports.
Image: Jeep
Image: Honda
Mitsubishi The new Mitsubishi Eclipse Cross utility vehicle trades on its familiar badge. The Eclipse Cross fits in the crossover lineup between the Outlander Sport and larger Outlander. Updated for 2019, the plug-in hybrid Outlander PHEV boasts more power, increased battery storage, improved handling and suspension, revised design and interior tweaks. A new Outlander, arriving in 2021, will be built on the same Alliance platform underpinning the Nissan Juke, Versa and Kicks.
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Image: General Motors
Image: Ford
General Motors GM intends to keep its passenger car production intact. Its lineup is relatively young, and having repaid the investment they needed to develop the current generation of cars, GM is in a good position to enjoy market share. But they’ve indicated they’ll invest less on cars and more on crossovers. Luxury brand Buick has only the LaCrosse sedan, and Cascada convertible remaining in their predominantly utility vehicle portfolio. But there are refreshed versions of the Cruze, Malibu, and compact Spark arriving for 2019 with new trim levels and restyled fascia.
FCA The late Sergio Marchione, FCA’s recently-departed CEO, announced the company’s five-year plan concentrated on expanding Jeep and Ram, with the goal of Jeep being one in every five utility vehicles sold, and Ram the number two commercial brand in North America. Chrysler, Dodge and Fiat will still exist, but get only 25 per cent investment share. FCA just introduced their three-row 2019 Dodge Durango in five models—from base SXT to the 475hp performance oriented SRT.
Subaru Subaru is returning to the three-row, crossover segment with the Ascent. By offering a mid-size crossover, Subaru hopes to retain customers looking to move up from a Forester or Outback. It’s powered by 260hp turbo-charged four-cylinder but boasts a max tow rating of 5,000lbs and 10.2L/100km fuel consumption. Subaru’s Eyesight Driver Assistance Package is standard on all models, but navigation, Android Auto and Apple CarPlay come only on upper trims. A Wifi hotspot supports up to eight devices.
Mercedes-Benz The compact C-Class sedan/coupe receives a mid-cycle refresh including interior and exterior styling tweaks, and enhanced technology—a 10.3-inch touchscreen, Intelligent Drive and standard auto emergency braking, attention assist and smartphone integration. The turbo four-cylinder, and AMG V6 receive a boost in power, to 255 and 385 respectively. The compact A Class arrives in 2019. It’s powered by a 2.0L turbo-four with 221hp, with a possible AMG variant to arrive later.
Hyundai Hyundai offers several new, refreshed models arriving for 2019. An all-new Santa Fe replaces the existing smaller Santa Fe Sport, while an entirely new large crossover will soon replace the larger three-row Santa Fe. More stylish inside and out, the new Santa Fe offers more interior passenger and cargo space, and two engine choices, with a diesel option later. Currently available connectivity options will become standard, and an advanced suite of driver assist safety technology is available.
Image: Hyundai
Image: Mercedes-Benz
Image: FCA
Image: Subaru
Ford Ford announced plans to axe most of its North American car lineup. That doesn’t include the Mustang, which recently became the top-selling sports car of all time. After a mid-cycle refresh in 2018, the Mustang returns virtually unchanged except for a special edition Bullitt for the 50th anniversary of the film. It has a 475hp from its Shelby GT350-inspired V8, a Torsen Limited Slip, Brembo brakes, leather Recaro seats and green cabin accents. Ford plans to revamp the rest of its lineup by 2020, focusing on smart technology and hybrid propulsion.
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By Kara Kuryllowicz
HEAD IN THE
GAME cross Canada, Canadians’ perspectives on distracted driving are evolving and it remains a top concern according to a recent Canadian Automobile Association poll. “Distracted driving is becoming socially unacceptable but vigilant law enforcement and ongoing education remain crucial,” says Ian Jack, managing director, communications and government relations, CAA, Ottawa. “People need to know that something bad could actually happen to them.” According to the Traffic Injury Research Foundation, distracted driving deaths have surpassed impaired driving deaths and the RCMP reports that driver distraction is a factor in about four million motor vehicle crashes in North America annually. In addition, the National Highway Traffic
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Safety Administration finds that driver inattention contributed to 80 per cent of collisions and 65 per cent of near crashes. “Distracted driving has been the number-one killer for the past five years and inattention is the leading factor in all types of collisions,” says Kerry Schmidt, Sergeant, OPP Highway Safety Division. As a result, all 10 provinces have some form of cell phone-distracted driving legislation in place. The penalties typically comprise a fine and demerit points, ranging from a low of $80 in Quebec to a high of $1,200 in PEI. In select provinces, fines increase for second and third offenses and demerit points range from three to five depending on the province. “While legislation in many jurisdictions has focused almost exclusively on electronic
communication devices, legislation in some jurisdictions such as Alberta has prohibited a broader range of distractions, (such as reading, sketching, programming an audio player, excessive interaction with a pet, using video entertainment displays and personal grooming) and other jurisdictions are starting to consider such an approach,” says Robyn Robertson, president and CEO, Traffic Injury Research Foundation. Not just digital devices
Distracted driving is most often associated with digital devices that take eyes off the road and hands off the wheel, but any activity that affects a driver’s ability to safely operate a motor vehicle is distracted, careless driving. “It’s more about what your brain is
©123rf.com/Srinrat Wuttichaikitcharoen
A
Combating distracted driving means more than putting down the phone
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ing videos and live action sports, texting, searching and engaging with likes, comments and shares to social media. “Motor vehicle collisions are the leading cause of workplace death and that’s why innovative, industry leading, safety-minded firms are committing to Cellcontrol which saves one life annually for every 5,000 subscribers,” says Joe Boyle, CEO and cofounder, Cellcontrol, Lisle, Illinois. Fleet managers can customize Cellcontrol settings to block everything but 911 and other emergency calls; allow only Bluetooth-enabled and emergency calls; and support only such calls and navigational apps.
Safety systems can’t replace the driver’s brain, eyes, hands and feet. A single second of inattention can result in a collision. —IAN JACK, CA A Fleet and risk managers need good, not lucky, drivers in view of the potential for multimillion-dollar liability suits when drivers are on company business or in a company-provided vehicle using company-supplied tools. They create, implement and fully support driver and technology-related policies to mitigate the risk to the company and protect its most valuable resources, its employees, brand and reputation, and hard assets such as vehicles. Consequences to drivers in the event of a collision in which technology was involved may include dismissal or the loss of the vehicles and digital devices. “It has to be punitive and it has to scare them,” says John Meiklejohn, national account manager at Element. “The telecom providers can tell us exactly what the driver was doing and when, and that ability to monitor driver behaviour is extremely powerful.” Beyond their distracted driving and digital technology policies, fleet managers do limit and control access with tools like Cellcontrol simply because the most appalling behaviour can include watch-
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“About 90 per cent of our fleets have formal technology policies, but fewer than 10 per cent actively enforce and support them with tools like Cellcontrol, due to concerns about everything from costs to productivity,” says Bensel. To date, Cellcontrol has over 100,000 subscribers in Canada, the US, the UK and Australia and their customers report an immediate 40 per cent collision reduction, which delivers a five-to-one return on the investment. In fact, a North American pest control company will save $US5.8 million annually in direct collision-related costs. Companies must consider the potential return-on-investment due to insurance, repair/replacement, lost-time (human and vehicular) and benefits reductions as well as the potentially enormous liability cost in a worst-case scenario. In view of its productivity concerns, a global pharmaceutical company had its top sales rep test Cellcontrol and discovered his productivity actually increased. “Aside from the fact taking calls and answering emails while driving is egregiously unsafe and irresponsible, how productive can a driver truly be while so
unfocused?” says Boyle. Increasingly, fleets’ telematics systems monitor drivers’ behaviours to determine whether the driver requires more training and education or is chronically inattentive and lazy. Element’s Meiklejohn notes a large oil and gas company, although initially wary of the reaction from its unionized drivers, ultimately introduced telematics for safety’s sake. “They presented telematics as a safety strategy designed to protect drivers rather than watch their every move,” says Meiklejohn. “It’s about changing the bad habits that have become ingrained since we started driving in our teens and helping drivers alter behaviours and improve skills whether or not they realize they need it.” Vehicle safety
Fortunately, vehicles are the safest they’ve ever been to mitigate the effects of poor driving, and the OEMs’ high-tech safety features have trickled down to entry-level vehicles. Automatic emergency braking, adaptive cruise control, blind-spot monitoring, lane-departure warning and lane-keeping assist, rear cross-traffic alert, front- and rear-end collision avoidance and other features can all be effective. But Jack, Bensel and John Meiklejohn, all stress drivers need to really understand these features’ capabilities and must guard against becoming overly dependent on them. “Even collectively, these safety systems can’t replace the driver’s brain, eyes, hands and feet,” says Jack. “A single second of inattention can result in a collision.” A few years ago, a large security firm noticed its safety statistics had plateaued and the collision rate was holding steady despite the company’s policies, training and more. Having exhausted the most traditional approaches, the executives worked with their employees to create testimonials. One driver talked about rear-ending a vehicle with a woman and child as occupants while reaching for a water bottle. The mother survived, the child died. “The testimonials really resonated and stuck with me and since the company’s collision rates dropped a few points, I wasn’t the only one,” says Bensel. B2B
©123rf.com/Ihor Obraztsov
thinking than what your hands and eyes are doing,” says Jack. “Hands-free does not equal distraction-free!” As the OPP’s Schmidt points out, it’s human nature to have an optimistic bias regarding our driving abilities. Most drivers would consider themselves above average drivers and when they have driven collision-free for decades, they typically see this history as proof they are good drivers. However, Eliot Bensel, vice-president, account development, at fleet management company Element Fleet, asks: “Are you good? Or are you lucky? Virtually every person, on the road and elsewhere, makes mistakes, massive or minor. The lucky ones get away with it!”
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Nissan Titan
The 2019 truck model year The 2019 truck lineup sees many major OEMs has substantial new offerings producing refreshed models from each of the Big Three adaptive cruise control with stop-and-go starting with the Ram 1500. Ford’s F-Series This is a carryover year for Super Duty functionality and Pre-Collision Assist The Chevy Silverado and as the big changes came in 2017. The with Pedestrian Detection. The key for key changes from that update, that carry 2019 is the new small diesel. It’s very GMC Sierra are also new forward, include the F-450 Crew Cab quiet and makes 250hp at 3,250rpm and for this year. From Ford, getting an eight-foot box on its 4x2 config- 440lbs-ft of torque at 1,750rpm. whose 2018 F-150 was new, uration, while rearview cameras are now The look of the new 2019 Ram is just standard on the base XL series truck. The different enough to announce this new we got a small diesel engine Power Stroke diesel has also bumped up generation with LED adaptive front for 2019. Speaking of diesel, its power rating and added 1,500lbs to its lighting anchoring a flatter, swept-back hood that now wears the brand badge on GM has also announced the max trailer tow rating. The F-150 continues to refine its alu- the new grille. The truck is slightly larger, addition of a small diesel minum-body truck by increasing pay- yet its 225lbs lighter thanks to the use of (a 3L inline 6) to its half-ton load and towing capacity. Last year it more high-strength steel and a wider use changed the base V6 engine to a new of aluminum. Engines and transmissions lineup. So, for the first time 3.3L, which it mated to a six-speed in this next generation remain mostly ever, each of the major automatic. All other engines now use unchanged with the 3.6L V6 Pentastar the 10-speed SelectShift automatic. still being the base standard and the 5.7L players will offer a small Standard features now include: Auto Hemi V8 optional. An interesting sales diesel engine. If you heard Start-Stop for all engines; also new is twist to the Ram roll-out is that only the that Ford is bringing the mid-size Ranger back this late this year you’re right. It seems that the mid-size truck market is expanding yet again.
Toyota Tacoma
NEW OFFERINGS ABOUND
Chevrolet-Silverado-3500HD
By Howard J Elmer
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Ford F-150
GMC Sierra
Honda Ridgeline
top trim levels in the 2019 Crew Cab version are offered initially. The HD Ram is scheduled for a major update in the 2020 model year. In the meantime it carries on with current capacities. The anchor is the 6.7L Cummins turbo diesel; however there are two gas engine options, plus manual and automatic transmissions. It continues to offer some class-exclusive features, like smart diesel exhaust brake, auto-level rear air suspension or multilink coil spring rear suspension. It now features Ram Active Air technology on the 6.7L Cummins. New from Toyota
There are no real changes to Tacoma for 2019. Its 3.5L Atkinson-cycle V6 is available with a five-speed manual (2.7L only), a six-speed manual, or six-speed automatic Super ECT with lockup torque converter. That they still offer a manual transmission sets these trucks apart. The TRD Pro version of the Tacoma features multi-terrain select 4WD, crawl control, beefed up front and rear suspension and Bilstein shocks. The Tundra got some updated design cues last year. Also added were Toyota Safety Sense and upgraded convenience technologies. Toyota also added a TRD Sport model to the Tundra lineup. This package features TRD Sporttuned Bilstein shocks and a sport-tuned suspension. Chevrolet has announced that the next-generation Silverado HD will debut as a 2020 model. In the meantime there are few upgrades to the current model. It now has a digital steering assist system
and the gooseneck/fifth wheel package includes a spray-in bedliner. Chevrolet MyLink comes with an eight-inch touchscreen and Apple CarPlay. Everything else remains the same. The new Chevrolet Silverado is slightly bigger (four inches longer) than the previous generation. However, the bulk of the “what’s new” is found underneath and inside. A wide variety of parts and panels now use aluminum—but not the cargo bed—that is still steel with a new inner sidewall leading to a best-in-class cargo volume of 63cu-ft (on a short-box). Also bed width has increased by seven inches that lets Chevy offer new removable storage bins. Tie down points have increased to 21—each with a 500lbs capacity. It gets task lighting, a 120V in-box outlet and bigger cutouts for the CornerStep bumpers. Available gas engines include updated versions of the 5.3L and 6.2L V8’s along with an all-new 2.7L turbo engine that will now be the base engine on the high-volume Silverado LT and RST. It offers 22 per cent more torque and greater fuel efficiency that the 4.3L V6. An exciting development in fuel efficiency is a technology called Dynamic Fuel Management. Unlike the current Active Fuel Management (which runs as either an eight- or four-cylinder), the new DFM can fire on as few as two cylinders. This translates to a nine per cent improvement in fuel efficiency over the old AFM system. Silverado’s sister Sierra is also new for 2019. And while much of the underpinning is the same in both GM trucks, GMC is pushing its unique “profes-
sional grade” image by offering several new features not found on the Silverado. First is a convertible tailgate with multiple functions. This gate acts as a step, cargo extender and workstation. Second is an industry-first carbon fiber cargo box. This is lighter and stronger than any steel bed. Also offered is a segment first rearview mirror camera. These are a few of the items that GM is using to set Sierra apart. Powertrains and weight capacities mimic the Silverado. These mid-size twins are certainly one reason that we will be seeing a comeback of the Ford Ranger in late 2019. Other than that, 2019 is a carryover year; however the 2.8L diesel is a segment exclusive. The Ridgeline has no changes this year. This small seller appeals to a select group with its car-like features including a fold-down tailgate that also opens sideways and a large, lockable trunk. It features all-wheel drive. The Titan
The Nissan Titan XD remains the same, still offering its unique Cummins 5.L V8 turbo-diesel. It features integrated trailer brake controller, trailer sway control, tow/haul mode with downhill speed control and a trailer light check system that allows one-person hook-up operation. The 2019 Nissan Titan is competing in the half-ton segment. It offers a 5.6L V8 engine and several trim packages making it a solid contender. Smaller than the diesel-powered XD it remains the same for 2019. Nissan expects to add powertrain and other features in the future. B2B
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Ryan D’Souza
comfort Fall and winter driving tips to keep fleet drivers safe
F
or much of Canada, fall has arrived and winter is just around the corner. At the same time, some parts of the country have already seen a substantial amount of snow. Alberta got a record-breaking amount of the white stuff on October 2 that ground Calgary to a halt after close to 40cm of snow fell. With unpredictable road conditions in mind, now is the time to make sure that your fleet and drivers are equipped to brave the cold. Below is a list of tips to help prepare your vehicle fleet for the upcoming seasons:
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Get your vehicle ready for winter in the autumn as repair shop wait times can significantly increase when the white stuff starts to fall. Check vehicle tires for proper inflation as well as the wear patterns. Consider installing a set of winter tires. Check provincial requirements, as certain jurisdictions such as Quebec require the use of winter tires. Pack an emergency safety kit. Some items you should include in a safety kit are a snow brush/scraper, small shovel, battery jumper cables, flashlights and a blanket. Plan trips ahead, and remember to check road and weather conditions prior to starting a trip.
Remove all snow from vehicles before each trip.
Account for extra travel time for trips in bad weather, including allocating extra road time for route-based fleets.
Avoid using cruise control on slippery roads.
If embarking on a longer road trip, ensure you start with a full tank of fuel.
If the vehicles in your fleet come equipped with a block heater, plugging the heater in can help increase fuel economy by ensuring the vehicle gets to the proper operating temperature quicker. Most block heater systems will also help heat up the cabin quicker so the vehicle does not have to idle for long to warm up the cabin.
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Always travel with a fully charged cell phone.
Consider implementing a fleet telematics program. Most modern telematics programs capture valuable real-time operating data such as speeding, excessive idling and hard braking that can help maintain a safe and efficient fleet. Some telematics programs can also provide important alerts such as accident notifications.
By Michael Power
While Canada is known for it’s cold climate and often snowy conditions, that doesn’t mean Canadians enjoy being on the road in the winter. According to a 2015 driving survey conducted by State Farm Insurance, 80 per cent of Canadians dislike driving when the mercury drops. Among those surveyed, 59 per cent said they typically put on their winter tires before the first snowfall, while 14 per cent said they wait until after it has snowed. A total of 25 per cent said that they don’t use winter tires at all. A total of 45 per cent of respondents said that they find it most difficult to drive during the winter when there’s black ice. That’s followed by 23 per cent, who responded that freezing rain represented the toughest driving conditions. Whiteouts followed with just over 20 per cent and heavy snowfall at just over 01 per cent. Interestingly, two thirds of Canadians said that their fellow motorists drive “horribly” during the first snowfall, or as if they’ve never driven before. At the same time, 86 per cent of Canadians view themselves as good drivers.
Ryan D’Souza is regional director, prairies, Jim Pattison Lease
More driving tips can be found using the Transport Canada website: https://bit.ly/1gaoxHJ.
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| October 2018 | PurchasingB2B.ca | FLEET MANAGEMENT
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CANADIAN FLEET OPERATIONS MAZDAFLEET@MAZDA.CA 905-787-7000
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RISE OF THE MOBILITY MANAGER Technology and other developments are changing how fleets operate
W
hether you’re in the catering, cleaning, rental car or delivery service—if it contains a fleet of vehicles, the fleet manager is essential to its operations. The fleet manager has various roles that cover scheduling, driver management, financing, safety, as well as health and wellness, to name a few. And the success of one’s business may hinge on how they manage those fleets. Like many other fields, the fleet world has gone through its fair share of changes stemming from an increase in online work, new technologies and the globalization of businesses as a whole. It has brought about a constant flux to the fleet manager role. That’s on top of additional responsibilities in understanding metrics, vehicle tracking, lowering costs, lowering emissions and increasing productivity as a whole. Efficiency has always been key to the job, but it’s now done in a new, more technological format. Rather than focusing solely on drivers or vehicles, they both can be effectively monitored through ongoing digitized systems. No longer are paper
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maps and physical meetings needed. In its place are GPS navigation, fleet tracking and real-time driving directions. In addition, loads of data are aimed at simplifying the planning process, alleviate any arising situation—be it an accident or traffic— with an ultimate goal of saving on costs. “For typical corporate fleets, it’s the impact procurement has had on how they do their jobs,” explains Phil Russo, chief executive offer, NAFA Fleet Management Association. “The focus has shifted from ‘total cost of’ (TCO) to lowest cost now.” It all adds to the stress of the fleet manager position, placing them under the gun to do more with less. Jim Pattison Lease, one of Canada’s largest privately owned fleet management companies, founded in 1961, understand the new challenges and pressures faced by fleet managers. “Fleet managers are required to review and analyze an overwhelming amount of data in order to optimize their total cost of ownership,” explains Lana Prokopuik, manager of corporate accounts, Jim Pattison Lease. “The fleet manager of
today needs to be fully educated in deciphering and making sound business decisions based on the many fleet reports that are available at the push of a button. Aligning themselves with a proactive fleet management company will alleviate time and allow them to quickly focus on other areas of improvement.” Prokopuik feels that it’s not just about dealing with new technologies, but understanding the data (overall acquisition costs, maintenance and resale and so on) in order to make quick and effective decisions such as which vehicle is best to utilize for a particular job. To do this, fleet managers should work with their respective teams to make corporate fleet policies and decisions, while keeping up with industry standards. It’s a changing of the guard, explained best by Russo: “They are no longer just fleet managers, but mobility managers which add/change their responsibilities significantly.” Dealing with disruptors
With an industry constantly in flux, there’s no way of hypothesizing what new technologies and systems are on the horizon. Industry experts can only provide estimates, while fleet managers have to be able to quickly adapt and be adept with whatever challenge comes their way. Currently in the automotive sector, fleet managers have numerous disruptors including ride sharing; mobility as a service (Uber and Lyft); greenhouse initiatives; upcoming alternative powertrains and autonomous vehicles. None of them is a pipedream with almost all already well established in the shift towards mobility and connectivity. “These are all shifting and adding responsibilities to fleet managers,” adds Russo. “If fleet managers are not on top of these changes and rather sticking their heads in the sand, they will become casualties of change.” Looking at this situation from the other side is Peter Cornu, national commercial accounts manager, General Motors Canada Fleet. Cornu’s job is to liaise between GM, large and small companies, as well as fleet management clients to make sure everything goes smoothly for all parties. He’s witnessed first-hand every one of
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By David Miller
| October 2018 | PurchasingB2B.ca | FLEET MANAGEMENT
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these changes and believes GM is, “well positioned not only with its vehicles, but with technology and connectivity.” GM main focus may be selling vehicles, but it has covered all its bases through owning Cruise Automation, a driverless car company, a car sharing service called Maven, and is a shareholder in Lyft, a company along with Uber that’s taken over the ride sharing space and buying lots of vehicles in the process. On top of that, it has one of the most connected and technologically-sound fleets in the industry with an abundance of technologies including: 4G LTE Wi-Fi for ultimate communication, OnStar for help with diagnostics and directions, My Link apps for remote starts, as well as Apple CarPlay and Android Auto. “GM needs to be competitive and efficient in all areas,” adds Cornu. “If fleet managers wants and needs aren’t handled well, other automakers can take away that business.” Out of all the current disruptors, ride sharing seems to hit the fleet business at its core. Despite GM experiencing year-overyear growth, Prokopuik points to a poten-
PRICE? CHECK. DURABILITY? CHECK. WARRANTY? CHECKMATE.
tial future where fleets in certain areas will no longer require their drivers to have their own company-assigned vehicles. “At Jim Pattison Lease, we can envision fleet management beginning to morph into a hybrid of asset based management along with an increased emphasis on mobile management,” she said. “Fleet reporting will inevitably shift from the traditional lifecycle cost of a vehicle to a more in-depth analytics around travel time and optimum, cost effective forms of alternative transportation.” Cornu also realizes these changing fleet demands could reduce vehicle volume in the future: “We are taking a realistic approach, driven by the changing market demands and shifting accordingly in order to be well positioned within these disruptors.” Preparing for the shift
Change is never easy, especially with new technologies. It creates mental and economic pressures that can only be overcome through education and experience. Fleet managers must be trained in analyz-
ing data, and that’s where the NAFA can help. With time and the implementation of these new technologies, pressures will be alleviated and business can be conducted in an efficient manner. Fleet managers should also take solace that once up to speed on these latest technologies, their workplace skills will be more in demand. “Technology and connectivity actually add value to the fleet manager role,” explains Prokopuik. “It highlights the importance of a fleet manager even more, because the data provided allows them to be better equipped to make sound, effective decisions on the fleet, ultimately reducing overall costs.” Prokopuik adds that understanding leading edge reporting tools will help them in operating a cost-effective fleet. A fleet management program is only as good as its manager and the technology used. So long as those two are up to date and in sync, productivity should stay up and the fleet business and its managerial role should stay healthy during this new technological age. B2B
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By David Miller
THE POWER OF CHOICE &
CUSTOMIZATION T
here are plenty of cargo van choices in the Canadian marketplace, but a standard option since 1965 has always been the Ford Transit. Ford has mastered success through choice. Currently, the Transit not only offers up various choices in dimensions and aftermarket installations, but also engine and powertrain options that serve its customer base well. Whatever the needs, Ford most likely has an answer for it and its North American sales reflect that despite its last generational change being back in 2013. In Canada, the Transit is experiencing a 28.5 per cent increase in year-over-year sales, while the US is up 18.2 per cent. To further accentuate its dominance, as of August 2018, the Transit sits at 10,219
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Rated Fuel Economy (L/100 km): City 16.2/ Hwy 12.8
up a Transit Connect cargo van for those needing a more compact ride yet still be able to lug a ton to the tune of 739kg of payload and a maximum storage capacity of 4,219L. We won’t be focusing on the Transit Connect for the review, but its mentioned to showcase some more of the Blue Oval’s dominance over this segment, being everything to everyone.
Combined observed Fuel Economy (L/100 km): 14.1
Have it your way
AS TESTED Starting Price: $32,727 Engine: 3.5L EcoBoost V6 Power: 310hp, 400lbs-ft. of torque Transmission: six-speed automatic
Canadian units sold, more than double its next competitor, the GMC Savana. And down south that gap to its next competitor—another Ford product in the E-Series—almost triples. If that wasn’t enough, Ford also offers
The amount of choice can be overwhelming, so we will go through each step one at a time. The first decision to make is whether you want a regular cargo van with two seats and an empty backspace for hauling or seating between eight to 15 passengers. Yes, there are multiple options for seating. The base starting price is $32,727
Photos: David Miller
The 2018 Ford Transit 150
| October 2018 | PurchasingB2B.ca | FLEET MANAGEMENT
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and that immediately jumps to $37,363 if opting for the passenger van configuration, beginning in XL trim. The rest comes down to customizing your needs, but be aware, everything that’s bigger than the base adds to the final cost. So what started out reasonable can easily inflate, but luckily it’s all in small increments. There are three different roof heights: low (56.9in), medium (72in) and high (81.5in); followed by length: regular, long and extended (the latter is only available with the high roof) that range from 217.8in to 263.9in in its extended version. Once the dimensions are settled, it’s off to engine choice. The base is a 3.7L, V6 producing 275hp and 260lbs-ft of torque (can also be run on compressed natural gas). If you need more hauling, a peppier engine or better fuel economy opt for Ford’s latest engine, the 3.5L twin-turbo EcoBoost V6 that ups power numbers to 310hp and 400lbs-ft of torque. Lastly, there’s a 3.2L turbodiesel inline-five with 185hp and 350lbs-ft of torque, but it’s also the most expensive option. All engines use a sixspeed automatic transmission and are rearwheel drive, two of the only areas where no choice is provided, and I’m sure some would prefer a four-wheel drive option. The final choice not including any accessories is its gross vehicle weight rating. For this drive, I picked up a Ford Transit 150, which is the smallest load carrier. Even with that label, it’s still able to tow up to 6,800lbs and a payload up to 3,330lbs. Not too shabby, but if you need more payload (towing numbers stay the same), there’s the 250, 350, 350 HD. On the road comfort
We don’t need to go over exterior styling, as with all cargo vans, they’re pretty utilitarian and boxy and the Ford Transit is no different. For 2018, new additions of a high-mount rear view camera, available leather seating, a cargo LED switch and the expansion of Bluetooth have been included to assist its driver and occupants with added comfort and technology. The most comforting part of the 150 was its supportive seats. In other cargo vans, the drive tends to get bouncy like a theme park ride that can at first be fun, but after a few hours that dwindles. Luckily, the Transit’s comfy seats (available in
There are three roof heights: low (56.9in), medium (72in) and high (81.5in); followed by length: regular, long and extended that range from 217.8in to 263.9in in its extended version. The Transit’s comfy seats (available in vinyl, cloth and leather) strap you in for the ride without any bounce and more similar to driving an SUV.”
vinyl, cloth and leather) strap you in for the ride without any bounce and more similar to driving an SUV. My 150 tester had the 3.5L EcoBoost V6 and it uses all of its 400lbs-ft of torque in initial gears to get moving and up to speed. The use of its turbochargers also aids in a brisk ride throughout, setting you up for easy passing that can become extremely important in traffic. It’s unavoidable to feel the weight of the cargo van, but at least wind noise is somewhat cut, at least more than other cargo vans for a relatively quiet ride. An added bonus comes down to improved fuel economy that will always help the bottom line where I combined to achieve 14.1 L/100km. As for steering around town, the 150 does a decent job getting by. You do have to hit corners in a slightly wide manner or hit the curb. It only happened once, but that’s nothing out of the ordinary for
cargo van drivers and after some getting used to, steering corrections are on a minimal basis. Visibility and blind spots are always a concern, especially when using a company van and there’s no substitute for checking all of your blind spots—there’s a lot of them. Ford reduces these stressful moments through an expansive windshield and a new rear-view camera. A way of adding some driving security is purchasing Lane Keep Alert with Driver Assist that comes with an upgraded stereo system using Ford’s Sync3 infotainment screen for only $1,087 extra. Having a bright and responsive system (you have to add around another $1,200 for built-in navigation) along with a little extra safety technology seems to be worth the trouble and modernizes the Transit in the process. As mentioned, cargo vans can start to add-up. One needs to know exactly what their needs are and that includes aftermarket accessories such as shelving, ladders, running boards, et cetera, which could be vital to your business. With the 2018 Ford Transit, the options are endless, allowing consumers and businesses to create almost whatever they wish for and that’s exactly what you want from your cargo van. B2B
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By Katherine Vigneau, CAFM
SOLVE FOR FLEET
Some of the biggest challenges in fleet asset management and what to do about them
M
anaging a fleet is challenging. Fleet managers can save time and improve their operations by confronting their biggest asset management challenges and learning how other organizations have solved them. Here is a list of solvable asset management challenges.
Eliminating the shadows
Most fleets have 10- to 20-per cent more vehicles than they need and retain vehicles after they have been replaced. Few fleets conduct regular utilization studies to evaluate vehicle utilization and criticality. A recent review of a Canadian municipal fleet of 500 vehicles identified 150 vehicles that had been retained in excess of requirement—these vehicles form a “shadow fleet.” Know your fleet requirements for primary vehicles and spares. Base vehicle allocations on need and substantiate that through a formal process. Holding vehicles to augment your fleet for peak requirements or to replace vehicles that are in the shop makes sense if the number and type of those vehicles has been planned. In addition, fleets should conduct annual utilization reviews with the following steps: 1. Regular utilization reports from users giving asset numbers and odometer readings; 2. Identify vehicles in each class that are above or below the average mileage/ hours of use for that class; 3. Ask users to explain/justify lightly used vehicles; and 4. Consider eliminating, pooling, sharing or renting for assets without sufficient justification. Standard specifications
Many organizations purchase vehicles and equipment through a tender process that doesn’t consider fleet standardization. This results in many vehicle and option choices. The more variety in a fleet, the more training is required for mechanics and drivers and the more parts and tools need to be ordered. Also, non-standard-
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ized fleets require time for procurement and involve lost opportunity for discount pricing. There is a balance to adhering to procurement regulations for fair and open bidding and achieving some standardization in a fleet. To minimize costs and maximize efficiency, fleets should create technical specifications for common vehicle classes. Guidelines for creating those specifications include: 1. Seek input from users and mechanics.
This may result in conflicting information. While helping an organization specify a fleet of pick-up trucks, I discovered that drivers needed automatic windows to extend a camera out of the passenger window to record the state of the road. Mechanics argued it was almost impossible to maintain the automatic windows due to harsh operating conditions. We compromised, installing automatic windows only when absolutely necessary.
2. Ensure you’re asking for something that exists. In another example, I helped an organization create standard specifications for four common classes of vehicles to form part of an RFP. For the mid-sized SUV, they determined that they needed options in gas and diesel, on road and off, then defined every detail of the vehicle including ground clearance. When they were done, there were no options on the market meeting their specifications. They had to revisit it to consider existing options. 3. Separate needs from wants. In both
examples above, stakeholders tried to use wants to influence the specification process and found a solution only by enforcing need-based standard specifications.
Service level agreements
There is virtually no use of SLAs between fleet departments and their customers, so there’s often confusion regarding: • Who ‘owns’ the vehicle; • Roles in fleet replacement;
• Who is accountable for fleet use/abuse; and • Who leads fleet acquisition. The solution involves creating a fleet policy framework consisting of: a fleet policy manual, a driver’s handbook and SLAs. The policy manual delineates the fleet manager’s responsibilities. The driver’s handbook is a contract with drivers. They should sign an acknowledgement annually that they have read, understood and will abide by the contents. Finally, the SLAs should state KPIs that fleet adheres to as well as the customers’ responsibilities. RFP tips
RFPs often lack standardization and are aimed at one bidder. They may contain onerous and unnecessary terms. This can discourage bidders. For one Northern Ontario organization, although I was there to do a fleet study, the city manager asked me to meet with vendors as they had stopped bidding on most RFPs. During the meeting, dozens of potential vendors complained about the organization’s RFPs, saying it was so complicated to bid it wasn’t worth the time or effort. Use a standard RFP template with four sections, include the evaluation matrix, lay out what you want to see in the proposal and omit onerous terms like excessive insurance requirements. The four sections NAFA recommends are: • Offeror information; • Statement of work; • Bid submission details; and • Terms and conditions. Every problem has a solution. If you are looking to share concerns or solutions with other fleet professionals visit NAFA’s online chapter calendar: https://bit.ly/2zP2uKH. B2B Katherine Vigneau, CAFM is Director of Professional Development, NAFA— Fleet Management Association.
| October 2018 | PurchasingB2B.ca | FLEET MANAGEMENT
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PUBLIC PROCUREMENT
By Stéphanie Dion
PUBLIC
connections
The National Institute of Governmental Purchasing Forum (NIGP) provides support, training and networking opportunities for procurement professionals
T
he National Institute of ations never fails to highlight the Governmental Purchasing value of the human aspect and (NIGP) hosts the largopportunities that arise from doing est public procurement annual so. I am very fortunate to be able forum and product expo in North to say I have learnt and grown America. While NIGP has a big because of other professionals I presence in the US, there are sevhave met along the way. It’s a form eral local chapters in Canada, of support system no one could including in British Columbia, ever buy. I am certainly not alone. Alberta, Saskatchewan, Ontario I haven’t met many colleagues who and the Maritimes. Chapters proaspired to and studied for a provide a local support network as curement career. Most of us acciwell as training and volunteering dentally stumbled into public proopportunities to their members. curement and subsequently started The NIGP Forum is the largnavigating the career-long learnest North American conference for ing process of becoming a procurepublic procurement. This year’s ment professional. Some of us were forum was held in Nashville, TN, fortunate to have mentors who from August 19-22. With over help guide the way. 1,300 attendees and 200 exhibiI’ll never forget when a menThe 2018 NIGP Forum in Nashville, TN saw over 1,300 tors, the 2018 edition was a great tor and true leader introduced me attendees and 200 exhibitors. It’s the largest North American conference held exclusively for public success. I have had the privilege to to her “mom” after a meeting in procurement professionals. attend the forum six times in the Denver. Her “mom”, who was a last seven years. While the educaretired procurement professional, tional sessions and the product expo are Procurement and Materiel Management had been my teacher for an online course major components of the program, the were in attendance. Participants contrib- and helped me prepare to write the exam opportunities to network, build alliances, uted to a full agenda including trade agree- to obtain my professional designation. I create friendships, share information and ment interpretation, group purchasing, was honored! For the longest time, and collaborate are endless. As part of its pro- struggles, tips, issues, new programs, sys- with pride, I shared with many colleagues gram, NIGP dedicates a two-hour net- tems and innovations. We see similar faces, the story about how fortunate I was to working session for Canadian public sec- yet year after year we continue to broaden have met Barb Johnson’s “mom”. Barb tor attendees. I have had the opportunity to our circle and grow. is a recognized, award-winning procurevolunteer and facilitate such sessions for the ment leader, volunteer, teacher and menlast five years with colleagues who stepped Similar challenges tor to many procurement professionals. I too used to believe that procurement up to contribute. It turns out it was her “procurement Over 40 Canadians from seven prov- was very different between the USA and mom”. Then, I clearly understood value inces attended from all levels of govern- Canada however public procurement prin- of those around me and I too now have a B2B ment and the MASH sector (municipal- ciples and best practices are similar wher- few more “moms”. ities, school boards, health regions and ever we are. Their application is adapted Stéphanie Dion is publicly-funded post-secondary institutions) according to the laws, policies, procedures strategic sourcing this year. In addition, representatives from and processes each public agency is subspecialist, supply chain other professional associations such as the ject to. Interestingly, it also seems that a lot management—strategic sourcing, corporate Canadian Public Procurement Council, the of us face similar challenges. services division with Participating in events such as the forum Universal Public Procurement Certification Manitoba Hydro. Council and the Canadian Institute for and volunteering for professional associ-
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| October 2018 | PurchasingB2B.ca | PURCHASINGB2G
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By Sam Adhikari
Getting the job
DONE
Purchasing organizations can benefit from implementing cutting-edge technologies
Sam Adhikari was a speaker at NIGP Forum 2018. To learn more about NIGP and Forum 2019 visit nigp.org.
A
rtificial intelligence involves statistical learning, dynamic inferring and using pattern recognition from a business knowledge base. A digital transformation is underway in the procurement organizations toward blockchain information technology, a secure method of storing and sharing data. AI and blockchain are used in acquisition and contract management processes generating higher project efficiency and cost reduction necessary for the current competitive supply chain environment. Current competitive supply chain environments require innovative means of lowering acquisition costs and risks without compromising responsible, accountable, transparent, environmentally sustainable and regulatory compliant acquisition and contract lifecycle management processes. An integrated, best-value sourcing system with a contract lifecycle management module provides the initial steps necessary to achieve a smart procurement process within the framework of continuous improvement. The context-sensitive documents available in an online environment and system recorded process documentation make the processes environmentally sustainable while maintaining transparency and an audit trail. However, the cost reduction and risk mitigation in complex and dynamic acquisition projects requires intelligent and collaborative systems that can learn from past mistakes and securely share knowl-
edge. AI- and blockchain-based information technologies are instrumental in making the supply chain processes achieve the required maturity supported by intelligence and immutable distributed knowledgebase. Supplier performance tracking
Best value sourcing and contract lifecycle management can reduce cost, increase productivity and mitigate risk if supplier performance is tracked and feedback provided to the supplier as well as used in the supply chain process as key performance indicators (KPI).
ting automated—thereby increasing productivity while reducing monitoring cost and errors. In addition, AI and statistical learning systems take care of changing dynamic environments. This makes supplier performance tracking objective and transparent. Blockchain makes the difference
Blockchain provides open-source digital data architecture for related entities, processes, components and their histories. The data is chronological, distributed and cannot be changed without the knowledge of authorized and interested parties. The term blockchain refers to the fact that data is stored in numerous blocks, typically on multiple servers. It can be the public Internet or the cloud but, in the supply chain world, it’s increasingly within a private Intranet of authorized users. The data
Cost reduction and risk mitigation in complex and dynamic acquisition projects requires intelligent and collaborative systems that can learn from past mistakes and securely share knowledge. Changing dynamic parameters that we can’t control within the contract period create the biggest hurdle in measuring the supplier performance objectively. It’s resource intensive and many supply chain organizations stay away from tracking supplier performance over time. Blockchain and AI have changed that. Supply chain managers are now able to automate the supplier performance tracking with Blockchain technology. Contract compliance, supplier performance tracking and contract management functions are get-
is refreshed periodically and automatically at a frequency set by the network’s designers. The biggest advantage blockchain brings is the trustable audit trail and transparency. Programmable contracts make it possible to automate contract management and the supplier-tracking process. Intelligence from pattern recognition
Human cognition works with recognizable patterns. Artificial Intelligence (AI) is a function of four types of learning systems and their application. First is
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supervised learning that uses past recognizable data patterns. The second type is unsupervised learning based on patterns and cognition within current data. Third is knowledge gained from converting unstructured data like photo, audio, video and other multimedia formats into structured data that can be stored in a traditional database and patterns within the data can be recognized. This includes natural language processing (NLP). Finally comes reinforced learning. This is what we use most in our daily life. It’s a technique of using supervised and unsupervised learning, continuously evaluating the results and changing the strategy as needed. AI has taken bestvalue sourcing and contract management to a new level. It’s lowering cost, mitigating risks and increasing productivity. Blockchain integrated AI systems can make smart decisions and help managers make determinations and quickly recognize wrong decisions. It also allows collaboration and smart optimization between resources and constraints.
A word of caution
AI and blockchain are ideal for implementing smart supply chain infrastructure. Best-value sourcing and contract management can produce results in business performance when used with AI and blockchain. But like any other technology, they should be brought in a way that they can complement existing legacy systems. The biggest mistake an organization can make is to throw away their well-tested legacy system and opt for a new technology that requires time and resources to learn and apply. Fortunately, there are supply chain infrastructure, best value sourcing, and contract lifecycle management systems that can ingrate with legacy systems. At Sysoft, we implemented AI and blockchain years ago and the architecture is such that it can easily integrate with existing legacy systems.
tecture is easy to use and easy to maintain. A complex system becomes inefficient over time. A simple architecture also makes it easy to enhance functionalities and integrate with other systems. Above all, a system’s effectiveness is measured by its ability to get the job done. AI and blockchain also help learning and support infrastructure. AI- and blockchain-based supply chain infrastructure, best-value sourcing systems and contract lifecycle management modules are bringing productivity, mitigating risks, lowering procurement cost and augmenting sourcing value. With a little bit of caution in implementation, purchasing organizations can benefit from these technologies. The focus should be on keeping it simple and getting the job done. B2B Sam Adhikari (sadhikari@ sysoft.com) is research and operations lead at the division of BI, analytics, blockchain, cybersecurity, & IT audit at Sysoft Corporation.
Keep it simple
AI- and blockchain-based supply chain, best value sourcing and contract management systems can be simple. A simple archi-
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| October 2018 | PurchasingB2B.ca | PURCHASINGB2G
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By Deb Blowers
ASOLID FOUNDATION
Best practices for beginning the managed travel journey
B
eginning the journey from an unmanaged to managed travel program can be daunting. What are the key areas of your travel spend to assess and how can you determine which to address first? How can conducting a solid evaluation and assessment set the foundation for long-term success? Below are some best practices to help you on your journey:
Travel Policy: While building your foundation, the best place to begin is your travel policy. It will form the building blocks of your program. Policies require governance so consider who can champion the policy and make decisions. Establish the goals and purpose of the policy. Most policies provide clear guidelines for employees, while embracing a few key tenets, including cost controls; safety and security of employees while travelling; booking channels; and payments, to name a few. Policies typically incorporate the values of the employee and customer, while supporting the organization’s overall objectives. As well, ensure your policy is concise. Or employees won’t take the time to read any further than opening the document.
©123rf.com/visivasnc
Find Documents: Gathering your
documents is a critical step and can be done in concert with reviewing the travel policy. The evaluation generally requires that you find travel related agreements, internal data, supplier data and presentations. The information you
find in these documents comprise pieces of the puzzle that can help evolve your story and drive the program forward. Assess the Current Program: a. At GoldSpring, we do several program assessments every year and clients have shared their experiences about organizational alignment. Understanding your organization and aligning with it will help you take the program to the next level with some confidence for success. For example, defining if your company is cost cutting, growing globally or is in a steady state can assist you in the design of the program and next steps. b. Established the travel program’s current state so you can compare to it in the future. For example, know the satisfaction level of your travellers with the program by doing traveller satisfaction survey. A survey can help you quickly identify the greatest areas of improvement based on your traveller’s experiences. c. Key metrics are a critical factor to a managed travel program. Are any metrics being measured? These can include policy compliance, preferred suppliers and taking the lowest fares? This is still one of the best ways to measure a program’s total cost of ownership. If none exists, you have an open book to build the metrics that will help the program succeed.
credibility with leadership. Can you focus on a quick success from the survey you did during the assessment phase? Another idea is to do a corporate card RFP or renegotiation—the savings this can yield may surprise you. Or negotiate with a frequently used hotel. These are great ways to build internal capital and gain supporters of the program. Return
Tackling Low Hanging Fruit: Early success in
the process can help establish your
on
Investment
(ROI):
Providing ROI to the organization is a crucial step on your way to building a managed program that is successful in the long term. Focus on a few actionable metrics, for example compliance in the program and whether travellers follow the policy. If travellers are not following, then reach out and find out why. Outlining your metrics via easy-to-read dashboards are ways for leaders to evaluate the program easily. Leaders care about how satisfied their employees are with the program and whether they are following the policy. This may seem simple, but make sure the dashboards are categorized by satisfaction, air, hotel and car rental, along with other metrics you have deemed important for your company. Show value to your leaders by highlighting the improvements and successes with the program! Complex
Categories:
Once you’ve finished the assessment, had a few early successes and
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determined the metrics, you are ready to consider the more complex categories of TMC, airlines and hotels. Besides giving you current state, the assessment should help answer questions about where to spend immediate to mid-term resources in the program. For example, do you need to go out to RFP or can you simply renegotiate your agreements? If your trav-
you will want to consider taking your airline program out to bid to gain savings and make sure your airlines are aligned in a way that best serves your organization. The feedback loop with your travellers and other internal stakeholders is important, as they will be cheerleaders or detractors. Communication:
While building your foundation, the best place to begin is your travel policy. It will form the building blocks of your program...consider who can champion the policy and make decisions. ellers are super satisfied and your TMC agreement benchmarks are okay, then maybe a simple renegotiation will suffice. If you’ve had an update to your travel policy, but not looked at your airline or hotel programs, then consider doing an RFP in these categories. For example, if you have moved inventories, routes or have added significant volume to your program, then
Frequent communication about improvements in the program, savings and other opportunities will help you grow the program. When considering your internal stakeholders, which will be individuals with whom you will want open lines of communication, they can come from any number of departments, including: procurement, finance, human resources,
security, and so on. However, identify the executive in your company who will help you drive the program to the next level. Program Management: Managing ongoing improvement is a principal part of the program. Establish governance and align internally and externally with your supply base. As a part of the governance, have periodic reviews. Many companies do quarterly business reviews with their suppliers, but frequency is dependent on your organizational culture and the goals of the program. The key item is to always look for ways to evolve and improve your newly established managed travel program. So, when will you begin your journey from an unmanaged to a managed travel program? B2B
Deb Blowers is senior consultant at GoldSpring Consulting
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| October 2018 | PurchasingB2B.ca | TRAVEL MANAGEMENT
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In the Field
Coming Through In The Crunch
Louis Girard is a supply chain consultant, coach and instructor
On the frontlines of SCMA training at the UN By Louis Girard
A
s a coach, mentor and instructor for the central nervous system of companies—the supply chain—every now and then yet another defining moment occurs. For colleague Larry Berglund and me, this moment was the opportunity to travel to Brindisi Italy, United Nations Peacekeeping Headquarters to work with supply chain professionals from around the world. What an honour to be with the people who keep the peace for all of us to enjoy our lives. I made this point in my introduction and was warmly received. ‘Not everyone recognizes the work we perform on our missions,’ they said. We were off to a great start! My role was to outline the latest supply chain trends, processes, techniques and tips that can add to the success of a field project. Our goal was for each UN staff member to return to the field with a well-defined project set to implement. It was no surprise that these
peace to moving on with a better life for residents. The supply chain leader said: ‘my mission is to help people make a better life and look beyond the military strife they face today.’ Another project was the air support division that had experienced a “budget cut.” How real is that! I asked, “Are you faced with the daily challenge of doing more with less?” They answered that this has been the norm for years and yet they continue to deliver on and exceed expectations. One example: the troop exchange project leader faced the challenge of operating with four troop helicopters versus six and still achieved large troop rotations (troops are exchanged every six months and for safety, helicopters are safer from a ground attack perspective versus fixed wing aircraft). How was the budget cut achieved while still exchanging the troops? With effective teamwork between air and ground transportation teams— each soldier was reduced to 20 kilos of personal effects and the balance was transported with ground transportation. This enabled the four helicopters to achieve their mission and soldiers had the balance of their kits arrive at their new destination within a few days of their air arrival. The project was now to roll this initiative out to all the other missions in Africa. They were able to do more with “My role was to outline the latest supply chain less, and their pride and emotion was trends, processes, techniques and tips that can add infectious. One evening at dinner we exchanged stories of our working lives. to the success of a field project” Larry and I passed when asked about our missions. One UN member told us gifted, dedicated individuals had already started their of the need to deliver eight vehicles to a brand new rush mission within 48 improvement project prior to leaving our session. hours from two countries away. Through supply chain coordination and I was intrigued by their challenges, including staff the power of personal relationships, this individual arranged three ocean safety on site, supply of resources and all equipment containers with ground power units and crossed two borders. The shipand materials so that frontline peacekeeping staff can ment was waiting at the gates of the new mission two hours ahead of the execute their core competencies, equipped and ready impossible deadline. to deploy on a moment’s notice. The supply chain proWe arranged to have this story relayed to my students the next day. With fessionalism of how we provide an environment for the a map as a backdrop the individual retold this Herculean task and the outfrontline staff to deliver transcends the globe—includcome. The students in my room stood and gave a standing ovation. The ing UN peacekeeping missions. emotion and pride in the accomplishment of this supply chain example of Among their projects a few caught my attention, one “coming through in the crunch” left me speechless. being the project to enhance the environment, plant We all face the same supply chain challenges around the world. Supply fruit trees and take advantage of an otherwise war-torn chain is the central nervous system in any organization and it’s the people area and make it into a beautiful, lush fruit-bearing who have the knowledge and the positive approach to solutions that always compound. This project, still in its infancy, met huge make things better. local enthusiasm and the local residents are now plantHaving returned from the UN Peacekeeping headquarters, I have ing fruit and maintaining in their own homes. This changed my focus from “making things better” to “making peoples lives project already looks beyond the mission of restoring better.” B2B
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The Law
Hot Launching Project Teams
Paul Emanuelli is the general counsel of the Procurement Law Office.
Procurement departments must take a procurement-centric approach By Paul Emanuelli
G
etting what you need, on budget, on time and by the rules is hard, especially when major public sector projects are involved. This article explains where to leverage business process improvement practices, project management principles and procurement-centric technologies to guide your project teams with speed and precision through solicitation drafting, proposal evaluations, and contract award negotiations in the front-end of your procurement cycle. Procurement must take a procurement-centric approach to leveraging business process improvement practices, project management principles and procure-
in a lawsuit and where rushed timeframes are standard, razor-sharp drafting execution is critical. To execute on a design plan, procurement advisors must be stationed in the control room of a properly integrated solicitation drafting business process, which should be treated as its own project, with the proper application of project management disciplines. These design and drafting disciplines can be leveraged through procurement-centric technologies that are ahead of improvised manual drafting processes. While most organizations have automated their solicitation posting procedures, many remain mired in paper-based bid submissions and must migrate to electronic bid submissions quickly for three reasons: (1) paperbased bids require longer trade treaty posting periods and therefore waste precious time in your procurement cycle; (2) paper-based bids block the significant downstream process improvements gained by using electronic bid evaluation tools to “The “95/5” rule recognizes that 95 per cent of score proposals; and (3) paper-based bids block procurement failures are caused by the failure to electronic reverse auction platforms which, used address properly the five core design elements of properly, can cut 20 per cent or more from oneshot bid prices. project planning.” Most project team members lack the skill and ment-specific technologies. This means carefully conexperience to manage evaluation complexities and meet due diligence stansidering every step of your front-end process and every dards. Control over evaluations should reside with the team’s procurement interface between different project team members, to advisors, who apply enhanced consensus scoring techniques to streamline identify weak links, bottlenecks and resource gaps. By and improve the evaluation process. By focusing on outlier scores during realigning your procurement pipelines at the institugroup evaluations, teams can avoid wasting time in redundant line-by-line tional level, your project teams will be in a better posireviews of scores that already fall within acceptable scoring ranges. While tion to leverage project management principles and spreadsheets are typically used to deal with group evaluations, these antiprocurement-centric technologies at the project level. quated applications are slow and prone to human error. Deploying procureTo increase project success rates, procurement adviment-centric bid evaluation platforms allows for the superior coordination sors need to embed themselves early with project teams and acceleration of group evaluations and creates better records for downto manage internal approvals, define roles and develop stream negotiations, debriefings, audits and bid-protest challenges. solid project plans using the “95/5 rule” of procureMoving to contract awards, the proliferation of negotiated RFP forment planning. The “95/5” rule recognizes that 95 mats has put a premium on procurement advisors who lead project teams per cent of procurement failures are caused by the failthrough complex deals. To compress timeframes while maximizing negoure to address properly the five core design elements of tiated gains, project teams must move beyond standard negotiation theproject planning: (i) scoping of requirements; (ii) pricing ory and leverage deeper strategic, tactical and operational principles from structures; (iii) evaluation criteria; (iv) contract format; game theory, sports analytics and military strategy. Managing multiple and (v) tendering format. Failing to properly manage pieces during contract award negotiations calls for a procurement-centric the gating process between design planning and solicapplication of business improvement principles to coordinate the negotiaitation drafting guarantees a suboptimal drafting protion team within project management disciplines. Maximizing your returns cess and greatly increases the likelihood of project during negotiations also requires the tight tactical use of scheduling and failure. Project teams should therefore be required to meeting platforms to connect purchaser and supplier negotiating teams correct any deficiencies in their design plans before getacross time zones to close deals quickly. Maximizing the speed and preciting the green light to proceed to solicitation drafting. sion of the front-end procurement stages will help hot launch project teams In an industry where a misplaced comma can result to higher levels while accelerating tendering cycles. B2B 46
| October 2018 | PurchasingB2B.ca
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Paul Cargnelli, Commercial Sales Lead Visa Canada T: 416-860-3868 | E: pcargnel@visa.com
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