Supply Professional April 2021

APRIL 2021

FORGING CONNECTIONS Hugo Fuentes helps organizations see their supply chains clearly

Supplier collaboration

Cybersecurity Subaru Crosstrek 3D printing Post-pandemic office space

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VOL.63 No.2 APRIL 2021 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN

@SupplyProMag

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COVER: MIKE FORD PHOTOGRAPHY

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Bleed: 11.125" Trim: 10.875" Safety: 10"

FEATURES 7 RISK MANAGEMENT The new fundamentals of uncertainty.

8 QUESTIONING MODERN WORKSPACES Post-pandemic office safety.

10 FORGING CONNECTIONS Hugo Fuentes on supply chain visibility.

13 3D PRINTING How the technology can bolster supply chains.

ALSO INSIDE 19 BREXIT FALLOUT How the UK’s departure from the EU will affect trade.

4 UP FRONT

20 SUPPLIER COLLABORATION Getting to win-win with key vendors.

6 IN THE FIELD

22 AUTONOMOUS GUIDED VEHICLES Advancing technology and AGVs.

5 BUSINESS FRONT

30 THE LAW

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UP FRONT

CANADA FIRST? Global supply chains rose in prominence along with the COVID -19 pandemic last year, an interest that shows little sign of slowing. On February 24, US President Joe Biden signed an executive order to boost manufacturing jobs and strengthen US supply chains for batteries, pharmaceuticals, critical minerals and semi-conductors. Aside from a supply chain issue, the US sees this as a national security issue and economic risk.

The country has grown increasingly reliant on imports of many of these goods, and Biden wants a 100-day review, along with the possibility of increased domestic production.

There’s a case for such interest. Many countries, Canada included, were caught flatfooted by the pandemic kicked in March 2020. Many scrambled to procure enough PPE to manage the new demand. We’re seeing similar global demand challenges now with the vaccine rollout.

An ongoing semiconductor shortage precipitated by the pandemic affects everything from mobile phones to electric cars to 5G communications and mobile devices. No wonder the US administration would like to manufacture more of their own.

Luckily, Canada is making moves to strengthen its manufacturing and supply chains, as well as boosting innovation. In early March, the Federal Economic Development Agency for Southern Ontario (FedDev Ontario) announced $4.7 million to expand Canada’s first hardware and semiconductor-focused lab, ventureLAB’s Hardware Catalyst Initiative.

Those in the program can access technical resources, manufacturing capacity, investment expertise and talent networks.

In another example, Next Generation Manufacturing Canada (NGen), the industry-led organization behind Canada’s Advanced Manufacturing Supercluster, recently announced over $27 million for winners of its Strategic Supply Challenge. The competition saw companies use advanced manufacturing technologies to build a sustainable, madein-Canada supply of critical products.

The projects aren’t designed to address the pandemic only, said Jayson Myers, CEO of NGen: “They are investments in advanced manufacturing processes and technologies that will help meet the immediate needs created by COVID-19, while also developing a sustainable, globally competitive and cost-effective domestic supply that can be applied to industry needs beyond the pandemic.”

There is an appetite for more homegrown solutions. A recent KPMG Canada survey of over 2,000 Canadians found that most wanted a “Canada-first” mindset to jumpstart the economy after the pandemic subsides. The survey found that 92 per cent want government to create incentives to “buy Canadian” and ensure we build domestic capacity to supply critical needs. As well, 86 per cent want corporate Canada to allocate a share of contracts to Canadian SMEs. Catastrophes like pandemics can accelerate innovation. Hopefully, Canada continues to support opportunities to build a more innovative and dynamic supply chain and manufacturing base.

EDITOR MICHAEL POWER 416-441-2085 ext 110, michael@supplypro.ca PUBLISHER ALEX PAPANOU 416-441-2085 ext 101, alex@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY CUSTOMER SERVICE/PRODUCTION LAURA MOFFATT 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com ASSOCIATE PUBLISHER FARIA AHMED 416-441-2085 ext 106, faria@supplypro.ca EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management—City of Toronto JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc. iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x105 swilson@iqbusinessmedia.com President ALEX PAPANOU

PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION 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 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.

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MICHAEL POWER, Editor 4 APRIL 2021

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BUSINESS FRONT—BY MICHAEL HLINKA

HALF EMPTY OR HALF FULL WILL STAGFLATION BE COVID-19’S LEGACY? It has been almost one year since the global economy hit the brakes in the wake of the COVID-19 crisis.

The amount of fiscal stimulus in all of the developed countries of the world has been both astonishing and unprecedented. One year ago, the net provincial and federal debt in Canada was roughly 65 per cent of the Canadian economy. By the end of the current fiscal year (March 31) it is estimated that it will exceed 90 per cent. Trust me, next year it will be well north of 100 per cent.

Arguably, the situation is even more dire in the US. In 2019, leading up to the outbreak of COVID-19, the US deficit was $1 trillion. This year it will exceed $3 trillion. There are 330 million Americans. That means that in the past year, every single person was given $6,000 in excess of what was collected in taxes. Debt to GDP stands at 136 per cent and my guess is that this will exceed 150 per cent at this time next year.

Lots of money has been printed and the issue many economists are debating is whether this will lead to inflation in the near future.

Here’s the argument why inflation is nothing to worry about.

In a developed economy, such as we have in North America, the most important cost input is wages.

Both unemployment and, maybe as important, underemployment are high, which means that as the economy picks up, businesses will be able to attract workers without raising wages. In fact, if this thesis is true, there’s every reason to suggest that wages may actually fall in the near future, which is anti-inflationary. This is the argument why the glass is half full and there is no reason to be concerned.

Here’s the argument why inflation is something to worry about.

As Milton Friedman noted, inflation is always a monetary phenomenon. Too many dollars chasing too few goods. How can you give each person $6,000 for doing nothing and not expect that prices will be bid up? In fact, my argument is that we have seen significant inflation in the past 12 months. Don’t believe me? Look at housing prices. With the economy at a standstill, prices on average went up 23 per cent year-over-year across Canada.

The stock market tells a similar story. And don’t get me started about Bitcoin.

Therefore, we have seen asset inflation in the past 12 months where we haven’t seen similar increases, at least according to the consumer price index (CPI), in the goods and services we routinely buy. The latest reading is that prices are up one per cent year-over-year. The food category was supposed to be in line which is why I’m suspicious of the CPI. I’ve done much more grocery shopping in the past year than I had since I was married five years ago. Staples like bacon, eggs, and ground beef are significantly more expensive than they were a year ago. (This is something I’m going to track and will be the subject of the next column).

I’m in the glass half empty camp. There will be inflationary pressures and sooner than most people think. I don’t think there will be runaway inflation. Rather, I think that the more likely scenario is stagflation, a combination of underemployment combined with inflation slightly higher than the target of two per cent tradi-

tionally set by the Bank of Canada. What most economists are missing is that life is going to be getting much more expensive in a variety of ways not captured by the CPI. But before I address inflation, I’m going to talk about the much more serious problem, and that is the underemployment not captured by the unemployment rate which currently exceeds nine per cent. The participation rate in Canada is 65 per cent. If the economy were healthy, it would be 70 per cent. This means that unemployment is really closer to 14 per cent and even that understates the magnitude of the problem. We are warehousing young people in college and university at an unprecedented rate and a distressing number of them are enrolled in programs that offer no hope of meaningful employment after graduation.

Back to inflation. Here’s what it’s going to look like over the next several years. All sorts of taxes and user fees are headed higher. My guess is that property taxes in Toronto will appreciate at an annualized rate of six per cent, compounded annually over the long run. That means you’ll be paying twice as much 12 years from now. Income taxes are going to be much higher, particularly for those in the upper brackets.

And a variety of “hidden” user fees will go up as well. None of these are captured in the CPI and all of them will contribute to an extended era of stagflation which will be the ultimate and extended legacy of COVID-19. SP

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

“Lots of money has been printed and the issue many economists are debating is whether this will lead to inflation.”

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IN THE FIELD—BY LISA FENTON

DIGITAL TRANSFORMATION DEFINE THE SCOPE OF YOUR TECHNOLOGY NEEDS Why would supply chain want to leverage technology more? Aside from moving away from outdated legacy technology, there are some statistics to support digital transformation. For example, 79 per cent of companies admit COVID-19 increased their budgets but 47 per cent have not yet started to implement technology (State of Digital Business Report). As well, 93 per cent of supply and procurement executives are seeing negative business impacts from misinformation and poor supplier data.

Negative impacts include financial loss, delayed timelines, unhappy stakeholders and termination of supplier relations. Look to see if presenting a business case makes sense before gaining stakeholder buy in and ensure that your company is not stagnant and is protected while continuing to gain market share. The scope of your technology needs should be defined. State what problem you want to solve. Can you determine and define metrics and KPIs? Will employees and users accept and be able to use the technology or need additional training?

SUPPLIER INTELLIGENCE PLATFORMS A supplier intelligence platform can help you diversify your supplier mix, reduce risks, help with environmental and social corporate governance (ESG), facilitate quick change, provide reliable data and enable upstream decision making.

Tools to optimize technology include the Internet of Things (IoT), artificial intelligence (AI), machine learning and blockchain. But like any technology, manual processes must be in place first along with an understanding of the impact 6 APRIL 2021

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of these processes. Leadership support and cross-functional development are also key.

Here are some key questions: How much must we order, create, ship and sell?

How can we use data to drive our supply chains?

How can we keep track of all the information?

How many orders have been entered for any good or service?

How much is in production and where are the goods?

Is demand being matched to customer demand?

Can cognitive technology help pull together information and combine big data and AI to crunch data? What key lessons will be derived?

Can cognitive technology enable quicker decisions and allow for real-time strategy adjustments?

Do we have a work culture that can support change and embraces new technology?

The right systems can help anticipate future behaviour by providing analytics with a big-picture view.

IoT can help to enable visibility and facilitate the exchange of realtime information, thereby mitigating disruption. One example is the use of devices like GPS monitors, which help to track a ship’s location and temperature. This is useful for high-value and temperaturesensitive goods.

Such data will be needed to power automated systems in warehouses. Smart logistics solutions that manage paperwork will accommodate cumbersome paperwork tasks, for example verifying a trucker’s bond or processing a bill of lading.

An IoT system can improve data accuracy and provide better data

to create demand forecasts. It can allow data to be collected continuously, or at specified intervals, thus preventing human error and hours of manual processing. Leveraging advanced IoT sensors that track and monitor inventory levels can create an up-to-the minute inventory tracking system.

Adding AI and machine learning will enable a better response to demand and supply changes. This allows for faster and more efficient supply chains by shipping product faster, decreasing inventory and increasing supply chain flexibility.

AI uses a programmed rule that instructs the machine to behave in a certain way in a certain situation. Machine learning uses algorithms that are trained on data to minimize error between predictions and ground truth rules (error function). The more data points it has, the better it gets. This is helping to eliminate delays and issues tied to disruptions. AI and machine learning take time-consuming analysis and compile it within seconds. Solutions are enacted in real time.

An integrated, intelligent technology will be a challenge for most, as companies will likely have to partner with a digital specialist for advice on how processes and practices will work for current and future challenges. A software-as-aservice (SaaS) provider can help to provide an intelligent portal to capture, create and expand your supplier master.

In theory, blockchain could replace slow, manual processes, strengthen traceability and possibly reduce IT spend. There are concerns with blockchain, such as permission and privacy, and it may be more valuable to manage databases and analytics better with

Lisa Fenton is supply chain manager at Rapala VMC Corporation.

“Like any technology, manual processes must be in place first along with an understanding of the impact of these processes.”

your trusted partners than explore unproven technology.

Supply chain professionals can also use technology to uncover materials, regions and suppliers most likely to use forced labour by mapping bills of materials of products and services to raw materials, then cross referencing where there is a high risk of forced labour.

IoT can foster safer supply chains by leveraging machines and predictive analysis to monitor equipment and prevent accidents. Organizations can also ensure fair labour practices and create opportunities for minority suppliers.

The future of supply chain will still include people. Those people will work to change, evaluate and redirect the overall strategy in an autonomous environment that leverages AI, machine learning and other technological advancements. SP SUPPLY PROFESSIONAL

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BY ALLISON PAN

SUPPLY CHAIN RISK MANAGEMENT THE NEW FUNDAMENTALS OF DEALING WITH UNCERTAINTY The sheer complexity and scale of supply chains in today’s global economy are an increasing concern for leaders in terms of how effectively their company manages related risks. The challenge can become daunting when you layer in details such as shifting definitions of what constitutes a supplier or a vendor, raw materials, professional services, software as a service (SaaS) and cloud providers.

Fortunately, although supply chains are changing, the fundamental risk management strategies still apply. Surprisingly, this begins with an in-depth analysis not of your existing supply chain, but of your own business, value chain and value drivers.

The following are five key steps in managing supply chain risk: 1) Map and prioritize your business’s value proposition to understand the material breakpoints that define success. Suppliers aren’t intrinsically important solely due to who they are or what they

provide. Rather, their importance is defined entirely by the elements of your business that they support.

Any understanding of supply chain risk, and the impact on your business and operations, begins with an internal assessment.

One way to understand such materiality is to look for bottlenecks in value generation and/or recognition. Consider a pharmaceutical company manufacturing a critical vaccine that requires extreme cold storage conditions for distribution. Some might argue that the vaccine itself is the critical value driver for the pharmaceutical company, meaning the direct supply chain of vaccine ingredients represents the highest potential impact if disrupted. However, the vaccine’s value is only recognized after distribution, which is impossible without specialized cold chain distribution. Cold chain distribution, therefore, might actually be more important than the raw materials that allow the company to manufacture the vaccine.

2) Rank suppliers by their level of criticality to material business operations. This step follows the same logic of materiality as step one. After identifying criticality within your operations, rank the suppliers specific to those operations.

3) Identify potential disruptors, and make sure to consider black swan or unexpected risks. Shock events are aptly named, yet we rarely contemplate true shock disruptors when assessing potential risk. Military intelligence experts often couch their analysis of battlefield conditions in terms of “most likely” and “most dangerous,” with the latter consisting of cascading and layered extreme scenarios.

This approach enables commanders and their staff to adequately prepare for extreme contingencies. Interestingly, while the most dangerous scenarios often appear excessive at the outset, they are almost always drawn from historical lessons.

“Expanding your understanding of risk events to include rare, but historically grounded, events can produce a more solid baseline for true resiliency.”

Recently, countries that had more severe SARS and Middle East Respiratory Syndrome (MERS) outbreaks generally weathered the early stages of COVID-19 better than others. They may have understood early the potential magnitude of disruption from COVID -19 because they applied lessons learned from SARS and MERS. Shock events are rarely without precedent. Expanding your understanding of risk events to include rare, but historically grounded, events can produce a more solid baseline for true resiliency and agility.

4) Measure your supply chain using metrics that describe supply intake, utility, risk controls and external environmental conditions. Mapping criticality across the business and various supporting supply chains should yield a discrete set of metrics tied explicitly to such analysis. These metrics help to benchmark your supply chain’s general health and status, and can provide early warning indicators of disruption.

Among the metrics that may be helpful is one that focuses on supplier spend. Some may say that it should be a separate step. However, spend analysis divorced from an understanding of criticality may, at best, optimize a balance sheet, but gain no preventative value.

At worst, it may harm operational viability and create negative value.

Spend analysis should supplement

Allison Pan is senior vice-president, emerging risks group at Marsh Advisory.

risk analysis, providing a secondary metric against which to derive risk mitigation or cost mitigation efforts.

5) Identify and implement risk controls as needed. Risk controls should include not just direct action within the procurement process — such as holding more stock to weather disruption — but also in other areas of the business. Can research and development develop an alternative to that component or reengineer the process to skip it altogether? How can risk transfer provide a level of financial protection against these shocks?

These fundamental components of a supply chain risk program are part of many well-established supply chain risk management (SCRM) frameworks, precisely because they are foundational principles to understand, measure and manage risk.

Applying these to your own SCRM can help you manage today’s known and tomorrow’s emerging risks. SP

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BY EMILY ADAMS

BACK TO WORK ADAPTING THE OFFICE FOR POSTPANDEMIC SAFETY Over the past 14 months, home offices and zoom calls have replaced communal workspaces and lunch meetings. Terms like “the new normal,” “social distancing” and “unprecedented” still dominate the narrative around our daily lives. We have begun to question the modern workspace.

The way we work and interact with one another has evolved, and spaces will change to reflect this.

Across Canada, workers have been shifted out of their traditional office spaces and adapted to remote working.

While we all hope that the end is near for COVID-19 and we can see the light at the end of the tunnel, there are some lessons we will carry with us far into the future.

Now that a pandemic-free future is approaching, companies are working to adapt their spaces for a safe return to the physical workplace. We will cover some steps you can take to ensure safety today and follow the workplace design in the future.

ADAPTING YOUR CURRENT WORKPLACE The official guidelines for a safe workspace are location dependant and vary depending on the industry, but everyone can make some overall changes.

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Take steps to identify what teams will be working from home versus your total office occupancy.

This will give you a good idea about adapting your floorplate, so everybody feels comfortable and safe while in the physical office.

You don’t need to purchase new furniture or perform costly renovations to ensure your office has social distancing measures in place. There has been a surge of popularity in partitions and glass screens that can be added to workstations and between desks. Glass

screens and partitions are cost-effective ways to adjust the furniture you already own. They provide distance and screens between employees but still allow for an aesthetically pleasing design.

Co-working spaces saw a rise in popularity over the last decade.

Companies scrapped the individual workspaces and opted for open-concept space with ample lounge seating for on-the-fly meetings.

Colla­borative spaces still play a vital role in the modern office but need to be adapted to allow social

distancing. Fewer people will be physically in the office, so look at rearranging your design to allow for the recommended six feet of distance between individuals. Incorporate more solo guest seating into the layout, and stay away from large, shared furniture pieces like couches.

Typically, home offices do not have ergonomic-friendly furniture.

This can cause negative long-term effects on employee health. Ensure that your layout is ergonomic and your team is physically supported.

These changes will be crucial after months of workers sitting at kitchen tables or couches. Look at incorporating sit-to-stand desks, monitor stands and proper task chairs into individual workstations to optimize employee health.

DESIGN FOR THE FUTURE Workplace design for the future has an emphasis on flexibility and adaptability. If there is one thing that we’ve learned recently, it’s that no one knows what the future holds.

Prepare your workspace so that it can handle any hurdles and challenges that may come your way.

An excellent way to stay agile is to incorporate flexible furniture into your design. Flexible furniture allows for easy day-to-day changes and quick modification of every kind of workspace. There are tons of great flexible furniture options on the market, including moveable office furniture, modular office furniture and moveable walls.

Moveable office furniture can enable mobility and productivity while still being stylish. Modular furniture is made to provide your organization with long-term flexibility and use your office space as efficiently as possible. Moveable furniture allows for day-to-day changes, while modular furniture does require trained installers for reconfiguration. Moveable walls are a modular system that lets you adapt your space in hours, compared to weeks, without any major renovations. No matter what your priorities are for your workspace, flexible furniture will keep your workspace versatile for the present and future.

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“When ordering new furniture, it’s important to discuss realistic deadlines with your supplier.”

When ordering new furniture, it’s important to discuss realistic deadlines with your supplier.

You should expect different lead times with manufacturers based on current supply chain demands.

For example, while most workstations would have around a six-toeight weeks lead time, there may be some further delays due to the pandemic.

OPTIMIZE FOR SANITIZATION Sanitization is a bigger priority now, and modern offices are reflecting this. Focus on incorporating easyto-clean surfaces in high traffic areas. Frequent sanitization can deteriorate materials, so look for finishes that are constructed to withstand routine cleaning. Workstations, washrooms and kitchens are all breeding grounds for bacteria and germs. Focus on updating these areas first. With increased cleaning protocols also comes the need for

increased accessible storage. PPE and cleaning supplies take up valuable office space, so incorporate some additional storage into your areas that are accessible by all employees.

WORK WITH EXPERTS When doing major updates to any space, it’s essential to work with experts. Design experts can help you modify your workspace in the most efficient way possible. Look for a design expert who is up to date

on the latest regulations and focuses on the future. Any significant changes you make today, should still work in 10 years.

Professional install teams ensure that your furniture is installed correctly and safely. Professional installation may take longer now so that teams can stay COVID-19 compliant. Social distancing and increased sanitation are just some of the steps that installation teams are taking to ensure everyone involved is safe.

EMPLOYEE WELLNESS The most crucial factor is the safety and wellbeing of your team.

Take extra steps to support your employees’ physical and physiological health. When updating the workspace, ask for employee input.

They will be the ones that have to work within the space, and their wellness should be the priority.

Returning to the workplace may seem like a daunting task. By stay-

Emily Adams is digital content specialist at Office Interiors.

ing flexible and making all of the necessary changes, you can welcome this new way of work with ease. Stay safe, remain adaptable and greet your team back to the improved workplace. SP

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FORGING CONNECTIONS

HUGO FUENTES HELPS ORGANIZATIONS SEE THEIR SUPPLY CHAINS CLEARLY Environments can help to shape people, and Hugo Fuentes’s childhood home did just that. The veteran supply chain and procurement professional and current CEO of The Owl Solutions, a supply chain consultancy, grew up in the Chilean port city of Valparaíso. The city, a major seaport about 120km northwest of Santiago, remains one of the South Pacific’s most important seaports. The city’s port has served as a major stopover for ships travelling between the Atlantic and Pacific oceans.

“I’m from there,” says Fuentes, who is now based in Waterloo, Ontario. “That’s the reason my passion for supply chain and logistics started, because I spent most of my days in that place for my first 25 years. And today it’s still a very large port but pretty much focused on exports, like wine. Chile is very well known for wine.”

It was against this cosmopolitan, logisticsdriven backdrop that Fuentes began his career in 2000. His first job was in the maritime industry, working for a large container shipping line called CSAV. He had just graduated in 1999 from the Pontificia Universidad Católica de Val10 APRIL 2021

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paraíso with a degree in industrial engineering when CSAV hired him as a trainee engineer.

The company ran a program in which it hired five or six engineers into a year-long training program. The engineers would rotate every two or three months to different functions, including operations, sales, marketing and so on.

Fuentes’s first rotation was in procurement, specifically the bunkering division, which is responsible for the supply of fuel to ships. Along with providing an immediate education in procurement, the tasks associated with the position proved exhilarating.

“I felt like I was working on Wall Street,” he says. “We were doing a lot of things like forward buying, evaluating trends, assessing risks and taking options – very exciting at that time.”

A year later, the company moved Fuentes to a cost control management position in which he acted largely as a bridge between the operations and finance teams. The position involved costing operations worldwide. Similar to the bunkering division, the post proved exciting

to the 20-something Fuentes, as the company assigned him to manage cost control for the west coast of South America and the Caribbean.

“I had to travel a lot,” he says. “But it was very nice because I had to visit pretty much all the Caribbean ports, all the South American ports on the West coast. It was very exciting travelling and getting to know different cultures.”

Fuentes worked in that position for a couple of years before deciding to quit. The position was exciting, and those he knew questioned his departure, but Fuentes had long dreamed of studying for a master’s degree and possibly continuing his education abroad.

Fuentes was eventually accepted into the Master of Science, Maritime Economics and Logistics program at the Rotterdam School of Management. He began the course in 2002, moving to the Netherlands with his new wife for what felt like an extended honeymoon.

The young family returned to Chile the following year, where Fuentes was rehired at CSAV as global transportation manager. After a few years, the company offered him the position of director of operations and logistics at its branch in Mexico. The family, which now included the first of four children, moved to Mexico City in 2006. He worked for CSAV there for about twoand-a-half years.

“It was very exciting because I had to negotiate a lot of contracts with ports in the country and all the rail companies and tracking companies,” he says.

While Fuentes was still based in Mexico City, a consumer packaged goods (CPG) company named Tresmontes Lucchetti in Chile with operations across Latin America, offered him a position as supply chain director. The company wanted someone to help the existing team to design and implement a new distribution network.

After about five years working in Mexico City, Feuntes and his family returned to Chile, where the company offered him a global supply chain role, based at their headquarters there.

The opportunity involved implementing a sales and operations planning process (S&OP).

After about four years at Tresmontes Lucchetti, a Canadian company named Finning offered Fuentes a position as supply chain director. The company is the largest Caterpillar dealer worldwide, with headquarters in Vancouver. While based in Canada, the organization has sizeable operations in South America due to the large number of mining sites on the continent. Those operations were situated in Santiago, and from there managed operations in four South American countries. The position seemed like an interesting move for Fuentes, given his experience in transportation and CPG. SUPPLY PROFESSIONAL

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MIKE FORD PHOTOGRAPHY

BY MICHAEL POWER

see. If not, at least it’s a trip to get to know Vancouver,’” says Fuentes.

The family spent two days in Vancouver visiting the company’s operations and exploring the city. They returned to Chile afterwards, with Fuentes ultimately deciding to accept the position. The move would allow the children to learn English, along with living in a different country.

He continued the position for three-and-a-half years, until 2018, when he started his own business, called The Owl Solutions.

The name comes from Fuentes’s admiration for owls, and some of the animal’s attributes can be reimagined for business. Owls have great vision, a reputation for wisdom, can see in the dark and are excellent, silent hunters. Fuentes sees this as representative of hunting for efficiencies and savings in business. An owl’s ability to rotate its neck 270 degrees also offers an apt metaphor for supply chain visibility.

Fuentes says he started the company to help supply chain decisionmakers increase their awareness of what’s happening in their operations. For example, many organizations monitor their key business metrics on a weekly, some-

times monthly, basis. But whether due to a lack of resources, support, tools or other reasons, the level of detail they get is often superficial, Fuentes says. Supply chain professionals risk unexpected hazards along the way.

“The idea was to find a way to help professionals to have fewer bad surprises,” says Fuentes, who has been based in Waterloo, Ontario since the middle of 2019. “To face fewer situations where they were uninformed, they were not ready and not prepared for those circumstances. We created the company to provide some tools and support for these individuals to receive fewer bad surprises and increase their level of awareness about their performance so they can do better.”

A typical day for Fuentes centres around building connections with customers, talking to people in the industry, learning from their challenges and providing perspective on how

MIKE FORD PHOTOGRAPHY

“I had the opportunity to learn about something different, which is the more industrial supply chain: spare parts, large mining equipment for big mining companies,” Fuentes says.

“I thought it was really interesting.”

After about three years there, another Canadian company called Factors Group of Nutritional Companies offered Fuentes the position of vice-president of global planning and procurement, a position based in Vancouver. The company manufactures vitamins and nutritional supplements such as Webber Naturals, which are sold by large retailers like Costco and Walmart.

By that time, Fuentes and his wife had four children and had just settled back in Chile and bought a house, after almost six years in Mexico City. After considering the offer for several months, Fuentes initially turned it down. But the company eventually made another offer: go to Vancouver for a few days on the company’s tab.

See the city and get to know the company better.

If Fuentes reconsidered the job, the discussion could continue. If not, no hard feelings.

“I discussed it with my wife and said ‘well, I think it’s a good chance. Let’s go and

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they might improve in their operations. As the CEO of a company he founded, Fuentes must also take care of the day-to-day business.

DIFFERENT CULTURES Among the highlights of his career, Fuentes points to the opportunities he’s had to work in different industries and cultures across South America, the Caribbean and now North America.

Working in the CPG industry was also a highlight, as he enjoyed the environment. The concept of speed-to-market and the complexity of issues to be dealt with were especially enjoyable. In particular, Fuentes recalls a project while in Mexico that he and a team were tasked with to develop an entire supply chain and distribution network.

“We had the responsibility for delivering full truckloads to Walmart and making sure we delivered one small box of product to a very distant location in the middle of nowhere,” Fuentes says. “That was our respon­sibility and our accountability. That was very rewarding.”

Another highlight is that, throughout his career, Fuentes has helped organizations implement sales and operations planning (S&OP).

This process is appealing since it helps align people around an outcome while promoting communication within an organization, he says.

The coronavirus pandemic has changed his day-to-day work life drastically, Fuentes notes.

When the pandemic was declared in March 2020, he had recently started The Owl Solutions.

Practically overnight, everything got tougher.

“At the time I was visiting customers and trade shows and participating in those activities,” Fuentes recalls. “And all of a sudden, boom.

Everything stopped. We had to adapt to a new reality. That was tough.”

Fortunately, the company can deploy all its services and run operations remotely, he adds.

The Owl Solutions has customers 10,000km away but can still do business with them. Still, the pandemic has changed things significantly.

Among the areas that COVID-19 has highlighted is the importance of focusing on the important issues, Fuentes says. This requires awareness. With everything that’s happened over the last year, it’s easy to get derailed. Staying focused has become a critical skill.

“The pandemic has reminded us that that’s critical,” he says. “In supply chain, with all the complexity, with all the things you have to deal with every day, staying focused is key.”

The importance of communication, monitoring and alignment has also risen to the surface during the pandemic, Fuentes says. Supply chain professionals now realize that some practices must evolve; for example, many have real12 APRIL 2021

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“It was very nice because I had to visit pretty much all the Caribbean ports, all the South American ports on the West coast. It was very exciting travelling and getting to know different cultures.” ized the importance of more real-time, granular data when looking at the business. Companies that had a S&OP process and better ways to delve into the details before the pandemic hit have had better outcomes and results, he says.

“They have to understand what’s going on in the business because I believe that the supply chain devil is in the details,” Fuentes says.

“I truly believe that. If you’re not equipped in your organization to really get to those details in a simple and effective way, you’re going to suffer.”

In 2020, Supply Chain Canada recognized Fuentes as one of the Canadian Immigrants Impacting Supply Chain. The accolade was an honour not only since it was recognition in a country that had recently accepted him and his family, but it allows Fuentes to offer an example to his children that hard work pays off. He tells his children that there are no limits to what can be achieved. But you must first imagine what you’d like your life to be and don’t be afraid to take the steps to get there.

The nomination also coincided with a twodecade journey in the profession. “I think it was a really nice opportunity for me and I’m really proud of that,” he says.

Supply chain management is his passion, Fuentes says, and he plans to continue working with supply chain professionals to help them succeed. His vision for the future of the profession is that many more companies will have CEOs from supply chain and operations roles in the next decade. He looks forward to helping those future CEOs influence how their teams work and deliver results.

Fuentes notes that more people are realizing how important business data is for improved decision making. He sees that as “the fourth business pillar” around which organizations are built, alongside people, process and technology.

“I’m excited because I’m seeing that folks in supply chain are understanding this better,”

he says. “They’re trying to take action towards incorporating this fourth pillar much more.

I’m excited about what this fourth pillar is going to bring for supply chain and for professionals in the field.”

Fuentes is an avid sports fan and plays tennis.

He was also a Boy Scout for 15 years, starting when he was eight. He moved up to become a group leader at 23 years old. He credits the organization, in which he managed and organized activities for up to 30 kids, with providing him with many of his leadership skills.

CHALLENGES Supply chain and procurement remain great areas in which to seek a career, Fuentes stresses.

Challenges abound, and hardly a day goes by without something new to deal with. Yet he also notes that some people may benefit from thinking twice before jumping into the profession.

“If you’re a person that doesn’t like to solve problems, or you get overwhelmed by facing complex situations, perhaps it’s going to be too much for you,” he says. “Maybe you could evaluate other options.”

Yet the field offers rewards, Fuentes notes.

Supply chain is like the engine for many organizations, and there are opportunities to create value for customers and the business.

“If you like that, that’s great – it’s the greatest place to be,” he says. “But I think first you need to evaluate yourself and assess whether you have those characteristics.”

Supply chain also requires many of the skills needed to thrive in today’s world, Fuentes notes.

That includes critical thinking, like judging and evaluating situations before making decisions; a focus on details; and listening more while talking less. Anyone can improve listening skills, Fuentes says. It’s a matter of staying aware of the situation. “Technical things you can learn,” he says. “But the three things that I mentioned are critical skills that for me are really relevant today in the future of supply chain.”

The year has been tough and supply chain and procurement have faced hardships, Fuentes says. But those in the field have done excellent work keeping goods and services flowing.

Fuentes stresses that while supply chain and procurement continue to evolve, practitioners shouldn’t fear advancing technologies. While it’s common to hear about robotics, advanced analytics and other forms of automation, people will remain at the centre of the profession, he says.

Continuous learning is a key to dealing with an evolving supply chain landscape.

“Changes are inevitable, but we can always be better prepared – that’s the message at the end.” SP SUPPLY PROFESSIONAL

2021-04-05 3:21 PM

BY JACOB STOLLER

3D PRINTING AND THE SUPPLY CHAIN RECENT PROGRESS IN 3D PRINTING HAS RAISED HOPES THE TECHNOLOGY COULD HELP SHORE UP WEAKNESSES IN CANADIAN SUPPLY CHAINS.

says Tharwat Fouad, founder and president, Anubis 3D, which specializes in 3D printing of customized end-of-arm robotic tooling.

“3D printing complements traditional manufacturing as one more tool which can do certain things that you cannot do easily with other methods.”

The technology has been widely used for prototyping since 3D plastics printers were introduced in the 1980s. In the last decade, the technology became more viable for production, with the range of printable materials growing from a handful to hundreds, and machines getting significantly faster and cheaper.

Printing with metals is newer and less advanced. Costs of

machines are still extremely high – often in the $1 million range – and printing often has to be supplemented by other processes such as machining. As well, material characteristics often necessitate compromises.

In either case, the physical properties of 3D printed components can differ significantly from those of traditionally manufactured ones. 3D printed products, consequently, require significant design work.

“There’s a lot of engineering that goes into creating manufacturability plans with these printers,” says Graeme Findlay, marketing director at Precision ADM in Winnipeg, a provider of a variety of additive printing

services. “And then also, there’s the post processing.”

NATURAL MARKETS Production use cases for the technology are opening up in selected areas that are not well served by traditional manufacturing.

In healthcare, 3D printing significantly reduces the time and lowers the cost of making customized implants and prosthetic devices.

“There is a natural market here for mass customization because each one of us humans has a unique shape,” says Gilles Desharnais,

Watching a $300 3D desktop printer at work, it’s easy to get the impression that the technology will soon replace conventional methods of manufacturing. However, while 3D printing, or additive manufacturing, is finding growing use on production floors, its high costs, slow production speed and material limitations restrict how and where the technology can be economically deployed.

“The idea that you can print anything, and that printing will replace other manufacturing means is the biggest mistake” SUPPLYPRO.CA 13

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“Production use cases INTRODUCTORYforMEMBERSHIP the technology are opening up in selected areas that are not well INDUSTRIAL APPLICATIONS CEO of Montreal-based additive 3D printing’s ability to produce manufacturer Axis Protypes, which served by traditional unique shapes has created signifihas recently transitioned from procant opportunities for parts contotyping to specialized production. manufacturing.”

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solidation, where a single printed “So when you deal with things that are medical or dental, the capa- object replaces a multitude of components. Gas turbine engines bility to mass customize means are one application area. that you can produce appliances Navigate the ever-changing supply chain environment.

“A turbine vane is a collection or tools that are specific to the indiJoin 7,000+ supply chain professionals across Printing is also playingCanada. a of many parts,” says Findto Home Depot and print a new vidual patient.” growing role in producing tooling one,” says Findlay.

There’s now evidence that cus- lay. “With 3D printing, we can for industrial equipment such as combine a lot of these parts into Another is the progression from tom printed knee implants proone. Now we’re reducing the duce better outcomes than the CNCs and, in the case of Anubis medical devices to consumer number of parts, simplifying the off-the-shelf equivalent. “Tests 3D, specialized tooling for robotic devices such as sports helmets. “3D repair process, and it will also are still ongoing,” says Findlay, applications. the door to a numRegular membership price: $410 + HST I Introductory member price: printing $205 opens + HST perform better because there are “but early results indicate that ber of embryonic solutions that fewer parts that with can break down.” when you’reCollaborate able to produce PRODUCING AT VOLUME point to the wayprofile things are going withanleaders I Network peers I Learn from industry practitioners I Elevate your This practice is particularly implant that is specific to the As machines get faster and prices to go in the future,” says Desharbeneficial in aviation, patient, the outcomes have been continue to UNTIL drop, 3D printing is nais. “One of these is the custom FOR 1ST TIME MEMBERSwhere ONLY. conMEMBERSHIP VALID APRIL 30, 2022. solidated parts can be lighter and better for the patient than off-thebecoming viable at higher volsports helmet to reduce concusstronger than their equivalent, shelf implants.” umes, particularly where faster sions. The NFL is currently sponreducing fuel costs, eliminating 3D printing can also create development and reduced setup soring projects for that.” failure points and simplifying shapes and textures that were not times are advantageous. Last The trend will explode when, possible with other methods, open- maintenance and administration. year, Precision ADM was able to perhaps seven to 10 years down the Replacement parts for critical ing the door to innovative medical road, printing can compete with use polymer printing, the most equipment is another promising area. advanced category, to produce mil- methods like injection molding. solutions. A metal implant called “One example is these a spinal cage, for example, employs “The first step is getting the lions of nasopharyngeal nasal 1 gas turbine engines that are runa lattice framework that allows tistechnology to the point where swabs for COVID testing; the largning in the oil sands,” says Find- est run of a single 3D-printed med- I can print 10 times what sue to grow into theNETWORK gaps.

2 I’m lay. “What happens is that some The widest use, however, is in printing today at half the cost ical device in the world.

Engage with 3,000+ supply chain professionals THOUGHT LEADERSHIP dental, where on-demand printing of these engines will break of materials,” says Fouad. “Then One of the key trends to watch in Ontario nationally, grow your down, and theytoneed turbine of orthodontic appliances andand 7,000+ easily compete with two is consumer markets and replacLeverage opportunities to speak atI can events; contacts career to the next partsyour to replace them.

But alevel. lot implants is transforming theand advance to five ing participate broken parts of devices may on the Board and Committees;million give molded parts.” SP of these parts aren’t made anyindustry. “In the dental market, be aback key inroad.

“I think there’s to the profession.

3 pieces that are being more. We’re able to help by we now have a market for the average consumer reverse engineering and printing printed right in theEXPERIENCE dentist’s where maybe you broke the back 4 a broken part.” office,” says Findlay. of your TV remote, and you go Complimentary webinars on pertinent topics LEARN and member-only site tours of leading-edge Access to insights from industry leaders facilities. (when tours are permitted) through 12+ professional development seminars per year at member-only prices.

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SUPPLY PROFESSIONAL

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To learn how we can bring corporate training to your teams, please reach out to Kim Sforza for a free consultation. (Contact below)

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FOR REGISTRATION ENQUIRIES Visit www.supplychaincanada.com/events or contact Alisha Seguin: +1 416.977.7566 x2150 I aseguin@supplychaincanada.com

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BY CHRISTIAN SIVIÈRE

SUPPLY CHAIN CANADA, ONTARIO INSTITUTE INVITES YOU TO THE “Canada and the UK

LEADERSHIPSERIES

signed a memorandum of understanding in early December, laying the foundations for a trade continuity agreement.”

between the UK and the EU, and goods now have to go through customs and other regulatory clearances. Although this creates complications, delays and extra costs, it’s a boon for customs brokers, as customs declarations are Christian Sivière is now required on both sides. Cuspresident at Solimpex. toms controls and inspections are required for many products, since the UK is no longer bound by EU LEADERSHIP SERIES standards. This applies particularly for food products, with UK exportimport-export controls in both direc- good news. Brexit adds complexiers having to supply health certifities for exporters, since it is no lontions. Northern Ireland must follow cates for many exports to the EU, EU customs rules, with special rules ger efficient to serve all of Europe through a single base. Companies which they didn’t need before, applying for trade, as it remains in doing business in both markets must adding delays and costs. All prodthe EU single market for goods. rethink their distribution strategies ucts of animal origin entering due to the border complications, the EU and Northern Ireland now CANADA’S ROLE Canada and the UK signed a memo- delays and costs. Customs is not the need an EU Export Health Certifionly issue: standards for products cate (EHC). randum of understanding in Decemare now different (CE in the EU and ber, laying the foundations for Like all free trade agreements, SECTOR CHAMPION IN PARTNERSHIP WITH a trade continuity agreement govthe EU-UK TCA PUBLIC contains prodUKCA in the UK), there are two erning Canada-UK trade. It mirrors uct-specific rules of origin and channels for IP protection (UKIPO exporters must provide an origin our CETA Free Trade Agreement and EUIPO), changes with VAT and TITLE PARTNERS COLLABORATIVE PARTNER certification to avoid customs with the EU. Temporary measures challenges on direct shipment rules. duties. The regional value content Companies must now treat these began January 1 to ensure continmarkets separately and establish Brexit, the UK’s departure from the required for most products is 50 per ued preferential tariff treatment for cent of the EXW price. For gasoline goods shipped between the counseparate distribution channels.

EU, happened on January 1, after Whether Brexit benefits the tries until a full CUKTCA is agreed several years of uncertainty. With and diesel automobiles, it is 55 per an exit agreement on December 24, cent. For electric and hybrid vehiupon. CBSA issued a remission UK’s economy is an open question 2020 and the UK’s abrupt departure cles, the RVC is 40 per cent, going order so UK products still enjoy tar- but studies, including from the UK days later, there was little time for up to 45 per cent in 2026 while for iff-free entry. UK origin goods are Government, point to a decline in businesses to prepare. The UK left batteries, it is 30 per cent, going up now accounted for in our B3s under GDP. “Frictionless trade” doesn’t to 50 per cent by 2026. Unlike in MFN tariff treatment code 02, the European Single Market, the exist with a border, as it involves with mention of Special Authority customs formalities, processes, EU Customs Union, the Common CETA, there is no mutual recognicontrols, additional steps, delays Agricultural Policy, the Common tion agreement for testing and certi- OIC number 20-1135 in field #26.

LEADERSHIP Fishery Policy, EU Laws, SERIES fication, so products have to be The TCA replicates the CETA rules and costs. This was shown at the Regulabeginning of 2021 when UK goods tested and certified in the destinations, Directives and the European of origin and allows for accumulaCourt of Justice. The EU-UK Trade tion country. tion with the EU on a transitional exports fell by £5.3 billion (19.3 Northern Ireland now has special basis for three years: materials per cent) in January, mainly and Cooperation Agreement govbecause of a £5.6 billion (40.7 per erns the new relationship. Until that status and the UK is split in two: sourced from the EU used in procent) fall in exports to the EU. UK agreement, there was uncertainty, Northern Ireland remains in the EU duction of goods in Canada or in with consumers and businesses the UK continue to count as origisingle market while Great Britain imports fell by £8.9 billion (21.6 stockpiling products in the event of (England, Scotland and Wales) are per cent) in January, driven by a nating goods. a “no-deal’’ exit, which would have out. This is to avoid re-introducing It was important for Canada (and £6.6 billion (28.8 per cent) fall in increased costs by re-introducing a hard border between Northern Ire- the UK) to reach a quick, though EU imports. The January 2021 fall land (part of the UK) and the Repubincomplete, agreement as the UK is in UK goods imports and exports MFN tariffs/customs duties on products.

ThisADVANTAGE would have been OF OUR lic ofCORPORATE Ireland (a full EUGROUP our first export market in Europe. was the largest monthly fall since member).PRICING TAKE detrimental as UK exports to the records began in 1997. SP The Brexit TCA leaves an open bor- Gold and precious metals represent Member Pricing: $149 der + HST I Non-member $199 +ofHST three quarters our exports to the between Northern Ireland andPricing: EU account for 45 per cent of total SAVE UP TO 50% (Complimentary until April the 30, 2022) Republic of Ireland to preserve UK exports and UKmembership imports from UK and are duty-free anyway. But WITH OUR GROUP PRICING the Good Friday Agreement of the EU represent over half of UK the UK is a major supplier, our third Group Pricing: $99 per1998. attendee for a group (4) or more These provisions, called of the fourone imports. in Europe, after Germany and Northern Ireland Protocol, establish The EU-UK Trade Continuity Italy, and ahead of France. an unofficial “border” between Agreement applies to goods, not Tariff-free access to the EU and FORIt REGISTRATION AND/OR PARTNERSHIP ENQUIRIES Northern Ireland and the UK, with services. re-introduces a border the UK are maintained and that’s

THE NEW NORMAL PUBLIC SECTOR HOW BREXIT June 17, 2021 I Zoom Platform WILL SHAPE THE UK’S TRADE WITH CANADA AND THE EU

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Registration: Visit www.supplychaincanada.com/events or contact Alisha Seguin: +1 416.977.7566 x2150 I aseguin@supplychaincanada.com SUPPLYPRO.CA 19 Partnership: Contact Kim Sforza: +1 416.977.7566 x2134 I ksforza@supplychaincanada.com

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BY MICHAEL POWER

“Maybe you don’t want to be fully collaborative, especially during tough times and you’ve got tough targets,” he says. “You’ve got to turn the screw a little.”

A MATTER OF TRUST

SUPPLIER COLLABORATION COMES FROM CREATING VALUE FOR BOTH SIDES COVID-19 has made partnerships more important than ever. With the pandemic yet to loosen its grip, collaboration with suppliers is paramount in fostering innovation, develop products, mitigate risk and keep goods flowing.

To increase that collaboration, supply chain leaders must move away from transactional exchanges with suppliers towards partnerships focused on value creation, says Jon Rosemberg, senior vice-president, merchant operations & program enablement for Indigo Books & Music.

While some exchanges must remain transactional, Rosemberg stresses that in times of crisis, relationships that resemble partnerships are most likely to create that value for all parties.

Developing these links starts with both communication and building trust to understand each organization’s true interests, says Rosemberg. Open dialogue involves acknowledging tough times and resolving to support key clients through them.

“When you build that trust and have an open conversation, in my experience you tend to see that, many times, the interests of each of the parties can be complementary as opposed to being a zero-sum game,” he says. “You need to be able to have those conversations, which you won’t do if you’re only focused on margins and trying to extract every dollar from each other.”

Rosemberg recommends revisiting vendor scorecards to understand who’s at the top of the list, ranking those vendors by spend, business 20 APRIL 2021

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growth or other metrics, while assessing where the most value lies. As well, with supply chains upended by the pandemic and facing other issues like shipping container costs, open dialogue with suppliers is more important than ever.

“The amount of stress that COVID has added to operations and the amount of reactiveness that an organization needs in order to survive in this environment is forcing us to have a lot more conversations and to make sure that those conversations are about ideation,” Rosemberg says. “They need to be solution oriented because finger-pointing really doesn’t work.”

A collaborative focus may also help to attract and retain talent. Younger supply chain and procurement professionals value partnership, Rosemberg adds. While haggling with suppliers may sometimes be necessary, younger professionals don’t want to do the job that way.

“People want to build engagement and interact and not see it as a rivalry, but as a collaboration,” he says. “Ultimately, it’s people dealing with people.”

On the whole, collaborative people make for better recruitment candidates, says Neil Drew, director at recruitment company Winchesters.

Communication skills are key, and collaboration with stakeholders rates high in desirable skills. Yet how important a knack for supplier collaboration is depends on the role, Drew adds.

It’s definitely important for vendor-management roles. Yet a sourcing role may call for less-developed supplier collaboration skills.

THE SPECIAL SAUCE Kathy Cheng, president of apparel manufacturer WS & Co. and founder of Redwood Apparel, echoes the importance of human connection in fostering collaboration with suppliers. Cheng has two perspectives: as a businessperson dealing with her own suppliers and as a supplier herself.

The company has manufactured garments in Canada for over 30 years, Cheng says.

The closest relationships with both suppliers and clients (which Cheng refers to as brand partners) are the ones spanning 10, 15 or even 20 years. The key to maintaining and deepening those relationships is to forge those collaborative, strategic ties, she says. Cheng refers to deep-rather-than-wide relationships as a “special sauce” that has allowed the company to thrive.

That collaborative approach also means that Cheng’s company acts similar to an extension of its brand partners’ product development and production teams.

“We’re focused on what we’re great at and it allows our brand partners to focus on what they’re great at – be it distribution, marketing, sales and branding and all that other stuff,” she says. “Instead of just, ‘I’m buying from you,’ it’s ‘we’re a part of you. We’re a part of your team.’”

Like any relationship, success lies in open communication, Cheng adds. For example, the company employs an embellishing coordinator who is responsible for visiting its embellishing decorators daily to see how production is going.

Brand partners also share information so that the company can support and service them as well as possible.

“We’re very close with our partners, so much so that we also recognize that we’re a significant part of their business as well,” she says.

“It’s not like we own them by any means, but it’s all these years with mutual respect and really being transparent.”

The pandemic also highlights the need for collaboration, Cheng says, noting the company has set up weekly calls or Zoom meetings with brand partners in an effort to maintain close communication. That helps to bridge some of the physical distance that remote work has injected into business. That virtual connection helps to ensure everyone is aligned and improves efficiency. It has also lowered risk.

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us to share, and vice versa, problems and risks so we can address them earlier as opposed to waiting until the end.”

COVID-19 has also made it more difficult to ensure that companies get the information about suppliers they need to collaborate effectively.

According to the 2021 Supplier Information Study from Toronto-based supplier data and AI company Tealbook, 72 per cent of procurement leaders are “very concerned” their supplier intelligence has still not improved to crisis-proof their supply chains. Some are also concerned about missing out on innovation (30 per cent), falling behind the competition (25 per cent) and being unable to determine ROI (22 per cent).

Having that supplier intelligence not only fosters collaboration but also helps to limit supply chain risk, a concern pushed into the spotlight during the pandemic. Diversifying that supply base can help to monitor risk better, says Stephany Lapierre, Tealbook’s CEO. While it makes sense to have suppliers in different countries, there are also opportunities to partner with and support local suppliers, she notes.

“From a risk mitigation perspective, if you’re able to partner and promote those businesses and work with them on scaling them appropriately to handle the type of contract

“When information is communicated accurately and in real-time between you and your suppliers, the guesswork is virtually eliminated.” that you’re going to send them, you’re going to promote your economy locally,” she says.

“You’re going to be able to reduce the cost of transportation, to reducing some of the risk of having a global supply chain.”

Technology can also help to foster collaborative relationships with suppliers, Lapierre says.

In this, focusing on data is superior to a strictly technology-driven approach. More software can mean a heavier burden on the supplier, as it can be portal-based and rely on the supplier to maintain a lot of information. Synchronizing and enhancing that information across these systems can lead to an efficiency gain and provide a way to get 100 per cent visibility across the supply base, Lapierre says.

“Technology, in a way that is lead by data, is more the future,” she says. “You need software. But the analogy is, back in the day when

you lost your phone, you lost your pictures, you lost your contacts, there was a lot of friction.

Today, I can change my phone and I’m up and running within 10 seconds, and now I’ve got the latest iPhone. Everything is updated because my data is in the cloud.”

COLLABORATING FOR SUSTAINABILITY Pierre-Francois Thaler, co-founder and co-CEO of EcoVadis, agrees that collaboration is key not only to creating impactful supplier relationships but reducing risk. Effective communication promotes visibility, which can help to spot potential shortages, regulatory considerations, as well as social and human rights concerns.

“When information is communicated accurately and in real-time between you and your suppliers, the guesswork is virtually eliminated in pinpointing problems and potential threats that may lurk – making any issues that arise easier to resolve in a more timely, effective manner,” Thaler says. “This gives you the context and forward-thinking insights to prevent possible future harm.”

Collaboration also promotes sustainability within the supply chain, Thaler notes. It helps to focus on a ‘performance approach,’ rather than having suppliers check off compliance points, he advises. Measure and benchmark best practices while looking at how suppliers can improve, excel and innovate.

Ensure that you’re not making demands when collaborating with suppliers on sustainability, he says. Rather, demonstrate the value of your initiatives. Treating goals as a partnership instead of a command puts organizations in a better position for success.

“They will feel more empowered and see more clearly the role sustainability plays in advancing mutual benefit within the value chain,” Thaler says.

Collaborating with suppliers can help to boost an organization’s reputation, Thaler adds. These improved practices help to reduce the likelihood of brand-damaging events.

Supplier collaboration to advance sustainability also aids recruitment by showing the organization can walk the talk, helps to win over new recruits and retain existing employees.

In some categories, being the customer of choice is a competitive advantage, and many suppliers also set a high sustainability bar for their customers.

“Overall, the benefits of working closely with your suppliers are undeniable,” Thaler says.

“It is a zero-sum game when brands work against rather than with each other – no one wins.

When you join forces, you have the opportunity to improve capabilities across the board.” SP SUPPLYPRO.CA 21

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BY MARIETE F. PACHECO

AUTOMATED GUIDED VEHICLES ADVANCES IN AGV TECHNOLOGY MEAN A LARGER RANGE OF USES Automated guided vehicles (AGV) have been around since the 1950s when they were used primarily in warehouses for material handling applications, like moving large quantities of goods during the shipping and receiving process – usually done with a towing AGV. These early AGVs operated on a taped or wire-based system which guided them on predetermined, simplistic and repetitive paths.

The mass retail boom in the 1990s and the e-commerce explosion of the 2000s pushed the demand for AGVs to new levels with AGVs taking on a larger role in warehouse automation.

Since then, AGVs have become more commonplace across many industries including, most notably, in manufacturing and industrial applications. In addition, AGVs have evolved greatly in their functionality and costing as technology has changed.

TYPES OF AGV Automated guided vehicles differ greatly from their more advanced and progressive cousins, automated mobile robots, which are highly autonomous and can learn their surroundings based on blueprints uploaded to their systems or follow employees throughout a facility. In contrast, AGVs travel along a fixed guidance path, most commonly a flexible magnetic or coloured trail, embedded wire track or wireless navigation which is based on distances between sensors or reflectors. There are six common types of AGVs, including: assembly line; automated guided carts; forklift; hybrid; towing vehicles and unit load.

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An assembly line AGV creates a surface that moves in place of a fixed conveyor or an overhead crane system. The assembly line AGVs carry the unfinished or unassembled product from workstation to workstation for the employee or robot to complete their task for that station. The movement along the production line continues until the product is finished. This type of AGV is frequently used in the automotive manufacturing industry where a partially completed car moves from station to station for the operator (human or robot) to assemble a new component on the car until the end of the production line.

Automated guided carts (AGC) are the lower cost AGV option which follow a flexible magnetic or coloured tape adhered to the floor on a predetermined path and are generally smaller in size and offer a lower weight capacity than other types of AGV. They can be easily adapted to reflect changes in the environment they are used in by simply re-affixing the flexible magnetic tape in a new guidance path as the surroundings change, making these a good solution for both budget conscience applications and tight quarters which require a smaller footprint solution. Common uses for AGC include moving compact loads through a facility such as a hospital and transporting food trays, linens or medical supplies.

Forklift AGV are similar to an automated forklift that moves and lift palletized goods using the frontloading forks of the AGV. This includes moving pallets into spaces such as high-bay racking. These operate on a laser

sensor platform to ensure their fully autonomous function in a warehouse environment to store and retrieve products.

A hybrid AGV is modified standard operator-based equipment which is dual-purpose and can function both autonomously and manually with a rider-operator guiding its path. Hybrid AGVs offers the most flexibility in terms of offering the benefits and ease of use of a fully autonomous AGV as well as the ability to function as manual transporting or lifting equipment.

Hybrid AGVs are commonly used as forklifts in warehouses.

Towing vehicles (also referred to as tuggers) were one of the first AGVs. These are used in pulling or towing applications such as moving trailers and trains either in a warehouse or in a shipping or train yard.

Unit load AGVs have built-in conveyors which offer the ability to flex easily and adapt a production line as business demands change.

The flexibility of unit load AGV also provides greater safety as it opens the work area for moving equipment or people. Unlike its fixed conveyor counterpart, if an issue is encountered in the process the production line doesn’t shut down; alternatively the process continues as each step operates independently of the others.

This type of AGV is frequently used in manufacturing, assembly and warehouse applications.

TRENDS The most significant trend in the AGV market relates to technology advancements in the equipment for energy options and guidance systems.

A major challenge to AGVs being reliable has been their limited battery life. There was nothing worse during a production run than having an AGV going down without warning due to a discharged battery. To combat this, a well-known development in battery technology in the automotive industry has shifted into the AGV market as well. The introduction of lithium batteries means a power source that is fast charging, has eliminated maintenance and reduced gas emissions compared to traditional lead-acid and gel batteries.

The second evolution in energy options for AGVs is the battery-free and wireless AGV. This allows the equipment to run continuously through charging via inductive power transfer (IPT) technology whereby the AGV is powered wireless from the floor.

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Trackless systems have grown in popularity whereby the AGV is guided by an operator’s voice, GPS or WIFI technology instead of traditional physical markers or tracks such as magnetic tape or reflectors. These advancements offer greater flexibility and adaptability as an organization’s operations change.

SUPPLY CHAIN BENEFITS Automated guided vehicles offer extensive overall benefits to an organization; however, the scope of the benefits will differ depending on the industry and the organization’s operations.

The six most frequently occurring benefits from deploying AGVs include labour cost savings, utilities cost savings, improved safety, a reduction in damages, increased inventory productivity and accuracy.

Labour cost savings is the most common positive impact upon deploying AGV in an organi-

“The most significant trend in the AGV market relates to technology advancements in the equipment for energy options and guidance systems.” zation. The direct savings can be attributed to the reduced staff required to complete a task.

The additional advantages are further compounded when considering the long-term savings against salary increases and benefit payments.

AGVs can function in less-than-ideal working conditions when compared to a human workforce, as the equipment can operate in lower or higher temperatures than the average person.

The savings of reduced electricity consumption from fewer hours of heating and cooling systems running can add up over the ownership lifetime of an AGV. An AGV’s precision in terms of following predetermined paths leaves little room for error in terms of accidental collisions with products, racking other equipment or, worse yet, employ-

Mariete F. Pacheco, MBA, PMP is managing director at FRW Services Ltd.

ees in the facility. This slim margin of error can dramatically generate savings for an organization due to reduced damages caused to the physical structure, its contents and the reduction in employee injury claims. During the pandemic when physical distancing has become the norm, AGVs have provided organizations with the ability to continue to operate without sacrificing the health of their employees by reducing the number of employees on site at the same time.

The improved inventory productivity and accuracy from adding an AGV to an operation can be dramatic in high-production facilities which manufacture in significant volumes and in very systematic methods. An AGV can operate at any time with minimal downtime due to breaks, vacations or injuries (with the exception of maintenance). As well, the precision of an AGV in following tight tolerances is unmatched in manufacturing settings of frequent and repetitive actions. The human operator will produce some variances at a much higher rate than an AGV. Lastly, the AGV can, in real-time, maintain an active inventory count while an operator must perform a more time-consuming and sometimes inaccurate physical count.

With the continued growth of e-commerce and the need for retailers and manufacturers to reduce operating costs, increase productivity and efficiency to remain competitive on the global stage; AGVs will be there to support organizations. The North American market alone for AGVs is estimated by the Mordor Intelligence Group to grow 14.6 per cent annually in 2021 and to reach a new record of nearly US$2.7 billion by 2026 (pre-pandemic impacts).

Automated guided vehicles can offer tremendous value to an organization depending on the industry; from distribution efficiencies in warehouses to reduced production times in manufacturing and even maintaining sterility or safety in sensitive sectors such as pharmaceuticals, healthcare and electronics. SP SUPPLYPRO.CA 23

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We’re in the business of driving yours forward.

Behind every thriving business is a team you can count on.

The all-new 2022 KONA and TUCSON, as well as the 2021 PALISADE, SANTA FE and VENUE, from Hyundai all bring capability, reliability and impressive fuel economy to you, your company and everyone that drives it forward.

Kevin Forodi Senior Manager, Fleet Sales CPO and Remarketing kforodi@hyundaicanada.com (905) 948-6701

Zohair Ahmed Manager, Commercial and Government Fleet Sales zahmed@hyundaicanada.com (905) 948-6822

Julian Cheng Fleet Analyst jcheng@hyundaicanada.com (905) 948-6764

Neil O’Donnell Remarketing and Fleet Analyst nodonnell@hyundaicanada.com (905) 948-6891

hyundaicanada.com

™/®The Hyundai name, logos, product names, feature names, images and slogans are trademarks owned or licensed by Hyundai Auto Canada Corp.. All other trademarks and trade names are the property of their respective owners.

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Fleet Management

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Upfitting trends Build options for fleet managers.

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Road test Driving the Subaru Crosstrek.

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

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Fleet branding The benefits of sprucing up your fleet.

EDITORIAL INQUIRIES: Michael Power, 416-441-2085 x110, michael@supplypro.ca

ADVERTISING INQUIRIES: Alex Papanou, 416-441-2085 x101, apapanou@iqbusinessmedia.com

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Fleet Management

By Howard J Elmer

Upfitting trends

Fleet managers now have unprecedented build options We’ve been tracking the trends in the world of upfitting. Some of these follow the social trends of the customers they serve, while of course, others are the result of the advances in technology and hardware provided to them by the OEM truck builders. But before we get into the nuts and bolts, we have to deal with an unanticipated trend that is affecting all the players right now – builders and customers alike.

Of course, it’s the pandemic.

The quick and dirty (and obvious) is that disturbed supply lines have created delays in builds and deliveries. However, a secondary cause is the hesitancy of ordering by industries trying to deal with the real-time fallout of lockdowns.

Curiously, most every business has viewed the year-old pandemic as a sales killing event; but for some, surprisingly, it actually increased sales dramatically. These companies are the ones that suddenly needed new vehicles and replacement ones ASAP. That’s where the problems started as the normal rhythms of this industry were upset.

While this is not really breaking news, it does continue to affect many 26 APRIL 2021

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industries as lead times draw out and ship-thru dates come and go – vanishing into a black hole of parts shortages. Rest assured that OEMs and upfitters are working hard to meet demand – but for the foreseeable future keep in mind that leadtimes will need to be elastic.

Safety first

According to the US Occupational Safety and Health Administration (OSHA), work-related musculoskeletal disorders — awkward movements, heavy lifting, and repetitive strain — account for 34 per cent of lost workdays. A heightened awareness of the true costs associated with injuries is driving fleet managers to equip vehicles with equipment and systems that will better safeguard operators.

This trend pays dividends in costs and productivity – so it’s here to stay and will be improved upon perennially. But what are we actually talking about?

To start with, OEM builders continue to provide additional safety features in vehicles as standard equipment. Upfitters then take that as a starting point to add their own

improvements. These include rearview camera systems; parking sensors (front and rear); standard back-up beepers; improved grab handles (inside and out); improved mirrors; easy opening doors and improved access steps. These are just the basics. Specialized equipment can be expected to get specialized safety features.

Upfit designs are being reviewed with a critical eye to determine if equipment add-ons get in the way of the driver or crew. Can they be moved? Should they be? This new attitude leans toward the upfit being moved, rather than the old thinking that expected people to just learn to work around them.

The safety benefits are obvious.

Safety is also an exercise in knowing what works and what doesn’t – there has to be a way to measure success – hence the growth in telematics. You have to have data to determine how new designs are working, so more and more companies are ordering upfitted vehicles with systems that monitor driver and vehicle performance. This gives insights into fuel costs, possible causes of frequent repairs, effective-

ness of equipment in terms of time spent using them and also identifying potential liabilities for the company. These data are also a proactive indicator identifying possible problem areas so companies can react and better train operators.

Going green

You can’t talk about new trends without talking about “going green.” At first glance most think of going green as the trend towards electric service and delivery vehicles. Sure, that’s part of it – but just part. There is also a more subtle subtext to “green.” What we’ve seen is owners want to do more with less (meaning smaller vehicles) and they want it all to weigh less, too. This is also green.

This trend lowers costs on conventional ICE-powered trucks. And, while electric is exciting, fleet managers know that costs drive innovation – and sometimes the expensive ones stop them dead.

With that in mind, we can look at the CNG and propane systems that have been around for while now. These too were considered experimental in their time – yet FM/SP SUPPLY PROFESSIONAL

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have proven themselves to be economical in many applications.

In the same way electric is now on the cusp of moving from futuristic to a solid economic choice.

Past propulsion though, buyers are increasingly looking at van bodies rather than pickup trucks. Some of these lower weights, while inside the use of modern plastics in the upfitter add-ons also trims weight.

This trend from upfitters using more plastic composites and aluminum have far reaching benefits.

This lighter equipment eases the burden on the engine, increasing fuel economy. This increases engine life, with less time and money going to repairs. The result is better use of space, as lower weight equals reduced driver stress and overall costs.

New vehicle preferences

As stated above, there is a noticeable shift in preference toward commercial vans. It can be argued that the new European-influenced vans have opened up this market.

However, acceptance across a variety of industries is what is really driving this trend. While pricing, again, is important, a few other inherent benefits of these vans have no doubt influenced fleet buyers.

First, an enclosed, covered work area is an operator benefit; also, clear, standing room is now a normal part of this type of vehicle. The large, tall, square body also offers a limitless number of upfit configurations that help increase productivity.

However, this new vehicle trend applies to more than just vans.

Sales figures suggest that companies are looking to reduce the overall size of their equipment wherever they can. In part this is possible by innovations from upfitters – providing the same equipment in smaller packages that weigh less. This in turn requires a smaller base truck that costs less – and costs less to run.

While we can argue that doing more with less has always been a plank in any business plan, the expanding base vehicles choices – and the imagination of the upfitting industry is offering an unprecedented increase in new build options. This benefits us all. FM/SP

Upfit designs are being reviewed with a critical eye to determine if equipment add-ons get in the way of the driver or crew.

Can they be moved?

Should they be?

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Fleet Management

By Stephanie Wallcraft

Powered up

The Subaru Crosstrek adds the extra oomph some drivers crave It’s really something how a single update can take a car from being a middling option to one of the better values on the market.

The Subaru Crosstrek is a great example. It’s a veteran in the subcompact crossover space having been launched in 2013, and it’s seen steadily increasing sales among the buyers who are more often seeking out this segment and appreciate the Crosstrek’s small footprint and standard all-wheel drive.

But there’s one thing critics have repeatedly pointed out as missing: more power. The 152hp and 145lbs-ft from the 2.0-litre engine works for some buyers, but for people who want to use their cars for more than trips to the grocery store – which includes more Subaru owners than the average across most brands, it must be said – an extra bit of oomph would make the Crosstrek just right.

Subaru listened, and now a mid-cycle refresh has brought with it 28 APRIL 2021

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a 2.5-litre, four-cylinder engine making 182hp and 176lbs-ft of torque. Not only that, but it can be equipped at an MSRP of less than $30,000 for buyers who opt for the new Outdoor trim.

This update caught the attention of Canada’s top automotive critics: the Automobile Journalists Association of Canada named the Subaru Crosstrek the Best Small Utility Vehicle in Canada for 2021, netting the Crosstrek its first AJAC award.

Updates don’t need to be complicated to hit the right marks.

The new engine is available in two trims, the aforementioned Outdoor featured in this test drive and the top-of-the-line Limited, both matched exclusively with a continuously variable transmission (while the smaller engine remains available with a six-speed manual). This CVT feels more like an automatic than most thanks to simulated steps in the revs that replicate the feel of jumping between ratios. With the engine’s

low mount, typical of Subaru’s engines with their horizontally opposed cylinder arrangement, more of the Crosstrek’s weight is closer to the road. This gives it excellent handling in spite of its desirably high 22cm of ground clearance.

There are two downsides worth pointing out, however. The larger engine’s published fuel consumption ratings of 8.8L/100km in city driving and 7.0 on the highway are not at all far off those seen in the 2.0-litre (8.5 and 7.0 respectively), but the observed fuel consumption during this test drive is a fair bit higher at 9.6 litres per 100km, so driving style and conditions may sway the results with this engine more than average. The engine’s auto stop-start feature is also rough enough to be startling, which may cause some drivers to become annoyed and turn it off, meaning they lose even more fuel efficiency.

The EyeSight suite of safety and convenience features is standard in

all Crosstreks equipped with the CVT and includes pre-collision systems, adaptive cruise control, lane centring and lane keep assist, lane sway and departure warning and lead vehicle start alert. On this Outdoor trim, buyers receive this interior with acid-yellow accents as opposed to the orange found in every other trim but the base model.

The mix of features is targeted toward young, outdoorsy types and includes a trim-exclusive dual mode X-Mode for variable off-road performance, a front-view camera to assist with visibility around blind corners and steep hills, 17-inch wheels, the upgraded eight-inch infotainment system and gunmetal grey exterior accents. On the liftgate, a small overhead lamp is installed that could be handy when unloading gear in the dark. Subaru Canada opted out of including a sunroof, partly to keep the price below $30,000 and partly because drivers who might be more inclined to roof-mount cargo boxes or outdoor gear are less likely to see as much value from it.

There’s one more safety-oriented feature applied here that really ought to see more widespread use: a self-returning light switch, which flips back to auto whenever the car starts up regardless of where it was last set, meaning that it’s not left up to the driver to remember to flip the lights back on if they were turned off manually.

The subcompact crossover segment is one of the fastest growing in Canada. Now that it’s sporting these updates, the 2021 Subaru Crosstrek is a top choice among it thanks to its improved power, well-considered packaging and overall value. FM/SP

As Tested Price (incl. freight and PDI): Starts at $32,174; tested at same Engine: 2.5-litre four-cylinder Power: Max 182hp; 176lbs-ft Transmission: CVT Rated Fuel Economy (L/100km): 8.8/7.0/8.0 Observed Combined Fuel Economy (L/100km): 9.6 FM/SP SUPPLY PROFESSIONAL

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Fleet Management

By Tarek Salem

Best foot forward

Tarek Salam is a Canadian auto glass repair technician.

1.

Why investment in your fleet is an investment in your brand When was the last time you spruced up your fleet? Every vehicle you have represents your brand.

After all, it has your company’s logo on it. Every time it is out on the road, it gives the public a glance at your brand. For many, it will be their first impression. You want to make sure you leave a good impression by ensuring your vehicles are in top shape.

Your approach to branding the vehicles in your fleet also contributes to the impression those vehicles make. When designing graphics and decals to put on the trucks, you want to remember: K eep it simple: Don’t overcomplicate the design. Less is more. You want to keep things professional and limit the design so the information you have mentioned is readable.

The logo is key: It is easier for people to remember your company by its logo. Therefore, the design should centre around the logo.

Include information that allows people to act: You want to limit the information to just essentials for people to contact you. Websites are now more effective than a contact number so mention your URL before anything else.

Stick to basic colours: You want people to identify your business by just looking at the colour of

the van. Think of UPS and DHL, both have a massive fleet and are known for brown and yellow vehicles, respectively. Having vans all in the same colour will help people become more aware of your brand, even associating the colour to your brand.

Once branding is sorted out, all you have to do is ensure the vehicles are presentable. The following reasons are why you should invest in your fleet and how the investment will impact your brand.

2.

Meet safety standards, reduce bad PR

Do all your vehicles come equipped with technology that allows your drivers ease and safety on the road? The safety of your driver and others is important. You wouldn’t want one of your vehicles to be the cause of an accident. That would mean you generate bad PR. You’ve probably heard that any type of PR is good since it gets your name out there. But not in this case, such PR can drastically hurt your business.

Covering the basic safety of the driver should be your top priority.

This means, ensuring the vehicle is in shape to be on the road: seat belts work, tires are inflated, cracks on the windshield repaired and so on. Next, you want to equip the vehicles with technology such as a rear-view camera, blind-spot

warning and automated emergency braking. These will help reduce the chances of both minor and major accidents. Lastly, you want to ensure all your drivers are trained to be out on the road.

Improve efficiency, improve customer satisfaction

The quality of service your business provides correlates with its brand. If the business is known to ensure quality services then customers will continue to use it and even recommend it to others. The vehicles in your fleet play a major role in the service rendered.

You want to equip it with technology that improves efficiency and ensures timely deliveries.

Technology such as a navigation system, so your drivers take efficient routes. You also want to equip it with a telematics and management system that gives you insights into the systems within the vehicle so it limits breakdowns which, of course, lead to delays.

Poorly maintained vehicles reflect badly on your brand

Think of each vehicle as a moving billboard that advertises your brand. You want to make sure that it appears in top shape. That means, dealing with dents, chipping paint and regularly getting them washed.

Upkeeping your vehicle will reflect positively on your brand, showing people that you value it.

Save money, boost branding There are numerous ways you can invest in your fleet, from purchasing management software, upgrading the vehicle’s technology, to the vehicle itself. No matter what the investment may be, it will lead to your business saving some money.

For example, equipping the vehicle with management technology that improves fuel efficiency will help you save on costs, because fuel costs are rising. The amount may seem small at first, but it adds up.

The amount can be used for branding.

People’s first impression of your company is directly linked to the vehicles in your fleet. If you truly care about leaving a lasting impression, you will need to invest in your fleet. The investment won’t just impact your brand but also improve fleet management and your business’s overall efficiency.

For most, while the investment might appear costly at first, you will end up improving processes, brand image and saving money in the long run. So, it is one of the smartest investments you can make for your business. FM/SP

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THE LAW—BY PAUL EMANUELLI

SETTING BOUNDARIES BIDDING PRINCIPLES FOR SENIOR DECISION MAKERS For complex public procurement projects, purchasing institutions often supplement their general procurement governance practices by establishing project-specific steering committees to provide direction and oversight to project teams.

The following principles apply to senior decision makers, whether they be part of an organization’s general oversight structure, or part of a project-specific steering committee framework, when dealing with a bidding process for major procurement projects.

1. GENERAL ROLE OF SENIOR DECISION-MAKERS: The overall

role of senior decision makers is to provide project oversight by facilitating a clear decision-making and delegation process in support of project execution by project teams, and to ultimately approve the contract award recommendations of the project team when those recommendations fall within delegated authority.

2. DISTINGUISHING OVERSIGHT FROM INTERFERENCE: Providing

senior-level oversight should be distinguished from interfering with the work of project teams, since interfering with the bid evaluation process can undermine the integrity of the process and, among other things, nullify any resulting contract award decision.

3. SCREENING FOR CONFLICTS:

Senior decision makers, whether they be exercising a general oversight role, or participating as members of a project-specific steering committee, should be screened for potential conflicts in relation to specific bidding processes for which they will be a decision maker.

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4. NO AUTHORITY TO CHANGE GROUND RULES: Senior decision

makers should avoid revisiting their prior decisions once those decisions have been delegated and implemented. The scope of opportunity to set the rules and requirements of a tendering process is limited to the design, drafting and approval process that leads to the public release of a solicitation document and any resulting addenda issued prior to the receipt of supplier submissions.

Once those rules are established and bids are received, senior decision makers do not have the authority to change the ground rules of the bidding process.

5. NO INVOLVEMENT IN EVALUATION: While senior decision mak-

ers may be involved in initial project approvals, related funding decisions, and in determining the composition of project team members for delegating the authority to execute a project, they should not be involved in the administration of a project and, specifically, should not be involved in the evaluation process.

6. STRUCTURAL BARRIERS AGAINST INTERFERENCE: Organi-

zations should establish structural barriers to protect against interference, and the appearance of potential interference, by senior decision makers, in the administration of a bidding evaluation process by enforcing “no-contact” protocols between senior decision makers and evaluation team members. These protocols should prohibit senior decision makers from interacting with evaluation group members in relation to the specific project during the evaluation process, or at any point prior to the ultimate contract award.

7. CONFIDENTIALITY OF EVALUATION TEAM MEMBERS: These

“no-contact” protocols should be bolstered by maintaining the confidentiality of evaluation team members from senior decision makers to protect against actual interference or future allegations of interference.

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

8. MANDATE OF EVALUATORS:

Once bid evaluation teams are properly constituted, it is those evaluation teams, and not senior decision makers, who are responsible for conducting the evaluation process. Evaluation team members are responsible for independently scoring each submission in accordance with pre-established evaluation criteria and procedures. Those evaluation procedures should be moderated by procurement advisors in accordance with proper group evaluation due diligence protocols.

9. SCOPE OF OVERSIGHT IN RELATION TO EVALUATION: It is

not the role of senior decision makers to override or replace the evaluations performed by evaluation team members. The oversight role of senior decision makers should be limited to: (a) confirming that the pre-established and pre-authorized process was followed during the bidding and evaluation process; (b) providing direction in the event that steps in the evaluation process need to be rectified by evaluation team members due to procedural irregularities; (c) providing direction on matters falling beyond the mandate of the project team, particularly in relation to unforeseen events that may arise during the bidding and evaluation process; and (d) determining whether to

proceed with the recommended contract award to the top-ranked respondent.

10. GOVERNANCE OF STEERING COMMITTEES: Senior decision

makers should avoid making decisions in relation to major procurement projects in an ad hoc or informal manner. Project decisions should be made in accordance with the organization’s general oversight practices or, where project-specific steering committee structures are established, in accordance with the formal procedures established for the steering committee. Steering committee decision making should be formally documented and made in accordance with formally approved meeting agendas and formally approved recommendations.

Following the above-noted protocols will help senior decision makers navigate the boundaries between proper oversight and inappropriate interference when dealing with major public procurement projects. SP SUPPLY PROFESSIONAL

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