Supply Professional August 2019

AUGUST 2019

A RISING STAR Gurkirat Singh is leaving his mark on supply chain

Cybersecurity & travel

Digital supply chain Reusable packaging Data management

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2019-08-09 3:18 PM

VOL.61 No.4 AUGUST 2019 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN

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

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COVER: JOHN PACKMAN PHOTOGRAPHY

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FEATURES

ALSO INSIDE

7 DIGITAL SECURITY Keeping employees cyber-safe on the road.

12 IN THE LOOP Pushing the possible with reusable packaging.

4 UP FRONT

8 DATA MANAGEMENT Tips for dealing with today’s info avalanche.

14 RISING STAR Gurkirat Singh is leaving his mark on supply chain.

30 THE LAW

10 DOES PROCUREMENT NEED SPREADSHEETS? Spreadsheets in the digital age.

17 MANAGING SUPPLIER RISK Keeping things smooth with suppliers.

5 BUSINESS FRONT

18 AHEAD OF THE DIGITAL CURVE Innovative technology in material handling.

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Fleet Managment

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UP FRONT

CIRCULAR LOGIC As illogical as it sounds, there was a time when wasting certain resources was seen as a virtue. After the Second World War, some companies began marketing their goods as having disposable packaging, which apparently was a novelty at the time. One such advertisement displayed happy consumers, awash in post-war abundance, throwing packaging into the air in a display of wasteful glee. To the contemporary viewer of these ads, the whole scene appears mildly ridiculous.

Tom Szaky, founder and CEO of TerraCycle, displayed some of these ads during a speech in the spring. Szaky spoke at the SCMA conference in Montreal last April, focusing his keynote address on reusable packaging.

Along with a fascinating history of post-war consumer packaging and attitudes toward waste, he also laid out some of the organizations that his venture, Loop, has partnered with to create more sustainable packaging options. Specifically, packaging that can be reused rather than merely discarded or even recycled.

One example is Haagen Dazs, which is working with Loop on a homedelivery service for foods (like ice cream, of course) and household goods that feature reusable packaging.

Other products Loop works on to create reusable packaging include a toothbrush for which only the end with the bristles needs to be discarded and replaced regularly. This cuts down on waste, along with the packaging that would otherwise be used to ship and display individual toothbrushes.

Such alternatives clearly support sustainability. Contemporary wisdom suggests that reuse is superior to recycling because it cuts waste out of the value chain even before it has a chance to become waste.

But what also struck me was how attractive the packaging actually was for some of these products. The ice cream containers are sleek and silver.

The toothbrushes are polished and modern in appearance. The projects change an everyday, disposable item like a food container or personal hygiene into an interesting design item.

The products fascinate me because they show what’s possible.

Society’s view of waste has long been as an inevitable byproduct of production. Sure, this thinking goes, it must be dealt with but it’s always going to be there. Reusable packaging short circuits that thought process— you’re preventing waste rather than managing it after it’s produced.

It also contributes to a circular economy, as the resources used to produce and package goods are kept in the value chain, producing more value, rather than discarded.

It’s also noteworthy the degree to which supply chain and procurement are integral to this process. Supply chain and procurement collaborate with suppliers, think about the packaging and, through social procurement, work to ensure communities benefit from the buying decisions that organizations make.

This helps not only to boost sustainability, but to create additional value for organizations while benefiting local communities in the process.

Ultimately, it’s hard not to see the benefits.

PUBLISHER/ADVERTISING SALES DOROTHY JAKOVINA 416-441-2085 ext 111, dorothy@supplypro.ca EDITOR MICHAEL POWER 416-441-2085 ext 110, michael@supplypro.ca DESIGN Art Direction BARB BURROWS Design Consultation BLVD AGENCY CUSTOMER SERVICE/PRODUCTION LAURA MOFFATT 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com 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, Corporate Social Responsibility—RBC Global Procurement JEFF RUSSELL Senior Manager, Purchasing, Curtiss-Wright Corporation 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.

Publisher reserves the right to refuse advertising that does not meet the standards of the publication.

No part of the editorial content of this publication may be reprinted without the publisher’s written permission. © 2018 iQ Business Media Inc. All rights reserved. Printed in Canada.

MICHAEL POWER, Editor 4 AUGUST 2019

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SUPPLY PROFESSIONAL

2019-08-12 12:01 PM

BUSINESS FRONT—BY MICHAEL HLINKA

NEGATIVE INTEREST RATES ARE THEY THE NEW NORMAL? I tend to focus on what’s going on in the North American economy.

This is understandable. I live in Canada and the majority of my equity investments are headquartered in the U.S. There has been a great deal of discussion lately about interest rates, and whether the Bank of Canada and Federal Reserve should be cutting them. At the most recent meeting of the Bank of Canada, rates were held steady. There is a broad consensus that at the next meeting of the Fed, rates will be reduced by 25 basis points.

But what is happening in Europe right now is much, much different.

Interest rates are actually negative.

This is almost unbelievable to someone like me who got his grounding in the time value of money (which is what interest rates are really all about) from watching Popeye cartoons as a young boy.

There was this character, Wimpy, who famously and frequently said: “I’d gladly pay you Tuesday for a hamburger today.”

Wimpy understood the time value of money which means he understood interest rates. Give me a hamburger right now and I’ll pay for it in the future. This implies that there will be no interest charged on the money that is owed, which is one heck of a deal!

Back to Europe and negative interest rates. If I can flip Wimpy’s saying to explain what’s going on, it would go as follows: “I’d gladly pay you immediately and get that hamburger next Tuesday!”

Negative interest rates mean that I pay €1,000,000 right now for a debt instrument and receive less than that in the future! And this is not an isolated phenomenon.

Negative interest rates pertain to approximately $13 trillion-worth of government debt.

NOMINAL RATES We saw negative interest rates 10 years ago. In the credit

crisis of 2008–2009, there was understandable fear about the solvency of major financial institutions. It didn’t make sense to hold billions of dollars in liquid cash-like assets in a bank that could go bankrupt, which would mean that you might get back only pennies on the dollar. It was preferable to hold governmentbacked securities (which is what treasury bills or government bonds represent), even if the return was negative. At that time and in that particular context, negative interest rates could be justified. They are harder to understand right now.

Harder, but not impossible.

There is another way to interpret negative interest rates and it starts with an understanding of how, at least theoretically, nominal interest rates are established in the first place. “Nominal” interest rates include an inflation component.

When you walk into a bank and you see GIC rates posted on a wall, these are nominal interest rates.

When that same bank quotes a five-year fixed mortgage rate, this is also a nominal interest rate.

Expressed formulaically, it looks like this: nominal interest rate=real interest rate+inflation.

Therefore, if inflation is three per cent and investors require a real return of two per cent, then the nominal interest would be five per cent.

OK, now we’re seeing that, in Europe at least, nominal interest rates are negative. So let’s re-write that equation: nominal rate (-1 per cent)=real rate+inflation.

To make the equation work, either the real rate and/or inflation could be negative. I’m going to focus on inflation and why negative interest rates could become the new normal.

I believe that after 20 years of economic stagnation, the developed world is on the cusp of a productivity boom that will

dwarf what we saw over the 1980s and 1990s. Between artificial intelligence (AI) and robotics, manufacturing is being radically transformed. I recently met with the head of a private equity firm that specializes in these technologies and he described visiting a plant in the suburbs of Toronto. It was a huge location— several football fields would have fit comfortably in it, production was humming along … and he could have counted the number of employees on both hands. This is profoundly anti-inflationary.

Robotics is transforming manufacturing while AI is transforming the service sector and productivity is in the process of going through the roof!

Yet at the same time, it is my belief, and even fear, that real economic growth will be tepid. The public sector continues to grow at the expense of the private sector.

We will continue to treadmill more and more young people in useless college and university degrees, wasting their time and burdening them with debt. Putting this together means anti-inflationary pressures combined with tepid economic growth and interest rates should be negative.

And if the central banks in North America are smart, they’ll see the writing on the wall and cut rates sooner rather than later. SP

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

“ Negative interest rates mean that I pay €1,000,000 right now for a debt instrument and receive less than that in the future!

And this is not an isolated phenomenon.”

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2019-08-09 3:18 PM

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Oil & Gas Supply Chain and Procurement Canada September 10-11 Calgary, AB

CAMSC Business Achievement Awards September 26 Toronto, ON

GBTA Western Canada Conference October 16-17 Calgary, AB

Distribution Logistics Summit November 5-6 Brampton, ON

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Canadian Manufacturing Technology Show September 30-October 3 Toronto, ON

Canada Logistics Conference October 23-25 Niagara Falls, ON

ACTE Global Summit November 21-22 Montreal, QC

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SUPPLY PROFESSIONAL 2019-07-26 12:00 PM

2019-08-09 3:18 PM

BY WENDY STACHOWIAK

CYBER SECURITY AND BUSINESS TRAVEL MITIGATING RISK ON THE ROAD Whether you’re a seasoned road warrior, or a once-a year-tripabroad traveller, business travel poses unique cyber security threats.

Business travellers carry sensitive data, both business and personal, on many devices including smartphones, tablets and laptops.

Easily available WiFi networks, cell phone roaming service and the ubiquity of the cloud enable travellers to be connected. But this presents opportunities for cyber threats to target new technologies, which often lack security.

The internet of things, artificial intelligence and voice recognition software have multiple benefits for users, but to provide these services, these technologies use intrusive collection methods to obtain personal and sensitive data, making them targets for cybercriminals.

Control Risks published a Cyber Threat Landscape Report in 2017, in which 46 per cent of respondents believed their organizations’ boardlevel executives do not take cyber security as seriously as they should.

As well, 43 per cent of all respondents reported a compromise or data breach in 2016. Additionally, 37 per cent of IT and business pro-

fessionals globally said employee education and awareness was their biggest cyber security challenge.

Cybercriminals threaten business travellers and the organizations they represent with reputational damage and financial losses. Control Risks’ research and experience shows that travellers to a wide range of countries face a growing threat from cybercriminal activity, both from sophisticated as well as less capable groups.

Cybercriminals use techniques such as drive-by downloads and phishing attacks to facilitate financial fraud and steal credentials (for online banking, for example).

They typically also use remote access Trojans (RATs) to install malware, allowing them to monitor victims’ behavior on their devices.

THE COST OF CYBER ATTACKS Lloyd’s Bank says the global total cost of data breaches for businesses in 2015 was $400 billion and is expected to reach $2.1 trillion in 2019. According to Control Risks’s Cyber Threat Landscape Review 2017, in 2017 deploying malicious updates to software already installed on computers became one of the most dangerous methods.

That review noted 264 significant cyber-attacks were recorded between January 1 and September 30, 2017. In the same period, 75 countries were impacted by cyberattacks. Travellers should take precautionary measures before, during and after travel, especially to high-risk locations.

There are several common cyberattack techniques used against business travellers. These include: DATA BREACH Theft of data due to limited security measures could lead to leaks of sensitive and reputation damaging information;

Travellers should take precautionary measures before, during and after travel, especially to high-risk locations.

DDoS – Using infected devices that lead to slow or unresponsive web facing devices and applications; RANSOMWARE Malware which encrypts data until a ransom is paid.

Increasingly used as a smokescreen for deeper network intrusions; MALICIOUS UPDATES Malicious requests for software or application updates. Hard to detect as installed malware runs in the background; PHISHING SMS and emails impersonating legitimate actors, involving malicious links or attachments used to install malware; UNAUTHORIZED ACCESS Using stolen credentials or brute force attacks (guessing username and passwords) for access to a network or device. Has been the highest threat score in the past 2 years due to its potential for privilege escalation and lateral movement; FINANCIAL FRAUD Usually through phishing emails. Luring victims into making illegitimate payments or redirect legitimate details to criminal accounts.

Several points of cyber-security vulnerability exist for travellers.

These include rogue wi-fi, which are wi-fi hotspots in airports, hotels and other public places that can be subject to packet sniffing attacks.

These put at risk the confidentiality of communications being sent over that network and may lead to credential theft and network breaches.

Eavesdropping includes snooping, in person or through video, can lead to credential theft or sensitive data disclosures.

Device theft can also lead to data breaches and sensitive data leaks.

This may be carried out both by criminals and more advanced groups. As well, USB chargers that are supplied at public places for convenience can be used to download and execute malware onto your devices.

TRAVELLER PROTECTION Before travelling, research location-specific cyber threats.

Implement security measures to prevent issues while travelling, and avoid advertising online the exact location/purpose of your business trip. As well, ensure all software on

Wendy Stachowiak is VP of global travel partnerships at International SOS and vice-chair of the GBTA Risk Committee.

your devices is up-to-date. Avoid connecting to non-secure networks (public wi-fi hotspots) and, if possible, disable any wi-fi and Bluetooth capabilities.

In high-threat locations, maintain physical control of your devices and sensitive information.

Keep your laptop as carry-on and don’t loan it to anyone. When returning from a trip, or if you have witnessed suspicious activity on your devices, ask your IT service desk to check for signs of cyberattack. Do not connect your devices to sensitive networks until they have been verified as safe.

There are preventive and protective actions that employees can take while in an office setting as well, including: • Back up your data regularly, and make sure your anti-virus software is always up to date; • Practice good password management; • Adopt simple cautious behaviours; • Never leave your devices unattended; • Constantly monitor your accounts for any suspicious activity and do not hesitate to report something suspicious; • Always be careful when clicking on attachments or links in email • Sensitive browsing only on a device that belongs to you and on a network that you trust; and • Be careful of what you plug in to your computer.

Cyber-risks are more prevalent than ever. But by using the tips above, travellers can work to ensure their sensitive information is as protected as possible. SP SUPPLYPRO.CA 7

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2019-08-12 12:02 PM

BY MICHAEL POWER

ACCURATELY COLLECTING, PRESENTING AND INTERPRETING INFORMATION IS MORE IMPORTANT THAN EVER As business becomes more global and digital, technology is more integral than ever to the way companies operate. This puts a vast amount of information at the fingertips of most supply chain professionals. Companies therefore must process and interpret data in ways that are beneficial to their organizations.

As well, companies must now deal with data in real time, says Maria Greaves-Cacevski, strategic sourcing, pharma services group, at Patheon. Software and information systems support global supply chains and networks, and data is the foundation of that. Without accurate data, knowledge-based business decisions become impossible, Greaves-Cacevski says.

Global business means more risk, she says, and organizations are using more data systems than ever. There are online systems such as SAP and Oracle, and even tools like Excel spreadsheets remain common. “That’s why good data is critical to any sort of supply chain or procurement network, because that’s the 8 AUGUST 2019

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only tangible (thing) that we can make any sort of purchasing decisions, logistical decisions (from),” she says.

The quality of an organization’s data is affected by the rate of human error in dealing with that data, Greaves-Cacevski says. Typos, for example, can affect data quality. Clarity is paramount. Many companies therefore will accept orders only from SAP, she says. As well, real-time data is critical, she says. With data snapshots like forecasts, organizations open themselves to risk. Circumstances change and an inventory count may have adjusted inventory levels. Another supplier could then place an order that uses whatever inventory was shown.

A new client means the demand forecast goes up. But while a forecast is merely a snapshot, real-time data shows what’s actually happening.

The concept of garbage in, garbage out is critical to planning, Greaves-Cacevski says.

If an organization’s warehouse management system isn’t connected to a customer

COMMUNICATION IS KEY Having a consistent format for how data is communicated and received is useful, GreavesCacevski says. Sending data as a snapshot in a format that can’t be edited or manipulated—for example a PDF—provides the sender peace of mind. But it creates the potential for error if the receiver must transcribe that data in some way into another format or document. If the receiver is in a hurry, they may keystroke the wrong number or value. That can create a trickle effect, spreading inaccurate data to others.

“We need to make sure that we have a consistent way of communicating or transcribing our data,” Greaves-Cacevski says. “It might be more effective for me to give you Excel. You can use the Excel because that’s pretty common to most of our ERP systems. That way it’s easy to upload and you are uploading the accuracy of the data.”

As well, ensure data isn’t over- or undercommunicated, Greaves-Cacevski advises.

When communicated down, data must be more succinct and granular. When communicating up, it may be enough to provide the big picture, or how information affects a specific goal or SUPPLY PROFESSIONAL

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ILLUSTRATION: ANGELICA YIACOUPIS

MASTER YOUR DATA

relationship system, which isn’t connected to demand flow and so on, each functional group remains disconnected, she notes.

“All of these systems are connected through data,” Greaves-Cacevski says. “You input data to place a buy. You input data to release and receive inventory. You input data to pay for that released and received inventory. A lot of crossfunctional teams rely on the accuracy of data.”

Like having no data, bad data comes with risks, Greaves-Cacevski says. Regularly reviewing data helps practitioners to become more familiar with its accuracy. Procurement often bases decisions from forecasts, which often comes from entities like customers, suppliers and even from within the procurement team itself. Monitoring data helps validate where changes occur and therefore aids in predicting what’s going to happen, she says.

ILLUSTRATION: ANGELICA YIACOUPIS

First, you should validate the source of the data, how was it gathered, how many samples are being looked at and who gathered the data. target. “You need to be able to show your data in a way that your audience can capture the essence without questioning the data,” she says.

Finally, Greaves-Cacevski recommends having an organization’s master data steward or team regularly vet data in a consistent, regular format. Organizations invite miscommunication when they change the way data is communicated. Doing so can use more resources as an organization struggles to interpret faulty data. “If we’re presenting the data in a way that it can’t be easily understood or interpreted, then we’re delaying how quickly that data can be optimized,” she says. “And we’re also essentially making that data useless.”

Supply chains face a data “tsunami” from procurement, accounting and ERP systems, external business partners and even connected devices, says Mark Morley, director of strategic product marketing at OpenText. This data impacts business leaders’ decisions and making sense of it is a challenge for many companies.

That data must be timely and accurate.

Reducing time and improving the speed of information flows is important, Morley says.

For example, seamlessly exchanging advance ship notices (ASN) between a supplier and car manufacturer is important because this notifies the manufacturer when an inbound shipment will arrive at the factory gate and when parts can be fitted to a car. This information is important as part of a just-in-time production system. Ensuring that the notice is in electronic format so it can be exchanged seamlessly between business systems is critical.

It’s equally vital that data exchanged between trading partners be accurate, he says.

If inaccurate information is exchanged, it could then be brought into SAP, for example, potentially impacting downstream production systems. Being able to check business transactions before they enter ERP essentially places a ‘firewall’ around applications.

To help ensure good data, rules can be set up and aligned with business processes so that information contained in transactions

aligns with business rule templates, Morley says. Many companies have business rules or templates in place to define how data should be formatted and exchanged across the supply chain. There are also tools to help validate data against business rules and information, then accepted or reworked. “Companies should consider leveraging analytics against this transactions data,” Morley says. “This can provide deep insights into whether business transactions have complete and accurate data compared to previous or historical transaction flows, and it can also indicate the performance of the trading partner concerned.”

Morley recommends setting up processes to check data quality and that ASNs match the order (the same goes for receiving an invoice without an ASN already received).

Define the rules for each process to which each transaction type must adhere or align. Have some communication, for example a detailed return email, to tell the sender an inbound transaction has been highlighted as inaccurate.

This should announce the transaction has been discarded and not delivered. This protects backend systems and forces suppliers to check data accuracy before sending. Morley also suggests considering AI or have workflows to do repetitively analyze transaction flows and ensure data accuracy.

Good data lets organizations make solid decisions, while bad data can lead to poor decisions, notes Jason Newbold, co-founder

and COO of DirectRFP, a cloud-based RFP community platform. Having valid data allows procurement teams to understand the marketplace for the goods and services they are looking to buy which is the most critical component in any negotiation, Newbold notes.

“First, validate the source of the data, how was it gathered, how many samples are being looked at and who gathered the data,” he says.

“Do they have an ulterior motive? Second, you should start with your current environment and compare the data you’ve received to what you know in your environment. Does it measure up?

Lastly, check with peer groups, do they have similar data points and reference?”

Once data has been acquired and validated, organizations can ensure there’s a strategy in place to leverage that data, Newbold says.

Typically, DirectRFP’s clients seek to leverage data to negotiate better rates, better contract terms and improved goods and services. Using that data to negotiate with vendors and partners can not only help realize those results, but also help strengthen relationships with end partners—sharing validated data with vendors can help them work to meet an organization’s needs while remain competitive in the market.

“Too many times we see the negotiation of a deal lead to a sour relationship as buyers may believe that by berating the vendors they can get a better ‘deal’ and in many cases without good data to help the vendor there is still gaps in the final ‘deal,’” he says.

‘Big data’ is now a common phrase, Newbold notes. The more data, the more likely an organization is to make better decisions.

Technology can help gather and correlate that data. “Business continues to become more competitive and we all need to be more efficient in our processes—and with the combination of technology and data we can be,” Newbold says.

As the world becomes more globalized and digital, data is more important than ever.

Procurement organizations would do well to ensure their data is as accurate as possible and communicated effectively to help optimize performance. SP SUPPLYPRO.CA 9

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2019-08-09 3:18 PM

BY JON HANSEN

THE END OF SPREADSHEETS

Jon Hansen is editor and lead writer for the Procurement Insights Blog and was host of the PI Window on The World Show on Blog Talk Radio.

DO SPREADSHEETS HAVE A PLACE IN THE DIGITAL PROCUREMENT WORLD? Earlier this year, I wrote an article about the S2P process and its impact on distribution. The industry experts with whom I talked indicated that the continued utilization of spreadsheets in the S2P quoting process was a weak point regarding most digital distribution platforms.

In and of itself, it was an interesting article to write given the way that the Amazon model has radically changed our view of the modern supply chain. It was also a timely piece because I was about to moderate an international guest panel discussion on the topic, and I was looking to my research to provide the insights for many of the questions I would be asking the panelists.

But here is the thing; at the time I did my research, it was in the context of Supply Chain 2.0. However, I also discovered that McKinsey was talking about the emergence of Supply Chain 4.0? I could not help but wonder if I’d missed something, especially since the industry had apparently skipped over 3.0 from 2.0 to get to 4.0. I know, it is “point 0” overload. I had to learn more.

But never mind the X’s, what are the 0’s?

For those who don’t have a program to identify the players and the various versions of their Point 0’s, below is a brief primer on what I discovered.

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Supply Chain 2.0: In June 2016, Accenture wrote a paper called Supply Chain for a New Age. In it, they introduced the Supply Chain 2.0 concept, which focuses on rapid demand sensing, scalable supply networks, intelligent predictive capabilities and connected supply ecosystems.

The authors of the Accenture paper then go on to say that future 2.0 is enabled by “six core pillars.” Again, this original information was from 2016. When I did my research, there was also a January 4, 2019 CNBC advertorial piece presenting 2.0 as if it were still the standard, so keep that in mind as you read further.

Supply Chain 3.0: Now, this is where it starts to get a little confusing. A November 20, 2012 (that’s right, 2012) article in the European Business Review talks about how Supply Chain 3.0 will “automate and transform the rules of the global supply chain.”

While the European article made random references to manufacturing, ERP platforms and the dot.com boom, two years later a Supply Chain Brain article summed up 3.0 by saying that it is “the Internet of Things that will combine with Web 3.0 technology.”

Here is my question: how does 3.0 come before 2.0? Did we take a step forward with 3.0

and then take a step back by way of 2.0?

Supply Chain 4.0: In October 2016, McKinsey published an article—are you ready for it—about Supply Chain 4.0 and how it “will make your organization faster, more flexible, more granular, more accurate, and more efficient.”

So, to be clear, in June 2016 Accenture coins the term Supply Chain 2.0. In October 2016 McKinsey introduced Supply Chain 4.0.

In a matter of five months, we go from 2.0 to 4.0, only to discover that the concept of Supply Chain 3.0 was introduced four years earlier, in 2012. It must be the new non-sequential math?!?

DON’T GET LOST IN THE 0’S Regardless of what number precedes point-0, I found that the McKinsey article was from an S2P perspective most interesting in that it brought all elements of the digital supply chain into focus. This is especially true in areas such as internal and external demand and predictive analytics, the Uberization of transport capacity and agility and the utilization of advanced algorithms relating to demand probability and fulfillment.

Another interesting area of impact—and this relates more directly to my article and panel discussion, is how McKinsey reports that digital SUPPLY PROFESSIONAL

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will enable prices to be “dynamically adapted to optimize the overall profit made,” while simultaneously “minimizing inventories.”

This last point from McKinsey aligns with my overall belief that an integrated, intuitive and streamlined digital S2P process will finally start to reduce, if not eliminate, the persistent dependence on spreadsheets in the procurement world.

In other words, and particularly as it relates to the distribution quoting process, spreadsheets have no place in a digital supply chain. Getting away from procurement’s long-standing reliance on them should be one of the top objectives with going digital.

CHANGING THE SPREAD (SHEETS) Is it possible that the time of spreadsheets is coming to an end?

In a recent TweetChat I had with Bank of America University Distinguished Professor Robert Handfield, he reported that a recent survey found that 70 per cent of procurement people still rely on Excel as “their number-one tool.” In a digital world, this is an unacceptable number. In follow-up comments, it is clear that Handfield believes that this reliance on

Ignoring the added cycles associated with using spreadsheets for quoting, if there is such a large propensity for error, why are they still considered to be a viable tool? spreadsheets has to change.

He is not alone in his thinking. Although hedging his bet with the words “it’s possible to remove the reliance on spreadsheets,” industry expert Steve Wargalla agrees with Handfield’s position about spreadsheets. Wargalla, who is a leading authority on distribution in the digital age, believes that the industry is starting to see the value of having a digital database with extensive search capabilities and intuitive analytic functionality to simultaneously acquire quotes, assess best value pricing and fulfill

customer requirements within a minimum keystroke framework.

Both Handfield’s and Wargalla’s digital confidence will likely be bolstered by a Procurementexpress.com report that indicates that “90% of excel spreadsheets are sensitive to human errors.” Ignoring the added cycles associated with using spreadsheets for quoting, if there is such a large propensity for error, why are they still considered to be a viable tool?

COMING BACK TO SUPPLY CHAIN POINT 0 Whether you call it Supply Chain 2.0, 3.0, or 4.0 (and yes there is, according to industry experts, a 5.0 on the near horizon), it appears that digital transformation can move procurement into a brave new world of error-free efficiency and freedom without the continuing dependence on spreadsheets. Alright, maybe not across all areas of a supply chain practice, but at least in strategic areas such as distribution quoting.

Referring once again to my article and guest panel discussion, the quoting part of the S2P distribution process would be a logical starting point to dispense with spreadsheets and go digital. After all, every long journey begins with a single small step. SP

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2019-08-09 3:18 PM

BY TOM SZAKY

IN THE LOOP

TRANSITIONING THE SUPPLY CHAIN FROM LINEAR TO CIRCULAR Businesses are faced with significant challenges every day. Among the most demanding are working towards a supply chain that is sustainable, yet profitable. It’s no longer about minimally meeting environmental regulations but creating value for consumers and stakeholders.

The focus is toward more innovative, opportunity-focused thinking that considers impacts on the planet and society (is it positive, neutral or simply “less bad”?) and prepares organizations for resilience and growth in an uncertain future.

For consumer packaged goods (CPG) companies, thinking critically about the function of packaging and the ways they can change the paradigm around production and consumption is one aspect of designing a supply chain that can take us out of the linear and into a regenerative circular economy.

As the system currently operates, industry produces on a one-way track to landfilling and incineration. Raw material is sourced from the earth to produce commodities sold, used and disposed, and the value of the material is lost— either buried or burned. Facilities waste and other pre-consumer materials meet the same fate.

FROM LINEAR TO CIRCULAR This make-use-dispose pipeline is known as the linear economy because products and packaging, once manufactured and used, too often go in one direction: the garbage. Conversely, the 12 AUGUST 2019

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concept of a circular economy keeps resources in the supply chain at high value by recovering, reusing and repurposing whenever possible.

Within this context, supply chain doesn’t just refer to the materials and processes involved in the back-end of making and distributing something, but the full lifecycle of an item, including when it leaves the production line.

The consumer goods supply chain is currently quite wasteful end-to-end; focusing on packaging reveals significant opportunities for improvement.

Many “green” packaging trends aim to solve for waste with the end-user, the link where the value of material is visibly lost. For example, biodegradable bioplastics made of renewable feedstocks instead of petroleum are supposed to break down in the environment as plastic litter does not. This demonstrates a change in raw material sourcing and an attempt to prevent litter with a material that will decompose.

However, most compostable bioplastics need an industrial composting facility to break down.

There are only a handful of those globally, and many don’t want this in their piles. What’s more, the resources needed to produce bioplastic are agricultural space, water and material the world is nowhere near able to sustain at scale.

Another example of manufacturers aiming to tackle waste on both ends of the supply chain is the practice of lightweighting packaging by either replacing materials with a lighter weight alternative (glass with plastic) or using less

material. The idea is less waste at the front and back end, but often results in a product or package rendered non-recyclable through conventional channels.

What neither of these methods do is value resources such that they are kept cycling within the supply chain and in use for as long as possible, extracting their maximum value and recovering them for reintegration. Each practice assumes the resources that go into producing packaging, and the resulting post-consumer waste, is disposable and still treats the material as single-use.

We did a lot of reflection and realized that the foundational cause of garbage is disposability.

For a packaging designer, an effective approach when considering materials is to make packaging out of material that recyclers want and have the technology to handle. It’s about the entire supply chain and the potential for a recycling company to make a profit.

But a circular economy is one that focuses on durability and use of renewable resources, including energy inputs. Recycling, while important, is energy and resource intensive, which is why so many items are not considered cost-effective to recycle.

THE NEED FOR PROFIT Packaging design for profitability is certainly complex enough without considering the full life cycle of materials. Manufacturers and brands that commit to sustainability in a practical, scalable way stand out in an industry that still profits from the status quo, but it must be profitable in order for it to stick in the short-term.

Rethinking all aspects of the supply chain, from sourcing to end-of-life, is the key. Above all resources, true change requires boldness.

TerraCycle’s new circular shopping platform Loop works with brands to create durable versions of goods previously housed in singleuse packaging. The products are offered in a combination of glass, stainless steel, aluminum and engineered plastics designed to last at least 100 uses; when they do wear out, TerraCycle is SUPPLY PROFESSIONAL

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Tom Szaky is the founder and CEO of TerraCycle

able to recycle them, cycling the value of the material.

Offering trusted brands in upgraded containers, consumers enjoy products they love while eliminating packaging waste—a “winwin” for profitable, sustainable supply chains.

Conveniently delivered to one’s doorstep, the Loop Tote doesn’t use bubble wrap, air packs, plastic foam, or cardboard boxes, also scrapping excess e-commerce packaging material.

With Loop, brands are taking the bold step of owning their package at every link on the supply chain and putting their packages back on the line.

Thinking critically about the function of packaging and the ways they can change the paradigm around production and consumption is one aspect of designing a supply chain that can take us out of the linear and into a regenerative circular economy.

While the goal of the platform is to eventually eliminate single-use packaging from the waste stream altogether, manufacturers have the opportunity to offer their refillable products as an additional SKU in their product lines, which has virtues for large and small brands alike.

While large companies have the resources and funding to take on a lighthouse project like this, smaller businesses have the flexibility to design for sustainability in the

now. Corporations such as Procter & Gamble and Unilever can make a huge impact here, while young companies like Soapply and Melanin Essentials set the standard for making sustainability a part of their DNA. As an integral aspect of the supply chain, retailer partnerships bring the packaging into stores, making it accessible for consumers. In the United States, our founding partners are Walgreens and Kroger, Europe has Carrefour, and Canada’s largest food and pharmacy retailer Loblaw Companies Limited recently announced it would launch the platform in the country early-2020.

Developing close collaborations of this kind creates a strong position for all players to offer higher-value products with less waste on the back-end. Reconciling innovation and growth with sustainability is by no means an easy task, and dialogue with all stakeholders yield morecomplete information and options to consider.

An important thing to remember is that supply chains are about people, not just processes. What’s interesting is the higher up the waste hierarchy you move (from litter to landfill, waste to energy, to recycling, upcycling and reuse) the more jobs you create in the process.

In terms of injecting value in moving from the linear to the circular economy, this is a positive most of us can agree on.

In the end, sustainability comes down to taking responsibility. What companies tend to be good at is being efficient in their operations.

Focus less on the physical factory as the point of the environmental issue and realize everything put out on the market will become garbage unless you take responsibility for it. Everything leaving the factory currently becomes waste.

Design products that have value, instead of harm. The circular economy at its ideal is intended to be regenerative. Shouldn’t we aspire that our products actually create a benefit? Even If we get to 100 per cent recycling, 100 per cent recycled content and zero packaging waste from reusable packaging, we’ve only hit net neutral.

What is net positive? We need to start thinking about that versus just going about how are we going to eliminate our negative. SP

Haagen Dazs partners with Loop for a subscription home delivery service for foods and household goods with reusable packaging. The Nestle brand is the ice cream partner for the pilot project in New York.

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A RISING STAR GURKIRAT SINGH IS LEAVING HIS MARK ON SUPPLY CHAIN Entering the supply chain field indirectly, for example by falling into it from fields such as finance or operations, is common for many in the profession. In that way, Gurkirat Singh’s story is a familiar one. Singh is a mechanical engineer who graduated from university with a Bachelor of Engineering in India. He worked in the tire and automotive sectors in technical roles before immigrating to Canada, pursuing an MBA and, finally, landing a supply chain internship and career.

But what perhaps sets Singh apart is the speed at which he has risen in his chosen field.

In a short span, beginning in spring 2017, he went from a student intern at facilities management services firm BGIS in Markham, Ontario to strategic sourcing specialist at the company. In April 2018, he won the Rising Star Award during the EPIC Awards, held at the ProcureCon Canada conference in Toronto.

The same year, he won the company’s internal accolade, the 2018 BGIS Inspiring Excellence Annual Award. Most recently, he was promoted at BGIS to strategic sourcing manager.

Singh studied in India’s southern state of Karnataka and graduated with a Bachelor of Engineering degree in 2011 before starting work in Delhi at an Indian company called JK Tyre & Industries for three years. He then worked at Honda for a year. During this time, Singh’s roles were quite technical, involving product development, R&D and quality control.

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with manufacturing, purchasing and supply chain teams, and Singh gained exposure to these departments during this time. He saw that supply chain professionals used a very different skillset than what he had become used to up until that point in his career.

“They don’t just rely on the hard skills,” Singh says. “They relied a lot on the soft skills—people management, relationship management, vendor management, which is very, very important.”

MAKING A MOVE After four years in the workforce, in an attempt to broaden his business exposure, Singh decided to pursue an MBA. Following the example of an acquaintance who had moved to Canada, Singh applied for and received permanent residency status here in 2015.

Singh landed in Calgary in the middle of that city’s oil crisis. This, he now says, was a big wake-up call for him. While he had by this time decided he wanted to get into the supply chain field, he found he was competing against professionals who already had the needed skills, along with a decade or more of Canadian experience in the profession, who had been laid off during the crisis. Singh realized he’d have to ensure he could compete.

“Frankly I did a kind of gap assessment, a skills assessment,” he says. “I thought that, ‘OK, I need to upgrade myself. I need to bring myself on par with the people I’m competing with. I

saw that this industry is so competitive that I can’t just sit there and not do anything. That’s when I decided to do an MBA.” Singh applied to several business schools and was accepted into the Schulich School of Business at Toronto’s York University. When asked, he would tell the school interviewers that his future career goals revolved around supply chain and that he hoped to rise to the executive level. Because of his experience at JK Tyre & Industries and Honda, he had a solid manufacturing background. But he now saw supply chain as a growing, evergreen industry where he could leverage his experience and hone his skills.

“I could have looked into something completely different, like finance,” he says. “But I don’t think that excites me. Supply chain has challenges and it’s a pretty dynamic field. That’s always attracted me.”

But once he began his MBA studies in earnest, Singh realized just how much he had to learn about supply chain. The first year featured a handful of supply chain focused courses that helped him learn more about areas like purchasing and logistics. The school also offered an internship opportunity, through which Singh landed his spot at BGIS. The internship, he says, was useful because it allowed him to get a foot in the door and demonstrate his experience.

Singh works at the company’s head office in Markham, Ontario. BGIS manages facilities on behalf of clients, overseeing the day-to-day running of facilities for those clients, including equipment maintenance, janitorial services, landscaping, snow clearing and so on.

Singh worked as an intern for four months, and BGIS then allowed him to continue working part-time while he continued studying fulltime. The company then hired him full-time as a strategic sourcing specialist after graduation and Singh saw his responsibility increase. He could then work with a bigger variety of clients.

And like many in the field, Singh says that every day is very different in a dynamic area like supply chain and procurement. One reason SUPPLY PROFESSIONAL

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IMAGE: JOHN PACKMAN PHOTOGRAPHY

BY MICHAEL POWER

IMAGE: JOHN PACKMAN PHOTOGRAPHY

I could have looked into something completely different, like finance.

But I don’t think that excites me. Supply chain has challenges and it’s a pretty dynamic field. That always attracted me. for that is, BGIS is a large organization with a range of clients across several industries. That environment allows Singh to work on several different things and avoid monotony, which he says is an important aspect of any job for him.

As a strategic sourcing specialist, Singh managed four categories for BGIS clients: elevators, fire light safety, UPS and generator maintenance. He prepared strategic procurement plans for clients, in which he would work to leverage BGIS’s volume and buying power.

Once a client approves a plan, a baseline analysis must be done regarding areas like the spend and targeted outcome for such a project.

From there, procurement initiatives must be decided to deliver value to clients and their customers. Vendor management also comprises a big part of the role.

“Procurement is not just about cost savings.

I frankly learned that these two years,” Singh says. “People are moving away from just cost savings. They want cost savings coupled with service improvement, coupled with something which is innovative—something which is sustainable—and creates value for the client and the end user. Sometimes you need to give a bit to improve the service quality or achieve your

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You keep on working on new things, you keep learning new things—that’s a goal. If you keep on learning, if you keep on challenging yourself, you’ll grow.

complete target. It has to be a win-win situation for you and the supplier and the client. Everyone has to be happy in the whole loop.”

As of July 22 Singh’s new position is strategic sourcing manager, and he now manages multiple accounts. His area of responsibility includes overseeing sourcing activities for facility management, capital projects as well as managing vendor management activities. “This role provides me with complete end-to-end exposure and a great learning opportunity,” he says. “I’m looking forward to pushing myself and growing personally and professionally.”

ACCOLADES Among his professional accomplishments so far, those that involve recognition from his peers stand out to Singh. Both the EPIC Award at the ProcureCon Canada conference and the 2018 BGIS Inspiring Excellence Annual Award—which he received in his first year working there—hold special meaning for him.

The project that ultimately landed him both awards was a multi-client elevator maintenance RFQ. Singh’s executive team nominated him for the company’s quarterly performance award.

From among those winners, the company’s CEO and executive team then choose winners of the annual awards. After winning the BGIS annual award, Singh won the EPIC Award for the same project.

“As a fresh graduate I don’t think there’s anything better you could ask for,” he says.

“Your peers, your team members, your management team believing in your ability— once you get recognized, your confidence grows. You know that whatever you’re doing is right. And you have to continue doing it.”

Singh credits both the Schulich School of Business and BGIS for offering support and flexibility while he worked and studied simultaneously. During the second year of his MBA, he would spend between 25 and 30 hours a week working at BGIS while also studying.

But the experience helped him hone his project management and time management skills. For 16 AUGUST 2019

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example, he could attend class in the morning then work on projects for BGIS for the rest of the day from the school’s library. He also attended classes on weekends.

While Singh has accomplished much during his relatively brief sourcing career, he also has his sights set on the C-suite. His end goal is to reach the executive level, perhaps as CPO or COO. In the short term, his plans involve continuing to learn, challenge himself and take on more responsibility. On the one hand is the development of hard skills.

Supply chain changes rapidly these days and practitioners must work to keep abreast of those changes. While his MBA degree specialized in supply chain management, Singh is also considering working towards a designation such as the SCMP, offered by the Supply Chain Management Association (SCMA).

“Procurement is not just about running solicitations. You need to improve the whole process,” Singh says. “I’ve also been looking at process improvement and the Lean Six Sigma.

I got a green belt and in the long term I want to get a black belt, then bring that onboard with what I’m doing right now.”

In terms of soft skills, Singh says his major focus is improving his communication ability. In supply chain and procurement, relationships are paramount and the ability to deliver a message in the right way—a way that suits all parties—is important. To develop those skills, Singh says he is also considering taking public speaking courses.

And he hasn’t limited his accomplishments to the supply chain world. One of his personal interests is running, and Singh has completed six half marathons and one full marathon over the past three years. The experience, he says, has been exhilarating while also keeping his mind and body fit to perform at the necessary level for his sourcing role.

MIXED PERSPECTIVE Because of his mix of experiences, Singh says he is well-suited to offer guidance from three

different perspectives for those looking to enter the field: as a recent immigrant, fresh graduate and a sourcing professional already working in the field. While Canada is receptive to those from other countries, recent immigrants must remember that the Canadian job market is not easy—it’s a highly competitive environment. A skills or gap assessment can help those who are new here to figure out what areas they need to improve. Figure out your strengths and upgrade where needed, Singh advises.

As well, look at doing some certifications, he says. Having one gives job candidates “a star on your shoulder” immediately. A supply chainrelated diploma or even an MBA can help, as can doing an internship within an organization.

“Any opportunity to get in a company, take it,” he says. “I would suggest, don’t worry a lot about money, get your foot in the door. With this opportunity, demonstrate your skills and your strengths. Use this as a platform to grow, not just within that organization, but within the industry.”

For new graduates, Singh says that networking is key. Peers, alumni, professors and others can counsel job seekers on what’s happening in the industry, tips for professional improvement and employment opportunities.

Finally, for those already working in the field, Singh suggests focusing on relationship building and improving communication skills.

View suppliers as partners and recognize that, whatever you do, work to create value for everyone involved—clients, suppliers, end users and others. That customer-focused attitude is part of what injects joy into his role. As an engineer, Singh would help to create products and, when the product was released, he got joy from seeing that product used by end users. In supply chain, especially the service industry, seeing those services run smoothly is now a source of joy for him.

“Until you see how you’re influencing that end user, I don’t think you completely understand what you’re doing,” he says. “Once you see how you’re improving someone’s life in XYZ, then you understand the impact of your work. Then you can keep on doing it.”

Along with the direct impact that supply chain and procurement have on an organization’s success and people’s lives, the field also offers a variety and diversity that keep it interesting. As well, Singh adds, those working in the field tend to be receptive to new ideas and open to helping to develop and improve newcomers. And a drive to continue to improve oneself helps to make any profession more interesting.

“You keep on working on new things, you keep learning new things—that’s a goal,” he says. “If you keep on learning, if you keep on challenging yourself, you’ll grow.” SP SUPPLY PROFESSIONAL

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BY LISA FENTON

SUPPLIER RISK RESPONDING TO SUPPLIER RISKS, INCLUDING FINANCIAL ONES, REQUIRES AN END-TO-END VIEW It’s been a busy decade. The last 10 years have seen advancements in communications, logistics and supply chain technologies, improved geo-political relations and more open trade as well as an increased ability to maximize a company’s global potential. One area that has not changed is the very human trait of needing to understand the behavioral side of a decision being made during a time of disruption.

The techniques that supply chain professionals used in the early 2000s were not able to help us have a resilient enterprise, the ability to sense potential vulnerabilities or what’s needed to respond.

We will never be able to get rid of all supplier risks. However, to respond we need to be both proactive and reactive with an endto-end view. As we become more interconnected, companies struggle with supplier base transparency and the scope and scale of risks is difficult to address, quantify and mitigate. Proprietary data can also

impede the process.

Risk mitigation strategies could include avoiding or eliminating suppliers who are underperforming or unreliable, taking control of high-value components, entering into collaborations with key suppliers and introducing increased internal responsiveness, increasing inventory, adding capacity at different locations or adding more suppliers are often not implemented as managers choose to do nothing.

This is unfortunate as average costs from disruptions are much larger than any savings from avoiding upfront investments.

Segmenting the supply chain and regionalizing the supply can reduce the risk and improve cost efficiency as well as help control the complexity of the supply chain.

STEPS TO TAKE Four areas to focus on include supply base; demand base, processes (internal) and environmental landscape (outside of the organization).

Proactive actions include: get to know your suppliers; make sure you get what you’ve asked for; only pay for what you’ve actually received, prevent or resolve disputes effectively and avoid risks in the sales process.

Four steps to take to reduce risks: Identify and document; build a supply chain risk management framework; monitor risk; institute governance and regular review.

The supply chain aims to reduce costs, add value for customers and enhance shareholder value as well.

As we become more interconnected, companies struggle with supplier base transparency and the scope and scale of risks is difficult to address, quantify and mitigate.

Blockchain technology may be able to help with value creation and comes in two types: permission less and permissioned.

This technology can replace slow manual processes, strengthen traceability and, in theory, reduce IT transaction costs. Disruptions in raw materials will be able to be detected sooner, allowing companies to react proactively.

There are many questions to examine before considering if blockchain is better suited than leveraging existing technologies on their own or with their partners.

The financial impact of experiencing a disruption can include shareholder value decreasing, stock prices seeing greater volatility, a decline in sales and return on assets that last for a few years.

FINANCIAL IMPACTS Examples of financial impacts are shown in the book, Financial Intelligence for Supply Chain Managers: Understand the Link between Operations and Corporate Financial Performance, by Steven M. Leon. The book includes charts in which share prices dropped 9 percent below the benchmark group during the day before and the day of a disruption announcement.

Over a two-year period it showed 19 percentage points lower than the benchmark group.

Another chart demonstrated that volatility and uneasiness can affect share price, illustrating that after two years, underperformance was higher by 10 points from the benchmark.

The return on assets and sales chart presented a decline of five points after considering normal business environment effects and was experienced by more than 60 percent of the companies. One year after experiencing a disruption, return on sales dropped four points.

The top supply chain risks for 2019 included: trade wars, raw material shortages, recalls and safety scares, climate change, tighter environmental regulations, economic uncertainty and structural change, industrial unrest, container ship fires, battles at the borders and drones and aviation safety.

Lisa Fenton is supply chain manager at Rapala VMC Corporation.

DIGITIZATION With the digital and physical worlds blurring, we are entering the digitization of supply chain with a focus on reducing inefficiencies and lowering costs and increasing flexibility.

Technology disruptions include big data and analytics, connectivity via machine-to-machine and human-to-machine interaction, 3D printing, automations, artificial intelligence and augmented reality.

Now the traditional supply chain will have to incorporate the intelligent supply chain, demand driven supply chain management and the formation of the digital thread. It will also have to accomodate value co-creation, evolving customer experience and cyber risks with a renewed focus on resiliency.

Creating this digital culture will include aligning your business and operating models, reviewing your people and processes along with stepping back to assess your talent gaps. You’ll also have to work to redesign the roles of the future.

Even so, investing in digital tools is the key differentiator in gaining a competitive advantage. SP SUPPLYPRO.CA 17

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BY MICHAEL POWER

AHEAD OF THE DIGITAL CURVE

INNOVATIVE TECHNOLOGY AND MATERIAL HANDLING The annual ProMat show boasts a huge turnout in the tens of thousands, but this year’s show in Chicago in April saw record attendance even by those standards. Registration hit 49,718—an 11-per cent increase over the last show in 2017.

The expo covered 425,000sq.-ft. of exhibit space on two show floors and saw 938 companies exhibit. The conference included a keynote panel discussing the 2019 MHI Annual Industry Report—Elevating Supply Chain Digital Consciousness. MHI released the sixth in a series of annual industry reports in collaboration with Deloitte Consulting.

According to this year’s report, eight of 10 survey respondents say digital supply chains will be the dominant model within five years.

The survey suggests that investment in supply chain innovation is at an inflection point, with a trend of declining investment from 2015 to 2018 countered by a 95-per cent increase in projected spending this year. Overall, 57 pe rcent are planning new technology investments totaling over $1 million over the next two years.

The report provides updates on innovative technologies and respondents cited robotics and automation as most likely to offer disruption or competitive advantage (64 per cent), followed by predictive analytics (59 per cent). AI (55 per 18 AUGUST 2019

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cent) and IoT (52 per cent) also scored high, as did wireless vehicles and drones, at 51 per cent.

Cloud computing had the highest adoption rate, at 56 per cent. That’s expected to reach 91 percent over five years. Predictive analytics is expected to reach an 87-per cent adoption rate, followed by IoT at 80 per cent, robotics and automation at 72 per cent and artificial intelligence at 55 per cent. A skilled, digital workforce is needed to implement technology— and the talent gap is growing. The top skills to compete are analytics/modeling/visualization (40 per cent), strategic problem solving (37 per cent) and general business acumen and crossfunctional knowledge (31 per cent).

The report defines digital adoption in four stages: data collection; digital connectivity; generate increasing value and insights from that base data; through automation, advanced analytics and artificial intelligence.

The report includes a supply chain digital consciousness framework to help organizations assess their digital mindset and progress. The framework characterizes a supply chain on four levels of awareness—from dormant to elevated—and across categories including leadership, talent development and workplace culture, technology and innovation adoption

as well as customer experience. The report includes an assessment tool to measure where they are via a Supply Chain Digital Consciousness Index (DCI).

A keynote panel on the report featured questions from the CEO of MHI, George W. Prest and Scott Sopher, principal Deloitte Consulting’s supply chain practice. Panelists were Annette Danek-Akey, SVP supply chain, Penguin Random House; Jim Liefer, CEO, Kindred AI; Joel Reed, CEO of IAM Robotics; and Randy V. Bradley, assistant professor of information systems and supply chain management, Haslam College of Business, The University of Tennessee.

The panel discussed the finding that adoption will rise over the next five years. “It tells me that reality is finally starting to set in,” Bradley told the audience. Organizations have been tactical in their adoption but are getting more strategic.

Since many new technologies are disruptive, companies may see short-term, negative results before value rises. “Organizations have entered the zone of what we refer to as necessity,” he said. “You can no longer sit on the sideline.”

Danek-Akey highlighted Penguin Random House’s digital technology adoption. Progress depends on the area, she noted. Penguin has a warehouse management system and a TMS to help determine when trucks will arrive. The company has forklifts equipped with sensors and is interested in using drones for cycle counting.

In discussing what innovations are leading to more supply chain robotics, Leifer noted three converging elements. First, AI’s growing sophistication lets robots operate in unstructured environments. Secondly, robotics components are getting less expensive, while the third factor stems from the fact that a labour shortage means that companies must act immediately.

Panelists commented on AI’s potential, which Liefer called massive. “We’re just scratching the surface of what we can do,” he said. AI learning has become general, Liefer pointed out. The same technology used to cool data centres and run windfarms can be used SUPPLY PROFESSIONAL

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within robots to manipulate physical objects.

Bradley said some industries are adopting AI even if they’re not associated with the technology. Oil and gas and the power and utility industry, for example, are sectors with heavy assets looking to improve asset use.

Bradley cited a cement manufacturer that’s leveraging AI to help understand which assets to use in cement production and how to utilize them. “They’re using artificial intelligence where they’ve previously relied on one individual in a control room monitoring everything and knowing that individual is going to ignore some things,” he said.

Danek-Akey said while the skills gap and workforce shortage ranked first on the survey, she didn’t consider it one of her top issues—but she’s aware of difficulties. Lead times can be longer because the right workers aren’t in place. Her company uses training for current employees and creative ways to recruit.

There are apps allowing workers to input their available hours, who are then matched to companies. “If you’re willing to go the extra mile, you will find a workforce,” she said.

PRODUCTS With close to 1,000 exhibiting companies at ProMat 2019, there was no shortage of products to peruse. Yale showcased its first counterbalanced lift truck with a factoryintegrated lithium-ion battery pack. Designing the Yale ERPVL around a lithium-ion battery pack reduces truck weight for better acceleration and reduced energy consumption, the company said. The battery’s smaller size opens space under the seat for improved access and convenience. Meanwhile, Swisslog displayed its robotic picking solution, ItemPiQ. The product is redesigned with new robotic technology and an intelligent vision system for higher pick rates and machine-learning capabilities. It combines

Organizations have entered the zone of what we refer to as necessity. You can no longer sit on the sideline and watch others pass you by. a Swisslog gripper system with new technology for speeds of up to 1,000 picks per hour. The six-axis lightweight robot works in tight spaces and the robotic arm extends up to 43 inches.

SSI SCHAEFER highlighted its SSI Flexi Shuttle, which handles a variety of stored goods with a storage capacity of up to 50kg, due to an adjustable-width load handling device. The system is adaptable for storage location sizes.

This works by having flexible positioning within the racking system. The design allows installation at any position throughout the storage aisles and combines automated storage, buffering and sequencing.

Canadian company OTTO Motors announced its OTTO 750 at the show, a self-driving vehicle for material handling with a payload of 750kg.

OTTO 750 is a mid-range self-driving vehicle designed to move pallet-scale loads. The vehicle uses the existing self-driving operating system, OTTO OS, to adapt to facility changes.

RightHand Robotics announced the RightPick2, the company’s next-generation, integrated software and hardware product platform. The product is an autonomous piece-picking platform for picking and placing individual items. It works with employees and manual or automated systems. RightPick2 also won Best Innovation of an Existing Product during the MHI Innovation Awards.

LEARNING OPPORTUNITIES The conference featured educational seminars with many of those sessions focusing on supply chain trends. One session, called Optimizing the future of connected supply chain and led

by James Hendrickson, director of product management at Honeywell, looked at what’s driving change and what organizations can do to leverage technology and processes.

The company polled supply chain leaders to discover key needs, Hendrickson said.

Responses included on-time delivery, lower inventories, accurate order deliveries and flexible supply chains. Respondent’s concerns included smarter operational intelligence, newer financial models, operating system consolidation and changing market dynamics.

Hendrickson mentioned the cost of unproductive time in distribution and fulfillment, saying there is an average of 22 unproductive minutes per eight-hour day, per worker. There are an average of 134 mispicks per week, while $400,000 is the annual cost of mispicks reported by the average distribution centre. “The stakes of these types of things get extraordinarily higher as you move into the e-commerce space where the importance of getting that pick right is critically important,” Hendrickson said.

One trend, urbanization, allows companies to service a large number of customers. Delivering across a wide area gets expensive, he said.

But it makes it even harder to serve people with modern omnichannel, ecommerce ideals.

Another trend is towards transparency, which Hendrickson said has become a must. Measuring data and increasing transparency are powerful tools for managing the risks and grasping the opportunities of global supply chains, he noted.

A third trend involves ergonomics and worker wellbeing. It pays to look at workers as a part of the value chain, he said. By comparing employee steps between picks, companies can look at ways to optimize the process. The fourth trend involved technological innovation. Data is now important and businesses need solutions to collect data and make it actionable, he said.

With a record turnout, products and networking and education opportunities, ProMat 2019 offered something for every attendee. SP

Moderators Scott Sopher of Deloitte Consulting and CEO of MHI George W. Prest led a panel discussing the 2019 MHI industry report. Panelists were Annette Danek-Akey, Penguin Random House; Jim Liefer, Kindred AI; Joel Reed, IAM Robotics; and Randy V. Bradley, assistant professor at The University of Tennessee.

SUPPLYPRO.CA 19

Supply Professional_August2019.indd 19

2019-08-09 3:18 PM

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And mark your calendars! On November 20th, SCMA and Supply Professional will host a webinar to discuss the survey findings. Stay tuned for further details.

20 AUGUST 2019 SP Survey ad_Aug issue.indd 1

Supply Professional_August2019.indd 20

SUPPLY PROFESSIONAL 2019-07-24 3:20 PM

2019-08-12 9:36 AM

Fleet Management 24

26

22

24

26

28

Collision management Handling the world of collisions.

The 2020 Silverado HD Two brand new engine choices from Chevy.

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.

21 FEBRUARY 2019

Supply Professional_August2019.indd 21

The Mitsubishi Eclipse Road testing the new Eclipse.

Greener roads ahead Electric vehicle charging stations in BC.

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

ADVERTISING INQUIRIES: Dorothy Jakovina, 416.441.2085 x 111, dorothy@supplypro.ca

SUPPLYPRO.CA 21 FLEET MANAGEMENT FM/SP SUPPLY PROFESSIONAL

2019-08-12 12:18 PM

Fleet Management

By Roger Constantin

Covering Your Risk

Best practices in collision management When it comes to collision management for fleets, every organization needs the right coverage in their risk exposure. Who’s going to negotiate the right certificate of liability insurance with insurers to get the best proposition? The answer is often the purchasing department.

Recently, fleet managers have been solicited to go beyond reporting collisions as just the facts. They must do more than produce KPIs, driver’s licence verification, repairs and so on. They must analyze driver’s behaviour, review policies and instructions to include new laws and regulations, such as the recent marijuana legislation.

Collision management vs risk management

According to NAFA, collision management falls under risk management. Fleet managers must work with risk managers to make sure that an organization’s exposure for vehicles is well covered and well protected against any issues (accidents, death, major and minor injuries, et cetera) that can occur with vehicles. NAFA talks of crash Management instead of collision management. For more details, you can get the Risk Management guide from NAFA’s website. You will have a full and complete document on this topic. To get a copy of an e-guide, visit the following link: https://bit.ly/2Yx8ncS. NAFA says this about risk 22 AUGUST 2019

Supply Professional_August2019.indd 22

• Insurance; • Safety program; • Crash management and motor vechicle records; • Maintenance (ensuring vehicles are safe to use); • Employee-provided vehicles (liability).

Now that we understand the fleet manager’s role in the collision management process, here’s what fleet managers have to work on.

Roger Constantin is a fleet management expert. Reach him at roger.constantin@ conseilsrc.com.

management: Risks can be classified according to the probable frequency and magnitude of future loss. Risk management (involves) identifying, evaluating and measuring risk, then developing strategies to control it ... risk is most often aligned with loss exposures faced by the organization. These loss exposures are typically pure and finite losses resulting from catastrophic events or crashes. (Risk management guide page 8).

The fleet manager’s role is to use their expertise in collision management to cover aspects that need to be integrated into the risk management process of their organization. Some of those aspects are:

Recent developments

In the past, alcohol was one of the issues fleet managers focused on when dealing with the use of an organization’s vehicles. Speed was another. Now, distracted drivers are prioritized, particularly with the use of cell phones and, more specifically, texting while driving.

Management shouldn’t avoid this issue and updating the use of vehicles policy should be a priority.

Any serious website on this topic concludes distracted driving is now the first subject highlighted in the use of vehicles. Fleet, safety and risk managers are under pressure to find the best approach to manage this. Some organizations include a total ban of cellular phone use. Some of them require a minimum use of cell phones to manage some aspects of there operations, such as emergency intervention on different sites.

In distracted driving cases, drivers on mobile devices are

up to four times as likely to be involved in a crash, according to the AAA Foundation for Traffic Safety, 2017. What’s more, 80 per cent of collisions and 65% of near crashes have some form of driver inattention as contributing factors.

(National Highway Traffic Safety Administration, 2010).

Driver fatigue is another risk.

On the web site of the SAAQ (Quebec equivalent of drivers license), on average, 78 people are killed annually, and 8,532 people are injured in an accident related to driver fatigue. From 2014 to 2018, fatigue was a factor in 21 per cent of fatalities (source : https:// saaq.gouv.qc.ca/en/road-safety/ behaviours/fatigue/dead-tired/).

Status quo is not acceptable.

Fleet managers, through different departments of their organizations, need to act. They need to remember to evaluate exposure continuously and review their use of vehicles policy. An annual review a good practice.

It’s unpleasant to manage fatalities following a collision, but costs are an important consequence that needs highlighting.

From my experience as a fleet manager, the first step is ensuring you have a use-of-vehicles policy and updating it regularly. If not, fleet managers should propose modifications. Next, establish KPIs that reflect policy and work towards these goals: 1. Crash rates by type of equipment and crash; 2. High-crash locations; 3. Crashes by seniority groups; 4. Kilometres operated per crash; 5. Crash costs per kilometres (Risk Management Guide, page 78).

Best practices include: • Register for collision • Collision Prevention Program • Motor Vehicle Record review • Develop a Driver Behaviour Program Manufacturers are working to include more safety technology to reduce collision, but the next major step is autonomous vehicles. Are you ready for it? FM/SP FM/SP SUPPLY PROFESSIONAL

2019-08-09 3:18 PM

Trim: 9” Safety: 8”

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2019-08-09 3:18 PM

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Fleet Management

By Stephanie Wallcraft

Unmistakeable in a crowd The Mitsubishi Eclipse Cross is an SUV with an unusual number of unique qualities. Some of these are very positive. Others fall more into the compromise category.

On the upside—especially as far as a business-related purchase is concerned—Mitsubishi Motors Canada’s 10-year, 160,000km limited warranty is a compelling value proposition that’s difficult to ignore.

Plus, four-wheel drive is standard at every trim level, including the base model with pricing that starts at $29,953 with freight and PDI. This could make it a cost-effective way to access Mitsubishi’s well-regarded Super 24 AUGUST 2019

Supply Professional_August2019.indd 24

All-wheel Control system for use in remote or weather-prone areas.

However, it should be noted that while the brand’s other products allow for manually selecting either two- and four-wheel drive, the Eclipse Cross stops short of that, offering only a drive mode selector for auto, snow and gravel.

This could make it a less fuelefficient choice for heavy highway use where full-time, two-wheel drive might be preferable. The Eclipse Cross is rated by Natural Resources Canada at a combined fuel consumption of 9.3 L/100km.

A highway drive from Toronto to Detroit and back netted an observed 8.5L/100km—which is

certainly acceptable, but there are quite a few competitors that could do better.

A single powertrain configuration is available, a 1.5L turbocharged four-cylinder engine that produces 152hp and 184lbs-ft of torque between 2,000 to 3,500rpm, matched with a continuously variable transmission.

In entry-level models, this power output is similar to the rest of the compact SUV segment. Those opting for a more expensive trim such as the GT tested here will find that similarly priced units from other manufacturers offer more powerful engines, such as the 2019 Ford Escape Titanium’s 245 hp

2.0-litre and the net system output of 219 hp in the new Toyota RAV4 Hybrid.

Drive feel is an area where opinions may become split. The Eclipse Cross’s suspension, while smooth in application, does tend to transfer some of the road’s movement into the cabin, meaning that vertical motion through bumps persists and some lean is permitted in curves. Some drivers don’t mind this, while others find more comfort in a vehicle that stays relatively flat.

Value adds on the base model include standard 18-inch alloy wheels, heated and poweradjustable front seats and side

IMAGES: STEPHANIE WALLCRAFT

Road testing the Mitsubishi Eclipse Cross

FM/SP SUPPLY PROFESSIONAL

2019-08-09 3:18 PM

1. The Eclipse has a spoiler that splits the rear window, creating a divide.

2. The GT trim as shown on this test unit adds a heated steering wheel and a pair of sunroofs, while the infotainment system is laid out as though it was designed for a right-hand-drive vehicle.

IMAGES: STEPHANIE WALLCRAFT

1.

Unlike many other modern crossovers that can be difficult to tell apart at a glance, the Eclipse Cross’s highly angular appearance and stance are unmistakeable.

mirrors, and Android Auto and Apple CarPlay functionality.

Stepping up to the GT trim as shown on this test unit adds heated rear seats and steering wheel and a pair of sunroofs that serve to brighten up both rows of the cabin.

A power liftgate is not available.

The infotainment system is interesting in that it’s laid out as though it was designed for a righthand-drive vehicle as one would own in Japan but wasn’t converted for export. The on-off button and volume control functions fall on the screen’s right side, which could make them difficult to reach for shorter-limbed drivers. The volume is controlled by touch buttons rather than a dial, and the steering wheel controls are button-based as well. This means that multiple taps are needed to turn the radio up or down, which could potentially become an irritant for some users.

But perhaps the most distinctive trait of all is the Eclipse Cross’s styling. Unlike many other modern crossovers that can be difficult to

2. tell apart at a glance, the Eclipse Cross’s highly angular appearance and stance are unmistakeable in a crowd.

One of the results of this dramatic look is a spoiler that splits the rear window, creating a divide similar to that found in a Toyota Prius or Hyundai IONIQ. Some people don’t mind it, while others find it difficult to adapt to the

As Tested Price (incl. freight and PDI): Starts at $29,953; tested at $37,873 Engine: 1.5-litre turbocharged 4-cylinder Power: 152 hp; 184 lb-ft of torque from 2,000 to 3,500 rpm Transmission: CVT Rated Fuel Economy (L/100 km): City 9.6/Hwy 8.9 Observed Combined Fuel Economy (L/100 km): 8.5

visual distraction it creates. This comes very much down to a matter of personal preference.

If the prospect of Mitsubishi’s 10-year limited warranty seems especially appealing, then the Eclipse Cross could be the optimal choice regardless of its quirks.

Apart from the Mirage subcompact car, the company has a stated goal of becoming SUV-focused, which means it’s unlikely that options such as the Lancer sedan will return any time soon. With 40mm less in length and 45mm less in height, the subcompact RVR may be too small for some applications, while the Outlander’s five-plustwo passenger dimensions may be too large, as much as the plug-in hybrid powertrain is proving to be an appealing alternative for efficiency-minded buyers.

The Eclipse Cross takes up the middle ground as a five-passenger SUV that’s competitively packaged and has a warranty that could well be worth the investment down the road. FM/SP FLEET MANAGEMENT SUPPLYPRO.CA 25

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2019-08-09 3:18 PM

Fleet Management

By Howard J Elmer

The 2020 Silverado HD

Two all-new engine choices When it comes to ordering your next truck—half-ton or HD—what do you consider first? The job it has to do, right? However, jobs that trucks do are as varied as the people who buy them and to match the truck to the job you need a wide variety build options. Ford has always been really good at offering multiple choices in every aspect of truck building. Still, the General is not far behind and for 2020 they are adding significantly to the build-sheet options by offering two brand-new engine choices.

Here are the high-notes: For 2020 Silverado HD will offer bestin-class towing of up to 35,500lbs.

Its traditional 6.6L Duramax turbo-diesel will make 445hp and 910lbs-ft of torque and this year it’s matched to a segment-first 10-speed automatic transmission, built by Allison. But there are customers who don’t want the Duramax option. Most are owners who need capacity but don’t rack up that many kilometres. GM has a new option for this buyer.

Completely new for 2020 is a gas engine option for the HD—a 6.6L gas V8 that makes 401hp and 464lbs-ft of torque and is much cheaper to buy than the diesel. This engine is well matched to the new load limits of the next-gen HD. Past this innovation, whether you choose diesel or gas, here are some of the other highlights on the 2020 HD that will come standard.

There are new sub-systems crucial to road-manage these increased weights. Among these is an Auto Park Brake that holds the truck 26 AUGUST 2019

Supply Professional_August2019.indd 26

in place while hooking up. There is also Hill Start Assist and Hill Descent Control. Controlling speed on hills is also a function of the Auto Grade Brake and the Diesel Exhaust Brake. Enhanced Digital Variable Steering assists the driver at highway speeds as well as during low-speed parking lot maneuvers.

The new Silverado HD comes with an advanced camera system with 15 views—all seen on the centre stack consol screen. These include off the nose of truck, a hitch-view, in-bed view and a camera mounted at the rear of trailer that creates a view called “transparent trailer”—yes, you can see exactly what’s behind your trailer.

There is also a new one-person trailer light test and trailer light diagnostics system. Everything is aimed at making one-person operations easy. Another feature extends

coverage to the trailer and includes trailer-tire pressure and temperature monitoring right in the truck cab.

The other new engine is a new Duramax turbo-diesel that displaces 3.0L. It will go into the 1500-series pickup. With its arrival, all the popular American built halftons now have a diesel option. This 3.0L is GM designed and built. Its straight-six long-block design sets it apart from Ford and Ram as they use V-block designs for their 3.0Ls. This aluminum powerplant uses a variable-geometry turbo and a low-pressure exhaust gas recirculation system that adds to its efficiency. Thanks to its in-line design, it’s vibration-free and the power comes on smoothly. This 3.0L makes 277hp and puts out 460lbs-ft of torque at a low 1500rpm.

A feature of diesel is fuel efficiency and GM wants its new turbo-diesel to be known for this. So,

they’ve paired it with a new efficient transmission. A light-weight, 10-speed automatic manages this diesel’s power—with a design emphasis on overdrive gearing.

Chevy’s stated goal for the 3.0L Duramax is an estimated fuel target of 40MPG at a steady 50mph (which is 5.8L/100km at 80km/h).

Note: this engine has not received EPA fuel economy certification yet.

To show this was not just a boast, GM asked me to drive a 30-mile (50km) loop while trying to achieve the best fuel economy number on the truck’s digital readout.

I managed a top-scoring run of 44.1mpg (5.3L/100km). I was hyper-miling—mirrors folded in, AC off, feathering the accelerator, never touching the brakes and driving below speed limit. Still, it’s impressive and shows the potential fuel savings of this 10-speed diesel powered combination.

While fuel economy is a high note, a curious stat is Chevy’s max-tow rating for the 3.0L diesel equipped Silverado: 9,300lbs. This is considerably lower than the Ram 3.0L diesel rating (12,560lbs) and what Ford has pegged its 3.0L Power Stroke at—max 11,500lbs.

Is Chevy being conservative? Are the others boasting? These questions remain to be answered.

However, conversely, for 2020 Chevy 1500 is claiming the towing high ground in the weight wars with a new max rating of 13,400lbs—with the 6.2L V8 gas engine providing the propulsion.

Of note too is that this max number has been boosted from a (what was then) high of 12,200lbs on the 2019 Silverado 1500. This kind of jump in just a year is what this level of competition causes.

For 2020, with the diesel engine included, you now have five powertrain options available to you.

Silverado 1500 is also offered in eight unique trim packages—Work, Custom, Custom Trail Boss, LT, RST, LT Trail Boss, LTZ and High Country. The content is already high, but Chevy felt that it needed more. FM/SP

2

FM/SP SUPPLY PROFESSIONAL

2019-08-12 12:19 PM

P-3457_S

NO MATTER HOW YOU SEE IT, THE NUMBERS ARE ALWAYS RIGHT.

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And for the 5th consecutive year, ALG named Subaru as the Top Mainstream Brand for Residual Value.

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You’ll find out that Subaru is always a great solution.

Visit us at subarufleet.ca 1. Safety ratings are awarded by the Insurance Institute for Highway Safety (IIHS). Please visit www.iihs.org for testing methods. 2. ALG named Subaru the Top Mainstream Brand for Residual Value in the 2019 Canadian Residual Value Awards. ALG is the benchmark for residual value projections in North America, publishing residual values for all vehicles in the United States and Canada. For more information, visit www.alg.com. 3. Based on IHS Markit Vehicles in Operation as of June 30, 2018 for Model Years 2009 to 2018 vs Total New Registrations of those vehicles.

P-3457_SUBMI_Supply_Pro_April Supply Professional_August2019.indd 2019_ENG_V2.indd 27 1

2019-08-07 3:18 2019-08-09 1:25 PM

Fleet Management

By Barb Everdene & Alyssa McDonald

Greener Roads Ahead

Alyssa McDonald is program coordinator at MCSP.

EV charging stations in BC British Columbia has the largest public infrastructure network and the highest adoption rate per capita of electric vehicles in Canada. It’s a big deal for action on climate change, as each EV on the road displaces four tonnes of CO2 annually. Last year, the Province took a step towards transitioning to clean zero emission vehicles.

The Ministries of Environment and Climate Strategy and Citizens’ Services jointly released Corporate Supply Arrangements (CSAs) for electric vehicle (EV) charging stations, making investing in charging infrastructure more accessible for BC government ministries and the province’s broader public sector, including municipalities, universities, school districts and healthcare.

The CSAs are listed on the province’s website and offer either supply, or supply and install, of EV charging stations. Public organizations can use the CSAs to buy charging stations for use by their fleets and, in some cases, by the public on their property. These CSAs allow hundreds of public organizations to buy EV charging stations from suppliers that have been approved through a fair, open and transparent public procurement process. This initiative followed the model of a successful supply arrangement for LED street lights launched by the province in 2012.

By March 2019, over 55 public sector organizations across BC have purchased more than 53,000 LED street lights through the CSA. The CSA is now in the evaluation phase of re-procuring for another 28 AUGUST 2019

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three-year term with the option for two one-year extensions to support BC’s remaining communities in the transformation to LED. The EV charging stations CSA initiative was a partnership involving BC’s Procurement Services Branch and the Climate Action Secretariat. The Climate Action Secretariat began by leading the needs assessment and procurement pre-planning stages. They surveyed the province’s carbon neutral government stakeholders, including ministries and public sector organizations, as well as municipalities to understand which clean tech commodities were most commonly required. When results indicated that EV charging stations were the top priority, they gathered a team of technical experts and stakeholders with experience procuring EV charging stations, including Metro Vancouver, BC Hydro, the Ministry of Environment, Ministry of Energy and Mines, Fraser Basin Council and others. This team developed and vetted the technical specifications and evaluation criteria. The partnership also consulted with Ministry of Citizens’ Services’ Real Property Division.

Procurement Services Branch advised during the pre-planning phase and then stepped in to lead the development, implementation and management of the procurement process. They initially ran a Request for Information to seek feedback from the market on this new clean technology, including how it is distributed, installed and maintained. The second phase of

the procurement was designed to seek bids for the supply, or supply and install, of charging stations and to accommodate requirements for just-in-time delivery. Arrangements were awarded in six regions across the province: Cariboo, Kootenay, Mainland/Southwest B.C., North, Thompson/Okanagan, and Vancouver Island/Sunshine Coast.

As a condition of holding a CSA, within two years of award installers in all regions must complete BC Hydro EV charging station training, which is coordinated through the electricians’ industry group. This is an important step towards preparing electricians for broader market transformation.

The CSAs were awarded in June of 2017. Since then, Procurement Services Branch monitors their usage on a monthly basis, deals with buyer questions or concerns, and connects with suppliers to make sure that they are available to deliver on the supply arrangement.

According to Soledad Reeve, former Director of Procurement Transformation at the BC Ministry of Citizens’ Services, “this supply arrangement will save many public buyers across BC the time, effort and cost of running individual procurements, since the suppliers available through the supply arrangement have been qualified through an evaluation process developed by experts.”

Infrastructure barriers’

Public organizations with funding for electric vehicle infrastructure can now plan their expenditures

Barb Everdene is program advisor at MCSP.

more quickly, efficiently and effectively. Gord Rogers, Procurement Specialist within the Procurement Services Branch at the BC Ministry of Citizens’ Services, believes it’s a step closer to solving the ‘infrastructure barrier’ for adopting zero emission vehicles. He says: “The Clean BC mandate requires us to reduce greenhouse gas emissions and the public sector wants to buy EV vehicles, but we need infrastructure to support this transition.

This supply arrangement helps facilitate a base so that fleets can switch over more easily.”

To replicate a similar central procurement for multiple buyers, Reeve stresses the importance of connecting with each type of buyer to confirm their interest in using a CSA, and to ensure all or most of their purchasing requirements are met. Rogers adds that meeting with subject matter experts and suppliers is key to getting a feel for the industry. Lastly, Reeve promotes using central procurements like CSAs for clean tech and other new-to-market commodities to deliver buyer education and guidance. She cites the LED street light supply arrangement, which for the first three years offered a business case calculator for funding applications, guidance written by a leading street lighting designer, links to rebates, and informational webinars delivered by experts or peers sharing case studies and lessons learned. FM/SP This article was pulled from the Municipal Collaboration for Sustainable Procurement’s (MCSP) Annual Report on the State of Public Procurement.

FM/SP SUPPLY PROFESSIONAL

2019-08-09 3:18 PM

MITBRD1

This is a green SUV.

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The 2020 Outlander Plug-in Hybrid Electric Vehicle.

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Increase your fleet’s efficiency with the Outlander PHEV. Charge it from any household outlet, enjoy 3 innovative driving modes and get superior handling for any road with its advanced Super All-Wheel Control system.

Visit mitsubishi-motors.ca/fleet to learn more about adding an Outlander PHEV to your fleet. ** Whichever comes first. Regular maintenance not included. See dealer or mitsubishi-motors.ca for warranty terms, restrictions and details. Some conditions apply.

MITBRD19046_2019_Mitsubishi_Q1_Fleet_9x11_SupplyProfessional_E Supply Professional_August2019.indd 29 3.indd 1

2019-05-24 3:18 2019-08-09 3:23 PM

THE LAW—BY PAUL EMANUELLI

SEVEN PROCUREMENT PRINCIPLES APPLYING GLOBAL STANDARDS TO LOCAL PURCHASING In the world of public procurement, there is little left that is truly local. While a public institution may operate within a specific sector of a specific jurisdiction, its procurement operating system is typically influenced by formally established global standards and by government procurement practices that are so widely adopted across the public sector that they have evolved into broadly recognized global standards. This article summarizes these global standards and recommends a rapid action plan for complying with these standards at the local level.

Ongoing developments in the procurement field have put us under an unprecedented level of scrutiny and an unprecedented volume of compliance requirements. The everexpanding and overlapping body of red tape flowing out of public inquiries, public commissions, task forces, auditor general reports, domestic and international trade treaties, statutes, regulations, government directives and best practice guidelines must be untangled and reconciled against a relentless tide of case law that is washing over every aspect of the tendering cycle and reshaping the purchasing landscape.

The common global standards that apply to government procurement can be summarized in the following seven governing principles that apply in all rulesbased jurisdictions to regulate the award of government contracts: 1. Open Competition: Unless a contract falls into a recognized exception, each contract award valued over prescribed thresholds must be awarded pursuant to an open and fair competitive bidding process.

2. Transparent Requirements and Criteria: Each solicitation must contain clear information regarding 30 AUGUST 2019

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the requirements of the tendered contract, along with the evaluation criteria and process rules under which that contract will be awarded.

3. Neutral Requirements: Public institutions must avoid using biased or unnecessarily restrictive requirements, evaluation criteria, or process rules when running a competitive bidding process.

4. Fair and Transparent Evaluations: Bid evaluations must be conducted by neutral and independent evaluators in a manner consistent with the pre-established evaluation criteria and procedures. Those procedures must include a thorough record-keeping of the evaluation process.

5. Fair and Transparent Awards: Subject to narrow exceptions, contracts should be awarded: (i) to the supplier whose submission ranks the highest based on the prescribed evaluation criteria and procedures set out in the solicitation document; and (ii) with a scope consistent with the contract opportunity initially scoped in the bid solicitation.

6. Bid Protest Mechanisms: The competitive bidding process must provide all bidders with the opportunity for a post-award debriefing and must also include bid protest mechanisms that enable bidders to legally challenge the bidding process.

7. Performance and Debarment: Contracts should include performance-tracking mechanisms to monitor contract performance.

Institutions should establish procedures to sanction recurring poor performance, as well as other bidding infractions and misconduct, through fair and consistent debarment protocols.

These seven governing principles represent the common core global standards that apply to public procurement across all rule-

of-law jurisdictions irrespective of the specific source from which these rules are derived in the local context.

While these standards often originate from external sources, at the end of the day, each public institution remains accountable for its own spending. Senior decision-makers within our public institutions need to allocate greater portions of their departmental spending towards updating their central procurement systems and enhancing training programs for their procurement staff.

For strategic execution to deliver projects with speed and precision, public organizations must implement a rapid action plan by redesigning, rebuilding and rebooting their procurement governance systems. This calls for an assessment of existing conditions within the organization, followed by implementing a procurement-centric process improvement strategy, and culminates in the deployment of a rebooted operating system supported by training programs and smart procurement technologies.

These programs should include training on the proper drafting of contract specifications and bid evaluation criteria, on using tendering formats that help avoid legal risks, on properly documenting group evaluations and bidder debriefings, and on properly conducting contract negotiations and managing awarded contracts.

Finally, public institutions should also train staff on how to properly handle bid disputes under open tendering rules before they escalate into formal bid protest proceedings.

Without an effective strategy for addressing these regulatory requirements, a procurement operation can quickly find itself stretched to the breaking point

Paul Emanuelli is the general counsel of the Procurement Law Office. Reach him at paul.emanuelli@ procurementoffice. com.

“ These seven governing principles represent the common core global standards that apply to public procurement across all rule-of-law jurisdictions irrespective of the specific source from which these rules are derived in the local context.” by the competing tensions of meeting standards while meeting deadlines. Yet, as experience has shown, institutions can fulfill these twin objectives through the deployment of a three-stage strategy that assesses current conditions, integrates a proper, professionally designed governance framework, and implements an effective institutional deployment and training program.

This article is extracted from Paul Emanuelli’s new book The Art of Tendering: A Global Due Diligence Guide. SP SUPPLY PROFESSIONAL

2019-08-12 12:18 PM

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Onita Dey BCD Travel

Garth Jopling Nina and Pinta

Deanna Ois Canadian Forces Morale and Welfare Services

Dirk Baerts MeritBiz ACTE Board of Directors

Andrew Gize Professional Institute of the Public Service of Canada

Jennifer Savard NAV CANADA

Joshua Amiel MeritBiz ACTE Canada's Regional Chair

Melanie Glaser Enterprise Holdings

Lisa Stymiest AccorHotels

Daniele Gorla Shaw Communications Inc. ACTE Canada's Regional Chair

Michelle Grant Ritchie Bros. Auctioneers

Florence Wang OpenText

For event information, registration questions or to join our growing list of sponsors, please contact Amber Hall, ACTE Regional Manager, Canada | canada@acte.org Supply Professional_August2019.indd 31

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SOME COMPANIES CHOOSE TO DO ONE THING, AND DO IT WELL. We call them underachievers.

(800) 361-5882 info@arifleet.ca

(855) 905-9800 sales@autotruck.com

Our fleet management and truck up-fitting companies work together to provide an unmatched range of services and expertise to fleet managers across North America.

HOLMANENTERPRISES.COM HolmanEnterprises.com

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2019-08-09 3:18 PM