Supply Professional December 2021

DECEMBER 2021

LOGISTICS ON THE ROCK

Alex Kane on supply chain challenges in Newfoundland and Labrador University of Guelph’s waste solutions

Commodity prices Facility lighting EV roundup Social procurement

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VOL.63 No.6 DECEMBER 2021 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN

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COVER: BRIAN CAREY PHOTOGRAPHY

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FEATURES 7 STATE OF THE SUPPLY CHAIN Current events are affecting how we get goods.

ALSO INSIDE 13 SOCIAL PROCUREMENT Ensuring sustainable purchasing policies.

8 BAD WEATHER AHEAD Supply chains and climate change.

14 COMMODITY REPORT How did commodity prices get to where they are?

10 ISLAND CHALLENGES Alex Kane on getting medical supplies to Newfoundland and Labrador.

20 BRIGHTEN UP! Facility lighting is one of sustainability’s low-hanging fruits.

4 UP FRONT 5 BUSINESS FRONT 6 IN THE FIELD 30 THE LAW

22 GREEN FOOD CHAINS The University of Guelph makes its food supply chain more sustainable.

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UP FRONT

KNOWLEDGE IS POWER Each year, we focus our December issue of Supply Professional on sustainability. While always important to the supply chain and procurement fields, this year the topic takes on more urgency.

First off, the COP26 Conference – the 26th UN climate change conference – wrapped up in Glasgow, Scotland last month. The process saw 197 countries agree to a new deal, the Glasgow Climate Pact, aimed at curbing climate change.

As well, several weather events have recently disrupted Canadian supply chains. For example, rainfall, floods and mudslides have thrown transportation in British Columbia into disarray (to say nothing of upending people’s lives) while our East Coast has also grappled with torrential rains that have damaged several roads in Maritime Provinces like Nova Scotia and Newfoundland and Labrador.

Yet mitigating climate change’s worst effects, to the extent that’s possible, will be a long-term project for all levels of government. We can’t easily halt greenhouse gas emissions or the rise of average temperatures.

But we can take quicker steps to bolster our infrastructure and make supply chains more resilient.

There’s talk among some of stepping away from a just-in-time supply chain model or lean manufacturing towards systems that can absorb more of the shock that comes from unexpected events. Other steps, like risk analysis and expanding an organization’s supply base, can also prove useful in blunting climate change risks.

With that in mind, we’ve approached sustainability in this issue through a holistic lens.

For example, our In The Field column on page 6 looks at steps that supply chain leaders can take to fight human rights abuses.

Making supply chains more equitable also helps to extend benefits into local communities. See our article on page 13 for a discussion of the benefits of social procurement. Among other areas, author Larry Berglund highlights how a well-designed policy can bolster social procurement efforts.

Industrial lighting has advanced since the days of incandescent bulbs, and our story on page 20 looks at the business case for switching to LED lighting in supply chain and manufacturing facilities.

Our fleet management section, starting on page 23, also tackles sustainability in the automotive space. We feature a roundup of recent electric vehicles on the market, test drive the Toyota Prius Prime plug-in hybrid and look at alternative fuels available to help power your fleet.

Climate change will no doubt continue to affect many aspects of our daily lives in the coming years, and supply chains are no exception.

But in the face of challenges, knowledge is power, and we hope that this issue provides you with some of that knowledge.

Finally, this is also the last issue of the year, and 2021 has been almost as tumultuous as 2020. So, here’s to a more predictable 2022. Have a great Holiday Season and a Happy New Year!

EDITOR MICHAEL POWER 416-441-2085 x7 michael@supplypro.ca PUBLISHER ALEX PAPANOU 416-441-2085 x1 alex@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY CUSTOMER SERVICE/PRODUCTION LAURA MOFFATT 416-441-2085 x2 lmoffatt@iqbusinessmedia.com ASSOCIATE PUBLISHER FARIA AHMED 416-919-8338 faria@supplypro.ca EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management— City of Toronto JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc. iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x3 swilson@iqbusinessmedia.com President ALEX PAPANOU

PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION Mail: 126 Old Sheppard Ave, Toronto ON M2J 3L9 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.

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MICHAEL POWER, Editor 4 DECEMBER 2021

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BUSINESS FRONT—BY MICHAEL HLINKA

TAKE THIS JOB AND …

THE DIRECTION OF POST-PANDEMIC WORK It is not often that a Country and Western song becomes a crossover hit. The first time I can remember that happening was Glen Campbell’s Galveston, the story of a young soldier serving in Vietnam, separated from the love of his life. But of all the C&W crossovers in my lifetime, none has achieved the mainstream popularity of Johnny Paycheck’s Take This Job and Shove It. My guess is that readers have heard the song.

I’m also guessing that you’re not overly familiar with the lyrics, which is why I’m giving you the second verse: “I’ve been working in this factory/For now on 15 years/ All this time I watched my woman/ Drownin’ in a pool of tears/And I’ve seen a lot of good folk die/That had a lot of bills to pay.”

I’d heard the song scores of times without paying much attention to the underlying message.

If I had to summarize it, it would go something like this: “I don’t want to keep doing a job I hate because life is too short.”

I came across a very telling statistic last week. In August, 4.3 million Americans voluntarily left their jobs, which was a record, albeit a short-lived one, because in September, 4.4 million workers just up and quit.

I would imagine that at least some of this was -vaccine related.

There are a number of employers (mine included) who have told their people to get vaccinated.

Or else. Given that there is currently a great deal of slack in the labour markets, it’s logical to look for different work when opportunity is ample. But I wonder if something else isn’t going on?

It’s possible to quantify the economic impact of COVID-19, the first global pandemic of the Internet age. It’s more difficult to measure the collective psychological impact. COVID-19 forced all of us to look our own mortality directly in the face. “Life is short.

A lot of good folks have died recently. Come to think of it, I’ve been working at this job for a long time. I don’t like it. And I still have lots of bills to pay. Maybe it’s time to rethink how I live my life, and this starts with finding better work? Work that pays better.

Work that is more satisfying.

Or maybe I just don’t want to work. I can always let the government take care of me.”

LABOUR MARKET RUMBLINGS Many commentators have noticed that there are strange goings-on in the US labour market. For several months in a row, job openings have exceeded unemployment. There are almost five million fewer Americans who either aren’t working or looking for work than there were before the pandemic. There has been a surge in retirements with 3.6 million people packing it in, twice as many as would normally occur.

Those are American numbers, not Canadian ones. However, our unemployment rate is 6.7 per cent but it understates the truer picture.

To be unemployed, an individual must be both out of work and actively seeking work. If you include the unemployed who have simply given up, unemployment is closer to nine per cent.

Several weeks ago, US President Joe Biden suggested that there was an easy way to remedy the slack

in the labour market and that was to raise wages. Something tells me that he’s partly right, partly wrong.

Everything else being equal, it’s hard to imagine that more money for identical work wouldn’t entice at least some of the unemployed to re-enter the job market. Pre-pandemic, the US was operating at full employment and it’s intellectually defensible to suggest that it could go back to that if workers felt that their lot in life was improving. But that’s becoming more and more difficult given how inflation has been rearing its ugly head, particularly when it comes to necessities like gasoline and food.

So, here’s my guess of what the foreseeable economic future will look like. There will be greater demand for workers than there will be workers willing to supply that demand. This is the precondition for stagflation, a phenomenon last seen in the decade of, you guessed it, the 1970s.

This time around it won’t be nearly as bad. During the Jimmy Carter presidency (1977-1980) combined inflation and unemployment, known as The Misery Index, averaged 16.3 per cent. The last four years under Donald Trump, it was 6.9 per cent. I’m not predicting that we’ll see a return to the Misery Index levels of the 70s, but as long as there is a significant cohort of the North American population that isn’t ready – for any reason – to return to work, stagnation will be the new reality. It really is déjà vu all over again. SP

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

“Given that there is currently a great deal of slack in the labour markets, it’s logical to look for different work when opportunity is ample.”

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IN THE FIELD—BY PATRICIA J. MOSER

BEYOND THE LOOKING GLASS REMEDYING THE DARK SIDE OF SUPPLY CHAINS Organizations often choose not to peer through the looking glass and into the depths of their supply chains. Why? Perhaps fear of what they might find; or not understanding the potential issues. Or they are paralyzed by what they see as the enormity of the task. Yet as they turn a blind eye to the conditions downstream of their products and services, they reinforce the culture of abuse in their vendor base.

They don’t do this with malintent. No one starts the day expecting to support human rights abuses or environmental devastation. Yet, with every day that corporations, governments and others do not move to identify and rout out these transgressions, they inadvertently become pawns, enabling bad actors to continue their nefarious practices.

Many organizations focus primarily on sustainability’s obvious aspects, for example GHG emissions, supplier diversity, health and safety, which are extremely important. However, sustainability’s hidden elements, in the arena of supply chain risk, can have the most devastating consequences, but also the most positive impact when acknowledged and acted upon.

According to the International Labour Organization (ILO) there are over 40 million victims of modern slavery. One in four are children, and over 70 per cent are female, predominantly in Asia and Africa, but human rights abuses exist on every continent.

Global and national corporations, NGOs, NFPs and governments have, to their chagrin, discovered the impurity of their supply chains, often through the media. These reports on the poor 6 DECEMBER 2021

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conditions in the garment industry, child labour used to mine cobalt or PPE made by forced labour, represent the tip of the iceberg.

DOWN THE CHAIN It’s not only the front end of supply chains that have issues, but also waste generated from that consumption. Developed countries export massive amounts of waste to developing countries. In 2019, Canada was criticized after sending a container of contaminated plastic waste to Indonesia. How many of these containers have and are continuing to leave our shores?

It is not just regular waste that is exported to developing countries.

According to the United Nations Environment Programme (UNEP) under 20 per cent of e-waste is formally recycled, with 80 per cent ending up in landfill or informally recycled – much of it by hand – in developing countries. This exposes workers (including children) to hazardous and carcinogenic substances like mercury, lead and cadmium.

E-waste in landfills contaminates soil and groundwater, putting food supply systems and water at risk.

COVID-19 exasperates these issues. The United Nations Secretary General, Antonio Gutteres said “the world faces a pandemic of human rights abuses in the wake of COVID-19, and equally, our disregard for the environment is, according to David Attenborough, the ‘biggest threat that modern humans have ever faced.’”

Many enterprises hide behind an invisibility cloak. They believe that it is sufficient to outline their sustainability requirements in a contract.

At best, this is done naively, believ-

ing it will ensure vendors refrain from nefarious activities. A skeptic may believe it is to provide plausible deniability. Yet it is conceivable that organizations will eventually be outed with reputational damage, regardless of contract conditions negotiated with vendors.

This is an urgent situation that must be addressed now. It can’t be solved overnight, but sustained and constant progress will ensure that through a “clean” supply chain, bad actors will be neutralized.

How can organizations start moving towards sustainable development goals (SDGs)? Here are some tips: Organizations must be educated on the issues and risks. The UN Global Compact; the Social Accountability Standard (SA8000); and ISO26000 and Transparency International are great resources.

Communicate with stakeholders, particularly suppliers. They may be struggling with the same issues and welcome collaboration.

Chose 20-to-25 products and services, then fully map their supply chain. What raw materials go into the product? How/where is it manufactured and by whom?

How is it transported? How are services delivered? Through (sub) contractors? Where are those entities obtaining materials?

Take a cross-sectional sample of high/medium/small value and size of suppliers, as the lowest value or small suppliers might prove to be the highest risk. The intent is to perform this mapping on at least 80 per cent of your vendors.

Create a strategy outlining intent, short-, mid- and long-term objectives, process and outcomes.

Some elements to include are:

Patricia J. Moser is principal at i3advantage.com and was CPO for a large UN agency for several years.

“It is conceivable organizations will eventually be outed with reputational damage, regardless of contract conditions negotiated with vendors.”

• Identify key stakeholders and how to engage them; • What policy drivers to develop; • Develop and incorporate questions into solicitations that address high-risk areas like management systems, human rights, labour/health and safety standards, along with environmental management and questions about (sub)contractors.

• Database creation of information gleaned and creation of a protocol for in-person assessments.

It is important to trust but verify.

• Remedies if issues are uncovered.

Can the supplier be educated, informed and rehabilitated?

Just get started. Move forward and make a difference. Ensure the looking glass reflects the reality you want to see. SP SUPPLY PROFESSIONAL

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BY CHRISTIAN SIVIÈRE

SUPPLY CHAIN TURBULENCE SUPPLY CHAINS WILL REMAIN VOLATILE INTO THE NEW YEAR Our global supply chain has been in turmoil since the COVID-19 virus appeared. As we slowly emerge from the pandemic, new challenges arise. The torrential rains and subsequent floods in BC are a good illustration of this, making it seem like there is no end. No matter how well prepared we are, we remain vulnerable to unpredictable environmental threats.

BC’s tragedy had a serious impact on local residents and across Canada, with Vancouver being our busiest port and gateway to and from Asia. Ironically, this happened right after the UN Climate Change Conference, the COP26, which took place in Glasgow from October 31 to November 12. The conference produced an agreement between 151 countries and commitments to mitigation and conservation efforts on deforestation, methane and

financing of oil and gas projects but commitments from some countries were weak.

China, the world’s largest polluter, wasn’t even there. China currently consumes over half the world’s coal, burning three billion tons in 2020 and continues to build coal-fired power plants. One would have reasons to be skeptical about the COP26 outcome and whether it goes far enough. My impression is that world leaders are not ready to take the drastic actions necessary to limit climate change and we will see more of these weather-related disruptions in the future.

LOGISTICS HEADACHES In logistics, we have plenty of challenges already: depending on the lane, ocean freight rates tripled or quadrupled, there are bottlenecks at ports, ships are full, ocean carrier schedules are less reliable, transit times are longer and unpredictable. And our exporters are greatly affected by a shortage of containers, as ocean carriers prefer to return empty containers to Asia, where they’ll earn much higher revenues on the inbound move back from Asia to North America, than on an export move from here. Airfreight is still problematic, with few options and high rates, and will remain so until more passenger flights take off.

Closer to home, a truck driver shortage remains an issue. Regarding transborder freight, it may get worse with the compulsory vaccination requirement for truck drivers coming into Canada effective January 15 next year. Similar measures have been announced in the US, where there are challenges against requirements to adopt vaccine mandates in businesses with over 100 employees. However, if vaccination remains our main tool against the

“Our exporters are greatly affected by a shortage of containers, as ocean carriers prefer to return empty containers to Asia.”

spread of this awful virus, we should just do it and stop arguing.

On the supply side, we experience raw materials and components shortages, long lead times and hefty price increases. Aluminium prices, for example, surged to a 13-year high in October. We know about rising energy prices when we fill up at the pump. The shortage of semiconductors and its impact on the automobile industry is well documented. All this creates headaches for buyers.

On the plus side, the position of supply chain professionals moved to the forefront. Few people in the public knew what supply chain meant until COVID-19 hit.

The pandemic changed that as the world realized that the supply of masks and other protective equipment was concentrated in China.

The giant containership stuck in the Suez Canal for a week in March with over 20,000 containers on board, delaying hundreds of vessels and the consequences on the world’s supply chains, was well publicized.

With the BC floods, the supply chain is all over the headlines.

It has been reported that the chief supply chain officer is the new C-suite star, as large brands are reinforcing their executive ranks with specialists to ensure that increasingly complex supply chains operate smoothly and sustainably.

What these trends mean for Canadian supply chain professionals going into 2022 is to be proactive in mitigating some of the risks:

Christian Sivière is president at Solimpex.

stay informed and connected with suppliers and partners; develop close partnerships; diversify our sources of supply with a so-called “Plan B” whenever possible; and encourage local production.

Reshoring or nearshoring to shorten our supply chain and lessen our dependence on Asian imports is an obvious tool. But bringing production back takes time and investment. US statistics demonstrate that it’s not happening yet as US-bound container imports set a record in October, with shipments up 15.2 per cent annually and up 34.7 per cent compared to 2019.

A new hurdle for many companies is the prohibition on the importation of goods mined, manufactured or produced wholly or in part by forced labour. In November, the CBSA seized a first shipment of women’s and children’s clothing made from cotton from China’s Xinjiang region. For now, it looks like supply chain professionals will have to keep their seatbelts fastened going into 2022. SP

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BY MICHAEL POWER

MANAGING CLIMATE CHANGE

PROTECTING SUPPLY CHAINS AGAINST GLOBAL WARMING Climate change and its risks have shown us how interconnected our world is today. Flooding, forest fires, drought and other events can upend best laid plans. Supply chain leaders must work to dampen the effects of climate change to their operations. But they can also ensure those operations don’t make climate change worse.

That need is more important than ever. Heavy rainfall and flooding has hit supply chains recently in British Columbia, for example. The COP26 Conference – the 26th UN Climate Change Conference – in Glasgow, Scotland last month has also brought attention to the climate crisis. The event saw 197 countries agree to a new deal, the Glasgow Climate Pact, aimed at curbing climate change.

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Supply chains play a pivotal role in the process. According to the US Environmental Protection Agency (EPA), over three quarters of the greenhouse gas emissions (GHG) produced by many industries come from their supply chains.

COLLABORATION IS KEY One important way that supply chain organizations can reduce emissions is collaboration with suppliers, says Abe Eshkenazi, CEO of the Association for Supply Chain Management.

“It’s important to ensure that organizations’ actions are consistent with their rhetoric,” he says. “If an organization is indicating that they hold themselves accountable for carbon emissions, or a single company relative to the environment, it’s much easier to hold your partners accountable.”

GHG emissions have risen to become perhaps the single most important issue within sustainability, says Tim Reeve, president of Reeve Consulting. As organizations recognize that supply chains make up such a large part of their emissions, many are engaging with suppliers around reducing that footprint.

“If you really want to look at it in a holistic way as an organization, your own stuff is the tip of the iceberg,” he says. “The more substantive berg is lurking beneath the surface in how it shows up in the supply chain.”

To deal with this, supply chain management must be a team sport, says Adel Guitouni, professor of management sciences at Victoria University. Think about how each player adds value, rather than focusing exclusively on which can provide the cheapest price. Where possible, think about exchanges with suppliers as long-term relationships, especially first- and second-tier vendors, Guitouni says. Switching to LED bulbs and other operational fixes may solve a fraction of an organization’s emissions problems. That’s not a bad

thing, he notes, but there is more potential for emissions reductions through forging relationships with vendors.

Supply chain leaders should consider the effects on emissions of moving goods multiple times and consider streamlining their supply chains, Guitouni says. He advises taking opportunities to purchase local or regional goods and services.

“We don’t need to move the parts of a car between Canada and the US multiple times if we can redesign how we do these workflows, these operations and so on; I think that’s important,” he says.

Ask strategic suppliers if they have climate change mitigation strategies and whether they’ve set science-based targets to reduce their emissions, advises Reeve. From there, speak with smaller, less strategic suppliers about carbon footprint reduction and the expectation that those suppliers will play a role in that process.

Organizations can also target high-impact procurement opportunities (HIPOs) related to carbon or GHG emissions, says Reeve. These include items that may have an obvious and direct impact on emissions, like power generation, vehicles, stationary and some types of equipment.

Another step organizations, particularly in the public sector, can take is looking at the carbon footprint associated with infrastructure and building projects, Reeve says. For example, Infrastructure BC, a crown corporation in British Columbia, has begun looking at calculating the carbon footprint associated with potential design options on new infrastructure and having contractors and suppliers provide that information as part of their bids.

“We hear so much about climate change and it can seem like a bit of an overwhelming topic at times,” Reeve says. “I think there are ways to break it down into some chunks.

Whether it’s choosing a few product or service categories to focus on or engaging with some suppliers, we’ve got to keep our eye on eating this elephant one bite at a time so that it doesn’t feel too overwhelming and people become paralyzed.”

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BEYOND THE BOXES When evaluating the carbon emission of suppliers, it’s important that the due diligence goes beyond checking boxes and evaluating for low cost, says Eshkenazi of ASCM. Too often, vendors are selected based on how quickly they can provide goods and how low the price is, he notes. Focusing exclusively on cost and speed is likely to leave out any discussion of the environmental and sustainability impacts of supply chain practices.

“All it indicates is that I’m getting my materials and my resources in front of everybody else, or I have priority,” Eshkenazi says. “It really doesn’t establish climate change as a significant consideration for organizations. So, due diligence has to go well beyond just a check box or a low cost.”

Establish criteria on how to evaluate vendors and then follow through, he advises. It’s critical not only to establish goals, but to measure progress towards them. “Actions need to be consistent with the rhetoric,” Eshkenazi says. “Not only for yourself but for your suppliers as well.”

Supply chain challenges such as the COVID-19 pandemic and the blockage of the Suez Canal by the container ship, the Ever Given, have highlighted the nearshoring of manufacturing as a potential fix for the risks of lengthy, global supply chains.

But nearshoring or establishing local operations isn’t a quick fix to supply chain problems, including GHG

“We hear so much about climate change and it can seem like an overwhelming topic at times.

There are ways to break it down into chunks.” emissions, Eshkenazi says. Such a move must harmonize with other activities. What does it do to your existing vendor base? What does it do to logistics operations? What about customer expectations regarding time, frequency and product availability?

“While nearshoring would help with lead times, with the logistics and the transportation, and could reduce our carbon footprint or the impact on the environment, we also need to understand the challenges in

establishing these multiple facilities – because it’s no longer just one facility and one location,” Eshkenazi says.

To fight climate change, supply chain leaders must keep in mind the bigger picture surrounding what they do, notes Guitouni. Value doesn’t refer only to financial gain. In working to tackle the challenges of climate change, it’s also important to remember that while the relationship between buyer and supplier is important, it’s not the only relationship. Modern supply chains depend on many stakeholders.

Organizations that realize this fact gain a competitive advantage, he says.

“It seems complex in the beginning, but it gives us more satisfaction in terms of the job that we do because everything in our modern life depends on supply chains,” he says. “This is why I think it’s important for supply chain professionals, researchers and everyone to step up their game and become part of the solution, and not part of the problem.” SP

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LOGISTICS ON THE ROCK

ALEX KANE ON SUPPLY CHAIN CHALLENGES IN NEWFOUNDLAND AND LABRADOR Supply chains are bound to face regional challenges in a country as vast and varied as Canada.

For Newfoundland and Labrador, the biggest logistics challenge comes from the province’s status as an island, says Alex Kane, SCMP, provincial manager of sourcing and contracts at Central Health.

“You can get a lot of raw medical supplies still coming from China and East Asia,” says Kane, regarding the province’s medical supply chains. “It comes in through Vancouver, Prince Rupert; it gets to Toronto or Central Canada fairly easily. You still have to get it to Newfoundland. That always tends to be a problem.”

Ultimately, many goods end up arriving by air cargo, Kane says, with each added step in the logistics process adding to the cost of transporting goods to the province.

“You’re pushing your price point an awful lot higher and you’re essentially pricing yourself out of the market,” he notes. “There’s always the question of, ‘how do you get something to Newfoundland in a reasonable time but while maintaining cost effectiveness?’”

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While logistics into Newfoundland and Labrador can be difficult due to its status as an island, the process can often come down to relationships with suppliers, Kane says. Treating your core suppliers as partners and maintaining good communication can help to ensure those vendors will help you get the goods you need.

“It’s all about building a business relationship with your vendors and suppliers,” he says.

Like many, the veteran supply chain and procurement professional didn’t start with the aim of working in the field. Rather, he earned a Bachelor of Arts degree in history and business, and once aspired to go into law. But his ambitions changed, and he went back to school in 1997 to earn both a Bachelor of Business Administration (BBA) and a graduate diploma in information technology. He worked fulltime while studying, completing the IT diploma in 2000 and the BBA in 2001. From there, Kane got a job at Cable Atlantic (now Rogers Cable) before working various IT jobs.

“But things started to dry up and I said, ‘I do have a business degree. I can kind of reinvent

myself,” Kane says. “So, I changed to customs brokerage. While I was working in customs brokerage, I did a diploma in project management through our local college here, the College of the North Atlantic. I completed the CCS in 2005, which is the ‘certified customs specialist.’”

His first customs broker position was with a company called PF Collins International Trade Solutions, one of the main customs brokers in Newfoundland and Labrador. Many of the large oil and gas operations in the province employ the company. Kane began as a coordinator, which is an entry level position looking after low-value shipments. He progressed to become a senior customs rater and consultant.

Kane worked there until 2012.

As a customs broker, Kane spoke frequently with the buyers and procurement specialists that used the company’s services. Those conversations made him wonder whether he’d like to be the one doing the purchasing, he says.

He had seen an advertisement about the professional designation offered by Supply Chain Canada (known then as PMAC). Kane decided to enrol to earn his Supply Chain Management Professional (SCMP) designation.

“I was looking for a bit of a change,” he says.

“But as a whole, I still kind of liked supply chain.

I completed my SCMP between 2011 and 2014.”

Kane was then hired by Kiewit-Kvaerner Contractors, the main contractors for the Hebron gravity-based structure (GBS), an oil platform in Bull Arm, about 340km from St. John’s. He was hired on the $14-billion project as a materials expeditor, working to ensure that goods arrived on time to meet the construction schedule. But since he had a customs brokerage background, the company made him the importexport coordinator as well.

“As the project progressed a little further there was less and less of a need for expediting as much as there was in the initial phases of the project,” Kane says. “As a couple of the other buyers had left, I became a project buyer and a contracts coordinator as well, mainly for larger installed items. It kind of went from there.”

Items were purchased in what were called “procurement packages” for installation on the Hebron GBS. One such package was a local electrical room, which is the system and electrical components that power the GBS while it’s attached to the shore. Once it goes offshore, the GBS generates its own power for the most part by connecting to onboard generators.

Kane was assigned to that project, which at the time was overbudget and late. An accomplishment of which he is especially proud involved getting the project back on budget SUPPLY PROFESSIONAL

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BRIAN CAREY PHOTOGRAPHY

BY MICHAEL POWER

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while also putting it back on time. Both goals required negotiation skills.

“A lot of times you’re a lot more effective if you’re meeting face-to-face with people,” Kane says. “You’re showing up at their door – it shows you’re serious about your position and where you want to be, versus a phone call or a Google Teams meeting. While effective, that only brings you so far. So, that was one interesting highlight from that part of my career.”

Overall, the job was based on a time-limited project, so Kane knew he would eventually need to search for a new position. In 2015, he saw an opportunity at FMC Technologies, another company in the oil and gas field. The company’s core products are sub-sea equipment that goes on the ocean floor, with one of the main components known as a “Christmas tree” – a large collection of valves that attaches to a flow line system which in turn attaches to the drill rig above.

The Christmas tree helps to ensure the flow is under control as it comes from the well head.

Kane and his colleagues were involved in the servicing and maintenance of the equipment on the infrequent occasion that such equipment was pulled from the sea floor.

When the company merged with a French company called Technip to become TechnipFMC in 2016, Kane’s role largely stayed the same. Although he began at the new company as a logistics compliance procurement specialist, the scope of his role morphed somewhat as the company became more international.

“We were assigned to different projects throughout the world,” he says. “As a result, I was involved in a project off the coast of Trinidad and Tobago, remotely, and I was being trained to handle the logistics portion to and from some of the projects there.”

A NEW CHAPTER In October 2020, Kane made the jump to Newfoundland and Labrador’s public sector when he took his current role with Central Health. In 2017, the province began a shared-services model that combines supply chain departments from five health organizations. Through this model, Central Health oversees four regional health authorities plus the NLCHI, the province’s IT arm for healthcare. The organization serves about 93,000 people across 176 communities. A typical day now consists largely of meetings and coordination, he says. A team of strategic planners and contract administrators report to him. The job involves little hands-on contract work; rather,

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Kane’s role focuses on providing guidance and ensuring the team’s work is strategically aligned with the organization’s goals and adheres to the province’s Public Procurement Act. He gets involved in higher-level contracts occasionally, especially when negotiations are involved.

When he began at the organization, Central Health already had a web-based system through which it would publish open calls. Invitations to tender, RFPs and other documents were available online. But from when he started last October until this February, the agency worked to switch its operations to the MERX platform. That put Central Health’s system in line with the Government of Newfoundland and Labrador.

“That was definitely an interesting product change to be involved with,” Kane says. “It has definitely streamlined our processes here internally and our ability to manage our open calls.”

When Kane began at Central Health, shortages of personal protective equipment (PPE) were still rampant. Surgical gowns, along with examination and surgical gloves, remained hard to get. While supply has since levelled off, worldwide struggles to obtain items remain, Kane says. Before the pandemic, many health authorities operated with a just-in-time delivery model for many of these core products, he notes.

Newfoundland and Labrador now has a provincial warehouse for PPE as a safeguard against future supply disruptions. Yet stockpiling core items can also lead to challenges.

For example, the organization must manage certain inventory based on expiry dates. The first-in, first-out method assumes that the oldest inventory unit gets used first, taking expiry dates into consideration.

A difference between the private and public sectors that Kane experiences involves flexibility in working with different suppliers. In the private sector, there’s greater flexibility in switching to a different supplier when needed. The healthcare industry doesn’t offer the same ability, Kane says. Items are often more specific to healthcare and only one or two vendors may be available to provide those items. A lesson from the pandemic has been to avoid relying exclusively on one supplier. Group purchasing organizations, or GPOs, can help to accomplish that, Kane says.

“As an individual health authority, if we had to go out and open call for a tender or an RFP for every single good, we wouldn’t have the resources and the manpower to do it,” he notes.

Another remedy might lie in more local manufacturing, a potential fix recently pushed both federally and provincially, Kane says.

Although he considers himself in the latter part of his career, Kane notes he remains interested in advancing his career and skills. Going 12 DECEMBER 2021

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“There’s always the question of, ‘how do you get something to Newfoundland in a reasonable time but while maintaining cost effectiveness?’” forward, he says he doesn’t anticipate starting any large educational pursuits, such as an MBA program. But having already completed a diploma in project management, he’s open to earning a Project Management Professional (PMP) certification from the Project Management Institute (PMI). And although he isn’t directly involved in customs these days, he would also consider more education to expand on his customs specialist designation. He’s also currently engaged in in-house management training through the Canadian College of Healthcare Leaders, leading to a designation called LEADS Canada Certification.

“At the end of the day I’m open to smaller designations,” he says. “I’m not looking at a threeyear program in anything.”

Along with his professional duties, Kane spends time volunteering with Supply Chain Canada. He began in 2015 as membership director at the organization’s Newfoundland and Labrador Institute. Although he started with no intention to become the province’s institute president, he found himself nominated for the role in 2017 when the person intending to become president was too busy with work commitments and decided not to run. Kane has been president of the Newfoundland and Labrador Institute ever since.

“I recently accepted my third term, so I’ll be there until September of 2023,” he says. “I’ve found the role to be fulfilling. You’re very actively involved. You definitely get a different perspective of what goes on behind the scenes of Supply Chain Canada. As well, I became vice-chair of the Federation Council for Supply Chain Canada nationally in 2018. I put my name forward for a second term in 2020. I’m now in the latter part of that second term, concluding in June of next year.”

As vice-chair of the Federation Council for Supply Chain Canada, Kane says he finds himself more involved in the organization’s national affairs, rather than just those of Newfoundland and Labrador. The role is busy. Kane serves on several committees and can watch the associ-

ation grow and develop. A combination of Supply Chain Canada’s advocacy and a heightened profile due to the pandemic have improved the profession’s profile in Canada, he says. And while some still think of purchasing as a strictly clerical role, that image is fading fast.

“Various companies are starting to realize that it’s a much more elevated field,” he says.

Supply Chain Canada’s Newfoundland and Labrador Institute is a strong advocate and partner of the Husky Centre of Excellence in Sales and Supply Chain Management at Memorial University, which works to enhance the sales and supply chain capabilities of local firms and employees, Kane says.

The institute also partners with Memorial University in St. John’s to offer a major in supply chain through the school’s Bachelor of Commerce program. The program then provides advanced standing for the SCMP designation.

The organization also partners with Eastern College for a diploma in supply chain, which also offers advanced SCMP standing.

“We’re working heavily with the community to provide a much more integrated approach,” he says.

When not at work, Kane volunteers in sports, coaching both minor hockey and baseball. Since his sons, Matthew, 15, and 12-year-old Michael, were young, he has also repaired bikes. Kane, his wife Jill and their sons also mountain bike along the trails in his area. When time permits, he also enjoys hiking.

“I’ve repaired and renovated a significant number of bikes in the last couple of years,” he says.

“I find it’s a good hobby. I’m not really looking to be paid for it as such, but I find it clears my head.”

Kane advises staying open to continual learning opportunities, such as the SCMP from Supply Chain Canada. Many learning opportunities are free or come at a nominal cost.

“What I find with webinars is that there’s a lot of information,” Kane says. “Even if you can get a couple key points from a particular speaker to make you think ‘we’re doing it this way and he’s been doing it that way. Maybe we can adopt some of his ideas?’”

Supply chain and procurement can offer interesting and exciting careers, Kane says.

He advises practitioners to remain flexible to possibilities. Whether purchasing, logistics, freight forwarding or another area of the field, all are interdependent, and practitioners need a knowledge base to function. Those who stay flexible can advance in any of these areas. SP

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BY LARRY BERGLUND

along with ensuring value for money which aligns with the policy. Oversight requires knowledge of competitive bidding obligations, case law, trade agreements, ethics, approval processes, procurement and sustainability competencies.

Most procurement policies have unity in principles with the intention of consistency in practice.

ADDRESSING SOCIAL VALUES HOW TO ENSURE SUCCESS WITH SUSTAINABLE PROCUREMENT POLICIES Procurement policies are not just for procurement professionals.

They are for all staff that have a role in the contracting of goods, services, equipment and construction projects for an organization.

A policy ensures an organization’s values are represented in its transactions. It sets expectations of conduct for stakeholders. Policies are approved by elected officials, boards or executives following rigorous consultation and review.

Organizations delegate authority to people to manage the demands present in all markets.

For procurement, this means making apolitical commitments to achieve organizational objectives following best and leading practices. Issues such as risk mitigation are inherent in each decision. Procurement plays an important oversight role to assess potential risks

POLICY AND PROCEDURE One common policy problem is including procedural guidance within the policy. These are the “how tos” that detract from the policy and add confusion. Policy procedures cannot be explicit enough for all to understand and are best left to a policy guide. Procedures change more often than policy statements due to new technology or best practice updates. Separating procedures from policy allows for agility to respond quickly to the marketplace. Procurement tools like competitive bidding and related documents should be revised to implement policy and procedure.

Stating targeted outcomes in policy can be problematic. While these may be noble causes, priorities change, and the policy becomes outdated.

A common trait for successful policy implementation is staff training. Organizations that offer training after a major policy or procedural update attain objectives more effectively. This is largely due to a better understanding of how to apply the policy. The training should include communications.

Progressive organizations are using procurement to enhance sustainability with local economic development. Stakeholders are looking for a better value proposition. Socially responsible procurement values and budgeting are not binary choices. There is a myth that social procurement costs more. It doesn’t. There are many organizations that adopt progressive procurement policies resulting in positive outcomes with local benefits.

The trend in Canada is to update procurement policies that address social procurement values to have

a broader commitment to sustainable outcomes. There are two main ways to do this. One is to draft a standalone social procurement policy intended to complement an existing policy. The other, in my opinion more effective, method is to draft a comprehensive policy inclusive of social procurement and the broader sustainability issues referencing environmental and social governance (ESG) practices. The first method loses the gravitas of social procurement, becoming another side issue. The latter method begins to change decision-making and behaviours, resulting in a social return on investment.

Policies in the public domain help to communicate organizational values and provide guidance to changes in governance. In 2021, we are aware of instances where municipalities have not complied with trade agreement requirements or followed best practices. For example, ambiguous, unweighted evaluation criteria in an RFx are contrary to the trade agreements.

Another is “onboarding” a contractor without a competitive process.

A well-drafted procurement policy, complemented by a clear procedure guide, helps to avoid procurement problems while maintaining a good organizational reputation.

SUCCESS STORIES One organization that drafted a sustainable procurement policy inclusive of ESG attributes and best practices is Vancouver’s Capilano University. It launched an aspirational objective, called their Envisioning 2020-2030 strategy. The institution tasked procurement manager Paul Gruber with developing a policy aligned with this bold commitment, including social procurement. Gruber contracted my colleague, Rusty Joerin, and me to undertake the drafting.

The draft process was done in seven to eight weeks as Capilano saw this as a priority. Once the policy, tailored to the university’s values, was approved in principle, it took a few more weeks to draft the procurement policy guide and com-

Larry Berglund is prin­ cipal at Presentations Plus Training & Consulting Inc.

petitive bid and related documents.

The policy complies with all trade agreements and legislated requirements. It enables the university to work with social enterprises supporting local jobs and economic development. As Gruber said, this work cannot be done with existing staffing resources. Expertise in the aforementioned areas is necessary.

Another example of an organization that took a similar approach is the Justice Institute of BC. Again, JIBC had a strong senior management commitment to social procurement values and ESG outcomes. A full policy review was conducted to identify gaps. Rusty Joerin and I delivered the policy and all related documents competitively on time and on budget.

Changing behaviours and avoiding problems begins with policy.

Policy that reflects stakeholder interests enhances organizational reputation. Stakeholders are very aware of the fiscal limitations and understand sustainability and societal values. I’m very pleased to say that with all the work we’ve seen and done with policy implementation, value is being recognized. In this epoch of a global pandemic and compromised supply chains, expectations will likely need to be tempered. We can revise our expectations but should not compromise on principles and values. Due process and best practices will continue to avoid problems and ensure success. SP SUPPLYPRO.CA 13

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Annual Membership Price: $410 + HST I Discounted Membership + HSTthe storm that hit “A lot Price: of this has$215 to do with Texas last year – it shut downprofile a lot of refineries.

Collaborate with leaders I Network with peers I Learn from industry practitioners I Elevate your That has impacted the market today where we’re *For 1st time members only (who have not been members in the past 18 months) who are residents of Ontario. facing allocation issues. Instead of being able This is an introductory offer only and renewal will be at a regular price, for the year starting May 1, 2023. to get 1,000 litres per month, you’re only getting 600 or 700 litres. So, you’re running short and that impacts our ability to service our trucks here at Miller Waste,” he says. “At first the shortages were tied to consumer-packaged material, but now it’s impacting bulk purchases.”

The other major storyline in this ongoing The pandemic brought the global economy to during COVID. When you see a rise in the fiasco is maritime shipping, which is impacting a halt, but it was not the catalyst for the disruptive costs and services, there is also a rise in costs several goods industries. “The abrupt shutdown business conditions and stressed global supply for labour, manufacturing and transportation.

1 chains that companies struggle with today. What It’s really a perfect storm for the supply chain in 2020, and equally shocking bounce-back in demand for goods, has resulted 2in a dearth it did was to expose NETWORK pre-pandemic supply chain globally today.” in shipping containers in parts of the world weaknesses and accelerate digital transformaEngagea with 3,000+ supply chain professionals THOUGHT LEADERSHIP where they were needed. Shipping prices have tion, as well as transform consumer behaviour.

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2020,” Andrew Hencic, is that due to the pandemic, manufacturing prothis “perfect storm” such as geopolitical participateissues, on the Board andsays Committees; give an economist with duction slowed and was not producing inventory natural disasters and climate change. are TD. “Compounding that, the surge in demand back to “These the profession.

3 to feed the supply chain. And when you reduce three factors that predate the pandemic, but have for goods has meant maritime trade from China to the West Coast of the US has supply, prices go up,” says Jeff Russell, corporate exacerbated supply chain challenges,” says EXPERIENCE 4 boomed, while port capacity has been slow to catch up. purchasing and inventory manager for Miller James Marple, a TD Bank Group economist.

Complimentary webinars topics Waste Systems. “When you start shutting downon pertinent “The trade war between ChinaLEARN and the US raised The end result is a queue of ships stuck waiting and member-only to unload cargo at major ports. The icing on this factories and telling everyone to stay events home, like Zoom tariffsCafe, on imported goods – including semiconAccess to insights from industry leaders Holiday Event,inand PDnow sessions. proverbial cake is even when the containers you create the bubble that we’re right ductors – reducing supply and contributing through 12+ professional developmentthat seminars with extremely high prices, longer lead times to hording of certain materials that led to greater are offloaded, a lack of drivers means that getper year at member-only prices. ting the cargo out is taking longer.” and product5 shortages.” shortages in the aftermath of the recession.”

Russell agrees, “What used to cost $2,000 Jérôme Thirion, a partner, national supply Natural disasters like floods in Texas have SECTOR-FOCUSED INITIATIVES 6 for a 20-foot container, now costs $22,000 to chain lead, and management consulting for reduced production and diminished supplies.

And,has according to Marple, efforts to mitigateDISCOUNTS cli- $25,000. This huge impact on the global ocean KPMG Canada, says it’s an understatement Understanding that every industry its MEMBER freight is making things cost prohibitive to mate change to say there’s stressown on global supplyand chains. challenges offering learning and have reduced investment in tradiMembership entails access a variety of but exclusive import.toNot only that, you have longer lead tional energy sectors and increased dependence “The move from brick and mortar to e-comknowledge-sharing platforms specific to those. offers“Severe and discounts times specific to member which – what took up needs, to 26 days for vessels to get on imports from places like Russia. merce has also had a significant impact to the includeondiscounts retail,Asia travel, restaurants, gymtaking up to to Vancouver is now weather more generally has weighed energy on from supply chain today. E-commerce jumped from membership and more. production and worsened shortages,” he says. about six per cent of sales to 40 per cent or 60 When the pandemic started, fuel prices were per cent. That is a significant shift in the operaat an all-time low because people were staying tion. The digitization of operations is another home and air travel was grounded. Now the cost transformation that was happening prior to of fuel isADVANTAGE taking off again.OF “It’sTHIS supplyOFFER and COVID but was actually accelerated and is still TAKE

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“It’s critical to costs is certainly a challenge, but there are other things that need to be taken into consideration. understand what’s ONTARIO INSTITUTE PRESENTS And you can’t just pass the cost to the customer.”

In terms of what’s to come, Omar Abdelrahhappened to your man, an economist with TD, anticipates that commodity prices will remain elevated in the suppliers’ cost since the near term before gradually downshifting in 2022. Still, prices will likely stay above last time you negotiated, pre-pandemic levels. “The near-term outlook continues to be propped up by uncertainty and to make sure that regarding energy supply and weather patterns.

Beyond the near term, anticipated supply you don’t overpay.””

three months. And then your ports are heavily congested, just adding to the delay.”

CHAIN CANADA, RodSUPPLY Sherkin, president of ProPurchaser.com, says that what you’re seeing when prices go up or down, it isn’t actually moving. It’s a balance point between supply and demand. Your job isn’t to try to outsmart the market. “It’s like an 800pound gorilla that does what it wants. Your job is to understand what’s happening. It’s critical LAUNCH PARTNER to understand what’s happened to your suppliers’ cost since the last time you negotiated, and to make sure that you don’t overpay.”

Ensure that any cost increase is supportable and reasonable. “Don’t stop watching the cost of raw materials. Your supplier is and will call you the moment they can raise the price,” says Sherkin. “If it’s supportable, great. If not, you push back until you get a reasonable price. On the flip side, everything fluctuates. If theTITLE costPARTNERS: of a raw JAN. 27, you’re 2022 material goes down, on the phone this time. Perhaps you’re removed from this as you’re buying finished parts and not tracking commodity prices. But you should be, because that has such a huge bearing on how much you’re going to pay and how you’re going to negotiate.”

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additions in 2022 should take some steam off markets.” SP

DIGITAL TRANSFORMATION SUSTAINABLE SUPPLY CHAIN FEBRUARY 24, 2022

ADDITIONAL SUPPLIERS If a supplier continues to escalate costs, having alternative sources for critical components is key.

“That comes down to your supply chain risk mitigation plan,” says Russell. “Years ago, a basic practice was to rationalize the supply by reduc31, 2022 ing theMARCH number of suppliers in a given commodity – today we’re adding additional suppliers for continuity of supply and market knowledge.

For operations that were primarily importing, INTRODUCING OUR NEW LEADERSHIP SERIES INSTALLMENT they are now looking to source domestically in the Canada and North America market.

Now you have to find someone producing what you need domestically and then you might have to factor in a higher cost.”

APRIL 28, 2022 TITLE PARTNER: Thirion recommends shifting focus to what KPMG calls customer centricity. “What the customer buys, how they buy and how they expect to be served. Create a micro supply chain around the customer, not the profit.”

Thirion continues, COVID, procurePRICE PER “Before INSTALLMENT ment teams would have their demand plan well Member Price: $149 HST documented, using historical data+ to figure out the procurement and operational plan. What Non-member Price: $199 + HST* organizations are doing today is using real-time Group Price (Team of 4 or more): $125 + HST per person** data points to enrich the demand plan. This is * Ontario resident, not a member of Supply Chain Canada, Ontario Institute in the past 18 months or more called ** intelligent forecasting.

For example, Can be a member or non-member (not ahow member of Supply Chain Canada, Ontario Institute in the past many kids are going back to school?

How many 18 months or more) stores are open? How many jobs are available, et cetera? You have thousands of data points that can be accessed, combined and re-correlated to enrich and add further accuracy to your foreFOR PARTNERSHIP ENQUIRIES FOR REGISTRATION ENQUIRIES cast because your historical forecast is no longer Contact Kim Sforza: ksforza@supplychaincanada.com Visit www.supplychaincanada.com/events or contact Danny Zhong: the one you can rely on. Rising commodity

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BY JACOB STOLLER

BRIGHTEN UP!

NEW TECHNOLOGY SPURS HIGHPAYBACK LIGHTING PROJECTS The CEO of a major light fixture company used to quip that the incandescent bulb is 95 per cent efficient. Then he’d deliver the punch line: “at generating heat.”

Industrial lighting has seen significant improvements since the days when incandescent bulbs, ranging in lighting efficiency of three to five percent, were the predominant source of illumination in factories and warehouses. While LED lighting is by no means perfect, it’s efficient enough to create solid business cases for replacing more recent technologies such as florescent and halogen lighting.

“LED lights have come so far from the old technology that without question, projects should reduce hydro costs by 50 per cent or more,” says Mike Leider, CEO of Toronto-based Leader Lighting and Energy Services. “It’s one of the fastest paybacks of any capital project you can do with a facility.”

If the lighting hasn’t been upgraded in the past five to seven years, Leider says, a lighting project is likely to be very beneficial from a financial perspective.

Simply changing fixtures, however, only scratches the surface of what is possible.

When LED is combined with smart sensors and controllers, savings from lighting upgrades can far exceed those from replacing lighting elements alone. The key is eliminating unnecessary lighting.

“One of the most common mistakes people make is over-lighting,” says Leider. “Why illuminate a whole row of a 300,000- to 400,000foot warehouse when the forklift operators are only going to be going into the first 20 feet for

the next hour? Or why keep the lights on when a facility is empty during lunch hour?”

Thanks to current sensor technology and the controllability of LED elements, lighting levels can be more precisely matched to requirements.

“Sensors are more intelligent than they used to be,” says Leider. “Where it used to be a simple on-or-off based on somebody triggering the sensor from underneath, we now have the flexibility of incorporating dimming into the motion sensors. For example, if nobody is in the department for a certain period of time, we can have the lights dim to whatever percentage we want. It can go down to 50 per cent, or it can go down to 10 per cent. We can also incorporate light sensitivity during daylight hours, where there’s a window and the lights are not required.”

Better control can also help match the lighting levels to work profile. For a particular area, there might be a minimum level required for safety, another for specific task work, and another for maintenance during a weekend shutdown.

A SYSTEMATIC APPROACH To benefit fully from recent lighting technology, companies need to invest the time and effort for a much more thorough needs assessment than they may have done in the past. This requires monitoring the use of light over a representative period and then analyzing the results.

“A trick we do is bring in a light-motion sensor and set it up,” says Bruce Taylor, CEO of energy consulting firm Enviro Stewards. “We might then be able to tell a client, for example, that a facility was lit 83 per cent of the time but it was only occupied 12.3 per cent of the time.

So, if the company had a controller regulating the lighting, this is how much it could save.’”

Outdoor lighting is an important category that is often overlooked. Exterior light fixtures are high wattage, Taylor notes, and lighting a parking lot or an equipment yard can consume a significant amount of energy.

There are indirect savings as well. For example, the heat from lighting fixtures can place unwanted stress on cooling and refrigeration systems. “In the food industry, a lot of these lights are in freezers,” says Taylor, “so you’ve basically got heaters in your freezers. So, when we calculate the savings, we include the reduction in freezing or air conditioning costs, which makes the payback faster for those types of areas.”

LEDs last longer as well, Taylor points out, so maintenance savings from less frequent element replacements are another important advantage that needs to be factored in.

BEYOND THE BARE MINIMUM LED upgrades aren’t only about reducing energy costs. Better control of light levels can also make the work environment more comfortable for employees and help them to be more productive.

“Lighting has an impact on performance and the quality of work being done,” says Leider.

“If you provide the bare minimum, you’ll get the bare minimum, which is keeping people safe.

But for good employee satisfaction, we typically go quite a bit beyond that.”

An important consideration is lighting colour. “They now have colour-selectable LED light fixtures,” says Leider, “which allow you to control the colour as well as the intensity simply by flipping a switch in the fixture.” A common practice is to program the lighting to mimic daylight, which people find the most pleasant.

“There are studies that show that this just makes people happier,” says Leider.

Using natural light is perhaps the ultimate way to improve ambience while reducing costs.

“Why not work with sunlight to accomplish your goal?” says Taylor. Enviro-Stewards recently moved to a larger facility which was an old factory and replaced 100 feet of single pane windows with double pane. The single pane windows were repurposed to bring natural light into the offices and conference rooms.

“We have a light harvesting sensor, so if there’s enough sunlight, you don’t even turn on your LEDs,” says Taylor.

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Perhaps most important in manufacturing environments, lighting projects function as a quick win that alerts decision makers to the potential savings from other energy projects.

A thermal project in a factory, for example, might produce savings much greater than a lighting project, yet many of the same principles apply in both cases. Therefore, the potential

value of a successful lighting project is not just the savings in hydro costs, but in its value as an education tool.

“LED is kind of a gateway or low hanging fruit,” says Taylor. “In a factory, there’s probably better stuff that you can do. But lighting is something that everybody can get their head around.” SP

“When LED is combined with smart sensors and controllers, savings from lighting upgrades can far exceed those from replacing lighting elements alone.”

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BY MARK KENNY

“At the university’s hospitality services, sustainable choices begin with our supply chain and a few questions.”

GREEN SUPPLY CHAIN 101 THE UNIVERSITY OF GUELPH FOOD SERVICES DISHES UP SUSTAINABILITY Sustainability at the University of Guelph is a shared responsibility between producer and consumer and a balance between supply chains and customer needs. There are measures we can share that, with teamwork, can benefit any organization.

At the university’s hospitality services, sustainable choices begin with our supply chain and a few questions.

Do we buy or make? How can we reduce plate waste? What can we do with leftovers? Where does our food come from? How much will sustainability cost? Who will support our initiatives? Does what we do make a difference? How will we communicate this? The answers are not so straight forward.

First, let’s tackle supply chain.

Reducing food miles in transit is a win. But how do we go further to have food less travelled?

Our executive chef Vijay Nair and 22 DECEMBER 2021

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his team work with Rodger Tschanz in the Plant Agriculture department to grow food in campus greenhouses. While it doesn’t feed everyone, our apprentice chefs learn to grow food and appreciate the time needed to go from seed to plate. We grow our own hot peppers for sauces, potatoes, berries and more. Find people in your business who are passionate about food and have them build a summer garden and serve it onsite.

Paul Kelly at the Honey Bee Research Centre on campus, along with over 300 hives, provides honey to our operations and for sale to faculty, staff and students. This cuts local food miles to about 500 feet.

The university is the second Bee City certified campus in Canada.

There is also the Guelph Urban Organic Farm (GCUOF), a one-hectare learning and research facility established by the Ontario Agricultural College in the Department of Plant Agriculture. We buy the produce they grow to serve students, faculty and staff. The farm does not operate in the winter, so during harvest season we preserve many of the local foods from this farm and others in our community.

Another supply chain partner is our Alma Aquaculture Research Station. This state-of-the-art facility has introduced Atlantic salmon, Arctic char and new strains of rainbow trout to the Ontario aquaculture industry. We source Ocean Wise-certified Arctic char from AARS for special events and are

working towards 100-per cent sustainable seafood through other regional suppliers.

These activities are unique to Guelph and have taken years of planning, promotion and collaboration between departments. The key is to find someone passionate about these choices, start small and incorporate more local goods into the food chain. There will always be someone willing to go that extra mile so your sourcing is local and sustainable.

WASTE NOT, WANT NOT What do we do with food rather than throw it out? Again, it’s about teamwork. Our staff work with the Sustainability Office to figure out what to do with the spent coffee grounds produced on campus.

In 2018, the office hired volunteers to collect coffee grounds from coffee shops around campus and divert it to the organic farm for compost which goes into the gardens at the farm. The program was dubbed Coffee to Compost and has diverted over 67,000kg of coffee grounds in the past three years.

To repurpose food waste – called food recovery – our chefs work with students Kiana Gibson and David Sahai (co-founders of MealCare Guelph) to make food go further. Their team of 20 student volunteers take food from our operations and redistribute it to local food banks, including the University of Guelph Campus Food Bank. We have diverted over

Mark Kenny, CSCMP, is the procurement manager with Hospitality Services at The University of Guelph.

14,000lbs of food otherwise destined for landfills. Although a traditional supply chain doesn’t rely on volunteers, ours does. It matters who you’re supplying.

Finally, we focus on reducing purchases of unnecessary goods.

We call this Resetting the Table.

In 2018 we eliminated single-use plastic straws, plastic cutlery and paper plates from a major food operation at the university. We started with the mantra “Reduce, Reuse, Recycle,” repurposing this with a social media campaign: “Reduce, Reuse, Rethink.”

Since 2011, we’ve offered green, reusable food containers rather than paper plates. Our new campaign built on this by offering the choice of a china plate or compostable takeout container. The plate is the reduce option, the green container is the reuse option and rethink is the compostable clamshell container for $1. The green container program is a one-time, $5 cost and the china plate choice is free.

For each program, customers get stainless steel cutlery. By eliminating paper plates, plastic cutlery and straws we have eliminated these from landfill and provide a better eating experience. We built a new ware-washing room to clean and sanitize plates and containers, but we utilize it to remove supply chain waste. SP TO LEARN MORE ABOUT OUR SUSTAINABILITY INITIATIVES, VISIT: HTTPS://SUSTAINABILITY. HOSPITALITY.UOGUELPH.CA/.

SUPPLY PROFESSIONAL

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Fleet Management

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Electric avenue What’s new in electric vehicles.

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Alternative fuels Different ways to power your fleet.

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

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Disruption ahead Fleets must adjust to tumultuous supply chains.

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

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Checking the boxes Test driving the Toyota Prius Prime plug-in hybrid.

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

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Fleet Management

By Supply Professional

Hyundai Elantra Hybrid

Chevrolet Bolt EV/Bolt EUV For 2022, the subcompact allelectric Bolt is redesigned, and joined by the longer Bolt EUV, which offers more rear-seat space. Both are powered by a 65kWh lithium-ion battery, and the electric motor makes 200hp and 266lbs-ft of torque. On a full charge, the Bolt EV is rated at 417km, while the EUV is 397km. The Bolt is now available with Super Cruise, a hands-free driving assist technology that works on some 320,000km of pre-mapped roads in Canada and the US. The battery and components are covered for eight years/160,000km.

Toyota RAV4 Hybrid/RAV4 Prime In addition to its regular gasoline version, the RAV4 also comes as a hybrid and as the Prime PHEV. Both use a 2.5L, four-cylinder that, when combined with the hybrid system, makes 219hp in the Hybrid and 302 in the Prime. The Hybrid has a combined city/highway rating of 6.0L/100km, while the Prime gets

up to 68km of electric driving when fully charged. Both the Hybrid and Prime are all-wheel drive. Standard equipment includes adaptive cruise control, emergency front braking, smartphone connectivity and heated front seats. The battery on both is covered for 10 years/240,000km.

The Elantra Hybrid compact sedan comes in two trim levels, both powered by a 1.6L four-cylinder and hybrid system that makes a combined 139hp and 195lbs-ft of torque. It used a six-speed dual-clutch automatic transmission for more conventional driving feel and is rated at 4.4L/100km in combined city/highway consumption. It’s roomy and comfortable for its size, and includes such features as a hands-free power trunk, heated steering wheel, blind-spot monitoring and emergency front braking.

The hybrid system and battery are covered for eight years/160,000km.

Mazda MX-30

Electric avenue Here’s what’s new in EVs Automakers are increasingly expanding their offerings of environmentally friendlier vehicles, and they can be a good fit for fleets. These include hybrids, battery-electric vehicles (BEV), and plug-in hybrids (PHEV), which run on electricity after they’re plugged in, and revert to gaselectric hybrid operation when the stored charge depletes. In addition to their fuel savings, some “green” vehicles may qualify for federal or provincial rebates, provide access to HOV (high-occupancy vehicle) highway lanes and create a favourable impression with clients. Here are a few of the possibilities for your fleet.

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Mazda’s first all-electric vehicle is a subcompact SUV that will initially be available in Quebec and British Columbia; a plug-in hybrid version will eventually be added. The MX-30’s 35.5kWh battery has a range of 161km, and its electric motor provides 144hp and 200lbs-ft of torque. The back doors are rear hinged for easier access to the seats, and the interior includes natural and recycled materials. Cargo volume is up to 431L with the rear seats up, generous for the car’s size, while numerous advanced safety assist technologies are standard.

The battery is covered for eight years/160,000km.

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Nissan Leaf The all-electric Leaf has been around for more than a decade. The base Leaf has a 110kW electric motor making 147hp and 236lbs-ft of torque, with a 40kWh battery and 240km of range. Leaf Plus models use a 160kw motor producing 214hp and 250lbs-ft of torque, with a 62kWh battery that gets 349km or

363km of range, depending on the trim. All include full-range adaptive cruise control with ProPilot steering assist and 360-degree camera.

The battery is covered for eight years/160,000km, including a limited warranty against battery capacity loss.

BMW 3 Series PHEV The 3 Series plug-in hybrid sedan is available as the 330e in rear-wheel drive, or 330e xDrive with all-wheel drive. Both are powered by a twinturbo 2.0L, four-cylinder with hybrid system, and when combined, can make a maximum of 288hp and 310lbs-ft of torque. The transmission is an eight-speed automatic.

BMW intends the car to be more about performance, using the electric motor for extra power, but its 12kWh battery provides up to 37km of all-electric range in the 330e, and 32km in the 330e xDrive.

The battery is covered for eight years/160,000km.

Mitsubishi Outlander PHEV An all-new Outlander with longer electric range is coming for 2023, but in the meantime, the 2022 model offers 39km of fuel-free driving when charged. It uses a 2.4L four-cylinder engine that combines with the hybrid system to make 181hp and 181lbs-ft of torque, with an automatic contin-

uously variable transmission (CVT) and all-wheel drive. It offers up to 1,886 litres of cargo space with the rear seat folded, and unusual for a PHEV, it can be fast charged on a DC charger. Warranty on all powertrain components is 10 years/160,000km.

Honda Accord Hybrid Honda’s midsize Accord sedan received a minor refresh overall for 2021, and the hybrid gained better throttle response, and the ability to switch over to electriconly driving for longer periods.

The 2.0L four-cylinder engine combines with the hybrid system for a total 212hp and 232lbs-ft of torque, delivered to the front

wheels through a CVT. Combined city/highway fuel consumption is as low as 5.0L/100km, and at 473L, its trunk is among the largest in the segment. Standard or available features include adaptive cruise control, blind-spot monitoring, lanekeeping assist, head-up display, and ventilated seats.

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Fleet Management

By Roger Constantin

Alternative Fuels 1.

Fleets must stay adaptable as fuel technology evolves Alternative fuels are a hot topic these days, leaving fleet managers with large quantities of information to sort through when making decisions. The road to 2035 – the year that manufacturers of light vehicles plan to stop producing combustion engine vehicles – won’t be easy. Fleet managers must face those challenges with an open mind and adapt.

There are several options for alternative fuels, and I will focus primarily on electricity. But before I do that, a quick word on hydrogen.

The path hydrogen takes will be different than electricity, mainly because manufacturers are not all at the same level on either research or hydrogen production.

But with electric vehicles, especially with regards to light vehicles, there is a value proposition. We must distinguish three types: B attery, requiring drivers to recharge the vehicle; Hybrid plug-ins, which have two engines and can be recharged; and Hybrids, which also have two motors, but you can’t recharge them, since the motors and brakes will do it.

fleet needs medium trucks, there aren’t a lot of full-electric options available. A few manufacturers have recently debuted some medium trucks. That’s good news, but choices remain limited.

In fact, fleet managers will likely have to wait two or more years, before having more options.

The other issue with medium trucks is range. Recent announcements by manufacturers have indicated a range of around 150km. That’s pretty good but is still limited enough to have impacts on the operational side.

For heavy vehicles there are some options, but range is still the main issue, and the recharge stations required are not yet in place.

When travelling short distances, you may find such a vehicle is the right solution. For longer distances, the infrastructure remains to be built.

Fleet managers must evaluate organizational needs, especially for kilometres driven for each truck trip and the time to recharge those trucks between trips. Organizations must make sure that enough trucks will be available. They must also work out the lifecycle costs and perform a right-sizing analysis for the vehicles.

According to the Canadian Automobile Association’s website, there are 62 EVs available, 17 of which are battery powered, 21 are hybrid plug ins and 24 are hybrids. If your

Maintenance and training

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The maintenance costs of electric vehicles will almost certainly go down. While this is a fact, there are no scientific studies that can con-

firm the percentage of reduction.

We can, however, estimate the range of that reduction to be between 25 and 50 per cent. For example, there can be issues with the rotor of the brakes on electric vehicles. In some cases, they are not used enough because the brakes are involved in the battery’s recharge process, and they also reduce the speed of the vehicle.

So, the driver does not have to apply the brake pedal.

To get good data, we will need to wait perhaps five years before analyzing a large body of information to make assumptions for the future.

It is only by accumulating this data that we can get the best estimate.

Another aspect of maintenance is the training of the technicians that will perform the preventive maintenance and repairs. The main issue is the voltage of the battery, which is higher in EVs than internal combustion engines. Technicians must be trained to perform maintenance and repairs safely.

As well, the lifecycle analysis needs to be updated with new inputs such as reduction of maintenance costs, the amortization rate, the life expectancy of the vehicle and fuel costs.

Risk management

Roger Constantin, CAFM, is a fleet management expert.

Reach him at roger. constantin@conseilsrc. com.

The way to cover these challenges is to perform a risk analysis.

Here are the most important risks to cover: a local electricity failure; the vehicle range versus daily needs; the availability of recharge infrastructure in isolated areas; and the availability of vehicles in various categories.

Environmental footprint

The impact on the environmental footprint of emissions is clear with fully electric vehicles. But what about the production of the batteries for those vehicles, which use a large amount of critical minerals. What about the recycling of those batteries at the end of their useful life?

Even more important, how will the electricity be produced? We know the answers to some of these questions, but not in their entirety.

Adaptation is the name of the game. Fleet managers must start planning to introduce electric vehicles into their fleets. The road will be full of challenges and some questions will remain unanswered.

The best advice is to observe the electric vehicle market, network with peers and to question the different government agencies about programs available during this journey. FM/SP

All fleet managers will face challenges with the arrival of EVs. FM/SP SUPPLY PROFESSIONAL

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Fleet Management

By Ted Davis

Disruption ahead 1.

Fleets must adjust to uncertainty In a typical year, most fleet operators would be in peak ordering season, developing operating strategies for the year ahead, fleshing out budgets and confirming orders with their OEM and upfitting partners.

This year, the automotive industry is in uncharted waters. Rather than implementing traditional order cycle best practices, most fleet operators are scrambling to adjust.

The 2021 model year was among the most unprecedented recently, given OEM-related production challenges, supply constraints and labor shortages. Unfortunately, these disruptions linger, and the fleet sector may be navigating them for the foreseeable future.

We must be proactive in acquisition planning and budgeting as it will likely take longer to source vehicles, and they’ll cost significantly more across nearly every segment.

Here are a few factors to consider.

The model year

Most manufacturers face huge uncertainty. Whether it’s the microchip shortage, reduced workforces or limited shipping capacity, most OEMs are trying to overcome multiple factors to normalize production schedules. Some OEMs continue to delay the opening of order banks while others are accepting orders for brief periods, often quickly closing the process with little, if any, notice. The ordering window for one popular van model was reduced from months to three weeks.

Supply chain silo

Examine your fleet and cycling strategy holistically. Ask how your fleet operations will be impacted by limited vehicle availability and extended order-to-delivery times.

Develop a holistic strategy addressing scenarios that may arise to mitigate challenges with units likely to remain in service longer than anticipated. In particular, you’ll want to reassess your maintenance strategy and budget forecast to account for additional utilization during the most costly portion of a unit’s lifecycle. This includes reconsidering which preventative maintenance services may be required.

For example, if you typically cycle vehicles out at 100,000km, your current PM schedule may not include a transmission service. Add this to your schedule if your vehicle must remain on the road longer.

So, consider how acquisition challenges will impact your fleet operations. This comprehensive view will help identify which units to prioritize for replacement.

Lead times

Plan for significantly longer lead times for certain models. If you can submit your orders, you’ll likely be waiting at least six months. If you place an order for a standard vehicle today, you’ll probably receive it towards the end of Q2. If your vehicle needs upfitting, you likely won’t take delivery until the late summer or early fall of 2022, if not

later, as upfitters work through limited component availability and production backlogs due to facility closures during the pandemic.

Limited dealer stock

Most dealerships are struggling with record-low inventory, hampering stock purchase availability.

Expect fulfillment of immediate/ emergency vehicle orders to be difficult and costly. Your standard preferred purchase agreements will likely hold little value for high-demand units.

STAY AGILE With limited vehicle availability, flexibility and quick decisions are important. For some, it may help to simplify vehicle specs to increase the number of units available from various manufacturers. While traditionally you may consolidate your orders with a small number of OEMs, you may benefit from embracing multiple manufacturers to maximize your options and minimize the impact of delays.

Regarding upfitting, if possible, streamline specifications for more simplicity and consistency in vehicle design to mitigate supply chain risks and let vehicles move through the upfit process more quickly.

This may also allow you to shuffle units across your fleet to where they’re most needed. Make acquisition decisions as quickly as possible. Discuss your strategy and budget with stakeholders to have the solution framework in place.

Ted Davis is vicepresident, North American supply chain, at ARI.

When vehicles are available, make decisions immediately or, when possible, pre-approved.

EXPECT THE UNEXPECTED Unfortunately, order cancellations and delays will be unavoidable and may occur weeks or even months after submitting orders. Have contingency plans to minimize the impact. This continues to be a particular area of focus for Holman’s supply chain experts. We’re speaking with our supply chain partners to stay ahead of disruptions to help our customers adjust their acquisition strategy.

Don’t go it alone

The pandemic continues to disrupt the supply chain, and fleet operators will navigate these issues into 2022 and likely beyond. You may need to get creative, adapting traditional budgeting and ordering strategies to account for volatility. You may not necessarily feel the impact of these decisions until the future.

In this area it’s beneficial to partner with a fleet management provider. A fleet management company can help to determine the impact to your business and operating budget, considering variables like increased downtime, higher maintenance costs and the inability to capitalize on the strong resale market to develop a holistic acquisition strategy. FM/SP FLEET MANAGEMENT SUPPLYPRO.CA 27

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Fleet Management

By Stephanie Wallcraft

Checking the boxes

The Toyota Prius Prime plug-in hybrid When discussion turns to hybrid vehicles, Toyota’s Prius nameplate is often the first to come to mind.

The original Prius was the undisputed pioneer of electrification when it debuted more than 20 years ago, and the technological revolution it kicked off around fuel efficiency has increased in importance dramatically.

Since those early days, numerous iterations of the Prius have been released, including the Prius v extended hatchback, the Prius c subcompact car, and the vehicle in question here, the Toyota Prius Prime plug-in hybrid. Launched in 2012 and last redesigned for the 2017 model year, the Prius Prime was an early example of a PHEV 28 DECEMBER 2021

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at a time when they weren’t yet common in the North American market.

Two grades of Prius Prime are sold in Canada. The base model ($33,550 before destination and fees) includes the Toyota Safety Sense suite of driver assistance technologies – a pre-collision system with pedestrian detection, automatic high beams, dynamic radar cruise control, lane departure alert with steering assist and lane tracing assist – as well as a heated steering wheel. The Upgrade trim ($36,350) adds heated front seats, blind spot monitoring with rear cross-traffic alert, a power-adjustable driver’s seat, and a wireless phone charging pad, among other features. The Upgrade Technology Package

($38,700) includes rain-sensing wipers, a head-up display, fog lamps, a 10-speaker JBL audio system, a parking assist feature and an auto-dimming rearview mirror.

Our test unit is the latter and, including the optional red exterior paint colour and a $1,790 destination charge, rings up at $40,871 as tested including fees.

One of the primary selling points of the Prius Prime is its affordability relative to its fuel use, especially in markets with EV incentive programs: the federal government’s iZEV program offers a rebate of up to $2,500, while stackable provincial rebates of up to $4,000 exist in Quebec and British Columbia. Depending on the grade,

these can sink the price of a new Prius Prime to less than $30,000, which is impressive for the fuel savings it provides.

That efficiency is supplied through a 1.8L, four-cylinder engine matched with a front-axle mounted electric motor – the Prius Prime is available only in frontwheel drive configuration – powered through an electronically controlled continuously variable transmission. According to Toyota and Natural Resources Canada estimates, the Prius Prime is capable of up to 40km of fully electric range that can be recharged in five hours and 30 minutes through a 110-volt household outlet, providing a total combined electric-gas range of FM/SP SUPPLY PROFESSIONAL

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1. The Upgrade trim adds heated front seats, blind spot monitoring with rear cross-traffic alert, a power-adjustable driver’s seat, and a wireless phone charging pad.

2. The Toyota Prius Prime plug-in hybrid has 19.8 cubic ft behind the second row and 36.6 cubic ft behind the front fow.

One of the primary selling points of the Prius Prime is its affordability relative to its fuel use, especially in markets with EV incentive programs.

1.

2.

1,035km and a fuel consumption rating of 1.8L-equivalent per 100km combined. Our observed rating varied anywhere from burning zero fuel in EV Mode on a typical day of school runs and errands to 3.1 L/100km after some longer highway runs across the city.

Drive modes

That said, owning a Prius Prime does mean living with some compromises in usability. There are two drive modes: D, which operates similarly in feel to a gas-powered car, and B, which firms up the regenerative braking system to recover more charge to the battery during driving. For most drivers, B is the better mode to live in

during city driving, while D is better at coasting and therefore more fuel efficient on the highway.

However, it’s not possible to shift straight into B mode when pulling out of a parking spot despite being a straight movement downward on the shifter. The driver instead needs to shift over to the left into D mode first, then into B afterward.

On top of this, the Upgrade trim comes with the larger portrait-oriented 11.6-inch infotainment screen. This is initially impressive with layers of graphics and on-board navigation, though it doesn’t take long for it to feel like a five-year-old system that’s relatively rudimentary in its function.

There are no dials for adjustments

such as temperature or audio volume, meaning a change requires repeatedly tapping on a hard button. Most critically, this upgraded system does include Apple CarPlay, but it doesn’t include Android Auto. The base grade with its seven-inch screen does, but this operating system is specific to this larger screen and was developed before Toyota started integrating Android Auto into its vehicles.

That’s a difficult omission for an Android user to live with today.

The 2022 Toyota Prius Prime Upgrade Technology therefore isn’t without its frustrations. But for fleet buyers, it checks the two most important boxes: it’s fuel-efficient and priced to be one of the

most cost-effective plug-in hybrids on the market. FM/SP

As Tested Price (incl. freight and PDI): Starts at $45,955; tested at $40,871 Engine: 1.8L four-cylinder plus 8.8kWh electric motor Power: Total system output 121hp; 105lbs-ft (engine) Transmission: eCVT Rated Fuel Economy (L/100km): 1.8Le/100km combined (4.3/4.4/4.3) Observed Combined Fuel Economy (L/100km): 3.1 FLEET MANAGEMENT SUPPLYPRO.CA 29

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2021-12-06 5:44 PM

THE LAW—BY PAUL EMANUELLI

DEFINING BENCHMARKS PURCHASING MUST SPECIFY WHAT THEY EXPECT Recent audits and legal decisions underscore the importance of establishing clear contract performance benchmarks to measure contract success and enforce contractual obligations.

Turning first to recent audits, in the July 2020 report entitled New Zealand Transport Agency: Maintaining state highways through Network Outcomes Contracts, New Zealand’s auditor-general found that while the New Zealand Transportation Agency had consolidated new results-based highway maintenance contracts, that new program continued to use outdated, specification-based performance benchmarks. This resulted in an overall lack of clarity in confirming whether the contractors were meeting their objectives. Rather than repurposing old contract management strategies to administer new contract structures, this report underscores the importance of developing new contract performance benchmarks when deploying new contracting strategies.

Similarly, in its November 2020 report entitled Weapon System Sustainment, the US Government Accountability Office (GAO) reviewed the mission readiness of 46 different types of military aircraft and recommended the adoption of better performance tracking metrics. As the report explained, the “mission capable rate” measures “the percentage of total time when the aircraft can fly and perform at least one mission.” While the GAO concluded that none of the aircraft achieved the desired 80 per cent mission capable target, the report provides a useful example of how performance benchmarks can help measure the success of contract management goals.

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Further, in its September 2021 report entitled Defence’s Contract Administration — Defence Industry Security Program, Australia’s auditor general noted the importance of establishing procedures for contract enforcement. The auditor general concluded that the Defence Industry Security Program, which is aimed at supporting Australian contractors in meeting their security obligations under Department of Defence contracts, failed to establish arrangements to monitor compliance with the requirements. The report ultimately recommended that new contract performance requirements should be “supported by an agreed implementation plan and appropriate levels of resourcing.”

As recent court cases illustrate, failing to properly define performance benchmarks can undermine the downstream enforcement of contractual obligations. For example, in its June 2020 decision in Blackpool Borough Council v.

Volkerfitzpatrick Limited, the England and Wales High Court of Justice dealt with a dispute over the construction of a new tramway depot in the coastal town of Blackpool, England. The Council claimed that the design was not suitable for the exposed coastal marine environment. While the Council was awarded £1.1 million in damages, that award was significantly less than originally claimed since that claim assumed a “design life obligation” of 50 years, whereas the design life expectations established under the contract were for a period of 25 years. The failure to clearly define the baseline assumption for the building’s design and construction undermined the ability to recover damages fully for the alleged defects.

Further, the August 2020 decision of the Ontario Court of Appeal in Grasshopper Solar Corporation v. Independent Electricity System Operator dealt with the cancellation of a solar power facility contract due to the contractor’s failure to meet the prescribed milestone date for commercial operations. In challenging the termination, the contractor alleged that the government agency led the contractor to believe that it would not be terminated since the agency issued a July 2013 bulletin informing solar facility contractors that the operational deadlines would not be strictly enforced. However, since the agency subsequently served the contractor fresh notice of breach in September 2019, the application judge ruled that the agency still had the right to terminate for non-performance. While the Court of Appeal upheld that ruling, this case highlights the risk of granting indulgences against strict performance since those indulgences can create uncertainty regarding the enforcement of future contractual obligations.

Finally, in its April 2021 decision in Tower Restoration v. Attorney General of Canada, the Ontario Superior Court of Justice rejected a contractor’s extra-cost claim after finding that the contractor should have anticipated the challenging conditions under which it was expected to perform its work.

The dispute dealt with a $3.2 million contract awarded to a low bidder for the replacement of windows at the Millhaven Maximum Security Penitentiary. The contractor encountered logistical issues accessing the interior of the facility, which led to delays and increased its costs. However, the Court rejected the $1 million extra-cost

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

“To guard against future extra-cost claims, purchasing institutions should ensure that bidders are fully informed of the site conditions that they will encounter during contract performance.”

claim, ruling that the contractor should have anticipated those conditions when it bid on the work.

To guard against future extra-cost claims, purchasing institutions should ensure that bidders are fully informed of the site conditions that they will encounter during contract performance.

As these recent case studies illustrate, purchasing institutions should ensure that they clearly define their contract performance benchmarks if they hope to enforce future contractual obligations. SP SUPPLY PROFESSIONAL

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2021 IMPREZA

2021 CROSSTREK

On models with EyeSight® and specific headlights

On models with EyeSight® and specific headlights

IIHS TOP SAFETY PICK

IIHS TOP SAFETY PICK

2021 LEGACY

AJAC

Voted Best Small Utility Vehicle in Canada for 2021

IIHS TOP SAFETY PICK+

J.D. Power Best Residual Value among Subcompact Utility Vehicles

1

Full-time all-wheel drive for full-time confidence in motion. Superior drivability, outstanding control and handling you can count on.

Innovative advance warning safety system that helps you avoid potential danger on the road.

Subaru’s eye on safety.

Like your company, we at Subaru are all about going the distance. Which is why we’ve got safety and durability covered like no other, giving you the peace of mind that comes with knowing your drivers are well protected when they’re on the road. Factor in high resale value, great fuel efficiency and low total cost of ownership, and it’s easy to see that selecting Subaru for your fleet just makes good common sense.

On-board technology system connecting your Subaru to the world. 24/7 safety and convenience wherever you go.2

3

3

Visit us at subarufleet.ca

1. Awards based on the J.D. Power ALG residual value forecast for the 2021 model year. For J.D. Power 2021 award information, visit jdpower.com/awards.

2. SUBARU STARLINK® Connected Services are offered on an initial three-year free subscription on select trim levels. Customers are required to enroll in the SUBARU STARLINK® Connected Services program. To operate as intended, SUBARU STARLINK® Connected Services require a sufficiently strong cellular network signal and connection. See your local Subaru dealer for complete details.

3. Safety ratings are awarded by the Insurance Institute for Highway Safety (IIHS). Please visit www.iihs.org for testing methods.

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DESTINATION:

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Shell®, Shell Fleet Plus™, Shell Fleet Navigator ® and Shell Telematics™ are trademarks of Shell Brands International AG. Used under license. The Shell Fleet Navigator Mastercard Corporate Fleet Card is issued by WEX Canada pursuant to a license by Mastercard International Incorporated. Mastercard and Mastercard Corporate Card are registered trademarks of Mastercard International Incorporated.

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