Supply Professional February 2022

FEBRUARY 2022

FAMILY TIES

Collaboration is key for Kathy Cheng of Redwood Classics Supply chain disruption

Building scalable retail supply networks

Packaging innovations Warehouse capacity Automation

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With the introduction of freighter aircraft and construction of our state-of-the-art cold chain facility underway, we are transforming our business to move yours forward.

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VOL.64 No.1 FEBRUARY 2022 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN

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

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COVER: MIKE FORD PHOTOGRAPHY

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FEATURES

ALSO INSIDE

7 KEEPING IT ROLLING This year has been tumultuous for trucking.

16 RETAIL SUPPLY CHAINS Building scalable supply network designs.

8 SUPPLY CHAIN INTERRUPTED Dealing with looming disruptions in 2022.

18 AUTOMATED EVOLUTION Accurate, real-time data is key for making quick supply chain decisions.

10 KATHY CHENG Collaboration, diversity and family ties in garment manufacturing.

14 WRAP IT UP What’s new in packaging innovations.

20 CAPACITY SHORTAGE Canadian Warehouse space is at a premium.

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

22 TERMS AND CONDITIONS What to look for in technology contracts.

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Fleet Management SUPPLYPRO.CA 3

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UP FRONT

INGENUITY FOR THE WIN Many Canadian COVID-19 pandemic metrics appear to easing. Yet the Omicron variant, which was first identified last November and has since spread to most countries, continues to present challenges. These challenges affect all areas of business, supply chains included.

No pandemic lasts forever. But we may see some permanent changes to our supply chains brought about by COVID-19. The design of those supply chains, and how the field deals with risk, may be different going forward. We could see organizations rely more on buffer stock, as supply chain professionals look to shield themselves from disruptive shocks.

This would help to cover not just pandemics, but also geopolitical instability, the effects of climate change and other risks.

Supply chains must become more resilient to remain viable.

Technology can play a big role. A digital transformation, termed Industry 4.0, was already underway before any of us had ever heard of COVID19. But the pandemic has increased our dependence on technology, and it will continue to play a major part in bolstering supply chain resiliency.

It has sped up by several years many technological changes already underway before the virus emerged. And while no one argues the pandemic is a good thing, our response to it means a shortened timeline on some of those changes by several years.

For example, the rise of e-commerce during the pandemic has meant tight capacity in warehouses. One solution, discussed in our related story on page 20, is to use technology to link warehouse management systems with other supply chain elements. Digitization will no doubt continue to play a role in managing e-commerce going forward.

Companies can use technology to automate certain material management functions. This can help to curb disruption brought on by labour shortages. Automating functions that are necessary but mundane, such as moving parts or equipment around a manufacturing facility, can free up employees for more high-value tasks. For more on this, see our story on supply chain disruption on page 8.

And as our automation story on page 18 shows, data integrity is vital to minimizing disruptions and ensuring supply chain continuity. Technology can once again help here. Organizations can add tools to help provide accurate, up-to-date data. The article contends that artificial intelligence (AI) and blockchain are the next frontier in the process of automating supply chains.

Humanity has always shown great skill in problem solving. Our collective ingenuity has meant advances in transportation, health, infrastructure and other areas. Some of those advances were unthinkable just a decade or two ago. That ingenuity, and the technology that comes from it, can help us to address supply chain disruption now and in the future.

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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SUPPLY PROFESSIONAL

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BUSINESS FRONT—BY MICHAEL HLINKA

TIME TO MOVE ON? WORKING AND LIVING WITH COVID-19 I started writing the outline for this column in late December.

At the time, COVID-19 was sweeping through the Hlinka family.

My wife has a son by a previous marriage, a wonderful 19-year-old who has a part-time job as a barista. This means he encounters many different people. He came home from work one day not feeling well and took a COVID-19 rapid test. It indicated that he did not have the virus. Subsequently, he took a more rigid test and discovered that he was indeed COVID-19-positive which led him to quarantine in his room.

My wife, who was fully vaccinated, soon complained of mild cold-like symptoms. She asked me whether she should get tested.

I told her that I didn’t understand why she would. It wasn’t going to change our behaviour. I suggested that she go to bed, take care of herself, stay away from other people.

Then I started feeling very, very tired. For several days, I slept a good 10 hours each night and took long naps in the afternoon on top of that. Because I am a teacher and all of my classes were online, it meant that my work life was moreor-less unaffected. After several days of extreme fatigue, I recovered.

One last thing: I, too, had been fully vaccinated.

The collective experience of our family underscored some valuable lessons about Covid-19 that I understood 22 months ago. If you are young and healthy, you have less rather than more to fear from this virus. I’m going to excerpt at length from an e-mail I sent to my students in March 2020:

“There is a great deal of information coming out of Italy about fatalities and who is at risk… and who is not at risk.

You are CFA candidates and you are capable of both understanding and communicating the meaning of these numbers. I would urge you to pass along this information to everyone you know. And keep in mind that these are numbers from Italy, a developed country and that – unfortunately – there have been in excess of 3,400 deaths, which means this is a meaningful sample: T he median age of death is 80.5 years old T he average age of death is 79.5 years old 75 per cent of those who have died in Italy suffered from high blood pressure It seems to me that anyone with a scintilla of common sense recognizes that this virus only seems to accelerate that which would be soon inevitable anyway.

Here’s what you should understand: The aged and those who are older with bad health should be very, very cautious. IF YOU HAVE PARENTS OR OTHER LOVED ONES AGED 80 OR GREATER, DO EVERYTHING IN YOUR POWER TO MAKE SURE THAT THEY MAINTAIN A STRICT QUARANTINE. Those reading this e-mail have very little to worry about.”

Those reading this column almost certainly have very little to worry about.

By this time, even the dullest among us (which seems to include most democratically elected lead-

ers) should realize that we are not going to stamp out COVID19. It’s something we will be living with for the foreseeable future. It is crystal-clear that the vaccines do not prevent COVID19. Rather, they seem to mitigate its effects. And this is not trivial.

It’s time to get back to business as usual. Government should not be imposing vaccine mandates.

Government should not be imposing masking regulations. Sensible public policy would allow each economic actor to determine its own rules and regulations, and I’m going to use my local pub to explain how this should work.

When indoor dining was open, the staff was required to wear masks. Patrons were required to wear masks upon entering the establishment, then were allowed to take them off to consume beverages and eat food. It was absurd and due to government fiat.

Here’s the better way. Allow each bar or restaurant to establish its own policies. If a condition of entry was wearing masks, I would have told the owner and manager that if they wanted my business, they would have had to amend their policy. There would be some places where masking was required, and some where it was not. Some would require their employees to wear masks where those who understood the science would not make this useless requirement. That said, if some workers felt more comfortable wearing masks, fair enough. But there should not be any mandates, either at the city, provincial or federal level.

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

“Sensible public policy would allow each economic actor to determine its own rules and regulations.”

With 20/20 hindsight, we should recognize that the original quarantine of March/April 2020 was justifiable. We tried to flatten the curve. But after that, can’t we admit that all other restrictions have been useless? They haven’t stopped COVID and they’ve devasted many people financially.

Let’s get on with work, let’s get on with life. SP SUPPLYPRO.CA 5

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IN THE FIELD—BY JOHN VANDENBERG

RESTORING TRUST SUPPLY CHAINS PLAY A ROLE IN INDIGENOUS RECONCILIATION We live, as the curse goes, in interesting times. The COVID-19 pandemic has been with us for nearly two years. Consumers suffer the impact of supply chain interruptions and bottlenecks. Scarcities, the rising cost of goods and inflation affect a broad demographic and geographic profile.

These difficulties have been accompanied by an often-unfair mistrust of our institutions and their leaders, who are unable to deliver a quick and neat solution to a global problem. A pandemic of misinformation driven by social media drives a wedge between citizens who are served facts and fantasy in equal measure. Conflict threatens pandemic recovery, citizens are suspicious of one another’s intentions and critical of perspectives they don’t share. Trust in media news sources is at an all-time low. How can trust be restored?

Business has a pivotal role to play. The 2021 “Trust Barometer” report by global communications firm Edelman notes that people expect companies to overcome these challenges, and CEOs are expected to speak out and address societal issues. It is a mantle of responsibility thrust upon today’s business leaders, and a role for which the best executives and managers have been prepared through attention to practices of corporate social responsibility (CSR).

Studies show an overwhelming majority of consumers are more likely to trust organizations that support social or environmental issues and are prone to be more loyal. Over half of jobseekers consider a company’s social and envi6 FEBRUARY 2022

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ronmental commitments and would choose to work for a socially responsible company even with a lower salary. Nearly two thirds of investors have integrated ESG (environmental social and governance) standards into their investment decisions.

ESG standards capture the practices and measurements by which a firm’s conscientiousness is judged.

The concept shared by CSR and ESG is that organizations must ensure the sustainability of their enterprise, to consider those who they influence and affect, and to protect the environment in their actions.

ESG should be integrated through all levels of the firm, at the board level where risks and opportunities are recognized, the executive where strategy is determined, and the operational, where supply chain management decisions are made.

Today’s supply chain professional appreciates that an ESG strategy is an obligation and predicator of future business success. Supply chains are at the forefront of ESG, and decisions made by procurement have an enormous environmental impact. The transportation sector, for example, generates 14 per cent of GHG emissions worldwide. Supply chains employ an estimated 450 million people across the globe, and therefore bear enormous social responsibility.

If recognizing ESG standards has become an imperative for private-sector firms, they may yet become the measure by which stakeholders judge public sector organizations. Last January, the City of Toronto became the first government in Canada to issue

an ESG report. Though other governments have yet to follow suit, I suspect that more will move to report using an ESG template, and procurement activities within departments and agencies will increasingly be called upon to include supplier ESG measurements in the proposal evaluation process.

Reciprocal trust is the currency that funds and sustains relationships, fosters individual and organizational success and issues an organization’s operating licence.

Enduring and mutually beneficial relationships between public- and private-sector organizations and those they serve depend on trust.

It is in challenging times like these that trust becomes the foundation upon which the economy rebounds and the supply chain is restored.

CONSIDERING FIRST NATIONS In matters of trust, the relationship between Canada and First Nations peoples has been a strained one.

The consequences of colonialism are far reaching, and Canada has much work yet to do toward reconciliation with First Nations peoples. The inclusion of indigenous concerns within ESG standards is not enough. Consultation alone is not enough. Now and in the future, major energy and infrastructure projects will be sustainable and ESG compliant when they are supported through Indigenous partnerships and include Indigenous equity stakes. ESG standards will best reflect social responsibility where the rights, interests and input of Canada’s Indigenous are recognized, where they are included as leaders and

John Vandenberg is principal of ARC Advisory Services, Inc., Yellowknife, Northwest Territories.

“Today’s supply chain professional appreciates that an ESG strategy is an obligation and predicator of future business success.”

decision makers, sharing risk and receiving development benefits.

Governments and business can come together and join with First Nations to foster constructive alliances, improve economic and social conditions, support Canada’s commitment to Indigenous reconciliation and meet the spirit and intent of the United Nations Declaration on the Rights of Indigenous Peoples.

I urge executives and practitioners to review the paper commissioned by the First Nations Major Project coalition titled Indigenous Sustainable Investment Discussing Opportunities in ESG published in January 2021, and a complementary document issued at the Indigenous sustainable investment conference in March 2021, A Road Map to Investing in Canada: Indigenous Inclusion in ESG. SP SUPPLY PROFESSIONAL

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BY CHRISTIAN SIVIÈRE

“The real issues facing our trucking industry are the economy, energy costs and driver shortages.”

TRUCKING TAKES CENTRE STAGE AMID OTTAWA PROTESTS, WHAT ARE THE ISSUES FACING THE INDUSTRY? Over the last two years, Canadians got a crash course on supply chains.

It started with the rail blockades in January 2020, then the pandemic in March, going through different phases with shortages of personal protection equipment, various commodities, lockdowns, re-openings followed by more lockdowns, a heat wave and forest fires in BC last summer, flooding in the Fraser Valley, with roads and rail lines closed for several weeks.

During that time, we had the US border closing, except for essential workers and trucks, and careful reopening. And as we seemed to emerge from the pandemic last summer and life got back to a quasi-normal, Omicron hit us last fall, leading to another odd Christmas and year-end celebration.

By that time, most Canadians were tired of this pandemic. We are not alone though, as it’s fair to say that every country around the world is feeling the same. But with the vaccine rollout (so far vaccination is the only proven method of fighting the virus) and around 85 per cent of Canadians fully vaccinated, we could look forward to a bright 2022.

With ample pre-advice, the federal government introduced a vaccine mandate for truckers entering Canada on January 15. Several industry groups, including manufacturers, lobbied the government to scrap the mandate or delay it until April, arguing that it was going to create shortages.

This was odd. The vaccination rate among truckers mirrors the overall population, so this measure only affects a small percentage.

In addition, the US Government was implementing the same measure effective January 22, so what choice did we have? In retrospect, one could ask: what were we thinking when we decided to implement these measures on different dates?

OTTAWA CONVOY In protest, truckers headed to Ottawa, forming a “freedom convoy,’’ soon turning into a protest against virus measures in general. This became very political as various opposition politicians jumped on it to take selfies with protesters.

In Alberta, another scenario developed with some truckers blocking the Montana border in Coutts.

All this brought Canadian truckers to front-page news, not just here but across the world. But it is hard to see how it can help the trucking

industry. It will also be interesting to see who financed this.

Meantime, the main issues facing us all is the pandemic and our health, then the economy and our livelihood. When we find better ways to manage and hopefully eradicate the virus, everyone will know. But for now, there is no other choice but to apply collective measures and work together.

The real issues facing our trucking industry are the economy, energy costs and driver shortages. With the pandemic and changing consumer patterns, supply chains shifted. Higher raw material costs and shortages greatly affect manufacturers. For example, the shortage of semiconductors impacted the automobile industry, and we see the result. Canadian auto production last year hit its lowest level since 1967. In 2021, we produced just over 1.1 million light vehicles, down from 1.4 million in 2020 and two million in 2019. Most of these are exported to the US and as our North American automotive supply chains are integrated, it means fewer trucks crossing the border.

Regarding energy costs, the world faces the same issue. Canada is an energy producing country, but we have distribution challenges.

Rising energy costs hit us too.

The issue of driver shortages is part of the greater labour shortage experienced across industries. Improved working conditions should help overcome this.

Another issue facing the industry in a more subdued way is the relentless growth of e-commerce, with companies like Amazon grabbing more market share, driving

Christian Sivière is president at Solimpex.

brick and mortar retailers out of business. When traditional retailers disappear, so do their suppliers, wholesalers, distributors, warehouses, transport companies and so on.

The distribution of products becomes concentrated among fewer players who dictate their terms, squeezing transport companies in the process.

Another factor is the parallel development of the gig economy, which we could also call the “informal’’ economy, with independent drivers delivering parcels, groceries, pizzas and other goods outside the traditional transport and delivery industry.

A FAIR PRICE Looking at the big picture, taking social and environmental issues into account, and to prevent the recent supply chain disruptions, we must shorten our supply chains and encourage reshoring. This takes investment and time. We must also stop this frenzy of buying online, encouraged by the “free’’ shipping and “free returns’’ madness, which results in overconsumption and creates waste.

The true cost of transportation must be considered, to ship consumer products across the globe, move exotic fruits and vegetables from South to North, or to truck goods across Canada. Shipping is not free. When we pay a fair price, the profession will be recognized and valued. SP

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BY MICHAEL POWER

ROCKY ROAD DISRUPTION-PROOFING THE SUPPLY CHAIN IS MORE IMPORTANT THAN EVER

While risk is a permanent theme in supply chain management, recent trends have made the situation worse. A new year seems not to have slowed down disruptions, with the COVID-19 pandemic, labour and commodity shortages as well as other factors affecting the flow of goods.

“The two big elephants in the room that are already disrupting aren’t going to be necessarily new disruptors, but I think they will continue,” says Jeff Christensen, vice-president of product at Seegrid.

A shortage of key supply inputs, such as microchips, affects downstream manufacturing. As well, labour shortages continue to rattle supply chain and logistics. The situation has worsened as the battle with COVID-19 grinds on.

“There was a labour shortage pre-pandemic,” Christensen say.

“The labour shortage got that much worse when people weren’t even allowed in the building.”

That shortage will likely continue to disrupt supply chains even after the worst of the pandemic recedes, he notes.

This year, supply chain professionals are dealing with the aftershocks of disruptions that occurred in 2021 and 2020, says Denis Sanchez, vice-president, operational excellence, at Cognibox. Sanchez agrees that labour shortages will continue in 2022. This shortage will show up in both manufacturing and transportation.

“Logistics, both in terms of availability, lead times and prices will also continue affecting manufacturers who will face higher costs both on the logistics and commodity sides,” Sanchez notes. “All of this unfortunately translates to higher prices for consumers, so inflation is certainly an issue to continue watching closely in 2022.”

VACANCY RATES Warehousing issues will continue well into this year, Sanchez says.

Vacancy rates in Toronto, Montreal and Vancouver reached the lowest levels in North America last year.

At one point, the industrial real estate vacancy rate in the Greater Toronto Area (GTA) hit 0.5 per

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cent. The situation will take time to normalize, he notes. Demand remains higher than capacity, as well as product and materials availability. This situation will persist for at least the first half of the year.

Supply chain professionals must continue to watch how the Omicron variant affects their operations and the global economy.

“More border restrictions, potential for lockdowns – we have all seen this movie before and it doesn’t end well for supply chains,” Sanchez says. “Even with lessons learned from 2020 and 2021, and recent improvements to supply chains, they are still fractured and very susceptible to anything that adds stress to the flow of goods. A prime example is all the disruption that’s been caused by the floods in BC.” Whatever the circumstances, supply chains can’t operate seamlessly if different departments operate in silos, says Laura Lough, fulfilment and logistics partner with Digital River. Transparency and communication between different areas can help to break down those barriers.

“My first comment to anybody trying to improve their supply chain is, who’s talking to whom? Is everybody briefed? Has everybody bought into this? Does the manufacturer know what the warehouse setup is?

You’ll find a client might say, ‘why does that matter?’ Well actually, it’s really important,” she says.

Just because a pandemic or other disruption hits doesn’t mean customers don’t want their orders delivered on time, Lough says. Warehouse automation can help ensure that deliveries run smoothly. That can include either fully automating a warehouse or a hybrid solution that includes some automation.

Other solutions include running warehouses all day and night, seven days a week. Largely automated “dark warehouses” keep productivity high while delivering savings through fewer staff and less energy used while the lights are out.

There are concerns that automation will take away jobs that people now do. Lough sees a shift in the kind of work people do, rather than full-scale phasing out of warehouse employment.

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“I think what we’ll see is an upscaling in the types of jobs that are required in a warehouse,” she says.

“Maybe less of the picking and packing sort of people, those on minimum wage. There will be much more of a need for managers to interpret data, to read the data, to understand the number of orders that are going out, and to understand the shifting in stock to replenish.”

With lack of labour a concern, Seegrid’s Jeff Christensen recommends first looking at operational areas most at risk of shortages.

Find out what you can do differently.

How can labour be applied to the highest-value tasks? From there, see if you can automate any functions that remain unfilled.

For example, moving material from one part of a facility to another may be critical to operations. But it’s not the highest-value task for employees to perform. Such tasks are ideal to consider for automation by mobile robot.

“The next step after that is, I can have AI making recommendations for me of what I ought to be doing.”

THE RISE OF AI Going forward, Christensen sees potential for artificial intelligence (AI) to connect different areas and functions that have been automated.

Such software would ensure those areas are interoperable, regardless of what technology is used. That frees up employees to make management decisions.

“The next step after that is, I can have AI making recommendations for me of what I ought to be doing,” Christensen says. “And then, eventually, AI making those decisions for

me and doing a constant optimization. That’s the direction that I see it going. I think we’re still in pretty early days. That kind of AI overall operation optimization, I think it’s inevitable that we’ll go there.”

Digitizing supply chains can mean better optimization, risk mitigation and operational outcomes, says Sanchez of Cognibox. Digital supply chains also make inventory management more efficient, allowing continuous monitoring of inventory through sensors and other technology.

Supply chain disruption often happens in the second or third tier of suppliers, Sanchez says. Technology allows visibility across all tiers, helping to relieve those risks.

“At Cognibox, we see increased use of our subcontractor management technology that allows buyers to map risk and digitize supplier pre-qualification beyond the first tier,” he says.

Focus on the basics to deal with future disruptions, Sanchez advises.

Resilient supply chains are built around the right suppliers, so selection remains key. A supplier’s location, capacity, capabilities and dependencies are important considerations when choosing suppliers.

Supplier collaboration allows for not only visibility, but leveraging partnerships to prevent and respond to disruption, Sanchez says. Working with tier-one suppliers can both ensure continuity of their service and mitigate risk across lower tiers.

“Technology is the driver of optimization across all these areas,” he says. “From supplier selection to collaboration, information exchange, data gathering and processing, to retaining visibility and delivering financial stability, it all happens through technology.” SP

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BY MICHAEL POWER

SEWING THE SUPPLY CHAIN

COLLABORATION IS KEY IN KATHY CHENG’S LIFE AND BUSINESS It was from her father, Chak Cheng, that Kathy Cheng learned the meaning of grit. When the family first came to Canada, the Hong Kong native had to work three jobs. By day, Chak was a cutter for an apparel manufacturer. He also worked as a server in a restaurant on weekends while delivering pizza at night.

In the 1980s, after the Cheng family arrived, Google Maps didn’t exist. There were no smartphones to help navigate deliveries. Chak relied on maps or map books to navigate his new city.

Cheng’s mother worked as a seamstress.

They spoke Cantonese as their first language.

The couple had worked in the apparel industry while living in Hong Kong.

Their daughter eventually became partners with her father in the family business, RW & Co., a garment manufacturer he founded with his brother and sister in 1988, originally called Wing Sun Garments. She is also founder and president of Redwood Classics Apparel, their wholesale and stock premium program. Cheng started helping in the family business at age 12. She performed tasks like tax remittances, some basic accounting, quality assurance and trimming.

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“Every summer pretty much, if I wasn’t able to find a job outside of the factory, my summer job was at the factory,” Cheng says.

Cheng attended the University of Toronto.

She considers herself a hands-on learner, and graduated from the school’s co-op management program, now the Bachelor of Business Administration program. She then attended George Brown College’s post-graduate program for sports and event management.

“I’ve always loved managing events,” she says. “From the outside it looks easy and smooth, but on the inside, you realize there are all these nooks and crannies that bring a successful event to life.”

The program led to a job in Taipei, Taiwan.

For about a year. Cheng ran a Canadian education expo for international students. When she returned to Canada, she worked at a financial consulting company called Brendan Wood International doing data entry. She moved quickly into project management, working to publish institutional equities reports. But the financial industry was demanding. The position paid well, but long hours meant Cheng rarely saw her family.

A NEW DIRECTION Cheng joined the family business in 2000.

For the next several years, she worked to learn the trade, helping as best she could. In 2008, when the financial crisis hit, the business faced a decision: continue as is or get into another field, as most North American textile makers had done?

As the company grappled with these decisions, Cheng’s father asked her to become his business partner. She hesitated, unsure of whether that was the direction she wanted for her professional life. That time, around 2008, was the height of the fast-fashion era. Consumers wanted cheap clothes. They cared little for quality, what products were made from or how long they lasted. But the family business was built on values quite opposite to those the garment industry pursued at the time.

It was around this time, as the family pondered its next business move, that Cheng recalls standing on the factory floor and suddenly grasping the direction her career would go.

“I realized that I’ve had such an incredible life because of the factory, because of our makers,” she says. “Many of them had been with us for 10 or 15 years by that time. They literally watched me grow up. It was my ‘a-ha!’ moment where I said, ‘I’ve got to do this.’ Shortly after, my dad and I became business partners, in 2009, January.”

The company restructured with 40 people, focusing on collaborating with their brand partners. Since then, it has tripled its workspace and head count. Yet the values remain the same: quality products, flexibility and collaboration.

During the restructuring, Cheng went from vice-president to president, and around 2010 developed Redwood Classics Apparel, the company’s wholesale program. The program started as a cut-and-sew manufacturer but eventually expanded its backend value chain, offering a commissioned, local knitting service.

The company brings in yarn by the container and then does custom knitting.

Reflecting on that period, Cheng is grateful she witnessed how local manufacturing and employment opportunities uplift communities.

Many of the company’s employees were immigrants who had brought their skills with them when they immigrated from Hong Kong, a forSUPPLY PROFESSIONAL

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MIKE FORD PHOTOGRAPHY

“This whole time my father and his brother and sister had continued to scale our manufacturing business,” Cheng says. “We’ve always been making in Canada, since 1988. He asked me, ‘if you’re working this hard for someone else, would you consider helping out in the family business?’”

MIKE FORD PHOTOGRAPHY

mer textile hub. Cheng credits the value those immigrants brought with helping to propel the company’s success.

“We’ve been able to onboard new immigrants to our business and to be part of families and livelihoods,” she says. “It gave us economic and social impact. There are just so many things that our business has touched on. It wasn’t until the last seven or eight years that I started reflecting and recognized that’s what was happening.

“When we restructured, it was in the midst of fast fashion. There were not a lot of celebrations of (clothing) makers. If you think about it, clothing is the next closest thing to our skin. But do we ever talk about the people behind the scenes?”

The company started a social media campaign a few years ago called #FactoryFridays, Cheng says. The campaign involves showcasing each Friday on social media what’s happening in the factory that week. Recent posts include demonstrating how to insert a draw quarter – the drawstring in a pair of pants. The purpose is to give a voice to makers. While supply chains must be efficient, Cheng says, it’s important to retain its human side.

BOX OF CHOCOLATES Cheng’s days at work are never typical. She likens the job to a box of chocolates: one day, she’s lucky and gets a dark almond chocolate, which she loves. Other days, she bites into a Maraschino cherry chocolate, which she dislikes. Either way, each day is an adventure that builds capacity to handle future challenges, she says.

COVID-19 made those days less predictable.

But it has also opened opportunities for Cheng to offer help. At the pandemic’s start, supply chains shut down and masks and other PPE were in short supply. Redwood Classics had the know-how and equipment to make masks.

They began a campaign, called #MadeForGood.

For each set of masks sold on their e-commerce platform, the company donated one set to local organizations like Habitat for Humanity and Toronto’s SickKids Hospital, to name a few.

Cheng counts the campaign as a career highlight. Her biggest highlight came in 2014.

That year, she became one of three Canadians inducted into the EY Entrepreneurial Winning Women program. The program identifies ambitious female entrepreneurs and provides advice and resources to further their business potential.

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“All these companies invested in me. They invested in us as a diverse supplier, so then I can continue to give back.”

“I didn’t see myself as a leader, as someone with a voice,” she says. “That’s why I thank EY for it because they discovered me and my voice before I discovered it myself. EY and that program exposed me to opportunities through supplier diversity. It helped me to refine and think through our strategy.”

She encourages suppliers to apply to development programs. Regardless of the oucome, the application process alone helps them see where they are with their businesses.

From there, several other accolades came along. Cheng won the CAMSC Supplier of the Year award in 2015, along with a scholarship to the MBE program at the Tuck School of Business at Dartmouth College in New Hampshire.

She has also won the CAMSC Special Recognition Award for philanthropy and inclusive local procurement practices for the #MadeForGood Challenge. She received the WBE President’s Award and Canada’s LGBT+ Chamber of Commerce Ambassador of the Year Award.

She appeared on the cover of the 2020 Annual Financial Report for the Royal Bank of Canada.

She also made Inc. Magazine’s 100 Female Founders’ list for 2020.

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Last year was also especially meaningful for Cheng’s career, as she was named to both the Advertising Speciality Institute (ASI) Power 50 list, one of a handful of women to make the list, and the Bay Street Bull Magazine’s inaugural Women of the Year list. Attending development programs has allowed her to connect with likeminded entrepreneurs, many of whom experience similar challenges, Cheng says.

“Which is why I’ve been so passionate about supplier diversity,” she says. “Not only did I get an opportunity to reflect and say ‘you know what, our business was able to make a human impact.’

But then I realized, all these companies invested in me. They invested in us as a diverse supplier, so then I can continue to give back. That’s why I’m so passionate about it. It’s really touched my life, not just professionally but personally.”

In her role at Redwood Classics, Cheng is not only a supplier but also a buyer and supply chain lead. Taking a broad, total-cost-of-ownership view of supply chain has served her well, she says. From her experience, large corporations often focus on a few key suppliers while excluding most others. But the pandemic has shown the importance of a diverse supply chain, Cheng says.

Cheng recommends that supply chain and procurement professionals categorize suppliers as small or large. Smaller suppliers are often more specialized in their offerings, while larger suppliers are more generalist.

“Make sure that you’re building and nurturing these supplier partnerships in the longterm,” Cheng recommends. “Don’t go to your suppliers whenever you need them and that’s it.

That’s not what a relationship is. A relationship is a two-way street.”

A diverse supplier base offers innovation, flexibility and agility, she says. Large suppliers, while they can have these attributes, can also move slower than their smaller, more nimble counterparts.

Procurement can also look at the country of origin of the product or service they’re procuring, which can affect cost, Cheng adds. Redwood Classics Apparel acts local, but thinks global, she says. It can fluctuate, but about 50 per cent of the company’s factory output is exported.

Made-in-Canada apparel has a stellar global reputation, partially because of the strength of Canada’s legal framework surrounding manufacturing, making such products valuable to those looking for sustainably sourced goods.

Cheng soon realized that supplier diversity offered strategies and opportunities benefiting both vendors and corporations. She got certified with CAMSC as a diverse supplier to access opportunities, soon discovering that corporate partners were willing to invest in her, such as sponsoring her for development programs.

It was largely her involvement in supplier diversity, for example, that led to the opportunity to appear on the cover of RBC’s annual report.

“RBC reached out and said, ‘we know you’re a client and we were wondering if you’d be interested in taking part in our annual report,’” Cheng says. “I had no idea what was going on.

I was like ‘OK, sure. Thanks! You guys have been great.’ And the photographer showed up and that’s when I found out it was for the cover.

I was flabbergasted!”

North America has largely become a service-based economy, Cheng says. Supply chains were hit so hard by the pandemic largely because so many industries relied on offshore suppliers.

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Cheng stresses the need to invest in local manufacturing and communities. This must be yearround, not just when it’s convenient or when disaster strikes.

Cheng looks forward to continuing to volunteer her time and expertise to non-profit groups and organizations, for example in supplier diversity. A message she has tried to spread is that supplier diversity can lead to innovative products. Corporate North America is finally embracing this concept.

Despite making her career within the apparel manufacturing industry, Cheng jokingly describes her sewing skills as “shameful.”

While she says she can barely sew a straight line, she can spot imperfections in others’ work.

And while people assume she has a passion for design and fashion, that’s not the case. “I’m in the supply chain of fashion but I don’t have a passion for fashion,” she says.

The pandemic has meant that Cheng has had little free time over the past two years. Still, she has recently taken up CrossFit and running, pastimes she says have taught her discipline and consistency while she strives to push herself past her physical limitations.

A source of support for Cheng has been her husband Ted, she says. She is proud that the couple avoids traditional biases about the roles of men and women in parenting their young son and daughter. And while her husband has his own career, he is supportive of her career and the family business, Cheng says. The family’s home during the pandemic has remained cheerful.

“If I had to reflect on COVID, one of the things that I’m most grateful and happy for is, I still come home to laughter. That’s precious,” she says.

BEYOND THE TOPLINE Cheng advises those considering a supply chain career remain open minded about the field. Recognize that supply chain touches everything, whether products or services. A career in supply chain once conjured images of logistics and little else. But while logistics is important, there are many more professional roles available in the field, Cheng says.

Supply chain isn’t always the most visible aspect of business. But those working in the field must have a voice at the table and be recognized for their role. Business accolades often come from revenue generation, such as with sales. But supply chain fills another, equally important role.

“The narrative tends to focus on topline where, in my humble opinion, it really should be about the bottom line,” Cheng says. “I think too many people confuse revenue with profitability.

It’s really the bottom line that matters.” SP

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BY MARIETE F. PACHECO

ALL WRAPPED UP

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

A COMPETITIVE MARKETPLACE MEANS MORE INNOVATIVE PACKAGING SOLUTIONS The world of packaging has come a long way.

Once seen as merely a container to protect a product on its journey from a manufacturer’s plant to a retailer’s store shelf, that packaging has now become a marketing tool to highlight one brand amongst a sea of others. The shift in packaging’s role has been brought about through the increasingly competitive marketplace because of globalization and brands crossing borders at an accelerated rate. Several key trends are driving innovation in the packaging industry including sustainability, lifecycle management, new packaging materials and packaging optimization.

SUSTAINABLE PACKAGING Sustainability continues to remain top-of-mind with the recent United Nations Climate Change Conference in Scotland (more commonly known as the COP26 Summit) which further pressured nations looking to enhance their commitments to mitigate climate change and expand their portfolio of solutions. At the top of many sustainability lists is waste reduction, recycling and moving to zero waste. In the packaging industry, the diversity of materials has exploded from the standard paperboard (folded carton and corrugated, plastic (rigid and flexible), glass and paper bags.

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packing peanuts, then bubble wrap. However, with demands for less waste and more efficient and less labour-intensive warehouse operations, this application is now being replaced by paperbased packing filler (often recycled paper).

Paper-based alternatives have also started to take over the wrapping and insulation functions once owned by plastic packaging. These paper solutions are created through converting paper into 3D honeycombs or specially designed waved inserts to leverage paper’s natural insulating properties.

Sustainability in packaging has also been advanced by the call by retailers to reduce product costs, as well as by calls from governments.

Retailers believe that reducing the amount of packaging used in a product will lower the product’s cost. Generally, packaging is a significant contributor to overall product cost.

Governments have started to mandate that manufacturers reduce packaging. For example, in Europe, boxed grocery items such as cookies that once had three packaging layers: a plastic shrink-wrapped box, paper box and plastic or wax paper wrapped cookie insert has been reduced to a sealed paper box with or without the wax paper wrapped cookie insert. In Canada, several provinces mandate manufacturers pay to operate local recycling programs based on waste generated, such as the case with the Ontario Blue Bin Program or the Electronics Recycling Program with eco fees. Some organi-

zations are looking to make their conventional packaging more sustainable through utilizing recycled materials, converting to greener energy sources during the manufacturing process such as shifting from gas or coal powered energy to solar or wind energy.

LIFECYCLE MANAGEMENT The trend to manage a product’s lifecycle from cradle to grave has expanded to include its packaging as part of the equation. Gone are the days of simply sending to landfill the box or bag a product came in. Consumers are demanding manufacturers look to maximize the use of the packaging as part of the product’s lifecycle.

Some manufacturers have turned to alternate packaging materials to divert their packaging from landfills to be recycled into products such as glass jars. The glass can not only be recycled but can also be reused once the container is empty and cleaned. Some consumer-packaged goods (CPG) companies in the cleaning products space now sell their products in multiple components. These components can be re-used, such as by purchasing new cleaning solution spray bottles and re-using the trigger nozzle from bottle to bottle for multiple uses instead of selling new triggers each time a full bottle is needed. The change from buying only needed elements not only reduces waste of still operational product components but also makes shipping more efficient and reduces the product cost SUPPLY PROFESSIONAL

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to the end user. This creates loyalty between the brand and consumer as the components may not fit another brand’s packaging.

NEW MATERIALS Demands to become more environmentally aware and sensitive to local communities have driven the need for more innovation in packaging with the explosive growth in bio-degradable options. These alternative packaging materials have grown in demand as pricing has reduced.

Plastic-based materials such as polybags have given way to paper-based materials like glassine bags. These offer enhanced water and grease protection due to their glossy, fibre-woven composition compared to traditional paper products. The glassine bags also offer better recycling options, as many curbside recycling programs can handle these bags as compared to traditional poly bags, which are generally sent to landfills. A trend in food packaging, primarily in food services is the

“The trend to manage a product’s lifecycle from cradle to grave has expanded to include its packaging as part of the equation.” addition of plant-based packaging. Some of the plant-based options include cornstarch, sugar cane and polylactic acid (PLA). These unconventional materials perform similar to petroleum-based plastic food storage containers. However, their production is lighter on the environment and they can be recycled or biodegrade in a fraction of the time. Traditional petroleum-based plastic and foam food storage containers can take over 400 years to decompose compared to plant-based bio-containers which can decompose in as little

as a few months for corn starch and sugar cane. Meanwhile, PLA products fully decompose in about a year.

PACKAGING OPTIMIZATION Packaging optimization is the concept of using smart packaging design to maximize supply chain efficiencies while maintaining the integrity of the packaging contents. With ongoing challenges over the last two years, supply chain efficiencies are critical to businesses to reduce their freight costs by better utilizing packaging configurations to reduce the volumes of the average product to hopefully increase the quantities allowed in each shipping container.

When determining the type of packaging, there are three main considerations: palletization, weather conditions and handling methods.

The palletization is a key driver in maximizing the efficiency of the packaging. The goal is to fit as much product as possible on each pallet and as many pallets as possible in a shipping container. Ideally, the pallets are filled to the edges with no overhangs. Additional pallets can then be added to the shipping container to maximize the cube capacity.

A consideration in packaging optimization is weather conditions the packaging will endure from manufacturing facility through transportation to the retailer’s shelf and finally in the end user. During this process, the packaging is exposed to temperature changes while travelling via sea or when stored at the retailer’s warehouse.

Will the packaging protect the contents from exposure to weather or is it vulnerable to extremes? If so, additional packaging may be required for protection. This could cause a larger footprint and reduce the quantities per pallet.

Lastly, a product’s packaging needs to be reviewed to ensure it can keep the contents safe from the variety of handling methods it may encounter on its trip to the end user. There may be high product damage risk during transportation from vibration, manual drops, clamp truck handling and others which can increase costs.

Product packaging is the ultimate in double-duty workhorse. It must balance the protection of the product’s brand while maintaining the product’s integrity and safety from transportation or handling dangers through the supply chain. Packaging has evolved as regulations and consumer demands have changed to drive a greater focus on sustainability, new materials, lifecycle and optimization. Selection of the right amount and type of packaging is important not only to reduce product damage but to ensure the product’s cost is aligned with financial targets and to maximize process efficiencies. SP SUPPLYPRO.CA 15

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BY GARY NEWBURY

STRENGTHENING RETAIL SUPPLY CHAINS

Gary Newbury is interim chief supply chain officer – retail supply chains & last mile at Retail Aid.

HOW TO BUILD SCALABLE SUPPLY NETWORK DESIGNS The pandemic has undoubtedly been torturous for retail supply chain executives working with geographically extended supply chains. This is especially true when those supply chains move general merchandise items through just-in-time supply networks to fulfill what were once predictable demand patterns.

Before the pandemic, organizations set up retail supply chains to achieve “lowest individual element cost.” This was supported by investors who enjoyed a dividend stream from this arrangement. Many governments also benefitted, as they were keen to demonstrate a continuous rising standard of living for citizens.

Demand patterns were stable, linear and competitive. Competitiveness arose not through differentiation. Rather, it came from having the “lowest price,” or what has been described as “the race to the bottom.” Many teams never learned to execute proposition differentiation.

If they did, it was not obvious, and they failed to reinvent their brands as they encountered long-range declining markets and profitability.

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preceding the pandemic, so much so that in March 2020, 48 per cent of working Canadians were only $200 away from meeting their financial obligations. At 1.70, the debtto-income ratio was the highest of any developed nation.

The development of supply chains with a focus on single factories to drive economies of scale during procurement – and low-cost, advanced global transportation systems – meant Canadians could expect to have a wide selection of products presented to them, all at relatively low prices.

The complacency that came from the predictability of category spending and seasonality provided little resilience to the demand pattern changes unleashed during the early stages of the pandemic. These changes accelerated quickly.

As governments put through emergency legislation, consumers switched their category spending, their channels and their volumes.

Many retailers were caught flatfooted, and many filed for CCAA. Some participated in significant layoffs to conserve operating cash.

THE FIRST TWO YEARS Many retailers and their CPG partners doubled down on the processes that got them to early 2020.

They stepped up pressure on an ecosystem that had been based on linearity, fixed capacity due to the focus on cost reduction, low transparency, a lack of sustainability and inadequate risk management.

In Canada, during the first few months, within the food supply chain the “Big Five Grocers” and key food CPGs worked together to reduce SKU count. They focused production on the “vital few” to assuage potential consumer anxiety from empty shelves of key lines and staples. It was important to avoid triggering panic buying as no one would win from this.

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However, this spirit of goodwill reverted to the usual level of combative behaviour within weeks. Fines for less-than-full order fulfillment and out-of-time window deliveries recommenced and it was “business as usual” in the face of continuing swings in demand volumes and tough government restrictions.

The swings in retail supply chains came from more consumers buying online and deferring spending on hospitality, travel and apparel in preference for home and household category products.

Initially, supply pipelines were drained to support unexpected demand. However, the demand kept increasing, often supported by government subsidies. There was also asynchronous capacity waxing and waning at factories, ports, ships, drayage, rail heads and within trucking fleets. This was due to COVID outbreaks, and major bottlenecks appeared as product and logistics operations expanded and contracted. Add in some unusual weather events, infrastructure challenges and peak, and the current designs showed little natural resiliency to such accumulating disruption.

In early 2022, with forecasts this disruption is likely to continue into 2023 and 2024, supply chain executives are compelled to rethink the current supply chain designs, processes, systems, infrastructure, culture and KPIs. CONSTRUCTING A ROADMAP Early in the pandemic, one could not attend a webinar, read an article or have a business conversation without three prevalent descriptors: agility, resiliency and pivoting. Beyond the headlines, supply chain leaders and their teams were severely stretched to produce miracles, based on the short-term goal of “getting back to normal soon.” A “just do it” mentality pervaded.

Unfortunately, two years in, there has been no respite; the disruption continues to accelerate.

Smarter organizations are looking for options to move to a more flexible supply chain design.

As a speaker on retail supply chain disruption and creating real competitive agility within supply networks, I continue to be surprised with

“The swings in retail supply chains came from more consumers buying online and deferring spending on hospitality, travel and apparel.” “pin drop” moments I create when I pencil options for being more agile, more resilient and able to pivot. I sum this up in the phrase “Scalable Supply Network Designs” (SSND).

These steps deserve consideration to establish an SSND fit for the challenges of the 2020s: 1) Recognize that the current supply chain design is no longer fit for purpose. Being highly dependent on many nodes and connectors, it is likely to have too many lead-time risks.

This does not allow retailing businesses to respond quickly and efficiently to demand signals – key in creating market-leading trends.

2) Develop a multi-region sourcing strategy including, where possible, onshoring, nearshoring and far-shoring. Pay particular attention to geopolitical challenges and single sources of raw materials. For example, certain materials may only be available in specific regions.

3) Ensure that the executive team agrees with the new scalable supply network design.

4) Engage with multiple suppliers at country level. Ensure robust and enforceable NDAs are a precursor to new ways of working, including experimentation, full two-way visibility and collective responsibility in pursuit of serving the consumer accurately and efficiently.

5) Agree to “price indifferent” trading agreements. Here, the capacity can be described

in terms of batch sizes to which the same price points prevail. The choice of supplier for a section of projected demand is based on speed to fulfill, rather than being in a queue behind other competitors pursuant to “lowest-cost” tactics.

6) Establish collaborative working arrangements that include meetings across the SSND. These meetings can focus on sharing capacity plans and demand information and planning to satisfy projected demand in the shortest time, including transportation mode switches.

7) Commit to orders – both ways. As the customer, your orders should be seen as solid, only cancelled before raw materials have been ordered, rather than when they are in production. This commitment applies across the supply network.

Traditional competitors will work together to ensure, collectively, progress is maintained.

8) Work closely with individual suppliers to remove friction from the path to purchase and fulfillment.

9) Deploy integrated business planning across the SSND to ensure alignment between supply network capacities and distribution network demands.

10) Digitize the SSND and manage exceptions, rather than engaging in firefighting or expediting.

Each of these steps has intricacies, requires relationship-building skills and trust. However, for businesses stopping at the second step (diversifying the geography of suppliers), business leaders must encourage their supply chain team to embark on this journey and push towards the tenth step.

Stopping at the second step and exercising the same paradigm in terms of managing suppliers, costs and lead times will not provide competitive advantage in a retailing world in which “inventory is king.” SP

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BY MICHAEL SHELTON

AUTOMATED EVOLUTION

Michael Shelton is an executive supply chain consultant.

AUTOMATION AND STREAMLINED SYSTEMS ARE THE DNA OF SUPPLY CHAIN In the high technology manufacturing sector, where much of my experience lies, manufacturing is either done in-house or through contract manufacturers that act as an extension of the organization. Sometimes, it’s a combination of both. In this sector and others, over the past couple of years the effects of the COVID-19 pandemic have caused, and continue

to cause, a global crisis. This crisis has clearly stressed supply chains. During that time, supply chain professionals have been pulled in multiple directions and face several simultaneous challenges.

For example, manufacturers require parts to ensure their production line continues to function. Sales departments must deal with

customers who still want their products shipped on time – even products they may have ordered over a year ago. Procurement must deal with suppliers whose lead times are increasing at least every quarter. These suppliers may de-commit on original schedule dates, while customer service centres request badly needed parts for the dealer.

And of course, coupled with the above issues are the constant price increases supply chain professionals must contain and mitigate.

Accurate data reporting lies at the heart of supply chain. As well, the tools that supply chain professionals require are effective systems and technologies. These include ERP platforms such as a robust demand management system. Such systems can include ATP (available to promise); vendor web portals; purchase to pay processes; visibility into the contract manufacturer’s compliant MRP system to identify issues; electronic data inter-

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“The Covid-19 pandemic means that supply chain data that organizations rely on has been dynamic over the past few years.”

change (EDI); barcoding; and warehouse management systems (WMS) including cycle count programs and data analytic mining to encourage cost reductions. This last point is especially useful in the current market, in which inflation is a factor.

Other useful tools include establishing strategic safety stock levels and identifying items on the critical supply path, as well as Internet of Things (IoT) components like advance shipping notices (ASN).

The pandemic means that supply chain data that organizations rely on has been dynamic over the past few years. Original delivery dates are no longer valid since suppliers can encounter delivery issues. These issues are due to several factors, including staffing levels associated with the impact of the pandemic. As well, both the supplier and a buyer organization could be in a mandatory short-term lockdown. Certain raw materials are on allocated or restricted supply. At the same time, increased transit cycle times due to port congestion and trucking and container availability play a role. Avoid suppliers that employ contractual penalties or backslash by playing the force majeure card due to the pandemic.

KEEP DATA CURRENT It is important that data attributes are updated and reflect the current environment. If this doesn’t happen, or systems and technologies are not properly integrated, aligned and streamlined, there is no credibility in the supply chain process. The organization will be flying by the seat of its pants. That reliability is lost, and customers will re-source their products elsewhere.

There are major consequences that come with a lack of data integrity. There is also risk associated with no or fragmented processes designed to streamline that data with other systems and technologies. Sometimes, the demand management function is simply broken. This can happen when planning has been working with inaccurate data. Such a situation jeopardizes the entire planning cycle. This can

lead to outdated supplier lead times or in-transit inventories not properly accounted for.

Inventories on hand may go unrecorded due to a backlog in receiving. This can stem from manually recording transactions rather than those recorded through barcoding, inventory inaccuracies or inventory allocation issues.

It is important that customer service staff provide realistic status updates to customers, which in turn have commitments that they must fulfill.

All the above have a cascade effect on supply chains. For example, vendor portals allow suppliers to input the latest lead times and delivery dates. Production planners use these portals to calculate when final product is available, when production-line shortages occur and any other supply chain impacts. This formulates demand management requirements. Sales can then provide a realistic delivery date for a new customer order, knowing the ATP (available to promise) is credible.

Data integrity and integration through streamlining allows an organization to be proactive, rather than in a constantly reactive, firefighting mode.

BACK TO BASICS It’s important to remember the fundamentals necessary to ensure systems are properly aligned, running smoothly and producing efficiencies. Supply agreements or master supply agreements (MSAs) in place with suppliers can help to ensure they are updating lead times as they increase or decrease. MSAs can also help track other attributes like lot sizes, minimum order quantities, price breaks, HS codes, country of origin and so on.

Strictly adhering to your company’s supply chain key performance indicators (KPIs) can also help to ensure the systems run smoothly.

Doing so ensures that in-transit inventory is accurately stated. It can also help guarantee that supplier delivery dates are realistic, and that the receiving department can conduct a receipt within one day. It helps to solidify inventory accuracy, for example that the right goods –

in the right quantities – are shipped on the right day, and within one business day. Further, it can prevent shipments to customers that are on credit hold. All this arms customer service with the proper information.

Still, supply chains suffer when hardware like printers and barcode scanners don’t work properly. To manage this, ensure that backup equipment is available. Software should be validated to the most recently released version.

That software should be available both in the cloud and through user licences.

Using technologies and systems is paramount in navigating fragile supply chains. We have seen this over the past few years with the COVID-19 pandemic. Yet we now have an effective toolbox to deal with supply chain challenges. These include the ERP platform, a well-controlled demand management process and warehouse management systems.

Other tools on the list are systems like the vendor portal, tracking systems provided by 3PLs, barcoding, data mining and data integrity compliance. Further, management should review KPI report cards with a focus on continuous improvements.

In supply chain, accurate and real-time information is the foundation for making quick decisions. We can do this through utilizing our effective toolkit of systems and automation – all coupled with streamlined efficiencies.

As systems and technologies continue to evolve, the next phase in the process will be investigating both artificial intelligence (AI) and blockchain. Going forward, this evolution will no doubt continue to be as interesting and innovative as what we’ve seen so far. SP

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BY JACOB STOLLER

THE WAREHOUSE CAPACITY CRUNCH A UNPRECEDENTED SHORTAGE OF WAREHOUSE SPACE IS ADDING TO THE CHAOS OF THE PAST TWO YEARS. Predicting supply chain behaviour has been particularly dicey recently, but the pundits did get one call right – that Canada would run out of warehouse space in 2021.

“The logistics sector ran out of space last fall,” says John McKenna, CEO of Mississauga-based 3PL McKenna Logistics Centres, noting that facilities like his would have been in an even worse bind if port congestion and the floods in BC hadn’t slowed incoming shipments.

“We’re finding that our clients are unable to secure not only warehouse space, but even find land in order to build a warehouse,” says Richard Kunst, president and CEO of Toronto-based Kunst Solutions Corp. “We’ve seen instances with people setting up temporary container spaces in farmers’ fields.”

Much of the pressure is coming from the growth of e-commerce. The difficulty is that facilities must transition from bulk fulfillment to handling large numbers of direct-to-consumer orders. Instead of moving a skid load of televisions, a facility might have to pick and process dozens of single-unit orders to move the same volume of product. This increases both space requirements and workload.

“E-commerce means that density goes down and the footprint sprawls,” says McKenna. “You also need massive packing areas because you’re processing orders, with a few items, at one time.”

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E-commerce is not the only factor, though.

As Kunst points out, irrational human behaviour, triggered by recent shortages, has made the situation worse.

“Because people have been starved for inventory, their natural reaction has been to order more,” says Kunst. “So, they’re just compounding the effect of this, and the supply chain is getting super saturated. They’re waiting longer, and they’re ordering more. You can imagine what will happen when that logistics chain gets untangled and all this stuff starts to land on people’s docks.”

COPING WITH DIFFICULTIES Many companies are undertaking reactive measures to squeeze more capacity out of their facilities, including putting trailers in parking lots, filling aisles with skids, and placing goods higher up. All these tactics, however, increase costs.

“Operations will utilize the building height when there is no square footage left on concrete,” says says Craig Gaulton, director of operations at Ingram Micro based in Mississauga, Ontario.

“But you have to do so with a balance between operational efficiency and storage. Because if you go too high and too condensed, then it’s going to be outweighed by the cost of your operation, because now you’re into forklift cost.”

McKenna likens logistics in a full warehouse to a puzzle you get in a cereal box as a

child. “You have to move five pieces just to get the one you want,” he says. “So, our handling costs go through the roof.”

Costs have also been driven upward due to higher rents, particularly in crowded centres such as the Greater Toronto Area. “The cost of warehousing space has more than doubled since 2015,” says Gaulton. “The average cost per square foot was $5.41. Now it’s going for $12.30.”

New warehouse space is typically leased out before the building is completed, but an air of uncertainty has developers hedging their bets. “A lot of investors like the returns they’re getting on real estate right now,” says McKenna. “The question is, how long is this demand going to last?”

A cautious attitude is also affecting capacity investments in shipping, rail and trucking.

“All of these are major investment decisions that obviously aren’t taken lightly,” says Douglas Kent, executive vice-president of strategy and alliances at the Association for Supply Chain Management (ASCM). “With the unprecedented amount of disruption in the supply chain, people are really trying to figure out what is going on.”

LONGER TERM STRATEGIES The need to do more with less space is causing some companies to take a more scientific, datadriven approach. “We use the engineers in our SUPPLY PROFESSIONAL

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teams to watch the flow of goods and streamline that as much as possible,” says Gaulton.

One key metric for Ingram is the percentage of floor space usable for storage. “Our Mississauga building, for example, is 500,000 square feet,” says Gaulton, “but it’s not all storage. We’ve got aisles, driveways and processing areas. To optimize, you have to minimize your processing footprint.” A reasonable target, he says, is to bring that percentage down to 25 per cent of the total floor space.

Another important metric, Gaulton explains, is inventory turns – the number of times that the total value of inventory turns over annually. Numbers between five and six are typical in consumer electronics, he says.

Reducing storage requirements is also an option for some companies. “We do a lot of planning work with our clients where we break down the paradigm of ordering in big batches,” says Kunst, noting that a company he worked with was storing large batches in trailers, and was pulling trailers into a dock several times a week to refresh the pick faces.

“With the unprecedented amount of disruption in the supply chain, people are really trying to figure out what is going on.”

While ordering in smaller quantities results in a higher purchase price, it might reduce the total cost of procurement when all factors are considered. “We expose our clients to an algorithm that will allow them to calculate the total cost of procurement, which is purchase cost, holding cost, logistics costs, picking costs and refresh costs,” says Kunst.

Another issue is visibility. According to The Resilient Supply Chain Benchmark, a recent ASCM-sponsored study with the Economist Intelligence Unit, just over half of bench-

marked companies based their supply chain view on internal data – typically on siloed or outdated datasets.

“If I’m operating a warehouse, I have to see deeper than my first connection points,” says Kent. “That goes beyond my suppliers to my suppliers’ suppliers, including tracing activities while in transport so I can better predict my own flow.”

Technology that makes it easier to link warehouse management systems with other elements in the supply chain is becoming essential for many companies, Kent says.

All these approaches will require highly skilled teams. “We’re gaining some capabilities and competencies that warehouse workers never had to have before,” says Kent.

The trend calls for not just stronger recruitment, but significant investments in developing employees’ skills over the long term. “Analytics, digital aspects of managing e-commerce, and inventory strategies are very transferrable skills,” says Kent. “So, we have to do more to make this career pathway attractive.” SP

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BY RAHUL RANADE

“If your vendor insists that their draft contract cannot be modified at all, consider walking away and finding another vendor.”

TERMS MAY APPLY FREQUENT RED FLAGS IN TECHNOLOGY CONTRACTS If you are a procurement professional who has made a significant technology purchase, this scenario may be familiar to you: Upon being informed that their product has been selected, the vendor sends you a draft contract. The vendor also informs you that the document represents their “standards terms” that are not negotiable. Grudgingly, you sign the contract as-is. (Note: In this article, ‘technology’ refers to digital or information technology, whether as hardware or software).

The above scenario, sadly too common, is troublesome for purchasers because vendors’ proposed contracts are likely to be drafted to favour the vendor and will place the customer at a disadvantage from the get-go. In this article, we will look at some red-flag provisions commonly found in technology contracts that purchasers should be wary of when negotiating a deal.

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First, let us dispel the myth of non-negotiability of the so-called standard terms proposed by vendors. There is no such thing as a non-negotiable contract term.

Yes, a party may have a handful of pet terms, modifying or removing which could be a deal breaker. But to claim that a draft contract is entirely non-negotiable is legally baseless and commercially unreasonable. If your vendor insists that their draft contract cannot be modified at all, consider walking away and finding another vendor.

One of the more problematic terms frequently found in vendor-drafted contracts is one where the vendor disclaims a warranty that their product is fit for the purchaser’s particular purpose. While such a term would be suitable when purchasing a generic product, it is out of place where the vendor is providing a product to the purchaser’s specifications.

I recently reviewed a draft contract offered by a technology vendor who had been selected to custom-develop a suite of operational applications based on several dozen pages of specifications issued by the customer.

Yet, their proposed contract stated that they do not warrant that their product was fit for a particular purpose. That is comparable to an airline selling tickets to fly you to some destination, not necessarily the one to which you want to go. If you are purchasing a technology product designed to your own specifications, insist on a fit-for-particular-purpose warranty.

MULTI-YEAR CONTRACTS When it comes to multi-year technology contracts (e.g., a software product supplied in the first year with support provided in following years), a frequently seen rogue condition is one in which vendors reserve the right to unilaterally adjust prices during the term. In the brick-and-mortar world, this would be equivalent to a building contractor being allowed to increase the contracted price midway through construction, at their sole discretion.

Such a term places the purchaser at a severe disadvantage of having no control of their budget. Any adjustment to the contract price must be by consent of both parties.

While on the subject of multiyear contracts, another term that purchasers should be wary of is time-dependent limitations on liability. Such a term may read something like this: “The vendor’s liability is limited to fees paid by the customer in the six months prior to the claim arising.” The trouble with such a term is that multi-year technology contracts often tend to be front-loaded and most fees will be paid in early years of the contract.

Thus, even if a purchaser has a strong claim against a vendor in later years of the contract, the purchaser’s recovery may be limited to a small fraction of the fees paid.

Purchasers should insist that, if there must be a limitation on liability, the limit should be set at the full contract price or some other reasonable amount.

Our final red flag arises from a feature unique to technology: products and services easily cross political borders and it may not be

Rahul Ranade (ranade@lidstone.ca) is a lawyer at Lidstone & Company Barristers and Solicitors in Vancouver, BC.

unusual for your vendor to be based in another province or country. When that’s the case, be wary of dispute resolution clauses that compel you to resolve legal disputes in the court of the vendor’s home jurisdiction. For example, if you are buying from a Silicon Valley technology company and the contract includes such a clause, the potential cost of bringing action in a California court may dissuade you from pursuing legal action even if you have a stronger position in the dispute. Purchasers should insist upon a dispute resolution provision that permits legal action in the courts of the purchasers’ home province.

The discussion above is neither exhaustive in scope, nor is it likely that your next technology contract will have red-flag terms exactly like the above. But if you are about to walk into a technology deal, you can put yourself in a better position by asking to read the vendor’s terms and conditions before you evaluate their technology. Often, purchasers don’t start thinking about contract terms until after selection, at which point the vendor has no incentive to negotiate terms. SP SUPPLY PROFESSIONAL

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Fleet Management

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Driver training Education is key to safe and adaptable fleets.

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Green fleets Policies to reach net-zero.

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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Road test Test driving the 2022 Ford Transit.

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

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

2022-02-08 9:21 AM

Fleet Management

By Sophia Sniegowski

Back to school The importance of driver training for fleets 2.

Providing education and continuity in driver training should be at the core of every fleet. Different lanes, equipment and cargo require different levels of training. Bridging the gap between technology and ongoing access to training are two key components in connecting drivers with opportunities, while also ensuring you operate a safe and adaptable fleet.

At Musket Transport, we have benefitted from having our own private career college since 1997.

Commercial Heavy Equipment Training Ltd. (CHET) connects us with Ontario AZ license graduates (to drive a tractor trailer). But it also provides a strong base for our ongoing training programs for drivers. Fleets that do not have their own driver-training academy should collaborate with schools.

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Here in Ontario, those schools should be members of the Truck Training Schools Association of Ontario (TTSAO), and there are similar schools across the country.

Larger fleets typically have dedicated driver trainers and departments but can still benefit from a partnership with a qualified school.

Truck training schools are an excellent resource for opportunities due to their dedicated clinics and training technology. Considering the current driver shortage, becoming an employer partner for a trusted school would be a beneficial step toward providing ongoing support and training for drivers.

Once you have a sense of the quality of their graduates, you can have a better understanding of how to adjust your training for drivers joining your fleet.

School collaboration

There have been great advancements in driver education programs in Ontario concerning the introduction of Mandatory Entry Level Training (MELT), but we encourage fleets to collaborate with schools that exceed the mandate. For comparison, MELT mandates 103.5 hours of AZ training for road test eligibility. At CHET, AZ students go through a 200-hour program, and additional training is still required once they are on-boarded at Musket. Fleets can cut down the amount of training required for new drivers if they look for schools that similarly boast a 200-hour program versus those that simply meet MELT standards.

By going over and above, you’re helping to ensure safety standards are met and providing peace of

mind to your fleet drivers and clients for ongoing service.

Across Canada, the introduction of the Electronic Logging Device (ELD) mandate will also present a boost in efficiency and fleet training opportunity. As a cross-border company, we rolled this out in 2018. This technological advancement required driver training as it was a new device and system for drivers to utilize daily.

“HOS alerts and vehicle tracking have allowed us to be more efficient and compliant,” says Daryn Rabb, Musket Transport’s health and safety manager. “We are using the driver scorecard feature to track and trace all of the driver’s behavior. As a result, it is having a direct effect on speeding, harsh braking and cornering events.

Every driver we have spoken to has FM/SP SUPPLY PROFESSIONAL

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1.

2.

Sophia Sniegowski is corporate communications officer at Musket Transport Ltd.

1. Investments in truck simulators, VR training and eLearning platforms can help fleets to improve their driver training.

2. Musket Transport’s success with CHET’s eLearning platform has meant that the company has rolled out a similar platform for its mechanics.

been able to improve this behavior in subsequent reports.”

In short, the ELD technology provides greater insights to how your drivers perform over the road.

This is when CHET’s clinics and investment in truck simulators as well as VR training pay off for Musket’s fleet. Thanks to the driver scorecard, we can also target specific behaviours that require correcting. Our fleet drivers are regularly scheduled for training at CHET where they receive an individual approach. Other fleets can develop this type of relationship with their partnered driver training school or look to building it into their fleet driver-training department.

Technological investments can help any fleet improve their driver training. We have found a lot of success in CHET’s truck simulators, VR training and eLearning platform. Behaviour correcting systems are available through these technological options. Additionally, instructional videos have been valuable tools for introducing new equipment to drivers or connecting them to community-related training programs such as Truckers Against Trafficking.

We have found the eLearning platform to be such a great tool for CHET students and Musket drivers

that we have rolled out a similar platform for our mechanics. This component might not apply to all carriers as it depends on whether they have their own maintenance department. At Musket, we have seen a great improvement in our mechanic apprenticeship program and overall equipment maintenance thanks to this eLearning platform. The creation of your own instructional videos is a relatively easy way to provide additional training options for a fleet.

The key with technology is that it can reach more drivers sooner, and it is a less expensive method of transferring knowledge.

Content creation

Custom content is something that everyone can take advantage of and can be updated when required.

Thanks to the general technology improvement in cameras and phones, creating content that is high quality is feasible and accessible to most. Musket tapped into this reality through our in-house marketing department. Accessibility to experienced content creators allows for the creation of our various instructional videos without negatively affecting operations.

My main tips for fleets to consider with regards to technology and training are as follows: I nvestigate the types of technology currently used by

high-caliber driver training schools.

Partner with truck training schools for added training options for your fleet and access to their new graduates.

Look to truck training associations and their technologically advanced members for more information.

Do not shy away from making your own custom content, as every fleet, lane and equipment types are different.

Embrace existing technology that is mandated or in-use at your fleet and consider its training applications.

onnect with trucking organiC zations that have a network of experts in this field.

I nvestigate which technological advancements are the right fit for your carrier and/or fleet driver-training department.

As technological innovations continue to close the gap in knowledge and connect us with more training opportunities, fleets should also look to other truck organizations for further inspiration. For example, Trucking HR Canada has excellent funding programs to encourage more youth to get behind the wheel and into transportation and logistics in general. It presents an excellent training opportunity, and it can be utilized as a successful recruitment tool.

“Technology is becoming more important in preparing driving fleets with training and knowledge-based improvements,” says Philip Fletcher, CHET operations manager. “The key with technology is that it can reach more drivers sooner, and it is a less expensive method of transferring knowledge.

Therefore, its role in training is bound to increase as more and more fleets tackle the needs of their drivers.” FM/SP FLEET MANAGEMENT SUPPLYPRO.CA 25

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Fleet Management

By Kate Vigneau

Greener roads ahead

Kate Vigneau, CAFM, is director of fleet, MCG Consulting Solutions.

1.

Fleet policies to support net-zero targets There is unprecedented interest in sustainability worldwide. In 2020, Canada joined over 120 countries in committing to achieving net-zero emissions by 2050. Many provinces and cities have made net-zeroby-2050 (or better) commitments.

These commitments will only become reality if they are defined by strategies and goals and supported by policies at every level.

Strategies and goals

Looking at a recent example, the Province of Nova Scotia has a strategy to hit net zero emissions by 2050. They introduced an Environmental Goals and Climate Change Reduction Act with 28 goals which include: increasing power generated from renewable sources to 80 per cent; having 30 per cent of new car purchases be electric vehicles, by 2030; setting aggressive 2030 greenhouse gas emission reduction targets (53 per cent below 2005 levels); and expanding conservation targets to protection for 20 per cent of the province’s land and water.

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Provincial strategies are important, but according to the United Nations, cities generate more than 60 per cent of greenhouse gases worldwide and consume 78 per cent of the planet’s energy, despite taking up only 2 per cent of the land. Cities, then, play a significant role in meeting the stated goals of the nation and its provinces.

Achieving net-zero emissions means that an organization either emits no greenhouse gas emissions or offsets its emissions, for example through actions like tree planting or employing technologies that can capture carbon before it is released into the air. Many Canadian cities have initiated strategies to ensure they are net-zero on or before the stated goals. For example, the City of Toronto’s first electric vehicle strategy was approved early in 2020. Ultimately, this strategy aims at 100 per cent of vehicles in Toronto using zero-carbon energy greenhouse gas reduction targets by 2050 and 75 per cent of trips under 5km to be walked or cycled. In addition, the strategy set the following greenhouse gas reductions goals (compared to 1990 standards): 30 per cent by 2020;

6 5 per cent by 2030; and net zero by 2050 or sooner.

The City of Montreal’s Climate Action Plan 2020–2030 will reduce GHG emissions by at least 55 per cent below 1990 levels by 2030 and enable the city to become carbon neutral by 2050. The goal is to increase resilience and capacity to adapt to climate hazards, environmental disruptions and potential pandemics. In addition to the GHG targets, Montreal has established these additional goals: P lant 500,000 trees with vulnerable areas prioritized; E xtend protected zones to 10 per cent of the territory; R educe solo car trips by 25 per cent; and Increase electric vehicles registered in Montréal by 47 per cent

Policy support

Policies are the link that ties strategies and goals back to the human behaviours that accomplish them.

City fleets need to put policies in effect today that will lead to meeting goals in the future. Some of the policies that can contribute the most to goal realization are:

1. Consider mobility alternatives

when acquiring vehicles and when making daily transportation decisions. Always ask whether the mobility need can be met by walking, biking, taking public transport or sharing a ride before deciding to take a solo trip in a vehicle.

2. Buy the lowest-emitting vehicles that are suitable for the job. Understand how the vehicle is used before determining if an alternative fuel will work.

3. Reduce idling. Create idle-free zones in areas with high pedestrian traffic and mandate that engines be turned off if drivers are stopped for a period.

4. Use telematics to determine vehicle suitability for alternative fuel conversion. Several companies have telematic solutions that calculate the suitability of individual internal combustion engine (ICE) vehicles to alternative fuels.

5. Use telematics to monitor and encourage eco-driving. Eco-driving needs to be at the heart of any fleet sustainability policy. Using telematics to gather data and FM/SP SUPPLY PROFESSIONAL

2022-02-08 9:21 AM

“City fleets need to put policies in effect today that will lead to meeting goals in the future.”

training drivers on changes can improve mileage and decrease emissions.

6. Adopt fuel-efficient vehicle use practices. Include combining trips into one outing and have an e-site where employees can advertise trips to facilitate this.

7. Conduct regular car maintenance. A well-maintained vehicle will have lower emissions.

8. Incentivize employees to make

sustainable choices and reward them when they do. Your policy should mandate the most sustainable mobility option or the most sustainable vehicle if that is the best option. Make it easy to make that choice by convenient locations of rideshare pick-ups and convenient parking of electric vehicles.

These policies should be communicated in the fleet management

manual and in the driver’s handbook. Visible support by senior management by using sustainable options themselves will boost adoption. The goal of net-zero is not going to happen overnight, and it is not going to happen without buy-in throughout an organization. Many organizations are questioning whether this is the time to start. They want to be proactive but recognize the real barriers of acquisition costs and vehicle availability.

They also recognize that technology is changing so quickly that there could be better options available in two years. Best-in-class organizations are taking these issues into account and adopting strategies, setting goals and creating a fleet policy framework that will support attaining those goals. FM/S

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Fleet Management

By Howard J Elmer

Tailored ride The 2022 Ford Transit sees three new packages The Ford Transit is the best-selling commercial van in Canada, and for 2022 it adds options and packages that will keep it in that number-one spot.

Introduced in the 2021 model year (and carried over to 2022) is a Livery prep package for the passenger van XLT, a new Parcel Delivery Package for cargo and cutaway and a new Adventure Prep Package for cargo or crew van.

The new Livery Package serves the premium transportation market with a ready-made configuration focused on comfort and style.

Available for Transit passenger van XLT, the Livery Package includes 10-way power seats finished in ebony leather seating surfaces for all passengers, power sliding side 28 FEBRUARY 2022

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door, HID headlamps, full privacy glass and 16-inch silver wheels.

The new Parcel Delivery Package builds on interior walkthrough im­provements and adds 50/50 hinged rear doors and wide 253-degree opening and full interior lighting for cargo vans to facilitate early morning and late evening deliveries. The package also includes driver and passenger seats without armrests to further improve cargo access.

Adventure Prep Package is available with all-wheel drive 3.73:1 limited-slip differential rear axle, heavy-duty front axle and privacy glass. The key here is the AWD – and it can be added to most every other package now available.

These new packages are meant to make ordering easier for specific

business needs. Interestingly, this new list of packages also includes one for Motorhome Prep. The Transit is fast becoming a favourite of motorhome builders who base their Class B van conversions on it.

So, while the packages simply ordering for some Transit can be custom ordered as you see fit. It continues to offer a range of configurations including cargo van, crew van, passenger van, cutaway or chassis cab; low, medium and high roof; with two wheelbases; an extended version; rear-wheel or all-wheeldrive; and single or dual rear wheels.

New in 2021, a Cargo Van model was added to the program.

With dual rear wheels, this Transit cargo van will offer a new maximum GVWR of 11,000lbs.

This version is also available with the AWD.

Enhancements added

Also brought out in 2021 are a few driver comforts and accessory features – and some exterior ones.

Exterior enhancements include front fog lamps and a new honeycomb mesh grille treatment. Inside, you’ll find a four-way manual swivel driver and passenger seat and an eight-speaker sound system.

Also new, the manual parking brake on the floor by the driver’s seat has been replaced in all Transit vans up to 9,500lbs GVWR by an electronic parking brake. This design move creates a 50 per cent wider aisle between the front seats.

An optional centre console with FM/SP SUPPLY PROFESSIONAL

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1. An optional centre console with right-side shifter offers more than seven inches of additional driver legroom.

2. The new Parcel Delivery Package builds on interior walkthrough improvements and adds 50/50 hinged rear doors and wide 253degree opening.

1.

2. right-side shifter further improves walkthrough and offers more than seven inches of additional driver legroom. The overhead shelf is now an option. For those that don’t need it, you get more headroom clearance when standing instead.

So, that covers physical changes. As for electronic driver assists, that effort continues with a strong list of improvements. Some of these items are optional but knowing that they can be ordered adds to the Transit’s appeal.

New is a driver-assist; pre-collision assist with automatic emergency braking, forward collision warning, post-collision braking, lane-keeping system and auto high-beam headlamps. Transit passenger van XLT is equipped

with Ford Co-Pilot360, adds Blind Spot Information System with trailer coverage and cross-traffic alert, as well as reverse- and side-sensing system. Additional available features include adaptive cruise control, front and rear splitview camera and enhanced active park assist to simplify maneuvering into parallel or reverse perpendicular parking spots.

For power, Transit is now offering two powertrains. The newest is the 3.5L EcoBoost V6 (310hp and 400lbs-ft of torque) economy-rated engine (late availability) added to the program this year. This is in addition to the standard 3.5L PFDi V6 (275hp and 262lbs-ft of torque).

Both are paired with a 10-speed automatic transmission.

For fleets, Ford continues to offer some of the best software aimed at managing, recording and evaluating vehicle (and driver) performance. If you choose to go with the FordPass Connect system you’ll have a Transit with a 4G LTE Wi-Fi hotspot and connectivity for up to 10 devices.

This will also include USB outlets in every row of a passenger van. This system also includes a modem that facilitates the use of Ford Telematics or Ford Data Services from Ford Commercial Solutions. This allows fleet customers to monitor their fleets with GPS tracking and geofencing, get live vehicle health alerts to plan and limit downtime, set reminders for vehicle service, analyze driver behaviour and help manage fuel usage to potentially reduce costs.

Included among the changes for 2022, the following packages and options have been deleted from the Transit order site: xterior colors, Green Gem (W6) E Diffused Silver (FK), Magnetic (J7) and Kapoor Red (AW) 16-inch styled aluminum wheel (64S) Power outlet 110V/150W (90C) Premium ‘wood-like’ flooring (16J) Three-passenger seating (212, 213, 216 and 217) Small centre console 2.0L EcoBlue Bi-Turbo I4 Diesel (99A) Passenger van XL/XLT W4X and W4Z Dual sliding doors (59B) FM/SP FLEET MANAGEMENT SUPPLYPRO.CA 29

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THE LAW—BY PAUL EMANUELLI

While many public purchasing bodies lack a cohesive operating culture, all public institutions have at least one de facto organizational culture that governs procurement practices. In fact, most institutions have multiple competing cultures that operate at cross-purposes.

As this article shows, these organizational cultures can be divided into four quadrants, with three common but flawed cultures, and a fourth less common culture that adopts a balanced and strategic approach to procurement governance.

QUADRANT 1 The natural state of public procurement is anarchy, not order. In fact, if left ungoverned, the crosscurrents created by operational time pressures and due process standards are guaranteed to cause turbulence in your tendering cycle.

Organizations that are trapped in Quadrant 1: non-compliant gridlock, suffer from slow and inconsistent procedures and a high level of non-compliance.

How do you know if this is your organizational culture? If your approach to balancing time pressures and due process standards has no rhyme or reason to it and your procurement department is in an ongoing tug of war with business units who always want to cut corners, you are probably in Quadrant 1. If you are constantly off balance, improvising and reacting to each project, dealing with unrealistic demands to customize your procedures, while renegotiating roles and responsibilities and working to unreasonable deadlines, then you are likely in non-compliant gridlock. Unfortunately, as discussed below, in trying to escape this state, most insti30 FEBRUARY 2022

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SPEED

FORGING A ROAD LESS TRAVELLED IDENTIFYING PROCUREMENT’S ORGANIZATIONAL CULTURE QUADRANT 2 Expedient non-compliance Speed over compliance

QUADRANT 4 Strategic execution Speed and precision

QUADRANT 1 Non-compliance gridlock Speed over compliance

QUADRANT 3 Red tape gridlock Compliance over speed

COMPLIANCE

tutions hit a crossroads that leads down two dead ends.

QUADRANT 2 Many institutions attempt to flee the state of procurement anarchy by rushing north to Quadrant 2: expedient non-compliance, where they embrace a de facto organizational culture that places operational deadlines over everything else. How do you know if this is your procurement culture? If you prioritize speed over compliance whenever rules get in the way, you are likely in Quadrant 2. If you improvise your planning decisions based on unrealistic deadlines, resource projects on the fly to try to meet those deadlines, and then view your biggest project risks as missing those deadlines, your organizational culture is expedient non-compliance. This highspeed approach may work for you in the short term, but your luck will ultimately run out when your corner cutting finally catches up to you.

QUADRANT 3 Institutions that want to escape the anarchy of Quadrant 1 but have no

appetite for the high-speed pursuits of Quadrant 2 tend to head east and seek refuge in Quadrant 3: red tape gridlock. The de facto culture in this quadrant prioritizes compliance over speed, at least superficially. These institutions tend to be locked under layers of seemingly unnecessary red tape.

How do you know if red tape gridlock is your organizational culture? If your reviewers, regulators and rejecters have no apparent sense of urgency, irrespective of your operational time pressures, you are likely in red tape gridlock.

If your priority is making sure that your standard procedures are always followed for the sake of consistency, while you bury your procurement cycle under multiple layers of approvals, you are likely living in Quadrant 3. While applying superficially standard procedures may create a false sense of compliance, embracing a culture of intransigence is a game of brinksmanship that you will ultimately lose. Your organization’s business units will remain mired in red tape for only so long before

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

they panic due to time pressures, break ranks and start cutting corners. Once that state of procurement panic sets in, they’ll either drag you into Quadrant 2 for another high-speed chase or, if you dig in your heels in the name of due process, pull you back into Quadrant 1 to battle it out in the state of procurement anarchy.

QUADRANT 4 Quadrant 4: strategic execution is the opposite of procurement anarchy. In this quadrant, time pressures are properly balanced against due process standards as organizations strategically forge a path between expedience and gridlock. Public institutions that practice strategic execution are serious about procurement governance and embrace a formal culture of proactivity and advance planning. They adopt updated procedures that enable high-speed precision. They allocate sufficient time and resources to better ensure successful project execution. While strategic execution may be a road less travelled in public procurement, it is the clear path forward for institutions that put a premium on good governance.

This article is from Paul Emanuelli’s forthcoming 2023 edition of The Art of Tendering: A Global Due Diligence Guide. SP SUPPLY PROFESSIONAL

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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.

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On-board technology system connecting your Subaru to the world. 24/7 safety and convenience wherever you go1.

2

Visit us at subarufleet.ca 1. 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.

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

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2021-11-23 4:15 PM

File: 3015197-02-Telematics Supply Pro Ad

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2022-02-08 9:21 AM