JUNE 2021
ALWAYS LEADING
Sanja Cancar-Todorovic on networking, career development and leadership Technology adoption
Inventory management Ram ProMaster ProMatDX show Drone delivery
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THE DATA IS IN. ARE YOU? Fleets that embrace the power of data are moving forward. They’re using new tools...stet YOUR FLEET IS AN INVESTMENT, AND IT’S TIME IT PAID OFF.
I’M IN
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VOL.63 No.3 JUNE 2021 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 7 CLEARING THE WAY After effects of the Suez Canal blockage. 8 QUANTUM LEAP Technology adoption in supply chain. 10 LEADERSHIP JOURNEY Sanja Cancar-Todorovic discusses networking, career development and professional organizations.
ALSO INSIDE 13 INVENTORY MANAGEMENT Can just-in-time systems withstand future crises?
4 UP FRONT
19 AIR CARGO DRONES The future of unmanned air cargo delivery.
6 IN THE FIELD
22 PROMATDX Highlights from the virtual ProMatDX show.
5 BUSINESS FRONT
30 THE LAW
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Fleet Management SUPPLYPRO.CA 3
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UP FRONT
DIGITAL FUTURE A crisis has a way of speeding up advances in various fields of human endeavour. Steps forward in medicine, for example, often arise during wartimes. The anesthesia inhaler, advances in facial reconstructive surgery and life-saving amputations are all innovations attributed to the American Civil War’s battlefield surgeons. While in some ways less dramatic, the COVID-19 pandemic has highlighted the importance of technology and the ways in which it can advance supply chains. Indeed, the adoption rates among supply chain organizations are increasing for several key technologies. We can see this in the results of the 2021 MHI Annual Industry Report, released during the ProMatDX show (held virtually earlier this year). Among the organizations surveyed in the report, 57 per cent are using cloud computing and storage, while 42 per cent employ sensors and automatic ID. Twenty-seven per cent are using IoT, 16 per cent employ artificial intelligence and 26 per cent use wearable mobile technology. Survey respondents said they believe these innovations can not only disrupt supply chains, but also create competitive advantage for the organizations that use them (see our ProMatDX story on page 22). Across most businesses, technology has become even more central to day-to-day operations over the past 15 months. Whether through e-commerce, Zoom meetings or even ordering a pizza, almost all of our daily interactions rely on the digital world. This reliance will remain and likely increase even as the pandemic fades. While supply chains have struggled over the pandemic’s course, customer expectations remain intact. Organizations will need technology to keep up with what clients want. To fall behind can mean disaster. The pandemic has also highlighted the importance of supply chain visibility, an area technology seems ideal to address. Adopting technology to increase visibility can help to track goods and devise contingency plans if delays arise. Finally, technology can help to provide a view into the future. Predictive analytics can help to spot risks and plan for them, something that’s been more on the radar of supply chain professionals over the past 16 months. Our article on page 13 looks at how technologies like machine learning and AI can help companies make better, faster predictions. And as several experts note in our article on page 8, ensure technology will solve the business challenges you face, rather than digitizing simply because it’s the trendy thing to do. It’s more important than ever to adopt the technology that will advance your goals. After all, who knows what challenges the future holds?
EDITOR MICHAEL POWER 416-441-2085 ext 110, michael@supplypro.ca PUBLISHER ALEX PAPANOU 416-441-2085 ext 101, alex@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY CUSTOMER SERVICE/PRODUCTION LAURA MOFFATT 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com ASSOCIATE PUBLISHER FARIA AHMED 416-441-2085 ext 106, faria@supplypro.ca EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management—City of Toronto JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc. iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x105 swilson@iqbusinessmedia.com President ALEX PAPANOU
PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION Mail: 302-101 Duncan Mill Road, Toronto, Ontario M3B 1Z3 SUBSCRIPTION RATES Published six times per year Canada: 1 Year $ 99.95 CDN Outside Canada: 1 Year $ 172.95 USD Opinions expressed in this magazine are not necessarily those of the editor or the publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. No part of the editorial content of this publication may be reprinted without the publisher’s written permission. © 2020 iQ Business Media Inc. All rights reserved. Printed in Canada.
MICHAEL POWER, Editor 4 JUNE 2021
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BUSINESS FRONT—BY MICHAEL HLINKA
PANDEMIC LESSONS HOW COVID-19 COULD HELP TO RESHAPE OUR ECONOMY By the time I’m submitting this column, about half of the North American population will have been vaccinated against COVID19. What this means is that the majority, and likely the vast majority, of citizens are now safe. How do I arrive at this conclusion? It’s estimated that anywhere from 15 to 30 per cent of the infected are asymptomatic. They’ve been “naturally” immunized, so whether they know it or not, they have nothing to fear from this virus. Life should be returning to normal and hopefully sooner rather than later. Arguably, the situation is even moThat said, there will be a new normal. It seems to me that much about how a modern economy operates has been revealed. Let me rephrase that: This pandemic has helped us understand how a modern economy should function. I’m not sure that we broadly understand this process and the public policy implications, particularly as it relates to tax policy. And that will be the ultimate focus of this column. HOME COMFORTS This pandemic has taught us that many white-collar workers can perform their duties out of their homes. Yesterday, I was speaking to a young man who works as an investment representative for a discount brokerage. He told me that throughout the past year, he has been working out of his apartment. However, he expects that he will be required to return to the office soon. My suspicion is that he is probably right, yet our government should be taking concrete action to discourage this. Working out of our homes is the single greatest productivity boost that North
America has enjoyed since the advent of the personal computer. I’d like to use the experience of that young man as metaphor. He previously spent 90 minutes each working day, driving to and from work. Time is money and then on top of that there is the hard cost of paying for gasoline, let alone wear and tear on public infrastructure. He was required to dress in a certain manner which meant that he regularly had to spend money for dry cleaning. He habitually bought coffee and lunch and now he eats at home, saving a great deal of money. The bottom line is this pandemic has provided him with an enormous boost to his real income. Let’s call it a pay raise in the neighbourhood of 10 per cent. What is this pay raise based on? Using fewer inputs to achieve the same output. Working from home rather than in redundant office space is fabulous for the economy. Thus, the question should be, how to encourage this practice? Let’s go back to this young man. Because he’s classified as an employee, he can’t write off home expenses. He could if he were regarded as self-employed. Couldn’t we allow employees to write off a fraction of home expenses (say, mortgage payments and common fees or rent) just as I am able to because I bill my work through a corporation? LESSON LEARNED However, the most important economic lesson we’ve learned is that in a modern economy, so much of the work being done can be understood as anything from superfluous to frivolous. I walk
down the streets of Toronto and see empty stores that were previously full of women getting their nails done and I ask myself if anyone is really worse off because this service is no longer available? Now, I’m guessing that the store owners and employees would like to ask me if anyone (except me) would be worse off if Supply Professional magazine chose to show a picture of a cute puppy instead of my thoughts on the Canadian economy? That actually buttresses, rather than refutes, my argument. Will there be a re-thinking of work and the responsibility to fend for yourself? It is already true in Canada that if you don’t want to work, you don’t have to. Life won’t be great, but you won’t starve, you won’t have to sleep outside, and you will be taken care of by the healthcare system no matter the decisions you have made. Is it possible that more of us will “opt out” of working and turn to the political process to take care of our needs and wants? I see two long-term economic implications of this pandemic. There has been an unintended and fortuitous productivity boom. Yet as fewer people create more of the value, it is inevitable that there will be a growing wealth gap. I’m thinking that the best public policy solution is an income tax system where you don’t pay anything until you’re past the poverty line and then a flat tax from that point forward. However, that doesn’t address the need for meaning that work provides so many of us. But that can wait until the next column, that is, if one appears instead of a picture of a baby Collie. SP
Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.
“Working from home rather than in redundant office space is fabulous for the economy. Thus, the question should be, how to encourage this practice?”
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IN THE FIELD—BY JAMES KENNEY
UNDERSTANDING EMPATHY EMPATHY WILL HELP TURN SERVICE INTO EXCELLENCE With the supply chain market evolving, suppliers and their partners are finding new ways to adapt and improve customer relationships. They are doing this by having tough conversations upfront. There is added focus on this now more than ever. No matter what stage of the supply chain game you or the people you interact with are at, having difficult supply conversations upfront is key for today’s business progression – be proactive, not reactive. Here are two mission-critical methods to reinforce no matter who you interact with or the type of business you provide: clear communication and transparency. If you take those business tactics and add the basic human element of empathy, you can turn those tough year-over-year conversations from mission critical to mission success. Most in the supply chain field have heard something like: “I need your organization to focus on communication and transparency.” This business communication strategy is not new but the direction on how it is presented – with clarity – is the golden ticket in growing a supply relationship. It allows your interactions to be candid while turning up the volume on the right information. For example, would your team rather know about a product shortage before it happens, or once it arrives at your back door? Everyone can agree, before it arrives. This is the difference between runof-the-mill customer service versus customer excellence. This will lead to the new customer relationship technique of openness through effective communication and transparency. 6 JUNE 2021
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THE IMPORTANCE OF EMPATHY Establish the groundwork now, then you can add empathy. Empathy can be embedded into any conversation, but when we add it to the notion of customer excellence it can take your communication and transparency from mere persuasion to a new level. What’s empathy? It’s the ability to understand and share another’s feelings. It allows you to read people. For example, this can be from how we dress and walk, as these actions provide non-verbal cues. This understanding will allow you to interpret and comprehend your perceptions of these verbal cues. Joe Navarro, a former FBI agent and body language expert, states that one of the biggest misconceptions of body language is when people cross their arms, often read as a blocking behavior. It’s easy to assume a person crossing their arms is raising their defenses. It’s a common assumption but untrue. Arm crossing during a meeting is a self-comforting or self-soothing behavior. A person is trying to comfort themselves when they are put in an awkward position in public, such as a meeting. It’s possible to prevent this reaction by practicing empathy through clear communication and transparency. This can help to avert a defensive reaction if the other party is caught off guard. Empathy allows people to have a positive response. This will reflect in their body language and verbal responses, allowing the person to become more open and honest. Understanding empathy is pivotal to any business relationship because it puts you in another’s shoes. Once empathy is estab-
lished, it can be used to further drive both sides’ business. Over the years I have seen many insightful businesspeople try to establish personal morality and kindness through communication and transparency. Some people have it, some don’t. However, it can be taught. People who are good at those skills have the drive to win and win big. Morality and kindness, through the above two skills while practicing empathy, will help to make customer interactions unforgettable. This can play in your favour. Practice customer excellence by showing that you care. Show that you are transparent but communicate effectively and people will be more receptive to you and your ideas. Empathy, through communication and transparency, is one of the best business tactics around and makes someone a great salesperson, team member, leader or helps them excel in a customer-facing role. However, it is underutilized in favour of the more traditional soft approach in order not to disappoint, upset or anger potential customers. Empathy allows you to change that individual’s perception from where they want to be, to where they need to be. I have used these tactics over the years, and they’ve helped my customer relationships grow stronger. Both parties drive better and exceed target results year-over-year. Practicing customer excellence though communication and transparency while using empathy can become a game changer. By understanding how your communication brings value to your interactions with customers, you set yourself up for success on a higher level, benefiting both parties.
James Kenney is senior customer replenishment – Canada Lead, at Blue Buffalo Canada.
“Understanding empathy is pivotal to any business relationship because it puts you in their shoes. It can be used to further drive both sides’ business.”
Through these tactics, you can form a unique business relationship that will last and get you to “mission accomplished.” Retention is now the focus. Obtain this by providing excellent customer interactions. Practice strong communication, be transparent through your interactions and be understanding by practicing empathy. It will turn customer service into customer excellence. SP SUPPLY PROFESSIONAL
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BY CHRISTIAN SIVIÈRE
THE SUEZ CANAL BLOCKAGE CONSEQUENCES AND SUPPLY CHAIN LESSONS LEARNED Built in 1869, the 193km-long Suez Canal is a vital shipping link between the Red Sea and the Mediterranean, carrying about 12 per cent of world trade. It saves around 10 days between Asia and Europe as ships would otherwise have to go down the African coast and around the Cape of Good Hope. The grounding of Evergreen’s 20.124 TEU (20-foot equivalent units) Ever Given containership caused a one-week blockage of the Suez Canal at the end of March. In our mediatized world, it quickly caught everyone’s attention, from supply chain professionals to the general public, exposing the fragile nature of global trade. The whole world could see thousands of containers loaded with Asian consumer goods stuck in the sand for a week and could imagine the other 400 and some ships that waited at both ends of the Canal for navigation to resume. Most had decided to wait it out, with only a few ships opting for the long journey around Africa instead.
The headlines carry other topics now and the world may have forgotten about the Suez Canal story, except for people connected with the shipping industry, and particularly companies whose cargo is still on board. Before we look at what can be learned, let’s summarize the facts. The Ever Given ran aground in the canal on March 23 and was freed on March 29. She then went to a holding area for inspection and would have normally been able to continue her voyage to Rotterdam but the Suez Canal Authority launched a US$916.5 million lawsuit against the vessel owners, as compensation talks between the SCA, the shipowners and their insurers dragged on. An Egyptian court then granted the SCA’s request for the seizure of the vessel and the Ever Given is again stuck in the Suez Canal, not in mud but in legal limbo, with all its cargo and crew on board. According to the ship owner’s liability insurers, the UK’s P&I Club, the SCA’s claim includes US$300 million for “salvage bonus” and another US$300 million for “loss of reputation.” On May 11, the SCA reduced its claim to $600 million, still an unacceptable amount for the P&I Club, who took the issue to an Appeals Court. The Court referred the case to a lower jurisdiction, to decide on the legality of the ship’s seizure, until a settlement on the compensation claim is found. Until the ship’s fate is decided, shippers and consignees have to be prepared to dig into their purse or insurance’s wallet, as the vessel owners have declared General Average, a legal provision enabling them to get all cargo owners to contribute towards the costs associated with the incident. In a precedent case in 2018, the Maersk Honam, cargo interests had to provide bonds for 54 per cent of their cargo’s value, in order to get their merchandise when it was finally delivered at destination.
“The whole world could see thousands of containers loaded with Asian consumer goods stuck in the sand.”
WHO PAYS? Who should pay between the shipper and the consignee is decided by the almighty Incoterm governing each individual transaction. Published by the International Chamber of Commerce in Paris and updated every 10 years, the Incoterms rules define the division of responsibilities between seller and buyer for the tasks, costs and risks involved in the shipping and delivering goods. Logic would tell us that whoever arranged and paid for the freight should bear the risks and the costs until the cargo has arrived. However, they don’t quite work this way as some of the most used Incoterms like CFR and CPT are counterintuitive: although the shipper contracts the carriage and pays the shipping costs up to the agreed place, goods travel at the consignee’s risks as soon as they leave the port or point of origin. This likely came as a nasty surprise for uninformed importers who have cargo on the Ever Given: they will have to dish out the money. This situation highlights again the importance of having adequate cargo insurance. In this case, no cargo has been lost but General Average costs are covered by standard institute cargo clauses, so for insured customers, it is their insurance that will be out-of-pocket. Aside from selecting carriers carefully, having “just in case” buffer stock and not putting all
Christian Sivière is president at Solimpex.
your cargo on the same ship, lessons learned include the choice of Incoterm used in your contracts: if you want peace of mind, buy DAP, DPU or DDP when possible. On the other hand, using these terms means you have no control over the shipment. If you want to control your shipment, go with FAS, FCA or FOB: you then have full control, all the costs and all the risks. CFR and CPT should be avoided, as they provide the worst of both worlds: you have no control, as your supplier selects the carrier, arranges and pays for the freight, but you have the risks during the voyage. If you want no risks at all, procure locally, which may become possible, if some meaningful reshoring of manufacturing takes place. On the other hand, reshoring, or nearshoring, if it does happen, will take time and Canadians may not be prepared to feed exclusively on potatoes, cabbages and apples, and may very well want to continue to consume avocados, oranges and bananas, so globalization may be here to stay. SP
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BY MICHAEL POWER
QUANTUM LEAP
THE BUSINESS WORLD’S MOVE TOWARDS TECHNOLOGY ADOPTION HASN’T LEFT SUPPLY CHAIN BEHIND Over the past year technology has crept into how businesses operate across many industries. Among other changes, the COVID-19 pandemic has pushed meetings and conferences online, accelerated e-commerce and given rise to work-from-home technology. The move towards digitization has not left out supply chain organizations. For example, McKinsey & Company’s recent McKinsey Global Survey found that companies have accelerated the digitization of their customer and supply chain interactions, as well as internal operations, by three to four years. The effects of technology adoption on the supply chain have already begun to be felt. The 2021 MHI annual industry report released during the ProMatDX trade show – held online in April – revealed that among over 1,000 manufacturing and supply chain leaders polled, 83 per cent said they believe that digital will become the predominant model within the next five years, while 22 per cent believe it’s already here. Pandemic aside, it’s easy to see why supply chain organizations would adopt technology. The com8 JUNE 2021
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petitive advantages of doing so can include better and faster planning solutions, an improved response rate and optimal growth, along with the reduction of revenue and margin leakage, says Sanjiv Gupta, CEO of OpsVeda, a software company. Gupta agrees that the pandemic has only sped up the process of technology adoption. Going forward, supply chain organizations will prioritize technologies including AI-powered self-learning systems, operational intelligence platforms, intelligent data platforms as well as data-led initiatives, he predicts.
Yet a barrier that companies face in adopting digital supply chain technologies is the multiyear commitment many of them require, Gupta adds. “Platform-centric IT initiatives could easily turn into the IT wild west. Data lakes could quickly become data swamps,” he says. “The right approach would be to focus on the customer. Focus on business imperatives. Create a dataled initiative that produces incremental benefits and funds itself.” FOCUS ON CHALLENGES Investing in digital technology allows companies to find efficiencies while
increasing agility, says Daniel Oh, vice-president, medium business segment at Sage Canada, a cloud technology company. When searching for benefits, Oh recommends looking at common business challenges that distributors face. For example, according to the company’s recent report, Forward Together, which looks at the pandemic’s impacts on SMEs, 81 per cent of distributors are dealing with global events, 75 per cent are dealing with supply chain disruptions and another 75 per cent face rising costs and margin erosion. Digitization can help organizations deal with cost reductions, improve data security, realize faster delivery, better customer service and experience, all of which improve efficiency and productivity. And while the report shows that 79 per cent of distributors have a digital transformation strategy, implementing the right technology into a Canadian organization can seem daunting. A perceived lack of expertise, knowledge or skill, as well as fear that costs will outstrip ROI, can hamper progress. But now is the best time to reassess digital initiatives, Oh notes. The pandemic has offered a glimpse at a future in which digital is central to most transactions, Oh says. This has forced many organizations further up the adoption curve, almost overnight. “We’re seeing a number of technologies that are emerging from this pandemic,” he says. “It’s creating some really unique advantages for Canadian companies specifically.” Robotic process automation and warehouse automation are among the technologies that are especially key to supply chain, Oh says. The Internet of Things, artificial intelligent machine learning and advanced data analytics are also becoming increasingly important. Among these technologies, Oh puts the cloud at the top of the list. There are several benefits to not only having all an organization’s technology remotely accessible, but the cloud is scalable and leverages the power of the internet to increase speed, SUPPLY PROFESSIONAL
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he says – the cloud makes it possible to view an entire global supply chain in real time. “All these things are interlinked as well,” he says. “RPA, the Internet of Things, artificial intelligence – none of that technically works without the cloud behind the scenes.” When looking at any technology, begin with the end goal in mind and what you want to achieve through digitization, advises Vijay Jainaraine, director of eProcurement & analytics, procurement & supply chain at Rogers Communications. Jainaraine says he looks at technology from a data and reporting perspective. While systems help users, organizations must know what those users are working on. “Every time we think of building systems or using systems, the end goal is in the data that’s going to be coming out of it,” he says.
“We’re seeing a number of technologies that are emerging from this pandemic. It’s creating some really unique advantages for Canadian companies.” Procurement organizations can choose whether to buy a bestof-suite system, meaning one system that can do everything for you, or best in class, which works better for a specific or niche process. Each has its pros and cons, and Jainaraine leans towards a best-in-suite solution due to the added flexibility. However, many systems, such as SaaS solutions, don’t give enough
flexibility to configure or make changes, leaving organizations stuck with an out-of-the-box solution. This can work for less complex organizations, while more complex ones making purchases for multiple lines of business may need a system that’s flexible enough to adapt to different business needs. “My view is for complex organizations to go with a best of suite that’s flexible enough for you to build your own processes that are unique to your organization,” Jainaraine says. POLICY IS KEY When looking to adopt a new technology or system, start with thinking about the organization’s policy, Jainaraine recommends. Are policies clear and do they make sense? Do users know what they need to do, when they need to engage procurement and what can they
do on their own? What’s the system being used for? Is it for complex or simple purchases? Once these types of questions are addressed, then build your system. It also helps to have the internal capabilities on your team to deal with a cloud-based solution, Jainaraine says. It’s an advantage to have team members who can make changes themselves, rather than relying on outside departments like IT. “I’ve also got the skill sets on my team to do the dashboard development,” he says. “That’s critical because when you’re building dashboards, you’re not sure exactly what you want. You have an idea, and then you’re building, you’re constantly changing and making enhancements and adding things. You want those resources on your team to make those changes on the fly.” SP
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BY MICHAEL POWER
SANJA CANCAR-TODOROVIC ON NETWORKING, CAREER DEVELOPMENT, PROFESSIONAL ORGANIZATIONS AND MORE Few people who pursue careers in procurement or supply chain complain that the work is boring. For Sanja Cancar-Todorovic, who is leading the enterprise procurement, outsourcing and vendor management team at Home Capital Group Inc., not only are no two days the same but the work is never dull. “Although I plan my days and there are reoccurring meetings and cadence of different stuff that I have to do on a daily basis, you really can’t pinpoint and say, ‘this is exactly what I’m going to do on this day, and this is how it’s going to happen,’” says Cancar-Todorovic, who describes herself as always looking for a new challenge in her role. And like many others, Cancar-Todorovic didn’t set out for a career in the field. In 2008, she was working in risk management at Bell Enterprise, now called Bell Business Markets, which at the time was forming a vendor delivery team responsible for responding to RFQs. Cancar-Todorovic found herself recruited onto that team. 10 JUNE 2021
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“A leader at that time recognized that this would be something I’d be good at,” she says. “I joined the team, and the rest is history. Which is why I say, no one dreams about this job. You fall into it, and you love it.” While her career in procurement began in 2008, her stint at Bell Enterprise started in 2000 while she was still a student at Toronto’s York University. She began with a part-time, entry level position in the company’s contact centre, which deals with customer support. Her time there was great training for later leadership roles, she says, since the environment is high stress, high turnover and monotonous. Leading a team in such an environment means thinking outside the box to ensure you’re coaching people to do their best, while also motivating them to minimize turnover. Shortly after graduating, Cancar-Todorovic moved to Bell’s corporate security team, which focused on broadcast security and governance. At the time, around 2003, Bell acquired ExpressVu, now known as Bell TV. When the
JUMPING INTO PROCUREMENT Not long after Cancar-Todorovic joined Bell Enterprise’s vendor management team, Telus offered her a procurement position. She accepted, working in that position for five years, until 2015, before another opportunity opened in the Telus outsourcing world. Specifically, Cancar-Todorovic focused on outsourcing the customer experience through the company’s contact centres. The role represented a shift, as the contact centres are the “bread and butter” of telecommunications companies, she says. The service must be impeccable, so that customers don’t know if they’re speaking with a representative based overseas or the city in which they live. The position proved fun, since it was a challenge she had never faced before. She worked in the role for three years until another opportunity arose. SUPPLY PROFESSIONAL
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ALWAYS LEADING
company was looking to ensure the new acquisition was Canada Labour Code compliant, the company’s corporate security leader asked Cancar-Todorovic if she was up for the challenge. Cancar-Todorovic jumped at the chance, and she now credits the role as allowing her to move into sourcing. The person who brought her to the vendor management team realized that if she could get the government aligned with what the company was doing, she would be adept at negotiating with large companies. At the time, Cancar-Todorovic was still a new graduate, having fast-tracked a four-year program and graduated with honours in 2003 with a Bachelor of Arts degree, consisting of a double major in law and political science. She had always been interested in a law career and York University, with its affiliation with Osgoode Law School, seemed the logical choice after graduation. And yet, her new director on Bell’s corporate security team suggested an alternative. An eMBA was like the Swiss army knife of degrees, he told her, since it could be used in multiple ways and locations. A law degree would provide only niche opportunities. “That kind of did the trick for me,” Cancar-Todorovic says. “Also, Bell had this tuition reimbursement program where they supported the development of their employees, obviously as long as it makes sense. You can’t go to cooking school and expect Bell to pay for it. But for graduate programs they were more than happy to pitch in.” In 2006, Cancar-Todorovic completed a double degree – an executive Master of Business Administration and a Master of Management at Landsbridge University, a school that has since been absorbed into the University of New Brunswick.
Rather than focusing only on risk or vendor management, the job also emphasizes thirdparty risk management. This allows her not only to expand her knowledge of third-party risk management but to take best practices from her other employers and incorporate them at Home Capital and its vendors. “One of the things that I was happy about is that being in Home Capital, which is the smallest organization out of all that I’ve worked for, it allows me to make changes quicker,” Cancar-Todorovic says. “It’s a lot more agile. It’s not a big machine that you have to work hard to move the needle on. Things just happen a lot quicker.” In just over six months at Home Capital, Cancar-Todorovic has also launched a corporate supplier diversity program. Supplier diversity has become more topical over the past year and a half, and she sees great value in such programs. “I’m happy to say that we’re actually doing very well,” she notes. “I’m looking forward to
finishing off a year, starting from zero with supplier diversity, to coming to some meaningful number that we can build on for next year before we turn our focus to tier-two suppliers as well.” While she plans her days, attends recurring meetings and completes regular tasks, Cancar-Todorovic stresses that an appealing aspect of procurement is that each day is unique. A typical day starts around 8am or 8:30am and lasts until the evening. At the same time, working from home can see personal life and work life blend together. Cancar-Todorovic puts a lot of emphasis on engagement while leading her own team. Once a day, she ensures the team meets virtually to talk about what members might need help or support with. Meetings also provide
MIKE FORD PHOTOGRAPHY
“I had a call with a recruiter who said to me, hey, it’s been 18 years in telecom – do you really want to retire one day and not know anything except for telecom?” Cancar-Todorovic says. “That made me think about it. Up until that point it was just, ‘OK, 10 years at Bell, eight years at Telus, what’s the next move?’ It would be Rogers. Is that really going to be any different from the previous 18 years? Or is it just a different sign above the door?” Cancar-Todorovic eventually accepted a position at Manulife, representing a complete shift from her career until then in the telecommunications industry. The job was on the investment side and focused on rates. She spent about two years in that position before accepting an offer from Home Capital. In her current role, Cancar-Todorovic leads a team responsible for the organization’s enterprise procurement, outsourcing and vendor management. The role has allowed her to combine the past 20 years of experience in one position, she says.
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a human element, which is even more important now that colleagues can’t see each other in person. Cancar-Todorovic has a portion of each day blocked off for that facetime with the team, as well as meetings with executives, stakeholders and vendors. “One thing that I love the most about this job is that it’s never boring,” she says. “It really, truly never is.” Perhaps the most stark, recent evidence of that comes from the pandemic. Like many in procurement and supply chain, CancarTodorovic faced supply chain obstructions last year, especially when seeking personal protective equipment (PPE). A product that previously cost pennies per unit suddenly jumped to $15 or $20. Aside from cost, PPE became practically impossible to procure, with shipments held at the border for months. Procurement has long been about just-intime delivery, Cancar-Todorovic says. And yet, with PPE during the pandemic, using just-intime delivery meant everything stopped. The experience has turned the concept of procurement and supply chain on its head. Far from being a fad, the demand for PPE will likely remain, says Cancar-Todorovic. Given that, why not hold onto inventory going forward? Why not procure now that prices have fallen back to the market value? “It started off with PPE, but now I’m looking at everything,” she says. “What are some of the items that are actually worth holding in inventory and incurring that bit of cost as an assurance that you won’t fall back into the same trap that a lot of us fell into last March, April and May?” One silver lining of the pandemic has been an increased focus on third-party risk management, Cancar-Todorovic says. There’s been a shift for many during the pandemic from simply paying lip service to risk management towards engaging stakeholders to review each vendor annually, rather than just at the onboarding stage. Business continuity plans have become more prominent during vendor management calls. Whereas they used to be simply status updates, there’s now discussion of how to mitigate risk in the future. “You’re also looking at reputational risk, which is something that I don’t think anyone really thought about up until now,” she says. “But reputational risk is resurfacing as being very important.” Cancar-Todorovic counts herself lucky to have worked surrounded by people quick to recognize her achievements. In 2019, she was awarded the Future of Sourcing Award at the SIC Global Executive Summit in California – the only Canadian amongst the nominees to win. Then, in 2020, 12 JUNE 2021
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“I’m looking forward to finishing off a year, starting from zero with supplier diversity, to coming to some meaningful number that we can build on.” Cancar-Todorovic received a Stars of Excellence award from Manulife, representing the highest recognition achievable from the company. She received the award after being with the organization for only a year. “It was a humbling experience but also an important one for me because after 12 months of being in a new organization, to get recognized and actually win the highest honour and recognition is pretty cool,” she says. OPEN TO LEARNING Cancar-Todorovic is always open to learning new things and expanding her horizons. Taking a risk by leaving telecom for the investment management, assurance and banking world paid off, she notes. The telecom world is perhaps the most advanced in terms of digitization and technology alignment, and Cancar-Todorovic says she’s excited to apply her experiences there to her current field. The pandemic has helped to open banks to the possibilities presented by embracing technology, she says. “Up until the pandemic I never really thought that much about security and having people work from home because it was something that was just too risky,” she says. “Now that we have all done it for over a year and business is going great – no one has skipped a beat – I feel like there’s more appetite to get more technology involved in all the internal processes as well.” Cancar-Todorovic is now rolling out a thirdparty risk management automated tool and automated processes around due diligence and vendor registration. At Manulife, she created a central contract repository and digitized the company’s contracts. She’s replicating that currently and is excited about how it’s shaping up. Cancar-Todorovic’s goal is to establish analytics to pull data from multiple processes. Cancar-Todorovic’s two sons, Marko, 10, and eight-year-old Petar help to keep her negotiation skills sharp, she says, noting that before the pandemic her part-time job was chauffeuring them to various activities. Now, like most people during the pandemic, that part of her life has slowed. Cancar-Todorovic and her husband,
Mario, have a cottage at Wasaga Beach where they like to spend time, although pandemic travel restrictions have limited how often they can go there. The family also enjoys skiing in the winter. During the pandemic, the family has also gotten a puppy, a Bichon poodle named Todo. “It’s probably the greatest thing that we did,” she says. “Ever since we got him, anxiety levels have dropped in the house. I really didn’t think, when they talk about dogs being support, emotional animals, I didn’t really believe it until we actually got one. It just brings so much joy.” Cancar-Todorovic enjoys speaking at conferences, especially about the value of supplier diversity and the value minority-owned businesses can bring to large corporations. She also enjoys writing for industry magazines. While it can sometimes seem like a chore, writing about a topic she’s passionate about is a much different experience. “When you’re writing articles about something you enjoy, it doesn’t feel like work. It actually feels like enjoyment,” she says. Cancar-Todorovic recently joined the Supply Chain Canada Ontario Institute, a move she says is valuable for those looking to progress in their careers and improve their networks. Membership in the organization helps her to continue learning, something she recommends. It’s easy for people to stagnate in their careers, going through the motions without advancing. Continuous learning, however, helps to guard against stalling in one’s profession. “Don’t stop learning, because that’s career suicide,” she cautions. “You’ll be on autopilot for a while, and someone will come in with fresh, new ideas and openness to change and innovation. If you’re lacking that you’re doing yourself a disservice for sure.” Developing your network is another way to advance, she advises. That’s especially important now, as most people are unable to see one another face-to-face. Groups like Supply Chain Canada and minority-owned certification organizations such as CAMSC and WBE Canada are excellent ways to meet like-minded people, expand a network and learn from one another. “For people who are at the beginning of their career, your network is your net worth,” Cancar-Todorovic says. “I didn’t appreciate someone telling me this 20 years ago. I really didn’t understand. But now, 20-something years into my career, I truly, truly agree with that statement. The bigger your network the more opportunity for growth. The more opportunity for the exchange of ideas. The more opportunity for development on personal and professional levels you have.” SP SUPPLY PROFESSIONAL
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BY JACOB STOLLER
THE INVENTORY CHALLENGE STOCK OUTS, DELAYED ORDERS MEAN MANY COMPANIES ARE LOOKING AT HOW THEY MANAGE INVENTORY
been that low inventory strategies are to blame. Industry stats, however, suggest otherwise. According to Statistics Canada, the inventory-to-sales ratio for Canadian manufacturers has risen steadily over the past decade – a trend that has continued during the pandemic. “There are more people holding more inventory than they would have 12 months ago to be able to have that confidence that they’ll have the product when the customer wants it,” says Shari Diaz, innovation, strategy, and operations director, IBM Sterling, based in Columbus, Ohio. Low interest rates, Diaz notes, have recently moved that trend upwards.
Inventory is always a balancing act, of course. While insufficient reserves can make a company vulnerable to market fluctuations, excessive inventory can tie a company’s hands when unexpected circumstances arise. When consumer behaviour changes in unpredictable ways, as it has during the pandemic, making the right call gets more difficult. In a whitepaper published at the outset of the pandemic, Robert Martichenko, CEO of LeanCor Supply Chain Group, addressed the alleged toilet paper shortage, noting that it was erratic consumer behaviour, not insufficient inventories, that was to blame for the empty shelves.
“There is no shortage of toilet paper,” Martichenko wrote. “The inventory has simply been replaced into the homes of individuals who feared grocery stores may close.” “Over the last year, demand was all over the place as well as supply,” says Mississauga-based Gavin Davidson, product marketing director at ERP software vendor Oracle NetSuite. “So I think it’s really about visibility into the supply chain more than anything.” The uncertainty has affected all levels of the supply chain. Last
Running shops faced an unprecedented supply problem last winter when COVID-19-related closures forced health club goers out into the cold for their workouts. “We were sold out of men’s winter running tights by November,” says Lynn Bourque, owner of The Runners Shop in Toronto, “and there was no way I could get more. None. And this wasn’t just one brand – I’m talking all of the brands.” For retailers like Bourque who order their gear a year in advance, these have been challenging times. Prolonged shortages of everything from masks to bicycles to building materials, and the seeming inability of manufacturers and their distribution networks to respond to changing circumstances, have been remarkably persistent. The kneejerk reaction, reinforced by the popular press, has SUPPLYPRO.CA 13
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“There are more people holding more inventory than they would have 12 months ago to be able YOU ABOUT OUR know what you have inKNOW the store?” shortages. “A JIT producer can October, over 400 manufacturingD0 Knowing what you have sounds to have that confidence switch within a few days to a difexecutives responded to a Thomas ferent model that might be in Industrial Survey titled “A Year in simple enough, but when data is siloed, for example, between chanmore demand because they don’t Review: How the Manufacturing that they’ll have the nels, or between different divisions have all the sunk cost of pre-purIndustry Adapted in 2020”. Overof a company that grew by acquisichased inventory,” says Eakin. all, 87 per cent reported that key product when the tion, significant work to integrate A JIT producer might have markets were disrupted by that data may be required. Software been able, for example, to help COVID-19, and 53 per cent customer wants it.”
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reported supply chain disruptions.
vendors supporting the omnichannel approach, which seeks to unify the customer experience across different channels, are rapidly evolving new tools to create a single view of inventory across the organization. AI tools are also rapidly becoming accessible to mid-sized companies. “Our approach has always been to use those advanced technologies to deliver out-of-the-box solutions to customers,” says Davidson. “So, any NetSuite customer can basically enable a feature that, behind the scenes, engages Oracle artificial intelligence / machine learning (AI/ML) technologies to start modeling their organizational data. One example is that you can start to look at what we call predictive risks – what’s the risk that this purchase order is going to be late?”
BETTER INFORMATION One of the key lessons from the pandemic was that planning stocking levels based on the previous year’s sales can be a recipe for disaster. Machine learning and other artificial intelligence (AI) technologies are helping companies improve both the speed and the quality of their predictions. Amazon has been the poster child for such methods, deploying machine learning and other AI technology in decisions around warehousing, distribution, transportation and procurement. A key advantage of AI is that models can be built with an unprecedented variety of inputs including structured data from ERP systems, IoT sensors, partner data, and external data from weather and DEALING WITH FRAGILITY social media sites. Furthermore, Some of the critics who blame panAIREGULAR allows decision makers to MEMBERSHIP PRICE: demic shortages on low inventory remove human biases that may point a finger at the just-in-time limit their choices. $410.00 per person (JIT) approach, which is a pillar of Most companies, however, are the lean manufacturing system pioa long way away from being able to take advantage of these capabil- neered by Toyota. JIT, they claim, EMPLOYER GROUP PRICING: ities. Many are taking the first step is purely a cost cutting strategy. This argument reflects a fundaof determining what inventory Forhave. a group of 5: $389.50 permental person. SAVE 5% of JIT misunderstanding they The pandemic-manaccording to Ken Eakin, an Ottadated shift to e-commerce has consultant. accelerated suchof efforts. For a group 10: $369.00 perwa-based person.management SAVE 10% “Low inventory is a by-product of “Grocery stores had to really switch to the buy-at-the-curb pickup a production strategy, but it’s not For asays group ofDiaz, 15: innova$348.50 per SAVE 15% theperson. goal,” says Eakin. “The goal is model,” Shari to enable faster production, and to tion, strategy, and operations direcenable flexibility by producing in tor, IBM Sterling, based in smaller batches.” Columbus, Ohio, “but they didn’t TO GET CONTACT: The real issue with shortages, know whatYOUR was onEMPLOYER the shelf. ButGROUP RATE, Eakin says, is North America’s how can you let someone fill a virNancy Tran at ntran@supplychaincanada.com or dependence on long, fragile suptual shopping cart when you don’t 416.977.7566 x2138
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alleviate last November’s winter running tights shortage. JIT, of course, is not a magic bullet. Agile companies that work with short lead times and low inventories need timely, accurate information to make fast decisions. High visibility of inventory, therefore, will become even more critical for companies that move in that direction. “We’re maybe a long way in many cases from being able to leverage technologies like AI and machine learning,” says Davidson, “but a good first step might be understanding what data you have available to you, and also, what information your suppliers can provide.” SP
ply chains built on moving goods halfway around the globe in container ships. “Making stuff in China for the North American or European markets is the opposite of JIT,” says Eakin, “because it’s got to go on trucks and trains, and through ports and depots, and anything that goes wrong at any point in that chain would cause the system to break down. With JIT, you minimize fragility by bringing suppliers closer to you.” The Thomas Industrial Survey revealed some anecdotal concerns about supply chain fragility, and a surprising 52 per cent reported that they plan 1 to re-shore or nearshore their supply chains. “Reshoring or nearshoring, orNETWORK having some Engage withsupply 3,000+ supply chain professionals in Ontario redundancy built into the andpeople 7,000+are nationally, chain, are things think- to grow your contacts and advance career to the next level. ing about,” saysyour Davidson. JIT can be a major force in 2 making reshoring economically EXPERIENCE viable. “By working with less inventory through a JIT producComplimentary webinars on pertinent topics, Zoom Cafes, tion system, you savetours money andcan facility (when tours are permitted). on transportation, and you reduce the risks of long supply chains,” 3 “So, I think reshoring says Eakin. could be done in a lot of industries LEARN – maybe not forAccess commodities like to insights from industry leaders through paper towels, but certainly development for professional seminars at member-only prices. many other things. When you look at the total math of the entire sup4 it makes a lot of sense ply chain, to bring it backSECTOR-FOCUSED domestically, or INITIATIVES perhaps to Mexico.” Understanding that every industry has its own challenges JIT could also be part of the and offering learning and knowledge-sharing platforms solution for relieving pandemic
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COMMENTS FROM OUR MOST RECENT CLIENT “In my role as Vice President Supply Chain and Operations, at The J.M. Smucker Company, I worked with Supply Chain Canada, Ontario Institute to bring supply chain training to my cross functional teams. The training provided by the association supports best practices in supply chain methodology across end to end supply chain functions and was very applicable to our operating environment. The approach of Supply Chain Canada fills a gap between academia and real-life application, by providing participants with an opportunity to learn best practices and then immediately apply them to their role, creating a meaningful impact. Our recent workshop resulted in our teams brainstorming solutions to our current challenges and leaving the session with innovative approaches to enhance our supply chain performance. In the current marketplace, supply chain has become an even stronger component of competitive advantage for manufacturers as we must pivot faster and innovate frequently to address unforeseen challenges. Having Supply Chain Canada as a partner that can draw on industry grounded experience, an extensive library of content adapted to the manufacturing sector and to current market forces makes the training and professional development offering invaluable in preparing my team for the future.” - TODD CAMPBELL VICE PRESIDENT, SUPPLY CHAIN & OPERATIONS – CANADA
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Aruja says that the pandemic has accelerated drone cargo delivery technology and it’s driven by e-commerce. Consumers are impatient and the demand for same-day or next-day delivery has never been greater. Kirk agrees. “There are certainly a lot more parcels being delivered now compared to preCOVID times,” he says. “That is a big driver. But there’s also a desire to improve delivery to remote communities and indigenous communities. Improved delivery of parcels and medical supplies to remote communities helps improve the quality of life. And certainly, the cost is lower by drone than if you had someone actually flying the plane.”
TURNKEY SOLUTION Drone Delivery Canada, a Canadian success story, has been in business for seven years. “All of the intellectual property patents are ours,” says Michael Zahra, president and CEO of the company. “I hesitate to call us a drone company because we don’t just sell a piece of hardware or software. It’s a turnkey infrastructure solution for logistics applications that’s sold as a managed serImagine decreasing workload and production The push for battery electric vehicles (BEVs) vice that includes consulting, set up, implementacosts, increasing operating efficiencies and, most and autonomous ground vehicles is also paving tion and the ongoing management of the solution.” important, easing that agonizing pain of first-mile, the way for drones. “Between autonomous Drone Delivery has three drones in its last-mile delivery speed bumps. The evolution ground and air delivery vehicles, there are simifleet—the Sparrow and Robin XL, which are of drone technology and the sophistication for larities,” says Barrie Kirk, executive director electric units, and the Condor, which is a larger these unmanned aerial devices is extraordinary. of the Canadian Automated Vehicles Centre of helicopter style gasoline powered drone. The The military has used and deployed drones for Excellence (CAVCOE). “The kinds of LiDARs fleet offers ranges of 30km to 200km carrying decades, consumers have mastered navigating and (light detection and ranging sensors) that are payloads of 4.5kg to 180kg. controlling them—in fact, a 16-year-old Toronto used on drones are the same basic concept for “The Sparrow has been operating for more teenager was recently recognized as the youngest autonomous ground mobility. On the ground than four years now. The Robin XL and Condor Canadian to achieve a drone pilot certificate. there are a lot of targets to track that are moving are in testing and are expected in the near Drones are now moving, at an accelerated slowly, whereas in the air, there are fewer things future,” says Zahra. “We’ve done a number of pace, into cargo delivery. Globally, there is lots to track, but the drone is moving quickly.” of activity with drone cargo delivery technolKirk says there are various market segments, pilot projects – we’ve flown in the US with the FAST-TRACK YOUR DESIGNATION THROUGH OURdoing PATHWAYS. IN CONTINUED ONLINE EDUCATION. FAA and we’ve flown at Moose Cree First ogy. Airlines in Africa, Asia SCMP and Europe are including Amazon, pilots andEXCELLENCE research Nation. We’ve also had First Nations pandemic getting into the drone cargo business for an for using drones for first-mile, last-mile delivunmanned alternative. The US has 377,000 ery. “But there’s also a lot of activity in ground- projects with Georgina Island and Beausoleil First Nations.” drones registered with the Federal Aviation based robots.” Using the Sparrow, Zahra says they were Administration (FAA). Europe-based DronamUPS has been conducting pilots that use able to fly to Georgina Island and the Beausoleil ics’ Black Swan, its flagship unmanned cargo a delivery van that drives to a location, the roof First Nations in Northern Ontario with the aim drone, can carry 350kg of cargo up to 2,400km slides open and a drone lifts off with a parcel. to deliver supplies, PPE, food and hygiene kits. at an 80 per cent lower cost than aircraft. It has Once delivered, the drone returns to the van, “These are island communities that wanted to said that it will have subsidiaries in Canada, even if the van has moved to a different locaself-isolate and limit person-to-person contact, Ireland and Australia. tion, says Kirk. Last November, Air Canada announced The real driver in this technology, according but they wanted to keep the supply chain open.” it could soon operate unmanned drones for to Mark Aruja, director of Unmanned Systems Drone Delivery has run two commercial logistics intermediary shippers and third-party Canada, is the small and powerful electric pilot projects with DSV, a global logistics comlogistics. Jaunt Air Mobility will be designing motors, along with the evolution of battery pany. DSV’s 1.2-million-sq-ft facility in Milton, and manufacturing its family of eVTOL aircraft technology and digital technologies. “[They Ontario, used the Sparrow to move cargo exterin Montreal. use] accelerometers that came from airbags nally around its campus, which is more efficient A first in Canada, InDro Robotics Inc. deployed in cars, the cameras on them came than trying to navigate the facility. It also ran a achieved the LIVE-FACULTY Canadian Transport Agency’s from cell phones,” he says. “People look at BASED project moving healthcare related items offsite REAL-WORLD CASE-STUDY LEARN AT YOUR (CTA) approval to operate domestic air service these little helicopter drones and think it’s low to a DSV customer. LEARNING INTERACTION EXAMPLES OWN PACE for cargo drone delivery. This license means tech, but actually what’s in there is more “We’ve done three projects with Ontario’s it can ship up to 10kg. sophisticated than aircraft that fly people.” Peel Region, where we were moving defibrilla-
DRONE CARGO TECHNOLOGY IS CHAIN PROFESSIONALS RAPIDLY TAKING OFF
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tors (AEDs) for simulated cardiac arrest needs in the field,” says Zahra. “If you’re in a rural area, it could take 20 minutes before an ambulance can arrive. We can get it to you by drone in a few minutes and potentially save lives. We’ve done three projects with Peel, involving Toronto-based Sunnybrook Hospital.” With the University of Saskatchewan, Drone Delivery tested moving blood equivalent samples. “They wanted to test the ability of temperature control cargo. We can do temperature control, passive or active, with all three of our drones. And we can ship vaccines, if needed.” Aruja says, “Just over a year ago, the Canadian Advanced Air Mobility Consortium formed, which is driving advocacy on the west coast. They’re really working from what they call the triple bottom line. This technology is being adopted because we’ve been successful in gaining social license to use it. From an investment perspective, you need to understand the social rational. It’s not by coincidence that the first trials of this technology are with blood plasma or organ transplant delivery or COVID testing. That’s by design to make sure that socially responsible things are happening.”
“As drones become more popular the public and government need to understand that the technology will never be perfect.” The biggest challenge for many countries is regulatory. Kirk says that it’s illegal to fly drones over people. “There are certainly liability issues. But cars have been around for over 100 years and sadly there are still collisions and deaths. As drones become more popular the public and the government need to understand that the technology will never be perfect. The government and Transport Canada need to communicate that any kind of automated technology, ground or air, will never be perfect. It will be safer than human driven, but never perfect.” Canada is ahead of the game in regulation. Last fall, Transport Canada added what it’s calling Advanced Air Mobility on its regulatory
roadmap. “It’s in the plan and that’s big time,” says Aruja. “If you’re an investor, that’s a measurable risk reduction statement.” Aruja says there is a reason why Canada Post is interested. It has a mandate to deliver to every Canadian address, which has some geographically difficult locations. “It really started to accelerate during the pandemic, but it’s no surprise that pre-pandemic London Drugs was testing the technology. And there’s a whole infrastructure piece that comes with it. It involves not only customers but also municipalities, which are starting to embrace it and understand how you might rethink cities of the future.” While Drone Delivery Canada can drop parcels in remote locations based on GPS for emergency situations, its preferred model is having designated depots (DroneSpots) where there are security cameras, a weather station, barcode scanning and access control. “Real estate developers, who are developing homes, condos and shopping plazas have reached out to us regarding integrating such depots into future developments,” says Zahra. “First mile, last mile are major pain points for couriers. That last mile could be more than 60 per cent of the cost. If you look at e-commerce specifically, the market is saying 13 per cent of e-commerce deliveries could be by drone by 2025. Even if you ignore health care and other applications and just look at e-commerce, the drone delivery market could go up to 40 per cent by 2030.” EFFICIENCY AND PRODUCTIVITY It’s about economic efficiency and productivity and drone cargo delivery is a stepping-stone to autonomous air taxis for people. “The only reason drones exist in the marketplace today is because they’re cheaper to get the job done, as well or better than the traditional way of doing business,” says Aruja. “I had a meeting with Airbus, one of the largest producers of helicopters. They showed the cost benefits of potentially going to this autonomous air taxi. These are people who understand the numbers better than anyone in the world because they own the numbers. It was staggering.” There are many big hitters from the aerospace industry getting into the autonomous air mobility game. A quick Google search will provide an overwhelming number of projects and game-changing technology. Aruja advises understanding where the costs and opportunities are. “The regulatory uncertainty continues to be reduced on an ongoing basis. It’s happening quicker than you think. If you want to preserve your competitive position, this is something you need to be aware of.” SP
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BY MICHAEL POWER
BUILDING BEYOND COVID-19 DIGITAL EVENT PROMATDX FOCUSES ON RESILIENCY, INNOVATION The venue may have been digital, but that didn’t stop over 17,000 supply chain professionals from attending ProMatDX, MHI’s annual manufacturing and material handling show. The online event, held April 12-16, saw attendees learn about supply chain equipment and technology innovations. Among the keynote discussions was Beyond COVID-19, a panel focusing on lessons from the pandemic and building resiliency. Panelist Carmela Hinderaker, senior director of business continuity and customer support at C&S Wholesale Grocers, said that resiliency for her organization meant ensuring stores receive their orders within a window of 12 to 24 hours. For fellow panelist David Lusk, director, FedEx Global Security Operations Center, resiliency equals elasticity and the ability to flex capacity or the network. Rick McDonald, senior vice-president and chief product supply officer 22 JUNE 2021
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at Clorox, saw resiliency as preparation for unexpected events, responding quickly, then moving from disruption to a stable state. To prepare for a crisis, McDonald said that Clorox runs efficiently at all times to model future capacity requirements. The company focuses on supplier relationship management as well as operating on a continuous improvement model. Lusk emphasized FedEx’s teambuilding, not only across the business but also industry segments. Teambuilding pays off when challenges arise. The company’s COVID-19 response was informed by past events, such as the 2009 H1N1 outbreak, he noted. “All of that work has gone on the front end before you need it, and that’s critical,” Lusk said. TECHNOLOGY FOCUS Each year, MHI presents the results of its industry report. This year, moderators John Paxton, CEO of MHI and Thomas Boykin, supply chain specialist leader at Deloitte, led a panel through the report’s main points. Panelists included Randy V. Bradley, associate professor of information systems and supply chain management, Haslam College of Business, The University of Tennessee; and Annette Danek-Akey, executive vice-president of supply chain at Penguin Random House. One survey focus was technology and among those surveyed, 83 per cent believe digital will become the predominant model within five years; 22 per cent believe that model has already arrived. The report outlined how much companies have adopted leading technologies, or when they planned to, tracking 11 technologies based on how they impact supply chains. The report found that 57 per cent of companies surveyed use cloud computing and storage, while 44 per cent have adopted inventory and network optimization. Sensors and automatic ID came in third with 42 per cent, followed by robotics and
The report found that 57 per cent of companies surveyed use cloud computing and storage, while 44 per cent have adopted inventory and network optimization. automation at 38 per cent. Overall, 30 per cent of organizations have adopted predictive analytics, while IoT weighed in with 27 per cent. Next up was AI (16 per cent), then AV and drones (21 per cent). The report highlights skills that professionals will need over the next five years to work with digital supply chains. Project management and leadership ranked the highest, with 41 per cent citing it as most important. That was followed by strategic thinking and problem solving, at 40 per cent. Supply chain management (degrees and certifications) came in at 32 per cent, while 31 per cent cited analytics, modelling and visualization. Bradley said he was encouraged by the report’s findings that 49 per cent are still increasing technology investment. But he warned that investing too early can also be as detrimental. The panel discussed developing business cases for technology adoption. Danek-Akey recommended highlighting core competencies that technology enables. Also, look within your own area when developing a business case. “If you want to talk about e-commerce investment, go to the person who is in charge of your e-commerce platform, or in charge of that P&L, and ask them, ‘what do you need from me to be able to create your business case and grow?’” she said.
Panelist Megan Smith, CEO of Symbia Logistics, stressed an integrated supply chain – a notion that’s critical due to the pandemic and recent technological advances. Ensure your systems are communicating properly and that complicated integrations are seamless, Smith stressed. Don’t overlook simple integrations. Ensure there’s a strategy in place and someone who keeps stakeholders aligned. Fellow panelist Erin Donnelly, supply chain development director at Home Depot, offered advice on prioritization. Understand where the starting point is, Donnelly advised, including analyzing the industry, competitors and other factors. Skillful mentoring is essential to leadership, said fellow panelist Chaneta Sullivan, Esq., director, safety, quality and compliance, Chick-fil-A supply. Sullivan noted it’s equally as important to influence the team you’re on, as the team you lead, since that can make it easier to get things done. “When your team wins, you win,” she added. “That’s helped me when I’ve led in that way.” The winners of the 2021 MHI Innovation Awards were also announced during the online conference. This year, ThruWave, Inc. won Best New Product for its ThruWave X2 mmWave Imaging System. The Best IT Innovation award went to 4Front Engineered Solutions for 4SIGHT Connect Digital Gate. Packsize International LLC took home Best Innovation of an Existing Product with their Packsize X7 Automated In-line Packaging and Fulfillment Solution. SP
WOMEN LEAD THE WAY Another panel focused on women in supply chain, with panelists discussing steps to achieve success. SUPPLY PROFESSIONAL
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Fleet Management
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Road test Driving the Ram ProMaster.
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Mid-sized roundup What’s new in midsized vehicles.
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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In with the new Do’s and don’ts of vehicle replacement.
EDITORIAL INQUIRIES: Michael Power, 416-441-2085 x110, michael@supplypro.ca
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Gathering data Trends in the telematics world.
ADVERTISING INQUIRIES: Alex Papanou, 416-441-2085 x101, apapanou@iqbusinessmedia.com
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Fleet Management By Howard J. Elmer
Designed to meet demand The 2021 Ram ProMaster In the commercial van market, the ProMaster by Ram is unique with its front-wheel-drive (FWD) system. With its transversely mounted front engine it offers reduced overall weight and complexity by locating all components beneath the cab. This also means that the chassis cab model has a completely clean deck back of the cab. This benefits upfitters in countless ways – all of which improve aftermarket design and offer cost savings. The FWD setup also keeps the cargo-load floor height and step-in height low. This trait alone is one that is much appreciated by an operator getting in and out of the van all day. Another advantage to the FWD system is traction. It’s always better to pull than push in slippery situations like snow. Improved traction comes from having the powertrain weight on top of the front wheels. The overall 24 JUNE 2021
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result of this design for ProMaster is a purpose-built, highly customizable van body that is unique among its competition. It’s designed to meet the demands of commercial customers and upfitters.
Euro roots
ProMaster has been selling in Canada for the past five years, however it’s worth noting that it’s a cousin of the Fiat Ducato van. The ProMaster we now have in Canada is descended from this van. Mind you, this is a common thread among the other van providers. Mercedes-Benz’s Sprinter and Ford’s Transit both originated in Europe. The key difference is that most of the old-world vans are diesel powered while the Canadian version of the ProMaster uses the 3.6L Pentastar V6 gas engine as its standard powerplant (280hp and 260lbs-ft of torque). It is paired
with a six-speed automatic transmission. Of note for 2021, the diesel option is no longer available. The Pentastar V6 is now the sole powertrain. Competition in this livery segment is brisk; and while vans don’t change much year to year, each manufacturer keeps looking for customer advantages. Frankly, it makes sense. If you wonder about the value of this market to the manufacturers, consider that the commercial van market in North America can consume as many as 325,000 units a year. The ProMaster is built on three different wheelbase lengths – 118, 136 and 159 inches. The cargo van body comes with either a low or high roof. As for the gross weight vehicle rating, it’s offered as 1500, 2500 and 3500 series vehicles. In all, the ProMaster can be ordered in any one of 18 different configura-
tions. This includes a Chassis Cab Cutaway on the 3500-series version. In addition to the cargo van models, ProMaster can also be ordered as a passenger window van. ProMaster has certain best-inclass features, including standard V-6 horsepower; turning diameter; standard interior cargo height; load-floor height; cargo width between wheel wells; and maximum cargo width. For 2021 there are also a few new standard features such as Crosswind Assist, which helps the driver stay on course in windy conditions. A range of new safety options are available this year, including blind-spot monitoring with rear cross-path detection, forward collision warning with emergency brake assist and ambient/ courtesy lights. Class-exclusive digital rear-view mirror is available to replace the traditional rear-view mirror with a 9.2-inch-wide LCD monitor. A new factory-installed trailer hitch option was new in 2020 – but is worth mentioning. It increases the max tow rating to 6,800lbs. Lastly, (late availability this year) is a monitoring system called Ram Telematics, which will interest fleet managers. Mopar offers an electronic vehicle tracking system as well. A new standard item on ProMaster now is a speed limiter. This is activated by the dealer and can be set at 100, 105, 110 or 120km/h. The ProMaster is becoming popular with upfitters, either as a chassis cab with clean frame rails or as a van body suited to institutional purposes. To that end, Ram is offering prep packages targeted at specific vocations, for instance, ambulances. They also offer the same prep for recreational vehicle builders. Also available from the factory is an interior cargo shelf group. This option requires the cargo partition installed. FM/SP FM/SP SUPPLY PROFESSIONAL
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We’re in the business of driving yours forward.
Behind every thriving business is a team you can count on. The all-new TUCSON brings capability, reliability and impressive fuel economy to you, your company and everyone that drives it forward. Kevin Forodi Senior Manager, Fleet Sales CPO and Remarketing kforodi@hyundaicanada.com (905) 948-6701
Zohair Ahmed Manager, Commercial and Government Fleet Sales zahmed@hyundaicanada.com (905) 948-6822
Julian Cheng Fleet Analyst jcheng@hyundaicanada.com (905) 948-6764
Neil O'Donnell Remarketing and Fleet Analyst nodonnell@hyundaicanada.com (905) 948-6891
hyundaicanada.com
™/®The Hyundai name, logos, product names, feature names, images and slogans are trademarks owned or licensed by Hyundai Auto Canada Corp. All other trademarks and trade names are those of their respective owners. Pre-production model shown, may not be exactly as shown.
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Fleet Management By Stephanie Wallcraft
Mitsubishi Outlander PHEV
Nissan Altima If the lack of available all-wheel drive is what causes some buyers to shy away from mainstream sedans, then the Nissan Altima is worthy of attention. Equipped with standard all-wheel drive in Canada, the Altima uses its 2.5-litre four-cylinder engine to power all four wheels with 182hp and 178lbs-ft of torque while still achieving a fuel efficiency of 9.4 litres per 100km in the city and 6.7 on the highway. With a starting price of $29,498 in the entry-level SE grade, the Altima offers a cost-effective way to add mid-size vehicles with all-wheel drive to Canadian fleets.
Kia Sorento Kia’s mid-size Sorento enters a new generation for the 2021 model year while remaining one of the most affordable ways to get into a mid-size three-row SUV with a starting price of $33,995. Two
engines are offered, each a 2.5-litre four-cylinder; the entry-level version makes 191hp and 181lbs-ft of torque while using 10.1 litres per 100km in city driving and 9.2 on the highway, while the upgraded turbocharged engine generates 281hp and 311lbs-ft while consuming 11.1 and 8.4 litres respectively. An all-wheel drive version of the hybrid Sorento is expected to go on sale in Canada late in 2021.
The Mitsubishi Outlander PHEV checks a lot of the right boxes for fleets. With a starting price of $44,198, it qualifies for partial incentives from both the federal iZEV program and existing provincial EV rebate programs. Its 2.4-litre four-cylinder engine combines with twin electric motors to generate a total system output of 221hp while using a combined average of 3.2 litres-equivalent per 100km and offering an electric-only range of 39km. All-wheel drive is standard, plus this is one of the few plug-in hybrids that works at a Level 3 charger for quick battery top-ups on the go, and it’s offered with a 10-year, 160,000km limited powertrain and battery warranty.
Mercedes-Benz GLE
City runners, highway haulers Mid-size fleet options for 2021 The proliferation of electrified options in today’s automotive market is giving fleet managers more choice than ever – and introducing more factors to consider in making those selections. Between fuel efficiency, all-wheel drive capability and price range, it’s easier than ever to customize fleets to best meet the tailored needs of both drivers and owners. Here’s a closer look at eight of the best mid-size options for fleets on the market in Canada today, from city-friendly runabouts to highway haulers and everything in between.
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Fleets with a need for luxury vehicles will want to consider the MercedesBenz GLE, a mid-size SUV that come as either a simplified entry model or a to-the-nines grade. The latter is the GLE 350 and is a suitably premium vehicle, priced from $69,900 and fitted with a 2.0-litre turbocharged four-cylinder engine that produces 255hp and 273lbs-ft of torque while burning 12.4 litres per 100km in city driving and 9.0 on the highway. The GLE 450, priced from $77,500, upgrades the engine to a 3.0-litre turbocharged inline-six-cylinder engine fitted with the EQ Boost mild hybrid system, which makes 362hp and 369lbs-ft while consuming 11.4 litres per 100km and 9.2 on the highway.
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Subaru Outback There’s nothing else on the market quite like the Subaru Outback. Its dimensions give it a feel that’s an ideal compromise between a wagon and an SUV, and standard all-wheel drive, 22cm of ground clearance, and off-road chops make it a great choice for more rugged applications. Starting from $31,195, the Outback is offered with two engine options. The entry-level engine, a 2.5-litre
with four horizontally opposed cylinders, makes 182hp and 176lbs-ft of torque and averages 9.0 litres per 100km in city driving and 7.1 on the highway. The upgraded engine is a 2.4-litre turbocharged horizontally opposed four-cylinder that’s good for 260hp and 277lbs-ft of torque, and it averages 10.1 and 7.9 litres per 100km respectively in the top two grades.
Ford Mustang Mach-e An EV’s efficiency depends heavily on its weight, which is why there aren’t yet a lot of reasonably priced battery electric vehicles much larger than subcompact. Ford has therefore filled a market gap with its new Mustang Mach-e, which with an overall length of 4,724mm falls firmly into mid-size territory. Although it doesn’t qualify for the federal government’s iZEV rebates with a starting price of $50,495, it does qualify for rebates in Quebec and BC in its lower-priced configurations. Offered with both standard and extended range batteries and in rear- or electric all-wheel drive, and a maximum range in the latter of 435km, the Mustang Mach-e hits the market ready to electrify a variety of applications.
Toyota Venza Toyota’s mid-size Venza returns to the company’s line-up after a fouryear hiatus, and this time it comes equipped with standard hybrid drive. Not only does this mean that hybrid fuel efficiency is available at every price point, including in the base model priced at $38,490, but electric all-wheel drive is also standard equipment since the electric motor powers the rear axle. Combined with the Venza’s 2.5-litre four-cylinder engine, it has a total system output of 219hp while averaging 5.9 litres per 100km in city driving and 6.4 on the highway, figures that are remarkably low for any SUV of this size that doesn’t require a plug.
Hyundai Sonata If what you really need is wheels and you can take ground clearance, allwheel drive and cargo capacity out of the equation, don’t let the market’s heavy lean toward SUVs distract you from the humble mid-size sedan. The Hyundai Sonata comes in both gaspowered and conventional hybrid configurations, and its dramatic styling and unique lighting treatment ensure it comes across as anything but boring. In the gas version (from $27,149), two engine options are
offered with the entry-level 2.5-litre four-cylinder producing 191hp and 181lbs-ft of torque while consuming 8.8 litres of fuel per 100km in city driving and 6.4 litres on the highway. Opt for the hybrid (from $40,199) and those figures drop to 5.3 and 4.6 respectively from its 2.0-litre fourcylinder engine and electric motor with a combined system output of 192hp and 271lbs-ft.
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Fleet Management By Katherine Vigneau, CAFM
In with the new Taking an informed approach to delayed fleet replacement 1. Fleet professionals understand optimum replacement and how to work towards the lowest total cost of ownership (TCO). It is intuitive that capital costs (depreciation) decrease when they are spread out over longer periods and operating costs increase as a vehicle gets older, is less fuel efficient and requires more maintenance. When possible, vehicles should be replaced when the TCO is at its lowest, usually just before a spike in operating (maintenance) costs. Many organizations use technology to calculate optimum replacement points for various equipment classes and the yearly budget. Optimal replacement can only happen if an organization can dedicate sufficient budget for fleet. Best-laid replacement plans fail the first year that funding is not forthcoming. In a perfect world, fleet professionals would adhere to optimum lifecycles and minimize TCO over multi-year plans. The pandemic means a far from perfect world. Budgets have been redirected to purchase of PPE, increased cleaning, workplace modifications, enhanced technology to allow work from home and other changes. These funds must come from somewhere and the fleet replacement budget is an attractive target. Decision-makers often see delaying fleet replacement as an “easy out,” as the impacts may not be known for years. Diverting fleet replacement funds to a higher operational priority may be inevitable. Although delayed replacement is not new, it is exacerbated by the 28 JUNE 2021
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COVID-19 crisis. I recently spoke with a fleet manager who is living this reality. After a devastating fire, followed by floods, his fleet replacement funding was zero in two of the past five years. He is now facing another year of no funding. The organization may not have other viable options. But they are digging a hole by delaying fleet replacement without a workable plan for longer-term fleet renewal. There’s no ideal solution. Fleet professions must act counter to best practice to meet priority goals. When delayed replacement is inevitable, fleet managers should take these steps:
Understand the budget reduction. In large organizations, it can take time to communicate information. Budget cuts rumours may hit the fleet office before official announcements. Fleet managers must understand the decision and reduction to capital and/or operating funds. They should be ready to perform “what if” analysis and offer alternatives. Ideally, the fleet manager is involved in the budget process and can ensure the impacts of any reductions are known. Evaluate short- and long-term costs and impacts. Cutting replacement funding has immediate and longer-term consequences. The fleet manager should evaluate the immediate impact on operating costs and service delivery. Keeping vehicles longer means that fuel and maintenance costs will rise. Maintenance needs may exceed shop capacity and outsourcing may
increase. More operating funds may be needed to the fuel or outsourced maintenance cost centres. If funds are not available for these increased requirements, downtime will increase. This can compromise key services delivery – it may take longer to plough roads, collect garbage or repair bridges. Downtime can mean lost productivity as crews wait for a vehicle. This operational degradation is difficult to quantify but should factor into the delayed replacement decision. Educate decision-makers on these impacts. Fleet professionals must quantify these impacts and educate decision-makers. They must paint a picture that short-term impacts grow exponentially over time. Every year that replacement funding is insufficient, the hole gets deeper and more difficult to make up. Decision-makers need to be reminded that withholding $2 million in funding may result in an increase to total fleet spend of twice that over 15 years. Fleet managers should use models to demonstrate these impacts. Explore less costly alternatives. Knowing that delays to fleet replacement postpone these expenditures, organizations should ask tough questions about whether a program or service can be discontinued to achieve savings. Can garbage service be every two weeks, instead of weekly, or can recreational facility hours be reduced? Either would mean reduced services but translate into savings.
Kate Vigneau, CAFM, is director (fleet and Canada) at Matrix Consulting Group, Ltd. (US) and MCG Consulting Solutions (Canada).
Before suggesting service level reductions, fleet professionals must be certain their house is in order. A fleet utilization review may reveal units that are lightly used and can be remarketed or pooled. The use of rentals, employee-owned vehicles and public transit may help alleviate fleet replacement costs. Implement wisely. Even after explaining the economics of fleet and exploring alternatives, some organizations will reduce replacement funding. Fleet managers must then plan and execute, making the best decisions under the circumstances. Using a points system that accounts for vehicle age, mileage or hours, maintenance spend and condition can help to minimize long-term impact. Abandoning the multi-year replacement plan is not the answer. Changes are needed to plan to reflect the new reality. Once adjustments are made to the multiyear replacement plan, decision-makers should be told of cost impacts and the risks associated with further reductions. Fleet managers will be asked to delay fleet replacement in tough times. They must ensure decisionmakers understand the impacts and have alternatives to delayed replacement. After the final decision to reduce fleet budgets, they must make informed decisions that minimize impacts. FM/S FM/SP SUPPLY PROFESSIONAL
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Fleet Management By Roger Constantin
An essential fleet tool
Choosing the1. right telematics Today, managing your vehicle assets is all about data. Data will give you all the details that you need to make the right choices about your fleet. It’s a data driven approach; the principal focus with such an approach is to base your decisions on facts. As you might have heard, the devil is in the details. One way to get the data you need is to use vehicle telematics. This tool will be able to get you the information you need to: Right-size your fleet Track driver behaviours Achieve your preventive maintenance goals Reduce greenhouse gas (GHG) emissions Support your lifecycle analysis
Rightsizing your fleet
The definition of rightsizing your fleet includes the following components: having the right number and right kind of vehicles, having them at the right location, as well as at the right time. While you can make this analysis without a telematics tool, you will not be able to get the same calibre of information, especially at the right time. That analysis will also confirm if you have enough vehicles, if you need more or, as in most cases, whether your fleet has too many vehicles. As mentioned, you can achieve this analysis without telematics. But by using such technology, you will be able to illustrate, with scientific facts, a clear
picture of the state of your fleet. Once that’s done, you are still just at the beginning of the process. You will be challenged by the end users of the vehicles. My advice is to take the time to prepare top management, including your own boss, and present to them a blueprint of the continuous improvement approach and how telematics fits in.
you’ve taken steps to get control of your vehicle. In fact, you will be able to provide an input into your risk management policy. Finally, telematics will offer you the possibility to geofence your vehicle, so you will make sure that the vehicle stays within a specific territory.
Driver behaviour
Now let’s discuss telematics products. We should distinguish between two major options. First, most OEMs have their own tool, including all the support a fleet would need, such as a dashboard to track your fleet asset and produce driver scoreboards. The main advantage with their products is the integrity of the data. The other option is to use tools developed by a third party or service provider. Their products are developed like the OEM to have the same features, but they need an agreement to include them in their solution. Some OEMs have preferred services providers. Your decision on which of those two options to select will also be influenced by the type of fleet you are managing. For example, do you have only cars or heavy vehicles?
Driver behaviour is all about how users utilize vehicle assets. Without telematics, you will have little data to produce a scoreboard for each driver. You will not be able to measure speed, idling time, harsh braking, fast starts or anything else. With a scoreboard, each driver will have a monthly report that can be compared to the group in which you driver belongs. If you have more than one driver per vehicle, you will be able to identify each driver’s performance. In my experience, I can confirm that without telematics, it is impossible to reduce excessive speed from users. You might even face legal actions that could have a major impact on your organization. If you have some problematic drivers, you can access the right data to take action directly with them. You will be able to present facts regarding their driving behaviour. With telematics, you will be able to get more specific details when an accident occurs. You will be able to demonstrate to your insurer that
2.
OEM versus service providers
Preventive maintenance
With telematics, you will be able to reach your maintenance program goals by using the input of the data, especially for heavy vehicles or specialized equipment. Telematics will
Roger Constantin is a fleet management expert. Reach him at roger.constantin@ conseilsrc.com.
Telematics will offer you the possibility to geofence your vehicle, so you will make sure that the vehicle stays within a specific territory. send alerts on when mechanical components require maintenance, so there will be heads up.
Reduce greenhouse gas
With telematics, you can get the idling time of your asset. Some telematics providers differentiate good idling from bad idling. This is included in the scoreboard. There is a lot to save.
Lifecycle analysis
Almost all the data that you will received can be converted in cost. You can then use it in your lifecycle analysis. Finally, with the arrival of electric vehicles (EVs), you will need to be aware of the driver’s behavior; telematics should give you the needed data. FM/SP FLEET MANAGEMENT SUPPLYPRO.CA 29
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THE LAW—BY PAUL EMANUELLI
COURT OF PUBLIC OPINION ETHICS WATCHDOG CLEARS TRUDEAU IN “NOT PERSONAL, STRICTLY BUSINESS” RULING In his May 2021 report entitled Trudeau III Report, Canada’s federal conflict of interest and ethics commissioner Mario Dion cleared Prime Minister Justin Trudeau of any Conflict of Interest Act breaches connected to the WE Charity (WE) contracting scandal, finding that the appearance of conflict did not constitute actual conflict under the statute. However, the ruling exposed significant gaps in the conflict statute, showing why we need to look beyond its minimum statutory standards to avoid future contracting controversies. Dion’s report found that Trudeau did not influence the government’s decision to recommend the WE organization for the impugned contract awards, that the Prime Minister had no knowledge of those recommendations before they were brought to federal cabinet, that neither Trudeau nor his spouse had any personal relationship with the WE organization’s leaders, and that Trudeau gave no improper preferential treatment in those contract awards. Dion’s report also found that Trudeau’s involvement in the award decisions was not motivated by his or his family’s private interest in winning future work from WE in connection with those new contracts. The reasoning behind those conclusions exposes glaring gaps in the federal conflict regime. For example, in dealing with section 7 of the statute, Dion found no improper preferential treatment was given by Trudeau since there was no prior personal relationship between Trudeau and the representatives of the WE organization. While arguably a technically cor30 JUNE 2021
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rect interpretation of the statute, Dion’s analysis glossed over the possibility of preferential treatment in the absence of direct personal relations since the statute apparently fails to capture preferential treatment when it’s not personal, but strictly business. Further, even though he confirmed that members of Trudeau’s family were paid by the WE organization for multiple speaking engagements, Dion dismissed the conflict allegations since Trudeau himself was never paid by the WE organization and since neither Trudeau nor his spouse had any personal relationship with the WE organization’s representatives. Again, based on the “not personal, strictly business” loophole, Dion’s report sidestepped the fact that past business relations between a private organization and the family members of senior government decision-makers, even where there are no personal relations, creates obvious conflict concerns over downstream government contract awards. Finally, in considering the statutory definition of conflict, which refers to the “furthering” of private interests, Dion concluded that Trudeau was not in a conflict since the award decisions were not motivated by Trudeau winning future personal work for himself or his family in connection with the new contract awards. By interpreting the “furthering” of interest as looking to future private benefits, Dion’s analysis glossed over the main focus of the scandal, which was the appearance of payback to the WE organization for past personal benefits enjoyed by the Prime Minister’s family members.
Even if we accept, as we should in the absence of contrary evidence, that there was no actual retroactive quid pro quo motivating Trudeau’s decisions in the WE contract awards, and even if we accept that there was no statutory recusal required based on Dion’s highly technical reading of the statute, Trudeau himself subsequently admitted that the optics of awarding high-value government solesource deals to an organization with prior business dealings with his family members should have resulted in his voluntary recusal from those award decisions. Moving forward, we need to plug these statutory loopholes as has been done in other jurisdictions. For example, to discourage “pay to play” schemes involving future government contract awards made as payback for past private benefits, New Jersey prohibits a company from doing business with the government if that company made a political contribution to the governor’s election campaign. In its February 2017 decision in Della Pello Paving, Inc. v. New Jersey, a New Jersey appeals court rescinded a $4.2 million contract award because a company made a $500 payment to the governor’s political fundraising dinner. No evidence of personal relations or personal influence was required in that ruling. The political donation was sufficient grounds to disqualify the company from future business. Giving work and other private benefits to the family members of senior politicians is a way that companies could try to improperly influence future government con-
Paul Emanuelli is the general counsel of The Procurement Office and can be reached at paul.emanuelli@ procurementoffice. com.
“Giving work and other private benefits to the family members of senior politicians is a way that companies could try to improperly influence future government contract awards.”
tract awards. Whether those companies are in fact motivated by, or successful in, exercising such improper influence is irrelevant. To avoid the appearance of impropriety, our system needs clearer standards since, in the final analysis, the WE contracting scandal did little to instill confidence in government contracting in the court of public perception, where the battle for trust in our institutions is ultimately won or lost. SP SUPPLY PROFESSIONAL
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