OCTOBER 2023
PEOPLE, CONNECTION, COMMUNITY LCBO’s Nick Nanos on how supply chains give back Supply chain visibility
Automation Continuing education 2024 Buick Encore GX Avenir Third-party logistics
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Workforce Shortages: 6 Unexpected Costs for Manufacturers
Besides better benefits and compensation, manufacturers are cobbling together a patchwork of tactics to maintain production. But doing more with less is starting to cost manufacturers more.
NO MORE NEW BUSINESS Almost half of manufacturers were unable to take on new business and lost revenue opportunities in 2022.
RECORD-BREAKING PRODUCT RECALLS
SLOWED DOWN EXPANSIONS
A lean pool of new, inexperienced, or undertrained workers are prone to make more mistakes that impact product quality. Is it a coincidence that a record-breaking 900 million of product units were recalled in the first quarter of 2022?
This year, over 59% of manufacturers say the inability to find enough workers has impacted decisions to make investment plans or expand.
SMART FACTORY CYBER RISKS © Avetta 2023, LLC
MORE WORKER INJURIES & FATALITIES Nearly 66% have increased reliance on temporary staffing services. Almost 10% reported using an “on-demand” labor force (like gig workers) to meet production demands. But temporary workers and subcontracted employment have significantly higher fatal and nonfatal injury rates than permanent employees in standard jobs.
Manufacturers are turning to robotics, co-bots, and other connected technologies to make up for the shortage of human workers. Cyber risk exposure will only increase as manufacturers embrace and scale automation. Nearly 50% of those surveyed say sites were targeted or victim of a cyberattack - and say the attacks have increased in frequency – as often as daily or weekly.
WANT TO ACHIEVE SAFER, SMARTER, MORE PRODUCTIVE OPERATIONS?
© Avetta 2023, LLC
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The Avetta One platform helps manufacturers across the world achieve safer, smarter, more productive operations.
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VOL.65 No.5 OCTOBER 2023 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
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8 CLEAR SIGHTS Improving supply chain visibility. 10 SUPPLY CHAIN ON TAP Nick Nanos and the LCBO foster community. 14 ROBOTS ON THE JOB In manufacturing, robots can do almost any task workers can.
ALSO INSIDE 20 GROWING WITH CONTINUING EDUCATION The value of always learning.
4 UP FRONT
22 3PL LANDSCAPE The adaptable, tech-savvy 3PLs of today.
6 IN THE FIELD
5 BUSINESS FRONT
7 INDUSTRY NEWS 30 THE LAW
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UP FRONT
GENERATIVE AI’S POTENTIAL Last Christmas, my family got a Roomba robot vacuum cleaner as a gift. It’s really a remarkable little piece of technology, the kind of thing science fiction shows on television featured when I was a kid. The device vacuums your house autonomously, leaving you free to do other things. It learns and maps your home. The more you use it, the better it learns how to do this. It learns to dodge objects in its path. Some models (not ours, sadly) can respond to voice commands. Yet, the device sat in its box for almost eight months before we unpacked and started using it. Why? Good question. Perhaps it was fear of new technology or stubborn thinking that we could do a better job. The vacuum cleaner, of course, uses artificial intelligence and machine learning to perform these feats. Not surprisingly, manufacturers are adopting such technology faster than my family. In his article on page 14, writer Jacob Stoller looks at how companies are using generative AI to transfer human expertise to robots and other mechanical devices. Generative AI, a subset of artificial intelligence, uses algorithms to generate new content or designs from scratch, given a set of rules and inputs. In the past, it’s been tough for robots to match the flexibility of their human counterparts in manufacturing or supply chain settings, our article says. Yet this flexibility has become all the more valuable as changes in work accelerate. Generative AI allows workers to guide a robot, showing it how to do tasks in a more intuitive, human manner. An example the article gives is of an operator guiding a robotic arm to pick up an object. The AI can learn from the different trajectories that the human guide takes it through. There are plenty of cool benefits to this. It can help to deal with labour shortages. It also empowers the worker to use the product without needing lots of education or background in robotics engineering. There are multiple ways in which generative AI can be used in both manufacturing and supply chain. Organizations can employ the technology in the design and development stages of their processes. General Motors is among the companies to have done this, using it to generate several design options for parts, coming up with parts that reduce a vehicle’s weight, for example. In supply chain, the technology can anticipate demand patterns and optimize inventory management. Generative AI has been shown to be able to negotiate costs and purchasing terms with vendors in a shorter time. The technology appears to have transformative potential for manufacturing and supply chain, among other industries. There are limitations, but it seems able to multiply what human workers are capable of. As for our Roomba vacuum cleaner, we now use it all the time. Seems crazy that we kept it in the box so long.
EDITOR MICHAEL POWER 416-441-2085 x7 michael@supplypro.ca PUBLISHER ALEX PAPANOU 416-441-2085 x1 alex@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY ASSOCIATE PUBLISHER FARIA AHMED 416-919-8338 faria@supplypro.ca EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management— City of Toronto JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc. iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x3 swilson@iqbusinessmedia.com President ALEX PAPANOU
PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION Mail: 126 Old Sheppard Ave, Toronto ON M2J 3L9 SUBSCRIPTION RATES Published six times per year Canada: 1 Year $ 99.95 CDN Outside Canada: 1 Year $ 172.95 USD Opinions expressed in this magazine are not necessarily those of the editor or the publisher. 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. © 2021 iQ Business Media Inc. All rights reserved. Printed in Canada.
MICHAEL POWER, Editor 4 OCTOBER 2023
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BUSINESS FRONT—BY MICHAEL HLINKA
A TALE OF WHAT IFS AN ECONOMIC “GEDANKENEXPERIMENT” “Gedankenexperiment” is a German word that you’re likely not familiar with. It means “thought experiment.” You may be wondering why I didn’t just entitle this column “An economic thought experiment?” That’s a fair question. But then I wouldn’t have been able to show everyone how cosmopolitan I am. With that out of the way, here’s a definition: “a thought experiment is an approach to problem-solving, where rather than running an actual experiment, one conceptualizes and imagines an outcome.” Thought experiments are a recognized technique consistent with the scientific method. Albert Einstein famously used it to arrive at the theory of relativity. When it comes to postulating about economics, thought experiments are required. For example, “what would the Canadian economy look like right now if the federal government fully supported the production and refinement of as much oil as possible?” We know that the country would be wealthier. How much wealthier? Since we can’t run an actual experiment, contrasting what would be with what is, all we can do is speculate. In other words, we have to conduct a thought experiment. RECESSION LOOMING? There’s a different gedankenexperiment that I’ve been mulling over. I know the following because of Statistics Canada: inflation is running at 3.3 per cent; GDP declined marginally in June; and over the past two months, consumer confidence has plunged. It hit a multimonth high in June at 51.43, and in the past two months has come
close to a multi-month low of 46.9. I and others examine this data and are reasonably concerned that the economy may be slipping into recession, even while inflation remains at inflated levels. Maybe it’s time to tighten our belts? Perhaps I’ll sit down with my wife and decide that even though our bank account seems healthy enough, she won’t be taking our son to Florida this winter. We generally go out for dinner on Sunday nights for half price wings, but we really don’t have to do that. So, before you know it, the Hlinka family that used to save about 10 per cent of its monthly income is now saving something closer to 20 per cent, and if we do it, and everyone else does it, guess what? The economy will slip into recession and maybe, to make up the revenue shortfall, airlines might cut flights and increase prices. Now it’s time for the gedankenexperiment. What if I didn’t know the inflation number? What if I didn’t know where GDP stands? What if I hadn’t heard of consumer confidence? What if we just got rid of Statistics Canada? Would that change behaviour? My wife would have noticed that the groceries we were buying had gone up in price (she does most of the shopping). She would have adjusted what she buys, seeking out specials more aggressively. She would have shopped around, maybe buying a bit less from Whole Foods and a bit more from No Frills. And if we went out for wings on Sunday, maybe I enjoy them with water instead of the usual draft beer or two. Then, when we were doing our monthly spending review, my wife
and I would have seen that we’re doing quite well in spite of higher grocery prices. We’re lucky in that we don’t have a mortgage, so while rates are higher and this is a concern for many people, it doesn’t impact us. By the way, about half of Canadian homeowners carry a zero mortgage. My employment with George Brown College is very secure. My other income isn’t what it was pre-COVID-19, but it’s coming back slowly. My better half hates the cold weather – she deserves to head south for at least a few days in February. But don’t we need to keep track of all this economic data to help the Bank of Canada set interest rates? No, if we had governments – and I mean at all levels – that had the mandate to balance budgets, no matter what … hey, wait a second! Would this include during COVID-19? Yes. Because if this were a requirement, we would not have suffered through the unnecessary shutdown we went through. Then the Bank of Canada could maintain the bank rate at 2 per cent, come hell or high water. This would inject the certainty into the system that businesses and consumers need to make rational, long-term economic decisions. WILL TO POWER None of this will happen any time soon. Nietzsche famously said, “there is will to power where there is life and even the strongest living things will risk their lives for more power.” I would not accuse those who are currently in positions of authority to risk their lives for pretty much anything. What does characterize them is pettiness, and
Toronto-based Michael Hlinka is a tenured professor at George Brown College. He hosts a weekly podcast about wagering on professional football. His website is www. michaelhlinka.com
“I and others … are reasonably concerned that the economy may be slipping into recession, even while inflation remains at inflated levels.”
the desperate need to feel important. This is why the bean counters will continue to count beans and try to micro-manage the Canadian economy, even if it ends up hurting, rather than helping. SP SUPPLYPRO.CA 5
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IN THE FIELD—BY ERIC WOOLINGS
FINDING HIDDEN OPPORTUNITIES TIPS FOR THE SUPPLY CHAIN JOB SEARCH When I was growing up, my father owned an auto service centre. After school I would walk to the garage. If I had homework, I could sit in the office to work on it. If not, the expectation was that I put on some coveralls and got to work. Generally, the tasks were things like restocking hardware bins, filling out purchase orders for inventories that needed replenishing, cleaning and organizing the shop, and maybe the odd oil or tire change. Looking back, a few of those tasks were my early introduction to supply chain. It gave me a good work ethic. In my early teens, I discovered the job board at the employment centre, where farmers posted the need for day labourers. It was hard work walking behind a tractor picking rocks out of fields or tossing hay bales onto trailers, then loading them into the barn. Essentially, it was material handling. By day’s end, I got a handful of cash. Sometimes, I was invited back the next day. The transaction was my time and energy exchanged for money. That was my introduction to the job search process. Things haven’t changed much. I still go to a job board, for example LinkedIn or Indeed, where employers post their needs and describe responsibilities and expectations. But it is not as simple as showing up at the employer’s location, where you’re given the job. It’s more complex now. STARTING THE SEARCH The first and most important step for me was to plan. I had to decide what type of work I wanted. My experience is almost entirely 6 OCTOBER 2023
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supply chain and I wanted to continue in this area. I had to do some self-assessment. I made use of online tools and books. I sought others’ input. I wanted a role where I could use my critical thinking skills while helping others to develop. I wanted to define strategy and build a highperforming team. I determined my target. I then went to the job boards but resisted the urge simply to apply. I made note of the criteria for the jobs I was targeting, paying attention to the keywords and phrases in the descriptions. Then I refreshed my resume, ensuring to include these keywords and phrases. I sought input from professional resume writers and recruiters. Frequent advice was to ensure that my LinkedIn profile, resume, and cover letter were concise, as their purpose was to sell me. Recruiters often use LinkedIn to filter candidates. I used the features to ensure that I was presenting myself in the best possible light. I also built a simple matrix to track the jobs to which I applied. My intention was to find a contact or connection to the job that I could contact and request a referral, or at least get some insight. Along the way, I used skills in my job search that I had developed during my years in supply chain. I was essentially following an RFP process. For example, I was determining my criteria (for a new position) and identifying a list of suppliers (of jobs) to invite to participate. It was not always easy, and there were moments of discouragement. Receiving no response, or worse, generalized rejection letters, can be demoralizing. It was important
to take breaks and to reward myself for the effort. Daily, I made a point of stepping away from the effort for a few minutes. This often involved going for a long trail walk. It also required patience. Much like the RFP process, I often had to follow up with employers and sometimes cross them off the list. FORGING CONNECTIONS Networking was critical. I reached out to people I hadn’t spoken with in years because I knew that they had potential influence in my landing my target role. Who in supply chain management hasn’t done that on occasion? We all have some connections that we haven’t spoken with in too long but, when the need arises, for example when a critical shipment gets held in customs and we have to reach out to a secondary source of supply, we humble ourselves and make the request. Networking also opened opportunities that were not yet posted. About 70 per cent of job openings are not advertised on external job boards. Connecting with people within my network and letting them know of my desired targets was a great way to get visibility into some of these “hidden” job opportunities. Apparently, around 80 per cent of job openings are filled due to a relationship or referral. The job search process has become more complex than riding my bike to a farm. But it is still the same concept. Put in the time, stay focused, do the legwork, and the result will be worth the effort. Perseverance pays off. Look forward to the moment when you get to award your services to the successful employer. SP
Eric Woollings is a supply chain professional with over two decades of experience, most recently in warehousing and distribution optimization consulting.
“I used skills in my job search that I had developed during my years in supply chain. I was essentially following an RFP process.”
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NEWS
IFC, Citi boost supply chain finance in emerging markets The International Finance Corporation (IFC) and Citi will launch a $300-million pilot under IFC’s new Global Supply Chain Finance Program (GSCF). The pilot will provide supply chain finance to suppliers and buyers in emerging markets, easing constraints and boosting market resilience. Higher working capital costs and worsening unsecured financing access have increased the demand for supply chain finance. The collaboration marks the first pilot under GSCF. The program is part of IFC’s response to global supply chain disruptions and provides financing options for large and small suppliers, and international and domestic buyers. The program will focus on supply chain finance gaps for SMEs and women-owned suppliers and expand access to sustainable supply chain finance.
DDC restarts drone delivery contract Drone Delivery Canada (DDC) has restarted a contract with the federal government to operate and evaluate its drone delivery platform using its heavy-lift Condor remote piloted aircraft. The contract, first announced in March with a value of up to about $1.2 million, is with the Innovative Solutions Canada program. DDC will restart the operation, testing, and evaluation
of the capabilities of the Condor drone solution. The contract has three phases: short-range flights, long-range endurance flights, and extreme environmental testing. The multi-package payload compartment of the Condor can carry roughly 20 cubic feet of cargo. The Condor measures 22 feet long, five feet wide and seven feet tall. It has a rotor diameter of about 20ft and
is capable of vertical takeoff and landing. The Condor is equipped with the company’s FLYTE management system – the same platform used in all the company’s cargo delivery drones. Subject to regulatory approvals, the increased size and payload capacity of the Condor should unlock opportunities, including in sectors like mining, oil and gas, inspection, and emergency preparedness.
Report spotlights Canadian shipping issues
Equinor, Maersk ensure methanol supply
Buster Fetcher has released its inaugural Buster Fetcher Report, which offers e-commerce businesses an analysis of shipping performance across Canada to make decisions to enhance their operational efficiency. The report identifies cost-saving opportunities by analyzing shipping patterns, carrier choices, and delivery times nationwide. This data helps businesses to reduce overhead while maintaining expected delivery standards, the company says. “We crafted this report to provide businesses with insights into the role that shipping plays in their operations and how misconceptions have resulted in wasted dollars,” said Matt Lessard, Buster Fetcher co-founder. “We discovered that over 90 per cent of the businesses who ship using popular carriers can cut shipping costs, even if told otherwise.”
Maersk and Equinor have signed an agreement to secure a supply of green methanol for Maersk’s new methanol-enabled feeder vessel into the first half of 2024. The agreement ensures the supply for the ship from when it starts operation. The biomethanol is made from biogas from manure. The biogas is upgraded to biomethane and injected into the gas grid and the methanol is produced from the biomethane in the grid. The existing European biogas certificate system is used to trace the attributes of the biomethane to the biomethanol and safeguard against double-claims. Green methanol can therefore be produced using existing infrastructure and plants. Long term, the feeder vessel will be fuelled by e-methanol from a plant in Southern Denmark, operated by European Energy.
Hangcha Forklift Canada opens Mississauga warehouse Material handling equipment provider Hangcha Forklift Canada has opened a warehouse in Mississauga, Ontario. The 30,000sq-ft facility opened on October 3. The new location will complement the existing warehouses in Vaudreuil-Dorion and Vancouver, the company said, allowing it to maintain an inventory of 550 units. “Selling Hangcha Canada material handling
equipment allows our staff to offer the Ontario market a full line of high-quality and well-priced electric and internal combustion forklifts and reach trucks,” says Chris DiBerto, sales manager at Ri-Go Lift Truck Ltd. “Hangcha Canada offers a broader product range than most original equipment manufacturers with stock at three distribution centres in Canada.”
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BY MICHAEL POWER
tor: we receive daily data from some partners, but only weekly data from others. Once we get this information, it’s a bit like reading a newspaper. A lot of these events have already occurred, and your ability to influence them has also passed by.”
A CLEAR VIEW
A COMPLEX WORLD MAKES SUPPLY CHAIN VISIBILITY MORE IMPORTANT THAN EVER It’s impossible to solve a business problem if you don’t know what caused the dilemma, or even if a one exists. In supply chain, that includes knowing where goods are. Meanwhile, the world remains chaotic and complex, and supply chain operations have become increasingly intricate. That makes it as important as ever to strive for visibility. The task of ensuring visibility provides supply chain professionals
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with the opportunity to show their value, says Alma Arzate, CSCMP, PMP, C.P.M., CPIM and senior director, global supply chain logistics, at Apotex, Inc. To begin, Arzate says, when talking about visibility, think of the supply chain as a network of interconnected processes and systems, rather than the linear ‘chain’ that comes to mind. Even within a single company, it can be a struggle to visualize all the steps in a rela-
tively simple supply process. When multiple partners are added – suppliers’ suppliers, customers’ customers, freight forwarders, ocean, air and land carriers, customs agents, governments, and so on – connecting all the dots becomes challenging. “The systems that each of the partners use are not interoperable, meaning, they are not designed to work together,” Arzate points out. “Information latency is another fac-
STAY CONNECTED Bernie Uhlich, president and managing director of Uhlich Associates Inc., likens the complexity of maintaining supply chain visibility to an air traffic control system – there are schedules to meet, competing expectations, and communication is vital. To keep visibility, supply chain professionals must be connected to their partners and well informed with reliable and timely data. Companies need a holistic, systems approach to ensuring visibility, says Uhlich. Supply chains consist of multiple ‘nodes,’ similar to a network. This can include suppliers in disparate locations like India, China, and Northern Ontario, to name a few examples. “The first thing is, you’ve got to understand, what does my supply chain look like?” Uhlich says. “What do we want to have visibility of?” A next step to ensuring visibility is to have a plan to deal with issues as they arise. Companies can run into problems, for example, when they place a purchase order with a supplier for a product without making follow-up arrangements for what happens if the supplier runs into problems along the way. There can be a lack of communication, no feedback loop, or a dearth of shared rules of engagement with suppliers. “There’s no communicated plan or horizon for a reaction,” Uhlich says. “If you’ve got a three-month window to get the thing you probably want your plan to go on for three months, and maybe six months so that the next orders are in the queue. And you can keep tracking the orders within that. You know there’s a reasonable horizon where you can still react if there’s a problem.” Supply chain visibility has been challenged as the global economic situation has reduced the willingness of companies to share data internationally, says Opher Baron, distinguished professor of operaSUPPLY PROFESSIONAL
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tions management at the Rotman School of Management at the University of Toronto. That reluctance can also stem from legislative requirements surrounding privacy and confidentiality issues. Yet such data sharing is important in supply chain, for example due to import and export requirements. Choosing the right technology, incorporating collaboration tools within the supply chain, and allowing the right data to flow are good first steps to help improve visibility, Baron notes. A further step involves companies changing how they view inventory. Many organizations got accustomed to a just-in-time approach to their goods. Keeping more inventory available than they have been used to as safety inventory now makes more sense. REDUCING COMPLEXITY Reducing the complexity of the buying process can also help improve
“The systems that each of the partners use are not interoperable, meaning, they are not designed to work together.” visibility, Baron says. In the case of computers, for example, it’s now possible to purchase different cores, motherboards, cables, monitors, and other related products. “There are so many options, which makes everything more complex,” he says. “Reducing the number of options and the number of items you are dealing with is something that can help you. Rather than managing a million SKUs, you’re just managing a thousand.
It makes a big difference. You don’t need as much visibility as before. You don’t need to share as much data as before. You don’t need to manage as many suppliers as before in some cases.” Products are in constant movement, and the ability to see where they are at a given point is a huge competitive advantage, Arzate says. Visibility helps organizations put in place service and performance indicators. For example, if an organization has visibility into the shipping cycle time from a supplier overseas to a distribution centre in Canada, that cycle time can be incorporated into the replenishment planning processes. “If it is a reduction, you will then be lowering the quantity of inventory you usually have in transit,” Arzate says. “If it is an increase, you will then need to factor that additional cycle time to avoid product shortages.” There’s a need to expand visibility across supply networks, both
within an organization and beyond its four walls, she says. There’s also a role for leveraging new technologies and implementing new systems. Yet the most important element in heightening visibility is collaboration, both across functions as well as an entire company. That collaboration helps to build bridges between disparate data sources, Arzate says. “To accomplish these goals, you will need to challenge yourselves and your team members to think differently, put together an effective project plan and a change management plan, overcome constant roadblocks, gain executive alignment to secure resources, and perhaps secure funding,” she says. “At the end of the project, once you start seeing the data flowing, visualized in a way that had never been seen before, you will be able to mine it, drive insights, and help improve the performance of your company.” SP
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BY MICHAEL POWER
THE LCBO’S NICK NANOS ON HOW SUPPLY CHAINS GIVE BACK From his earliest days working, Nick Nanos has focused on service, connections, and giving back to his community. Nanos grew up in Trenton, a small town east of Toronto. The community, with a population of about 16,000 people, hosts a Canadian Forces Base. Young Nick’s father operated a family restaurant in the town, and some of Nanos’s fondest memories are connected to the time he spent at the establishment. “It was a family business, and I literally grew up there,” says Nanos, now the chief supply chain officer for the provincial-government owned Liquor Control Board of Ontario, known as the LCBO. The LCBO is one of the largest retailers and wholesalers of alcohol in the world, with five regional warehouse facilities, 680 retail stores, and 18,000 restaurant and bar wholesale customers. “I think it’s in my blood to focus on service and on community and family and that’s what 10 OCTOBER 2023
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you get when you grow up in a family business,” he says. “Those are all the things that I’m able to recognize here in my role at the LCBO: service, community, and family, so it’s rewarding. I feel I’ve found my place.” The restaurant taught Nanos several skills, from working the cash, to washing dishes, to operating the grill and deep fryers. He sometimes jokes with his wife that when he retires, the couple will open a restaurant of their own. She jokes back that he’ll have to take on that project alone. While the restaurant industry is even more challenging now than when he was young, Nanos stresses that it’s also rewarding because of opportunities to deal with people, feed them, and help them enjoy time with friends and family. Nanos now gets that same sense of serving the community from his position at the LCBO. Profits from sales go to the Ontario government, which are then invested in the province’s communities.
THE CUSTOMER EXPERIENCE Nanos began his career at the LCBO in the early 1990s. He started in retail before moving into store management. He worked across Ontario in different roles and a variety of store types, and recalls that period as an exciting, transformational time at the retailer. At the corporate level, the organization understood what it needed to do to provide a good customer experience in LCBO stores. From there, Nanos decided to make the jump to more corporate roles within the organization. “I was in stores for about 12 years when I decided it was time for a change,” Nanos says. “I applied to corporate roles, and I had the opportunity to work in various roles right across multiple different capacities. I worked in store audit, corporate audit, finance, wholesale logistics, and it gave me really broad experience across all our functions.” When the LCBO did an organizational review in 2016, it asked Nanos to act as the senior vice-president, logistics and quality assurance, for 18 months. After that, he permanently stepped into the role of VP of distribution and logistics. In that role, he led all of the organization’s distribution and logistics activities. That was the final position he took before accepting his current role of chief supply chain officer. At first, the job title was senior vice-president of supply chain and wholesale, which Nanos accepted in 2018. He oversaw all of the company’s business-to-business operations and its SUPPLY PROFESSIONAL
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PEOPLE, CONNECTION, COMMUNITY
“One of the special things about the LCBO, when you look at it through a sustainability lens, is that every dollar of net income – or in our case, dividend – goes back to the province for investment in programs and services such as infrastructure, healthcare, education. That’s a really satisfying thing for all of us that work at the LCBO.” Nanos earned an undergraduate degree in political studies from Queen’s University in Kingston, Ontario. While the degree had no direct connection to supply chain, he’s since earned several industry designations, including the CITT-Certified Logistics Professional, and sits on the CITT’s board. He’s also a Certified Fraud Examiner through the Association of Certified Fraud Examiners. He has a certificate in logistics management from the Schulich School of Business at Toronto’s York University, an executive development certificate through his alma mater of Queen’s University and, most recently, the Certified Supply Chain Management Professional designation through the Supply Chain Management Association of Ontario (SCMAO).
MIKE FORD PHOTOGRAPHY
end-to-end supply chain. He was then appointed chief supply chain officer in 2020. The position focuses on transforming the LCBO’s supply chain to better enable the organization’s retail, wholesale, and digital experience. “I’ve got a very unique portfolio and I oversee the entire B2B sales, and the end-to-end supply chain from the source right up through to retail, wholesale or digital customers – it’s really my dream job,” Nanos says. Nanos didn’t start off with dreams of a supply chain career. Yet his desire to work in the field evolved as he realized its importance to the LCBO. Supply chain is fundamental not only to retail and wholesale operations, but to success in providing the right customer experience and service levels. “I didn’t start in it, it evolved into this role,” he says. “And I attribute it to all the different perspectives and assignments I’ve had across the organization that helped me or put me in a position where I could have a good perspective and get prepared for a role like this.” Having invested so much into a career in supply chain at the LCBO, Nanos puts a lot of value on continuing education. And while it’s a good idea that people invest in themselves, organizations must also invest in their people, he says. Nanos practices what he preaches. Along with his industry designations, he continually takes courses to sharpen his skills and knowledge. For example, last winter he completed a course about blockchain. While blockchain isn’t an area he would usually examine, it’s still helpful to understand how the technology works and whether it could be applied to supply chain improvement. “Continuous and constant, never-ending improvement – it’s so important,” he says. “You have to invest in yourself, and organizations have to invest in their people, too.” Nanos stays involved with some of the organizations from which he’s received designations. He’s the vice-chair of the national board for the CITT. He also appreciates the courses offered by the SCMAO and the value they bring to his team, he says. NO TWO DAYS ALIKE Like many in supply chain, Nanos says that each day in the field tends to be different from the last. Yet that variety is an attractive feature of the occupation. He’s responsible for a large breadth of tasks and activities. Operational items make
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up one part of his work. This includes foundational tasks like ensuring the business is on track, while focusing on the customer experience and how supply chain can support it. “I’m continuously looking at KPIs,” he says. “It’s like your bread and butter. What’s our in-stock position, our fill rates, our cost per case, our productivity measures, sales? All sorts of different things. The other part of it is, we’re in a global environment, and we import product from 80 countries around the world. We have a very expansive, large supply chain. There are issues and events that happen all over the world that can impact our supply chain and have downstream implications. So, I’m scanning the marketplace regularly for what it is that could impact us.” Many of these events are beyond anyone’s control. Nanos cites recent port strikes in British Columbia, as well as climate concerns such as drought and the low-water levels in some supply chain lanes like the Panama Canal. Even if an organization doesn’t bring much cargo through a particular lane, disruptions can still affect your supply chain. Keeping an eye on what’s happening globally is important, he says. Nanos also focuses on large, transformational projects and how they affect the organization. Focusing on strategy while looking ahead three-to-five years, along with coaching and mentoring, are large parts of his role, he says. He does a lot of one-on-one coaching with those reporting to him. “Those would be the three big buckets of what my days look like: operational, strategic, and a huge component is our people, in development and retention,” Nanos says. “There are about 1,500 people on the team. Obviously, that includes a lot of the seasonal employees in our facilities across the province.” Among the highlights of his career, Nanos sites the transition, in 2021, of the LCBO’s downtown Toronto warehouse and offices. The offices were moved to a location next door while the organization’s warehousing transitioned to a third party. The project was years in the making and was a response to the sale of the LCBO’s downtown Toronto property. The process was a major operational change that required close collaboration internally across all divisions and with trade partners. The new facility was an opportunity to modernize functions, Nanos says. And while the COVID -19 pandemic added complexity, the project was completed successfully on an accelerated schedule. Trade partners saw minimal disruptions. Nanos led the warehouse transition, and was involved in the office transition, sitting on its steering committee. 12 OCTOBER 2023
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“Continuous and constant, never-ending improvement – it’s so important. You have to invest in yourself, and organizations have to invest in their people.” Another career highlight for Nanos was navigating the pandemic itself. “We were lucky – we were given permission to remain open,” Nanos says. “Like so many businesses, our greatest concern was the safety of our people and our customers. I’m very proud of how the organization, and our supply chain organization, managed through that and led through that, on top of a lot of other challenges that we’re facing in the supply chain. We had transportation challenges globally; there were raw material challenges for a lot of our suppliers.” Nanos’s contributions to the supply chain profession haven’t gone unnoticed by his peers. Drinks Ontario, an industry association for the beverage alcohol industry, awarded him the Partnership Award twice, in 2011 and 2015. Receiving it in 2011 was all the more special because it was the first time an entire business unit won the accolade, with Nanos as the unit’s director. “That was a real point of pride because I won it with the team,” he says. “I then won it in 2015 individually, which was satisfying because it was on the heels of completing a transformational project. That project included a new DMS and WMS to improve our efficiencies.” CHALLENGES While supply chain is rewarding, there is no shortage of challenges that professionals in the field face. For starters, the effects of the pandemic linger in some parts of the supply chain, Nanos say. Many of those supply chains face a “transformational junction,” with organizations struggling to stay on top of technological advances. Those organizations may have to work to stay ahead of cutting-edge technology like artificial intelligence or blockchain while weighing how to fold them into operations. To decide what technology an organization should use and how, begin with the end in mind, Nanos advises. As well, be sure to choose the technology that is actually needed. There can be risks, and there’s a learning
curve associated with many technologies out there. Change management, updating processes, and organizational development are factors to consider. “It’s very important that organizations really focus on evaluating the different technologies available and making sure that it fits with what it is they want to accomplish,” Nanos says. “There’s a technology for every hour of the day if you really want to look at it. You need to be very, very calculated, very disciplined, and very clear with what the problem is that you’re trying to address.” Nanos has had the opportunity to see transformational change at the LCBO over his 30 years of working there. As the market continues to evolve, Nanos hopes to continue to contribute to building the “LCBO of the future.” On the distribution and fulfillment side, that includes looking at opportunities for more automation, he says. And whether in transportation, packaging, or other areas, sustainability remains an important opportunity for supply chains going forward. “Those are big opportunities as we look to the future,” Nanos says. “One of the things that the LCBO is very committed to, is the spirit of sustainability, and supply chains provide us with many opportunities in that. I think that’s something that is exciting.” Nanos lives in Oakville, Ontario with his wife, daughter, and son. He describes himself as an outdoors person and spends a lot of time with his family. He counts hiking and fishing among his hobbies, along with spending time in the outdoors. For those looking to a supply chain career, Nanos stresses the importance of curiosity. There’s value in challenging the status quo and approaching the field as a “disrupter,” he says. Opportunities reside in every process, and small adjustments can lead over time to large improvements in service and savings. It’s also important to remember that supply chain is a business career, he notes. As such, the field offers a great way to understand how a business operates across multiple functions, because supply chain touches all of those functions. “That’s probably the biggest message I would have,” he says. “From an end-to-end perspective, we might be sourcing some product from a winery in a remote part of Italy, and ultimately bringing it into our warehouses, into our stores, into a licensee, to the consumer to enjoy. When you see the entire end-to-end, and all the different touch points for parts of the organization, I think the supply chain gives those that work in it an opportunity to really understand an organization and what its strategic objectives are.” SP SUPPLY PROFESSIONAL
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SUPPLY CHAIN SECTOR
MONTREAL MAY 15 TO 17, 2024 PALAIS DES CONGRÈS
SIALCANADA.COM
THE ONLY ONE-STOP SHOP FOR THE NORTH-AMERICAN FOOD INDUSTRY! MEET ALL THE INDUSTRY’S KEY PLAYERS UNDER ONE ROOF!
SPACES ARE ALLOCATED ON A FIRST COME, FIRST SERVED BASIS! BENEFIT FROM THE EARLY BIRD PRICING BEFORE OCTOBER 31, 2023 $36 $41
FOR MORE INFORMATION sialcanada.com/en/request-form/
THE SUPPLY CHAIN, THE ESSENTIAL LINK TO SUCCESS! WHO SHOULD EXHIBIT? The main categories of supply chain exhibitors are: • Storage, handling-related materials and equipment • Information systems and logistics software • Supply-chain solutions • 3PL, 4PL • Systems integrators • Agro-industrial supply-chain management • Transportation, storage and material handling • Substainable development, etc.
WHY EXHIBIT AT SIAL CANADA 2024? Exhibiting at SIAL Canada in 2024 provides you with a unique opportunity to connect with the food and beverage industry, expand your market presence, and demonstrate your value to potential clients and partners. It offers a platform to showcase innovations, network with the industry’s key players, gain market insights, and strengthen your position in the supply chain ecosystem.
SIAL CANADA GIVES YOU ACCESS TO A TARGETED AUDIENCE TO TALK TO SOMEONE DIRECTLY Canadian Exhibitors bavandeligt@expocanadafrance.com mcharbonneau@expocanadafrance.com Want to visit? visitors@expocanadafrance.com
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2,000+ visitors interested in the supply-chain sector come to SIAL Canada from year to year 900+ visitors looking for logistics solutions
Buyer-visitors from this sector: Franchises Cora Inc., Costco, Dollarama, Loblaws-Provigo, Circle K/Couche-Tard, McDonald’s Canada, MTY Group, Shoppers Drug Mart, Metro, Walmart, DoyonDesprés, Groupe St-Hubert, Restaurants Cora, T&T Supermarkets, etc.
2023-10-03 10:41 AM
CANADA’S LEADING DESIGNATION FOR SUPPLY CHAIN PROFESSIONALS BY JACOB STOLLER
SCMAO Launches the New CSCMP Designation Curriculum
WHY THE NEW CSCMP DESIGNATION Commitment to supply chain excellence
ROBOTS THAT LEARN ON THE JOB Join 2,900+ CSCMP recipients in fuelling the supply chain industry across Canada. The CSCMP Designation is emblematic of the commitment to supply chain excellence that SCMAO delivers as a brand promise. It also signals to employers the commitment to excellence, the ethics and professionalism that the designation holders stand for.
Benchmarking against industry standards
Competitive, affordable and flexible price model
ROBOTS CAN BE CONFIGURED TO DO ALMOST ANY TASK HUMAN WORKERS DO
Elevating your profile by professionalizing your knowledge and expertise in supply chain functions
Clearly developed and measurable learning objectives
Real-life example based learning with clear learning objectives robots without some massive education, and Generative AI, popularized virtually overnight expert knowledge of the domain experts who that’s where AI becomes very useful.” through the introduction of ChatGPT, is familiar actually do that job,” says Wong. “What AI Enhanced experience to many as a web-based tool thatuser gathers and for- on does is allow for a human who understands the When programmers are needed, AI also mats information foreducation humans. Lesser known task to guide and show the robot how to do speeds up their work. “Not only does AI make platform is that in industry, the technology also serves as it in a human-intuitive way.” programming understandable from an operator’s a tool for enabling skilled workers to transfer their For example, an operator can guide a robotic perspective,” says Hulgard, “but it also handles expertise to robots and other mechanical devices. arm to pick up an object, and the robot’s AI the difficult parts of robot programming – sig“One of the most useful applications of AI “brain” can learn from the different trajectories nal exchange, handshakes with machines, comthat an experienced person takes it through. munications protocols – all these things that in industry is that it Knowledge-testing allows a robot to learn from tool to self-assess “This is essentially a no-code approach to proexpertise. Anspotlight humans,” says Dr. Alexander Wong, University AI can do now things faster Supply chainrequire profession in the gramming,” says Wong. of Waterloo engineering professor, Canada than a human programmer.” more than ever Robotics manufacturer OnRobot, which Research Chair in the area of artificial intellispecializes in manufacturing a wide assortgence, and a founding member of the Waterloo REDUCED TRAINING LOAD ment of tools and software for collaborative Artificial Intelligence Institute. While AI effectively hands the bulk of robotic Study at your own pace with suggested applications, is focusing on improving the The challenge with traditional programmed programming over to the operators on the shop timelines Increased demand and talent shortage for robots has been that they lack the intuitive flexibil- interface between machine and skilled workfloor, it can leave these operators with a voluenhanced chain skillsload. “One of the key limiters closer supply ity of a human worker. This is getting increasingly er. “Our mission is to bring automation minous teaching
WHY NOW
critical as manufacturers and supply chain operators adapt to a high-mix, low-volume marketplace where changes in the work are far more frequent. “Traditionally, all these tasks were pre-programmed, but that doesn’t work well when there’s variation,” says Wong. “If there’s an edge case or an outlier, it doesn’t adapt very well.” A related problem is that programmers don’t typically understand the tasks they are programming. “When you have developers programming tasks for the shop floor, they don’t have the 14 OCTOBER 2023
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to the end user,” says Kristian Hulgard, generwhen users are training robots is that there are al manager – Americas at OnRobot, based a lot of different examples that the robot has to in Irving, Texas, “and we’re actively Continued using be trained Wong. learning toon,” staysays current with evolving “Even if the endthat userCanadian is just guiding the robotic AI to bridge that gap.” supply chain competencies employers arm, covering all the different scenarios would This alleviates manufacturing’s perennial are hiring for require a lot of human labour. So that’s where skills shortage on two levels. “We have less and less people who want to work in manufacturing,” generative AI comes in.” says Hulgard, “so we have a growing demand Application Deadline for Winter 2024: December 11, 2023 for automation. But we don’t have a growing supP17 ply of robotic engineers. FOR So we have to be able INFORMATION Seguin to empower the end user Alisha or operator to deploy 416.977.7566 x2150 I aseguin@scmao.ca
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SUPPLY PROFESSIONAL
2023-10-03 10:41 AM
Supply Chain Management Association Ontario
Expands Its Focus To Become More Organization Centric SCMAO FOR CORPORATES •
CUSTOMIZED CORPORATE TRAINING
•
CORPORATE ACCESS FOR LEADERSHIP SERIES AND PROFESSIONAL DEVELOPMENT EMPLOYER GROUP MEMBERSHIP For a team of 4 or more, join the SCMAO membership for $250 per person and enjoy all our member-exclusive benefits and Signature member workshops.
NEW
Nancy Tran, Member Engagement Advisor 416.977.7566 x2138 I ntran@scmao.ca ALL-ACCESS CORPORATE SUBSCRIPTION PROGRAM Unrestricted enterprise-wide access to 60+ training offerings including 14 CSCMP Modules and workshops, 8 Diploma workshops and seminars, 15+ professional development sessions, 4 installments of Leadership Series and 3 Virtual Industry-Specific Conferences
NEW
Tanaya Jain, Director, Marketing & Growth 416.977.7566 x2142 I tjain@scmao.ca
SCMAO FOR INDIVIDUALS •
GET THE CSCMP DESIGNATION
•
GET THE DIPLOMA IN SUPPLY CHAIN
•
BECOME A MEMBER
•
CONTINUED LEARNING
Contact Tanaya Jain at tjain@scmao.ca for more details.
scmao.ca
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2023-10-03 10:41 AM
ALL-ACCESS CORPORATE SUBSCRIPTION PROGRAM
Engage, Elevate, Empower Your Supply Chain Talent In a world where people are your most valuable asset, be the employer of choice and invest in their growth and development. Unrestricted enterprise-wide access to 60+ training offerings.
CHALLENGES WE ADDRESS FOR LEADERS
Employee acquisition, retention & succession planning
Employee engagement
Team productivity
CHALLENGES WE ADDRESS FOR EMPLOYEES
Ask us about how your organization can earn this badge. Strenuous budget approval process
Professional development path
What we are offering
Value to your team
Details of offering
Access to the CSCMP designation
Your team becomes part of the supply chain elite committed to a standard of excellence and professional development
•
CSCMP Workshops and Online Learning
•
Complimentary access to all employees to the CSCMP virtual education courses (with the exception of the Final Exam)
A commitment to continued learning, organizational benchmarking, driving your organization’s supply chain strategy, in the pursuit of supply chain excellence
•
Leadership Series: Digital Transformation, Data & AI I Sustainability & ESG I Women in Supply Chain I Supplier Diversity
•
Virtual Conferences: Healthcare Supply Chain and Procurement I Public Sector Procurement and Supply Chain | Canadian Construction Procurement
Access to SCMAO Professional Development workshops (in-depth learning with a focus on skill development)
Unrestricted access to a full-suite of offerings based on employee interest
•
PD Workshops
•
Complimentary access to a minimum of 12 virtual workshops.
Access to SCMAO Diploma Program
Unrestricted access to a full-suite of our Diploma program offerings for those who are new to the profession and need level setting
•
All Diploma Modules and Workshops are accessible to the team members (with the exception of the Final Workshop)
Preferred pricing to customized corporate training
Upskill your team, your supply chain department and your organization
•
Save 20% off all in-house customized learning sessions.
(Canada’s leading designation for supply chain professionals)
Access To 4 Installments of Leaderships and 3 Virtual Industry-Specific Conferences Flagship offering from SCMAO to understand the leadership perspective and strategic point of view from industry leaders and subject matter experts
EMPLOYEE ENGAGEMENT Our Corporate Concierge will support you with onboarding, daily reporting, newsletters, calendars and quarterly check-points to support with your team engagement. Your success is our success.
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Removing barriers to access
Tanaya Jain, Director, Marketing & Growth 416.977.7566 x2142 I tjain@scmao.ca
2023-10-03 10:41 AM
INTRODUCING THE NEW
PROFESSIONAL DEVELOPMENT
CANADIAN CONSTRUCTION PROCUREMENT C O N F E R E N C E
November 16, 2023 | Virtual | 5 CPD Points
SEEKIN G N EW PA RTN ERS
ELEVATE YOUR BRAND
By leveraging the first ever Construction Procurement Conference in the Canadian Marketplace.
Kim Sforza, VP- Member & Corporate Engagement 416.977.7566 x2142 I ksforza@scmao.ca
2023/24 Calendar
PRICE: Included in the All-Access Subscription Program (mentioned in the adjacent page)
Individual pricing also available. Visit scmao.ca/professionaldevelopment
Topics
Dates
Duration
CPD Points
Contract Management Strategies for Success
November 1 - 2 and 8 - 9, 2023
4 Half-Days
10
Drafting a Statement of Work
December 6 - 7, 2023
2 Half-Days
5
Capital Equipment Procurement and Contracting
February 6 - 7 and 13 - 14, 2024
4 Half-Days
10
Advanced Construction Procurement
February 20 - 21, 2024
2 Half-Days
5
Contract Fundamentals and Negotiations
April 9 - 10, 2024
2 Half-Days
5
Leadership Series
Dates
Duration
Digital Transformation in Supply Chain
Thursday, January 25, 2024
1 Full-Day
Sustainable Supply Chain & ESG
Thursday, February 29, 2024
1 Full-Day
Women in supply chain
Thursday, March 28, 2024
1 Full-Day
Supplier Diversity
Thursday, April 25, 2024
1 Full-Day
FOR REGISTRATION OR GROUP DISCOUNT Gagan Dhaliwal, Membership & Education Coordinator 416.977.7566 x2145 I gdhaliwal@scmao.ca
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2023-10-03 10:41 AM
CANADA’S LEADING DESIGNATION FOR SUPPLY CHAIN PROFESSIONALS
SCMAO Launches the New CSCMP Designation Curriculum Join 2,900+ CSCMP recipients in fuelling the supply chain industry across Canada. The CSCMP Designation is emblematic of the commitment to supply chain excellence that SCMAO delivers as a brand promise. It also signals to employers the commitment to excellence, the ethics and professionalism that the designation holders stand for.
Clearly developed and measurable learning objectives
WHY THE NEW CSCMP DESIGNATION Commitment to supply chain excellence
Benchmarking against industry standards
Competitive, affordable and flexible price model
Elevating your profile by professionalizing your knowledge and expertise in supply chain functions
Real-life example based learning with clear learning objectives
Enhanced user experience on education platform
WHY NOW Knowledge-testing tool to self-assess Supply chain profession in the spotlight now more than ever Study at your own pace with suggested timelines
Increased demand and talent shortage for enhanced supply chain skills
Continued learning to stay current with evolving supply chain competencies that Canadian employers are hiring for
Application Deadline for Winter 2024: December 11, 2023 FOR INFORMATION Alisha Seguin 416.977.7566 x2150 I aseguin@scmao.ca
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2023-10-03 10:41 AM
Supply Chain Management Association Ontario Wong’s research group at University of Watersort of application programming interface (API) loo is collaborating with colleagues at Karlsruhe to make it easier for the end user to install Institute of Technology (KIT) in Germany and use. And AI is a normal part of control in a project, named FLAIROP, to apply generative software now.” Electric vehicle (EV) production facilities are AI to manufacturing automation environments. “The question we asked is, ‘what if we actually likely to be a hotbed for this new technology. generate these scenarios in a simulated environ“Many new EV production facilities are being ment so that an AI can learn from it?’” says Wong. built and ramped up in Canada,” says Cutulenco. The project has taken on one of the most vari- “This is a great opportunity to put digital capabilities into new lines from the start, and a perfect able tasks – bin picking. Items in bins can prestime to start leveraging predictive quality technolent themselves to a robotic camera in millions ogy. Plants face a lot of challenges during ramp of possible ways, making it impractical to train the robot manually for each scenario. The project up time, and there is limited experience still with the new EV parts being produced – this is a great is experimenting with a digital twin of a bin environment, which serves as a virtual classroom opportunity to leverage advanced analytics and for the robotic “brain” to learn from an unlimitpredictive data driven technologies to help ensure ed number of combinations. launch success.” SP “I can take random objects that we have in a manufacturing facility and randomly place SCMAO CORPORATES them as a bin as an example, andFOR then instruct the robotic arm to• learn from it,” says Wong. CUSTOMIZED CORPORATE TRAINING “Because it’s all simulated, I know exactly • where the arm should grasp. And I teach the FOR LEADERSHIP SERIES AND CORPORATE ACCESS AI, ‘hey, when you see this scenario, here’s PROFESSIONAL DEVELOPMENT what you should do.’” EMPLOYER GROUP MEMBERSHIP This makes it possible to undertake robotic For be a team of large 4 or more, training tasks that would far too for join the SCMAO membership for $250“Imagine per person and enjoy all our member-exclusive a human trainer to undertake. a scenario where an AI canbenefi just keep generating data ts and Signature member workshops. and learning from it,” says Wong, “and imagNancy Tran, Member Engagement Advisor ine an AI training itself for millions upon mil416.977.7566 x2138 I ntran@scmao.ca lions of years to be better. Of course, millions of years in the virtual world is maybe a week ALL-ACCESS CORPORATE SUBSCRIPTION PROGRAM or two, or maybe a month.”
Expands Its Focus To Become More Organization Centric
“What AI does is allow for a human who understands the task to guide and show the robot how to do it in a humanintuitive way.”
NEW
NEW
Unrestricted enterprise-wide access to 60+ training including 14 CSCMP Modules and workshops, MOVING FORWARDofferings WITH AI 8 Diploma workshops The use of AI to improve user interfaces and and seminars, 15+ professional development sessions, reduce the involvement of programmers is also4 installments of Leadership Series and 3 Virtual Industry-Specific Conferences taking place in other aspects of automation.
“One of the key challenges in production is that Tanaya Jain, Director, Marketing & Growth the type of data being generated can change fre416.977.7566 x2142 I tjain@scmao.ca quently, whether it’s due to new sensors that are being installed, renaming of sensors, calibration of equipment, moving around of equipment, SCMAO FOR INDIVIDUALS et cetera,” says Greta Cutulenco, CEO of Acerta AI, which provides• AI-driven predictive quality GET THE CSCMP DESIGNATION solutions. “To address this, we have been auto• GETcan THE DIPLOMA IN SUPPLY CHAIN mating how our platform detect and adjust to these changes and process for • simplifying BECOME the A MEMBER our users to quickly remap the data without hav• CONTINUED ing Acerta’s engineers get involved.” LEARNING Hulgard sees a general trend where more and more industrial products will be software enabled. “I think we can expect that automation manufacJain at tjain@scmao.ca for more details. turers will make itContact easier toTanaya use automation,” says Hulgard. “Every new product will have scmao.ca software, not just a valve, and it’ll have some SUPPLYPRO.CA 19
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BY JEFF VAN GEEL
EDUCATION EDGE
Jeff van Geel is professor, supply chain, at Lawrence Kinlin School of Business, Fanshawe College, London Campus.
THE VALUE OF CONTINUOUS LEARNING IN SUPPLY CHAIN There are many ways to continue to grow within supply chain through continuing education. Education avenues include in-person instruction or online via a college, an digital platform, a degree program, or a webinar on a topic that interests you. You need to be continuously learning and keep up with technology, so you don’t get left behind. You also need to prioritize your continuing education, just like any other task, deadline, or to-do list. If you don’t make the time or schedule it, then you will just get busy doing all the other things in your day, week or month, and you will fall behind all your colleagues who do prioritize it. Supply chain has moved from being a relatively unknown business process to an everyday conversation. Supply chain has been in the news daily, especially since the COVID-19 pandemic. We’ve heard discussions of items like N95 masks, personal protective equipment, vaccines, toilet paper, maintenance repair operations (MRO), to name a few. During the pandemic, these were all top of mind for consumers and professionals in supply chain. More recently, forest fires, the Vancouver Port strike and the ongoing war in Ukraine have impacted our supply chains. So, while most people now know some aspects of what we do daily in supply chain, we also must keep up with our own continuing education and learning experiences. 20 OCTOBER 2023
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OPPORTUNITIES ABOUND I currently teach many aspects of supply chain to my students at Fanshawe College in London, Ontario. I tell them that if you don’t continue to grow and subscribe to a regime of lifelong learning, you will unfortunately be left behind. I think about 20 years ago when the internet and mobile phones were just getting started on a larger scale. I remembered everyone’s phone number by memory. Now, I barely remember my own mobile number. Keeping up with new trends and finding creative and different ways of doing things in our supply chains is an important part of our career. But so is keeping up with ever changing technology. Through our mobile devices, we now have access to myriad apps. Often, these apps are free to download, and can help us learn, grow, and stay connected. LinkedIn Learning, Google, and YouTube channels offer such opportunities. Meanwhile, online or part-time, onsite learning can help us remain in touch with how quickly technology and processes can change. One app that has helped my students practice their public speaking is ORAI. ORAI uses artificial intelligence (AI) to analyze your speaking and give you feedback based on pace, energy, and conciseness. It then gives you an overall score and makes you self-aware of areas you might need to improve upon. While AI has been around for decades, it has recently increased in scope of application and how it is used,
including higher education, agriculture, business, decision making and analytics. Adoption of these new technologies depends on you and your organization’s ability to adapt to change. Change is constant, but the pace of change has become much faster. How many times have you found yourself reading an email or notes only to find the process has changed, or the person has changed? Perhaps you need to take a compliance course to be able to access the system? Another reason to invest your time in continuing education is that we have become more global. You need to stay on top of international trade regulations and tariffs, sanctions, and logistics. For sustainability reasons, we want to source goods and services locally. But we are often forced to buy internationally, either on price or sole sourced. Sustainability and going green has been talked about for years, but the discussion has shifted to the circular economy. How can we create processes that continuously reuse our limited natural resources as efficiently as possible? Continuing education allows you to learn about these new ways of conducting business while fostering relationships. Let’s face it, we only have one planet and things have changed in an unimaginable way in the last century. My great-grandfather was born in 1899, in a time with no automobiles, no phones, no TV, and no airplanes. I wonder what he would think of today’s society and all the things we now take SUPPLY PROFESSIONAL
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“Any continuing education requires some effort on your WHICH CERTIFICATION? Many people ask me about which supply chain part, which is an investment certification to get. The answer depends on many things. Many are costly, while many require in your future.” for granted, the technology we know how to use, and our nearly unlimited access to information?
a certain number of years of experience working in the field in which you want to be certified. Some require in-residence instruction and most require some sort of proficiency test or exam. In my opinion, it depends on the certification that your employer wants and is willing to pay for and support you in. Often, you will have to do this on unpaid time. But any continuing education requires some effort on your part, which is an investment in your future. If you are fortunate enough to work for an employer that is willing to pay or subsidize some of the costs
of continuing education, why wouldn’t you take advantage of that opportunity? That extra education or experience might very well lead to a promotion or your next opportunity. Continuing education doesn’t always have to be a structured course. It could also be sitting for an hour with someone in a different department to find out what they do, what challenges they face, or what information they have access to that might
help you in your planning and decision making. During the pandemic, I attended many webinars since we could not be together in person. Yes, I missed the people and networking. But I was able to attend many sessions for free and made some great contacts. Many supply chain professional associations offer events, networking opportunities, and job fairs. All these contribute to your personal and professional development and lifelong learning. Continuing education in supply chain management is essential for staying competitive in an ever-changing business landscape. It empowers professionals with the knowledge and skills they need to drive innovation, optimize processes, mitigate risks, and contribute to the overall success of their organizations. You should never stop learning. Maybe I will even see you in class at Fanshawe College. SP
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BY CHRISTIAN SIVIÈRE
GETTING THE BEST FROM YOUR 3PL THIRD-PARTY LOGISTICS MUST BE FAST, ADAPTABLE, AND UP ON TECHNOLOGY What is a 3PL? That can depend on who you talk to. Recently, I had a call from a company looking for customs training for their staff and when I asked what their main activity was, they said: we’re a 3PL. But in talking to them, I realized they’re a load broker or freight broker, not really a 3PL. International freight forwarders now often call themselves logistics services providers: it sounds better and more in tune with our times. Some say they offer full supply chain management services, which is not always the case, as this would include procurement. The term 3PL, short for thirdparty logistics, was coined in the 1970s when companies started to outsource the warehousing and distribution of their products to focus on their core activities. The key 22 OCTOBER 2023
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then was to concentrate on what you know and do best, and subcontract other functions to someone else. If this does not make companies more profitable in the long run, as outsourcing can be more expensive, it still makes them look better for the financial world and for shareholders, as it reduces upfront and financing costs. So 3PLs are independent contractors running facilities to store, sometimes sort, pack, repack, and so on, then ship out their customers’ goods. As that function became more common, it also became more sophisticated, thanks to equipment and software enabling 3PLs to offer integrated and value-added services. This is similar to how many companies converted their truck fleets from employee-operated to subcontractor-operated, forcing drivers to become independent contractors and shifting fleet management headaches onto them. Today, 3PLs extend beyond logistics and provide value-added services to meet customers’ needs, adding some supply chain management functions to their service offering. International freight forwarders and courier companies often provide 3PL services as well. We can distinguish two categories of 3PLs: the basic ones that perform receiving, storage, sorting, pick and pack and shipping, and more advanced ones that offer value-added services like packaging, tracking and tracing, and information management. The second category is more common today, as managing the information has become almost more important than managing the products. This explains the growing importance of 3PLs and how they have evolved from a “sidekick” to a core function. Whether they operate multi-customer, public facilities or are dedicated to one customer, another factor is flexibility. 3PLs can usually adapt their offerings and their way of working to customers’ needs. By nature, they have to adapt to customer requirements. The highest
level for a 3PL is to integrate fully with the customer and to manage their entire logistics function. In these cases, the key to success is the fit between customer and service provider, with adaptability, flexibility and reliability as important, if not more, than cost savings. In e-commerce, the term 3PL takes a slightly different twist, with the focus on order fulfilment. The classic model for e-commerce merchants, particularly SMEs, is to outsource this function to a 3PL. Order fulfilment is the method by which a company processes a sales order to the customer’s specifications and includes receiving stock; sorting and storing it; order processing; retrieving; pick and pack; production of documentation and shipping out. 3PLs also handle reverse logistics, the function of handling returns, disposing of them or repacking/refurbishing them for resale. This has become more important with the growth of e-commerce: the return rate for brick-and-mortar retailers is around 10 per cent, or as high as 20 per cent for online shoppers. CHALLENGES What challenges do 3PLs face today? They are asset-based, so operating costs, facilities and financing are key, as well as labour shortages. Keeping up with technology, automation, managing data and adapting to customer expectations are challenging. One element is that 3PLs must constantly expand their offerings. Three things drive this: customer retention, spreading risks, and keeping competition at bay. To strengthen customer relationships, we need to provide as wide a service offering as possible, develop strong partnerships and integration, to become an indispensable partner. Offering a wide service range spreads risks, as increased activity in one area can offset a slowdown in another. Staying ahead of the competition is tough, especially as big players get more active and offer
Christian Sivière is president at Solimpex.
fully integrated services. These days, it’s like everybody wants to become a 3PL, to diversify, strengthen their position and develop tighter customer relationships. A good example is Maersk. They used to only offer traditional ocean carrier services, as well as some limited air cargo services, using their own fleet. Maersk today does not just offer traditional ocean and air freight but also freight forwarding, logistics services, warehousing and distribution, customs brokerage, and even cargo insurance. Ironically, the reason traders need cargo insurance is ocean carriers have low limits of liability. If something goes wrong, you never get fully compensated for your goods. The maximum you will get from Maersk or any other ocean carrier, is between US$500 and US$900 per container, depending on the applicable convention. Maersk offering cargo insurance is like making up for its own shortcomings. What they could do instead is cancel their limits of liability and take full responsibility for the cargo they carry. 3PLs are key players for the success of many companies. They must be fast movers, adaptable, proactive and use new technology to meet customers’ expectations, stay competitive and profitable. Businesses will continue to focus on driving down operational and labour costs by outsourcing their logistics function to 3PLs. Adapting to new technologies is essential, yet in the end, people matter more than technology. SP SUPPLY PROFESSIONAL
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Fleet Management
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Cost control Inflation is driving up fleet costs.
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Technician staffing How to do a vehicle equivalent unit analysis.
Fleet Management is a special section of Supply Professional magazine. It is an important resource for Canadian supply professionals who recommend, select and manage fleet vendors and service providers.
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Road test Test driving the 2024 Buick Encore GX Avenir.
EDITORIAL INQUIRIES: Michael Power, 416-441-2085 x110, michael@supplypro.ca
ADVERTISING INQUIRIES: Alex Papanou, 416-441-2085 x101, apapanou@iqbusinessmedia.com
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Fleet Management By Ed Powell
Fleets and inflation
Ed Powell is director, consulting services, Holman.
1. Optimize fleet strategy to navigate economic headwinds Economic conditions and inflationary pressures now impact almost every aspect of fleet operations. Whether it’s rising interest rates, inconsistent supply chain performance, increasing maintenance costs, or fuel price fluctuations, these trends influence operating expenses and understanding their implications is crucial. Holman’s Consulting Services team has developed an Economic Trends report with in-depth analysis of how these pressures affect fleet operations. Our consulting services team offers a view of these economic headwinds. The report examines inflation in 2023 and highlights how these factors influence each stage of the vehicle’s lifecycle – buy, drive, service, and sell. Here’s a look at the challenges in each stage and how to navigate them.
Buy
Inflation and unreliable supply still make buying fleet vehicles difficult. Driven by vehicle price increases and surging interest rates, monthly lease payments have increased by nearly 40 percent since 2020. For perspective, a fleet with an annual acquisition budget of $1 million could finance about 135 vehicles in 2020. Today, that budget could accommodate roughly 95 vehicles, reducing the number of new vehicle orders by 40 units. To maintain the same order volume, you’d need to 24 OCTOBER 2023
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increase your acquisition budget by nearly $400,000. Vocational units with extensive upfitting are subject to additional cost drivers. Since 2020, vehicle upfitting costs have spiked by over 20 percent due to parts shortages, higher labour rates, and raw materials cost increases. Upfitting costs are stabilizing.
Drive
Luckily, pump prices have dropped 27 percent since the peak in the summer of 2022. In June 2022, gasoline prices peaked at $4.96 per gallon on average in the US, then dipped to $3.60 nearly a year later. Fuel prices followed a similar, yet slightly more volatile, trajectory in Canada. Fleet operators could therefore see fuel expenses reduced by as much as $1,800 per vehicle in 2023. There has been a small uptick in fuel prices, but 2024 signals more declines. Still, multiple factors influence fuel prices – production levels, the seasonality of travel, macroeconomics, and so on – and these variables can shift quickly.
2.
Service
Since 2020, disruptions have propelled maintenance costs to near-record highs. Fleet maintenance costs have increased by as much as 30 percent in some regions due to factors including parts shortages, higher commodity costs, and rising labour rates. For example, the cost
“Driven by vehicle price increases and surging of brake pads has increased by 17 percent since 2020; tire prices interest rates, are up as much as 30 percent; and labour rates by over 20 percent. monthly lease Limited new vehicle inventory payments have is extending lifecycles beyond initial forecasts. As vehicles log more increased by miles and wear, they need more maintenance while awaiting nearly 40 per replacement units. To mitigate this, adhere to the recommended preven- cent.” tative maintenance (PM) schedules.
Minimizing PM variability improves reliability, maximizes productivity, and controls operating costs. Minor PMs reduce more significant component failures. When a fleet has high PM variability, maintenance costs and downtime rise as the vehicle ages. Reconsider what maintenance services are required as vehicles remain in service longer. For example, if you cycle vehicles out at 60,000 miles, your PM schedule may not include a transmission service, but add this if your vehicle must remain on the road longer. The industry is stabilizing and price increases are leveling off. Maintenance and repair expenses are likely to increase in certain areas. Tire prices are unlikely to climb at the same rate as the last few years.
Sell
Rising costs present challenges but also create opportunities in selling used vehicles. Due to new vehicle
supply constraints, the used vehicle resale market remains strong. In early 2022, the secondary market peaked with used vehicle values nearly 50 per cent higher than pre-pandemic. While this secondary market has waned since April, used vehicle values are up about 35 percent compared to 2020. Forecasts show the market will stay favorable for 2023 and into 2024. You may be able to take advantage of this by liquidating excess vehicles or underutilized assets. Rising costs driven by inflationary headwinds are a challenge for fleet operators. Although some industry segments have improved marginally, macroeconomic trends will likely fuel uncertainty for the year ahead (and perhaps beyond). For the latest analysis or to download Holman’s Economic Trends report, visit Holman.com. FM/SP FM/SP SUPPLY PROFESSIONAL
2023-10-03 10:41 AM
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Fleet Management By Katherine Vigneau
The ABC’s of a VEU analysis 1.
Katherine Vigneau, CAFM, is director of fleet, Matrix Consulting Group, and Canadian director of MCG Consulting Solutions.
Justifying you technician staffing requirements Technician staffing questions are on the rise as delayed vehicle replacement drives vehicle maintenance requirements upward. Many fleet and maintenance managers feel they cannot keep up with the additional demand but struggle to quantify and justify how many technicians they need. The number of technicians required for a maintenance operation to operate effectively is primarily driven by the size, composition, and age of the fleet it serves. A process, originally used by the US federal government, known as vehicle equivalent unit (VEU) analysis, can be used not only to calculate an organization’s requirements, but also to benchmark against other fleets with varying fleet compositions. VEU analysis involves assigning a value to an asset class to equate the effort required to maintain dissimilar types of vehicles to a passenger car or sedan. The sedan is assigned a baseline VEU of 1.0 and all other vehicle classes are assigned values relative to that ranking. What does a VEU of 1.0 mean? Industry averages show that it takes approximately 10 hours of preventative and unscheduled 26 OCTOBER 2023
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maintenance per year to keep a sedan on the road. The age of the fleet and several factors unique to each organization can influence the 10-hour benchmark and will be discussed. Assuming 1.0 VEUs equals 10 maintenance hours, all other types of vehicles can be allocated a VEU value based on their relationship to a passenger car. For example, a half-ton pickup truck is assigned a VEU of 1.5. This means that a truck of this type, on average, requires about 1.5 times the annual maintenance hours of a passenger car, or approximately 15 hours per year. From this understanding of VEUs, the methodology involves 11 steps.
Create a consolidated vehicle and equipment inventory. For organizations with a fleet information management system (FIMS), this step is fairly straight forward. The data elements needed include the vehicle make and model, year, odometer reading and maintenance costs (lifetime and last 12 months). The inventory should contain any asset that a technician may be asked to repair, which could include hand tools and generators.
Assign like assets to specific equipment classifications. Assets should be grouped into classifications that have similar age, utilization and maintenance requirements as each group will be assigned a VEU value for the group. The value is an average so it is understood that some units will require less maintenance and others more. Where like assets are used in vastly different ways (and engender very different maintenance demands) sub-classifications may be needed. Calculate or assign a VEU value to each classification. A VEU value is assigned to each vehicle classification. There are two ways to do this. Organizations with very good data may use actual maintenance data to calculate the relationship of a given vehicle class to a sedan. More commonly, industry benchmarks of VEUs per common classes of equipment are used. Total the VEUs represented by the fleet. Once all classes of equipment have a VEU value, they can be multiplied by the number of assets in that class. Following this, all class-
es can be added to get the total number of VEUs in the fleet.
Determine the number of maintenance hours per VEU. I mentioned previously that the standard is that one VEU equates to 10 maintenance hours. However, experience shows that this number can vary. Factors such as vehicle age, parts support and operating environment can influence the number of maintenance hours required. Multiply the maintenance hours by the VEU count for the total maintenance required. Once the total VEU count and the maintenance hours per VEU are known, they can be multiplied to find the annual maintenance hours required to support the entire fleet. Assess the productivity of the technicians in annual productive hours. Now it is important to turn to technician productivity. The industry benchmark is that technicians should be 70 per cent productive. This allows for vacation, sick leave, breaks and training. The typical work year is 2,080 hours FM/SP SUPPLY PROFESSIONAL
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and 70 per cent of that is 1,456 productive hours per technician.
Divide the total maintenance required by the annual productive hours. Dividing the total annual maintenance needed (from step six) by the annual productive hours (from step seven) will reveal how many technicians are needed. Review current staffing for annual productive hours. Similarly, the number of current staff can be assessed to determine how many full-time equivalent (FTE) technicians an organization has. Does the supervisor turn a wrench? What percentage of time? The actual FTE count on the ground can be multiplied by the 1,456 annual benchmark to understand what current staff are capable of. Determine acceptable outsourcing percentage. Before calculating whether the organization is short-handed or has
surplus staff, the amount of outsourcing needs to be considered. Another industry benchmark is that fully functioning shops still outsource 10-15 per cent of work. This should be work that can’t be done efficiently in-house. The outsourced work should be removed from the annual maintenance hours required.
Calculate the shortage or surplus of technicians. Finally, the adequacy of technician hours can be assessed by comparing the number required (from step 8) to the number available (from step 9). Here’s an example. The example to the right (in the chart) represents a fleet of 602 assets. Using industry standard values, these 602 assets total 1,362 VEUs. Since the fleet does not have parts support and technicians must find and pick up their own parts, the maintenance hours per VEU is 11 hours/VEU. The fleet therefore requires a total of 14,982 maintenance hours each year. When that is divided by the industry standard of 1,456 hours per
technician, the number of technicians required is 10.29 (without considering outsourcing). This is by no means an objective analysis as the assigned VEU values, and assumptions on maintenance hours per VEU and technician productivity will all influence the outcome. The methodology is simple, but accurate data and individual experience will add value to the results and help to justify your staffing requirements. FM/S
Data
Hours Needed
FTE Needed
“Factors such as vehicle age, parts support and operating environment can influence the number of maintenance hours required.”
•City Fleet Count = 602 •VEU Count = 1,362 •Hours per VEU = 11
• Total Technician Hours = 1,362 VEU x 11 hours per VEU = 14,982 hours
•Full Time Work = 2,080 hours • 70% Productivity = 2,080 hours x 70% = 1,456 hours • FTE required = 14,982 hours / 1456 hours = 10.29
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Fleet Management By Stephanie Wallcraft
Modern and stylish
The 2024 Buick Encore GX Avenir offers a solid mid-market choice Subcompact crossovers are a hot commodity these days. And with a recent wave of redesigns and refreshes within its roster, General Motors now has a wide variety of these pintsized SUVs to choose from. The smallest are the Chevrolet Trax and the new Buick Envista, both available only with front-wheel drive. If you want an all-wheel drive subcompact, you’ll need to look to the Trailblazer or its Buick equivalent, the Encore GX, which is the subject of this review. Like the Trailblazer, the Encore GX receives a mid-cycle refresh for 2024 that brings a slew of important updates to differentiate it from its smaller siblings. Key among them is a new Avenir trim, an addition that makes 28 OCTOBER 2023
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Buick’s signature top trim available across its entire line-up. On the Encore GX, this adds exterior details such as a grille with an exclusive chrome surround, along with clear taillights, exclusive 19-inch wheels, chrome accents, and body-colour side mouldings.
A look inside
Inside, the Avenir trim wears an exclusive beige and black interior colourway with a leather dashboard cover, and Avenir logos on the door sills and the front seat headrests. The leather-lined front seats are adjustable eight ways including lumbar support; on the passenger side, the seatback adjusts manually and can fold fully flat to accommodate lon-
ger items. A digital camera-based rear-view mirror is an Avenir-exclusive option. The complete package comes across as modern and stylish with very good build quality. A large, curved panel integrates the standard 11-inch infotainment screen and an eight-inch digital instrument cluster together into a single unit. Based on GM’s excellent platform, this infotainment system is fully touchscreen-based and easy to navigate and operate. Wireless Apple CarPlay and Android Auto are standard equipment, and a Wi-Fi hotspot can be activated with an OnStar subscription. A panoramic sunroof is available on all trims but standard on none of them, including Avenir.
Second row space is on the tighter side and may be unpleasant for adults for extended periods, but this isn’t unusual in the subcompact SUV segment. The Encore GX’s cargo space of 665 litres with the rear seats upright is roughly on par with its competition. But if you’ll need to pack the rear of the cabin regularly, the digital rear camera mirror helps maintain rearward visibility even when passengers and cargo get in the way. Power is generated by a 1.3-litre turbocharged three-cylinder engine producing 155 horsepower and 174lbs-ft of torque. When AWD is equipped, this is paired with a ninespeed automatic transmission. Those aren’t face-melting figures, FM/SP SUPPLY PROFESSIONAL
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1. The 665 litres of cargo space with the rear seats upright is roughly on par with its competition. 2. A large, curved panel integrates the 11-inch infotainment screen and an eight-inch digital instrument cluster into a single unit.
“Inside, the Avenir trim wears an exclusive beige and black interior colourway with a leather dashboard cover.”
1.
2. but the Encore GX gets moving better than you might think, thanks to the very smooth nine-speed auto and the turbocharging, which both help to get it shuffled up to speed quickly. The three-pot also doesn’t have all that much car to move, given the Encore GX’s curb weight of 1,476kgs or 3,255lbs. There are two important things to note. One is that the base Preferred trim can be purchased with front-wheel drive, which is paired with a CVT. We haven’t driven this version, but we expect it would be a much less satisfying experience. The AWD version also comes with a button that allows for manual toggling, a rare level of control that can provide a happy medium between fuel
efficiency and foul-weather capability for a well-trained fleet driver. The other key point is the Encore GX’s primary competitor, the Mazda CX-30, offers optional powertrains that deliver significantly more power, albeit alongside a more frustrating infotainment system.
Fuel consumption
Since the AWD version offers fuel consumption figures of 9.1L/100km city, 8.4 on the highway, and 8.8 combined, while the FWD measures up at 8.0/7.6/7.8, adding this control doesn’t come with much of a penalty. On the other hand, there’s not as much of a gap between the Encore GX’s three-cylinder and the CX-30’s more power-
ful engines as there ought to be: Mazda’s 191hp, 186lbs-ft, 2.5-litre four-cylinder engine with AWD averages 8.2L/100km combined, while its turbo-four burns 9.3L/100km combined. The 2024 Buick Encore GX is sold in three trims. The base Preferred is priced at $32,480, fees in; adding AWD brings this up to $34,480. The former top trim, the Sport Touring, starts at $36,130, while the new Avenir tops out the line-up at $39,410 including fees but before options. Fully loaded as tested, the price rings up at $43,395. That’s steep for a subcompact crossover, especially when you can get a Mazda CX-30 with more power for less. But when brand
cachet and superior functionality are higher priorities, 2024 Buick Encore GX Avenir is a solid mid-market choice for those who want those features with a touch of class. FM/SP
As Tested Price (incl. freight and PDI): $43,395 Engine: 1.3-litre turbocharged 3-cylinder Power: 155hp, 174lbs-ft of torque Transmission: 9-speed auto Rated Fuel Economy (L/100km): 9.1 city/8.4 hwy/8.8 combined Observed Combined Fuel Economy (L/100km): NA FLEET MANAGEMENT SUPPLYPRO.CA 29
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THE LAW—BY PAUL EMANUELLI
ETHICS AND ACCOUNTABILITY PROCUREMENT IRREGULARITIES LEAD TO PROSECUTIONS There is an increasing public perception that those who hold high office are free to violate public procurement rules with impunity due to weak enforcement mechanisms. However, recent legal rulings reveal that procurement irregularities can lead to serious legal consequences, including criminal convictions. WEAK SANCTIONS During his term as Prime Minister, Justin Trudeau has been the subject of three separate conflict inquiries conducted by the federal Conflict of Interest and Ethics Commissioner. In December 2017, the Commissioner found that Trudeau breached the federal Conflict of Interest Act by accepting multiple vacations to a private island owned by the Aga Khan, a philanthropist whose projects have received over $300 million in federal funding since 1981. The Commissioner found that Trudeau breached the statute by accepting gifts from a party who had ongoing official business with the government, for which Trudeau could advance and influence future spending decisions. Further, in August 2019, the Commissioner found that Trudeau breached the conflict statute when he attempted to influence the criminal prosecution of SNC-Lavalin, a large Canadian engineering company that was charged in 2015 under the Corruption of Foreign Public Officials Act for allegedly bribing Libyan government officials. Finally, in May 2021, the Commissioner cleared Trudeau of any conflicts connected to the WE 30 OCTOBER 2023
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Charity contracting scandal. While the Commissioner found that Trudeau did not influence the government’s decision to recommend the WE organization for the contract awards, Trudeau acknowledged that the optics of awarding high-value government sole-sources to an organization with prior business dealings with his family members should have resulted in his voluntary recusal from the award decisions. Even more recently, in December 2022, the Commissioner found that Mary Ng, the Minister of International Trade responsible for Canada’s trade treaties, including treaties that govern public procurement rules across Canada, breached the federal conflict statute by awarding two low-value emergency government sole-source contracts to a firm owned by her friend. While the Prime Minister and Minister of International Trade were both formally found in breach of the federal conflict law and suffered the resulting public censure, the lack of enforcement mechanisms under that statute meant that both remained in office without even being fined the equivalent of a speeding or parking ticket. PROCUREMENT-RELATED PROSECUTIONS The above rulings may lead some to believe that senior public officials can breach government contracting rules with impunity. However, while weak enforcement mechanisms may encourage the normalization of improper conduct, recent case studies reveal that public contracting irregularities
can result in successful criminal prosecutions against high-level officials who break the rules. For example, in its January 2018 decision in R. v. Livingston, the Ontario Superior Court of Justice found David Livingston guilty of unlawfully destroying government records relating to the Ontario government’s controversial decision to cancel two gas plant construction projects. Livingston was serving as chief of staff to Ontario Premier Dalton McGuinty when he destroyed the records in question. Further, in its March 2018 decision in R. v. Carson, the Supreme Court of Canada upheld the influence peddling conviction of Bruce Carson, a former senior advisor to Prime Minister Stephen Harper. As the Supreme Court decision noted, after leaving his senior advisor position, Carson cut a deal with a water treatment company to use his government contacts to promote the sale of the company’s systems in exchange for commissions to be paid to his girlfriend. While Carson only received a suspended sentence, 12 months probation, and 100 hours of community service, the sentencing judge noted that by that point Carson had already suffered significant reputational and financial harm due to the prosecution. More recently, in its May 2022 decision in R. v. James, the British Columbia Supreme Court found Craig James guilty of breach of public trust and fraud under $5,000 for improper clothing expenses claimed while serving as the Clerk of the House for British Columbia’s Legislative Assem-
Paul Emanuelli is the general counsel of The Procurement Office and can be reached at paul.emanuelli@ procurementoffice. com.
“During his term as Prime Minister, Justin Trudeau has been the subject of three separate conflict inquiries.”
bly. James was sentenced to a term of imprisonment of three months, including one month of house arrest, two months of overnight curfew, travel restrictions outside of the province, and a restitution order to repay the funds. FUTURE CONSIDERATIONS Moving forward, since senior officials often fail to lead by example, public institutions need to build stronger institutional governance practices so that we do not have to rely on the criminal law as the means of enforcing ethics and accountability in the public procurement process. SP SUPPLY PROFESSIONAL
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