OCTOBER 2020
A GLOBAL AFFAIR
Jeff Russell on global sourcing, supply chain education, technology and more Supply chain skills
Canada’s Railways
Warehouses of the future Mercedes-AMG A 35 4Matic hatchback Emergency prep
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VOL.62 No.5 OCTOBER 2020 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN
@SupplyProMag
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COVER: JOEL ROBERTSON PHOTOGRAPHY
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FEATURES
ALSO INSIDE
7 ALL ABOARD Railways grapple with the pandemic.
14 CHANGING TIMES Tips for attracting supply chain talent.
8 SUPPLY CHAIN SKILLS What’s needed to do the supply chain job of the future?
16 WAREHOUSING OF THE FUTURE Using technology to optimize warehouses and distribution centres.
10 A GLOBAL AFFAIR Jeff Russell on the international role of the supply chain professional.
18 EMERGENCY PREPARATION How to do your best to prepare for the worst.
4 UP FRONT 5 BUSINESS FRONT 6 IN THE FIELD 30 THE LAW
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UP FRONT
SHARPENING PROFESSIONAL TOOLS
Similar to years past, the October issue that you’re reading focuses on education and professional development. While it’s challenging to take the time to target your career, even in less-turbulent times, the pandemic is making it even tougher for many to do so. But it’s still important. In that spirit, here are a few thoughts on how to keep your career goals front and centre, even in the current circumstances. First up, education. Our professional and social lives have been upended due to the pandemic, with even simple, day-to-day tasks like grocery shopping all the more more challenging. Supply chain professionals have seen every aspect of their jobs become more difficult, including their vocational education. They’re not alone – according to a UN study from August of this year, 1.6 billion learners in more than 190 countries have had their education disrupted in some way. Yet we all must continue our education to help us deal with rapidly changing technology, a shifting role for supply chain in many organizations and, of course, the ongoing pandemic. Traditional conferences and other in-person educational options are shut down for now. But many of the regularly scheduled events that supply chain professionals attend have gone virtual. Sure, it’s not quite the same as attending in person – networking is different and lacks a certain faceto-face experience. Yet the educational element of online events remains intact. You can still learn from a seminar streamed into your living room as easily as when someone is standing at a podium in front of you. Organizations such as the NAFA Fleet Association, CAMSC and Supply Chain Canada are offering ongoing remote education options during the pandemic. I recently attended and enjoyed both the NAFA and Supply Chain Canada national virtual conferences. The bottom line is, it pays to check out virtual conferences as an education option. Page 8 of this issue features an article offering advice on skills for enhancing a supply chain career. Technology is one of the main skills highlighted to pursue through education. Technology advances quickly these days, so staying on top of developments in the field will certainly pay off. Finally, it’s possible to seek other career goals during the pandemic as well. For those looking to make a change from their current positions, meeting with a career coach, consulting a recruiter or conducting informational interviews with prospective companies is all possible without leaving your kitchen table. It’s also easy to enhance your social media presence during a pandemic. Your contacts and followers on LinkedIn, for example, will still see your posts and activities and some are likely more active these days on the platform than ever. Give them something to follow along with and be impressed by. Professional education and career advancement take work, regardless of the circumstances. But during challenging times, a bit of creativity and focus can go a long way.
EDITOR MICHAEL POWER 416-441-2085 ext 110, michael@supplypro.ca PUBLISHER ALEX PAPANOU 416-441-2085 ext 101, alex@supplypro.ca DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY CUSTOMER SERVICE/PRODUCTION LAURA MOFFATT 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com ASSOCIATE PUBLISHER FARIA AHMED 416-441-2085 ext 106, faria@supplypro.ca EDITORIAL ADVISORY BOARD LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd. WAEL SAFWAT Procurement Director, Black & McDonald SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services KIRUBA SANKAR Director, Corporate Social Responsibility—RBC Global Procurement JEFF RUSSELL Purchasing Manager, ABS Machining iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x105 swilson@iqbusinessmedia.com President ALEX PAPANOU
PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION Mail: 302-101 Duncan Mill Road, Toronto, Ontario M3B 1Z3 SUBSCRIPTION RATES Published six times per year Canada: 1 Year $ 99.95 CDN Outside Canada: 1 Year $ 172.95 USD Opinions expressed in this magazine are not necessarily those of the editor or the publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. No part of the editorial content of this publication may be reprinted without the publisher’s written permission. © 2020 iQ Business Media Inc. All rights reserved. Printed in Canada.
MICHAEL POWER, Editor 4 OCTOBER 2020
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BUSINESS FRONT—BY MICHAEL HLINKA
WHERE’S THE INFLATION? WHAT THE CONSUMER PRICE INDEX SAYS ABOUT RISING PRICES As I write in mid-September it’s hard to know how the economy is doing. There has been a partial recovery since the precipitous drop in spring, when virtually everything except essential services was brought to a grinding halt. In both the US and Canada, governments provided fiscal stimulus that would have been unimaginable nine months ago. Canada will run a deficit this year that is projected to be $343 billion, up from $20 billion a year ago. That is an astonishing increase. One way to wrap your head around it: every man, woman and child has been given $10,000 this year for doing nothing. I’m not here to criticize this public policy decision. I have and will continue to criticize the decision to shut down the economy for as long as it was. We were told that the shutdown was to “flatten the curve.” Once it was flattened – which was in late April – there should have been a more concerted effort to open up, allowing each individual to assess his or her willingness to take the risk that they would contract COVID 19. Given that this wasn’t an option, the government had little choice but to print money and pay many of us just for being Canadian. This was common public policy in many of the developed countries of the world. If you agree with Milton Friedman (and this one is hard to dispute) that inflation is a monetary phenomenon, then we will be seeing some sort of inflation sooner or later. What Friedman argued is both reasonable and intuitive: if the output in an economy does not increase, but more money is printed, then natural market
forces mean that at least some prices will go up. It is very difficult to argue with that logic. BASKET OF GOODS We aren’t seeing inflation yet, at least not as measured by the Consumer Price Index. The latest reading we have is for the end of July and over the past year. The basket of goods and services tracked by Statistics Canada has risen by a miniscule .1 per cent. That means that if a year ago everything in the basket would have cost you $1,000, it would now take $1,001 to buy that same bundle of stuff. It is true that if you exclude gasoline, then it’s $1,007, but this is still an almost invisible increase. The fact that we don’t seem to have seen much general inflation yet doesn’t mean that no prices have gone up. I’m going to draw on admittedly anecdotal evidence to make this point. When the pandemic began, I started grocery shopping more regularly than I had in many years, and I paid closer attention to prices. Back in March, when I went to my local No Frills grocery store, I could buy No Name potato chips for $.99 a bag and I think I was paying about $2.40 for a dozen eggs. Today the potato chips still sell for $.99, but now the eggs are more expensive. And this is where much of the inflation will reside. The prices of what are understood as “normal” goods will get bid up, while “inferior” goods (and I put potato chips in this category) will remain at the same price. Therefore, the inflation that we will experience, at least in the food category, will result in an almost imperceptible
erosion in our quality of life. Yet at the same time, there will be powerful anti-inflationary forces at work. Labour markets in North America will be slack, likely for an extended period of time as we struggle to get back to something approximating full employment. Then there’s the China card. The country remains generally opaque to Westerners. However, from what I understand, a key concern of the ruling classes is full employment. Idle hands, after all, are the Devil’s workshop. My guess is that Chinese public policy will be oriented towards keeping everyone working and the best way to accomplish this is to offer low prices to the rest of the world. This will also be anti-inflationary. The bottom line is that I don’t see significant inflation returning any time soon, at least as reflected in the Consumer Price Index. So where will the inflation be? I think we’ve already seen evidence of that phenomenon with the performance of the US stock market. But where I think that asset inflation is really going to take hold over the next decade will be in real estate prices. Mark Twain famously said of land: “They’re not making it anymore!” Given that everyone needs to live somewhere and given the favourable tax treatment given to one’s primary residence, I’m betting that residential real estate will be where all that money that is being printed will (pun intended) find a home. SP
Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network.
“The inflation that we will experience, at least in the food category, will result in an almost imperceptible erosion in our quality of life.”
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IN THE FIELD—BY LISA FENTON
OUR FUTURE LIFE ARE YOU GETTING THE BEST FROM YOURSELF? What will your future self look like? Are you taking charge and getting the best from yourself? Hal Hershfield, a UCLA psychologist, notes that imagining our future selves as separate people whose interests and desires matter to us allows us to feel closer to the future you and treat him or her better. Future supply chain challenges will include developing digital dexterity and employing advanced analytics and artificial intelligence (AI). Beyond communicating, collaborating and managing constant change, supply chain leaders must have not only enterprise IT skills at the user level but also hands-on use. We also need an affinity for technology; an understanding of what drives demand, supply and pricing for the goods and services provided by your organization and its competitors; knowledge of costto-serve; flexibility for project management; and an understanding of the principles, pitfalls and challenges of project management. GETTING THE BEST FROM OURSELVES For results we must look beyond identifying weaknesses and explore self-reflection and self-assessment. We must create a road map to take action and to monitor ourselves. Self-reflection could include the five Rs model (Bain team, 2002): reporting, responding, relating, reasoning and reconstructing. This will allow you to ask questions and seek answers. If your job is killing you, if circumstances are leaving you stressed, if you’re unhappy, tired and frustrated then things are not working for you and must change. When our middle son was in rep hockey, there was a rule that stated, ‘give yourself 24 hours 6 OCTOBER 2020
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before responding to something that upset you.’ I have done this, and it’s a great idea to use this with many situations in our lives. Tools for reflection include journaling, blogging, video documentation and voice recordings. The Wheel of Life tool is one such tool, the modern-day version is created by Paul Meyer, a pioneer in life coaching. It contains eight sections – spirituality; health; work; social; development; recreation; family and life planning. Rate yourself in each area from one to 10. The process facilitates which areas you should focus on and gives you a perspective of your life. Such self-reflection improves self-awareness, provides perspective, a deeper level of learning and confidence while enabling you to challenge your assumptions. Self-assessment could include tools such as the Myers-Briggs Personality Type Indicator, a self-report inventory identifying personality type, strengths and preferences. The questionnaire was developed by Isabel Myers and her mother Katharine Briggs based on their work with Carl Jung’s theory of personality types. Today, the MBTI inventory is one of the most widely used psychological instruments in the world. Or, try writing a personal mission statement to define your fundamental purpose. It gets to the why of you and states who you are. A roadmap could include a personal vision statement, a timeline with milestones, questions on goals, skills, knowledge and personal experience. You can create a roadmap for each goal. I like the seven-step method from Design Epic Life: • Define the big picture
• Define the end of the roadmap • Define the milestones, achievements and rewards • Define the process • Define the obstacles • Track your actions • Do a regular review An action plan should include setting smart goals: specific, measurable, attainable and time focused. It could include a personal vision statement to define your current and future objectives while guiding and helping you to make decisions that align with your beliefs and goals. Criteria include concise; clear; time based; future based; stable; challenging; inspiring and abstract. You can return to it, review and revise as well as use it for reference. It helps you set a broader strategic plan with a long-term focus to differentiate you, as well as focus on core competencies needed to achieve your goals. Monitoring your plan could include aspects like educational, spiritual, physical, emotional and social. Setting personal KPIs, which focus on small, achievable steps, help keep your goal in mind while staying motivated. If, for example, you set physical fitness goals, monitoring them could include fitness trackers and apps. Professionally, if you’re working to improve focus, the process could include the Pomodoro Technique, a time management strategy; a meditation app such as Insight Timer; or Panda – an extension that offers a focus mode. There are many benefits to focusing on getting the best from yourself: smarter goal setting, a more balanced life, less stress, self confidence, improved quality of life, enriched relationships, better
Lisa Fenton is supply chain manager at Rapala VMC Corporation.
“If your annual income is under $50,000, invest three per cent of it in yourself. When your income climbs above $50,000, invest five per cent.”
health, fewer bad habits. I recently came across two figures: if your annual income is under $50,000, invest three per cent of it in yourself. When your income climbs above $50,000, invest five per cent. There are many cost-effective ways to work on your development. Take a class or course, read, watch webinars, ask for feedback, shadow others and observe, network, attend conferences, journal, meditate or get a mentor. In the future, supply chain leaders and their teams will face additional challenges in a virtual environment. This will compel us to anticipate trends, pivot quickly to take advantage of opportunities, provide appealing workplaces and challenge our ability to attract and retain employees. Focusing on our own development will help us to meet these challenges. SP SUPPLY PROFESSIONAL
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BY CHRISTIAN SIVIÈRE
ADAPTING TO CHANGE CANADA’S RAILWAYS AND THE PANDEMIC Originally serving Canada from East to West, our two historic railways, Canadian National and Canadian Pacific, both expanded into the US several years ago through acquisitions and are also important North-South lines. Being two of only seven North American Class 1 railroads (as they are called in the US), they play a major role in getting products to market in all directions – domestically within Canada and internationally with the US, southbound and northbound. The pandemic hit mid-March, just when business was getting back to normal with the lifting of the rail blockades that affected rail transportation in Canada at the beginning of the year. Covid-19 has affected all industries and like everyone, our railways must adapt. We’ll first look at the impact in Canada, then on their operations to and from the US. This market is crucial for Canada as, year after year, three quarters of our exports go to the US and about 60 per cent of our imports come from there. Canadian National had a good 2019, with revenue up four per cent. But 2020 didn’t begin that
well and revenues were flat in the first quarter, compared to 2019. Of course, second quarter results were adversely impacted by the pandemic, with revenues down 19 per cent due to lower volumes across most commodity groups and lower fuel surcharge rates. These were partly offset by increased shipments of grain, higher coal exports via West Coast ports and freight rate increases. RTMs, measuring the relative weight and distance of freight transported by CN, declined 18 per cent from the same period last year and freight revenue per RTM decreased by one per cent. By contrast, 2019 saw Canadian Pacific’s revenues increase by seven per cent, in spite of the economic uncertainties caused by geopolitical challenges, like Trump’s trade war with China and others. Following a record first quarter, where revenues were up 16 per cent, they were down 9.4 per cent in the second quarter, unsurprisingly, as automotive, metals, container, oil and coal revenues all decreased due to auto plants, factories and retailers shutting down. These negatives were partly offset by increases in grain, potash, fertilizer and forest products, with grain up eight per cent year-over-year. CAR LOADINGS The latest statistics on Canadian railways car loadings for July have just been released. In spite of the rebound in trade with the US, railway car loadings remained below pre-pandemic levels in July, falling short of a full recovery. The volume of freight transported by Canadian railways posted yearover-year declines for the fifth consecutive month since the start of the pandemic. Overall, 29.7 million tonnes of freight were carried in July, a decrease of 11.8 per cent compared with July 2019, with the low demand for raw minerals and hydrocarbon contributing the most to this decline. Loadings of fuel oils and crude petroleum saw the largest decline
“In the short to medium term, we will have to take climate change seriously, as evidenced by the wildfires in California and Oregon, and act on it collectively.” in July, dropping 67.1 per cent compared with the same period in 2019, in spite of stronger crude oil exports. Similarly, coal loadings dipped 23 per cent and fuel oils, crude petroleum and coal products accounted for over half of the total drop in tonnage. Gasoline and aviation fuel loadings saw a decline of 55.4 per cent, reflecting the weaker demand for these fuels during summer travel. Automobile and mini-van railcar loadings fell 29.7 per cent in July but motor vehicle parts and accessories saw a 12.8 per cent increase, with other transportation equipment parts on the rise as well, signalling that assembly plants were ramping up production as the economy began to re-open. Following the economic slowdown, loadings of essential commodities like agriculture and food products were up and this trend continued in July, with large year-over-year increases in car loadings of wheat (+34 per cent), canola (+82.3 per cent) and other cereal grains (+69.8 per cent). Potash loadings also increased in July (+9.9 per cent). Internationally, March saw our exports fall 4.7 per cent and imports decline 3.5 per cent. The big plunge happened in April with exports down 29.7 per cent and imports down 25.1 per cent. Following these historic declines, exports increased 6.7 per cent in May but imports decreased a further 3.9 per cent.
Christian Sivière is president at Solimpex.
The rebound took place in June, where overall exports were up 17.1 per cent and overall imports up 21.8 per cent. The good news is that our exports to the US alone increased 21.8 per cent and imports by 28 per cent in June. The positive trend continued in July, with our exports to the US up 15.1 per cent and our imports 16.2 per cent. As we saw in the car loadings figures above, these have not yet fully benefitted our railways. Trucks carried the majority of this increased trade and railways will benefit as well, with some delay, as the types of products they carry have a longer cycle and are slower moving. In the short term, we will be very attentive to the evolution of the post-pandemic recovery and the US election outcome. The latter may produce more harmony or more “trade wars,” with substantial impacts on Canada either way. In the short to medium term, we will have to take climate change seriously, as evidenced by the wildfires in California and Oregon, and act on it collectively. Meantime, railways will continue to play an essential role in transporting energy, minerals, agricultural products, automotive as well as containers loaded with finished goods across the continent, in a cost-effective and eco-friendly way. SP
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BY MICHAEL POWER
UNCHARTED TERRITORY THE POSTCOVID-19 WORLD OF SUPPLY CHAIN EMPLOYMENT Whether through technology, geopolitical shifts, climate change or other factors, supply chain professionals face challenges on multiple fronts. COVID-19 and the recession that has followed have added a layer of hazard and opportunity for the profession to deal with. Supply chain professionals must hone skills and sharpen job hunting tools to advance their careers. But what is the condition of the job market? And what skills will be important to navigate the new normal? The importance of supply chains is more profound than ever, says Abe Eshkenazi, CSCP, CPA, CAE, CEO of the Association for Supply Chain Management (ASCM). Both leadership and technical skills will be essential. The ASCM 2020 Supply Chain Salary and Career Report bears this out. Roughly half of the respondents said they are looking for professionals who are excellent communicators, Eshkenazi says, while other skills include collaboration and critical thinking. Over half said inventory management is essential, followed by best-prac8 OCTOBER 2020
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tices knowledge, project management and computer literacy. “Even before the global pandemic emerging technologies were disrupting roles and responsibilities,” Eshkenazi says. “That dynamic, combined with today’s record-high unemployment and increasing awareness of supply chain, are presenting remarkable opportunities for our profession. Now is the time to build a superior supply chain workforce of the future. And that hinges on education, training, reskilling and upskilling.” Meanwhile, the pandemic hasn’t so much changed the skills that supply chain professionals need as it has put more focus on risk, resilience, collaboration and leadership, Eshkenazi says. It has also put a spotlight on the field, with many realizing the impact of supply chains on their lives. “Supply chain professionals must take this opportunity to prioritize ethical standards, transparency and responsible business,” he says. Some industry experts estimating 270,000 new supply chain management positions created each year, with one qualified
worker to fill every six jobs. Industry professionals must hone skills and develop new capabilities to compete. Do a skills assessment to identify strengths and weaknesses while considering how to better position yourself, Eshkenazi says. Improve technical expertise as information systems are now at the centre of most business processes. Finally, Eshkenazi notes, become a lifelong learner. “We may not know where the supply chain field is headed, but the need for talented professionals is a certainty,” he says. “Make the most of this unique moment by pursuing on-demand courses and educational videos; seminars; performance-driven group training; and best-in-class designations.” NEW NORMAL Creative thinking that generates new ideas and procedures is becoming an essential skill in the field, says Sam Manna, director, supply chain recruitment – Ontario, Horizon Recruitment. Business is in a “new normal” phase where consumers and employers have shifted their habits, Manna notes.
Supply chain professionals can no longer rely on old-but-proven methods and must adapt quickly. Those who push boundaries and not only adjust to change but create the right kind of change will be in high demand. The pandemic has shown that there are events for which it’s tough to plan, Manna says. But when such events occur, it’s important to embrace change. “We realized recently that a supply chain can quickly and easily be disrupted,” he says. “No one in January could have predicted the toilet paper shortage that occurred in April, or that sanitizing products would be in such high demand. We saw some companies shift their production and distribution to address the changing needs. Also, businesses that could expand their online presence or maintain or establish a virtual office were able to thrive. Those that were not able to adjust were left behind. The need to be nimble and adaptable became critical.” Manna agrees that becoming more familiar with new technology helps to stay on top of the skills supply chain professionals will need. It’s impossible to say when the world will return to normal, so the ability to work remotely while remaining connected is essential, he says. While the effects of the pandemic and other issues have highlighted the need for certain skills training, how has it affected Canadian supply chain salaries this year? Manna notes an increase in salaries early in 2020, then flattening somewhat over the past few months – an understandable trend given the pandemic, he says. “I still find that the salaries being offered are slightly higher than what we saw in 2019,” Manna says. “One trend that has continued however is the improvement in compensation plans. I’ve seen more and more clients offer longer vacation packages, flex-hours and remote working options – even before this pandemic. It’s clear that employees are looking for a better work-life balance and employers are taking notice.” SUPPLY PROFESSIONAL
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Proactivity is key, says Sean Naidu, business manager – procurement/purchasing, HAYS Recruiting Experts Worldwide. Supply Chain Canada and other organizations offer training, while reading news, browsing supply chain forums and thinking about next career steps can help determine skills and career direction. Canadian supply chain salaries have mostly either gone down or stayed stagnant compared to last year, Naidu notes. This depends on the function, with purchasing and procurement largely remaining the same. Due to the pandemic, controlling cost is an even larger priority – a fact that’s reflected in salaries. “A lot of companies are starting to hire newcomers to Canada without the so-called ‘Canadian experience,’ as they can attract candidates with a lower salary and give them their first break into the Canadian workforce,’ Naidu says. “Supply
chain talent in Canada has been on a rise with job applicants bringing global supply chain experience.” Neil Drew, director of recruitment agency Winchesters, notes that the skills needed to perform well in purchasing and procurement, including analysis, negotiation and communication, will remain largely the same. But the demands will be higher and procurement professionals must up their game to compete, Drew says. Companies will also demand strategic, forward-thinking professionals with first-rate vendor management and sourcing skills. Patience will be an important trait for those looking to advance in the field. “Many companies are still trying to work out how to do business in the new climate,” Drews says. “New processes will affect the progress and efficiency of the procurement processes.” A promotion or increased responsibilities at work are good
ways to increase skills and education in the field, Drew says. Despite the importance of negotiation, many procurement professionals still lack skill when talking about themselves, which can hurt their job interview potential. Sales training may improve interview prowess, while also helping people to stand out from the competition. Drew notes fewer opportunities and more competition, so many have lowered salary expectations. Some industries have reduced hours or asked for voluntary salary decreases and some areas have seen significant salary drops. “Candidate confidence is down, so less people who are currently working are looking for new jobs,” Drew says. “Many procurement professionals who were open to new opportunities last year are now hunkering down and waiting for this to pass. When companies are trying to source the best talent and headhunting from their com-
petitors, aggressive salary offers have been made to try and entice top talent to leave.” At the same time, Canada is in a recession. During downturns, companies look to procurement to help reduce costs and boost cashflow and profits. Drew expects this recession will be similar and organizations will invest more in procurement and supply chain for the next few years. “This year is like no other though and things change often and quickly,” Drew says. “Although we predict more activity in Q4, all bets are off this year. It‘s been a whirlwind of a year and who knows what else 2020 has in store for us? Our hopes are we are over the worst of this and we are starting to recover.” SP
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BY MICHAEL POWER
JEFF RUSSELL CHARTS A PATH FROM HOCKEY RINK TO BOARDROOM The ways in which people get started in supply chain are as varied as those who work in the field. For Jeff Russell, that path was by way of a hockey rink and small-town Ontario. “My original dream was to play pro hockey in the 80s,” says Russell, now corporate purchasing manager for Miller Waste Systems Inc. in Markham, Ontario. “It didn’t work out, so I fell into purchasing by accident and it’s just been one steady thing after another.” At one point, Russell also dreamed of enrolling in the Norman Patterson School of International Affairs at Ottawa’s Carlton University. By that time his ambition had shifted from hockey to working in global affairs. But the program allows 25 to enroll each year, and during the admission process Russell placed 26th. “It was a small class and that was it,” he says. “So, I was left going, ‘what do I do now?’” But Russell’s options were hardly limited. By that time, he had received a business accounting diploma from Algonquin College of Applied Arts and Technology and a BA in Law-Sociology, along with an Honours in sociology, from Ottawa’s Carlton University. Russell was born in Shawville, Quebec but grew up in the small, Northern Ontario mining 10 OCTOBER 2020
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town of Ear Falls, about a five-and-a-halfhour drive northwest of Thunder Bay. His father worked in several mines in the area, including an iron ore mine for almost 15 years. Russell says that he grew up around the mining industry. “I left (Ear Falls) to play hockey but if you talk to my parents they’ll tell you that I left to go to school,” Russell says. “My dad, being in the mining industry, was quite big on getting an education as opposed to playing pro hockey. I did chase the dream, and that was what I wanted to do and up until I turned 19, that’s what I did. I played hockey and tried to make a go of it and then called it quits.” Russell had worked as an accounts payable clerk before attending Carlton and so was able to use his prior experience to land a role as a purchaser at Nellcor Puritan Benett (Meville) Ltd. in Ottawa. He became a buyer at Pratt & Whitney Canada in Mississauga in 1998 before taking on another buyer role at ABC Technologies the following year. He eventually moved on to become first a buyer-planner then a strategic sourcing specialist at Honeywell before then landing the role of procurement director at Crane Supply, a distributor of pipe,
DAILY ROUTINE These days, a typical day for Russell starts with reviewing key performance indicators (KPIs) along with scanning the news for changes in global markets that may impact future costs on critical items like foreign exchange rates or scrap metal costs. Global raw material is tied to the US dollar, so understanding its future impact on imported products in Canada is very important, he notes. SUPPLY PROFESSIONAL
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PHOTO: JOEL ROBERTSON PHOTOGRAPHY
A GLOBAL PERSPECTIVE
valves and fittings. Since then he has worked as procurement director, carbon, at Samuel, Son Co, purchasing manager at both Curtiss-Wright Corporation and ABS Machining, before getting his current role at Miller Waste Systems last April. Along the way, he also received his Certified Procurement Professional (CCP) designation from the Purchasing Management Association of Canada (PMAC) in 1999 and the Certified Purchasing Manager (CPM) designation in 2002 from the Institute of Supply Management and the Certified Supply Chain Management Professional (CSCMP) designation from Supply Chain Canada (formerly PMAC) in 2009. He has been a member of the Chartered Institute of Purchasing and Supply since 2011 and, in 2016, was invited to join the International Federation of Purchasing and Supply Management, which grants the IFPSM accreditation. He has gotten background training related to Canada Customs from the Canadian Society of Customs Brokers and has received his Green Belt certification in Six Sigma. While he has trained as a Black Belt he is not yet certified, and has also taken the Design for Six Sigma (DFSS) training in lean management for design but is not yet certified. After all his training and experience, Russell is quite happy to now work in the supply chain field, despite earlier ambitions in both pro hockey and international affairs. “In hindsight, with the amount of international business I’ve done, I’m almost in that role, just not doing it for the government,” he says.
Up next is a review of his emails to review submitted requests for products or services that require immediate attention. He also works with his team in directing and supporting what they do while helping with any issues they may have. A senior role means balancing strategic, long-term initiatives with a more hands-on approach to short-term, tactical tasks. This helps ensure purchasing objectives align with corporate objectives. Conversations with suppliers help to resolve issues, highlight opportunities and tie what’s
“I’ve been meeting with suppliers online and have met with a few in person. Visitors must wear a mask, no handshakes and keep a distance, which is funny sitting at a large boardroom table.”
happening in the marketplace back to news received earlier in the day, which clarifies how these factors affect the products and services being bought. A major draw of the purchasing and supply chain field is the variety of tasks and issues that arise, Russell adds. While those issues are often similar, it’s never quite the same from one day to the next. New challenges, different people and a constant push to coordinate between multiple branches within an organization to support company objectives keeps the profession interesting. But the three challenges of cost, quality and delivery are always present. Purchasers must ensure the best price with a high-quality product or service while also ensuring timely delivery. Technology, which has become increasingly important, could now be considered the fourth component that purchasing professionals must work to balance. “You’ve got to make sure that the suppliers and manufacturers that you choose can meet all four requirements as you move forward,” he says. “There’s always the competing element of all those. You may trade off on delivery for something cheaper, so you have to balance that. And then you’re looking at costs in terms of inventory and impact to the operation. If you can get it faster but pay more, you can make those types of decisions and pay it off. There’s always those types of situations.”
PHOTO: JOEL ROBERTSON PHOTOGRAPHY
SHUTDOWN WOES The biggest challenge to emerge recently has been the global pandemic, which has affected virtually all areas of business and private life. Russell began at Miller Waste Management last April, as the pandemic hit its peak. The economic and business shutdown at the time allowed him to learn about the new role at his own pace. Contacting suppliers for information has been time consuming and, with many working from home, it sometimes took a week or longer to get a response. “It’s definitely confusing,” he says. “I’ve been meeting with suppliers online and have
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met with a few in person. Visitors must wear a mask, no handshakes and keep a distance, which is funny sitting at a large boardroom table at opposite ends of the table instead of sitting directly across from one another.” Miller Waste Systems is an essential service, and Russell notes the challenge involved in working with suppliers that have reduced staff or even shut down their operations. It’s tough ensuring continuity and sometimes necessary to locate new sources of supply or buy extra inventory to accommodate lengthening lead times and shortening supply lines. As well, prices have risen as the Loonie’s value has dropped, since most Canadian products are bought in US dollars around the world, Russell says. There are challenges within the supply chain as well, as a lack of ocean vessels has meant fewer shipments from overseas. “It’s almost like a perfect storm – all these different scenarios are coming together, highlighting risks and impacts,” Russell says. “It highlights the fact you need to ensure you have a supply chain risk mitigation plan in place. Otherwise, your supply chain will impact your operation in a negative way.” For businesses and their purchasing organizations, Russell suggests planning and patience to weather the pandemic. Ensure your risk mitigation plan is written down and review it twice a year, he advises. If no such plan is in place, start working on one as soon as possible. For those who source globally, identify domestic sources and have backup sources for your primary source. “Your strategic plan should identify the sources of supply by commodity and as a buyer or purchaser you should be aware of the capabilities of your suppliers,” Russell says. THE GLOBAL STAGE Among other things, the pandemic has illuminated the fact that Canada isn’t as self-sufficient in key products, services or materials as it should be, Russell notes. Free trade and global commerce will always be part of the country’s economy and it’s important to recognize opportunities in these areas. And while it makes sense to protect local industry, Canada should ensure it doesn’t shut out the US, its closest trading partner, in the process. Meanwhile, many finished products like electronics and clothing are manufactured in low-cost countries with very little of it made domestically. Companies should pass along some of the savings they get from this arrangement to consumers so people can enjoy more of the buying power that would result. 12 OCTOBER 2020
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“Your strategic plan should identify the sources of supply by commodity and as a buyer or purchaser you should be aware of the capabilities of your suppliers.”
“I’m a big proponent of having global sourcing opportunities and companies should be able to pass it down to their consumer base so that way everybody achieves it,” he says. “I definitely agree that we should have more trade domestically, but I also agree that we should be doing more globally and reaping the rewards. You’re going back to economies of scale – some countries are going to be really good at certain things and other countries are going to be really good at other things. It’s about identifying what those economies of scale are and who the manufacturers are so you can reap the rewards.” For its part, Canada exports raw material then imports finished products. The country could likely do a better job of understanding the raw materials exported so we’re not paying as much for the finished product, Russell says. If Canada exports iron ore and imports steel or nickel, how much of the raw material is returning as a finished product? How much of that raw material originated in Canada that we could benefit from? “We can get a little more sophisticated that way,” Russell says. “The US is so concerned about all the minerals that are coming from the Congo area. They’ve got policies that review that. They police it, they want to know. If they can track that to the nth degree, Canadian companies should be able to benefit from knowing how much of our raw material was exported out into a finished product before it came back into Canada as a finished product so we can get credit for it.” SUPPLY CHAIN EDUCATION The supply chain and purchasing worlds have gained widespread attention since the pandemic began. But there’s still more that can be done to boost the profession’s profile, Russell says. Many universities abroad do far more to promote the field to students as a potential career
than is often done at Canadian institutions, he notes. While Canadian colleges do promote the field at the college level and there are a few MBA programs that concentrate on supply chain, there remains no business degree in purchasing or supply chain like there is in, say, accounting. Canada must promote the field as a viable career path while showing the sorts of tasks involved, Russell says. “You could be negotiating a multi-million-dollar contract for a product or service for your organization,” he notes. “If you were to save 10 per cent off the purchase price, this is the benefit that you’re going to see in the bottom line. We don’t do enough to promote in Canada at Canadian universities.” Along with a lifelong hockey interest, Russell also competed at a high level in judo. Recently he has contemplated joining a judo club locally, in Stouffville, Ontario close to his office. He has also thought about enrolling his daughter, 11, in the sport once clubs are allowed to operate again. He and his wife also have a 14-year-old son. The family also just got a new pet, Ginger—a Pikachu dog, or cross between a Pekingese and a Shih Tzu. These days, Russell’s sporting hobbies include golf in the summer and alpine skiing in the winter. He also loves to read fantasy books, with his favourite authors including Terry Brooks, Jay Kristoff and James Islington. Growing up, he devoured his father’s collection of novelist and short-story writer Louis L’Amour’s books and now owns his dad’s entire collection of over 100 books. Finally, for those new to the profession, don’t be afraid to start at the bottom and learn the concepts and processes by working as a buyer, Russell adds. While the day-to-day, tactical work of a junior buyer may be repetitive, the position helps to develop an understanding of the concepts and processes of the field while on the job. This process can help supply chain professionals perform better when they reach more senior levels within the profession. “Too often people fresh out of school are getting into senior-level positions without really, truly understanding the role properly because they haven’t taken the time to learn as their predecessors have,” Russell says. “I truly believe that purchasing and supply chain management is the heart of any organization that can make a company even more successful if given the opportunity.” SP
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BY TIM MOORE
CHANGING TIMES
Does remote working really empower enterprises toward driving a genuinely collective consciousness, with both increased efficiency and optimization of operations? I don’t think so. Can remote newcomers be truly assimilated within the company – complete with common goals and values – if they work and are held away from the collective? It certainly gives a different perspective, heightened urgency and, frankly, necessity toward improving collaboration and teamwork in the workplace. Better collaboration will have a more crucial connotation for everyone in today’s remote workplace, not just for supply chain professionals.
Without a doubt, COVID-19 has seriously changed how, when and where supply chain professionals work. What has been a traditionally in-person, face-to-face process of working and hiring has today become more technologically distant, or rather, ‘virtual’ process. Since the pandemic’s arrival, some supply professionals have been sourced, interviewed, and hired – spending months working remotely from home already; and yet haven’t met a single co-worker in person, or even visited the head office of their newfound employer yet. It will be interesting to see how sustainable and transformative practices like these will be in the long term, considering they’ve been implemented through an immediate crisis and global pandemic. Similar to EDI’s (electronic data interchange) introduction into the supply chain field, there are myriad levels as to how far a firm will dip their feet into virtual hiring. Sure, there is Skype, and by now mostly everyone is familiar with ZOOM interviews, but one hiring trend which is starting to gain traction is the asynchronous video interview (AVI). The AVI differs in that it involves no online conversation with an interviewer or even an organization. Individuals get an email invitation to participate, click on a link, and then record audio and/or video responses to questions. Interviewers can then score the videos and pick the top candidates. In some cases, a computer algorithm handles this task. I wonder how social recruiting will affect the already shrinking longterm tenure and retention rates of North American staff in general, if they haven’t been laid off or furloughed already? Many people find
STEWARDSHIP Companies know of their environmental responsibility – to address the ecological needs of the planet and their firm’s guardianship of the natural resources used in the production of products and services. After all, an environmental goal is to leave as small a footprint as possible to preserve both renewable and non-renewable global resources. But what about the firm’s stewardship and responsibility for their human resources (their staff, in other words) within their enterprises as well? Is the drive now toward the smallest footprint possible in the HR department too, with automated robotic ‘cams’ asking one-sided questions? Are staff in general deemed as renewable or non-renewable now? Have today’s remote onboarding practices been thoroughly considered beforehand, and what are the long-term sustainability goals, strategies and key performance indicators put into place to safeguard and ensure that it really does work? Even beyond AVI, the entire hiring and recruitment process has changed from initial advertising of open positions, identification of candidates, pre-screening and prequalifying, remote interviewing, testing, reference checking and the conveyance (and related negotiations) of an acceptable offer. In the past one simply dangled an opportunity toward talent. However, in today’s environment, smart employers must initiate a positive and ongoing connection with continuous social dialogue with potential supply candidates to help drive and nurture talent towards opportunity. So, what should employers consider once they have captured new (and elusive) supply chain talent? Strengthen a sense of belonging. Ongoing communication and improved onboarding are paramount. Nurture talent by providing guidance, communicate regularly, share as much information about the firm and their key role within it, as often as possible. Encourage strong teamwork and improved collaboration through special task
KEEPING A PERSONAL TOUCH WITH EMPLOYEES DURING CRISES.
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AVI rude and impersonal, with no two-way discussion for candidates to learn more about the company and their potential bosses. Not surprisingly, some unemployed candidates are refusing to cooperate with AVI altogether; and just move on. Is this really how employers want to be remembered and how they’re going to win the war for supply chain talent? Mindfulness when recruiting is a long-term strategic advantage. Is automated sourcing and recruitment even ethical? Some may hint ‘yes’ when slammed against the hard reality of health, safety and environmental standards within today’s modern workplace. But isn’t today’s COVID-19 reality extraordinary enough without further exasperating supply candidates who already find themselves unemployed or in difficult and challenging situations? People don’t forget, and doesn’t this erode any positive social media awareness that a company may have been trying to cultivate? Does this progress you toward becoming an employer of choice in a competitive marketplace, when superior supply candidates ultimately wish to make a move? Is the process truly without bias, and ergo will this impede the firm’s ability to hire the best qualified or facilitate acquiring the most presentable? What about those lofty preCOVID-19 corporate aspirations concerning diversity, equity and inclusion hiring goals? Ultimately, will remote working and hiring obstruct our profession’s progression toward a goal of building truly world class, resilient, responsive and responsible supply chains? Or will it be just an army of pretty faces comfortable communicating via webcams?
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forces, open communication channels, and yes, more virtual meetings. Help them cope. Monitor how they’re managing their time whilst juggling responsibilities and chores at home. Let them know that although they’re working remotely, they’re not working in isolation. Beware of project creep where, according to one study, the lack of a formalized structure at home can cause remote workers to invest more hours and days per month than their office-based counterparts, resulting in more than three additional weeks of work per year. While this may seem like a boon for employers, it adds more stress on employees as almost a third of remote workers report struggling with work-life balance, and even more reported a need to take a day off for their mental health. Competing priorities are a barrier to effective team development as well. Encourage and reward their best work by eventually giving more freedom to make decisions and demonstrate your recognition of their extraordinary work being accomplished during the crisis. It’s imperative to share and celebrate great outcomes and improved results with all staff.
“To keep your more talented and established employees from going elsewhere, help improve their motivation for staying put.” Whether new or established staff, reaffirm their value by extending an increased investment in their skillset and abilities by offering professional development training, ideally leading to a valid and respected accreditation such as the Supply Chain Management Professional (SCMP) awarded by Supply Chain Canada. No, a onehour, generalized certificate or micro-credentialled webinar in purchasing or supply chain offered by a social media giant really doesn’t cut it. Professional development training not only shows a stronger commitment and confirms their value to you, the employer, but also gives employees a better sense of control with a credible outcome and accomplishment, at a time of turmoil when things seeming totally out of control.
Tim Moore is president and owner of Tim Moore Associates, a search firm focused exclusively on supply chain professionals.
ENGAGEMENT To keep your more talented and established employees from going elsewhere, help improve their motivation for staying put and increase their level of engagement with the firm. Show them how you appreciate them and have been supportive during the pandemic with increased safety measures in the workplace, assisting them with setting up remote offices at home, and other innovations and benefits. Illustrate what your longer-term plans are for the future once the pandemic subsides – they have been wondering. For those staff approaching retirement, how can your firm help them adequately prepare for a successful transition? Might there be consultative opportunities back with the firm, to help those recently retired and prevent the loss of institutional knowledge? Offboarding can be just as important as onboarding these days to ensure continuity and resiliency while making due with fewer resources. Now is certainly not the time for automating your hiring processes or distancing your engagement with staff (remote or otherwise), under the guise of dealing with COVID -19. This serves only to further alienate great supply candidates who are in high demand and short supply. You will need them in the future. People do extraordinary work and can demonstrate astonishing resiliency in crisis times. Employers must step up and go above and beyond to assist and retain current employees and better attract new staff in the future – whether they’re office based or work remotely. SP SUPPLYPRO.CA 15
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BY JACOB STOLLER
CREATING THE WAREHOUSE OF THE FUTURE
WAREHOUSE AND DC OPERATORS ARE LOOKING TO TECHNOLOGY FOR AN EDGE Perhaps the most significant by-product of the e-commerce revolution is that customers now expect that they can have exactly what they want, when they want it, and at the right price. This puts enormous pressure on supply chains. “It’s this idea of the perfect order that’s driving how supply chains are changing right now,” says Carol Valentine Fleck, coordinator of the supply chain management program at Mohawk College in Hamilton, Ontario. “People expect things to be instant and at a really great price.” As facilities devote more and more space to direct-to-customer orders – a trend that has accelerated during the COVID crisis – they are evolving from holding areas to customer service organizations where small orders are the norm, returns and complaints are frequent, and the standards for speed and accuracy, as set by leaders like Amazon, are forbidding. “The disruption we’ve witnessed in recent months heightens the need for better collaboration across the supply chain,” says John King, director of customer solutions at GlobalTranz. “We will likely see more rapid adoption of new technologies, such as digital warehouse management systems, that are part of a single solu16 OCTOBER 2020
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tion or platform that allows customers to see across their entire supply chain.” The trend has increased pressure to streamline and automate processes on the warehouse floor. “How do you get to that point inside a warehouse?” asks Fleck. “You’re not going to get there by having people running up and down racks and picking things by hand.” A variety of technologies are entering the picture. Better scanners and vision systems are helping companies improve accuracy and ensure that an item confirmed to be in stock isn’t damaged. Internet of Things (IoT) sensors are helping managers locate single items and gain an accurate picture of overall inventory. Pick-tolight systems are increasing the speed of stock picking and reducing the number of errors. Piece-picking robots are starting to eliminate human picking functions altogether. Understanding the technology itself, even at the most sophisticated end of the spectrum, is not the major barrier that potential implementers face. “Robotic systems are pretty user friendly,” says Vince Martinelli, head of product and marketing for Boston-based RightHand Robotics “and I think the better ones are
designed with the needs of operations people in mind. There’s a bit of a learning curve, but I think it’s entirely manageable. Vendors expect to help people with the process.” ENGAGING THE TEAM The hard part is matching workflows with the technology, and according to Martinelli, this is the key area where companies need to devote time and energy. “When you decide to make an investment in new automation like robotics, you need to think about how you’re going to operationalize that,” says Martinelli. “This means getting the team in the facility who are going to use the system engaged in the process. How will the process work? How will it affect the shifts? What if it fails on a particular day? All these need to be considered.” Floor layouts often change as well. Martinelli notes that when Amazon first began to use robots from Kiva, a company it acquired, pilots took place in brand new buildings. The warehouse of the future, therefore, is not likely to be staffed with techno-wizards, but with people who can engage in the kind of dialogue that will be required to work with technology partners in a rapidly changing work environment. This is reflected in the program content for the eight-month supply chain management program at Mohawk. While the course introduces students to the technology, allowing them to get a feel for transactions and how they tie together using an ERP system, this is only scratching the surface. “There’s no way we can teach them about all the technology,” says Fleck, “so we focus on the soft skills that they’re going to need.” Fleck adds that these include time management, communication and negotiations. Supply chain managers introducing automation will find that they have many of the same challenges that IT departments face. Any new technology has to integrate cleanly into existing SUPPLY PROFESSIONAL
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“We will likely see more rapid adoption of new technologies, such as digital warehouse management systems, that are part of a single solution or platform that allows customers to see across their entire supply chain.” warehouse management systems and ERP systems, so finding system integrators that can pull everything together is critical. According to John McKenna, president of 3PL McKenna Logistics who also teaches in the business program at Humber College, data awareness is one of the most important skills for supply chain professionals. “Now that you have this data, how do you turn it into information that you can make decisions on?” he says. “I would think even if you’re not a programmer type or networking person, you ought to have some familiarity with data, and understand the thought processes around metrics such as overall equipment effectiveness (OEE),” says Martinelli. The Humber program is similar to Mohawk’s in that it also provides an introduction to ERP, in this case using SAP, and puts considerable emphasis on soft skills.
“I think the skills that are going to be needed are analytical, problem-solving skills,” says McKenna. “The technology solves 90 per cent of the issues, but there’s still that 10 per cent where you still have to think and become a problem solver.” This isn’t just a matter of reading data reports – it’s also important to keep an eye on the evening news. “If there are labour negotiations going on in the port of Vancouver, you need to think about how a strike might affect your supply chain,” says McKenna. “If your boss has to bring you a problem, it’s probably too late.” CALIBRATION IS KEY Perhaps the toughest call for decision makers is the timing of major technology projects. “That’s a pretty big decision,” says Martinelli. “There is a classic case where you have legacy infrastructure and a competitor starts an online store
tomorrow with a newer generation of technology that provides higher productivity, so they now have a cost advantage. You may be able to absorb that for a while based on your brand and customer relationships, but at some point, you have to face the tough question of when you will move to the new technology.” Creative thinking will be key in making the transition to a tech-enabled warehouse environment. “I ask students why companies hire employees,” says McKenna, “and they say things like ‘because they have a job to fill’. But that’s not the real reason. They hire because they have a problem that needs solving.” SP
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BY SANJA CANCAR-TODOROVIC
CONFRONTING RISK
COVID-19 MEANS SUPPLY CHAINS MUST FOCUS ON RISK MANAGEMENT MORE THAN EVER The COVID -19 pandemic has driven digital transformations across many organizations, forever changing the traditional business model and how organizations work. Moreover, this global pandemic has elevated our dependence on our supply chains and the importance of robust vendor governance strategy as part of every business’s continuity and disaster recovery plan. The pandemic revealed how unprepared the supply chain was for a major global business disruption. Many businesses already had business continuity and disaster recovery plans to cope with a full range of potential emergencies from both natural and human causes. However, the majority of them did not have the scope wide enough to cover the global economic shutdown brought about by COVID-19; even fewer had plans that integrated with the business continuity and disaster recovery plans of their most strategic high-risk vendors. As a result, 94 per cent of Fortune 1000 companies have seen supply chain disruptions, in addition to the challenges around business operations and employee health and welfare. And while some areas, like retail, will take a lot longer to recover, it is important for all industries to reassess their resiliency and put adequate measures in place to mitigate the risks that we have encountered as a result of COVID-19. 18 OCTOBER 2020
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DISASTER PREPPING Business continuity and disaster recovery plans must include business continuity plans of strategic high-risk vendors. Such plans (for both organizations and their vendors) must evolve from the typical types of disaster scenarios, to now include disruptions that we have encountered in 2020 thus far, along with ones that might arise as commerce and essential services continue under the shadow of the pandemic. Focusing on the vendors and supply chains, the best starting point would be a review of contracts, ensuring that they all include adequate business continuity plans, as well as the steps for the plan’s execution clearly outlined in a RACI chart (responsible, accountable, consulted, informed). For the vendors that already satisfy the above mentioned point, it is crucial to confirm if they are already operating under business continuity plans. If not, do they anticipate invoking such a plan? In either case, what is the availability of resources and personnel required to continue to perform and maintain the supply of goods and services? These types of conversations, along with any augmentation of their plans, are a lot easier to tackle with a robust vendor governance strategy, where the business and the vendors are having regular monthly/quarterly business reviews as a platform to work on any business
Sanja CancarTodorovic is director – strategic relationships, global real estate asset management, at Manulife.
operations challenges, as well as the potential resurgence of challenges associated with the current pandemic. FOCUS ON STRATEGY Conduct an end-to-end supply chain risk assessment and devise a robust strategy. Vendor rationalization has always been the most cost-effective, operationally efficient long-term strategy. Nevertheless, COVID-19 has taught us a valuable lesson on the risk of having all your eggs in one basket. Those organizations that over-rationalized their vendor base have found themselves in a bigger predicament than those who focused on vendor diversity. A strategy would be to categorize your vendors into local and international. While international vendors are usually a lot larger and thus have better economies of scale, as a business it is crucial to assess whether the cost of supply is overshadowed by the lengthy lead times, transportation logistics, border-crossing disruptions and the overall demand put on the international vendors that might force them to prioritize their customer needs based on different factors. Establishing a tier-two vendor base – a base of local, smaller providers limited in their geographic coverage – can be a saving strategy during a crisis, even if the cost of the goods or services they provide is not on par with the tier-one vendors. A great example of this that we have all experienced, is the procuring of PPE from April to June of this year. Those businesses that had the tier-two vendors in their rosters able to supply PPE did not struggle with procurement challenges, transportation logistics, quality issues and the massive price gouging that the rest of us went through. Go back to basics, such as demand versus supply, assessing the cost of holding inventory on hand versus the risk of inventory scarcity in the future. In most cases, supply chains have SUPPLY PROFESSIONAL
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“Focusing on the vendors and supply chains, the best starting point would be a review of contracts, ensuring that they all include adequate business continuity plans.”
been designed on the principle of lean-machine (minimal inventory on hand, drop ship options, just-in-time deliveries and so on). In the example of PPE – where for the long foreseeable future there will be a need for it regardless of the industry – there is a case to be made for holding some of that low-cost, low-maintenance inventory on hand as a back-up plan to the tier-two vendor back-up plan. However, regardless of tier-one or tier-two vendors, a robust vendor governance strategy
is critical for a sustainable supply chain. As part of the vendor governance strategy, it is important to implement reporting tools and frequently monitor risks and mitigating factors, as well as any impacts that it might have on both the vendor business operation and your organization. Partnering with your vendors and collaboratively and proactively (not reactively) addressing any business operations challenges, including business continuity plans, is the only way to remain one step ahead of any potential disruptions.
GET TECH SAVVY Stay on and evolve the digital transformation journey that was amplified by COVID-19. It is obvious by now that the pre-pandemic way of doing things is behind us, so embrace digital transformation, technology and the Internet of Things (IoT). By doing so, massive and pervasive disruption caused by this global pandemic will have minimal chance of being repeated in the future. Start by focusing on process automation, completely cutting out the no- or low-value work, and reinvesting those resources into different technologies and IoT networks, such as enterprise resource planning (ERP) and material resource planning (MRP) systems, that will shift business faster and more efficiently across the entire supply chain. Embracing the digital transformation and investing in supply chain is key to keeping the supply chain stable amid future business disruptions. COVID-19 is a wake-up call for the entire supply chain ecosystem, shouting loud and clear that better technology is needed in this effort. As the saying goes, ‘never waste a good crisis.’ Now is the time to review and assess all the lessons learnt of the past six months, revamp the supply chain and vendor governance strategy and integrate it into your organization’s business continuity and disaster recovery plans. It is time that we all plan for the best, but truly be prepared for the worst, going forward. SP
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Connected and protected. Coming soon. The all-new ELANTRA.
The all-new Elantra is about to make its debut in Canada. Designed with a lower and wider profile and strikingly aggressive stance, our fully reimagined Elantra sets a new standard for sportiness in compact sedans. In other words, it’s the perfect new addition to your fleet to help keep your business moving. Inside, leading-edge tech and safety redefine the Elantra far beyond expectations. Stay connected with available wireless Apple CarPlayTM∆ and Android AutoTM◊ smartphone connectivity and stay protected with our available Hyundai SmartSenseTM technologies to help keep you safe – including Forward Collision-Avoidance Assist with Pedestrian, Cyclist and Junction-Turning Detection. The all-new Elantra. Arriving late 2020. Kevin Forodi Senior Manager, Fleet Sales, CPO and Remarketing kforodi@hyundaicanada.com (905) 948-6701
Julian Cheng Fleet Specialist jcheng@hyundaicanada.com (905) 948-6764
Naval Khan Fleet and Remarketing Analyst nkhan@hyundaicanada.com (905) 948-6746
hyundaicanada.com
™/®The Hyundai name, logos, product names, feature names, images and slogans are trademarks owned or licensed by Hyundai Auto Canada Corp. All other trademarks and trade names are those of their respective owners. Pre-production model shown. ∆Apple CarPlay™ may not be available on all devices and may not be available in all countries or regions. Visit www.apple.com for further details and any applicable limitations. Apple and Apple CarPlay are trademarks of Apple Inc.. ◊Android Auto may not be available on all devices and may not be available in all countries or regions. Visit www.android.com for further details and any applicable limitations. Android and Android Auto are trademarks or Google Inc..
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Fleet Management
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Executive rides All-new executive vehicles for 2020.
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Taming fleet spend Tracking fuel to manage costs.
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 Driving the 2020 Mercedes-AMG A 35 4Matic hatchback.
EDITORIAL INQUIRIES: Michael Power, 416-441-2085 x110, michael@supplypro.ca
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Where rubber meets road Care and maintenance of tires for fleets.
ADVERTISING INQUIRIES: Alex Papanou, 416-441-2085 x101, apapanou@iqbusinessmedia.com
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Fleet Management By Lesley Wimbush
Hyundai Palisade The Palisade is a full-size luxury SUV with seating for eight, powered by a 291hp, V6 engine. New for 2021, Hyundai adds an even more upscale, top-spec Calligraphy trim featuring standard all-wheel-drive, unique grille and exterior lighting, 20-inch wheels, quilted leather upholstery, suede headliner and perforated leather-wrapped steering wheel. All Palisades now come with standard LED headlights, Apple CarPlay and Android Auto. Mid-range models future 10.3-inch display, navigation, Sirius XM radio and semi-autonomous driving aids. Front-wheel drive is standard, with available all-wheel drive on all but base models.
Chrysler 300
Lexus NX 300
While the current sedan enters its 16th year, the 300 badge was actually introduced in 1955. Chrysler’s rear-wheel-drive sedan may be aged, but has lost none of its swagger. For 2021, it’s offered in only three trim levels, powered by a 292hp, V6 or optional 363hp V8 – both mated to an eight-speed transmission. Standard are 8.4-inch touchscreen with Apple CarPlay and Android auto, but you’ve got to step up to a higher trim to get active safety technology or all-wheeldrive. The big sedan offers plenty of leg room and trunk space coupled with old school good looks.
Lexus’s compact luxury crossover NX 300 returns for its sixth year with only subtle changes. In addition to new low-profile wiper blades and power folding, auto-dimming, reverse tilt mirrors, a brand-new Nori Green Pearl replaces Blue Vortex Metallic on the paint wheel. Blind spot monitoring with rear traffic alert is now standard with Lexus’s Safety System driver safety technology bundle. Available trims include the NX300, NX300 F Sport, NX 300h and a limited edition NX 300h F Sport Black Line. Powertrain choices are a 235hp, four-cylinder with six-speed transmission and the 194hp hybrid mated to a continuously variable transmission.
Toyota Avalon
Fall fancy A look at executive rides for 2021
Toyota’s lovely, yet understated flagship sedan finally adds available all-wheel drive to its list of features. Also new for 2021 is a new Nightshade Edition on sporty XSE models, featuring black 19-inch wheels and black exterior trim. Android Auto joins its connectivity features and hybrid models now have a space-saving, compact battery pack. Powertrains are a 301hp V6 or 215hp hybrid, while Touring models come with adaptive suspension.
While autumn’s vivid palette paints a pretty reminder that another year is drawing to a close, it’s a time of new beginnings for automakers. Long before 2020 finally shows itself out, a new crop of vehicles will be rolling off the production line – with some already making their way to dealerships now. Among these are several premium sedans and SUVS that fall under the executive rides umbrella. Here are just a few of those highlights.
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Ford Mustang Mach E The first Ford designed specifically as an electric vehicle, the Mustang Mach E uses the emotional appeal of its heritage nameplate to help launch this new crossover. With choice of rear- or all-wheel-drive, available hands-free semi-autonomous driving, and up to 480kms of range, the Mustang Mach E is a proper fiveseater offering genuine crossover utility. A GT performance-badged model will boast 459hp and can scoot from 0-100km/hr in just over
Mercedes Benz S-Class The flagship of the Mercedes sedan lineup, the venerable S-Class has for years been a rolling ode to luxury and success. The latest model aims to build on that legacy with state-ofthe-art technology, a roomier, more luxurious interior and innovative new safety features. Highlights include a new active air suspension, rear wheel steering for cornering stability, an enormous OLED touchscreen and a three-dimensional gauge pod. There’s a choice of two powertrains: a 429hp turbocharged six cylinder, or 496hp twin turbo V8, both mated to a nine-speed transmission and standard all-wheel drive. A plug-in hybrid model is slated to arrive later with nearly 100km of range.
3.5 seconds. The Mach E comes standard with Ford’s CoPilot360 suite of safety systems, including lane keeping assist, blind spot monitoring, frontal collision warning and automatic braking. With similar price and performance, it will compete directly with Tesla’s Model Y SUV.
Mitsubishi Outlander Arriving in the spring of 2021, the fully redesigned Outlander is bigger, boasts more advanced technology, and according to Mitsubishi, will be the quietest and best Mitsubishi ever to be sold in Canada. As part of the new Nissan alliance, it will ride on the same platform as the Nissan Rogue. The Outlander PHEV, the world’s best-selling plug-in hybrid, will reportedly offer a more refined electric drive system with greater range and a more powerful engine.
Nissan Maxima Although rumoured to be discontinued in the near future, Nissan’s flagship Maxima sedan celebrates four decades of production with a new Limited 40th Anniversary Edition, featuring unique badging, red leather seats, 19-inch black alloys, and two-tone paint with black roof. All Maximas come standard with a 300hp V6 and Nissan’s Safety Shield suite of driver assistance tech, including intelligent cruise control, forward collision warning, lane departure warning, blind spot warning, traffic sign recognition, rear view monitor and rear cross traffic alert. Available are heated front and rear seats, panoramic sunroof, upgraded leather, adaptive cruise control and memory settings.
Subaru Ascent The largest vehicle in Subaru’s lineup, the Ascent is a three-row SUV ideal for four-season family outings. With Subaru’s trademark asymmetrical all-wheel-drive system and 250 horsepower, the Ascent can haul a camper or boat trailer in addition to seven passengers. Optional are blind
spot monitoring, heated front seats, wifi hotspot, rear cross traffic alert and power driver’s seat. New for 2021 are LED headlights that turn with the steering wheel and automatic high beams, standard across the lineup.
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Fleet Management By Ken Robinson
Chasing fuel savings
Ken Robinson is market research analyst at Motus.
Fixed and variable rates Despite the rise of remote work, driving remains essential to many business aspects. From onsite meetings to deliveries and more, there are employees who need mobility. Every business must choose the best approach for its vehicle program. But different approaches can impact employee satisfaction and the bottom line. Some components of driving costs remain stable. The price paid for a vehicle doesn’t change after the purchase. Other driving costs change all the time. Fuel is volatile and can be different every time a driver fills up. Since January 2019, fuel costs have made up 19.9 per cent of average driving costs. But fuel made up a different portion of driving costs every month. The volatile nature of fuel prices is one reason that paying every employee the same amount is not the best solution. It sounds like a good approach. It’s easy to manage. But the result is not fair to employees. Mileage reimbursements that pay everyone the same for every kilometre don’t consider geographic costs. Employers then overpay employees in some areas while underpaying others. In the US, the Internal Revenue Service (IRS) mileage standard rate is often used as a reimbursement method, but this is not an accurate representation of the costs where each employee lives and drives. Since the standard doesn’t account for driving costs that fluctuate based on geography and time of year, businesses using the rate to reimburse mid- and high-mileage 24 OCTOBER 2020
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workers are likely to give reimbursements that do not reflect actual driving costs. Similarly, the Canada Revenue Agency (CRA) allows individuals to deduct business mileage on a cost-per-kilometre basis through the CRA mileage rate, or automobile allowance rates. Again, it is not a fixed value and can vary year to year. The IRS mileage standard dropped from 58 cents in 2019 to 57.5 cents in 2020. The same year, the CRA mileage rate increased from 58 cents per kilometre to 59 cents per kilometre for the first 5,000 kilometres driven, and drivers are reimbursed 53 cents for each additional kilometre. There is another four cents per kilometre in the Northwest Territories, Yukon and Nunavut. Throughout the year, actual driving costs changed month to month in both countries based on variables like the cost of gas, local taxes and insurance premiums. When employers use a onesize-fits-all approach regardless of location or individual situations, they end up spending more than they need to on mileage. This cre-
ates winners and losers by over- or under-reimbursing drivers for their costs – which can occur at any time throughout the year as actual driving costs fluctuate while the IRS or CRA mileage rates remain the same throughout the year. Car allowances are another popular one-size-fits-all approach. While allowances are easy to manage, they also don’t reflect geographic cost differences, and are not fair to every employee. Another drawback to car allowances? They are a fixed cost for employers. No matter how many miles driven each month, employers pay the same. Allowances are treated as compensation, meaning they are taxed like all other income. This tax waste impacts both employees and employers. For example, for every $100 taxable stipend, $38 is lost to taxes in the US. This means that employees with a $575 monthly car allowance will only take home $393 of that stipend. Likewise in Canada, a car allowance will be considered a taxable benefit if an employee or officer is paid a per-kilometre rate that the CRA considers too high or too low
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(and thus not reasonable), or a flat rate allowance that is not based on the number of kilometres driven. The fixed and variable rate (FAVR) reimbursement methodology remains a flexible solution in any economy. By breaking the reimbursement into fixed and variable costs, companies can react to the market’s conditions no matter how volatile they get. Fixed costs are constant month over month but vary from employee to employee. They include things such as insurance premiums, license and registration fees and taxes and depreciation. On the other hand, variable costs vary month over month and are based on the number of business miles driven, including gas, oil, maintenance and tire wear. With FAVR, fuel price fluctuations are reflected in every reimbursement and each fixed and variable cost component is localized to the places employees work and drive. The result is a fair and accurate reimbursement. Especially due to the economic uncertainty from the pandemic, leaders are looking for ways to add both flexibility and efficiency to business expenses. The IRS and CRA mileage rates are recommended for high-mileage drivers only (Over 5,000 business miles or 5,000 business kilometres, respectively). For others, alternate methodologies like FAVR programs let employers quickly reduce tax waste while staying flexible to scale vehicle program expenses up or down as necessary. FM/SP FM/SP SUPPLY PROFESSIONAL
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1. AL 2. Sa
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2020 FORESTER
IIHS TOP SAFETY PICK
2020 OUTBACK
IIHS TOP SAFETY PICK+
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This innovative active safety system is like a second pair of eyes watching out for you, warning and even aiding your ability to avoid potential danger.
Predictable handling, superior drivability and outstanding control. The full-time all-wheel drive is engineered to deliver confidence in motion.
An in-vehicle technology system that connects your Subaru to the world around you, bringing added safety and convenience to every drive.
We’ve always felt that working from the road should be pleasant, but most of all, safe. Our long-standing commitment to safety has given Subaru vehicles an impenetrable reputation for superior protection. Add to that a high resale value, impressive fuel efficiency and an exceptional total cost of ownership, and you get a fleet that’s ready to conquer new markets.
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1. ALG is the benchmark for residual value projections in North America, publishing residual values for all vehicles in the United States and Canada. For more information, visit www.alg.com. 2. Safety ratings are awarded by the Insurance Institute for Highway Safety (IIHS). Please visit www.iihs.org for testing methods.
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2020-10-13 1:59 PM
Fleet Management By Stephanie Wallcraft
All hail the hatchback
Test driving the 2020 MercedesAMG A 35 4Matic Long live the hot hatch. It’s a sentiment that’s largely falling on deaf ears these days. Cars of all kinds, including this all-new 2020 Mercedes-AMG A 35 4Matic hatchback, make up only 20 percent of the automotive market in Canada as buyers go all-in on SUVs and pick-ups. In response, many automakers, including MercedesBenz, are making cuts to the lowerslung products in their portfolios. In short, Mercedes didn’t have to build this car. If they hadn’t, people would have understood. But they did build it, which means the people who understand and sign on the dotted line for are in for a treat. Of course, being that it’s a treat that starts at just shy of $50,000 26 OCTOBER 2020
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– and this test unit rings in at a tick over $60,000 – it also had better be good. And it is. The Mercedes-AMG A 35 takes all the individual elements that the brand has been developing throughout its line-up for years and packages them into a single model where they make sense all at once.
The look
There’s the ideally proportioned exterior styling, for a start: not so ostentatious that an adult with a family would be embarrassed to own it, but with just enough attitude to show it means business. And on the inside, the designers haven’t shied away from suede-like material, performance pedals, and
an optional performance steering wheel, but have instead finessed them all to give them a look befitting the brand. The 2.0-litre single-turbo fourcylinder suits the character of the car ideally, producing 302hp and 295lbs-ft of torque. The band on the latter is relatively narrow, hitting its peak at 3,000rpm to 4,000rpm, but that makes it ideal for hanging out in second or third gear while flicking through an autocross track or some twisty country roads. The seven-speed, dual-clutch transmission hits like shuffling a deck of cards when using the paddle shifters in the sportier drive modes, and while it’s a crying shame that there is no manual
available, it’s high time we all accepted that’s because almost no one would buy it anyway. By choosing the AMG Driver’s Package ($2,500), buyers add a sport suspension with three-stage damping plus 19-inch wheels and the performance steering wheel with digital drive mode adjustments. Comfort mode renders the throttle slightly numb and keeps the suspension perhaps stiffer than some drivers will enjoy on rougher winter-ravaged roads, but the latter is appropriate for the body style and both attributes are liveable. The Sport and Sport+ modes pick up the slack with incremental responsiveness from the throttle and gearbox along with notably FM/SP SUPPLY PROFESSIONAL
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The MercedesAMG A 35 takes all the individual elements that the brand has been developing throughout its line-up for years and packages them into a single model
1.
1. Input for the infotainment system is possible through the 12.3-inch touchscreen display or the user interface on the centre console, or thumb pads on the steering wheel. 2. The designers haven’t shied away from suede-like material, while the multi-hue interior lighting system is a visually appropriate fit.
2. tighter handling. For non-track purposes, Sport mode is definitely the sweet spot. And all that performance doesn’t come at too horrible of a hit at the fuel pumps, at least according to this test drive. While official fuel efficiency figures are not yet available from Natural Resources Canada, my week of spirited driving netted a result of 9.7L/100km. This car does request premium fuel, but the figure still feels like a fair exchange for the degree of fun it provides.
Voice command
As for the rest of the Mercedes box of tricks, this is the first car in which I’ve found the multi-hue
interior lighting system to be a visually appropriate fit. And it’s made all the more entertaining by being able to play with it through a voice command to the MBUX infotainment system: “Hey Mercedes, change the interior lighting to blue.” It will be a big hit at parties, once they resume someday. The rest of the infotainment system works well, with input possible through the 12.3-inch touchscreen display that sits alongside an equally sized digital gauge cluster, or through the user interface on the centre console, or thumb pads on the steering wheel. However, it should be noted that Android Auto and Apple CarPlay – along with other desirable features such as
blind spot monitoring, keyless entry, wireless charging, SiriusXM capability and the premium Burmester sound system – require the Premium Package add-on ($3,200). The Navigation Package ($1,000), also equipped here, adds on-board navigation with an augmented reality mode, plus traffic sign assistance and live traffic updates. If the market keeps trending ever further toward SUVs and trucks and away from cars like this one, hot hatches like the MercedesAMG A 35 may not be long for this world. My advice? If you appreciate driving entertainment in a pocketsized package, snap these up while you still can. FM/SP
As Tested Price (incl. freight and PDI): Starts at $49,200; tested at $60,050 Engine: 2.0-litre turbocharged four-cylinder Power: 302hp; 295lbs-ft @ 3,000 to 4,000rpm Transmission: Seven-speed dual-clutch automatic Rated Fuel Economy (L/100km): TBD Observed Combined Fuel Economy (L/100km): 9.7 FLEET MANAGEMENT SUPPLYPRO.CA 27
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BY RANDY OWEN
be found online. A tire with 94 it can support 670kgs. W is the maximum speed rating of the tire, 270kph in this case. M&S stands for mud and snow, meaning this is an all-season tire. Note this is not the same as a winter tire specially constructed for ice, snow and low temperatures. These tires will have a winter tire symbol (mountain with snowflake inside).
Where the rubber meets the road The importance of tires for your fleet Drivers of fleet vehicles rarely think of the tires their cars run on until there is a problem such as a flat. However, all drivers should be trained on basic functions and how to inspect their tires because they are an important part of the maintenance team. Fleet managers should consider that tires are one of the top vehicle costs and educate themselves on the variety of manufacturers, models and types of tires.
Functions of tires
Tires have several important functions beyond the obvious of providing traction so a vehicle can move down the road and change direction. Tires are an important part of a vehicle’s suspension system and knowing how they support loads is essential for drivers of pickups and trucks. Tires also help to dampen shocks from uneven road surfaces, potholes, hazards and so on. Finally, tires also work with a car’s brakes to stop a vehicle quickly and safely. Brand new brakes will struggle to stop your car if the tires are bald. 28 OCTOBER 2020
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Tire selection
Picking the correct tire requires you to be able to match the tire to the type of vehicle and its service. To do this you need to know how to decipher tire jargon, codes and sidewall information. Consider a tire that has the markings LT255/40 R17 XL 94W M&S. These codes mean the following: T denotes the tire type. In this case Light L Truck. P would stand for Passenger, T for spare, and ST for Special Trailer. 255 denotes the section width of the tread in millimeters from sidewall to sidewall. 40 refers to the height of the tire in terms of the aspect ratio, meaning percentage of sidewall height to section width. R denotes the tire’s construction as a radial, which applies to most tires these days. 17 refers to the rim diameter in inches XL means the tire has been reinforced to provide a higher load capacity. 94 indicates the load index, which can
Tires also have a serial number, known as a DOT number (for the United States Department of Transportation). This number provides the manufacturer and plant the tire came from, as well as the date of production. The last four numbers indicate the week and year of manufacture. For example, 2018 would indicate that a tire was made in the 21st week of 2018. All of this information is valuable for fleet managers to use when specifying new vehicles and especially when replacing tires on vehicles already in the fleet. For instance, many pickups today come standard with passenger (P) rather than light truck (LT) tires. Passenger tires provide a smoother and quieter ride but are not the right choice for pickups that will be used for hauling and towing heavy loads.
Tire maintenance
Tires have to be inspected and maintained to provide good performance. The primary focus for tire maintenance should be ensuring proper inflation. Under-inflated tires perform poorly, create more rolling resistance which impacts fuel economy and can lead to failure on the road. All vehicles sold after 2007 are equipped with a tire pressure monitoring system (TPMS). This safety feature was mandated by governments because drivers do such a poor job of checking their tires and this was leading to accidents. The TPMS provides a visual warning when a tire falls below a recommended range – this range is set at 25 per cent by law but can be less depending on the car manufacturer. The TPMS provides a valuable failsafe for monitoring tire pressure but should never replace regular air pressure checks. Tires that are underinflated by just five per cent begin to suffer from decreased fuel economy and increased internal temperatures. These issues become more pronounced as underinflation increases, so tires can be significantly underinflated without triggering a TPMS alert. Drivers of fleet vehicles should be asked to check their tires at least on a monthly basis. The proper air pressure can be found on the driver-side door jamb of a vehicle. The maximum pressure that may be listed on a tire should never be used. Fleet managers should equip all of their vehicles with a quality digital or dial presFM/SP SUPPLY PROFESSIONAL
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sure gauge. Besides air pressure, monthly inspections of tires by drivers should include tread depth, any uneven wear, imbedded objects and sidewall cracks. Any issues in these areas should be immediately reported to the fleet manager.
Replacing tires
Tires that have been properly maintained will provide service for tens of thousands of kilometres. However, all tires wear out and eventually have to be replaced. The primary reason tires have to be replaced is that the tread has worn down to an unsafe level. The legal limit of wear is 1.6mm or 2/32nds of an inch of tread depth. But most tire makers recommend tires be replaced before the legal limit of wear is reached to ensure better performance such as in wet weather. Many fleets will replace tires before the tread reaches 3.2mm or 4/32nds of an inch. Tires can also wear out from shear age as the rubber and other compounds deteriorate. Michelin recommends replacement of tires after 10 years. Other manufactures have lower standards, particularly for severe duty such
as hauling heavy loads and running off road. When buying new tires, fleet managers should start by considering if a passenger or light-truck tire is needed. Passenger tires are fine for most vehicles, including many SUV and pick-up trucks. These tires provide higher comfort ratings, lower noise levels and better fuel economy. Some pick-up and SUV’s require a more robust light-truck tire for hauling heavy loads and driving on rough terrain. When replacing tires, fleet managers should do their homework about which tires and tire brands best fit their operations, including geographical area, weather conditions, service needs, driver habits and budget. Some tire manufacturers have better reputations for quality and longevity than others. This quality comes with a higher price, of course. Fleet managers should also consider ratings for tire treadwear, traction and temperature. These ratings, which are most useful to compare models within – rather than between – manufactures, can be provided by your tire dealer. Also plan to have new valve stems installed when tires are replaced. SP
Randy Owen is senior manager, fleet practice lead, Matrix Consulting Group.
Tires have several important functions beyond the obvious of providing traction so a vehicle can move down the road and change direction.
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THE LAW—BY PAUL EMANUELLI
THINK LOCAL LOCAL PREFERENCE FOR PURCHASING PANDEMIC SUPPLIES Given the ongoing pandemic, many are asking whether Canadian health sector institutions can limit the purchase of pandemic-related personal protective equipment or other pandemic-related supplies to Canadian suppliers or to suppliers from a specific province or territory. Based on procurement treaty obligations and case law interpretations, this discussion explains the relevant legal issues. Public institutions are required by various trade treaties to award contracts valued at over the prescribed thresholds by way of open competitive bidding and are required to avoid unnecessarily restrictive requirements in those bidding opportunities. The ongoing purchase of all supplies, including pandemic supplies, should generally be purchased in accordance with these open procurement standards. The requirement of open competitive bidding and prohibition against restrictions do not apply if the contract is valued below the applicable thresholds since in those cases the open competition duties do not apply. However, public institutions should avoid artificially splitting their contracting opportunities into smaller contracts to avoid open competition duties. The onus remains on the public institution, if challenged, to establish that the acquisition in question validly fell below the relevant open competition thresholds. The acquisition of pandemic supplies would presumably require larger orders and proper planning to obtain those supplies by open tendering practices so direct awards for small pandemic-related orders would presumably be limited as an effective strategy to deal with future pandemics. 30 OCTOBER 2020
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EXTREME URGENCY The trade treaties allow public institutions to avoid open competitive bidding and directly award contracts in instances of extreme unforeseen urgency, especially where the contract is required for health and safety reasons. However, the urgency exception does not apply to a self-created crisis. The failure to plan does not constitute an emergency where the public institution should have anticipated the urgency and procured in advance by open tendering to secure the supplies needed for a future emergency. While the urgency exception may have reasonably been relied on for the COVID-19 2020 pandemic, public institutions would be in a more difficult position to assert that a subsequent similar pandemic crisis was not foreseeable and self-created due to a failure to engage in appropriate contingency planning. Since their ability to reasonably rely on urgency exceptions will likely be more limited in the face of future similar pandemics, health sector institutions should be engaging in advanced planning to order and stockpile those supplies in accordance with open tendering practices. Imposing procurement requirements that unnecessarily restrict competition, particularly where those requirements are not rationally connected to the contract and cannot be effectively enforced or verified, is generally prohibited by the procurement rules. As part of their advanced pandemic planning, health sector institutions would arguably be justified in seeking domestic suppliers or distributors to, at minimum, stockpile internationally sourced supplies on behalf of Canadian health sector
institutions for the exclusive access of those institutions as legitimate operational objectives. Those Canadian institutions should be proactively establishing those stockpiling and supply arrangements in preparation for future pandemics. However, to be defensible, those local arrangements should be verifiable through the creation of objective local performance standards. A public institution has the right to defend restrictive requirements and those requirements will not constitute a breach of the neutrality requirements of open competition if the institution can prove that the restrictions to competition were based on legitimate operational requirements. Those Canadian health sector institutions that seek to secure a domestic supply chain in anticipation of a future pandemic should ensure that they are identifying and documenting pandemic supplies that may be subject to shortages in the event of another pandemic. Establishing thorough records of a pandemicrelated scope of supplies would help to defend a restrictive domestic supply chain as a legitimate operational requirement against any challenge to those restrictive domestic requirements. LEGITIMATE AND PROPORTIONATE The onus remains on the public institution to prove that any restrictive requirements were legitimate operationally, that they did not overly restrict competition, and that those requirements can be verified and enforced. In securing their domestic pandemic-related supply chains through restrictive procurement practices, Canadian health sector entities should be careful that those arrangements are
Paul Emanuelli is the general counsel of The Procurement Office and can be reached at paul.emanuelli@ procurementoffice. com.
“The trade treaties allow public institutions to avoid open competitive bidding and directly award contracts in instances of extreme unforeseen urgency.�
proportionate to the need to respond to a future pandemic and that they do not unnecessarily create barriers to competition for the procurement of generally required goods and services that are not specifically pandemic related. Public sector decision-makers should be prioritizing their procurement planning to ensure ongoing services to the public and to minimize adverse impacts on the economy. The best way to manage the next crisis is by planning to avoid it. SP THIS ARTICLE IS BASED ON RESEARCH COMMISSIONED BY HEALTHPRO CANADA.
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