PurchasingB2B April 2015

APRIL 2015

Buying Safety Equipment

Canada’s Supply Management Magazine

VENDOR MANAGEMENT EXCELLENCE Jeremy Gibbs on TD Bank’s Journey

STEVE WOZNIAK

At ProMat 2015

PM 40069240 $18.00

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Table of Contents

Vol. 57, No. 2 • APRIL 2015

Features 11

11

S TEVE WOZNIAK MUSINGS Steve Wozniak speaks at ProMat 2015 on technology, the supply chain and how engineers can help start ups.

12

THE VENDOR MANAGEMENT JOURNEY TD Bank sets up a centre of excellence to manage its suppliers.

14

S AFETY FIRST Buying the right gear means safer workers, legal compliance and a more profitable business.

16

12

P RODUCT SHOWCASE Industrial Procurement: Material Handling and Safety Equipment.

Also inside 5 B USINESS FRONT

Supplements Inside Vol. 17 No. 1 April 2015

UNLOCKING

ENERGY’S VALUE

6

FINANCE CORNER

7

PROCUREMENT PROFILE

8

PURCHASINGB2G

Getting the most from an energy program

IN THIS ISSUE 6 Connected-Car Security 8 Executive Rides 10 Vancouver Auto Show 12 Ram Promaster City

Powered by

18

14 Nissan NV Taxi

THE LAW

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Connect With Us Online We encourage you to visit us online to stay in touch with what’s happening in your industry and to view enhanced articles.

Features

.ca

PurchasingB2B.ca

@PurchasingB2B

Michael Power

CONSULTATIVE SELLING What it is and what it means for procurement www.PurchasingB2B.ca/features

Conference Coverage GBTA Conference 2015 | Toronto Catch all the highlights from the GBTA Canada conference.

GLOBAL SOURCING Risks and rewards of buying around the world

NAFA 2015 Institute & Expo Highlights from the fleet management industry’s largest event. http://www.PurchasingB2B.ca/news/

RULES OF ENGAGEMENT Best practices for supplier relations management and collaboration

Fleet Management and CAR

Check our PurchasingB2B’s homepage for regular Fleet Management and CAR updates. www.PurchasingB2B.ca/category/3-fleet/

PurchasingB2B Weekly eNewsletter Sign up today for regular industry news and insights. www.PurchasingB2B.ca/e-newsletter-subscription/ PurchasingB2B.ca / April 2015 / 3

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Up Front 80 VALLEYBROOK DRIVE TORONTO, ONTARIO M3B 2S9

www.PurchasingB2B.ca

PUBLISHER

Dorothy Jakovina 416-510-6899, djakovina@PurchasingB2B.ca

The Trusted Advisor

T

here’s little that we trade magazine editors love more than surveys, studies and research. They feed our appetite for information. A survey provides a snapshot of what people in a specific industry think of an issue or a series of issues. They also offer data that can be sliced and diced several ways to provide a variety of perspectives.

PurchasingB2B does several each year. We’re involved in the Annual Survey of the Canadian Supply Chain Professional, performed along with Canadian Shipper and MM&D magazines, as well as the Supply Chain Management Association (SCMA).

In that survey, we look at various aspects of employment in the supply chain field such as salary, job satisfaction (and the factors influencing that satisfaction), wage discrepancies between the sexes, average number of hours worked and so on.

Something that we consistently see in that survey is, when it comes to the biggest issues they face, procurement and supply chain professionals rank keeping costs under control as the main challenge both in year leading up to the survey as well as the largest challenge they expect to face in the following 12 months. That’s consistently been the case with every survey fielded since I’ve been the editor of this magazine. And it makes sense—procurement certainly has its share of pressure to save on the bottom line.

But two recent surveys offer a different perspective. Earlier this year, the Miamibased organization The Hackett Group released a study called Procurement’s Key Priorities in 2015: Harnessing Big Data and Renewing Training Programs to Promote Enterprise Agility. That research revealed that, for 2015, the top priority of procurement organizations (72 percent) is to “elevate their role to more of a trusted advisor in support of improved enterprise agility.”

While traditional goals such as cost reduction and expanding the scope of spend influence remain important, new objectives are coming into focus. But the study also finds that procurement will face challenges, as becoming a trusted advisor is one of several areas where procurement has a “low ability to meet objectives.”

Similarly, Deloitte conducted The Deloitte Global CPO Survey last year and found that, among the 239 respondents—cost reduction, while still a primary concern, had fallen in terms of importance. Businesses surveyed are increasingly looking for procurement’s input into new product development, innovation and mergers and acquisitions. The expectation is that this will be done quickly and with no effect on cost or supply market assurance.

In a way, these results are good news. It shows that businesses internationally realize the strategic importance of procurement and look to procurement to increase value in new areas. But for this to happen, procurement must be given the resources to perform in these areas. Rather than simply be given extra tasks or responsibilities, organizations must truly give procurement a seat at the table and realize that for procurement to perform at this level it must be viewed as the “trusted advisor” it’s striving to be.

EDITOR

Michael Power 416-442-5600 ext 3259, mpower@PurchasingB2B.ca ART DIRECTOR

Sandy MacIsaac 416-442-5600 ext 3242, smacisaac@PurchasingB2B.ca PRODUCTION MANAGER

Karen Samuels 416-510-5190, ksamuels@PurchasingB2B.ca CIRCULATION MANAGER

Barbara Adelt 416-442-5600 x 3546, badelt@PurchasingB2B.ca ANNEX PUBLISHING & PRINTING INC.

VICE-PRESIDENT: Tim Dimopoulos (416)510-5100, tdimopoulos@annexweb.com PRESIDENT & CEO: Mike Fredericks, mfredericks@annexweb.com For over 56 years, PurchasingB2B has been a trusted source of information for Canadian purchasing/supply chain management professionals in the private and public sectors. Special features and supplements include Fleet Management, Canadian Automotive Review (CAR), PurchasingB2G, and Travel Management Canada.

PurchasingB2B is published six times a year, except for occasional combined, expanded or premium issues which count as two subscription issues, by Annex Publishing & Printing Inc. © Contents of this publication are protected and may not be reproduced, in whole or in part, without the written consent of the publisher or editor.

NOTICE: PurchasingB2B accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue.

PurchasingB2B receives unsolicited materials including letters to the editor, press releases, promotional items and images from time to time.

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ISSN: 1497-1569 (print); 1929-6479 (digital) Publications Mail Agreement No. 40069240 We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage

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Business Front

Quality of Work in Canada

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

by Michael Hlinka

A

ccording to CIBC World Markets, the quality of work in this country is at a 25year low. They base this assertion on several different metrics, including the distribution between part-time and full-time employment, the split between self-employment and paid employment, and the sectorial composition of full-time employment. Let’s take these one at a time.

CIBC looks at the creation of part-time versus full-time jobs over the past 17 years, and sees that the growth rate for part-time work is much greater. Generally, full-time is preferable to part-time.

Paid employees, on average, make more money than the self-employed and in many cases, people only opt for self-employment when they can’t find someone to hire them. Finally, the number of low paying jobs (composition) is increasing more rapidly than the number of high-paying jobs.

Very important—and correctly—CIBC identifies these trends, given that they’ve been tracked since 1988, as “more structural” than cyclical. Which means that even if the economy would recover from its doldrums over the next few months, these downtrends would likely continue. And while the report from CIBC provides information about what has been going on, it doesn’t address the whys behind it…and that’s where I come in!

But first, let’s step back and understand what leads to “quality” work in the first place. It’s the value-added component. I’m a huge sports fan and I think we can learn a lot by comparing the wages enjoyed by members of the local football team, the Toronto Argonauts, and the local hockey team, the Toronto Maple Leafs.

For the upcoming season, the salary cap for the 56 players for the Argos is just a tad over CN$5 million. There are three members of the Leafs— Phil Kessel, Dion Phaneuf, and Joffrey Lupul— who will individually make more than US$5 million this season. Kessel alone will earn more than double the entire Argonaut team in 2015. And it’s not that he’s that much better an athlete than the average football player. My guess is that if we figured out some fair way to compare Kessel with

the 56 Argo football players, he’d be better than some and worse than others. The reason why Phil Kessel makes so much more is because the revenues of the Toronto Maple Leafs dwarf the revenues of the Toronto Argonauts, and players like Kessel are the beneficiaries.

This is important. Typically, when you hear politicians talking about the economy, you hear the phrase “job creation”. You don’t hear the phrase “wealth creation”, which is the only thing that really matters.

Quick question: you have the choice of working 40 hours a week at $10 an hour or working ten hours a week and making $40 an hour.

Which sounds better? The answer is self-evident. OK, now let’s think about the only way this trade-off could come about. It must be that in the former case you’re adding relatively low value while in the latter you’re adding a ton of it. To extend the CFL/NHL analogy: at $10 an hour, you’re the anonymous special teams player from the unheralded university program while in the second case, you’re the star NHLer.

“Let’s step back and understand what leads to ‘quality’ work in the first place.

It’s the value-added component.”

I would agree that sports is a very unique industry, but there is a lesson we can draw from it. In short: high value-added leads to great jobs and high wages. Yet it still begs the question: how to lure those jobs to Canada?

If there would be one pairing of policy that would unquestionably lead to that result, high-paying, high value-added jobs, it would be to immediately slash taxes on corporate profits to zero while simultaneously preventing employers in this country from gaming the system by bringing in workers from abroad to depress wages.

The country of Ireland gave us an example of how enlightened tax policy can transform an economy. When I was in university (which was the decade of the 1970s) it was one of Europe’s economic basket cases. That turned around pretty much on a dime in the 1990’s after Ireland greatly reduced tax rates on corporate profits. In short order, its standard of living exceeded England’s as the businesses of the future flooded across its borders. We would see something even more dramatic in Canada, given our proximity to the US, still the biggest market in the world for many goods and services.

Yet at the same time, to protect the interests of domestic workers, we can’t allow temporary worker programs to continue. It would be up to individual Canadians to get the training they need—either part-time or full-time—to exploit the opportunities that would spring up all over the country. And, as surely as day follows night, the “structural” trend that CIBC sees would quickly reverse itself. B2B B2B

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Finance Corner

A Head For Numbers To understand your suppliers, you need

Brent Jackson, CPA, CA, CBV, is senior manager at Grant Thornton LLP.

to understand their finances

by Brent Jackson

P

rocurement professionals know a thing or two about numbers. Negotiations and analyzing supplier pricing requires a grasp of the bottom line. But many practitioners were never formally taught how to read financial statements, and those who can’t assess the financial viability of potential suppliers may struggle to select appropriate contractors. A supplier’s finances can shift over a long-term contract. To mitigate risk, it’s important keep track of your suppliers’ financial stability—and that means regularly reviewing their financial statements.

What are financial statements?

Financial statements act as a company report card. Each statement tells about the company’s current and historical financial results. Collectively, a company’s financial statements provide details about its overall financial health. While public companies must make detailed financial statements publicly available, private companies generally aren’t required to share them. Financial statements typically include four elements: balance sheet, income statement, statement of cash flows and financial statement notes.

The balance sheet gives a snapshot of the company’s financial position at a point in time. It details assets owned and liabilities owed. By subtracting the company’s liabilities from its assets, you arrive at the company’s total net worth (assets – liabilities = shareholders’ equity). A look at the company’s assets shows if the company is maintaining a positive cash balance.

Assets are items a company owns that typically have monetary value, either in the short term or long term. Items like cash, accounts receivable, inventory, equipment or even trademarks are examples of assets commonly found on a balance sheet. Assets are listed in the order of how quickly they can be turned into cash or consumed. Liabilities are monetary obligations a company owes, such as loans, trade payables, wages payable and taxes.

Current liabilities need to be paid back within one year of the balance sheet date. Long-term liabilities have repayment dates beyond one year.

When reviewing a balance sheet, there are certain ratios that can help you better understand how well the company is performing: • The current ratio (current assets ÷ current liabilities) indicates the company’s ability to pay back its short-term liabilities with its short-term assets.

It can highlight the efficiency of a company’s operating cycle or its ability to turn its product into cash. Depending on the industry, a current ratio over 1:1 is typically seen as healthy.

• The debt to equity ratio (total interest bearing debt ÷ shareholders’ equity) shows the company’s financial leverage, which is the amount of debt compared to equity it uses to finance the business. If this ratio is too high, it could indicate the company relies too heavily on debt, which could result in a riskier business, while if it’s too small the company may not be taking advantage of low rates of debt in the market and is financed at a higher cost. The ‘right’ ratio depends on the industry and type of business.

The income statement measures the financial performance over a period of time (i.e., fiscal year). It details revenues or sales (the amount of income

generated in the year), its cost of sales (costs required to generate the income, for example in labour, raw materials or warehouse costs) and its expenses (all other cash outflows of the business). Key ratios include: • gross margin percent ((revenues or sales - cost of sales)/revenues or sales), which shows the direct profitability of the product or service. Margins are different across all industries and in order to understand whether the company is generating a healthy margin, you must compare their margin with similar businesses within the industry; and • net income (revenues – cost of sales – expenses), which represents the earnings generated in the year (revenues less all expenses (including interest and taxes).

This shows the ending cash balance for the year by measuring cash movements between fiscal periods (as reported on the balance sheet) and net cash inflows and outflows (as reported on the income statement).

The statement of cash flows summarizes where the money was spent or generated over the year, separated between three different spending activities: • Operating activities include net cash flows generated during the current fiscal period, including the net income and movement of current assets and/or liabilities; • Investing activities include net cash flows generated by/spent on investment activities in the business, such as on capital assets or other capital investments; and • Financing activities include net cash flows generated by/spent on financing activities, such as the receipt or pay down of debt (principal payments) and/or equity (new capital raise or dividends paid).

Most financial statements include “notes” providing more detail than in the financial statements. They include information about the nature of the company’s business, accounting policies and the detail behind all material accounts summarized in the financial statements. B2B B2B

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Procurement Profile

The Problem Solver Terry Volpel, CPSM C.P.M. SCMP LSSBB

emails and catching up on the day’s meetings and tasks. At lunch I review my Institute of Supply Management (ISM) emails. Afternoons are usually spent in meetings or calls to suppliers or branch managers. There are usually five or six projects at any one time so I tend to juggle these. Drafting reports or revising drafts takes up most of the rest of the day. Evenings are when I do ISM work and planning as well as responding to emails and requests. Again, there are five or six ISM projects I am juggling along with my teams so time zones are challenging.

How did you get involved in procurement/ supply chain?

I started as an apprentice in the mid-70s and found inventory control and purchasing were challenging and interesting. Learning to compute Reorder Points and EOQ showed me how important math skills were. Learning about cash flows and authorization limits taught me how supply management interacted with finance.

What do you like most about your job?

When we save a dollar, it’s pure profit. I learned early not to panic when faced with economic changes. If you are good at what you do and your bosses know it, you are usually fine. Your skills are very marketable to others.

What does your typical day look like?

I’m usually in the office by 7am looking at

What career highlight stands out?

At 14 we blew the water pump in the family Ford. My dad took me to Canadian Tire. At the parts counter, he said to the guy, “I need a water pump for a ’67 Mercury Comet Capri with a 289.” The guy at the counter just walked about three steps and took a box from the shelf. I was so floored by that simple act; it set my career path for life.

I always tried to have that part or piece on the shelf for when a guy walked in with his kid. In the mid-90s, a gravel trucker came to my shop with a leaky air valve. I told him to blow some shop air through the exhaust port, perhaps dislodging some junk. The next day he came back and handed me a $20 tip. I realized that I had become that guy at Canadian Tire. That, in a nutshell, is why we do what we do—we solve problems for people.

What are your future plans?

I try to give back more than I took from the profession. My work with ISM-Canada and with the ISM-Materials Management Group in the US gives me the opportunity to teach, guide and mentor those who are entering the field. This is play for me at this point.

Tell us something about yourself unrelated to your profession As a teenager we had a dance hall band where I played lead guitar.

We played dance clubs and arenas. B2B B

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PUBLIC PROCUREMENT

Virtual Group Buys Leveraging group purchasing through eCommerce platforms

By Boris Tsinman

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ecently, the topic of increased complexity in the supply chain has been brought to light, with vendors and purchasers trying to understand an ever-changing process.

Public sector buyers must adhere to acts, regulations and policies ensuring that the procurement process meets government needs. Purchasers work with end users to create specifications and meet customer deadlines. The process unfolds slowly due to internal approvals, decision-making points, as well as meetings and communications between the parties. Depending on the complexity of the requirements, it can take months for the tender documents to be ready for vendors to download.

The question is, can we simplify this process and still meet all the required policies and procedures? The simple answer is yes, but how?

A simpler process might begin with end-user empowerment. For example, those responsible for the specifications, such as subject matter experts, could create a bid package at the same time that they are laying out the specifications.

This can be done using a software platform that allows anyone to write a proper RFP, which in the case of public organizations, that complies with all the government regulations, policies and procedures that are internal to the organization For private enterprise,

such platforms are used to buy various supplies required for final product production and operations. The documents are then sent to a centralized purchasing organization (if there is one) or directly to the proper approval authorities within the organization and, if there are no further additions to the bid package, it can be posted with a keystroke. The benefits are obvious: no lengthy deliberations regarding specifications and no confusion as to the role of each team member as they are well defined: the subject matter experts create a draft of a procurement document together with the specifications that suit end users, and the procurement department participates in an advisory or consultative role instead of writing and re-writing bid documents. Approval authorities receive concise summaries for final approval of the purchase.

The ease with which the documents are created reduces the time to market dramatically.

Technological advances have made the evalu-

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Making the most of virtual group buys Many industries such as the grocery, health care, electronics, industrial manufacturing and agricultural sectors are using group buying to leverage the purchasing power of a group of organizations to get lower pricing from vendors based on collective buying power. The positive results of such buying are proven and the costs of certain commodities are reduced significantly. There are many group purchasing organizations (GPOs) in Canada and the US that address the specific needs of their members. The organizations that belong to such GPOs have aligned their procurement methods with GPO-based processes and procedures. In many cases, this reduces operational costs as well as the cost of products purchased via contracts established by the GPO. But procurement is still complex if you ask anyone who is involved in the process. The end users, the buyers, the vendor community and governments have raised this issue many times in the past and will probably continue to do so.

To reduce supply chain complexity, many organizations have entrusted central procurement organizations and GPOs to establish cross-organizational contracts so that all the members of the group can purchase goods, services and equipment without going out for competition individually. The administration of those contracts is quite from procurement’s point of view, where multiple organizations with many buyers can cut purchase orders against a pre-established agreement with ease.

But the complexities to get to this point are the same. Thus, practitioners are seeking new perspectives in the ever-changing procurement world. The new reality is that we have the technology and the knowhow to create contracts that can be employed by as many users as required, but the navigation of the sourcing/bidding process is still a challenge. The further use of virtualization of group buying could help all parties in the sourcing process tremendously.

A solution lies in creating a virtual environment offering the same benefits, at a significantly reduced cost, to buyers and suppliers alike.

To make this happen, the sourcing process could be fully automated—public advertisement of the requirement, auto selection and award to the best offer submitted against the pre-established criteria—and this could all be done online with very little interaction from the specific organization or agency. The terms of the resultant agreement could be modified to allow potential members to join agreements midstream, either as their own contracts expire or for other reasons, such as availability of funds. The membership of each group could be public, private or mixed, as this would make no difference.

The main driver would be a product or service that is applicable to all members who wish to join the virtual group. The benefits of this model could be significant, not only in supply chain cost reductions but in the simplification of the connection between end users and a large number of vendors.

PUBLIC PROCUREMENT

ation of received proposals easy as well. Team member collaboration happens online, with no requirement for numerous face-to-face meetings during this process. The majority of work by the evaluators happens at their own time and place.

When it is time for contract creation there are platforms that allow this process to be done virtually, much the same way that the RFx process unfolded, with the end user concurrently creating the document during the approval process.

“The positive results of (virtual group) buying are proven and the costs of certain commodities are reduced significantly.”

Many studies have shown that an efficient, competitive procurement process results in greater efficiencies and lower prices. The prospect of combining everyone’s volumes provides the members of a buying group with an opportunity to take advantage of the economies of scale that vendors can pass along to their clients during the bidding process. The efficiencies can be measured by the reduction in costs only, or by combining this with service level improvements, higher product or service quality, improvement in client operations, and better logistics and warehousing opportunities.

The aggregation of volumes created in order to achieve cost reductions or greater efficiencies is finite because the complexities of managing such global procurements increase depending on the number of organizations involved, locations, staff, financial constraints and other factors. Therefore, an economic analysis should be done to see what would be the optimal volume a buying group could sustain.

After all, the goal of the group is to improve not only the costs of acquisition of goods but also to simplify the sourcing process.

Virtualization of the sourcing process gives supply chain staff who participate the time to spend on analytics and on driving value for the organization, removing all the non-value added activities from the process. For example, if the procurement and supply chain functions are automated end-to-end, staff can spend more time on customer service and less on mundane tasks such as chasing orders or invoices. The goal is to reduce unnecessary touch points and to empower end users from the start of the process to final implementation.

Efficient group buying is better able to provide service to a successful organization. B2B Boris Tsinman is principal at Novus Incorporated. Reach him at btsinman@novus-pbo.com.

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Professional Directory

CORPORATE ON-SITE TRAINING WHY CHOOSE ON-SITE TRAINING? On-site training offers a variety of benefits to both employers and staff. In addition to cost savings and convenience, on-site training can be customized to meet different business needs. On-site training ensures consistent learning across the board from a single team to an entire organization.

WHY CHOOSE SCMAO TO PROVIDE YOUR TRAINING? Expert Instructors – Our expert instructors are leading supply chain academics and experienced practitioners who have real-world SCM experience.

Our Programs – Our programs are designed to enhance skills development, professional competence and strategic perspective of SCM professionals at all levels of career progression from entry, to mid, and executive levels of functional responsibility.

Our Reputation – As the leading supply chain association in Ontario, SCMAO has established a reputation for excellence in education and professional training. Over 70% of our corporate training is provided to repeat clients.

For more information on corporate training with SCMAO, please contact Carol Ship Spencer, Director, Education and Professional Programs at 416-977-7566 x2146 or csspencer@scmao.ca.

Are You Getting Enough Greens?

Find out by participating in the 2015 Annual Survey of the Canadian Supply Chain Professional! Watch your inbox for the Survey invitation, which will be sent out this coming June.

The Annual Survey of the Canadian Supply Chain Professional is conducted in partnership with

Shipper CANADIAN

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UNLOCKING

ENERGY’S VALUE Getting the most from an energy program

Powered by

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Welcoming message

The Bottom Line on Conservation

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n many respects, Ontario’s businesses have led the way in creating a culture of conservation in the province. Companies, both large and small and across all sectors, are investing in energy saving and seeing the results in their bottom line. In 2014 alone, business conservation efforts through the IESO’s saveONenergy programs resulted in almost 600 GWh of energy savings.

The business case for conservation is pretty clear — it cuts costs. But conservation also delivers broader benefits for all Ontarians — reducing the need to build new infrastructure and lowering the wholesale price of electricity. We are helping to make our province more competitive for business while also contributing to a cleaner environment.

That’s why the province has moved to a new framework that puts conservation first before all other supply options. This opens up myriad opportunities for businesses that are able to shift or reduce their demand for electricity. Through the IESO’s saveONenergy programs, there are numerous opportunities for businesses to reduce their overhead costs through retrofits, energy audits, lighting and equipment upgrades and participating in demand response.

This success, however, is only possible by business, industry, associations and public agencies working together to use their collective strengths to increase our conservation and business competitiveness.

We need this collaboration to continue. Over the past four years, we have seen businesses step up their conservation efforts – not only to capture cost savings but also capture the strategic value that conservation can offer their organizations.

Now we need to push further. The province has set new conservation targets — ones that are more ambitious than in previous years. Our research shows that there remain more than enough opportunities for us to work with businesses to achieve these results. We need to develop more comprehensive solutions — including embedding sound energy management practices within the very core of business decisions.

This publication aims to further this conversation. There are many dedicated individuals with great ideas about how to enhance our province’s conservation capability — you will learn their stories here.

To find out what conservation can do for your business, visit saveonenergy.ca/getstarted.

Terry Young Vice-President, Conservation and Corporate Relations Independent Electricity System Operator

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Engergy Efficiency

Shedding Light On Energy Efficiency There’s more to long-term strategy than meets the eye

By Jacob Stoller

T

he procurement of products and services connected with energy conservation is a complex and often baffling subject. For starters, the field is highly technical, replete with buzzwords, new technologies, and a plethora of regulations and certification criteria. Fluctuation of energy costs and changing government policies have made forecasting tricky at best. Finally, the soft benefits of sustainability, such as improved brand image, are difficult to assess and quantify.

This complexity can often leave decision makers with a list of unanswered questions. Should we retrofit our lighting, HVAC and other equipment? Should we invest in solar collectors? What kind of expertise should we hire? Which numbers really matter? And finally, where do we start?

To get a better understanding of these questions PurchasingB2B and the Ontario Independent Electricity System Operator (IESO), assembled a roundtable on March 5 on the subject “Unlocking the Value of Energy Efficiency”. At the table were seven energy conservation “heavy hitters” who advise utilities, municipalities, and businesses on their longterm planning. Their knowledge spans diverse areas such as engineering, energy partnerships, regulations, and the subtleties of creating a conservationminded organization.

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The seven panel members were: Mike Lithgow, P.Eng., manager, corporate energy services at the Regional Municipality of York; Tom Wynn, business development manager at GreenSaver, which advises utilities on conservation and demand management (CDM) strategies; David Piotto, P. Eng., technical sales representative, industrial air division at Atlas Copco; Brian Smith, chief conservation officer at Horizon Utilities; Alex Bogun, P. Eng., energy manager, Region of Peel; Bala Gnanam, director of sustainability and building technologies, BOMA Toronto, a non-profit organization supporting best practices in commercial real estate; and Janis Hodgson, C.E.T., acting energy services supervisor, Hydro One, Brampton, energy services department Over two hours, PurchasingB2B editor Michael Power peppered the experts with questions about technology, incentive programs, management issues, and what all this means for procurement. In this special report, we’ve

Energy Insights IESO recently commisioned a survey on energy efficiency across multiple market sectors. The survey explores whether companies have done an energy efficiency audit and their efforts to increase energy efficiency. Among other findings, the survey found that:

38%

the number of respondents that reported their company having conducted an energy audit in the past five years.

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Energy efficiency is not just “scientific facts but it’s also an idea. Making it into something that is emotionally resonant with people is the real key to adoption.

”

—Tom Wynn

Powerful Help: Incentives to flip the switch on energy efficiency projects There are several reasons to focus on upgrading systems for energy efficiency, from reduced operating costs, increased sales, improved employee comfort and productivity, to name but a few. Luckily, myriad incentives, rebates, and resources exist to ensure businesses can take advantage of these opportunities while improving competitiveness.

In Ontario, funding is available through the saveONenergy program for: Energy Audits and Engineering Studies These processes are often the first steps for a business to improve energy efficiency. They’re used to identify opportunities for improvements and provide business cases in several areas, including to: find energy savings by project; identify non-energy improvements by project including productivity, safety, yield, sales and others; identify the capital cost of projects; and summarize the ROI for projects and prioritize them based on capital cost, lifecycle cost savings and non-energy financial benefits. The SaveONenergy program covers up to 50 percent of energy audits. Once opportunities are identified, more detailed engineering studies can define requirements and provide accuracy on potential savings and costs. For engineering studies, 100 percent is covered.

Retrofit Funding SaveONenergy provides funding once a business is ready to upgrade to high efficiency systems for lighting; HVAC systems; pumps; motors; fans and other equipment. Companies can get up to 50 percent.

Funding for Energy Managers Energy manager resources may be available free through the Roving Energy Manager Program from local utilities. Incentives for to 80 per cent of the salary for a full-time energy manager may also be available.

Energy Management Training Rebates are available for up to half the cost of hiring an certified energy manager, commissioning agent, and measurement/verification training.

Find out more at saveONenergy.ca/business or get your local electric utility to contact you at saveONenergy.ca/get-started.

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condensed the proceedings into seven key guidelines that you can take back to your office and use immediately.

Start with the low hanging fruit.

When it comes to setting out in a new direction, nothing gets executive buy-in like a few quick wins. In energy conservation, there are plenty of opportunities to take a visible step forward and deliver a convincing shortterm financial return.

Janis Hodgson: If a business is just starting out [with conservation], they should go after the low-hanging fruit—the lowest cost, lowest investment items that have a bigger payback. And the place we always suggest for any business to start looking at is their metered data, whether that’s daily or hourly, and determining their base load—the minimum requirements for running their facility.

Brian Smith: I think it’s typical of most of our customers to look at lighting as the entry point. And that really introduces an opportunity to go out and meet with the customer and do a facility walk-through to start identifying more opportunities.

David Piotto: I know in a compressor system alone, they can typically save 30–50 percent. And compressed air systems in manufacturing facilities are typically up to 30 percent of their total energy consumption. So those opportunities are huge.

Use incentive programs to get things rolling….

Governments across Ontario and Canada have a number of programs to encourage companies to replace their lighting, retrofit their equipment, and improve the energy efficiency of their buildings. There are also programs that support wind power and other forms of renewable energy generation by guaranteeing a price for energy that is fed back into the grid.

Our panellists referred to the programs that are available in Ontario. However, many similar programs exist across the country.

David Piotto: I think the biggest [incentive program] in Ontario is the IESO saveONenergy Program. They have retrofits and planned upgrades to all their different uses.

Tom Wynn: [Projects that take advantage of incentives] will comprise the lion’s share of conservation. I think about 60 to 70 percent, at least in terms of the new framework, will continue to be through the pro-

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People only want to look at “something with a one- or two-

vincial-wide programs. But there’s also going to be a huge opportunity for innovation funding as well.

Alex Bogun: Sometimes [the program] actually decides, am I going for that project? 50 percent will be funded by the IESO, otherwise I would not implement it—simple as that.

It’s the same with the lighting.

And I’m sure you know that there is a lighting for small business program and, yes, they will help you and fund your retrofit to LED lighting, which otherwise probably won’t happen.

Mike Lithgow: The Feed-In Tariff program with the Province guarantees a fixed rate for any electricity that you may generate from a renewable source for 20 years. And the level of the rate is designed to provide a certain return on investment. This started out quite high, but as equipment and contract costs have been going down over the last few years, we’re now looking at a 10-year payback for solar electric panels in some cases. For renewable energy, this is unprecedented.

…but quickly broaden the scope to develop a long-term plan.

Once the “no-brainer” projects have been completed and the results are on the board, the going gets tougher. Gains require more work and expense, and the wins won’t come as quickly. This is where the policy makers have to bear down.

Brian Smith: Quite often people only want to look at something with a one- or two-year payback, which limits it to lighting. But they don’t look at the entire lifecycle costs of their energy use over a longer period of time. And they don’t often factor in the increase in energy costs. So once we gain their trust by identifying the quick hits, we introduce them to other solutions and cost options, whether it be equipment replacement or changes they can do operationally.

Bala Gnanam: What we advocate to our members in the sector in general is, take more of a holistic and systematic approach for energy efficiency. The knee-jerk reaction is to go after lighting, but those low-hanging fruits tend to grow back if you don’t have a proper continuous improvement strategy in place.

year payback, which limits it to lighting. But they don’t look at the entire lifecycle costs of their energy use.

”

—Brian Smith

Gather your facts…

Energy conservation is a fact-based undertaking, and gathering the right information requires technical expertise. A number of organizations provide basic energy audits and the more advanced re-commissioning exercises.

Bala Gnanam: If you want to have a plan, start with a proper audit. That sets out what needs to be done beyond the low hanging fruit, and it also points out ways to combine projects so your total payback will be quicker.

An audit to me is kind of going through the building to see what needs to be done. A re-commissioning exercise is a little bit broader, and usually related to the HVAC system and the envelope side. It involves a little bit more investment but you also capture a significant savings. So it’s including an enhanced energy audit and then re-commissioning as part of the to-do list.

Mike Lithgow: I’d say lifecycle costing is key. It’s looking at the life cycle of your equipment, your process, your facility, and even if everything is working fine, look at it again. There’s new technology, there’s new techniques. Apply that sort of time value of money and to minimize that over time because money—that’s what pays the bills. And once you’ve got that then the other fantastic stuff will come, especially the environmental and the sustainability aspects.

Brian Smith: It can be quite simply being at a facility at night and seeing their shutdown procedures. Do they have documented shutdown procedures? And if they do, are they following them? And for interval metered customers, or customers that you have access to their data, you may not even have to be there at night. You just have to look at their low profile to see what’s on it during those off operating hours.

Conservation is becoming “more important. But I think it’s a philosophy that we have to instill in the people. They have to push this philosophy and continuous improvement.

—David Piotto

”

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sure you know that there “isI’m a lighting for small business

…but read between the lines.

Energy conservation in a business is a multi-faceted affair that requires constant learning. There’s a tendency to over-simplify, and not see the forest for the trees.

program and, yes, they will help you and fund your retrofit to LED lighting.

”

—Alex Bogun

Tom Wynn: To us on the front lines talking to people who have no concept of what a kilowatt hour is, energy efficiency is not just scientific facts but it’s also an idea. Making it into something that is emotionally resonant with people is the real key to adoption as something that everyone strives for. In my experience, sustainability—the idea of being green because it feels good—is really an adjunct to what should be a best practice to run your business. And that is the main selling point. Sustainability is a concept that you sell on top of the economic argument, which should be there and is increasingly easy to make with the passing of every year.

Support from the top

55%

the number of respondents to ieso’s energy efficiency survey who agree that senior leadership is doing all it can to enable energy efficiency

Do you have an energy manager on staff at your company?

78%

13%

No No but planning to hire one Don’t Know/NA Yes

8% 1%

In what areas of your operations do you track energy consumption?

Lighting Vehicles/fleets 32% Machinery-high load motors/equipment 30% Compressors 27% 26% Water/wastewater 24% Chillers/air conditioning 21% Ventilation/fans Machinery-low load motors/equipment 21% 12% IT/servers 7% Plug loads Grinding/blasting 5% 2% Mineral processing 21% No areas Other 9%

place we always suggest “anyThebusiness to start looking at is their metered data, whether daily or hourly, and determining their base load.

—Janice Hodgson

”

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49%

Bala Gnanam: In the context of buildings, we see energy efficiency as an intersection of three main areas. You have your highly efficient technologies. Then you have people, and that includes both informed occupants and well-trained operators. Then the third part would be best management practices. So the whole emphasis becomes how do you run buildings on a day-to-day basis in terms of technology, people, and best practices?

Alex Bogun: I would add the environment to those three aspects. It’s not just to save money or energy itself. It is a lot about the environment and the greenhouse gas emissions.

Tom Wynn: Once you begin to go through the process of looking at your scheduling and then looking at your building operations, it’s common for existing building operators of that facility to perceive that as a threat. Because in the mindset of a building operator who’s been operating building for 10 or 15 years, they might actually have a disincentive to push this process forward because if it turns out that the building is being managed inefficiently, it weighs very negatively upon their job performance. So maybe finding a way to even incentivize building owners for reaching their conservation targets internally is a way to get them on board.

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If you want to have a plan, “start with a proper audit. That

Invest in your people.

Building a sustainable organization requires more than compliance—there has to be a level of vigilance that involves each and every employee. This takes time, and a significant investment in people. Yet, that culture change unlocks one of the most powerful benefits around sustainability: the improvements in engagement and productivity that come with creating a community around common purpose.

Bala Gnanam: If you look at the incentive programs, they’re very equipment replacement-centric. But how much money is available for market transformation and employee engagement? Very little, comparatively. So people say, “Normally I would turn things off, but now I don’t care because I’ve got LED lighting, and I’m green.” And then gradually, all the money you’ve invested in your greening the building degrades over time. So, what we say is “yes, get the green building— put in all the energy efficiency features using the incentive program. But invest in people and training so that you continue to drive savings.”

Brian Smith: I guess you could say that all our customers should strive to be LEED standard or ISO 50001 compliant. But if you looked at it from just the people perspective, to be energy efficient you really have to be open enough and, I guess, aggressive enough to go after things that are achievable in the way of efficiency and solutions, but modest enough to be open to continuous improvement, to be open to new technologies, new solutions, and also be open enough to learn from others.

Prepare for a project with no termination date.

Mike Lithgow: This is a continuous process. There’s always new opportunity, due to new people and new technology. Business processes can always be tweaked to work better, more efficiently. And our energy rates are increasing. So, whereas something wasn’t economic a couple of years ago, it is now. An example that keeps coming up is lighting. Over my 25 years in the industry, there’s been opportunity for many rounds of retrofits and each one is economic and each one is better than the last one. And most recently, the

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sets out what needs to be done beyond the low hanging fruit, and it also points out ways to combine projects.

”

—Bala Gnanam

LED lighting, that’s sort of reducing energy used by 75 percent from where we were just two years ago. And opportunity like that will keep coming up.

David Piotto: I think conservation is becoming increasingly more important. But I think it’s a philosophy that we have to instil in the people. They have to push this philosophy and push this continuous improvement too, with conservation towards everything they do in terms of their process or where their energy usage is. I think it’s going to take quite a bit of time, but I think there’s a lot of untapped potential that we still have to target.

Tom Wynn: You have to keep going because it’s incremental. Too many organizations commit to a big program that looks fantastic, but then nothing gets done beyond that point, and then it just goes away. Behaviour change is dogged persistence. It’s little by little. Companies haven’t found a way to incorporate the administrative costs of doing this. So, as soon as companies start to understand the sustained operational costs of implementing behaviour change, that’s when you’re going to start to see people getting more involved because there will be the push behind it.

Conclusion

Nobody at the table said the process would be easy. Technology and standards are evolving, prices are fluctuating, and the soft aspects of conservation are becoming more ingrained in people’s thinking. With no permanent answers to even the most basic questions, the sustainability journey will be characterized by constant learning.

Sustainability is a contact sport that cannot be played from behind a computer screen. To be part of the process, procurement will have to partner with all the players—engineering, facilities, HR, and marketing—who are stakeholders in the organizations conservation journey. And if you’ve arrived late at the party, don’t worry—this one will be going on for a long time.

B2B

Lifecycle costing is key. It’s “looking at the lifecycle of your equipment, your process, your facility—and even if everything is working fine, look at it again.

”

—Michael Lithgow

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When he reduced costs by 13% with a new RTU, he wasn’t just saving money.

He was setting a precedent.

Once your clients start seeing the benefits of our incentives for upgrading to high efficiency RTUs, they will want to look into making other parts of their building like ventilation, chiller and building automation systems more efficient too.

When they do, they’ll be joining thousands of organizations across Ontario who are already enjoying the savings that our programs deliver.

Take a look at their stories and our incentives at

saveonenergy.ca/business

Subject to additional terms and conditions found at saveonenergy.ca. Subject to change without notice.

OM Official Mark of the Independent Electricity System Operator.

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ProMat2015

A Chat With

THE WOZ Apple Inc. co-founder Steve Wozniak speaks at ProMat 2015 on technology, the supply chain and how engineers can help start ups.

By Michael Power

T

hese days the world moves fast, even for “The Woz.” In fact, Steve Wozniak, who spoke at the ProMat 2015 conference in Chicago last March, didn’t foresee many of the changes that computers would eventually bring when he began his career in technology.

“We grow up and every generation says, oh my gosh, we’ve changed so much since our great grandparents—now we have washing machines and we don’t have to do it by hand,” he told Mitch MacDonald, president and CEO of Agile Business Media, who moderated Wozniak’s keynote address. “When I was young it always seemed like there was no change at all. It was very slow and life was nice and it was settled. And in the last few decades, it started with computers and then the Internet and mobile and the apps and then social. It’s like you can’t keep up with it. Things are changing much faster than ever before.”

Wozniak spoke on the final day of ProMat 2015, the largest expo for manufacturing and supply chain professionals in North America.

Wozniak, who is widely referred to as Woz, together with Steve Jobs and Ronald Wayne, co-founded Apple Computer—now Apple Inc— with Wozniak designing both the Apple I and Apple II computers in the late 1970s.

Perhaps young people today view the world as static since the availability of high-tech devices is now the norm, Wozniak opined. But for those who survived the world before apps, the contrast can be startling. “Every time I use a different app, I’m thinking, how did I used to do this in the old day? It was very slow.”

That notion applies just as much to the materials handling and supply chain fields, Wozniak told the audience. In the past, everything had to

Steve Wozniak, co-founder of Apple Computer (now Apple Inc.) speaks at ProMat 2015

be done in person through reps and distributors. By comparison, the Internet has opened to the door to a much faster process within the supply chain.

But the technological advances that he helped spark have resulted in to both good and bad elements, Wozniak said. These days, people can access all the information there is to possess, so it’s no longer necessary to work or think to get the data. But while most people are happy with that development, it has also led to an increased complacency. “We’re building the machines to take care of us, and that makes me think we want to be the family pet, the well-taken care of dog,” he noted.

And while he had no plans to start using an Apple we watch or similar device, technology like drones had potential for product deliveries.

In speaking about artificial intelligence, Wozniak was also skeptical of the positive value of a fully conscious computer. But, he added, having such computers could solve a major education problem— namely class size. “If computers ever got conscious, you could have one teacher per student,” Wozniak said. “One teacher per student can never fail, and every single student could be made to go in the direction they want to go in life.”

Among the top lessons he’s learned during his professional time, Wozniak noted that, starting a business often involves building products such as hardware or software. During the process, entrepreneurs can get wrapped up in the process of raising the money needed. They often decide to hire engineers to help with the product development side. But thinking back on his experiences, Wozniak recommended getting those engineers involved as soon as possible.

“Find some really competent engineers to build things and think outside of the box and create some good stuff,” he said. “Engineering involves such careful thinking and problem solving and trying to fix things that are wrong. Engineers are very good at looking at a plan for a product and coming up with a lot better ideas than you would come up with on your own just coming from business school.”

Wozniak ecouraged entrepreneurs to build products that won’t necessarily make money. Rather, do it just for fun, he advised. Every time you do that your brain advances and you learn what worked and what didn’t. “You get better every step of the way,” he said. “I had a lot of steps going up to the Apple computers.” B2B B2B PurchasingB2B.ca / April 2015 / 11

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Supplier Relations

The Vendor Management Journey TD Bank group sets up a vendor management centre of excellence

By Michael Power

O

n any journey, knowing where you’re going is imperative. Twists and turns in the road can take you off course, and take longer than planned. So it is with procurement transformations like the one TD Bank Group went through with their vendor management program.

At the outset of that journey, both the route and the method of getting there were unclear, says Jeremy Gibbs, associate vice-president, strategic sourcing group, TD Bank Group. There’s a need to be receptive to that changing environment along the way, and failure to be open to those changes can slow progress.

In 2011, the bank began the task of establishing a vendor management centre of excellence, with Gibbs detailing the transformation during a presentation at the Procurecon Canada conference, held in March in Toronto.

At the outset, Gibbs says, there was no consistent approach to how we managed our vendors, what we did or who did it. “We set out, first of all, to understand the current state,” Gibbs says. “At the time we had identified less than 100 people who were managing vendors within the bank. We have a supply base of over 20,000 vendors.”

So the vendor management center of excellence team met with vendor managers across the bank to get a handle on how they were managing those vendors—and what they found was interesting. They discovered that at the time, while many managers followed a process, it wasn’t formally documented, which can lead to inconsistency. Fewer than half of those managers differentiated the approach they took to their various vendors, Gibbs says. In some cases, the most important vendors were being undermanaged, and the least important vendors were being over-managed. There was a real disconnect.”

As well, there was nothing automated in place. Everything was manual and a small percent of vendor managers the team met with had guidelines detailing what should be done or what roles and responsibilities were. As well, none of the vendor managers they met with had formal vendor management training, Gibbs says. “If they’d done vendor management previously they were in a better place than most,” he says. “But if they were new to vendor management they were literally having to start from scratch.”

While the situation was daunting, it was also an opportunity, Gibbs notes. The key goals of the vendor management center of excellence included optimizing the value the bank got from its vendor base by elevating the capability of its vendor managers. Procurement went about that task through several strategies, including training, build-

ing processes and best practices, communicating information to vendor managers and to ensure they focused their time on managing vendors. From the outset, procurement focused on building tools for the managers that were both relevant and applicable so they could quickly realize value and support their businesses, Gibbs notes.

The process began with the creation of a procurement methodology, and the first step was to move the bank from sourcing to procurement, he says. That included understanding supply chains, focusing on analysis, using tools and best practices, developing a category sourcing strategy and, obviously, managing vendors.

Procurement broke down the management of those vendors into three areas, the first one being roles and responsibilities.

“We spent an awful lot of time defining what the roles of the vendor managers were,” Gibbs says. “The reason we did that was because when we met with the vendor managers and started to work with them, what we consistently found was that many of them were performing similar tasks to the sourcing managers, They were doing deals, they were negotiating contracts, and there was a lot of overlap between the various groups. We wanted to define those roles and responsibilities so that they could focus on what they should be doing, which was managing vendors, and delivering value to the organization.”

The second part of methodology focused on sourcing, Gibbs says. Vendor managers sometimes didn’t understand why a certain vendor was selected, what the key components of a deal were and how they could manage the value within a contract. With that in mind, procurement worked to define key activities around knowledge transfer and the transition from the sourcing manager to the business line and ven-

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fining what the different governance models looked like for the various segmented vendors and what the activities were at the operational, managerial and executive levels.

A third piece focused on vendor performance management, Gibbs says, which focused on giving vendor managers the tools and processes to understand how their vendors were performing, then manage them accordingly. Meanwhile, a final component focused on continuous improvement. “We needed to get people to better understand what continuous improvement is, when it’s applicable, how you ensure it works for your organization and, equally, how you ensure you get the best opportunities from your vendors when they’re presenting them,” Gibbs says. “If you’re never going to do anything with the ideas and the opportunities vendors present, over time they’re just going to lose interest.”

Jeremy Gibbs of TD Bank described the bank’s vendor management centre of excellence at the Procurecon Canada conference in March.

dor managers. As nothing documented what vendor managers should do once a contract was signed and handed over, a lot of time was spent defining actions to take to manage the vendors, on an ongoing basis Gibbs notes.

A vendor management framework was also established in order to standardize the approach, Gibbs says. This framework included four components, with the first being vendor segmentation. This became especially important working with some vendor management groups, he says, since they had multiple vendors. “What they needed help with was understanding who their most important vendors were so they could allocate the time and effort appropriately so that they were managing the vendors that needed that effort but equally not overly managing the vendors that didn’t,” he says.

Another component of that framework focused on vendor management governance, Gibbs says. A great deal of effort went into de-

The outcome So what results have the centre of excellence produced? Gibbs says that not only has engagement with vendors increased, but the size of the vendor community has grown. From less than 100 vendor managers the centre of excellence initially met with has now grown to a few hundred. That growth, he says, is a reflection of the importance the bank now places on managing its most strategic vendors effectively to manage performance and mitigate supply chain risk.

Live, online meetings each month have also helped increase vendor manager engagement, Gibbs says. The meetings revolve around a predetermined topic, and vendor managers are presented with information surrounding that topic. “They can vary from an update on a sourcing category strategy through to an update on an internal policy or a process, or a change in how they do things,” Gibbs says.

The bank also runs an annual vendor management conference, Gibbs says. The most recent such conference—the third one that the bank has organized—saw a sizable spike in attendance. As a testament to the importance of vendor management, at that conference, a senior vice-president at the bank spoke to the managers to stress the importance of their role. Finally, Gibbs notes, vendor managers have received a lot of training in areas ranging from the bank’s procurement methodology to its enterprise procure-to-pay technology.

“We’ve focused a lot on training so that they can in turn focus more on managing their vendors,” he says.

TD also moved to transform the elective adoption of the program to a mandated endeavor, adds Gibbs. Vendor managers now have one year to adopt the framework, and the bank has also created a vendor management leadership council.

Gibbs notes that along the journey it was critical to remain collaborative and demonstrate value to the vendor managers. For the managers to adopt the framework, it was important to deliver something to them that was both relevant and applicable. Finally, constant tracking and monitoring of progress has helped show when course adjustments are needed.

For Gibbs, the key lesson learned was that vendor managers wish to do the right thing but don’t always understand what to do or how, he says. “Our role was to be an advisor to the business in order to allow them to get value from what they’re doing and help them understand the best way to do it,” he says. B2B PurchasingB2B.ca / April 2015 / 13

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Safety Equipment

Play It Safe Buying the right PPE means safer workers, legal compliance and even a more profitable business.

By Michael Power

P

rocurement is—at least in part—all about learning and discovery. Before signing any contract, purchasers must research to understand the product, or at least advise those who do. Before buying expense management software, for example, it pays to understand what your organization’s needs are, as well as product options.

These considerations are crucial when buying safety and personal protection equipment (PPE). Worker safety rests on getting the right gear and organizations, when buying such equipment, must also ensure that they comply with provincial and federal legislation. Below, we take a look at some of the factors involved in buying safety equipment, along with some advice on how to make the right choice.

It’s the law All Canadian jurisdictions have legislation specific to occupational health, says Thushara Jayasooriya, technical specialist at the Canadian Centre for Occupational Health and Safety (CCOHS). From that perspective, purchasing PPE shows that an organization has done its due diligence to ensure that its workers are protected on the job, Jayasooriya notes. Having appropriate protective equipment available at the workplace also helps keep workers safe if they’re exposed to specific hazards.

When sourcing PPE, look at both the legislative requirements specific to the particular province or jurisdiction, along with any stan-

dards that apply to that particular gear. Each province has its own health and safety legislation or an occupational health and safety code, she notes. As well, all health and safety legislation requires the employer to select the correct type of PPE, and each piece of equipment can have a different standard.

“There are standards for safety bells, lanyards, full body harnesses—there are different types of standards available for different types of protection,” she says.

The next step, she says, is to choose the right kind of PPE. “There are so many models and different types available in the market,” she says. “For example, if it’s for hearing protection, there are earplugs, ear muffs, foam plugs—there are different types,” she says. “You should know which ones would be suitable for the risks that your workers are going to be exposed to.”

A further consideration is to look at what level of protection users of the equipment need, Jayasooriya says. Again, with hearing protection as an example, products like earplugs have a noise reduction rating designed to ensure the proper level of protection. The CCOHS website has plenty of free resources and information through its OHS Answers section, she notes.

Buyers should look for equipment that’s the right size, Jayasooriya advises, since there’s a tendency for end users to avoid wearing equipment that doesn’t fit properly, she says. Equipment end users should be involved in selecting the right kind of PPE and it’s wise to consult them before a purchase. “Physically, [workers are] different so you have to get the right size,” she says. “It’s better if you can introduce

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“

When sourcing PPE, look at both the legislative requirements specific to the particular province or jurisdiction, along with any standards that apply to that particular gear.

”

them to different models and styles and see if they really fit. That’s a great approach to getting acceptance from the workers. At the end of the day, after you buy it, they can’t say OK, this isn’t going to fit me so I’m not going to wear it.”

End users aren’t the only ones to consult before purchasing safety equipment and PPE, Jayasooriya says. If your company has one, speak with the health and safety committee.

Also, consult the supervisors, since they’re the ones monitoring employees to ensure they’re wearing or using the equipment. Some equipment requires professional involvement, she notes—for example, prescription safety eyeglasses require consultation from an optometrist.

Jayasooriya recommends speaking with several vendors before deciding to purchase equipment. Provide vendors with information gathered from the workplace, she says. As well, check product claims, client reviews and test data so that you can get the right equipment for the situation. The two most common standards to watch for are from the Canadian Standards Association (CSA) and from the Bureau de normalisation du Québec (BNQ ). “Mainly, those products should comply with those certified standards,” she says. “That’s one of the main points. You don’t want to go to a company and they say no, this is not CSA certified.”

Standards based in the US are also considered, such as the American National Standard Institute (ANSI) and the National Institute of Occupational Health and Safety (NIOSH).

“These standards have guidelines for manufacturers for designing and testing data,” she says.

“But those would be really good guidelines for buyers to look for when they want to see the right specifications, whether they have the correct requirements that they’re looking for.”

Safety and profit Manish Gupta, market manager, national accounts manager, Draeger Safety Canada Ltd.,

notes that the long-term risks of exposure to contaminants are often unknown, and safety equipment can protect workers from both immediate dangers and possible long-term effects. Draeger provides gas detection products—both fixed and personal—which are used to protect workers from the unseen dangers of gas contaminants. The company also offers respiratory protection used by firefighters and mine rescue teams, as well as air purifying respirators.

But those aren’t the only reasons to protect workers—safety and profits aren’t mutually exclusive, Gupta notes. Improved safety means greater worker satisfaction, which can mean higher productivity, reduced sick leave and other indirect benefits.

Support from the vendor is one of the most important features to look for in safety equipment, Gupta says. While there are many brands of safety equipment on the market, buyers should look for those that provide support when issues arise. For example, can the manufacturer—or their approved distributor—provide employee equipment training? Some safety equipment, such as portable gas monitors, needs daily testing and frequent calibrations. The equipment supplier should be able to provide this training, along with troubleshooting, so issues can be addressed without downtime or having to wait for the supplier to respond.

“Similarly, respiratory equipment requires fit checks every single time equipment is donned and annual or biannual fit testing which can be addressed by the equipment supplier,” Gupta says. “In the event of an accident or injury, an inspector would not only look to see that employees were supplied with safety equipment but also that they’re trained and competent with this equipment.”

Most manufacturers use a network of distributors to represent and sell their products, Gupta notes. Buyers should ask about whether the distributor can support the product and, specifically, what’s included with that support. For example, will they have stock on the shelf in case the company needs products urgently? Can they provide training on their products? Do they provide afterhours support?

What questions to ask regarding safety equipment depends on the needs of the purchaser as well as the buyer’s location, says Munawar Quraishi, national director, facility solutions, Staples Advantage. For example, some provinces require a type-two hardhat (featuring additional foam protection) while others don’t. As well, some equipment—fire retardant wear, for example—has extremely specific requirements. “They want it to meet very, very specific standards that it needs to be for their specific requirements,” Quaraishi says.

Staples Advantage looks to its array of vendors for much of the detail surrounding such products, he adds. For example, 3M Canada, one of the company’s vendors, has a mobile app that helps narrow down product choices based on a buyer’s specific requirements. “For example, with eyewear, are they looking for it to be tinted? What colour do they want it tinted? What kind of arms do they want? That kind of thing,” he says. “The app helps narrow it down to the two, three or one product that they might sell that’s specific to [a company’s requirements.] It’s actually a pretty amazing product—as simple as eyewear is to as complicated as respirators get—it narrows down what the customer is looking for and we’re able to provide the customer instant information.”

Ultimately, due diligence, research and familiarity with provincial and federal legislation will help purchasers make the right decisions when buyer safety equipment and PPE. B2B PurchasingB2B.ca / April 2015 / 15

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Product Showcase

Industrial Procurement:

Material Handling And Safety Equipment Mighty Line Floor Tape By contrasting two standard colours in a diagonal fashion, Mighty Line’s floor tape makes workers aware of possible danger zones in the workplace. The tape comes in four sizes: two, three, four and six inch-widths and is available in yellow with black diagonals and white with red diagonals. www.mightyline.net/en

Size-IT From ADSI comes Size-IT, the company’s wireless, mobile dimensioning tool. Size-IT digitally captures the length, width and height dimensions of a package and autocalculates the dimensional weight for. The product can be configured to wirelessly transfer dimension calculations and package details to ADSI’s order packing and shipping software solutions. www.adsionlin.com

Komatsu AE50/AM50 Series Komatsu’s electric counter balanced trucks bring improvements like a reduced operating cost, high productivity from outstanding performance, operator safety and comfort. Komatsu AE50/AM50 Series offers excellent features designed to fulfill the customer needs. Either engine or electric, the series can help provide efficient cost reduction in material handling industry. www.komatsu.com

Toughbook 54 The Toughbook 54 is a lightweight, semi-rugged laptop with durability and power beyond consumer laptops. It features a 5th-generation Intel Core i5 vPro processor, 11-hour battery life and several integrated options. The Toughbook 54 is ideal for mobile workers in video production, utilities, construction, field service and public safety. www.panasonic.com/ca

Ansell Polar Grip Gloves Designed for outdoor work, the Ansell Polar Grip gloves are ideal for protecting hands in frigid conditions. PVC coating stays soft when cold, while curved fingers, wing thumb and soft insulating lining provide comfort. The gloves offer resistance to oils, acids, caustics and alcohols. www.latoplast.com

Jungheinrich ETR-340-335d Reach Trucks Mitsubishi Caterpillar Forklift America Inc, provider of Jungheinrich lift trucks and narrow aisle products, has introduced the Jungheinrich ETR-340-335d series of pantograph reach trucks. The 3,500-4,500 lb. capacity reach trucks offer lift speeds combined with high capacity retention, allowing loads to be staged at higher-rack levels for efficiency and productivity. www.jungheinrich.com 16 / April 2015 / PurchasingB2B.ca

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ESC030AD Three-wheel Stand Yale Materials Handling Corporation will launch the ESC030AD three-wheel stand.

With ergonomic features and a Clear View mast, the three-wheel stand eliminates up to 65 percent of shock and vibrations. The system needs no adjustments for operator weight and functions in extreme temperatures and conditions. www.yale.com

Citation 931 Protective Eyewear The Citation 931 Protective Eyewear features super lightweight wraparound design for men and women. Its impact-resistant polycarbonate lens provides 99.9 per cent UV protective and scratch-resistant coating. Rubberized temple arms provide additional comfort and traction. The eyewear is CSA and ANSI certified. www.Eway.ca

CIMCORP 3D Cimcorp Automation Ltd., a manufacturer of robotic gantry-based order fulfillment and tire handling solutions, has introduced the CIMCORP 3D, an automatic storage and retrieval solution (AS/RS) for goods-to-man order picking. It uses gantry robot technology integrated with a shuttle device to store and retrieve goods in plastic crates, totes, bins and containers. www.rmtrobotics.com/page/home

iFlex RackGuard The new iFlex RackGuard provides benefits including side and front impact absorption, and a compression hinge so the leg is in a constant state of compression and grips securely around the racking leg. The product has ten frictional grip points for an improved grip to any rack leg. www.asafe.com

Zenith Flammable Storage Cabinet Zenith’s flammable storage cabinet has a 24-gallon capacity and three adjustable shelves. It features a double-wall, 18-gauge welded steel construction with 1.5inch air space and a 2inch capped vents with flame arresters. The full-height piano hinges open 180 degrees. The cabinet has adjustable leveling feet and a corrosive-resistent finish. www.zenithsafety.com

EdgeAlert Alarm The EdgeAlert alarm works with new or existing swing gates, slide gates, tilt gates or scissor gates. It includes a 120 VAC plug-in power supply and can also be powered by four long-life alkaline D cell batteries. A single-pole, single-throw 30V, 2A, 60W relay output allows for connection to other alarms or safety controls. www.wildeck.com

Got a new product or service potentially of interest to our readers?

Just send an image, brief description and website address to Michael Power, mpower@purchasingb2b.ca. For information on the PurchasingB2B ProducteBulletin, contact Dorothy Jakovina, djakovina@purchasingb2b.ca.

To view these and other products online, visit PurchasingB2B.ca.

PurchasingB2B.ca / April 2015 / 17

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The Law

Cutting Ties Knowing your rights to terminate in a tough economy

Doug Sanders is a partner in theVancouver office of Borden Ladner Gervais LLP. Reach him at dsanders@blg.com. Bill Woodhead is an associate in the Vancouver office of Borden Ladner Gervais LLP. Reach him at bwoodhead@blg.com.

This article is for information purposes only and may not be relied on for legal advice.

By Doug Sanders and Bill Woodhead

T

he current state of the Canadian economy and its future is uncertain. The housing market and our natural resources—including oil and minerals—have all been volatile over the last year.

The result of this is that supply contracts that were once very profitable may now be the opposite. In our difficult economic circumstances, a party to a contract may seek to terminate these unprofitable contracts. This needs to be carefully considered.

Know your rights Well-drafted contracts contain termination clauses that specify when a party has a right to terminate. A supplier may be able to terminate a contract if work is not paid for or suspended for a long time. A purchaser may be able to terminate a contract if a supplier fails to deliver goods in accordance with an agreed schedule, goes bankrupt or fails to perform the contract. The parties may also be contractually entitled to terminate for convenience upon giving notice or paying a fee.

Prior to exercising any termination rights, it is important to review carefully the reasons for termination and ensure any required processes are followed. In order to rely on a contractual right of a termination, a party must ensure that the contract actually provides a right to terminate for the breach in question and that the procedures laid out in the contract are followed. These can include requirements to give notice and provide an opportunity for the party to rectify its default.

”Many contracts do not contain a right for the supplier to terminate, but a court will likely imply that a significant failure to pay will permit it.”

Know your rights at common law Beyond express termination clauses, there is also a narrow set of circumstances that give rise to common law rights to terminate, unless they are expressly excluded in the contract. For example, many contracts do not contain a right for the supplier to terminate, but a court will likely imply that a significant failure to pay will permit such ter-

mination.

At common law, a party to a contract has the right to terminate on the grounds of a fundamental breach. A fundamental breach goes to the root of the contract and has the effect of depriving the non-breaching party of substantially the whole benefit of the contract. Examples of fundamental breach can include the failure by an owner to pay a supplier when payment is due. It is important to remember that not all breaches are fundamental. For instance, work that is completed below a certain standard or that contains certain cosmetic deficiencies may not be considered a fundamental breach.

The right to terminate a contract at common law also arises if one party clearly and unequivocally informs the other party, either directly or through conduct, that they do not intend to perform the contract. This can occur, for instance, in the event of a clear abandonment of a project.

Make your election The existence of a right to terminate under the express terms of the contract or at common law does not necessarily mean that a contract has to be terminated. The innocent party may elect to affirm the contract or accept a breach. If the innocent party elects to affirm the contract, then the contract is still in effect and the parties are bound to complete their respective obligations in the contract. Conversely, acceptance of the breach brings the contract to an end.

When contemplating termination, a party must be careful to ensure they have proper grounds. If the process required to terminate is not followed under the contract or the conditions required for other forms of termination are not met, the party attempting to terminate the contract will be in breach and may be faced with a claim for wrongful termination and damages.

These matters must be critically examined and legal advice should be obtained. B2B B2B

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A one-day buyer + supplier extravaganza presented by PurchasingB2B and FRASERS.com

September 15, 2015

Mississauga Convention Centre Network… Source products and services… Gather information… Exchange ideas and advice at this tabletop event that will connect YOU with suppliers from across ALL industries!

Registration is open June 1st No charge admission for qualified buyers

www.ProcurementFair.ca Suppliers: Reserve your tabletop today!

Look for the Procurement Fair Show Guide in the August issue of PurchasingB2B! Your integrated content marketing solutions partner…where the serious buyer goes.

CONTACT: Dorothy Jakovina, publisher PurchasingB2B magazine DJakovina@PurchasingB2B.ca 416-510-6899

Derek Morrison, publisher FRASERS.com DMorrison@FRASERS.com 905-409-6976

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