Canadaâ€™s magazine for procurement and supply chain management professionals
greening the paper supply chain
Also inside: Innovation & advice at SCMAO conference Next-level public procurement NSCF highlights What to do with e-waste PM 40069240
Focus on Sustainability
Canada’s magazine for procurement and supply chain management professionals
features 80 VALLEYBROOK DRIVE TORONTO, ONTARIO M3B 2S9
Dorothy Jakovina 416-510-6899, firstname.lastname@example.org Addressing issues affecting Canada’s public procurement professionals EDITOR
Michael Power 416-442-5600 ext 3259, email@example.com Fleet Management/CAR Editor
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Barbara Adelt 416-442-5600 x 3546, email@example.com BIG MAGAZINES LP
Executive Publisher: Tim Dimopoulos Vice-President of Canadian Publishing: Alex Papanou President of Business Information Group: Bruce Creighton For over 55 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 eight times a year, except for occasional combined, expanded or premium issues which count as two subscription issues, by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. © 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. PurchasingB2B, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. SUBSCRIPTION SERVICES: To subscribe, renew your subscription, or to change your address or information, contact us at 416-442-5600 or 1-866-543-7888, ext 3258, firstname.lastname@example.org, or visit us at www. PurchasingB2B.ca. Subscription price per year: $99.95 CDN; Outside Canada per year: $172.95 US; Single issue Canada: $18 CDN. Annual Supply Chain Survey issue, Canada: $45; Outside Canada: $70 US. Taxes extra. From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374, Fax: 416-442-2200 E-Mail: email@example.com Mail to: Privacy Officer, 80 Valleybrook Drive, Toronto, ON M3B 2S9 Printed in Canada. 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
Contents Vol. 55, No. 8 NOVEMBER/DECEMBER 2013
16 Innovating the chain Highlights from the 16th annual SCMA Ontario conference.
19 beyond reduction Sustainability and the paper supply chain.
26 Real-world sustainability Risks and benefits at Sustainability Applied conference.
44 What to do with e-waste Options abound for end-of-life disposal.
48 National supply chain forum Highlights from the NSCF conference in Calgary.
departments 4 Buylines
46 Le professionnel
6 Business Front
47 the Professional
8 Ask The Expert
50 The Law
9 Sustainability Profile
A Greener Look
s you hold it in your hands, you might have noticed something different about this issue of PurchasingB2B. We’re using a different kind of paper, which we received from Cascades. As we gear up for the New Year, it’s nice to offer readers a new look to our magazine. This new paper also has practical benefits. Chief among them is that it’s a sustainable choice. That’s good. Since we report so often on sustainability issues here at PurchasingB2B, it’s important that we also walk our talk. As well, I hope readers agree with me that it’s visually appealing, an equally important consideration for us when choosing to use it. We strive to set ourselves apart from other publications and deliver the best product possible, so please consider a nicer looking magazine our holiday gift to you. Cascades was also our partner for a panel discussion we held at the Supply Chain Management Association (SCMA) Ontario Conference in Toronto on October 18. For the panel (see page 19), we collected several industry experts to discuss issues surrounding sustainability and the paper supply chain. We touched on a definition of sustainability, the effects of greenwashing, developing a sustainable paper policy and more. As is often the case with panels, I ended up learning quite a bit. For one thing, I learned there’s no shortage of options for making the paper suppy chain more sustainable. Sure, it’s good to reduce paper use when appropriate. But looking at the chemicals used in the paper, methods of transportation and other areas also yields benefits. But benefits are often easier to see when shown in figures. Included in our Buylines section (page 4) is a by-the-numbers breakdown of the environmental benefits of our paper choice. Take a look, and as always feel free to get back to me with your opinions. NOVEMBER/DECEMBER 2013 | 3
Updated Ecologo Standard Released
ith 2013 coming to a close, Michael and I were reflecting on what an incredible year it’s been for PurchasingB2B. The word that came to mind was gratitude. It seemed appropriate to write a letter expressing in some small way how incredibly thankful we are to everyone that has an impact on this publication. First of all, thank you to our readers for so generously sharing your knowledge and expertise with us. By participating in thought leadership roundtables, being featured in Procurement Profiles, helping us with editorial contributions, answering surveys, or even sharing your photos (loved the October issue—Canada is one beautiful country!), you’ve had an impact on Canada’s procurement community. Looking back over the year, though, the most memorable times for us have been the industry events we’ve attended. They’ve given us the chance to meet many of you, and for that we’re especially grateful. Thank you to our partner associations including SCMA, CAMSC and GBTA Canada for providing us the opportunity to reach your members, for connecting us with industry leaders and for sharing your expertise with our readers. Thank you to our thought leadership partners and advertisers for valuing the readers of PurchasingB2B and for supporting our publication. And a special thank you to Michael, Sandy, Kimberly and all the other talented people at Business Information Group who produce a publication that we can be proud of! And so it’s with a heart full of gratitude for the impact that all of you have on our publication, and by extension, on us, that I wish you all a Joyous Holiday Season! We look forward to seeing, and working with, many of you again in 2014. Have a very Happy and Healthy New Year! Dorothy Jakovina, Publisher
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L Environment has launched its revised UL 175 Standard for Sanitary Paper Products. This new standard consolidates, revises and updates the following five ECOLOGO certification criteria documents (CCDs): CCD-082 Toilet Tissue, CCD-083 Facial Tissue, CCD-084 Table Napkins, CCD-085 Kitchen Towels and CCD-086 Hand Towels. Certification of products under the new version of the standard offers several advantages for manufacturers, said UL Environment, such as a larger focus on protecting human health, additional broad sustainability requirements relating to the sourcing of fiber and further reducing greenhouse gas emissions. Highlights to the updates in the standards relating to human health and safety include: enhanced restrictions on the use of active components which are potentially bio-accumulative and hazardous, and additional restrictions on use of chemicals which are classified as potentially carcinogenic, which have oral toxicity or which are very toxic to aquatic life, which may cause genetic damage, or which are classified as heavy metals. Additionally, any fragrance used may not include ingredients on the European Union’s allergens list and must be IFRA (International Fragrance Association) certified. Environmental sustainability and impact updates include new criteria on packaging requirements; requirements for the sustainable sourcing of fiber (including a revised recycled content component and clearer rules for how to evidence the sourcing of fiber); improved limits on energy consumption; and requirements for biodegradable organic compound additives, including for optical brighteners.
Airbus Americas Hires Director of Procurement for Canada
s part of its business strategy to continue to grow its supplier network in North America, Airbus Americas said it has created a new position in order to nurture its supply chain in Canada. Joe Marcheschi has joined the company as director of procurement for Canada, Airbus Americas. Marcheschi is responsible for strategic and procurement marketing activities related to Canada, said the company. This includes identifying suppliers, promoting the Canadian supplier base within the Airbus community, leading missions in Canada and supporting Airbus procurement priorities within existing Canadian suppliers. Marcheschi is also the liaison for procurement matters between Airbus and Canadian industrial associations and provincial and federal authorities. Marcheschi will report directly to David Williams, Airbus Americas vice-president, procurement. Before joining Airbus Americas, Marcheschi spent 14 years at Avior Integrated Products, a Quebec supplier of structural assemblies for the international aerospace industry. He has also worked at Hochelaga Aerospace and Hubbell Canada, Inc. Marcheschi will be based out of Airbus Americas headquarters in Herndon, Virginia.
Auditor general criticizes National Shipbuilding Procurement Strategy
The Canadian Press
anada’s navy may get neither the type nor the number of warships it needs because of the government’s budget inflexibility and failure to do its defence-policy homework, Canada’s auditor general warns. Michael Ferguson’s latest report examines the National Shipbuilding Procurement Strategy and the first few projects, which are already in the queue but still in the planning stages. His report gives the government credit for a smooth, consultative process in establishing the framework arrangement and says oversight mechanisms are in place to protect taxpayers, but suggests the government is being rigid in aspects that could harm the navy over the long term. “The ships haven’t even been designed yet, so it is very early in the process,” said Ferguson, who pointed to the current $26-billion budget to replace the country’s existing frigates and destroyers. “Based on all of the information available right now, it looks like that $26 billion will be insufficient to acquire 15 ships to replace the existing 15 ships.” The budgets for the planned frigate replacement and the Conservatives’ signature Arctic patrol ship program have not been revised or increased in more than half a decade, despite rising labour and material costs. As a result, the report says, it’s unclear how many ships the strategy will produce, particularly with such cost restrictions in place—meaning the navy could be forced to reduce the fleet size below its needs. The audit points out that in order to stay within budget, the navy has made capability trade-offs on both the Arctic patrol ships and planned replacements for military supply ships. Ferguson said the 30-year, $34-billion strategy requires close monitoring but also budget flexibility. “While budgets are a useful control, Canada may not get the military ships it needs if budgets are not subject to change,” Ferguson wrote. The Conservatives have tended to treat “rough estimates” as budget caps, the auditor said. The budgets for the Arctic patrol ships and the Canadian surface combatants, meant to replace the frigates, have not been adjusted since 2007-08, and according to National Defence, ``there have been significant increases in cost elements, which are impairing the affordability of the military ships.’’
PurchasingB2B’s Paper Goes Green
he November/December issue of PurchasingB2B is printed on Rolland Enviro100 Satin paper, which is EcoLogo, Processed Chlorine Free (PCF) and Forest Stewardship Council (FSC) certified and manufactured in Canada from 100-percent, post-consumer recycled material from North American recycling programs by Cascades using biogas energy (methane from a landfill site). This alternative green energy source is supplying the paper mill with 93-percent of its thermal energy needs. Manufacturing Rolland Enviro100 Satin produces 85-percent less greenhouse gas emissions than the average 100-percent recycled paper and 94-percent less than the average 100-percent virgin paper. According to Cascades’ environmental calculator, compared to products made with 100-percent virgin fiber, this issue of PurchasingB2B saves: 8 trees 6 5 tennis courts
10,001 kg CO2 emissions of 3 cars per year
248,314 L of water 709 days of water consumption
60 GJ 275,951 60W light bulbs for one hour
3,044 kg of waste 62 waste containers
13 kg NOX emissions of one truck during 40 days
Bélanger Wins Supplier of the Year
lumbing accessories and faucets manufacturer Belanger has won the 2013 Top Supplier Award from Chalifour Canada, a Spancan member. The award recognizes strong sales growth, high fill rates, innovative products and the ability to collaborate in partnership. “This award reflects the strong business relationship that has developed between Belanger and Chalifour Canada,” said Andrew Pantelides, procurement and merchandising manager at Chalifour Canada. “When committed and experienced partners share a vision and their know-how, the most valuable products are truly distinguished; it’s an honour and privilege to be working closely with a vendor partner like Belanger.”
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Hewers of Wood, Drawers of Water by Michael Hlinka
ublic school was a long time ago for me. But the phrase I remember most from the Canadian history I took was “hewers of wood, drawers of water.” I couldn’t remember who said it—and I was unsure of the context—but there’s this incredible tool called Google…so here’s all the information anyone needs to know. The quote originally came from the King James Bible. But to Canadians like me, it’s more closely associated with historian Harold Innis. He used the phrase in a pejorative term in his classic tome from 1930: The Fur Trade in Canada, describing Canada’s economy up to that time. But then something happened. Canada industrialized. And in my formative years, the decades of the 1960s and 1970s, the economic engine that drove the Canadian machine was manufacturing in Central Canada. Not only did the provinces of Ontario and Quebec control the political process through having more people than the rest of Canada combined, we were the “have” provinces in a financial sense. Those decades, the 60s and 70s, saw the growth of a variety of social programs as Canada morphed into a welfare state. The system worked…pretty well…because political and economic power were combined in the same region. Several days ago, I looked at the gross domestic product (GDP) report from Statistics Canada. GDP measures the value of all goods and services produced in a country in a given period of time. I hadn’t paid much attention lately to which sectors are the key wealth drivers in this country. And what I learned really surprised me. In the month of August, at least, the combined value of agriculture, forestry, fishing, hunting, mining, quarrying and oil and gas extraction was approximately equal to the value of all manufacturing. And the “hewers of wood and drawers of water” sectors are growing while manufacturing has declined sharply in the past year. Is this a case of Back to the Future? Is Canada once again becoming a nation of hewers of wood and drawers of water? It seems to be the case, and if this is indeed true, the implications for this country could be profound. 6 | NOVEMBER/DECEMBER 2013
Let’s look back at 2012. The GDP per capita was approximately $78,000 in Alberta and $70,000 in Saskatchewan. Meanwhile, Ontario’s was just under $50,000 and Quebec’s about $45,000. Here are the populations: there are approximately 4.7 million people in Alberta and Saskatchewan; about 21 million people in Ontario and Quebec. And by the way, the per capita GDP numbers completely skew the truth about where the wealth is actually being created. Every Canadian knows that while Ottawa is “formally” the capital of Canada, there is a huge number of government bureaucrats who reside in the Ottawa-Hull area. When a country calculates its GDP, the contribution of a government official is determined by how much money he or she receives. It doesn’t matter whether that person does anything useful or not. It doesn’t matter whether their services (think CRTC) are even needed anymore. The important thing is that bureaucrat is getting paid—which means a contribution to GDP. Let’s call a spade a shovel. While workers in provinces like Alberta and Saskatchewan are getting out of bed in the morning and creating things of real value, there are lots of people in Central Canada who are getting out of bed in the morning, shuffling paper and drawing a very nice wage on the backs of their Western brothers and sisters. And let me make something perfectly clear: I was born in Toronto, have only lived in Toronto, and am writing these words as I’m sitting at a computer terminal in the city’s downtown core. But truth is truth. That’s the economic reality. And it seems to me that the political implications are reasonably clear. As the years go by and the wealth divide between Western Canada and Central Canada widens, Central Canada will progressively take more and more through a variety of taxes, whether they are income-based or consumption-based, doesn’t matter. The promise of the welfare state is that no matter how little you do, you deserve certain benefits. And anyone who thinks that because our form of government is democratic, it’s not capable of tyranny, is borderline delusional. This is what I think the future is going to hold. Through the power of the ballot box, Central Canada will systematically expropriate more and more from the truly productive regions of this country. We won’t call it stealing because that would reflect badly on us. We’ll call it democracy and feel smugly virtuous. And more and more, the hewers of wood and drawers of water will (understandably) feel resentful that they’re the ones who are doing the productive work, and that Canadians in other regions are getting a free ride on their backs. B2B Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network. PurchasingB2B.ca
Ask The Expert
What’s Your Sustainability Business Case? Tips to measure and benchmark your organization’s sustainable performance by Linda Craig
e hear the term sustainability a lot these days and many organizations are striving to integrate this newer concept. Sadly, it’s easier said than done, and there’s a lot of variation in people’s understanding of just what this term means. It’s hard to pin down, so the path to realizing sustainability is not as straightforward as one might hope. An easy place to start is by developing a Global Sustainability Initiative (GSI). Have you done an environmental or economic impact assessment? This is not necessarily a new concept. It was first realized in the 1800’s when cities began to question whether it was good corporate governance to draw water from the same place that sewage was being dumped. When conducting assessments of this type, the question you’re trying to answer is: do we have enough for everyone, forever? Begin measuring from there.
“Sustainability goes beyond a ‘feel good’ exercise. It must become a key consideration in all business activities.” Supply chain practitioners are already attuned to measuring, so why not start measuring sustainability attributes? Practitioners also have the advantage of the whole picture viewpoint and know the start-to-finish journey of their products. Broadening this perspective beyond the supply chain can bolster sustainability initiatives. Consider the light bulb. When light bulbs are replaced in a warehouse, office or factory, consider their start-to-finish lifecycle. By doing so, you gain a better understanding of the total cost associated with this one item: energy savings realized from using
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new bulbs as well as the anticipated cost (monetary and environmental) of disposal when they inevitably burn out. Usually, one considers only environmental and economic factors when thinking about sustainability. But the social factor is the third main sustainability pillar, and social conscience is a vital component that needs to be taken into account. Determine the impact on the quality of life of the people who touch your offering. You can also improve quality of life without jeopardizing economic or environmental inputs and outputs. Consumers are becoming better informed about the products they buy. We need only think of our own buying habits. How many times do we gravitate towards those that are environmentally friendly or energy efficient? It’s not just the economic value of a product that is being factored in but the environmental and social value. Leading companies like Wal-Mart, Rona and Ford are already doing ESG (economic, social, corporate governance) benchmarking. They’re looking within their supply chains to track the environmental impact of the goods and services that they utilize. Although no clear, overall ESG standard exists, they’re forging ahead and starting to measure and improve sustainability through efficiencies in packaging, transportation and beyond. Sustainability goes beyond a “feel good” exercise. It must become a key consideration in all business activities. It’s what will enable companies to endure, remain productive and continue evolving. While there will be commonalities in many of the sustainability initiatives companies enact, it’s up to individual organizations to find the optimal route that suits their individual and organizational needs and goals. Procurement Professional Tip: Become the functional expert on the sustainability issues surrounding the goods or services you procure. Is there an industry standard sustainability measurement associated with these items? If none exist, what economic, social and environmental elements should be taken into consideration? Management Insight: Look within your organization to see how a Global Sustainability Initiative could be implemented. An organization’s strategic goals need to be factored in. Leverage your leadership and passion to make it a rewarding personal and professional journey. B2B
Linda Craig CSCMP, CITT, CHRP, MBA, is the managing partner of RSVP (Retention Strategy Value Partners), a strategic supply change innovation organization. Reach her at Linda@retention.ca. PurchasingB2B.ca
Fostering Positive Change Jeremiah Brenner, manager, corporate responsibility, LoyaltyOne
Q: Describe your educational background and work history? I completed my undergraduate degree at the University of Waterloo, an honours degree in arts and business with a sociology major. I then joined the City of Mississauga as a service value analyst reviewing city services. After nearly two years, I returned to school to complete a master’s degree. I’ve always been passionate about the environment and was accepted into the University of Western’s masters of environment & sustainability program. I completed a work term with a Toronto-based environmental consulting firm before joining LoyaltyOne, the owners and operators of the AIR MILES® Reward Program, as manager of corporate responsibility.
Q: What do you enjoy most about your position? LoyaltyOne fosters innovation and experimentation. This allows me the flexibility to pilot new and innovative programs and initiatives. LoyaltyOne is a recognized leader in corporate responsibility, including environmental sustainability. The culture of the company is another reason I enjoy my role. The associates are supportive of all the work the corporate responsibility team does to create a healthier and more sustainable work environment. Q: Why did you choose sustainability as a field? Sustainability allows individuals from numerous backgrounds and sectors to identify, address and propose solutions to complex problems. These problems have an effect on a global scale. Being part of the sustainability sector allows me to drive these discussions and contribute to the solutions that foster positive change.
Q: Why is sustainability important for companies to address? All organizations, regardless of sector or industry, are consumers and producers of goods and services. As such, there are resources that are used to create and distribute these products and services. When you look at the scale of this consumption, you get a clear sense of the possible impacts, positive or negative, that this can have. Organizations have the power to make positive changes by being good corporate citizens.
Q: What’s your proudest professional moment? My proudest professional moment was working with LoyaltyOne’s property management company to complete a LEED® EB: O&M (Existing Buildings Operations and Maintenance) submission. The process was intensive and a lot of effort went into this project. When we receive this certification, we will have over 1,000 LoyaltyOne associates in a LEED certified space.
Q: What are your future plans? Sustainability is constantly in flux, so you have to keep current. I get involved with committees, conferences and workshops to ensure I benefit from the knowledge and experience of leaders within this field. Q: What advice would you give organizations looking to bolster their sustainability programs? Have a vision and plan that outlines your organization’s sustainable goals and objectives. Sustainability is not a one-sizefits-all solution. Setting targets and goals will allow you to focus on achieving the objectives that are the right fit for your company. Sustainability programs also provide accountability and transparency to your organization and customers. Get involved. Participate on boards and committees. Attend workshops and conferences. Join webinars and education sessions. Sustainability is a field where creativity, innovation and collaboration are essential. What a great opportunity for us to rise to the occasion. B2B
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Professional Development Directory Advertorial
CITT can help you become as expert in logistics as you are in procurement Many purchasing professionals are now managing the flow of goods or materials and are sharing in the responsibility for ensuring uninterrupted supply chain operations. That’s logistics. And that means you may be dealing with a host of new challenges, including: security risks, liability exposures, foreign and domestic regulations and other variables that impact a stable and reliable supply of materials for manufacture or flow of product for end-use customers. At the very least, you’re buying services and might want to understand how all these forces relate to your procurement processes at a deeper level. Chances are good you’re facing this role expansion without the benefit of specialized, logistics-specific professional education or certification. That’s where CITT can help. We can help you get smarter, faster. And prove you know what you’re doing in logistics. You can complement your purchasing knowledge with CITT’s expert-level, 5-course suite of specialized logistics courses CITT’s courses will equip you with a depth of understanding that is more complete and comprehensive than any other, similarly named set of industry courses offered anywhere in Canada. Take three core courses (Transportation Systems, Logistics Processes, Integrated
Logistics) and pick two electives (Logistics Decision Modeling, Transportation Law, Transportation Economics). After completing these courses, you’ll have the best technical foundation for profitably managing stable, sustainable (multi-modal) supply chain and logistics operations available today. Then you’ll be eligible to complete your professional certification from CITT and carry industry’s most widely-held and relevant designation in logistics: CCLP® (CITT-Certified Logistics Professional). No other credential says “Logistics Expert” as decisively as CCLP. So add CCLP to your procurement credentials—and add more transport-ability to your resume CITT believes in making supply chain and logistics certification attainable for anyone who is prepared to meet our high, industryrecognised and respected standard of functional proficiency. That’s why all of our courses, certification and certification maintenance requirements are affordable and accessible to anyone with internet access. Visit www.citt.ca/transportability for more information and to download your FREE guide to the most respected source of professional training and most commonly held logistics certification.
Add “Logistics Expert” to your professional credentials. And more profitability to your supply chain logistics. The deadline to register for CITT’s winter semester is January 10th. Register now at www.citt.ca to guarantee your spot.
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Head Professional Development Directory Advertorial
Demonstrate your expertise with a professional designation
There are many options available to gain professional knowledge. An academic degree can provide a knowledge foundation, and conferences and workshops can provide a quick understanding of industry changes. A professional designation is the best way to show colleagues and employers that you have both the knowledge and skills to be a leader in your profession. A professional designation is one of the highest achievements you can attain in your field. It signifies that its holder has completed a rigorous program and adheres to the highest level of professional standards.
in senior roles. As a core component of achieving the designation, candidates must be working in the field while pursuing their designation, so classroom principles can be put into action.
Completion of a professional designation, such as the Certified Supply Chain Management Professional, combines a rigorous academic program with real world application. The program covers a wide range of SCM competencies and prepares you for success
As a highly trained professional you will be poised to drive profitability and bottom line results for your employer. Surveys consistently show that individuals with a professional designation earn more than their colleagues without one.
Academic degrees often gather dust on the mantle. A designation is different than completing a degree, diploma or other forms of post-secondary/graduate education because of the ongoing professional development required to maintain it. New practices and processes are emerging daily and you must continually update your knowledge and skill set to stay at the forefront of your profession.
Make a strategic career move and begin your pursuit of the Certified SCMP today. For further information contact SCMAO at firstname.lastname@example.org, www.scmao.ca or 416 977-7566.
INVEST IN YOURSELF. With training from SCMAO throughout the year, you will gain more in-depth knowledge to help you manage your supply chain career. We offer a wide variety of supply chain management seminars which will enable you to hone your management skills. SCMAO is pleased to present three new workshops coming in the new year:
Project Management for Supply Chain Professionals February 6/7, 2014 (Mississauga) Discover practical and effective management techniques to make your projects successful.
Approaching Conflict with Emotional Intelligence March 5/6, 2014 (Mississauga) Gain the confidence you need to confront situations and manage conflict.
Capital Equipment Procurement and Contracting March 19, 2014 (Toronto) Develop strategies to meet the current challenges of major equipment procurement.
For more information contact Carol Ship Spencer, Director, Professional Programs, at (416) 977-7566 x 2146 or visit www.scmao.ca to register now and guarantee your spot! PurchasingB2B.ca
NOVEMBER/DECEMBER 2013 | 11
If you purchased LCD panels and/or televisions, computer monitors or laptop computers containing LCD panels, your legal rights could be affected by class action settlements. Background Class action lawsuits have been initiated in Ontario, British Columbia and Quebec alleging that, between January 1998 and December 2006, the defendants conspired to fix prices for LCD (liquid crystal display) panels and televisions, computer monitors and laptop computers containing LCD panels (“LCD products”). On May 26, 2011, the Ontario action was certified in respect of a national class on behalf of certain purchasers of LCD panels and LCD products. The defendants were granted leave to appeal certification and the appeal is pending. The plaintiff has brought a motion to amend the class definition to include all purchasers of LCD panels and LCD products during the relevant period and that motion is also pending. You are encouraged to read the long-form notice, available online at www.classaction.ca. Proposed Settlements Additional settlements have been reached with Japan Display Inc. (successor to Hitachi Displays, Ltd.) (“JDI”) on its behalf and on behalf of Hitachi Ltd., Hitachi Canada, Ltd., Hitachi America Ltd., Hitachi Electronics Devices (USA) Inc., and Innolux Corporation (successor to Chi Mei Optoelectronics Corporation) (“Innolux”). Pursuant to the settlements, JDI has agreed to pay CDN$3,150,000, and Innolux has agreed to pay CDN$10,000,000 for the benefit of settlement class members, in exchange for a full release of claims against them and their related entities relating to the pricing of LCD panels of all sizes and products containing such LCD panels. JDI and Innolux have agreed to provide cooperation to the plaintiffs in pursuing the class actions against the remaining Defendants. The settlements represent a resolution of disputed claims. JDI and Innolux do not admit any wrongdoing or liability. The class actions have been certified against JDI and Innolux for settlement purposes. Motions to approve the settlements will be heard by the Ontario Court in the City of London on January 10, 2014 at 9:00 a.m., the British Columbia Court in the City of Vancouver on January 24, 2014 at 9:00 a.m., and the Quebec Court in the City of Quebec on February 20, 2014 at 9:30 a.m. At these hearings, the Ontario, British Columbia and Quebec Courts will determine whether the settlements are fair, reasonable, and in the best interests of settlement class members. Settlement class members are entitled to file written submissions and/or appear and make submissions at the settlement approval hearings. Settlement class members who wish to exercise either of these rights must submit written submissions postmarked no later than December 31, 2013. Instructions regarding the process for making submissions are available online at www.classaction.ca. Proposed Distribution of the Settlement Funds Including prior settlements, the settlements achieved to date in the litigation total $37,623,000. At the approval hearing, the courts will be asked to approve a protocol for distribution of the settlement funds for all settlements, plus accrued interest, less court-approved legal fees, disbursements, administration expenses, and applicable taxes. A copy of the proposed distribution protocol is available at www.classaction.ca or from Class Counsel. After the approval hearings, a further notice will be distributed by mail or email and posted online at www.classaction.ca regarding the process and deadline for filing a claim. To ensure that you receive this notice, please register online at www.classaction.ca, email email@example.com or call 1-800-461-6166 ext. 2446. Class Counsel & Legal Fees The law firms of Siskinds LLP, Camp Fiorante Matthews Mogerman and Siskinds Desmeules s.e.n.c.r.l. are class counsel. Their full contact information is available online at www.classaction.ca. Class Counsel legal fees and disbursements must be approved by the courts. Class Counsel will collectively be requesting that legal fees of up to 25% of the settlement funds, plus disbursements and applicable taxes be approved by the Courts and paid out of the JDI and Innolux settlement funds. Questions? Visit www.classaction.ca, call 1-800-461-6166 ext. 2446 or email firstname.lastname@example.org
Addressing issues affecting Canada’s public procurement professionals
he Canadian Public Procurement Council hosted it’s forum in St. John’s, Newfoundland and Labrador, November 3-6. The conference featured a mix of plenary and concurrent sessions. This issue of PurchasingB2G features three articles highlighting selected conference sessions. The first article, by Owen Pawson, partner with Miller Thomson LLP, summarizes his plenary session entitled The
Procurement of Design-Built Construction Projects— The Basics and Fundamentals. Next up, writer Denise Flint reports on how procurement can take their profession to the next level. Finally, Paul Emanuelli of the Procurement Law Office, highlights the City of Lethbridge’s efforts to adopt flexible tendering. Watch for additional coverage of the conference in our January/February issue.
A Level Playing Field
Critical issues of fairness in design-build procurement by Owen Pawson
n the 1981 case, The Queen (Ont.) v. Ron Engineering & Construction (Eastern) Ltd., the Supreme Court of Canada (SCC) enshrined the concept of Contract A/Contract B into Canadian procurement law. Contract A is the agreement between each bidder and the public owner, while Contract B is the actual contract that comes into existence when the public owner accepts a compliant bid. In Martel Building Ltd. v Canada, the SCC found there is an implied term in Contract A that owners must treat all bidders fairly and consistently during the procurement process. Not doing so opens public owners to claims and lawsuits by unsuccessful compliant bidders. Public owners should adhere to fair and unbiased procurement procedures, especially during evaluation of bids. Low bid procurement is straightforward— evaluation is based on price and the project is awarded to the proposal with the lowest price. Design-build procurement is more complex and has other relevant evaluation considerations such as quality, performance, experience, capability and design innovation. Public owners must remember that proponents spend significant time, effort and money preparing proposals in response to a design-build request for proposals (RFP). For this reason, proponents may choose not to waste time and resources preparing a proposal where there is little or no chance of success. In addition, after expending significant resources without success, they may be sensitive to any hint of unfairness in the procurement process. Accordingly, public owners
should consider a quality based selection process or request for qualifications (RFQ) in order to shortlist eligible design-build teams to a maximum of three or four proponents. An RFQ will help ensure that only qualified proponents respond to the RFP. An RFQ does not require significant resources and should focus on expertise, experience and other indicia of competence but without the onerous task of preparing a detailed technical proposal and conceptual design.
Be clear and careful Public owners must keep in mind an RFP is a legal document (Contract A). The RFP must clearly set out the evaluation criteria and should indicate the weighting for each criterion. There are typically two broad evaluations: one of the technical proposals and one of the financial proposals. The RFP should state the weighting that will be given to the financial proposal and what weight will be assigned to the technical proposal. When price is a criterion, public owners should avoid any perception of bias by separating the technical and the financial evaluations and putting safeguards in place. Such safeguards include: having proponents submit their technical proposals and their financial proposals separately; maintaining separate and locked evaluation rooms, and so forth. Also, the technical evaluation team should be unaware of the financial proposals. This will ensure that price bias does not influence evaluation of the technical proposals. Every member of the public owner’s evaluation
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committee and its technical advisors assisting the evaluation committee must disclose any relationships with team members of each of the proponents. Identification of actual or perceived conflicts and dealing with them prior to evaluation of proposals is essential to avoid claims of bias. Be consistent During the evaluation process, proponents typically ask clarification questions. Some of those may be posed as “in-confidence” questions. Generally, responses to clarification questions should be disclosed to all proponents. However, the public owner may agree that a response to a specific question should not be disclosed to other proponents (i.e., a creative and proprietary design idea). Take care to avoid any hint of preferential treatment of one of the proponents.
Public owners may decide to include an exclusion clause in an attempt to bar recovery for any breach of Contract A—even if the public owner has been unfair during the procurement process. However, such clauses have to be drafted very carefully for a court to find them effective. They can be seen as impairing an owner’s reputation for fairness. An exclusion clause can also mean that proponents will include a risk premium in their financial proposal and it may also mean that good proponents will not submit proposals. Indeed, the best way for a public owner to protect its reputation and obtain competitive design-build proposals is to consistently conduct procurement processes that are fair, open and transparent. B2B
Owen Pawson is partner at Miller Thomson LLP in Vancouver. Reach him at email@example.com.
You Are Important Purchasing professionals learn to take pride in the importance of their work by Denise Flint
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he tone of the Canadian Public Procurement Forum 2013 was set by plenary session speakers Yvon Paris, Koce Kolev and Francois LaRue. The three discussed how procurement and logistics professionals can take the profession to another level. “Do you think you are important?” LaRue opened the session by asking the room. The positive response he received was then contrasted with an acknowledgement of how undervalued their services often are. The problem, according to LaRue, is that while surrounded by modern technology, supply chain management is stuck in the Palaeozoic Era. Using their experiences as administrators at a Quebec hospital as an example, Paris, Kolev and LaRue explained how to bring purchasing and logistics into the 21st century. The centre hospitalier universitaire de Sherbrooke (CHUS) is a multi-purpose organisation: part hospital, part research centre and part medical school. With over 6,000 employees and an annual budget of $462 million—of which $100 million goes to purchasing—it’s the fourth largest medical institution in the province While the service side of the equation may have been working smoothly, that wasn’t the case with supply. As LaRue, the logistics co-ordinator for CHUS, explains: “When a person comes to the hospital you cannot tell them to come back next week because you’re out of something. Without good inventory people were just ordering and ordering to make sure they had enough.” As a result, in 2011, for example, the inventory on the shelf did not match the records 89 percent of the time. As well, about two boxes of ‘stuff’ were disappearing each week.
With a mission to improve accessibility and contribute to the high quality of service at a minimum cost, they took a four-step approach. The first step was to build teams. They needed people working together who had a good attitude, the right competencies and capacity for teamwork. The second and third steps were to review all processes and put the correct tools in place. They mapped everything that went through the system (which is how they first learned about the poor inventory records and missing ‘stuff’) and amalgamated 13 regional purchasing agencies into one. They built a separate warehouse with a proper warehouse management system and suitable technology, including reading guns and RFIDs just to manage the inventory. As a result, that 89 percent blot on the books dropped to just four percent in 2013. A huge time and cost cutting measure involved charting the hundreds of individual contracts signed each year. Developing a master contract helped them save $2.5 million in 2012/13 through measures such as the saving of $430,000 on a ten-year MRI maintenance contract. Finally, they established operating rules, outlining everyone’s role, responsibility and authority to increase everyone’s level of effectiveness. Operational audits are ongoing. They consist of many factors including customer surveys, internal audits, external audits and financial indicators. The result is greater efficiency throughout the hospital, decreased costs and greater job satisfaction—truly the revolution LaRue describes. B2B Denise Flint is a writer based in St. Philips, just outside of St. John’s, Newfoundland & Labrador.
Leveraging the Dialogue RFP The City of Lethbridge adopts flexible tendering formats by Paul Emanuelli
s announced in November, 2013 at the Canadian Public Procurement Council’s annual conference in St. John’s, Newfoundland, the City of Lethbridge won a Leadership in Public Procurement Award for 2013. The award is the culmination of a procurement governance overhaul that started several years ago at the City of Lethbridge that featured the deployment of flexible tendering formats such as the Dialogue RFP. As noted by Lethbridge procurement manager Craig Milley during his conference presentation, Lethbridge’s senior leadership was aware of the negative results from an audit of the City of Calgary’s procurement operations in 2009-10. The leadership team decided on proactive measures. The journey that led to the Dialogue RFP began with an assessment of Lethbridge’s procurement practices and the realization that its current suite of inflexible, high-risk tendering formats needed an overhaul. As Milley noted, fixed-bid tendering was resulting in performance issues and postaward cost increases. The City’s solution was to implement more flexible tendering formats. Deploying Flexible Formats An independent legal review of the City’s procurement practices supported the decision, and included recommendations on deploying a suite of flexible, low-risk tendering formats and integrate that deployment into a governance framework. That deployment included using a simplified Request for Quotation (RFQ) format for construction projects. The RFQ operated under traditional contract law rules instead of the fixedbid tender law rules that generate most of the tendering lawsuits in the construction industry.
“Public and private sector institutions in all parts of Canada are adopting flexible tendering formats to mitigate risk, increase flexibility and better serve their institutions.” Another tool in the City’s revamped tendering toolkit was the Dialogue RFP, with its use of shortlisting, dialogue and a best-and-final-offer process. The Dialogue RFP operates under traditional contract law, enabling the post-bid discussions that facilitate the clarification of contract respon-
sibilities before the contract is awarded. Milley’s team had hoped that this would reduce the performance issues and cost overruns associated with fixed-bid no dialogue tendering, and the Dialogue RFP delivered on that promise. As noted in Lethbridge’s award submission, the City deployed the Dialogue RFP on two high-profile projects: • $40 million project for a community ice centre with twin hockey rinks and curling facility; and • A $26 million project for the renovation and expansion of police headquarters. In both of these projects, Lethbridge leveraged the flexibility afforded by the Dialogue RFP. It engaged in concurrent discussions with the short-listed finalists to better refine project details at the critical pre-award design stage. According to Milley, this concurrent dialogue helped ensure that all parties understood project objectives, that project risks were mitigated and that competitive tension remained in the process prior to contract award. Milley noted that once the tendering format overhaul was done, the Dialogue RFP was implemented using internal staff. While achieving significant savings—over $500,000 in post-bid reductions and counting — the City avoided the large transactional costs associated with external advisors in complex projects. To counter the fear of pre-award delays, Milley statistically recorded how the Dialogue RFP led to faster contract awards compared to the twostaged prequalification-invitational bid process used in similar projects. The measurable benefits of the Dialogue RFP format support its broader deployment. As Milley noted, the Lethbridge story can serve as a blueprint for implementing the format across other public sector institutions. Wave of the Future Those alive to industry trends know the Lethbridge story reflects a movement reaching beyond southern Alberta. Public and private sector institutions across Canada are adopting flexible tendering formats to mitigate risk, increase flexibility and better serve their institutions. With Lethbridge’s story adding a chapter in the evaluation of advanced tendering practices, it’s a matter of time before flexible formats become the standard across all purchasing institutions. B2B
Paul Emanuelli is the general counsel of the Procurement Law Office, which helped the City of Lethbridge in the overhaul above. He works with public and private institutions to develop and deploy flexible tendering formats. Reach him at firstname.lastname@example.org. NOVEMBER/DECEMBER 2013 | 15
Innovating The Chain
Big picture thinking combined with nuts-and-bolts advice featured at 16th-Annual SCMA Ontario Conference by Michael Power
“The adventure of life is to learn. The purpose of life is to grow. The essence of life is to care. But the true beauty of life is to give. Thank you for giving me the opportunity to be here.”
ith those words, Michael “Pinball” Clemons opened the 16-annual Supply chain Management Association (SCMA) Ontario conference in Toronto. The two-day event kicked off October 18 and boasted over 300 delegates. Clemons, a former Toronto Argonauts team member and head coach, was the event’s keynote speaker on October 18. He told the group that he had pondered what to say to supply chain management professionals beforehand, but decided to speak to them about value. He jokingly compared them to offensive linemen (football’s “big guys”) since few spectators know who they are until something bad happens. He used the team metaphor again when noting that no one member is as good alone as all members together. “It’s incumbent upon us to know that our input is significant,” he told the audience. At the same time, Clemons noted, each member must act as if the team’s success relied on them completely.
Former Toronto Argonauts Michael “Pinball” Clemons brought a unique energy to his keynote speech during the first day of SCMA Ontario’s conference.
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Clemons spoke about a fullback he played with, who was one of the most consistent people he’d ever known—the player coached his children in football and never missed a day of either coaching or work in eight years. During that time, Clemons said his friend battled brain cancer and died the same day Clemons was inducted into the Canadian Football Hall of Fame. “What I want to say here is, without [that player] and the other big guys, I couldn’t have run for 100 yards,” Clemons said. “I ran for 25,000 (yards) but I couldn’t have run for 100 if it wasn’t for them. I want you to know that that’s your role in the workplace.” During another presentation, John Weigelt, chief technology officer for Microsoft Canada, addressed staying competitive. The productivity gap, he noted, was a shortcoming of innovation. But “innovation” is an overused term, he said, and people don’t often see innovation within their own organizations. When referring to the “digital economy,” Weigelt noted areas such as the gaming industry, the medical field or banking. But other businesses like the oil and gas industry have adopted digital technology, with companies in Fort McMurray using systems that manage staff right at the wellhead. Another example is agriculture, where farmers use robotic tractors to harvest food. To remain innovative, look at how technology can change business, Weigelt said, with transformational trends like mobility, social media, big data and others coming one after the other. He also cited “the internet of things,” in which computers and systems are more connected than ever before. Commercial industries have led the way in this area, he noted. There’s an evolving interaction with computers, he said. For example, some computers can be manipulated with gestures rather than touch. Robots are also finding new places within various industries. Teddy Bear robots are being used to sooth children in hospital, home service robots can help the elderly stay in their homes longer and robots can even hand equipment to surgeons. “This is a big transformation that’s happening and I’m not sure many people are paying attention to it.” Innovation came up again during a presentation on building an RFP, by Ian Brennan of PPI Consulting. That spirit of innovation is important in procurement, Brennen said, noting a onesize-fits-all approach often doesn’t work. Don’t be afraid of using the RFI process, Brennan said, as the process allows procurement to approach a vendor with key questions. Brennan stressed the importance of building an RFP team from the outset. He cited several key people to include on that team, such as strategic procurement experts; subject matter experts; the legal department; and senior management.
Begin an RFP with the business outcome in mind, Brennan recommended. Beginning with “process paralysis”—focusing on process rather than outcome—usually means an unhappy client whose needs remain unmet although there was an open, fair and transparent RFP process, he noted. “If you build a model, at the end of the day you’ll get better results,” he said. Constructing models helps clients focus on what they’re buying and picture that product—especially when multiple stakeholders are involved. Models also help vendors better understand deliverables. For procurement, models help to focus on business outcomes, avoid scope creep and aid in articulating the deliverables in the RFP. Also, Brennan noted, use models that align with industry best practices where applicable. A model helps to provide a clear and concise view of what the organization expects through the RFP. The majority of an organization’s money (about 60 percent) flows out through procurement when payroll and treasury are put aside, said Cameron McCaw of McCaw Consulting, during his presentation on fraud prevention on the conference’s second day. “By shear definition, where you have the majority of the funds flowing out is where the majority of fraud is occurring,” said McCaw. McCaw noted that the average fraudster has usually been doing it for two years at the time their actions are discovered and has taken $145,000. “It’s usually not a one-off situation.” Frauds usually occur when there’s a breakdown of internal controls or with something that started as an error. These are called “points of vulnerability,” he said, noting they were places where things could “slip through the cracks.” Fraud involves asset misappropriation or corruption, McCaw told the audience. Misappropriation tends to have direct evidence, such as cheques or vouchures pointing the way. Corruption involves conflicts of interest, bribery or kickbacks and the evidence is circumstantial. For example, an employee might set up a business supplies company then buy from themselves on their employer’s behalf. “The key to preventing fraud is through trying to ensure you have an ethical work environment where everybody knows the expectation for honesty,” he said. “If you set the right tone at the top it goes a long way to ensuring that things run effectively.” For that, organizations need internal control systems, McCaw said. If employees feel they work in a positive environment, fraud is less likely; organizations with low morale are more likely to experience fraud. Fraud red flags include unusual trends or close relationships between procurement and suppliers, or when an employee’s lifestyle suddenly improves without explanation. Improving the RFP process Hugh Lawson of Staples Promotional Products led a session highlighting tips for improving the RFP process. Doing so has become more important recently, he noted, since many organizations aren’t seeing much growth and a better RFP offers organizations value without additional staff, Lawson said. With RFPs, collaboration is key, Lawson noted. To get the best performance from participants, make them an extension of your organization. By collaborating, vendors can take on a “help us help you” approach to producing the RFP, Lawson said, which
is better than making the process entirely about price. “If you make it all about price then you’ll get price,” he said. “But there’ll be strategies put in place to get it back over time.” Using emotional intelligence during the process is helpful, Lawson said. He recommended getting internal staff, stakeholders and vendors involved in an RFP. “At the end of the day, you’re leading a mass of people on both side to get the right outcome,” he said. Lawson also recommended allowing about three weeks as a timeline for an RFP. While a tight timeline often means an RFP writer is waiting for information from other sources, it can also mean that vendors are unable to offer their best. The conference wrapped up with Bill Zakarow, director of procurement for the Toronto 2015 Pan/Parapan Am Games. Zakarow took the audience through what it takes to procure for an event that host 41 countries across over 40 venues with 450 staff, 51 sports and a budget of $1.4 billion. Zakarow focused on the impact of the supply chain on large, multi-sport events and what happens behind the scenes. When it comes to logistics, Zakarow said, collaboration is critical. With 100,000 SKUs warehoused, the games can’t afford mis-shipments. “We can’t have equipment coming into Canada prior to the warehouse being opened,” he said. “In the games, warehousing and logistics are extremely important.” Zakarow highlighted the transportation of horses as one area with logistical complexity. Choosing the right supplier and working with sports federations in each country is complicated, he said, as is the reverse logistics afterwards. “It’s another complexity that, when I took the job I didn’t know how to do,” he said. The games have also worked to engage diverse suppliers, Zakarow noted, as well as supporting the local economy. Workshops have been held to help diverse suppliers participate in bidding, as well as encouraging large companies to work with SMEs and diverse businesses for servicing the games. Themes such as the importance of innovation and collaboration emerged at the conference. While procurement and supply chain practitioners must keep an eye on emerging trends in technology and the field overall, they must pay equal attention to core skill sets in order to be successful. B2B
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Head Thought Leadership
Beyond Reduction Greening the paper supply chain by Michael Power Julie Loyer Communication and sustainable development advisor Cascades Fine Papers Group
Director of programs Forest Stewardship Council (FSC) Canada
Director of environmental programs HP Canada
Jeremiah Brenner Manager, corporate responsibility LoyaltyOne
Photos: Dave Starrett
A thought leadership editorial report brought to you in partnership with
hen discussing paper and sustainability, one of the first questions that arises is: what are the strategies that organizations can put in place to reduce paper’s usage? Most of us are familiar with the expression “reduce, reuse and recycle.” Certainly, those “three Rs” are well established as the first steps for organizations looking to minimize paper’s footprint. But paper products tell a story outside of those three Rs. So how do organizations move beyond reduction in pushing towards their sustainability goals? To investigate, PurchasingB2B hosted a thought leadership panel at the Supply Chain Management Association (SCMA) Ontario’s 16th-annual conference in Toronto. The panel, held October 18 in partnership with Cascades Fine Papers Group, consisted of: Monika Patel, director of programs, Forest Stewardship Council (FSC); Jeremiah Brenner, manager, corporate responsibility, at LoyaltyOne; Julie Loyer, communication and sustainable development advisor, Cascades Fine Papers Group; and Frances Edmonds, HP Canada’s director of environmental programs. Michael Power, PurchasingB2B’s editor, moderated the panel.
Organizations must seek to move beyond the “three Rs” to ensure the supply chain is as sustainable as possible. As a leader in the manufacturing of ecological fine papers and security papers, Cascades partnered with PurchasingB2B to bring together sustainability and paper experts at the Supply Chain Management Association Ontario Conference on October 18 for a panel discussion focusing on sustainable paper. Cascades uses postconsumer and FSC certified virgin fibre for its commercial papers and uses renewable and local biogas energy produced from the decomposition of waste buried in a landfill. To learn more, visit paper.cascades.com. NOVEMBER/DECEMBER 2013 | 19
Thought Head Leadership
o begin, the group discussed the definition of sustainability, especially regarding paper. And while the environment is part of that definition, economic and social impacts are also important to sustainable development, said Loyer. “It could mean buying locally, employment and the economics of the procurement policy as well,” she told the audience. Brenner agreed that a balance between the social, environmental and economic aspects of sustainability is key. Sustainability’s classic definition—meeting the needs of today without compromising future needs—has driven the concept over the last few years. “We’re trying to achieve the checks and balances that allow us to operate successfully as a business, but also (remain) respectful and a leader in the sustainable, environmental and social spaces.” For Patel, responsibility for the future helps define sustainability. It’s important to remember that paper begins it’s life in a forest, she said, and using resources from forests has implications for wildlife, First Nations populations and communities surrounding that forest. “Each sheet of paper is not just a sheet of paper,” Patel said. “You’re actually looking at a very large group of social, Aboriginal, economic and environmental attributes.”
“Reducing, reusing and recycling is very important, but when we reach one point we need to go further. After doing one good thing we need to think about the next thing.” ~ Julie Loyer
Edmonds said that HP’s biggest impacts were with the customers using their products. The organization works to help those customers print better, but also to improve their buying habits. “We encourage our customers to take our paper policy and apply it to their own operations,” she said. “To reduce our impact, we have to work with our customers to help them reduce their impact. It’s not just about producing, it’s also about buying better.” The panelists agreed that “reduce, reuse and recycle” has its place in organization’s sustainability efforts. But while the three Rs made a great starting point, Patel recommended investigating whether the product comes from a sustainable source. As well, Brenner suggested looking at various aspects of a paper product’s production, such as the energy source and what chemicals are used. Loyer stressed that sustainable development is a
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journey with multiple steps that are involved. “Of course, reducing, reusing and recycling is very important. But when we reach one point we need to go further,” she said. “After doing one good thing we need to think about the next thing. That’s how we could look at those three Rs—a good start.”
But sifting through sustainability claims can be challenging and so-called “greenwashing” can mask just how sustainable an organization’s practices are. Greenwashing, said Edmonds, is often inadvertent but can be intentional, for example by using deliberately misleading labels. She recommended that organizations seek backup for sustainability claims. “Sometimes, that gets in the way because you have to put multiple references at
is because it adds credibility,” she said. “It removes you from the equation and puts a completely unbiased person in. From my perspective, third-party certification is certainly very important.”
Elements of sustainable paper
The panel discussed several of the elements that contribute to sustainability within the paper supply chain, from the materials used to the type of energy needed in production to the transportation that moves the product. The energy used to manufacture paper has the largest impact on its environmental footprint, Loyer said. The paper industry is one of Canada’s largest industrial energy users, she noted, with natural gas and coal employed most often in the process. However, they are non-renewable and when burned produce a large amount of greenhouse gases. But some alternatives exist, such as biogas, which comes from landfill waste. “It could be hydro-electricity, too,” she said. “There are great alternatives that reduce a lot of the environmental footprint of a product.” Loyer discussed the chemicals that can be used in paper production, such as chlorine derivatives. In North America, laws exist forbidding the use of basic chlorines, although most mills use chlorine derivatives to bleach paper. But alternatives are out there, she said. “That’s what we’re using at
“To reduce our impact, we have to work with our customers to help them reduce their impact. It’s not just about producing, it’s also about buying better.” ~ Frances Edmonds the end of an advert, but it’s important,” she said. Greenwashing can touch not only an organization’s customers but also its employees, she added. These days, many people are savvy to greenwashing so it also pays to focus on internal communications regarding sustainability policies and practices in order to drive employee engagement. “Otherwise, you can risk losing them,” she said. To protect against greenwashing, Patel recommended that organizations use certification labels. She noted that there are several types of labels available that help to identify how sustainable a product is. Rather than doing it themselves, FSC uses a system in which a third-party organization evaluates the sustainability of an organization’s paper products. “The reason why the third party is so important
Cascades because we believe that when you make something you can make it with a smaller environmental footprint,” she said. “We believe certification is very important. Looking at paper, you could look for a certification, a product that’s chlorinefree. That will help you choose a product with less impact on the water and human health.” Looking at transportation can also help reduce paper’s footprint, said Patel, and how far paper travels—whether from overseas, across North America or within Canada—can reveal what transportation mode was used. For example, paper from Cascades, which has mills in Quebec, travels less than products produced in Asia. “There are different aspects and types of paper you can get and they’re from different parts of the world,” Patel said. “But it’s about looking at what’s right for your
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Thought Leadership company and the best way to address that.” Companies shipping paper themselves or employing courier services can use a program called SmartWay, Edmonds noted. The North American program sees the US Environmental Protection Agency and the freight transportation industry collaborate to help improve fuel efficiency and to reduce transportation’s footprint. All HP products in North America are shipped using the SmartWay program, she said. As well, aspects of ordering paper like shipment frequency or requesting bulk orders can improve efficiencies, Brenner added. “Evaluating that overall transportation process is key to minimizing the impact,” he said. The panel also discussed establishing a sustainable procurement policy, noting it was an important and useful step in the journey towards sustainability for paper. Loyer noted that such a policy—backed up by management—takes some of the difficulty out of the process of green procurement. “It makes it much easier, on a day-to-day basis, to do the act of buying and then also to be able to answer questions from our customers,” she said. Edmonds quoted from HP’s paper policy, saying that it was the company’s intent, by demonstrating commitment to the environment, to lead others to do the same. “We’re choosing to set a leadership role with our paper policy that we want other people to follow with us,” she said. “For us, it’s about leadership and doing the right thing.”
Brenner noted communication was key. “Whether you’re doing an annual accountability report or releasing documentation, so long as there’s transparency in the processes and methodologies of why you’ve chosen a certain way or a supplier or supply chain, then you can be held accountable for those choices. There’s no smoke and mirrors.” LoyaltyOne, he said, has a paper procurement policy specifying where the paper comes from, unacceptable chemicals and required third-party certifications. He noted some jurisdictions—Quebec, for example—offer rebates for having higher post-consumer content. “There are incentives besides the obvious, which is driving change in the industry and being a leader in terms of making the right choices with the impacts in the marketplace.” Brenner also noted paper procurement policies were becoming more formalized, and organiza-
tions’ internal divisions often forwarded RFPs with sustainability questions attached. “I see paper getting up there just the same as a carbon report,” he noted. “More and more, I see paper questions like ‘do you have a paper procurement policy in place?’ right after the carbon question. I think it’s gaining visibility and a lot of priority within organizations that are medium-to-large size and are heavy paper-users.” The market has also changed a lot, said Loyer, with more offered than in the past. Certification has gained ground, and there are products available that are FSC-certified, high-recycle content, have chlorine certification and use renewable energy. “So there are choices, and the price gap is smaller than ever between recycled and virgin,” she said. “The quality isn’t an issue any more.”
A mix of fibres In talking about recycled and virgin fibres, Patel said that both types are important to a sustainable supply chain. Recycled fibre, she said, can’t exist without forests. “We should still be recycling and we should still use recycled content,” she said. “However, keep in mind that recycled content, after so many uses, will become unusable. Once it’s unusable you will have to go back to the forest and get more.”
Loyer agreed both were important. She added that it’s usually environmentally preferable to reuse resources as much as possible. “Recycling the paper and using recycled products, including the virgin part, in our mind, is the best way to do it,” she said. The price gap between virgin and recycled fibre products has shrunk, said Loyer. But while some may think that recycled products should cost less because they’re already “used,” there are still sev-
“There are different types of paper from different parts of the world. But it’s about looking at what’s right for your company.” ~ Monika Patel 22 | NOVEMBER/DECEMBER 2013
“Being knowledgeable about a topic like paper from start to finish—from raw material to production—is key for helping implement positive sustainability changes.” ~ Jeremiah Brenner
eral steps needed to collect the paper, sort, clean and de-ink it, and so forth. “All of the different steps makes the process a little more expensive, so the main price differential is from there,” she said. Recycled fibres have become more difficult to come by, said Patel, as some of them end up in landfills or other places and might not get recycled to full capacity. Brenner saw such fibre as an “untapped resource”, noting education helps organizations and individuals realize the importance of putting paper in the right place. Loyer said Cascades was one of Canada’s main collectors of old fibres and still saw enough fibre to make lots of recycled product. The company was even able to sell some of the pulp, she noted. “There are fibres available in the market and it will still be possible in the [coming] years to make a lot of recycled product,” she noted. With any initiative, it’s important to track the future course and chart what the progress has been—sustainable paper included. Edmonds said that what metrics to use depends on an organization’s objectives. She recommended that procurement focus on metrics that mattered to their companies. As well, to set clear goals organizations needed a baseline in terms of sustainability. “That’s often the step companies miss,” she said. “They’ll launch into something and realize that they haven’t got a baseline, so they’re actually not able to measure the change over time. The most important thing is deciding what goals or metrics are important to you, getting a baseline and then tracking your change over time and being transparent.” Patel agreed, noting areas organizations now report on include: percentage of reduction, amount of post-consumer, recycled content; and how much FSC-certified material a company purchases.
Organizations can also use a lifecycle assessment (LSA) to calculate a product’s footprint, Loyer noted. Such assessments cover the extraction of the raw materials to a product’s end-of-life. An LSA targets not just one metric, but several such as effects on human health, climate change and resources. “You’re able to have a very complete, scientific, measurable, rigorous set of data,” Loyer said, noting that a weakness was that they could be difficult to understand. Meanwhile, Edmonds recommended having lifecycle assessments peer-reviewed by an independent third party as it helps to verify that the assessment is well done. As the panel session wrapped up, participants offered closing comments. Loyer noted that while designing sustainable paper procurement policies was challenging, tools existed to help. For example, Environmental Paper Network’s (EPN) website features a purchaser toolkit. “It’s a journey, so take it step-by-step,” she said. An initial step, added Brenner, was setting clear goals and accountabilities. He recommended site tours of paper manufacturing facilities to learn about the product. That helps organizations to make educated decisions and relay information to the C-suite. “Being knowledgeable about a topic like paper from start to finish—from raw material to production—is key for helping implement positive sustainability changes.” Patel re-iterated the importance of knowing where paper comes from—something on which organizations could then base their decisions. “Remember, there’s a story behind it,” she said. “There’s a huge process involved to where your paper is coming from.” Edmonds concluded the discussion by saying that while establishing sustainable paper policies sounds daunting, getting started and setting up metrics remains a straightforward process. Overall, the discussion illustrated to the audience that a sustainable paper supply chain—rather than simply being a cost to corporations—offers them tangible benefits. Indeed, the most effective supply chains most likely already use sustainability as a guiding tenant. And as the audience heard during the panel discussion, the category of paper B2B is no exception.
NOVEMBER/DECEMBER 2013 | 23
Life Cycle Assessments Taking account of our impact
In conjunction with the preceding panel report, Beyond Reduction: Greening the Paper Supply Chain, Cascades is pleased to provide the following special feature that focuses on Life Cycle Assessments for paper products.
Life Cycle Assessment, or LCA, is a scientific method that assesses the environmental impact of a product throughout its lifecycle. This holistic approach requires consideration of all of the product’s life stages including, but not limited to, raw material extraction and processing, manufacturing processes, transportation and product end-of-life. During each product life stage, energy and resources are expended and emissions are generated that negatively impact the environment. An LCA seeks to quantify such impact. More specifically, for each component of the product under evaluation, its environmental impacts are measured and aggregated to yield a reportable and final, cumulative result that provides better understanding of the potential damage to human health, ecosystem quality and non-renewable resources, as well as the effect on climate change. The strengths of an LCA include its standardized methodology and high degree of accuracy. Throughout the course of the research, several choices are necessary to maintain, as closely as possible, the specific reality for each participating product. That said, one drawback to an LCA stems directly from these choices, rendering it almost impossible to accurately compare its results with those from any other study. Purpose
The LCA is a tool that supports more informed decisions and helps decision makers focus on driving improvement in various areas, such as: • New Product Eco-Design: reducing the impact of products on the environment by guiding decisions starting in the development stage; • Existing Product Improvement: identifying areas for improvement related to the environmental impact of current products; • Identification and Deterrence of Transferrable Issues: identifying and deterring aspects that have the potential to create more significant issues when shifting from one life cycle stage to another; and • Environmental Performance Comparison: comparing performance and environmental impacts between two or more products.
24 | NOVEMBER/DECEMBER 2013
An LCA is currently the most comprehensive and rigorous method for the scientific calculation of a product’s environmental footprint. This approach is also internationally recognized, as much by companies and governments as by non-profit organizations. An LCA is comprehensive, quantifiable and rigorous. • Comprehensive: Incorporates multiple attributes and evaluates product impact on various aspects of the environment. • Quantifiable: Measures impact and rejects vague and/or unjustified claims. • R igorous: Leverages methodology based on international consensus. Science Speaks Out: Cascades fine papers LCA
Third-party validated to ensure transparency and adherence to rigorous standards, Cascades LCA measures the environmental impact of Cascades’ fine papers in comparison to the North American industry average. With supporting evidence, it demonstrates that Rolland Enviro100 and Rolland Opaque50 each have a much smaller impact, 68% and 46% respectively, as compared to the generic North American papers. These outstanding results are primarily due to the types of energy used, biogas and hydroelectricity, as well as the use of recycled fibers. Generated from landfill waste decomposition, biogas is a local and renewable energy that serves 93% of the thermal energy needs for Cascades’ Rolland Mill. Cascades is proud to share the results of its LCA as well as an explanatory video, available at paper.cascades.com. Along with panel and roundtable editorial reports, PurchasingB2B provides its partners with the opportunity to present tips, best practices and commentary regarding a specific topic raised in the panel discussion in order to offer additional background and information on that topic. Julie Loyer, Communications and Sustainable Development Advisor at Cascades Fine Papers Group, provided the report. PurchasingB2B.ca
WE RECOVER. WE RECYCLE. WE PRODUCE. WERE-RECOVER.WERE-RECYCLE. WE RE-PRODUCE. WE RE-RE-RECOVER. WE RE-
RE-RECYCLE. WE RE-RE-PRODUCE. WE RE-RE-RE-RECOVER. WE RE-RE-RE-RECYCLE. WE RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RERECYCLE. WE RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RECYCLE. WE RE-RERE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RERECOVER. WE RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-RE-PRODUCE.
RE-RE-RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-
RE-RE-RE-RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-REPRODUCE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECOVER. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECYCLE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-PRODUCE. WE RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RE-RECOVER.
RECYCLED PAPER MADE WITH RENEWABLE ENERGY, A TRANSFORMATION THAT BENEFITS NATURE. ROLLAND
This magazine was printed on Rolland Enviro100 Satin, a 100% recycled paper from your blue bin. The fine paper that Cascades makes contains maximum recycled content and uses renewable biogas energy for over 93% of the mill's thermal energy needs. Cascades' products are independently certified, and have been proven to have a small environmental footprint. Printing this magazine on Cascades fine paper produces effective design that both looks good and reduces the environmental footprint.
GREEN BY NATURE
The mark of responsible forestry
Risks and benefits of sustainability highlighted during Sustainability Applied conference by Michael Schwartz
ot environmental enough—we’re not buying from you.” Scott Deugo, Teknion Corporation’s chief sales and sustainability officer, gave this candid reason why his company failed to win an office furniture order. Describing this dealbreaker was a key moment at Sustainability Applied, The Bloom Centre for Sustainability’s conference in Toronto, October 1-2. Deugo, one of the conference’s keynote speakers, himself has a lifetime commitment to sustainability. His father hunted and grew organic vegetables while his mother took waste to the only recycling facility for miles. In 1999 he joined furniture manufacturer Teknion. The pushback from one customer was that Teknion’s environmental programs lacked substance. The president volunteered Deugo to chair Teknion’s environmental committee. He got the opportunity to gather together other volunteers and form the Greenworks team. They wrote a sustainability charter to guide the company despite some saying “it was just a fad and wouldn’t last.” Deugo mentioned some examples of sustainability being applied. The powder-coating process had witnessed low chemical emissions and the re-use of power, he noted. As well, TIG welding is yielding less particulate matter and using less energy and waste. Deugo’s own home features solar panels, geothermal and solar thermal heating and cooling. Financial aspects Sustainability speaker and author Bob Wil-
Sustainability Applied 2013 took place in Mississauga from October 1-2.
26 | NOVEMBER/DECEMBER 2013
lard, who also spoke at the conference, looked at values-based banking and responsible investing. The financial sector, Willard noted, is inadequately assessing the risks and opportunities arising from impacts of global sustainability mega-forces on companies in which they might invest. Willard’s research shows that if a company used best-practice sustainability approaches already being used, it could improve its profit by at least 51 to 81 percent within three to five years. Most investors are unaware of these benefits from aggressive sustainability strategies, and so are overlooking attractive investment opportunities, he said. However, laggard companies could be blindsided by new regulations, be blocked access to markets and suffer reputational damage with important stakeholders, as well as a vanishing social license to operate. Most investors are not yet asking questions about how companies are mitigating these risks, and so may be doing inadequate due diligence on their investments. An investment community that is awakened to impending sustainability risks and opportunities will make smarter investments and help drive a new sustainability mindset in C-suites, he said. English-speaking Canada’s largest commercial credit union, Vancity, was introduced by Paula Martin, advisor to its CEO. The organization boasts 492,000 members in metropolitan Vancouver and a focus on social, environmental and financial sustainability. Some of the results include an ethical growth fund since 1986, women-only mortgages since the 1960s and carbon neutrality by 2008. Procurement and supply chain One panel session entitled Driving sustainability in Canada and the role of supply chain and procurement brought together four senior executives. Jeff Hayward, general manager, marketing, Office Max Grand & Toy, said he was confident Canada is leading in profitability derived from sustainability initiatives: Canadian organizations are integrating sustainability into supply chain and procurement. But he believes Canadian sustainability departPanelists (from left) Jeff Hayward, Boris Tsinman and Joanne McMillin.
ments may be over-emphasizing cost-reducing initiatives at the expense of other non-financial initiatives. Hayward offered several recommendations: organizational design is vital to sustainability, as is working with external bodies. Reporting sustainability achievements needs co-ordination and the drive towards sustainability goes beyond a company’s procurement and supply chain. Economic conditions will continue to influence the balance of conflicting costs and other priorities, Hayward said. As resources become scarcer, risk mitigation will become a key factor. Social attitudes, too, can help and hinder success; Hayward predicts behaviour modification will become a key area. Panel participant Joanne McMillin, associate VP, business sustainability, Canadian Tire Corporation, noted, “Business sustainability is integrated into our operations and across the value chain. Since implementing the sustainability strategy, we estimate our C02 avoidance at approximately 37,000 tonnes, equivalent to powering approximately 5,500 Canadian homes or over 10,000 cars for a year. We have also avoided over 6,200 tonnes of waste, which is equivalent to the annual household waste from nearly 10,000 Canadian homes.” Fellow panelist Boris Tsinman, joint director-procurement & supply chain, Lakeridge Health Corporation and Rouge Valley Health System, reviewed recent sustainability projects. In a project called the Scrubs Program Improvement Initiative, the targets for laundry usage and costs were to be reduced by 30 percent for each category, with a 90 percent scrubs losses target. In the first four weeks, the usage and costs were reduced by 37 percent over the corresponding month last year, and the scrubs losses goal had been surpassed, achieving 95 percent reduction. “The sustainable environmental impact of this initiative is significant as it results in less water and energy requirements to launder the garments replenishing scrubs inventory at the hospital,” Tsinman said. A similar success came with the Total Medical Gas Management initiative, he noted. Staff confidence in the supply chain was to increase, product delivery and warehousing were to be streamlined, notably by reducing supply chain touch points, and overall costs were to be reduced. All these aims were achieved, along with lower inventory locations, back-order/re-order activities re-work and unnecessary deliveries. Paula Martin, advisor to the CEO, Vancity.
“This initiative has resulted together with a safer environment in a reduction of the volume of medical gas being vented from partially used cylinders, thus reducing energy requirements to replenish unused gas,” Tsinman said. Steve Quon CA, VP, Corporate Development, Maxxam Analytics International Corporation, explained Maxxam’s triple bottom-line focus regarding sustainability: Maxxam firstly understands the importance of engaging in socially and environmentally responsible business practices; as a commercial enterprise it must ensure its decisions are economically feasible in the long run; thirdly, that its sustainability strategy must be integrated with all of Maxxam’s business practices whenever management makes company-oriented decisions. Sustainability can be a means for Maxxam to “empower and engage our people by developing programs and policies that encourage active participation,” Quon said. “Sustainability policies and procedures must also be maintainable over the long run. In order for this to occur, it must be engrained in our corporate culture.” The capital approval process requires that consideration be given for any social or environmental factors, not to complete these projects at the lowest possible economic cost but rather to ensure that investment leads to solutions that create the greatest amount of value for Maxxam. Maxxam’s vendors are encouraged to work in partnership with its procurement and operations teams “to educate us on their products from a triple bottom-line perspective and to recommend solutions which reflect an understanding of our business and related business objectives,” Quon noted. B2B
Scott Deugo, chief sales and sustainability officer, Teknion Corporation.
NOVEMBER/DECEMBER 2013 | 27
EVERY INCH A JEEP. EVERY INCH A SMART CHOICE.
ALL-NEW 2014 JEEP CHEROKEE IS HERE. The all-new 2014 Jeep Cherokee with Best-In-Class capability * is the breakthrough mid-size Jeep that’s a brilliant addition to any fleet. Beyond its attractive and revolutionary new design, it offers outstanding fuel efficiency,+ a class-exclusive nine-speed automatic transmission,** and over 70 standard and available safety and security features. With all that and more, it’s easy to see why the all-new Jeep Cherokee is the right choice, no matter what size your fleet.
1 800 463-3600
*Best-in-class capability based on Jeep Cherokee offering 2 speed power transfer unit (PTU) with rear locking axle, exclusive Jeep Selec-Terrain with 5 settings (including rock), and industry first: fully disconnecting drive-line, best-in-class towing, approach angle, departure angle, ramp breakover angle. Based on Jeep Brand’s “Mid-Size SUV” sub-segmentation based on 13MY cross shop activity: Ford Escape, Honda CR-V, Hyundai Santa Fe Sport (5 pass), Subaru Forester, Toyota RAV4, Chevrolet Equinox, GMC Terrain, Hyundai Tucson, Toyota Venza and Kia Sorento. +As low as 6.4 L/100 km (44mpg) highway. Based on 2014 EnerGuide highway fuel consumption ratings. Government of Canada test methods used. Your actual fuel consumption will vary based on powertrain, driving habits and other factors. Use for comparison purposes only. Ask your retailer for EnerGuide information. **Based on Jeep Brand’s “Mid-Size SUV” sub-segmentation based on 13MY cross shop activity: Ford Escape, Honda CR-V, Hyundai Santa Fe Sport (5 pass), Subaru Forester, Toyota RAV4, Chevrolet Equinox, GMC Terrain, Hyundai Tuscan, Toyota Venza and Kia Sorento.
In this edition 30 Ford Transit
Introducing the new family of work vans
32 truck king
Ram 1500 drives away with the title for 2014
Don’t be a fish or a fat cat on the road
40 Road Test
Five small cars that are easy on the budget Fleet Management is a special section of PurchasingB2B magazine, running in the January-February, March-April, May, July-August, October and November-December issues. It is an important resource for Canadian procurement professionals who recommend, select and manage fleet vendors and service providers. Editorial inquiries: Emily Atkins, 416.510.5130, email@example.com. Advertising inquiries: Dorothy Jakovina, 416.510.6899, firstname.lastname@example.org.
Volvo cops to global ambitions The Swedish police love Volvo’s purpose-built XC70 D5 AWD enough that the home-grown car maker has 90 percent of the local market. But with a new specialized chassis and anti-roll bars, shock absorbers and springs, the manufacturer is hoping to take global police forces by storm. Currently, Volvo Cars sells between 500 and 600 police cars a year. Most are sold in Sweden, but Volvo police cars can also be found in the UK, Belgium, the Netherlands and Switzerland. “With our new model-year 2014 cars with the new chassis, we have an even wider product range and we believe we can double our sales numbers in the coming years. We are in discussions with at least a dozen different police forces around the globe: seven in Europe, two in the Americas and three in Asia. And we are determined to add more to that list,” says Ulf Rydne, business manager commercial vehicles at Volvo Car Special Vehicles and Accessories, where Volvo police cars are developed. The Swedish Police recently designated the 2014 Volvo XC70 D5 AWD as the best car in its fleet—out of six different cars—
Volvo has 90 percent of the Swedish police car market.
after exhaustive tests, with an overall score of nine out of ten. The Volvo XC70 D5 AWD scored ten out of ten in emergency driving and booked an overall score of nine out of ten in the test, that also covers noise, comfort, stability, elk and braking tests and evasive maneuvers. Driveability, engine performance as well as cornering and braking stability were some of the features highlighted in the test report.
ARI’s Gaysek retires Roy Gaysek, president of ARI in Canada, will retire from the company as of March 31, 2014. Gaysek joined the fleet management company in 1993 as a regional sales manager, later serving as national director of sales and service, and senior vice president sales and service. In 2009, he was named executive vice president and chief operating officer, before being appointed to his current position as president of ARI Canada in 2010. PurchasingB2B.ca
“I am extremely fortunate to have been part of the ARI family for the past 20 years and am deeply honoured to have led ARI Canada for the past three,” Gaysek said. “I am so proud of what we have accomplished together and have every confidence that ARI will continue to do great things for fleets across Canada.” Under his leadership, ARI grew its client base from 11th in the industry to become the largest fleet management company in Canada. NOVEMBER/DECEMBER 2013 | 29
Meet the Transit family
Ford offers fleet managers a sneak peek By Fleet Management staff
The big boy Ford is counting on global commercial vehicle sales growing by 4.8 million during the next several years to 21 million units annually by 2017 to fuel sales of Transit. For North America, Transit eventually replaces the ESeries nameplate, first sold in 1961 as Ford Econoline and a Canadian favourite for over 50 years. In other global markets, this all-new vehicle will replace today’s popular, market-specific Transit models, first sold in 1965 and the best-selling commercial van in Europe. 30 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
The Transit will have a standard 3.7-litre V6, the same 3.5-litre EcoBoost engine proven in Ford F-150 and an all-new 3.2-litre Power Stroke Diesel option. The 3.7-litre V6 will also be available with a compressed natural gas/liquid propane gas (CNG/LPG) prep kit. Each engine is paired with a six-speed automatic transmission for efficient rear-wheel-drive operation.
Range expansion Choices go beyond powertrain options to encompass multiple lengths and three roof heights. The high-roof Transit has 81.5 inches of interior cargo height, enough headroom for a 6’5” person to stand upright in the cargo area. The medium-roof can accommodate up to 72in of cargo height and the low-roof has almost 56in of cargo height. Cargo volume ranges from about 7,000 to almost 14,000 litres (250 to almost 500 cubic feet) as a jumbo configuration–nearly 80 percent more space than the largest E-Series—and over twice the volume of today’s standard E-Series. Essentially, one jumbo van can haul the volume of two current models in a fuel-efficient manner. Transit’s rear cargo doors can open up to 270 degrees for easy loading and unloading. Designed and developed to provide efficient service over the long haul, Ford Transit scheduled maintenance costs for a three-year usage cycle are projected to be more than 30 percent less than a Chevrolet Express 1500 with the standard 4.3-litre V6, a fact which Ford claims gives Transit the segment’s lowest cost of ownership per cubic foot or pounds of cargo transported. The new Ford Transit in intended to deliver a severeusage service life of 10 years and 240,000 kilometres. Transit features unibody construction. A durability program included 148 prototype vehicles, with a regimen of 215 separate tests. Transit durability test vehicles were driven more than 7.4 million kilometres. Transit vans will be available at Ford dealers starting next fall. They will be built at Ford’s recently upgraded Kansas City manufacturing facility. PurchasingB2B.ca
Photos by Emily Atkins
The Transit Connect comes in a family-friendly seven-passenger wagon configuration.
ord introduced the new Transit family of vans to fleet customers at its Canadian HQ in Oakville this fall. The Transit Connect has been available in North America since 2009, but is completely updated for 2014. It comes in a van or wagon configuration. Later in 2014, the bigger Transit van will join the Transit Connect on the road, rounding out the family. “We have completely reengineered Transit Connect with North American business owners top of mind,” said Joe Hinrichs, Ford’s president of The Americas. “This cargo hauler offers a unique combination of leading fuel efficiency, cargo capacity and maneuverability.” Anticipating up to 30+ mpg on the highway with EcoBoost power, the Transit Connect Van offers customers their choice of two fuel-efficient four-cylinder engines—a standard 2.5-litre and an optional 1.6-litre EcoBoost—two model series and an available CNG/LPG prep package. Both engines come mated to an efficient six-speed automatic transmission. The Transit Connect Van has sliding side doors, sidehinged rear cargo doors, a choice of side and rear window configurations, and an estimated 725-kg (1,600-pound) payload. Ford’s MyKey programmable ignition key, enabling owners and fleet administrators to restrict maximum vehicle speed and audio system volume, is standard. Multiple vehicle fleets can specify Transit Connect with the available Ford Work Solutions Crew Chief telematics system. This system enables a centralized fleet logistics leader to simultaneously monitor several vehicles in real time–for location, speed and excess idle time. The Transit Connect Wagon is offered in five- and sevenpassenger configurations, and in XL, XLT and Titanium series levels. It offers fold-flat seating, at least a 1,200-pound (540-kg) payload and more than 100 cubic feet (2,800 litres) of cargo space. Properly equipped, this wagon is approved to tow up to 2,000 pounds (908 kg). The Transit Connect van and wagon are expected to be available in dealerships now.
BUSINESSES LOVE US.
WE ACTUALLY LOOK FORWARD TO OVERTIME. With over 70 years of global truck heritage, the 2014 Tundra and Tacoma are ready to take on any of your business needs. Whether you’re looking for power, towing capability, advanced technology or safety, you’ll ﬁnd it all right here in our truck lineup. With all of that and more, Tundra and Tacoma are the perfect hard-working vehicles that are ready to take on anything you throw at them.
A hat-trick for Ram in 2014 2014 Canadian Truck King Challenge
even years running, we have been testing the top pickup trucks head to head right here in Canada. The “why” has been the same from the beginning. A truck is a tool—these days an expensive one—and whether you buy one truck or a hundred at a time you deserve the best, unbiased third-party opinions you can get. Truck manufacturers make a lot of money on their products and the claims they make are just that, claims, until I and my fellow Canadian automotive journalists get behind the wheel: That’s what the Canadian Truck King Challenge is. What we do each year in September is no different from what you do every day of the year—and that’s the point. So, the rain, mud and cold are a vital part of testing; my judges and I have to feel what you feel, contend with what you contend with, and ultimately appreciate what you appreciate, and judge each feature along the way. 32 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
As in years past, we tested at my IronWood site in the Kawartha Lakes region of Ontario. We use a public, 19-kilometre test loop that consists of a hilly gravel road, broken twisting asphalt and a smooth highway section. We take trucks out in groups of five and drive them round and round, switching drivers on each circuit until all five judges have driven all five vehicles. The trucks are always used in the same condition, that is, all empty, all towing or all with payload. Back-to-back testing is the best way to compare vehicles. It took us about two-and-a-half hours to do a complete back-to-back test; then we’d head to the yard for the next five. We did this over and over, 10 hours a day for two days, making notes and scoring along the way. And while 19km doesn’t sound like much, by the time we were finished, collectively, we had driven over 4,000km.
So, what happened? Well, 2014 is going to be a big year for Ram. The work they have been doing for at least the past five years is all coming together now and it showed up in the scoring. Their technology, design work and the will to take chances crystallized in one unique pickup truck. The overall points winner of the Canadian Truck King Challenge is the 2014 Ram 1500 powered by the 3.0L EcoDiesel with 8-speed transmission. This is a revolutionary setup—one that we feel is going to be copied very quickly—but past this, it deserves credit right now. It takes guts to be the first, and this small diesel from Ram works very, very well. Price-wise, the diesel will be a $4,500 option—however it will be available on every trim level except the absolute base. At a lower price point (in our under $45K category) Ram did it again with the 2014 Ram 1500 powered by the 3.6L Pentastar V6 with the 8-speed transmission. This PurchasingB2B.ca
Story and photos by Howard J Elmer
The 2014 Winner: Ram 1500 with 3L Ecodiesel and 8-speed transmission
powertrain speaks to the holy grail of truck ownership—power, capability and decent fuel economy. There was a time when this was simply impossible, remember? Not any more. In large part, this is due to the 8-speed gearbox—again a revolutionary step forward. For that matter, all the Rams—3L diesel, 3.6L V6 and the 5.7L Hemi—came to IronWood with 8-speed transmissions. This gearbox worked well in all configurations during every test. The three Detroit-sourced HD trucks were tested near London, Ontario. Because HD owners tow a lot, that’s what we do too. Each truck was outfitted by the manufacturer with a fifth-wheel hitch, and we partnered with Can-AM RV centre, towing 14,000lb fifth-wheel RV trailers over a 300km route. The next day we stripped the fifth wheels out and loaded up 3,000lb of IKO shingles and set off on a 200km route. Once again the judges switched up back-to-back during the driving. In this HD category it was the 2500-series Ram, equipped with the 6.7L Cummins diesel that won out—though just. Last year saw the Silverado HD in first place, howPurchasingB2B.ca
ever, for 2014 it still suffers from the dated interior, poor video screens and older software of last year. Mind you, we have already seen the 2015 Chevrolet and that’s all been fixed—but for now, we can only grade what we get. Ram was in a similar boat last year, but for 2014 Ram’s chassis was upgraded and strengthened; while the engine was also tuned up and converted to use the DEF fluid for cleaner combustion and better mileage (though still not the best). One high-tech addition this year was the installation of data recorders in each truck. We contracted a third-party company (recommended by Natural Resources Canada) called MyCarma to have a technician on site both days to record and interpret the fuel economy data from readers they installed in each truck. We made a point of recording each truck in each condition: empty, loaded, and towing. The resulting figures are as real-world as they get. During each stage of testing, trucks were hot-swapped by the judges (never shut-off) as they traded vehicles. They idled between loops and recorded the fuel used by the judges as they tested accelera-
tion, braking and handling. No dyno testing here—these numbers are real and dirty, just like those everyday owners might achieve.
Towing The payload this year was 1,000lb of patio stones on pallets. Trailers were twin-axle dumps and car carriers. Most trailers weighed in at 6,000 lb, another at 6,100 lb and one at 6,900 lb. The weights varied because the trucks sent to us all had different limits—so we tried to give heavier trailers to trucks that claimed higher towing limits. Also, the smallest truck, the Toyota Tacoma hauled 3,500 lb. The judges agreed that generally, all trucks hauled well, but the torque of the Ram 3.0L diesel with the 8-speed automatic stood out; its air suspension also held the load level, felt firm on the road and made its attitude with a trailer attached always level. The Tundras, while new this year, and powerful, still suffer from a lack of chassis rigidity, though special mention is deserved for the new 1794 trim package. This has to be one of the most upscale, sumptuous interiors ever put in a pickup.
Continued on p.36
NOVEMBER/DECEMBER 2013 | 33
Breaking Down Your Fleet Spend. Knowing your fleet costs is the first step in controlling them. espite being a significant annual expenditure,
“Only by identifying each element that goes into the fleet
many organizations still struggle to get a clear
spend, can you focus on containing the individual items
handle on just what goes into their fleet spend and how
as well as overall costs,” says Peter Nogalo, marketing
best to manage it, let alone contain it. As Canada’s largest
manager at ARI.
provider of fleet management services, ARI collects operating and expense information on over 150,000 Canadian vehicles, and over 950,000 across North America.
From that, ARI has been able to develop a
profile and breakdown of the typical Canadian fleet spend, which includes depreciation, fuel, maintenance, license and taxes, interest, tires, management fees, and accidents.
Typical Fleet Spend
Depreciation Depreciation is really just the fixed cost of owning or leasing vehicles. Whether it is leased or owned, it is essentially your fixed cost of ownership from the time the vehicle is purchased until it is sold. “Many organizations focus on the up front costs when looking at depreciation, but actually what happens on the back end can have as much or more impact on the total depreciation,” says Nogalo. Determining market conditions and what a used vehicle will be worth several years out can be challenging, says Nogalo. “This is where the role of your fleet management company becomes critical. While it may seem like there is some sort of alchemy involved, at ARI we actually use historical, regional, published and internal benchmarks to determine the future value of the vehicle and set depreciation rates accordingly.’
Fuel and Maintenance Fuel has historically been the second largest fleet expense, but over the past few years it has actually challenged depreciation for top
“Only by identifying each element that goes into the fleet spend, can you focus on containing the individual items as well as overall costs.” spot. “The situation with fuel has been very interesting,” says Nogalo. “Of course, we all know that higher fuel costs are the new normal, but the fact that depreciation costs have not risen
Fleet Management Fees While often the focus of sourcing professionals, fleet management fees typically make up less than 3% of the total fleet spend. In many ways, fleet management fees
is what’s also affecting that balance.
are one of the most interesting line items, says Nogalo.
According to Nogalo, the used vehicle market has been at
“In some ways, they receive disproportionate attention,
historic highs over the past several years, which has taken the pressure off of depreciation. “The more a vehicle is
and other ways not enough.” At such a small percentage of the fleet spend, the attention should be focused on
worth on the backend, the less your depreciation will be.”
what value is being delivered from those fees.
One piece of good news on the fuel front is the introduction
“At ARI, we have focused on the 97% of fleet costs that
of new, much more efficient technologies. While you can’t control the cost of fuel, you can control how much of it
can be managed down. Our role is to work with our clients to identify potential cost savings through process
you use, at least to a certain extent, says Nogalo.
improvements and best practices. We report on those
“By replacing older, less efficient technology with newer
are often more than the fees themselves,” says Nogalo.
models, you can benefit from a strong used vehicle market; reduced maintenance expenses on newer, warranted vehicles; and reduced fuel expenses, not to mention improving the overall environmental performance of your fleet,” says Nogalo.
targets and return the savings back to our clients, which
About ARI ® ARI is the largest vehicle fleet management provider in Canada, and second largest in North America. ARI operates in Mississauga, Laval, Ottawa, Calgary, Edmonton, and Burnaby. ARI manages over 950,000 cars, trucks and equipment globally, including 150,000 in Canada. This year marks ARI’s 65th anniversary in providing fleet management solutions.
Once again, your fleet management partner should be able to help you with a comprehensive fleet replacement schedule that includes a lifecycle analysis, standardization options, fuel usage and green performance, as well as all associated costs and potential savings.
For a comprehensive analysis of your existing fleet spend or to learn other best practices to drive down costs, contact ARI at 1-800-361-5882 or visit www.arifleet.ca
The Truck King judges (L-R) Eric Descarries, Clare Dear, Jil McIntosh, Mario Cywinski, Howard Elmer.
Best Truck Results Average Price*
Under 45K Over 45K Heavy Duty 100% Test Final Adjusted Half-Ton Half-Ton Score Score $42,254.49 $58,738.36 $79,811.00
2014 Ram 3.0L V6 EcoDiesel 4x4 Laramie Crew Cab w/8-speed auto
As Tested: $64,185 Base MSRP: $52,195
84.53 83.87 Truck King and over 45K winner
2014 Ram 5.7L Hemi V8 4x4 Laramie Crew Cab w/8-speed auto
As Tested: $58,065 83.23 Base MSRP: $52,195
2014 Chevy Silverado 1500 6.2L V8 4x4 High Country w 6/speed auto
As tested: $60,745 80.47 Base MSRP: $53,315
2014 GMC Sierra 1500 Ecotec3 6.2L V8 4x4 Crew Denali w/6-speed auto
As tested: $65,585 80.05 Base MSRP: $58,890
2013 Ford F150 5.0L V8 4x4 FX4 SuperCrew w/6-speed auto
As tested: $55,109 77.19 Base MSRP: $46,899
2013 F150 3.5L EcoBoost V6 4x4 Lariat SuperCrew w/6-speed auto
As Tested: $58,249 77.50 Base MSRP: $50,999
2014 Tundra 5.7L V8 1794 4x4 CrewMax w/6-speed auto
As tested: $54,134.45 75.95 Base MSRP: $53,700
2014 Tundra 5.7L V8 Platinum 4x4 CrewMax w/6-speed auto
As Tested: $53,834.45 75.05 Base MSRP: $53,700
2014 Ram 1500 3.6L V6 4x4 Outdoorsman Quad Cab w/8-speed auto
As Tested: $44,860 Base MSRP: $40,495
2013 F150 3.7L V6 4x4 XLT SuperCab w/6-speed auto
As Tested: $44,504 77.93 Base MSRP: $38,099
2014 Chevy Silverado 1500 5.3L V8 4x4 LT Crew w/6-speed auto
As tested: $41,935 77.41 Base MSRP: 39,975
2014 GMC Sierra 1500 Ecotec3 5.3L V8 As tested: $43,680 4x4, Double Cab, SLE, w/6 speed auto Base MSRP: $39,895 2014 Tacoma 4L V6 4x4 DoubleCab TRD Sport w/6-speed manual
79.63 79.22 Under 45K winner
As Tested: $35,973.95 68.39 Base MSRP: $28,615
2014 Ram 2500 6.7L I-6 Cummins Diesel 4x4 Laramie Limited Crew Cab w/6-speed auto
As tested: $81,390 Base MSRP $63,995
77.84 Heavy Duty winner
2013 Ford F350 6.7L V8 Diesel 4x4 Lariat Platinum SuperCrew w/6-speed auto
As tested: $80,980 77.58 Base MSRP $60,749
2014 GMC Sierra 2500 6.6L V8 Duramax Diesel 4x4 LTZ CrewCab w/6-speed auto
As tested: $77,165 73.59 73.88 Base Price: $61,860
36 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
The Fords generally felt good during all the testing (and at the moment they are the oldest models we tested)—but the surprise for most judges was how well the base 3.7L V6 handled the weight in the bed and while towing. Its overall cost and fuel economy was impressive. However, strangely, three of the four Fords we were given for testing had electrical gremlins in their trailer lighting hookups. The new 2014 GMs are strong, transmissions are smooth, but the ride is slightly twitchy under load and several judges had steering complaints. The new interiors are nice, with excellent materials and layout, and they also had several new, innovative features in the truck beds, like integrated steps in the bumper and lighting under the box lips. On the fuel side, note how close the results are between the GM 5.3L V8 and the newer 6.2L V8—way more power and very little extra fuel consumption.
Chevy on the off-camber test
Off-road The off-road is the shortest test. It’s done on a half-mile course I built myself. It consists of muddy hills, rockstrewn fields, a water-filled trench and an off-camber test which gets the wheels in the air. Three things showed up out in the field this year. First with builders looking for more aerodynamic advantages they keep adding length to the front air dams. This had several trucks scraping repeatedly through the course. Second, the mechanical rear differential lock on the GMs works well and is still unique. Otherwise, the trucks all handled the course, except in the off-camber test, where the GM’s rear differentials nicely locked up when power went to the lifted wheel. Third, and this is a gripe that’s several years old, the Fords still have the electrical hookups below the bumper where they collect mud, dirt and grime. As with many tests, much of what you are reading is opinion. However, it is educated opinion, offered by five Canadian automotive journalists with well over
Ford tackles Northern Ontario mud
150 years of combined trucking experience. Past this, though, numbers do tell a tale and it’s worth looking at the overall scores as averaged among the five judges. The first thing that stands out is how close they all are. This means that there really isn’t a bad truck in the bunch. Each has strengths and weaknesses, but as in any competition there must be a winner and a loser, B2B we feel confident in our choices.
Test Conditions: Thirteen (13) light-duty trucks were testing under three on-road conditions. These conditions included a trailering event, a payload event with a loaded bed, and an empty event where no trailering or payload mass was added. An additional off-road test has been completed; however, these results have not yet been tabulated. PurchasingB2B.ca
NOVEMBER/DECEMBER 2013 | 37
By Alan Sidorov
Fish, Bison, Fat Cats and Driving
e can learn many things from fellow animals. Loons show fidelity, dogs demonstrate loyalty; cougars represent an uncanny readiness to act, even from repose. However, there are also behaviours we do not need to adopt, such as a dog’s habit of turning around three times before going to sleep. When driving, we can avoid acting like fish, fat cats, or bison. Fish generally travel in schools. There may be strength in numbers, but to a predator, a school of fish is just a wellplaced snack. Drivers also tend to travel in schools. An overhead view of our highways would show clumps of vehicles, followed by open spaces. Sometimes long stretches of double lines cause these schools to form, but more often it seems to come from some odd sort of group behaviour. Could it be loneliness, a subconscious need for bonding? Unfortunately, driving in schools hasn’t even a tiny safety benefit. Chances are there will be erratic speed changes, some drivers following too close behind others, and a tendency for each motorist to look no further than the taillights of the vehicle in front. Eventually, one driver decides to break free. Now the behaviour of drivers becomes that of bass, trout, or other gamefish. Just as fish will rush after a fly, other drivers will also start to overtake. Once everything settles down, new packs will start to form. Drivers zone out until the behaviour is repeated, just like a goldfish eating something, spitting it out, then grabbing it again on the next go-round of the fish bowl. When drivers are overtaken by others, they often start to act like remora fish, the ones that cling to sharks. They will speed up and stay with the vehicle that has just passed them. This could be ego, or maybe they just woke up. Unlike the remora fish that helps a shark keep clean, this behaviour behind the wheel is annoying and dangerous. I race cars and teach advanced driving. There is a skill set I want to be able to use in an emergency. Even without a crisis to deal with, there are tactics that are part of everyday motoring, such as easing off the throttle for hazards or changes in road
38 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
surface. Chances are I’ll also speed up a bit before the start of a hill, so I don’t have to waste fuel by adding power part way up. The remora driver doesn’t know this, so will alternately rush up behind or fall back. If someone is closer than three seconds in travel time behind me, they are reducing my options. I don’t like it, nor does any other driver who is alert and scanning the mirrors regularly. I now have to, in a sense, drive and pay attention for the remora driver hanging on behind as well as for myself. I can do that, but really should be able to invoice for the work. If you must cling to an overtaking vehicle, at least have the decency to stay ten or more seconds back. Nobody wants your company. In passing lanes, humans display the logic of bison in a stampede. Everyone picks up their skirts and puts the pedal down, including the driver who was going slowly and causing a build-up of traffic in the first place. Have any of you visited Head-Smashed-In Buffalo Jump in Alberta? Stampedes don’t always end well. Obese house cats are represented, in the driving world, by cruise-control overtakers and others who simply will not get on with it, finish the passing manoeuvre, and keep traffic flowing. You know the sort. There is a two-kilometre passing lane. Vehicle One is going 96 kmh, vehicle Two, cruise control set at 101, pulls out to pass. Do the math. That speed differential will use up most of the passing lane. Nobody else gets by. The fat cat doesn’t care, as he or she strolls towards the food dish. There is a simple way to avoid driving like a fish, bison, or obese house cat. Overtake to find clear spots, rather than running in packs. Don’t speed up in passing lanes, especially if you were a slower vehicle, just let everyone go. That would be the smart bison who decided not to stampede, and got to graze in relative peace. When overtaking, do it with an eye to letting traffic flow, not like a fat cat wandering towards the window. Above all, pay attention. Humans far too willingly sub-contract this basic survival tactic, whether it’s to advanced vehicle electronics, traffic lights, police, or anything else. B2B PurchasingB2B.ca
BUILT TO OUTLAST. THE ALL-NEW
2014 OUTLANDER WORLD’S MOST ADVANCED ALL-WHEEL CONTROL SYSTEM § HIGHWAY FUEL CONSUMPTION OF 6.3 L/100 KM 1 10 YEAR, 160,000 KM POWERTRAIN LIMITED WARRANTY* AVAILABLE 6-CYLINDER ENGINE
Available on Outlander GT §
Insurance Institute for Highway Safety
ENTIRELY NEW FROM MITSUBISHI
2014 MIRAGE GET A LOT FOR A LITTLE! 10 YEAR, 160,000 KM POWERTRAIN LIMITED WARRANTY* 5.3 L/100 KM IN THE CITY AND 4.4 L/100 KM (64 MPG) ON THE HIGHWAY ^ 7 STANDARD AIRBAGS
Available on RVR SE 4WD and GT models§
Insurance Institute for Highway Safety
Available on Lancer SE AWC and GT AWC §
Insurance Institute for Highway Safety Excludes Lancer Evolution and Lancer Ralliart
§ S-AWC standard on Outlander GT. AWC standard on RVR SE AWC and GT and Lancer SE AWC/GT AWC. 1 Fuel consumption ratings shown for the Outlander ES 2WD model. ^ Fuel consumption ratings shown for the Mirage CVT model. * Best backed claim does not cover Lancer Evolution, Lancer Ralliart or i-MiEV. ® MITSUBISHI MOTORS, BEST BACKED CARS IN THE WORLD are trade-marks of Mitsubishi Motors North America, Inc. and are used under license. ** Whichever comes first. regular maintenance not included. See dealer or mitsubishi-motors.ca for warranty terms, restrictions and details. Not all customers will qualify.
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By Emily Atkins
Great value, small price
2014 Mazda3 is a class winner
Compact cars are a staple in many fleets. They are prized for their low cost of entry, lower operating costs and frequently lower insurance rates. There are also many to choose from in any given year, with all the manufacturers offering at least one or two that come onto the market at a base price around $20,000. We’ve reviewed quite a few, and have picked several to highlight here, from the Mazda3, which we predict will be the best in class in the AJAC awards for 2014, to the thrifty Nissan Versa Note, Subaru Impreza, Fiat 500, and the All-new Toyota Corolla.
Photos by Emily Atkins
he new Mazda3 makes its debut this fall for the 2014 model year completely redesigned and better than ever. At a starting price of $15,995, it’s a superb compact car with extremely good handling and great looks. It’s also packed with standard features—like a 7-inch touchscreen, back-up camera and auto headlights—that bump up its value. This car is by far the strongest contender for the Best Small Car Under $21,000 category in the 2014 Automotive
The nose is reminiscent of a European sports sedan. 40 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
Journalists Association of Canda (AJAC) Canadian Car of the Year awards. Starting from the exterior, the long, sleek nose is reminiscent of a European sports sedan, and has a much improved “face” over the old Mazda3’s silly grin. Inside, there are a few odd details such as the touchscreen sticking up awkwardly from the dash, looking like an afterthought. The rest of the cabin is classic Mazda simplicity, updated with soft finishes and attractive accents. Performance from this car is excellent
Mazda 3 SPECS AT A GLANCE... Model
Mazda3 Sport GS
Price As Tested: $20,895
Cargo Capacity: 320L Body type:
Compact, Compact, 5-passenger sedan 5-passenger wagon
in both the automatic and six-speed manual transmission models which are paired with a 2-litre, 155-hp engine. Each offers peppy acceleration, great handling and excellent braking, especially compared to the other cars in this class (Corolla and Versa). It’s a truly fun car to drive, yet the Mazda3 also manages to turn in fuel economy numbers that best the Corolla’s. A bigger, 2.5L engine is also available this year. Drivers of the Mazda3 Sport (the hatchback) will have to contend with a significant blind spot. The driver’s seat also feels cheap. In the manual model, the driver’s armrest and items in the cup holders at times interfere with shifting. These shortcomings, however, are more than made up for by the car’s roomy versatility, with the split, fold-down seats and rear hatch. This would be a great car for use in a fleet where the ability to carry moderate or bulky loads and people are needed from the same vehicle. The sedan version is less expensive than the Sport, yet still boasts a large trunk and reasonable room for back-seat passengers. PurchasingB2B.ca
Photos by Emily Atkins
2014 Toyota Corolla S The new Corolla is a great looking car, inside and out. Bland is banished in favour of a sharp, cleanly styled body, fierce face and superb interior. The cockpit of this car is simple and clean, with long, straight lines, an interesting mix of surfaces and few distractions. The effect is suave, European and masculine. The tester version had two-tone cloth and leatherette seating surfaces covering what are by far the most comfortable seats in the class.
The rear seating area has tons of legroom, but the ceiling height is a bit low for those who are long in the torso. The passenger seat also does not slide back as far as it should, leaving longlegged right seat riders cramped up against the glovebox. The trunk is large and has an easy-access opening. The engine is a 1.8L 4-cylinder, making 132hp. This S model was optioned ($985) with the electronically controlled continuously variable transmission (CVT) with manual override, paddle shifters and sport
mode. The car whined and groaned through the gears, and was annoyingly noisy in reverse. Handling was acceptable, but at slow speeds the car feels awkward, making reversing a chore.
advantage over the competition, especially when you are considering a vehicle to travel through potentially treacherous Canadian winter road conditions. This car handles beautifully and delivers a smooth, quiet and comfortable ride. It’s nimble and responsive, and offers decent pick-up, even with the growly CVT that accompanied the 148hp, 2.0-litre, 4-cylinder boxer engine. Both inside and out, the Impreza is
bland, lacing in design pizazz. It offers a good driving position, albeit in a slightly hard seat. Visibility is above average all the way around. The rear seating zone is roomy and comfortable, and the cargo capacity is generous, with or without the seats folded down. Controls and instrumentation are simple and easy to use. The basic electronics interface, however, was not intuitive; once the limited number of smartphone slots had filled up it was a challenge to figure out how to clear them to allow a new connection. There is a good argument here for buying the upgraded communications system.
Subaru Impreza 2.0i Touring MSRP: $24,955 As tested: $29,439 What’s good: Handling and all-wheel drive. Room for improvement: Communications interface; styling.
2014 Subaru Impreza 2.0i Touring The Impreza wagon is a competent car with by far the best driving credentials of this group. Its full-time all-wheel drive, and four-wheel disc brakes give it a big PurchasingB2B.ca
Toyota corolla S MSRP: $19,215 As tested: $23,354 What’s good: Packed with standard features like Bluetooth connectivity. Great looks. Super cabin. Room for improvement: Harsh ride. Poor slowspeed steering
NOVEMBER/DECEMBER 2013 | 41
Nissan Versa Note MSRP: $16,998 As tested: $19,000 What’s good: The Versa Note is a really well appointed, serious little car. The base model is packed with standard equipment like AC, alloy wheels, pushbutton start and backup camera.
2014 Nissan Versa Note The Versa Note is a five-door mini wagon, pared-down but sophisticated. And it does its job very well. This car will keep up comfortably with the big sedans on the highway, but slips into the tiniest parking spot with ease. Although it is a simple-looking car, the Versa Note offers very good quality. It’s solidly built, and well put together. The doors close with a satisfying thud, and the road noise is less noticeable than in comparable cars. Inside, the seating is comfortable, all controls are in easy reach for the driver, and there is a clever second glove box on
the passenger side. The base model offers steering wheel controls for Bluetooth, stereo and cruise control. Rear passengers have loads of leg room, and the back seats fold flat, providing easily accessible cargo capacity. The base model comes with a back-up camera, although with the car’s excellent all-round visibility, it’s hardly a necessity. The Versa Note handles very well, with true steering and good road handling capability. It’s surprisingly not rough over bumps, in spite of its relatively short wheelbase. The brakes inspired confidence. This car’s weakness is the slow
Room for improvement: Throttle reponsiveness could be better.
throttle response from the 1.6-litre 4-cylinder engine that was paired with the CVT as a $1,300 option in our tester. It’s sluggish and growly, although the transmission is smooth.
The Fiat 500 Turbo hatch is a delightful little ride. Not only does it have the stylish demeanor of its old Italian forbear, this cute car also has enough oomph to make it a fun ride. It’s also well built, with quality materials inside, and a very solid feel for such a small vehicle. Its 1.4-litre 4-cylinder turbo engine produces 135hp. With the manual transmission and smooth-playing clutch there’s plenty of torque to take a spirited driver to her happy place. The car also delivers good fuel economy, when driven in a sensible way, and doesn’t rev too high when cruising on the highway. It offers good visibility, although with a different type of mirror on each side, using them takes some adaptation time. The driver’s position is somewhat truck-like, with a tilted wheel. There were problems getting the Bluetooth connected, requiring a look at the manual—this is seldom needed in current cars. As well, the window controls are on the centre console, requiring two 42 | FLEET MANAGEMENT | NOVEMBER/DECEMBER 2013
Fiat 500 turbo sport hatchback
hands to operate both at once. The rear seats however, are only adequate for kids or really small adults. Access is difficult and there’s little head or leg room. The back hatch is small, but well designed to hold cargo. B2B
MSRP: $20,995 As tested: $25,750 What’s good: Great road manners. Fun to drive. Room for improvement: Connectivity was difficult. Access to rear seats is a challenge.
Photo by Emily Atkins
Fiat 500 Turbo Sport Hatchback
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The E-Waste Supply Chain
More options than ever exist for electronics at the end of their useful lifecycle by Jacob Stoller
he introduction of the latest electronic device—perhaps a new smart phone or tablet—has become one of the most popular consumer events in recent memory. Behind the glitzy ads and long lines at stores, however, lurks another story; each time a new product is released, thousands of devices enter the e-waste supply chain. The e-waste management sector has seen enormous growth in the past decade. According to the Electronics Product Stewardship Canada (EPSC), an industry organization that designs programs for electronic disposal, 120,000 tonnes of e-waste were collected in Canada in 2011-2012. Equally important, 71.2 percent of Canadians are aware of recycling programs, while nearly 94 percent have access to recycling facilities. Awareness about recycling has increased substantially in the past few years, thanks in part to awareness programs promoted by players in the industry. Future Shop, for example, provides e-waste disposal for consumers across Canada. To date, the program has diverted more than 300,000lbs of ewaste from landfill. Programs like this take the pain away from recycling—by providing convenient drop-off points, retailers are keeping the issue top of mind, and are making recycling part of the normal shopping routine. The program is back ended by a growing e-waste sector that is based on a partnership between governments and industry. Governments in most provinces have mandated a fee to cover the cost of disposing of new devices at end-of-life, which is used to put programs in place. The average electronic device is also a treasure trove of precious metals, plastics and other commodities that can be sold in industrial markets. The practice of extracting valuable resources from a growing supply of electronic waste has spawned companies like Barrie, Ontario-based Global Electric Electronic Processing (GEEP). In their 600,000sq-ft plant in Barrie, Ontario GEEP uses proprietary processes, systems and equipment— recycling over 98 percent of the material received. GEEP provides asset management and
44 | NOVEMBER/DECEMBER 2013
end-of-life recycling services to a wide variety of business sectors and companies. GEEP also serves as the e-waste handler for a number of highly public recycling efforts. These include Earth Day Quebec, and the Sustainability Campaign jointly promoted by the Big 5 Canadian Banks. In the GEEP facility, e-waste typically goes through a series of processes. Initially, items are weighed and labeled for tracking purposes, and then sorted according to the required process. For equipment and assets that have reached their end of life, GEEP’s recycling services harvest all available commodities housed in each product and process them back to within one step of pure resource recovery; also referred to as above ground mining. GEEP processes over 200 million pounds of material annually.
Government Regulation By comparison with the US, Canadian regulation is fairly strict and uniform. The administration of programs is handled at the provincial level by arms-length organizations, such as Alberta Recycling. “The environmental fees that are collected on the sale of the computer equipment and televisions are remitted to us by the retailers, so we manage that fund,” says Alberta Recycling communications coordinator Elizabeth Gray. “And out of that, we fund the incentives for the collection and recycling of those materials.” One of the key areas for enforcement is the management of downstream processors. “There are controls about who they ship the material to,” says Gray. “They have to make application for the company that they’re going to ship the material to. The point is that we know where it is going.” That said, Alberta Recycling is always looking for ways to make the process easier. “We try to reduce what we call the administrative burden,” says Gray. “One of the things we do is online remittances. We’re also looking at the paperwork itself, and trying to streamline that, and how often they remit, depending on how much they sell.” A related aspect is the ongoing dialogue between provinces to provide continuity across Canada. “We share the big remitters— the Best Buys and the Future Shops of the world,” says Gray, “and they don’t want to have to reinvent everything every time a province makes some change.”
The future There is still much work to be done. “We’re always looking to increase the recovery rate, and improve the environmental outcome of materials,” says Gray, noting that plastics are the biggest challenge. Another key area is expanding programs to include all devices that contain electronics. Of all the provinces, only BC has regulations to cover major appliances. Indications are that more comprehensive programs will be well received. In Alberta, says Gray, over 90 percent support recycling programs, while over 70 percent are willing to pay for them. B2B
©2013 ® and ™ trademarks of Kruger Products, L.P. ®’ registered trademark of Kimberly-Clark Worldwide used under license. EARTH DAY® and the Leaf & Swirl Design™ are trademarks of Earth Day Canada (1991) Inc., used with the permission of Earth Day Canada (1991) Inc. M trademark of TerraChoice used under license. ®FSC—Forest Stewardship Council, A.C 1Absolute based. 2Scope 1. 3Cube utilization.
KRUGER PRODUCTS : SUSTAINABILITY 2015 IN ACTION In 2010, we launched Sustainability 2015 and set to work on various initiatives to meet our nine targets. At the midway point of our journey we are proud to share our progress. We have experienced challenges along the way, but they have helped us tackle situations in different ways and develop solutions in an ever-evolving industry. This has truly been a company-wide effort. Employees from every department and each of our sites—manufacturing and head ofﬁce—have contributed to projects and initiatives that are helping us achieve our targets. We are committed to sustainable growth and innovation. I encourage you to visit sustainability2015.ca to keep up with our progress and learn more about how we’re building a sustainable future.
Mario Gosselin Chief Executive Ofﬁcer
reduction1 in energy consumption
reduction1 in GHG emissions2
of ﬁbre third-party certiﬁed
improvement in logistics efﬁciency3
(7.1% reduction1 since 2009)
(19.4% reduction1 since 2009)
(7.5% improvement since 2009)
increase in FSC®certiﬁed ﬁbre utilized
(FSC ﬁbre represents 53% of total ﬁbre)
Became Ofﬁcial Earth Day Canada Partner sustainability2015.ca
Par Cheryl Paradowski
Les salaires continuent de progresser au Canada
Les p.g.c.a. gagnent en moyenne 14 % de plus que les spécialistes du domaine ne détenant pas le titre professionnel
et été, l’Association de la gestion de la chaîne d’approvisionnement (AGCA) et ses partenaires, les magazines PurchasingB2B, MM&D et CT&L, ont mené encore une fois leur sondage annuel auprès des spécialistes canadiens de la chaîne d’approvisionnement. Ce sondage fournit de l’information utile sur les salaires, mais aussi sur d’autres facteurs importants pour les spécialistes de la GCA au Canada. Malgré un contexte économique toujours incertain, les salaires dans le domaine de la GCA ont augmenté de 3,2 %, le salaire moyen passant de 85 178 $ en 2012 à 87 908 $ cette année.
Le titre de p.g.c.a. : un avantage Comme par le passé, les personnes détenant le titre convoité de professionnel en gestion de la chaîne d’approvisionnement (p.g.c.a.) décerné par l’AGCA bénéficient de salaires plus élevés, en moyenne, que leurs collègues ne détenant pas ce titre. Le salaire moyen des p.g.c.a. s’élève à 98 924 $, soit 14 % de plus que celui des professionnels qui ne détiennent pas le titre, qui s’élève à 84 782 $. Les p.g.c.a. ont investi beaucoup de temps et d’argent pour obtenir leur titre professionnel; il est donc réjouissant de constater que le sondage prouve année après année qu’ils ont effectué un investissement rentable.
Écart entre le salaire des hommes et celui des femmes En 2013, un écart persiste entre le salaire des hommes et celui des femmes. Les hommes ont un revenu supérieur en moyenne à celui des femmes, et ce, à tous les stades de leur carrière. L’écart le plus important a été observé auprès des personnes ayant de 21 à 25 ans d’expérience. Les hommes de cette catégorie touchent un salaire moyen de 108 770 $, tandis que les femmes sont loin derrière avec un salaire moyen de 85 093 $, soit une différence préoccupante de 27,8 %. Fait encore plus inquiétant, l’écart entre les salaires augmente pour les personnes possédant moins de 5 ans d’expérience. L’an dernier, on avait enregistré un écart salarial inférieur à 1 % au sein de ce groupe, tandis que cette année, on note que les hommes de cette
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catégorie gagnent en moyenne 9,4 % de plus que les femmes. Cette année, le sondage a cherché à évaluer la perception de l’équité salariale entre les sexes. Nous avons demandé aux répondants s’ils croyaient que leurs collègues du sexe opposé recevaient un salaire égal à travail égal au sein de leur entreprise. Dans une proportion de 55 %, les femmes croyaient que ce n’était pas le cas, tandis que 19 % seulement des hommes partageaient leur avis. Les résultats des dernières années semblaient suggérer des progrès encourageants quant à la réduction de l’écart entre les salaires des hommes et des femmes; je suis donc déçue que les résultats de cette année indiquent une régression. L’écart entre le salaire des hommes et celui des femmes demeure trop important et j’espère qu’en attirant l’attention sur cette question par des sondages tels que le nôtre, nous contribuerons à rectifier la situation une fois pour toutes. Disparités régionales Le sexe ne constitue pas le seul facteur déterminant en matière d’écart salarial. Nous avons aussi noté des différences régionales à cet égard. Dans l’ensemble, les salaires moyens ont augmenté partout au pays, sauf au Canada atlantique où une baisse a été observée. L’augmentation moyenne des salaires la plus importante a été enregistrée dans la région Manitoba/Saskatchewan, soit une hausse de 8,4 % portant le salaire à 81 519 $; le Québec suit avec une hausse de 4,9 % portant le salaire à 80 493 $. Les salaires moyens les plus élevés au pays se trouvent en Alberta (103 049 $), en Colombie-Britannique (85 831 $) et en Ontario (85 254 $). Autres facteurs de satisfaction Outre un salaire attrayant, les facteurs les plus importants qui contribuent à la satisfaction au travail sont la conciliation travail-famille, le soutien en matière de développement de carrière et de perfectionnement professionnel, un programme complet d’avantages sociaux et les vacances.
La satisfaction à l’égard du programme d’avantages sociaux et des vacances demeure élevée (plus de 80 %), en hausse de 2 et 3 % respectivement. Je constate avec plaisir que le niveau de satisfaction à l’égard du soutien en matière de développement de carrière et de perfectionnement professionnel a augmenté de 12 %, passant de 71 % à 83 %. J’espère que ces chiffres indiquent que les employeurs sont de plus en plus conscients de la valeur du perfectionnement professionnel à la fois pour la satisfaction de leurs employés et pour l’entreprise dans son ensemble. Malheureusement, le niveau de satisfaction à l’égard de la conciliation travail-famille a chuté de 7 %, passant de 81 % à 74 %. Hors contexte, il est difficile de déterminer la raison de ce changement soudain et radical, mais les entreprises qui emploient des professionnels de la GCA devraient en prendre bonne note et évaluer ce facteur au sein de leur entreprise. Comme par les années passées, l’entregent vient en tête de liste des trois principales compétences que les répondants jugent essentielles dans le cadre de leur emploi actuel. Viennent ensuite le leadership stratégique et les aptitudes à la prise de décisions. Ces réponses reflètent le rôle en constante évolution du spécialiste de la GCA, qui doit de plus en plus apporter une contribution stratégique plutôt qu’un soutien tactique. La capacité à établir des relations est une compétence essentielle à un niveau stratégique, et la priorité accordée à ce facteur par les répondants illustre qu’ils travaillent de plus en plus à un niveau stratégique. Voilà un aperçu des résultats de notre sondage annuel. J’incite les personnes qui engagent ou qui gèrent des spécialistes de la GCA à consulter les résultats complets afin de s’assurer que leurs stratégies de recrutement et de fidélisation du personnel reflètent les priorités du personnel qu’elles désirent attirer et maintenir en poste. Les membres de l’AGCA peuvent obtenir gratuitement un exemplaire des résultats du sondage de 2013. Pour vous renseigner davantage, veuillez consulter le site scmanational. B2B ca/AnnualSurvey.
the professional By Cheryl Paradowski
Canadian supply chain salaries continue to increase SCMPs earn on average 14 per cent more than non-SCMP supply chain practitioners
ver the summer the Supply Chain Management Association (SCMA) and its partners PurchasingB2B, MM&D, and CT&L magazines conducted our Annual Survey of the Canadian Supply Chain Professional. Beyond the obvious monetary indicator of salary, the survey results also provide important information on other factors that are important to Canadian supply chain professionals. I am happy to report that this year’s survey results suggest that despite some continued uncertainty in the economic climate, supply chain salaries increased by 3.2 per cent and the average wage reported was $87,908, up from the average $85,178 reported in 2012.
SCMP advantage As in past surveys, those with SCMA’s leading Supply Chain Management Professional (SCMP) credential continue to enjoy higher salaries, on average, than their peers without the designation. The average salary of respondents with an SCMP designation was $98,924 this year. This result represents a 14 per cent difference between those with an SCMP and those without the designation, who earned on average $84,782. Our designation holders have made a significant investment of time and money to earn their SCMP designations, so I am glad that our survey continues to provide solid evidence that they are receiving a good return on investment. Gender gap The 2013 results reflect a continued gender gap in industry wages. Male respondents reported higher average incomes than female respondents at all stages of their career. Incomes had the largest discrepancy with those who had between 21 and 25 years of experience. Male respondents in this category had an average salary of $108,770, while female respondents trailed with an average reported salary of $85,093, representing an unsettling 27.8 per cent difference in compensation. While this is concerning, of bigger concern is the increase in the gap between
male and female compensation for those with less than five years of experience. Last year’s results indicated less than a one per cent difference between men and women in this group. This year’s results report that men in this category earned on average 9.4 per cent more than their female counterparts. An exploration of the perception of equal compensation between the sexes is a new measurement for the survey this year. We asked men and women whether they believed that colleagues of the opposite sex were receiving equal pay for equal work within their organization. Fifty-five per cent of female respondents did not feel this was the case, but in contrast only 19 per cent of male respondents shared the same view. The results of the last couple of years seems to suggest that there had been positive progress in reducing the gender gap, and that is why I am discouraged that this year’s results indicate that we may be losing ground on some of the progress that has been made. The disparity between male and female earnings remains too large and I am hopeful that surveys like ours that bring this discrepancy to the forefront can contribute to its ultimate eradication. Regional differences Gender wasn’t the only factor that played a role in salary differences. There were also distinct regional differences in average salaries. As a whole, average salaries increased across the country, with Atlantic Canada being the only region that saw an overall decrease. The largest average increase in salary was found in Manitoba/Saskatchewan with an increase of 8.4 per cent to $81,519, followed by Quebec with a 4.9 per cent increase to $80,493. The highest average salaries in the country are found in Alberta at $103,049, followed by British Columbia at $85,831 and Ontario at $85,254. Factors beyond salary Besides a competitive salary, factors such as a healthy work/life balance, support for career/professional development, a
comprehensive benefits package and vacation time ranked highest in the category of contribution to job satisfaction. The survey revealed that satisfaction with comprehensive benefits and vacation time remained high (over 80 per cent) and increased two and three per cent respectively. I was happy to see that the satisfaction level around support for career/professional development increased 12 per cent from 71 per cent satisfaction last year to 83 per cent satisfaction this year. Hopefully, this is a sign that more employers are seeing the value that professional development brings to both employee satisfaction and enhanced value for their organizations. Unfortunately, the satisfaction level for a healthy work/life balance dropped seven per cent from 81 per cent to just 74 per cent. Without more context it is difficult to know why this sudden and dramatic change has occurred, but those who employ supply chain professionals should make note of this change and evaluate the work/life balance at their organizations. Consistent with previous years, people skills ranked highest when respondents were asked to identify the top three skills they felt they needed to do their jobs today. The next two were strategic leadership and decision-making skills. These answers reflect the continually evolving role of the modern supply chain professional, from tactical supporter to strategic contributor. Relationship building is critical at the strategic level and the priority placed on it by our respondents serves to reinforce that they are increasingly operating at a strategic level. These are just some of the revealing findings in our Annual Survey of the Canadian Supply Chain Professional. Those hiring or managing supply chain professionals should consult our survey to ensure their recruitment and retention strategies reflect the priorities of those they are looking to attract and retain. SCMA members can obtain copies of the 2013 survey free of charge, as a benefit of membership. For more information, visit: scmanational.ca/AnnualSurvey. B2B
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Sustainability In The Supply Chain While codes of conduct can be well-intentioned, are environmental obligations enforceable? by Doug Sanders and Bill Woodhead
ncreasingly investors, customers and the public are demanding that companies adopt environmentally sustainable practices internally and throughout global operations, including supply chains. The philosophy behind this trend is that many feel Canadian companies should not make profits in disregard of environmental consequences abroad. Through economic globalization, it’s increasingly difficult for businesses to ensure vendors are subject to legislative requirements demanding acceptable environmental practices. While procurement contracts present a potential opportunity to improve supplier sustainability practices, the issues that arise related to their practicality, enforcement and monitoring present more of a marketing opportunity than a method to improve sustainability. The growing trend in many countries is that governments demand corporate social responsibility locally and internationally. In the US, the Dodd Frank Act subjects companies who mine conflict minerals in certain areas of Africa to governmental disclosure obligations. In Canada, a bill has been proposed which, if passed, would require Canadian companies to adopt policies designed to stop the use of conflict minerals. Although there are currently no legal requirements for Canadian companies to ensure global suppliers follow environmental practices, these trends and increasing pressure from consumers indicate that companies should consider improving sustainability within their supply chains. Large organizations wishing to assure customers and investors that environmental sustainability is an important corporate value have begun to adopt and publish codes of conduct that they require their suppliers to comply with it. These codes demonstrate supplier obligations regarding labour, corruption, safety and environmental practices. Options exist for drafting these codes, which vary based on company, supplier or industry in question; but all pose issues in relation to their practicality. Codes of conduct are values, principles or rules based and may address environmen-
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tal sustainability for the purchaser, suppliers or sub-suppliers. Value-based standards are usually high-level ethical values that suppliers commit to through representations and warranties. Principle-based standards involve an intermediate level of detail requiring that a supplier perform obligations in compliance with stated principles. Rules-based standards are the most detailed and provide comprehensive environmental practices for the supplier to follow. While codes of conduct may be well intentioned, any attempt to create environmental obligations across a global supply chain present enforceability and practicality issues. Broad value or principle-based provisions make it difficult to determine whether a supplier has actually failed to comply. Overly detailed rules-based provisions will be difficult for the purchaser to establish, monitor and enforce as well as for the supplier to comply with. It’s important to consider the obligations imposed and whether they are realistic in the contract in question. Contractually imposed codes of conduct raise questions. What sustainability obligations are realistic? Should obligations flow down to sub-suppliers? How will the purchaser monitor the supplier’s compliance internationally? Should the purchaser have the right to termination if a supplier doesn’t meet obligations? Will the supplier have time to cure the default? Are damages more appropriate? While far reaching codes of conduct may be difficult to enforce globally, there are ways in which companies may improve sustainability through procurement contracts. Suppliers could be required to reuse or recycle any goods supplied once they’re not needed. Companies may also wish to create packaging requirements for any goods supplied specifying the type and content of the materials used. Purchasers may also require that suppliers use environmentally sustainable transportation. Due to increasing customer pressure and a signal that countries are beginning to require companies to comply with socially responsible practices, it’s well advised for Canadian companies to evaluate supply chain sustainability. Canadian companies can improve sustainability through procurement contracts. But due to global enforcement issues and the practicality of these types of provisions, procurement contracts intending to require environmental sustainability from suppliers may serve as more of a marketing tool than a way to reduce the environmental footprint of a company’s supply chain. B2B This article is for information purposes only and may not be relied on for legal advice. Doug Sanders (left) is a partner in the Vancouver office of Borden Ladner Gervais LLP. Reach him at dsanders@blg. com. Bill Woodhead (right) is an associate in the Vancouver office of Borden Ladner Gervais LLP. Reach him at firstname.lastname@example.org.
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Published on Dec 17, 2013
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