Canadaâ€™s magazine for procurement and supply chain management professionals
ANNUAL SURVEY OF THE CANADIAN SUPPLY CHAIN PROFESSIONAL
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Canada’s magazine for procurement and supply chain management professionals
Contents 80 VALLEYBROOK DRIVE TORONTO, ONTARIO M3B 2S9
Dorothy Jakovina 416-510-6899, email@example.com Addressing issues affecting Canada’s public procurement professionals EDITOR
Michael Power 416-442-5600 ext 3259, firstname.lastname@example.org FLEET MANAGEMENT/CAR EDITOR
Emily Atkins 416-510-5130, email@example.com ART DIRECTOR
Sandy MacIsaac 416-442-5600 ext 3242, firstname.lastname@example.org PRODUCTION MANAGER
Kim Collins 416-510-6779, email@example.com CIRCULATION MANAGER
Barbara Adelt 416-442-5600 x 3546, firstname.lastname@example.org 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, email@example.com, 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: firstname.lastname@example.org 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
Vol. 55, No. 7 OCTOBER 2013
9 P ARTY TIME!
Products to help corporate functions run smoothly.
12 C AMSC BUSINESS ACHIEVEMENT AWARDS Celebrating Aboriginal and Minority Businesses
Canada’s magazine for procure
13 N ATIONAL SUPPLY CHAIN FORUM PRE-CONFERENCE REPORT
20 2013 SURVEY OF THE CANADIAN SUPPLY CHAIN PROFESSIONAL
42 F ACILITIES MANAGEMENT
Trends in facilities outsourcing.
PM 40069240 $18.00
departments 4 Buylines
44 Le professionnel
5 Procurement Profile
45 The Professional
6 Business Front
46 The Law
8 Ask The Expert
How Happy Are You?
s in previous years, the October issue of PurchasingB2B focuses on the Annual Survey of the Canadian Supply Chain Professional and, as we did last year, we’ve partnered not only with the Supply Chain Management Association (SCMA) but also with sister publications MM&D and CT&L in order to bring you the most comprehensive survey of the field in Canada. This year, we had 2,177 respondents to the survey, which we fielded last summer. That’s not a bad turnout and definitely provides us with a sufficient sample size of the field. You may notice that the average salary has increased yet again. This year sees a jump from in the average yearly pay from $85,178 last year to $87,908 in 2013. That’s up 3.2 percent, more or less in line with a cost of living increase. As well, the average gross base salary—before taxes and other deductions but excluding bonuses and incentives—was $82,800 ($84,337 for SCMA members and $80,132 for non-members). Not huge, but it’s rising. It’s also a better increase than what we saw during the worst of the Great Recession. For example, the increase was just over two percent between 2010 and 2011 (from $81,000 to $82,800 on average). Interestingly, job satisfaction kept up even while salaries had somewhat stagnated. About 87 percent said they were satisfied with their job overall, about the same for the past five years. It appears the majority— yet again this year—actually like what you do and are satisfied with your positions. In this part of the magazine, I’m in a position to offer readers my opinion. And when it comes to our survey results, my opinion is that while salary is always important, people are attracted to this field for reasons other than the cash. OCTOBER 2013 | 3
Commodity prices down slightly: Scotiabank index
PurchasingB2B editor Michael Power and publisher Dorothy Jakovina accepted the CAMSC partnership of the year award from CAMSC on Septmeber 26.
PurchasingB2B Wins Supplier Diversity Business Achievement Award
4 | OCTOBER 2013
urchasingB2B, Canada’s magazine for procurement and supply chain management professionals, took home the Partnership of the Year Award at the Canadian Aboriginal & Minority Supplier Council’s (CAMSC) ninth-annual Business Achievement Awards. The awards, held at Toronto’s Arcadian Court, celebrated the achievements of Canadian minority and Aboriginal businesses. The Partnership Award is given to an organization that works collaboratively with other organizations to strengthen Aboriginal and minority economic development and to facilitate supplier diversity. Publisher Dorothy Jakovina and editor Michael Power accepted the award during the event. Since 2011, PurchasingB2B has enjoyed a close relationship with CAMSC that has evolved into a formal partnership. Through its editorial content, PurchasingB2B has highlighted examples of leading practices in supplier diversity amongst Canadian companies and has profiled diverse suppliers that have delivered business value to their corporate clients. CAMSC president Cassandra Dorrington participated in a thought leadership roundtable that PurchasingB2B hosted focusing on supplier diversity. Since then, PurchasingB2B has consulted with the organization on several occasions for articles and editorial reports related to supplier diversity. As well, earlier this year, Dorrington joined PurchasingB2B‘s editorial advisory board. The award was one of seven given out that evening.
cotiabank’s Commodity Price Index inched down 0.1 percent month-over-month in August, the bank reported. However, the All Items Index has edged up so far this year (1.2 percent over the previous eight months of 2012), largely reflecting a rebound in the Oil & Gas Index from last December’s low as well as a strong cyclical recovery in building material prices. The Oil & Gas Index continued to gain ground in August, 0.4 percent month-over-month, 24 percent year-over-year. “Slight gains in Alberta light and heavy crude oil and a big increase in propane prices at both Edmonton and Sarnia offset softer natural gas export prices,” said Patricia Mohr, Scotiabank’s vice-president of economics and commodity market specialist. “Western Canadian Select heavy oil (WCS) at Hardisty, Alberta climbed to US$90.90 per barrel—the highest level since mid-2008, when WTI oil prices were at a record (US$147.90)—just prior to the 2008-09 Great Recession. This price level is closer to the true, inherent value of heavy crude oil in international markets compared with the heavily discounted prices of only US$62.37 in 2013:Q1.”
Thank you for your photos
Your response was overwhelming, and we would like to extend a special thank you to all readers who submitted photos of Canada. Photos used on the cover as well as inside this issue were submitted by:
Joanne Caissie, CPPB, Enterprise License Agreement Specialist, Service Alberta, Procurement Services, Edmonton AB Merry Anne Banks, Administrator, Winton Homes Ltd., Prince George B.C.,
Nancy Lee, Napanee Machine Welding & Fabricating, Napanee ON Neysa Chittenden, Government of Saskatchewan, Regina SK Saskatchewan Rod Haig, CSCMP, Manager, SCM, Suncor Energy Services Inc., Mississauga ON Dianna Everson, Accounts Payable & Collections Coordinator, SGS Canada Inc., Lakefield ON Frank Beattie, Manager IT, Atlas Hydraulics, Brantford ON Michael G. Fleming, Director, Service Development, Service Alberta, Edmonton AB Thomas J. Foster, Program Engineer, Cooper Standard, Georgetown Ontario Paul Beebe, Owner, Beebe Custom Tools, Upsala ON
Nothing Stays The Same Jerome M. Ferber, SCMP, SPM, P.Log, manager, supply chain, Veresen Inc.
Q: How did you get into procurement/supply chain management? I started on a parts counter for an industrial supplier and moved into a purchasing role for an oil/ gas service provider based in the Arctic. That led to a job with an oil/gas producer, the forerunner of Suncor/Petro Canada. Due to my experience and knowledge of equipment, parts and operations I moved into an inventory control position that led to working on construction projects as a logistics/warehouse and transportation specialist. I covered the entire supply chain spectrum of functions, which let me move from tactical to strategic roles and into management. Q: Describe a typical day at work. My day with Veresen involves a lot of contract work. We’re a smaller organization with some legacy agreements and relationships. I also spend time looking at ways to gain efficiencies, improve or create processes and do general trouble-shooting. Since we’re smaller, I deal with tactical requirements, negotiation, transportation and sourcing. Q: What do you like most about the oil/gas sector? The challenge and change—the oil/gas sector is dynamic. I worked in retail and healthcare where planning, forecasting and demand are more predictable. In oil/gas, projects are on, then off. Budgets are approved then revised. Money moves to other projects or gets cut. You must think on your feet, make the right decisions and consider many variables. If you don’t like almost daily change, don’t go into oil/gas. This keeps my interest. Q: What are you especially proud of in your career? One example involves assisting in the development, testing and implementation of a very good, fully integrated supply chain management application for a major oil/gas service organization. Another was in the manufacturing world and involved the mapping of the production process from forecast, to sales, raw material ordering and allocation right up to shipment of the finished goods. Then the development of new processes, which in-
volved a complete new process for testing, a change in lot size, allocation and staging that continued through to delivery, receipt, storage and the issue of raw materials to the production team.
Q: What are your future professional/ education plans? I plan to continue supporting SCMA. My term as president of the SCMAAB Institute ends in November however I’ll continue with the responsibilities for national and as the chair-elect for the national body. I’ll move into the chairman of the national board of directors next June. I’ll also continue teaching courses and seminars in the two SCMA education streams. Q: Tell us something about yourself not related to your profession. In my garage you’ll find a limited edition model of a Harley Davidson and my newest toy, a Jaguar XK-R convertible. Before that there was a Shelby GT-500 Mustang. My wife and I travel and in addition to small trips to Mexico and the like, we’ve been to Egypt and China and are planning a trip to Africa and Italy. Q: What advice would you give those new to the field or planning to enter it soon? As the profession becomes recognized as a vital part of any organization, it’s in a constant state of change. Continue enrolling in seminars and courses. Carefully consider your appetite for working in a dynamic environment, ensure you have the soft skills and can conceptualize and implement. B2B
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Not About The Ratio
hold shares in a number of different publicly traded corporations. My guess is that you do as well, even if you’re not aware of it. If you’re reading this column, chances are very high that you’ll be drawing Canada Pension Plan benefits, and it’s not unlikely that you have either a company pension or a registered retirement savings plan. Welcome to the club, fellow shareholder! So when it comes to the issue of executive compensation—and more particularly—excessive executive compensation, you, like me, have skin in the game. It has frustrated and even angered me for some time now just how much the average CEO of a large publicly traded company makes. The latest numbers I’ve seen suggest that it’s anywhere from 250 to 400 times what the average worker takes home. But there are outliers. In 2011, it took 6,258 Apple workers to match CEO Tim Cook’s pay package. And it’s not like the guy has been or is setting the world on fire. People have taken notice— and what the Securities and Exchange Commission has been lobbying for is something called a “ratio pay scale”, a required disclosure for publicly traded companies.
“In my Utopian dream world, the janitor at a successful company would make more than the CEO at a money-losing one.” What exactly is a “ratio pay scale”? It will force companies to disclose how much the CEO is pulling in compared to the average worker. It’s not like this is really much of a mystery right now. Publicly traded companies are already required, in various filings, to indicate how much top executives and members of the board of directors pull in each year. Given that information, you could estimate what the average worker makes and come up with your own ratio. The ratio pay scale rule just makes it a bit more transparent. Labour unions are all for this SEC initiative. 6 | OCTOBER 2013
The U.S. Chamber of Commerce is against it. And I’m firmly on the fence. The reason I’m sitting there uncomfortably is that I don’t think it will accomplish what it hopes to do, which is to shame CEOs into moderating their pay packages. Once upon a time, there was self-restraint in the executive suites. There’s a famous story—100-percent true—that George Romney (father of Mitt Romney, Republican presidential candidate in 2012) refused a bonus when he was in charge of American Motors because he thought it would mean he made too much compared to the average worker. By the way, this was after he took AMC’s share price from $7 to $90 per share…if that doesn’t deserve rewarding, I’m not quite sure what does! But that was a very different time. In the age of multi-national corporations, the ratio pay scale becomes particularly meaningless. Here’s why. There are two U.S.-based CEOs, running companies with multiple divisions, with revenues in the tens of billions. One of the companies does all of its manufacturing work in the United States, paying U. S. wages to its workers. The other CEO’s company makes all of its products in China. I think you see the problem already. It’s an apples and oranges comparison. It might appear that CEO Number One is, relatively speaking, a bargain and CEO Number Two is making out like a bandit. When it could quite easily be the other way around. The primary responsibility of the CEO is to maximize long-term shareholder value. In my Utopian dream world, the janitor at a successful company would make more than the CEO at a moneylosing one. Therefore, the first benchmark for executive compensation should be: is the company earning super-normal profits? Then we can start thinking about super-normal compensation. But it shouldn’t stop there. Assuming the company is making money hand-over-fist, can we draw a direct line between the CEO’s unique contribution and that over-performance? Let me cite the Canadian banks as an example. All have been highly, highly profitable lately. Is it because all of their heads happen to be geniuses, or is that there are macro-conditions beyond anyone’s control that just make it impossible to lose money, no matter how doltish you might be? By the way, I’m certainly not saying that the current crop of Canadian bank CEOs is a bunch of dolts. Nor do I think they are geniuses, either. Ultimately, the ratio pay scale begs the real issue: the board of directors has a responsibility to shareholders to ensure that the shareholders’ money is spent wisely. If I thought the board was, for example, paying blue-collar workers more than they had to based on current market conditions, I would judge that board an abject failure. If we’re going to be consistent, we must think the same thing if white collar workers—or a single white collar worker who happens to be the CEO—is similarly making more than the market would bear. b2b Toronto-based Michael Hlinka provides business commentary to CBC Radio One and a column syndicated across the CBC network. PurchasingB2B.ca
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Ask The Expert
Party Tips Two event gurus weigh in with tips on sourcing for corporate functions and potential liabilities surrounding office events
t this time of year, corporations may be in the midst of planning their end-of-year celebrations. But what steps to take? To help procurement practitioners involved in sourcing the products or services for corporate events and parties, PurchasingB2B approached two
experts in this area: Amanda Cormier of the Supply Chain Management Association (SCMA) and Susan Mackay of Staples Advantage.
8 | OCTOBER 2013
Amanda Cormier, Manager, Events, Supply Chain Management Association Corporate galas can be grand affairs, replete with hors d’oeuvres, cocktails, centrepieces and sumptuous meals. This is all sourced by event planners, and the process has definite ties to procurement. Strategic sourcing is key to planning, managing and executing events and there are many pieces to this puzzle. Is the event planner’s process in hiring suppliers different from that of procurement? Yes and no. Event planners tend to build relationships with suppliers and leverage those relationships in negotiation while considering their knowledge of that supplier when determining the hire. There is a perception that procurement departments view supplier sourcing in terms of numbers only. But that perception is outdated. Procurement has evolved from focusing on reducing costs at the expense of the supplier to sustainably procuring goods and services aligned with the company’s strategic objectives. It’s about providing value through appropriate quality at a fair price, partnerships with suppliers that help provide a better product or service for the ultimate customer, procuring products and services that support the strategic objectives, being fair and transparent in competitive bidding and negotiating win-win solutions. Event planners and procurement have similar goals. Cost, professionalism and experience are factors event planners and procurement look for when sourcing suppliers. The event planner’s objectives in-
clude a program that drives results for the company through revenue, attendee satisfaction, relationship building and so forth. Meetings and events aren’t about decreasing operational costs, but creating and driving business value. Still, events can be a large part of the company’s spend and should be connected to procurement. Susan Mackay, National Events Specialist, Staples Advantage When organizing an event, planners must first deal with the hotel at which the event will take place. Other areas to take care of within the hotel include catering, audio-video requirements and the entertainment that will be featured. Those are the four major components of organizing any event. Of course, it’s necessary that attendees show up, so planners must also deal with getting out invitations, as well as organizing the production of posters and other marketing materials. Perhaps most important to remember is the event’s theme. Setting that theme—be it winter wonderland, ballroom or 1960s-style—from the outset helps the rest fall into place. Usually, it takes between three to six months from start to finish to organize and execute an event, depending on its size. Regarding catering, you must ensure a variety of food options. Some attendees have allergies or other health-related dietary considerations, so caution is necessary. As well, vegans and vegetarians must be provided with options. You don’t want anyone sitting through an event with nothing to eat. There are considerations that also must be taken with alcohol. Most companies have a two-drink free policy, but coverage through PAL Insurance Brokers Ltd., a Canadian broker with programs that include speciality events and party alcohol liability, can protect the organizing company from liability. Providing taxi chits helps partiers get home safely. Task people with standing near the door who, when they spot attendees on their way home who might require taxi service, can make the chits available. It’s helpful to deal with one taxi company. That way, there’s only one bill. B2B
Party Perfect Products to help ensure any corporate function or office party is a success
ith the holiday season just around the corner and the corporate party season also fast approaching, organizations may be looking for products to help make those events all they can be. We’ve assembled various products that can help make every corporate function or office party a success. Partying is hard work, and office revelers may get thirsty in the process. OfficeMax Grand & Toy can help, offering Nestle Pure Life Bottled Water. The 100-percent natural spring water comes in 24x500ml bottles. From Staples Advantage comes wine glasses that are perfect for parties, cocktail events and other functions. The glasses are clear, plastic and 5oz, 140ml in size. They come in packs of 12.
These 30-percent, post-consumer content and Green Seal certified embossed place cards from Staples Advantage are 65lb white, archival card stock. They can be used as name cards or description cards, reservation notices or price cards. The cards fold to 1 ¾ x 4 ¼ and are scored for easy tearing and separation. OfficeMax Grand & Toy offers hot drink paper cups that are fully compostable with a plastic-lined interior. The cups are available in both 8oz and 12oz sizes.
Light, fruity and very much like a Beaujolais Nouveau, this MADD Virgin Rouge wine exclusively from Staples Advantage can be enjoyed room temperature or slightly chilled—put in the fridge 30 minutes before opening. The 750ml bottle contains about half the calories of red wine. Provinces outside Ontario, expect a delay in delivery. Also from OfficeMax Grand & Toy comes party-perfect cutlery. This plastic-like material is made from cornstarch and is fully biodegradable. Microwavable, dishwasher safe, strong and durable for an elegant presentation, they come in packages of 15 assorted black utensils, five knives, five forks and five spoons. These champagne flutes, from Plum Gifts, are adorned with the word ‘cheers’ in six different languages. They can be used for company parties or provided as gifts at any corporate event.
Plum Gifts also offers a holiday season kit that can serve as a gift at corporate events. This trio of holiday items includes a dark chocolate bar, herbal tea and a to-go tea tumbler to enjoy it in.
Where to find it: Visit these sites to find the products showcased on this page: www.eway.ca | www.officemaxcanada.com | www.plumgiftco.com PurchasingB2B.ca
OCTOBER 2013 | 9
Professional Development Directory
Want some insight? Learn from the pros what the numbers mean Join us for the free Annual Survey of the Canadian Supply Chain Professional webinar on November 21st and find out why salaries are going up and what you need to do to see yours climb too. This one-hour live webinar will include presentations of the results by Michael Power, editor, PurchasingB2B; Carolyn Gruske, editor, MM&D; Lou Smrylis, editor, CT&L; and SCMA president and CEO, Cheryl Paradowski, along with commentary from HR professionals and recruiters.
Register at www.scmanational.ca/annualsurvey Thursday, November 21, 2013 - 12pm ET Canada’s magazine for procurement and supply chain management professionals
Your chance to WIN one of two original paintings!* Addressing issues affecting Canada’s public procurement professionals
To enter the draw: Visit www.PurchasingB2B.ca and complete an online entry form For complete draw details, please see “Original Paintings Draw” on www.PurchasingB2B.ca
The draw will take place on November 22nd and the two winners will be notified by phone and email. The winners names will also be posted in the November 26th PurchasingB2B eNewsletter. * Open to Canadian residents only. One entry per person. Entries accepted until midnight November 21, 2013. Canadian artist Jeannette Sommers specializes in automotive and Métis art. To learn more about this talented artist, please visit: www.jeannettesommersart.com 10 | OCTOBER 2013
Events & Education Supply Chain Management Association Ontario (SCMAO) offers education programs, networking opportunities, news and information for supply chain professionals.
Ca re e
Staples Facility Tour
Visit Staples’ main distribution centre to see how they utilize RFID technology. October 22, Mississauga, 8:00-10:00am
Strategic Supplier Performance
How to measure, manage & enhance relationships for increased returns, with instructor Shawn Casemore, CSCMP, CPM. October 30, Hamilton, 8:30am-5:00pm
Join us for an interactive workshop with Bradley Foster, founder of Giant Steps Coaching. The workshop will be tailored to the interests of the attendees. Topics will include career trajectory and networking skills. October 30, Hamilton, 5:00-8:00pm
Breakfast Series - Transportation Industry Perspectives
Featuring Claude Germain, Managing Partner, Rouge River Capital, this is the first in a series of breakfast events with speakers who are industry leaders and executives. November 5, Eagles Nest Golf Club, Maple, 8:00-10:00am
Mastering RFX Drafting
Get to market with clarity, speed and precision with RFX documents that can withstand legal challenge and develop solid contracts for your organization. Featuring instructor Paul Emanuelli, recognized by Who‘s Who Legal as one of the top ten procurement lawyers worldwide. November 6-7, Toronto; November 14-15, Cambridge; November 20-21, Ottawa
Movers & Shakers Speed Networking
Network more efficiently with this supply-chain inspired evening, in a format designed to provide you with time to make an impression on everyone in the room. November 13, Mississauga, 5:30-7:30pm
Developing a Competitive Supply Chain
Understand and use appropriate strategic analysis tools and processes to develop and optimize your organization’s supply chain. Featuring instructor Dan Georgescu, MBA. November 28-29, Markham, 9:00am-5:00pm
SCMAO Holiday Networking Celebration
Join us for a fun-filled evening of conversation, drinks and hors d’oeuvres. December 4, The Vue, Toronto Airport, 6:00-10:00pm
Breakfast Series - Procurement Transformation
Featuring Nick Seiersen, Corporate Supply Chain Manager, KGHM International. December 10, Mississauga, 8:00-10:00am
CAMSC dishes out accolades during ninth-annual Business Achievements Awards by Michael Power
Senator Donald H. Oliver receives special achievement award from CAMSC president Cassandra Dorrington and Glenn DeSouza, CAMSC chair and RBC Financial Group VP of sourcing. Inset: Keynote speaker, Cisco Systems Canada’s president Nitin Kawale, spoke about the world’s growing interconnectivity.
12 | OCTOBER 2013
he entrepreneur’s life boasts advantages, like deciding your own day and business journey. But an entrepreneur who’s also a visible minority faces unique challenges. With that thought, Farley Flex, music promoter, entrepreneur and Canadian Idol judge, kicked off the ninth-Annual Canadian Aboriginal & Minority Supplier Diversity Council (CAMSC) Business Achievement Awards. The awards were held September 26 at Toronto’s Arcadian Court and celebrated the achievements of Canadian minority and Aboriginal businesses. CAMSC represents private sector, minority-owned suppliers operating in Canada, said Flex, noting the organization had worked with hundreds of businesses. “Tonight we celebrate the achievements of those businesses and the organizations that support them,” Flex said. CAMSC president Cassandra Dorrington acknowledged the individuals who had won in the past while honouring this year’s award winners. “They’re the heart and soul of CASMC,” she said. “They’re what keep us connected to our vision.” Keynote speaker, Cisco Systems Canada’s president Nitin Kawale, spoke about the world’s growing interconnectivity. Our
lives have changed in the past 20 years through increased connections, he said—but most data isn’t analyzed or acted on. With less than one percent of what could be connected actually connected, Kawale challenged the audience to imagine a world where people, processes, data and things are easily brought together. “This isn’t the future—it’s happening now,” Kawale said. “We’re moving towards the internet of everything.” Canada must lead this interconnectivity, he said. “We need to change the information trajectory of this nation, and Cisco is trying,” he said. “I travel the country and I see tremendous innovation, but what we lack is commercialization. I challenge Canadian companies to do what we’re doing, to be leaders in driving innovation in this country.”
The winners CAMSC gave out seven awards during the evening: Senator Donald H. Oliver won the special achievement award. Oliver has worked as a civil litigator and legal educator at three universities and is president of Real Estate Holding company Glen Moir Holdings, Pleasant River Farms Ltd and Dolin Fisheries. He has been active in politics with the Progressive Conservative Party and speaks about corporate governance, political ethics, the constitution, diversity and entrepreneurship. The small business of the year award went to Master Manufacturing Inc, which offers packaging solutions for the automotive industry. Pradeep and Neera Saxena launched the company, which started as a rack manufacturing facility before expanding into design and fabrication of vinyl bags for automotive clients. Forward Signs Inc. won the supplier of the year award. Since 1986, the business has grown from signage products to a suite of indoor and outdoor signage, banner, metal cladding and retrofit lighting solutions. Sales have more than doubled in the past five years, with annual revenue growth at 30 percent in 2013. The company’s client base includes BMO, CIBC, TD Bank, Bell, Smart Centres and Oxford Properties. The CATA Alliance Innovation Through Technology Award went to Nulogy, a provider of specialized solutions for supply chain challenges. The company is listed among the C100’s top 100 Canadian Technology companies and is a CIX20’s top 20 Canadian Innovation Exchange companies. The procurement advocate of the year award went to Albert B.W. Louis of Johnson Controls. Since joining the CAMSC board two years ago, Louis, director of supplier diversity and business development, has advocated for supplier diversity and invested in developing and leading the inaugural CAMSC Corporate Learning Centre, sharing best practices and peer mentorship to strengthen and enhance six Canadian companies’ supplier diversity processes. TELUS won the corporation of the year award. Its sourcing team participates various outreach events with diverse suppliers while sharing knowledge with CAMSC member. The company recently launched its Executive Protégé program. B2B
Forging The Energy Supply Chain Event brings together supply chain management professionals with suppliers to learn, network and share ideas
n this issue, PurchasingB2B is pleased to provide this special pre-conference section highlighting the National Supply Chain Forum (NSCF) in Calgary. The Supply Chain Management Association’s (SCMA) Alberta Institute and June Warren-Nickel’s Energy Group (JWN) have put together the event, with the two organizations combining SCMA Alberta’s annual Supply Chain Management Conference with the National Buyer/Seller Forum. The new event—expected to draw over 800 delegates—takes place at Calgary’s BMO Centre, November 12-14. This section brings you coverage from fellow Glacier publication, Canadian Oilsands Review, including an article profiling KBR Industrial Canada, a company honoured as Canadian OilSands Review’s Supply of the Year. KBR Industrial Canada’s history stretches back to the very first oilsands project, and the organization has been involved with Suncor Energy Inc. and its predecessor Great Canadian Oil Sands for decades as the oilsands business has grown. We’re also pleased to provide you with another story from Canadian Oilsands Review highlighting the newly founded Alberta Supply Chain Working Group, which is making moves to improve relationships between owners and vendors in the oilsands. The article highlights what’s happening to better engage oilsands owner companies and their vendors in a dialogue to cut productivity hassles and supply interruptions. The group is readying for talks on those problems and potential solutions. A third story from PurchasingB2B staff outlines a new database from The Canadian Council for Aboriginal Business (CCAB) designed to facilitate finding Aboriginal businesses using an online database. The platform boasts several heavy hitting sponsors such as Suncor Energy, CN and Enbridge. If you’re going to be at the forum, please consider attending our panel on supplier diversity. You can find more information about the event—including our panel—by visiting www.supplychainforum.ca. Please also feel free to drop by PurchasingB2B’s booth at the forum to say hello. See you in Calgary! B2B PurchasingB2B.ca
The Business Case for Supplier Diversity Thursday, November 14 • 9:30-10:30am
In partnership with the Canadian Aboriginal & Minority Supplier Council (CAMSC), PurchasingB2B is also proud to moderate a panel session at the event highlighting the business case for supplier diversity. Supplier diversity represents a proactive business process that helps provide Aboriginal, minority and women-owned suppliers equal access to bid opportunities. Large organizations in sectors such as automotive, banking and finance as well as technology have long realized the ROI of sourcing from diverse suppliers. Canada’s energy sector can also reap those benefits including increased flexibility, innovation leading to cost savings, improved access to an important and growing labour force and enhanced social license, amongst others. This panel discussion will focus on the business case for utilizing diverse suppliers within the energy sector and the benefits of engaging prime suppliers to identify opportunities acroos the entire supply chain. Tips for getting buy-in from the C-suite to pursue a supplier diversity program, how to build supplier diversity into an RFP and metrics for measuring success will be discussed. PurchasingB2B editor Michael Power will moderate this panel discussion. For details, visit www.supplychainforum.ca.
CONNECTING ABORIGINAL BUSINESSES 15
Suncor sponsors new certified Aboriginal Business Platform
MODULES MASTER 16
KBR Industrial Canada builds sophistication atop its long oilsands history
MOVING THE DIAL 18
A new organization called the Alberta Supply Chain Working Group moves to improve the relations between owner companies and their vendors
OCTOBER 2013 | 13
FORGING CANADA’S ENERGY SUPPLY CHAIN Grow your business by taking part in Canada’s premiere energy supply chain forum. NOVEMBER 12–14, 2013
The National Buyer/Seller Forum (NBSF) and Supply Chain Management Association Alberta (formerly known as the Alberta Institute of Purchasing Management Association, or AIPMAC) Annual Conference have joined as one to form the National Supply Chain Forum (NSCF). For the last 12 years, the NBSF has been the pre-eminent gathering for buyers and sellers along the energy supply chain—a place to meet, connect, discuss issues and opportunities, and do business. Given the significant activity, challenges and opportunities ahead for the energy industry, the NSCF is more important than ever.
FIND OUT MORE AT sUppLYChAINFORUM.CA EVENT PARTNERS:
14 | OCTOBER 2013
Calling Aboriginal Suppliers Canada-wide directory to provide a place to publicize work opportunities for Aboriginal businesses by Michael Power
he Canadian Council for Aboriginal Business (CCAB) has launched the Certified Aboriginal Business platform, a Canada-wide online directory of pre-qualified Aboriginal businesses. The virtual tool provides a place to publicize work opportunities for the Aboriginal business community. “Increasingly, corporations have begun to realize the value that Aboriginal businesses bring to the table, but it’s not always obvious where to find Aboriginal contractors and suppliers,” says JP Gladu, president and chief executive officer of CCAB. “By creating a searchable, country-wide database for certified Aboriginal businesses, we are providing a starting point for those looking to source a new supplier.” CCAB is a member-based organization that promotes business opportunities and works to advance corporate social responsibility for the Aboriginal community. The organization offers programs and services that help facilitate sustainable relations between First Nation, Inuit, and Métis people and the Canadian business sector. In addition to acting as a resource for Aboriginal businesses to list basic company information, the platform will also ensure each registered business receives a certificate verifying Aboriginal ownership. Suncor Energy, Enbridge, CN and others are supporting the platform, and CCAB has worked with the Northeastern Alberta Aboriginal Business Association (NAABA) to align the new database, launched September 18 in Calgary, with existing and region-specific Aboriginal business directories and platforms. “Aboriginal businesses know the customs, environment, and needs of their communities better than anyone else,” said Gary Hart, Suncor’s senior VP of supply chain and field logistics. “We’ve found that knowledge to be invaluable in our relationships with Aboriginal suppliers in the Wood Buffalo region of northern Alberta, and we hope the Certified Aboriginal Business platform can help us engage more Aboriginal businesses right across Canada.” Canada-wide Suncor has been involved with NAABA specifically regarding its oilsands business but was looking to partner on a Canada-wide initiative, said company spokesperson Kelli Stevens. The organization began talking to CCAB about partnering on a platform allowing businesses to more easily find Aboriginal companies to employ while giving those Aboriginal businesses a place to go to find opportunities to connect with potential buyers of their goods and services. The Certified Aboriginal Business platform has been in development for about a year and included roughly 250 Aboriginal-owned businesses at launch. CCAB said it expects that number to increase. “Anybody can search it whether or not they’re a member of
CCAB,” Stevens said. “If you’re an Aboriginal business you go through a process with CCAB to get certified as Aboriginal.” Once CCAB certifies a business as Aboriginal, that business can be listed in the database so organizations can search and find them when looking for potential contractors or suppliers. The other side of the database is similar to a job posting board where organizations can place requests for proposals that Aboriginal businesses can search, then put together bids for the RFPs that match what they offer. Organizations must belong to CCAB in order to list work on the site. Suncor has loaded a few jobs onto the site, said Stevens, noting that the tool would be useful for large jobs for which firms plan to sub-contract various pieces of work. The company can stipulate that a certain portion of that work must be provided to Aboriginal suppliers. “Until now, we didn’t necessarily have a very good tool to say, ‘here’s where you can actually find talent,’” she said. “And we can use it ourselves but we’re also encouraging others to use it.” Suncor realizes that Aboriginal communities can be affected by the company’s activities and should get the opportunity to benefit from energy development, Stevens noted. Potential benefits include: employment, education, training and community investment. It’s also smart business to engage Aboriginal communities, both in discussions and in the company’s operations, Stevens said. Those communities understand how the operations can affect them and how to work through those issues. Benefits back to the company include insight, as well as tapping local resources and talent. Between 1992 and 2012, Suncor spent more than $2 billion with Aboriginal businesses, with $1 billion of that spent since 2009, Stevens noted. The Certified Aboriginal Business platform is hosted on the CCAB website at www.ccab.com. B2B
OCTOBER 2013 | 15
KBR Industrial Canada builds sophistication atop its long oilsands history
by Graham Chandler
Hal Williams, vice-president of operations for KBR Industrial Canada. 16 | OCTOBER 2013
f Oilsands Review had been published 45 years ago, KBR Industrial Canada could very well have been the magazine’s first Supplier of the Year in 1968. As it stands, the company will have to settle for taking the honours in 2013. The company’s history in the industry stretches back to the very first oilsands project. As the Canadian arm of KBR, Inc. (originally Brown & Root), it has been involved with Suncor Energy Inc. and its predecessor, Great Canadian Oil Sands throughout the decades as the oilsands business has grown. “We’ve worked with [Suncor] all along,” says Hal Williams, vice-president, operations for KBR Industrial Canada. “We were part of their Project Millennium, which started in the late ‘90s [a $3.4 billion expansion commissioned in 2001] and we’ve done ongoing work with them right up to this spring when they did their major turnaround.” A fabrication and construction contractor, KBR Industrial Canada is a Canadian subsidiary of KBR, a worldwide conglomerate that was spun off into a public company from its previous owner, Halliburton, in 2006 when it was known as Kellogg Brown & Root. The company continues to secure and execute massive oilsands contracts, including those supporting significant innovation, such as module fabrication for Shell Canada Limited’s Quest project, the first carbon capture and storage installation tied directly to oilsands production volumes. But KBR isn’t just about new construction. The firm also makes a mark in ongoing maintenance, repair and operations. For instance, Williams estimates KBR has completed five turnarounds for Suncor in the last three years, and is currently on site with two maintenance contracts. Plant turnarounds are no walk in the park—they’re highly intensive undertakings involving a complete shutdown of billions of dollars’ worth of plant production. “They are very intense periods of time,” says Williams. “You are going 24 hours a day, seven days a week for 30–60 days. We have a thousand guys on site for close to 60 days doing that turnaround.” During Suncor’s last turnaround, the company shut down one of their two production trains and took Upgrader-1 offline. “We went in and totally rebuilt the hydrogen furnace for them—this is a 30-year-old furnace,” explains Williams. “And then there’s the regular turnaround stuff where you go in and open up vessels that haven’t been opened up for a year,” he says, “and you clean them out, do any repair work that they need. And there is always repair work needed after a plant has been operated for a year or two between turnarounds; there is a lot of maintenance that can only be done when the plant is down.”
That includes installing anything new and updated that the operator wants installed.
Turnarounds KBR’s turnaround expertise extends to Suncor’s Edmonton refinery too, which is now over 60 years old. “This year we did their spring turnaround,” says Williams. “And last year we did their fall turnaround.” The refinery turnaround is much the same kind of thing, says Williams: shutting the process down, and then trying to do as much maintenance work as possible. In the case of the refinery, last year’s project had an even shorter time frame: just 37 days to complete a turnaround. During that hectic period, KBR completed the overhauling, refurbishing, installing new equipment, replacing worn equipment, cleaning components like heat exchangers out and getting them ready for another year or 18-month run. Suncor hasn’t been KBR’s only major oilsands client. The company also worked as part of the original Syncrude build at Mildred Lake, which started in 1973 and shipped first oil in 1978. “We did all the onsite work, we supplied pipes and fabrication as a subcontractor; and then when Syncrude expanded from a major fire rebuild, we were part of that,” says Williams. And the Syncrude project list goes on: “We were part of DB-1 and DB-2 [major de-bottlenecking projects], the CAP project [Capacity Addition Project commissioned in 1988], the hydrogen plant rebuild, and then we were a huge part of the big expansion UE-1 back in 2004-2005, where they added the third train. We were the CM [construction management] contractor on site for that.” KBR is currently busy with Syncrude on another large oilsands undertaking: the approximately $2-billion Fluid Fine Tailings— Centrifuging Full Scale Plant (FFT-CFSP), KBR is providing constructability, module fabrication and construction services. The facility, one of Syncrude’s new tailings reduction technologies, is designed to pump fluid fine tailings through a series of centrifuges to separate water from the solids. The water is then recycled and the solids placed in deposits for reclamation. Module fabrication is well underway. “We are building all of the modules—115 in total—and doing all the site work,” says Williams. “We are on site now and about 30 percent done.” All modules and piping are done in KBR’s massive Edmonton facility and are then trucked to the Syncrude site for placement. “It’s a huge material-handling project,” he says. “High volumes of water through all these centrifuges and then the stuff that comes out of the centrifuges, which is the solids, as well as the clean water; you have to handle all that.” Modular expertise Williams feels it’s KBR’s expertise with modular construction that wins them many contracts. An advanced process called 3rd Generation Modular—where modularization actually drives design right from the start—was developed and patented by Fluor Corporation. “The Shell Quest project is designed using 3rd Generation, and we are building all 87 of those modules,” he says, adding that KBR is the first contractor to build 3rd Generation modules from Fluor.
“We are just building to their specifications, and these are very sophisticated modules. Certainly KBR was chosen to build them because we demonstrated that we can handle such sophisticated modules.” And that’s an accolade. “What differentiates KBR from other module fabricators has to do with our systems that we have developed over the years,” explains Williams. “We not only have 100 per cent material traceability, but we have very tight quality control standards.” And that’s critical: 3rd Generation modules demand tight tolerances, and extremely high assembly and fabrication standards are needed so the modules will fit together when they arrive in the field. “We have developed systems to basically guarantee that these things will fit,” explains Williams. The modules are specifically designed in three-dimensional models so that the dimensions on the drawings are turned into reality. “When we are building these 150-tonne modules to an eighth of an inch tolerance, we’ve got to have some very tight systems in place to ensure that.”
“The company’s history in the industry stretches back to the very first oilsands project.” Such accomplishments feed employee satisfaction and pride at KBR, which tends to keep personnel turnover rates low. “We have a large contingency of long-term people who have grown up with the company, who know the systems, who helped develop the systems, and who feel very strongly for the systems,” says Williams. And that in turn is fed by a strong safety culture. It sounds counterintuitive when Williams says safety at KBR is not a priority. But the truth is, it goes well past that: “You need to say safety is a value,” he says. “And the difference between a value and a priority is that priorities change e.g. schedule or cost; a value is something that you live 24/7—at home as well as on the job.” With such a consistently strong track record that is as old as the commercialization of the oilsands, KBR Industrial Canada can wear its new crown with well-earned pride. B2B
OCTOBER 2013 | 17
Moving The Dial
Newly founded Alberta Supply Chain Working Group looks to shed the adversarial nature of owner-vendor relationships by Melanie Collison
here’s a move afoot to better engage oilsands owner companies and their vendors in results-based dialogue to eradicate the productivity hassles and supply interruptions that drive cost overruns. Research shows that companies around the globe achieve success by discarding adversarial business practices in favour of forging long-term relationships with companies they buy from and sell to. The very phrase “supply chain” sounds linear, but, in practice, the chain is a complex web of interrelationships, like a finished Scrabble board. The idea is that the results are much better when players pool their letters and build the board in a way that maximizes the total score for everyone. “Companies currently work in a transactional, adversarial way in Alberta,” says Jeff Baker, senior director, strategic marketing and communications for Productivity Alberta, which is jump-starting a project called the Alberta Supply Chain Working Group.
“When suppliers aren’t providing input into a project’s life cycle, the people making buying decisions may not understand the actual requirements, resulting in rework.”
18 | OCTOBER 2013
Currently gearing up, the working group is initiating a practical conversation about supply chain problems and solutions. Members of the working group include representatives of oilsands project owners, the contractors who do the engineering, procurement and construction, and the thousands of suppliers of goods, services and labour. Rather than talking among themselves, the goal is for the various industry segments to discuss their perspectives and best practices with each other—a venue for such a dialogue does not currently exist. Once some
cohesion develops, the organizers will back out in hopes the project carries on tackling problems over the long term. The working group idea sprang from preparations for the annual National Supply Chain Forum. “We wanted to bring together decision makers within the supply chain to help understand key issues to inform the conference,” says Allison Byrne, senior director of client services and program development with Productivity Alberta. “It evolved with people around the table saying we need to get a better understanding of what’s going on in that supply chain. We’ll define key action items we can focus on together, and make it less of a talk group; maybe do some things about it.” Productivity Alberta started in 2009 as a program within the provincial government’s Ministry of Enterprise and Advanced Education. Now a private, not-for-profit corporation, it aims to be self-sustaining by 2017. Partners laying the groundwork for the working group are Rainmaker Global Business Development; the industrial development branch of Alberta Enterprise and Advanced Education; the Supply Chain Management Association (SCMA) Alberta; Productivity Alberta; and JuneWarren-Nickle’s Energy Group (JWN), which is acting as facilitator. Trust improves bottom line Replacing adversarial habits with trust-based relationships “is about helping [companies] see their suppliers can be among their biggest assets and they can be assets to their customers,” Baker says. “Trust-based relationships can have a major impact on the bottom line,” and that holds true internally as well. “Improved productivity will retain skilled labourers. When people see their work is making a difference, [and] is being done in a more efficient way, they’re more engaged. If you build a system for soliciting employees’ ideas, if staff are listened to and their ideas are valued, they’ll look forward to coming to work every day,” he says. “They’ll have better relationships with suppliers and customers. It goes beyond the lowest cost. Stronger supply relationships and trust-based relationships help with cost management, productivity and efficiency.” It’s not an intuitive step in a competitive industry, though. “I think there is a little skepticism to start,” Baker says. “Are we going to hug it out? When we show them the impact on the bottom line, their eyes are opened and they buy into it a lot more.” The various participants in the supply chain need to talk about different ways of doing things; they can’t just throw labour at the problem, adds Byrne. The last 10 years have seen skills and training gaps within companies and a struggle to keep projects going through tough times.
“There’s a lot of risk, and people are moving the risk around and getting other people to take it on rather than sharing risk and sharing rewards,” Byrne says. “If we both fail, all of us lose. If we [collaborate to] make money or do a project faster, we all win.” She points to the number one automaker in the world as an example: “Toyota makes investments in suppliers. They know what they’re going to get every time they use them.” The suppliers also know where their next order is coming from and have a major stake in the outcome. Byrne says that when suppliers aren’t providing input into a project’s life cycle, the people making buying decisions may not understand the actual requirements, resulting in rework.
Costs versus value As procurement has matured from focusing on cost to maximizing value, the thinking has progressed from “three bids and a buy” to finding strategic ways to manage an integrated supply chain to benefit an entire enterprise. Certainly there is recognition within the industry of the benefits of an “all for one, and one for all” approach. Wayne Prins, Alberta director for the Christian Labour Association of Canada, says their motto is based on cooperation and partnership—a modern style of labour relations—unlike the more traditional adversarial relationship between business and labour. The Construction Owners Association of Alberta—project owners, engineering firms, construction firms, labour providers, and other parties with a vested interest in the construction industry in Alberta—promotes “advanced workface planning.” That’s detailed planning to organize the complete process of construction, from engineering to commissioning, so all the requirements are at hand on time. In its holistic thinking, it parallels supply chain management. For the Alberta Supply Chain Working Group to gain momentum, “what we need is the early adopters who understand something needs to be done,” Byrne says. “We’ve started to see movement for change. [Owners] know there are issues with the contracting process, with staff and training requirements, with all the [baby boomer] retirements.
Some companies are doing some stuff, but it’s not across the board. The purpose of the group is to bring them together to discuss what they see as the issues and what can be done to help move the dial a little.” With the problems nailed down and some ideas out on the table, the working group is “hoping by January or February to have some tangible things to report on. We hope to see some changes in the contracting process by next summer or fall,” Byrne says. Funding comes from the Alberta government and JWN, owner of the annual National Supply Chain Forum. “Publishing companies are in the content business—information, education—and the ones that do it well, at times, have to lead the conversation,” says Ian MacGillivray, director of events and conferences with JWN. “How we enhance and optimize the energy supply chain really is an important topic. For example, we go back to the peak of all the development in ’05, ’06, ’07, there were lots of projects and labour shortages. What that highlighted was a breakdown in the supply chain.” Trade associations and industry groups “can only talk from one perspective,” MacGillivray says, “but we connect a lot of these dots. We put on events, interview people, bring people around the table and have a conversation.” B2B
OCTOBER 2013 | 19
Overall salaries climb in 2013 while gap between men’s and women’s pay remains.
2013 ANNUAL SURVEY OF THE CANADIAN u As the leading and largest association in Canada for supply chain management professionals, the Supply Chain Management Association (SCMA) is the national voice for advancing and promoting the profession. With nearly 8000 members working across the private and public sectors, SCMA is Canada’s principal source of supply chain training, education and professional development. Through its 10 Provincial and Territorial Institutes, SCMA grants the Supply Chain Management Professional (SCMP) designation, the highest achievement in the field and the mark of strategic supply chain leadership. SCMA was formed in 2013 through the amalgamation of the Purchasing Management Association of Canada and Supply Chain and Logistics Association of Canada. Today the association embraces all aspects of strategic supply chain management, including: purchasing/procurement, strategic sourcing, contract management, materials/inventory management, and logistics and transportation. 20 | OCTOBER 2013
SUPPLY CHAIN PROFESSIONAL
ith more fuel now driving Canada’s economic engine, it appears that supply chain salaries are mirroring the increased momentum. Again this year, the average salary for procurement and supply chain management practitioners has gained ground. The 2013 Annual Survey of the Canadian Supply Chain Professional reveals the overall average salary in the field to be $87,908. That’s up from last year’s $85,178 for an average increase of 3.2 percent. The gross base salary, meaning before taxes and other deductions but excluding bonuses and incentives, was $82,800 ($84,337 for SCMA members and $80,132 for non-members).
The survey provided a breakdown of results for the readership of each magazine, as well as for SCMA members. Among overall survey respondents, PurchasingB2B readers specifically reported an average salary of $85,895. The survey—the largest of its kind in Canada—was fielded in the summer of 2013. For the second year in a row, PurchasingB2B, MM&D and CT&L magazines joined forces with the Supply Chain Management Association (SCMA) on the survey, which saw 2,177 supply chain practitioners respond. The survey has a margin of error of plus or minus 2.1 percent, 19 times out of 20. Overall, 66 percent of respondents noted they had seen an increase to their base salary this year (68 percent for SCMA members) while three percent had seen a decrease. A total of 30 percent said their base salary had remained the same (28 percent for SCMA members and 34 percent for non-members). As well, 29 percent said they had received a base salary increase of two percent or less, while 41 percent noted an increase of 2.1-tofour percent. Another 12 percent said the increase they received fell between 4.1-to-six percent while eight percent of respondents had gotten a raise of 6.1-to-10 percent. A further nine percent had seen an increase of 10.1 percent of greater. Many respondents remained hopeful about future salary increases. This year, 68 percent said they anticipated a salary increase (70 percent for SCMA members and 65 percent for nonmembers) while 31 percent said they didn’t expect their salary to go up.
Portrait of the supply chain practitioner Based on answers provided, we were able to piece together a picture of the ‘average’ respondent to our 2013 supply chain survey. The average respondent is over 35 (85 percent) and supervises five people. They have 16.7 years experience in procurement/supply chain management, as well as 9.1 years experience in their current company and 6.7 years of working in their current job. They work 44.3 hours per week (44.8 in 2012) and the annual sourcing volume they place is 28.9 million. Also, 96 percent of respondents said they work full-time in supply chain. Among respondents, 44 percent said the term ‘purchasing/procurement’ best approximated their job title or role while 19 percent said ‘supply chain management’ and seven percent responded with ‘strategic sourcing.’ Another 10 percent responded with ‘logistics.’ According to Adrian Harrison, team lead at Hays Procurement, the procurement field has seen more negotiation upwards in terms of salaries and higher expectations among job hunters. Some areas, such as manufacturing, finance and the public sector, have seen more job activity recently. The competition for candidates is likely to push salaries up as well, Harrison said. That competition has also meant organizations are focusing more attention on candidates’ salaries rather than assuming potential employees will be willing to accept lower compensation levels, he noted. “I would suggest a warming up of the market in Canada, (candidates) expecting more and also probably the influence of people being in permanent jobs,” he said. “To attract them out of a permanent job is going to mean that they’re going to expect more.” The demand for candidates depends on the industry and the type of roles that clients are looking to fill, said Sean Naidu, national procurement/purchasing recruitment consultant, also with Hayes. Naidu agreed that when it comes to salaries there’s still a lot of negotiating happening. “A purchasing manager or a senior buyer would be looking at closer to the $80,000 range, depending on the size of the organization, where the person fits and the type of industry,” he said. “(These factors) drive that quite a bit.” How much money procurement and supply chain professionals took home this year depended on where in the country they lived. Several regions across Canada saw an increase in 2013 over last year. Manitoba/Saskatchewan saw the biggest jump, up to $81,519 from $75,190 in 2012 for an 8.4 percent increase. British Columbia’s average salary increased from $82,836 in 2012 to $85,831 this year for a 3.6 percent increase while Quebec saw in increase of 4.9 percent—up to $80,493 in 2013 from $76,726 the previous year. Ontario saw a rise of 3.6 percent, from $83,207 to $86,254, while Alberta’s average supply chain salary—the highest salaries in the country but the smallest increase—went from $101,448 to $103,049 for an increase of 1.5 percent. Only Atlantic Canada saw a drop in the average salary, down 2.1 percent to $74,220 this year from $75,781 in 2012. Sam Manna, director of client development and talent acquisition with Argentus Search Group in Toronto, noted that while
FIVE-YEAR AVERAGE SALARY OVERVIEW REGION
2009 MEAN SALARY
2010 2011 MEAN MEAN SALARY SALARY
2012 MEAN SALARY
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and competitions are lengthier YOU “RFPs and there are more lease agreements SAID: and several different methods of procurement. The purchasing method used to be plain tender competitions—now there are so many other options.”
The average salary in supply chain management
is $87,908, up 3.2 percent from last year’s $85,178. The average gross base salary was $82,800 ($84,337 for SCMA members and $80,132 for non-members).
OCTOBER 2013 | 21
Mean Salary ($)
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MEAN SALARY BY SEX – A FIVE-YEAR OVERVIEW Gender over 5-Year overview
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that I am viewed any differently than my male
15 Salaries for men and women This year, the survey again highlighted the difference between what men and women make in supply chain manage10 ment positions. 5 Across the board, men’s salaries tended to be higher than for women. For those with 31 or more years of experience, men earned $110,181 while on average women with the same expe0 rience took home $92,515. For those with 21-25 years’ experience, men earned an average of $108,770 (up eight percent from $100,610 in 2012) while women earned $85,093—a 2.7-percent rise from $82,784 last year. For those with five years or less experience, the average salary was $65,479 ($56,125 in 2012 for a 16.6-percent rise) for men. For women, the average was $59,849, representing a 7.5-percent rise from $55,690 in 2012. Male readers of PurchasingB2B earned a mean salary of $91,320—3.4-percent below the overall male average of $94,492. Meanwhile female readers took home $77,927, almost exactly on par with the female average of $77,842. Overall, 60 percent of respondents were male, while 39 percent were female; 56 percent of male respondents were SCMA members as compared to 44 percent of female respondents who belonged to the association. The perception among female respondents was that they earned less than their male counterparts for equal work. In total, 44 percent (47 percent for SCMA members) of female respondents said that they earned equal pay while 55 percent (53 percent among non-members) said they did not. Among male respondents, 79 percent (82 percent for SCMA members) said they thought their female counterparts earned equal pay for equal work within their organizations while 19 percent (16 percent for SCMA members) said they did not. 25 Cheryl Paradowski, president of the Supply Chain Management Association SCMA (SCMA), said that overall recovery signals Member 20 Non-SCMA within the economy tendedMember to point towards continued growth and compensation was generally keeping pace. But when it 15 came to male-female wage differences, Paradowski pointed out that male respondents overwhelmingly thought that salaries at their organization was equal between the sexes, while female 10 respondents tended to feel pay was not equal. While she expected a gap between what men and women took home, 5 Paradowski said she was still surprised by the difference.
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he hadn’t observed much in the way of salary increases in recent years, this year has seen movement upwards in terms of compensation. He attributed that in part to the increased attention procurement has received recently as the field moves from being seen primarily as a cost centre towards a strategic partner aligned in forwarding an organization’s objectives. There’s also more contract work available, Manna said. “We’ve seen a huge increase in the number of contractors out 25 there within procurement (for) very strategic initiatives where they’re going in to cut or consolidate vendors or,” he said. SCMAcosts Member 20 Non-SCMA Member “That’s where thejob market is moving.”
“I honestly didn’t think it would be that large,” she said. “Certainly, I expected there would be some differential but I didn’t think it would be that big.” Some factors affecting the difference are more easily addressed, she noted. For example, scrutiny of the 2012 survey results revealed more wage parity in the public sector than, for example, manufacturing. Also, men and women relatively new to the workforce show less wage discrepancy than those who have been working for longer, she said. “We would have difficulty carving out whether there was anything specific to supply chain that was causing the issues or whether they were just general societal issues,” Paradowski said. “It does tend to be women who leave the workforce to have children and is that where the gap starts? Do they end up moving two or three years behind their peers as a result?”
Compensation by sector Compensation levels also depended on the sector that practitioners worked in, with some areas experiencing increases while others saw dips in compensation. For example, inventory/material control saw the largest increase to $78,342. That’s up 16.6 percent from last year’s $67,140. Meanwhile, consultants saw an increase from $97,243 to $107,695 for a 10.7-percent increase. The salary for supply chain management executives also rose to $108,969 from $103,720 in 2012. As well, those working in the role of purchase/procurement went from $74,036 to $78,685 (up five percent). For PurchasingB2B readers in the procurement role, the average salary was $79,335. Meanwhile, the strategic sourcing category rose from $96,127 to $99,364 a rise of three percent. PurchasingB2B readers in this role made an average of $95,757. Those with an SCMP earned more than those without the designation. Respondents with an SCMP earned $98,924 on average, compared to $94,835 in 2012. The average salary for those without an SCMP was $84,782 as compared to $83,864 in 2012.
Satisfaction How appreciated do Canada’s supply chain professionals feel within their organizations? According to the survey, 77 percent said they agreed that their company has come to realize business couldn’t function without supply chain management professionals (27 percent of them said they strongly agree). As well, 71 percent said that during the last year the supply chain role in their organization has increased in influence with senior management, while 22 strongly agreed. Among respondents, 96 percent said that influence on the job was ‘important’ to them, with 57 percent stating it was ‘very important’. As well, 39 percent said it was ‘somewhat important’ while three percent said it was ‘not very important’. Overall, 79 percent they were satisfied with the level of influence they had on the job. Meanwhile, 22 percent said they were ‘very satisfied’ while 55 percent noted they were ‘somewhat satisfied’. Another 17 percent said they were ‘not very satisfied’ and only three percent answered that they were ‘not at all satisfied’.
AVERAGE SALARY BY INDUSTRIAL SECTOR REGION
Natural Resources $90,800
chain management is YOU “Supply becoming better recognized as an SAID: important asset in any business.”
The average respondent is over 35 or older and
supervises five people. They have 16.7 years experience in procurement/supply chain management, as well as 9.1 years experience in their current company and 6.7 years of working in their current job. They work 44.3 hours per week.
OCTOBER 2013 | 23
Cardinal Carter Catholic High School (YCDSB)
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Energy efﬁciency incentives are available for businesses of all types and sizes from your local electric utility. Small businesses may be eligible for incentives to upgrade lighting. Commercial, agricultural, institutional and manufacturing operations may tap into funding for lighting, system and equipment upgrades, energy audits and shifting energy usage away from peak demand times.
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Mean Salary ($)
80,000 60,000 40,000
Priorities According to the survey results, the priorities of supply chain practitioners have shifted somewhat in the past few years. Certainly, cost control remains an issue. But while 32 percent or respondents said that cost control was the top supply chain issue they faced last year, that number dropped to 19 percent in 2013. The next most common issue cited as the top concern was reorganization (14 percent), followed by supplier relationship management (nine percent). Risk management, forecasting and capacity shortages were all cited by six percent of respondents as the top issue faced over the past 12 months. By and large, despite a persistent gap between the sexes, supply chain salaries continue to keep pace with the standard cost of living adjustment of two-to-three percent. With the market heating up in certain areas, and the worst of the recession over, it looks like supply chain management and procurement professionals are set to continue to experience increases in their annual salaries. B2B
TOP SUPPLY CHAIN ISSUE FACED IN LAST 12 MONTHS 25
Percent of Repondents
SCMA Member Non-SCMA Member
15 10 5 0
Su pp Co lie st r r co n e Ri lati tro sk l o M nsh an ip g s Fo em e Re reca nt Ca org sti pa an ng ci iz In ty s atio ve ho n En n vir to rta g ry on m Tra vis es en n ib ta spo ilit lS r y us tat i t Te Sk ain on ch ill ab s ili no lo sho ty Ov gy rta er up ge se gr as ad so es ur cin g
Mean Salary ($)
Job satisfaction remained 20,000 high with 87 percent noting they were satisfied with their positions (31 percent 0 5 or < 6-10 11-15 16-20 20-25 26-30 31+ said they were ‘very satisfied’). Meanwhile, 56 percent Years noted they were ‘somewhat satisfied’ while 11 percent considered themselves ‘not very satisfied’. Only one percent said they were ‘not at all satisfied’ with their job overall. Perhaps not surprisingly, a competitive salary was considered imGender over 5-Year overview portant among 98 percent of respondents, with 74 percent citing it as ‘very important’. A total of 72 percent of respondents said they 100000 were satisfied with their salary, while 18 percent said they were ‘very satisfied’ and 54 percent responded that they were ‘somewhat satisfied’. A total90000 of 21 percent said they were ‘not very satisfied’, while seven percent answered that they were ‘not at all satisfied’. This year, respondents deemed a healthy work/life balance 80000 important with 97 percent citing it as ‘important’ and 75 percent calling it ‘very important’. Overall, 74 percent considered themselves satisfied 34Overall percent Mean Salary 70000 with their work/life balance, Mean Salarythey Male were said they were ‘very satisfied’ while 40 percent noted Mean Salary Female ‘somewhat satisfied’. Eighteen percent noted they were ‘not very satisfied’ and seven percent were ‘not at all satisfied’ 60000
For those with 31 or more years of experience in the field, men
earned $110,181 while women with the same experience took home $92,515.
OCTOBER 2013 | 25
Addressing issues affecting Canadaâ€™s public procurement professionals
Putting On A Public Face Tips for breaking into the public sector procurement realm by Katherine Risley
orking as a procurement professional in the public sector can be a very rewarding opportunity and often gives employees the ability to positively impact the service provided to the general public. Itâ€™s a field that many in the private sector may be interested in getting into. But as with any field, public sector procurement in Canada has its own host of requirements when it comes to recruitment. Understanding what the employment market looks like in the public sector and what skill set and experience is highly valued in potential candidates will allow those looking to make a move into the public sector to be more strategic about their job search.
The last few years have seen a decline in the number of positions within the public sector as the government has cut spending and departments have had to make do with less. However, an area in which there has been some growth has been at the entry to intermediate level, from procurement clerks to procurement specialists. Procurement clerks are still in demand as the administrative side of the role produces a fair volume of work to attend to. Additionally, those providing guidance to internal departments, such as procurement specialists and contract managers, remain in demand to ensure that organizations follow a fair and transparent process and that their stakeholders receive best value for public funds
OCTOBER 2013 | 27
that are spent. When it comes to opportunities at a senior level within the public sector, these roles are often filled through an internal competition and rarely are external candidates hired.
28 | OCTOBER 2013
Public vs. private experience With an increased focus on the spending habits of public sector departments over the last few years, it has become crucial that procurement professionals within the public sector ensure that the competitions they run are fair and transparent. When looking to hire a new employee, often candidates who have experience working in the public sector are given preference over those that have only worked in the private realm. This is because of a perception that practices in the private world are not as rigorous. If you’re looking to get into public sector procurement without any experience in that realm, there are several areas you will want to be able to speak confidently about to demonstrate that your skill set is transferable. First and foremost among these is your ability to enforce a set of procurement practices with your internal clients. Many corporations within the private sector have comprehensive procurement guidelines in place and procurement professionals are tasked with informing their business partners of those policies and ensuring that they are followed. In an interview, your ability to articulate the extent to which you were able to educate internal stakeholders of the importance of these guidelines and have a process followed in a disciplined manner will go far in demonstrating your ability to transition in to a public sector environment. Secondly, your ability to enforce procurement guidelines without becoming what internal clients would refer to as a “just a road block” is a skill set that is highly valued. Often times, internal operating departments can see procurement as a hindrance rather than a help, but there’s no reason that being bound by good procurement practices means you can’t be innovative. In the private or public sector your ability to work with your client to develop creative solutions, while still ensuring procedures are followed, will make you stand out as a leader in your profession. Thirdly, in developing creative solutions, you must also be adept at working with your clients to gain a clear understanding of their needs in order to develop a tender package that does an exceptional job of communicating those needs to potential vendors. Within the public sector this is increasingly important given the structured nature of the tender process and the limited access vendors may have to the end client. Outlining your experience working with stakeholders to develop strong statements of work, RFx docu-
ments, evaluation criteria and so on will demonstrate that you will be able to repeat this process in a public sector environment. Finally, in both the private and public sectors there is a focus on procurement having a longterm customer service mentality towards providing ongoing procurement program delivery and implementation. Within the public sector, hiring managers are looking for procurement professionals who are able to give examples of how they supported their internal client groups past the awarding of a project by implementing performance metrics and monitoring client satisfaction.
Networking If you are interested in joining the public sector in a procurement role you will want to connect with your professional peers who are already employed in the industry. Using LinkedIn to set up informational interviews with procurement professionals who have made the transition from the private to the public sector is a great first step as it will allow you to gain an understanding of how they were successfully able to demonstrate that their skill set was transferable.
“As with any field, public sector procurement in Canada has its own host of requirements when it comes to recruitment.”
You may also want to consider taking educational courses that focus on public sector procurement offered through SCMA to compliment your work experience. In addition, if you are currently unemployed, there are often a number of contract opportunities available within the public sector for which the recruitment requirements can be less stringent. Taking on a contract role can be a great way to get some industry experience on your resume and increase your chances of being hired full time. Ultimately, making the transition from the private to the public sector may take some time, but if you put in the effort to get connected and understand how to talk about your experience in a relevant way, you should be a step ahead of the competition. B2B Katherine Risley is a senior consultant at Meridia Recruitment (a division of Knightsbridge Robertson Surrette) in Halifax. Reach her at email@example.com.
Demystifying The Negotiation Of Flexible Formats The spectrum for negotiation in the public sector may be wider than you think by Rosslyn Young
he last few years have seen more and more public sector organizations move towards using flexible, non-Contract A procurement formats. When designed properly these types of solicitation documents—referred to by many titles within the industry, such as non-binding RFPs; non-Contract A RFPs; negotiated RFPs; dialogue RFPs—are designed to avoid the restrictions created by Contract A and to facilitate transparent contract award discussions with suppliers. While these flexible formats are being adopted by an increasing number of institutions, some public sector purchasing entities hesitate to move away from the inflexible, but familiar world of Contract A because they view negotiations as a complicated, time-consuming, resource-heavy process. This article will briefly walk through the spectrum of flexible formats with a view to illustrating that not all non-Contract A procurement formats require a complex negotiation process to award a contract. The simplest non-Contract A format is a nonbinding request for quotation, which is best-suited for purchasing goods or simple services where the most relevant factor for selecting a respondent is the price. The difference between this format and the traditional RFQ is that the latter requires fixed irrevocable bids, while the former simply requires the submission of a clear pricing offer for evaluation and award. While these non-binding RFQs typically do not contemplate an active negotiation phase for contract finalization—hence why they are best-suited to straight-forward purchases— they do safely allow for minor pre-award contract adjustments without incurring the risk of bid repair challenges common under Contract A. Moving up the spectrum of complexity, the negotiated RFP provides the most bandwidth for a wide variety of projects. The major difference between a non-binding RFQ and a negotiated RFP is that the latter expressly contemplates a transparent negotiation phase with the top-ranked proponent or proponents. However, the scope of the negotiation phase can vary greatly depending on the nature of the project. Not all negotiated procurement processes require a multi-day, board-room centered affair. In fact, most negotiated RFPs can be conducted with minimal fanfare. The “negotiation” can be as simple as a teleconference with the selected proponent to discuss the finalization of the pro-forma agreement and the post-award roll out of the
project. The transparent negotiation phase also enables commercially reasonable adjustments and clarifications to the legal terms and conditions contained in the form of agreement so that the awarded contract is better tailored to fit the purchase in question. At the other end of the spectrum, the negotiated RFP can also be used for complex, high-value, enterprise-wide procurement projects with many stakeholders. It can be conducted solely with the top-ranked proponent with negotiations allowed with the second-ranked proponent only if the purchasing institution cannot come to terms with the top ranked proponent (also known as the consecutive negotiation model) or, where appropriate, can also include a dialogue with multiple short-listed finalists who are then permitted to submit a best-and-final-offer (BAFO) (also called the concurrent negotiation model). In order to be effective when used with major projects, it is essential that these more complex negotiation processes be well organized and effectively resourced with appropriate professionals. While the implementation of flexible formats may requires a cultural shift in the operating norms of some public sector organizations, moving away from Contract A does not require a complex negotiation prior to making every contract award. The following steps are key to ensuring a successful and efficient transition to flexible formats: • Mandating appropriate planning, including format selection, for procurement projects to ensure an informed choice of the most appropriate flexible format; • Providing staff with the necessary training to be able to effect meaningful, informed interactions with vendors at all levels of negotiations; and • Understanding the organization’s purchasing needs in order to effectively develop policies and procedures around every stage of the procurement process, including contract finalization. Public sector organizations that want to increase their efficiency and flexibility and improve their contract award processes should be adding flexible formats to their procurement arsenal. This does not automatically mean that they will be dragged into complex negotiations at every turn. The spectrum of flexible formats includes the right fit for getting to yes for all procurement projects. B2B
OCTOBER 2013 | 29
Rock-solid procurement hits St. John’s
he Canadian Public Procurement Council (CPPC) will host its annual forum in St. John’s, Newfoundland and Labrador, November 3-6. The conference features plenary and concurrent sessions, along with opportunities to learn, exchange best practices and network at an event dedicated to public procurement. The forum takes place at the Delta St. John’s Hotel and Conference Centre, and registration is now open through the forum page at the CPPC website at www.cppc-ccmp.ca.
PRE-FORUM SEMINAR The art of selection November 3, 9:30am-4:30am This session will focus on defensible evaluations with an emphasis on managing mandatories, creating clear rated requirements and establishing solid processes. PLENARY SESSIONS - November 4th You are important 10am This session will demonstrate how a team involved in purchasing and logistics revolutionized the way a hospital operates.
Binding offers + no negotiations: sound productive? 1pm The City of Lethbridge was able to incorporate a new “dialogue RFP” into its arsenal of flexible formats and realized significant benefits.
The procurement of design-built construction projects, the basics and fundamentals 2:15pm Performance specifications and submission requirements will be investigated as will process leading up to the evaluation of proposals. The steps prior to evaluation and tips on the evaluation process itself will be discussed. CONCURRENT SESSIONS November 5, 8:45am
Getting procurement right, first time, everytime Wendy Waites will talk about her personal and business experiences while working with UK and international clients facing tough procurement programs where commitments are made decades ahead. Procurement data…where to start on one of the fundamental elements to increase efficiency Speaker and description to be confirmed November 5, 10:15am
The new suite of contract documents for design-build project—the highlights The Canadian Construction Documents Committee is releasing a new suite of contract documents for design-build projects and are the first design-build contract documents fully endorsed by the CCA, ACEC, RAIC, CSC and owner representatives.
30 | OCTOBER 2013
Competitive methods considering the total cost of ownership A panel discussing total cost of ownership vs the cheapest price and other considerations. November 5, 1:30am
The latest technology and solutions available in electronic tendering platforms This session highlights new solutions and a case study using these new technology tools to enhance its strategic procurement.
The new world of networked business—how to widen your supplier base and capitalize on existing technology This session will investigate key elements allowing emerging leaders to embrace the new world of networked business and identify what steps must be taken to continue to flourish. November 5, 3pm
Measuring performance of your procurement processes to increase efficiency and customer satisfaction! This session offers tools to help measure the performance of your procurement unit and take an administrative process and associate KPIs to it. The session will also explore using a continuous improvement methodology. CPPC ANNUAL GENERAL MEETING November 6, 7:45am
PLENARY SESSIONS - November 6th Uncovering best value is like finding gold 8:30am Steve Krueger, Washington State Department of Enterprise Services’ director of policy and protest, discovered that best value can be expressed in a mathematical equation. This led to a best value calculator that mimics how people intuitively acquire best value. Krueger will introduce his Excel tool and atendees can practice. Procurement transformation in Atlantic Canada 10:30am Provincial governments in Atlantic Canada have taken steps to transform the way procurement is conducted in the public sector. This panel will discuss what has been done, and the road ahead. B2B
IN THIS EDITION 32 B EST VALUE AWARDS
Toyota, Mercedes-Benz and Ram win
34 R OAD TEST
The Fiat 500L is big brother to the cute 500
36 GREEN FLEET VEHICLES
Eco-Run shows which cars have green cred
40 PUMP IT UP
City of Ottawa buys 12 new fire trucks 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, firstname.lastname@example.org. Advertising inquiries: Dorothy Jakovina, 416.510.6899, email@example.com.
New Mazda3 pricing revealed The starting price for the new 2014 Mazda3 will be $15,995 in Canada, the same as the old 2013 model and $200 less than it was 10 years ago when the Mazda3 made its debut. The car’s fuel economy is rated at 4.7 litres per 100 kilometres on the highway. “The compact car segment is one of the largest and most competitive segments in Canada, and shoppers in this segment are discerning consumers who want the best value for their money,” said Kory Koreeda, president, Mazda Canada. “We believe that the all-new 2014 is a true game changer in the compact segment, offering a combination of style, performance, and fuel economy that will truly delight our customers.” On sale in October, the 2014 Mazda3 will be offered with two SKYACTIV engine choices in the 2.0-litre and 2.5-litre gasoline engines. The standard engine on GX trim level becomes the SKYACTIV-G
2.0-litre, replacing the MZR 2.0-litre engine previously used in the Mazda3 GX. For GT models, the larger SKYACTIV-G 2.5-litre gasoline engine is standard equipment and boasts 184 horsepower at 5,700 rpm and 185 lb-ft of torque at 3,250 rpm. The Mazda3 GX is available with either the SKYACTIV-MT six-speed manual or SKYACTIV-Drive six-speed automatic transmissions. Even with the entry level pricing, this trim is far from a base model, boasting standard Bluetooth and USB connectivity, push button start, and keyless entry, as well as the full suite of SKYACTIV Technologies. Other standard equipment includes four-wheel disc brakes, body-coloured power exterior mirrors, dual sport exhaust, auto-off headlights, audio and Bluetooth steering wheel controls. The 2014 Mazda3 is $200 cheaper than it was 10 years ago.
New marketing manager for Volvo in Canada Volvo Cars of Canada has appointed Margareta MahlstedtKarayiannis to the position of vice-president marketing at Volvo Cars of Canada Corp. Mahlstedt-Karayiannis started on September 25th, succeeding Brad Painter who left this summer to pursue other opportunities in the automotive industry. Mahlstedt-Karayiannis comes from Rogers Communications where she was senior manager for Go-to-Market Marketing Planning. She also worked for BMW Group PurchasingB2B.ca
Canada where she was marketing communications manager for BMW/MINI and helped establish the MINI brand in Canada as brand communications manager. “I am looking forward to working closely with my new colleagues and agency partners to drive Volvo forward in the Canadian market and strengthen all aspects of the marketing platform,” she says. “The Volvo brand has much potential here in Canada and with exciting new product on the way, this is the time to build a foundation for the future.” OCTOBER 2013 | 31
Toyota, Mercedes and Ram top Canadian best value awards
Toyota’s Avalon won the best value award in the Large Sedan category
Toyota received its second consecutive award as Best Value Passenger Car Brand in the second annual Vincentric Best Value in Canada awards, while picking up eight individual vehicle awards. Volkswagen also performed well in the passenger car segments, with six award-winning vehicles. Mercedes-Benz retained its Best Value Luxury Brand title, while also earning five model-level awards, and Ram showed its strength in the pickup market, earning the 2013 Vincentric Best Value Truck Brand in Canada award. Much of the success for these brands was due to the strength of their alternative fuel vehicles. Toyota won four of the five hybrid awards, with Mercedes-Benz BlueTEC diesel technology delivering three winners and Volkswagen’s TDI clean diesels earning five awards. In addition, the Ram pickup winners were diesel-powered, as were two of the three Audi award winners. Other manufacturers performing well in the awards were Lexus, earning three, as well as GM, Ford, Mazda, and Honda, which each took home two awards. “The 2013 Vincentric Best Value in Canada awards demonstrates the significant impact that alternative fuel vehicles are having on the marketplace,” said David Wurster, president of Vincentric. “We look forward to providing Canadian consumers with the opportunity to gather insight into Canadian specific automotive ownership costs by honoring vehicles that offer buyers the best overall value,” he added. To determine the 2013 awards, Vincentric analyzed over 1,800 vehicle configurations measuring cost of ownership using eight different cost factors: depreciation, fees and taxes, financing, fuel, insurance, maintenance, opportunity cost, and repairs. Using a statistical model, the company identified the winners by measuring which vehicles had lower than expected ownership costs given their market segment and price. Each vehicle was evaluated in all ten provinces plus the Northwest Territories, using a range of annual kilometre intervals and insurance profiles. 32 | FLEET MANAGEMENT | OCTOBER 2013
Trailer side-skirts offer significant fuel savings FPInnovations’s Performance Innovation Transport (PIT) group, a not-for-profit engineering and research group for the North American trucking industry, has revealed the results of five years of performance evaluations on trailers equipped with side-skirts and undercarriage aerodynamic devices. The test results show trailers with side-skirts consumed an average of 6.69 percent less fuel than similar vehicles without skirts. Trailers with undercarriage aerodynamic devices consumed 1.43 percent less fuel on average than similar units without the deflectors. “The goal of these trials was to identify the real value of each technology so fleet operators can focus their implementation efforts where they get the best value and can more easily justify their capital investment,” said Yves Provencher, director of PIT. “Our controlled test-track fuel efficiency studies accelerate technology implementation and provide the commercial vehicle industry with the information it needs to make sound technology choices.” For the fuel economy evaluations, PIT tested side skirts from Freight Wing, Laydon Composites, Ridge Corporation and Transtex Composite. Fuel savings with the devices ranged from 5.2 percent to 7.45 percent compared to similar vehicles without skirts. Trailer undercarriage air deflectors tested by PIT were supplied by AirFlow Deflector, Airman and SmartTruck. Fuel savings measured on vehicles equipped with the devices ranged from none to 2.2 percent. PIT testing on the trailer aerodynamic devices was performed in accordance with SAE J1321 Fuel Consumption Test Procedure - Type II. For each test, unmodified control vehicles and test vehicles had the same general configuration, were coupled to the same trailers for base and test segments, and maintained load weights the same throughout the entire test period. All vehicles were in good working condition and set to manufacturer’s specifications. Fuel consumption for the tests was measured by weighing portable tanks before and after each trip. The testing consisted of a baseline segment using non-modified vehicles followed by a segment using the control vehicle and test units equipped with the aerodynamic devices. For baseline and final segments, results were present, results were presented as the ratio between the average fuel consumed by the test vehicle and the average fuel consumed by the control vehicle. The values for fuel savings reflect the changes resulting from the modification of test vehicles. PIT hosted its biannual Energotest at the Transport Canada Motor Vehicle Test Centre in Blainville, Quebec from September 11 to 19, 2013. The event featured fuel consumption tests comparing North American and European trucks in addition to testing fuel consumption claims of new products. PurchasingB2B.ca
Accommodate more. Consume less. The All-New 2014 Sprinter. Starting at $39,900*. We donâ€™t just measure efficiency in litres. We measure it in time saved. And thanks to the All-New 2014 Sprinter, youâ€™ll get more out of both. Learn more about the Sprinter efficiencies at TheNewSprinter.ca.
ÂŠ2013 Mercedes-Benz Canada Inc. *National MSRP pricing is shown and is intended for information purposes only. Prices do not include taxes, levies, fees, freight and delivery charges, insurance and licence fees, as well as any other products or services not listed that may be available to you through your selected Mercedes-Benz dealership. Vehicle prices subject to change. Dealer may sell for less. These prices do not apply in provinces with total/all-in pricing requirements. Please contact your local dealership directly for exact pricing details and total pricing applicable in those provinces.
Driving big brother Fiat 500L grows on you
lthough they share a name, the Fiat 500L and its little brother, the 500, don’t seem to share the same design genes. Big brother is a lot bigger than the cute, little 500. From a distance of about 150 metres in your rear-view mirror you might confuse the two for a moment—the headlights and visage bear a family resemblance—but once this European doughboy passes you on the highway, you’ll never mistake the two again. Where the 500 seems to lean into the wind, eager to go, the 500L is a more staid, stately looking vehicle. It’s squared off shape is reminiscent of a Mini Countryman or even a shrunken Ford Flex. It also sports oddly truck-like front sidelight windows, forward of the A-pillar. While strange from a design standpoint, these little windows contribute to the L’s overall excellent visibility. This vehicle has no blindspot, thanks to the broad expanses of glass both fore and aft. Inside, there is plenty of cargo space, as well as seating for five adults in comfortable, adjustable front and rear seats. Fiat refers to the rear seats as
34 | FLEET MANAGEMENT | OCTOBER 2013
“Tilt, Tumble & Slide”, which means they move forwards and backwards for passenger comfort or cargo space, as well as dropping forwards and flipping into the space behind the front row to make more cargo room. The only limitation to this is that they do not provide a flat rear deck, making moving bulky or heavy objects a little more challenging. Another consideration is the size of the top-hinged rear cargo door. It’s tall and requires a lot of space behind the car to open. When it’s open there’s a long reach up to the grab handle, and a heavy door to pull down. For smaller, lighter people this would be a challenge; it’s not an operation one would want to repeat many times a day. Up front, in the cockpit, the L retains a lot of European flair with a stylish two-tone dash treatment and seats to match. It’s also a practical environment, with two glove boxes, two open cubby holes lined with sticky rubber, a storage compartment in the armrest, cupholders and spacious door pockets with water bottle holders. All this storage space is made possible partly by the massive dash. Unless you are a
gorilla it’s impossible to even reach the bottom of the windshield from the driver’s seat. Sadly, the instrument cluster is hard to read, with a strange marking system on the speedometer and red backlighting. The type labels on the steering wheel—as opposed to the pictograms—were also so small as to be illegible. The functionality of the electronics is excellent, however, with seamless Bluetooth-to-smartphone connection, and automatic music playback. The touchscreen is easy to navigate, and voice commands worked reasonably well. With the six-speed automatic transmission and the 1.4L turbo making 135HP the 500L is a little underpowered. This is the same powerplant as the lighter 500. The engine sounds as though it’s laboring under hard throttle and seems to produce a lot of noise and little acceleration when it drops a gear to pass. That said, once you get cruising on the highway it’s easy to creep up to ticketable velocity without realizing it. The 500L is smooth, quiet and easy to drive. It handles very well at all speeds, with a firm, comfortable ride and smooth steering input. The brakes PurchasingB2B.ca
Story and photos by Emily Atkins are superb, with good feel and great stopping power. Climate control is one area where this vehicle is a bit weak. Going at full power, the AC had trouble keeping two front-seat occupants cool on a hot, humid day. And forget about opening the windows or sunroof at highway speedsâ€”they create unreasonable noise and buffeting. While the base price for the 500L Sport is $22,995, the version tested had the panoramic power sunroof option ($1,200), black roof ($500), the automatic transmission ($1,450), park assist
and back-up camera ($750), and the UConnect system ($600) that is nav-ready, for a total package price of $29,490. Of those options, the UConnect is likely the most useful, with the automatic transmission running a close second, especially for a fleet buy. Aside from a few small details, this big Fiat is a winner inside and out. For family or business use, if you need a vehicle with excellent cargo capacity, but still a reasonably compact
footprint and decent fuel economy, and crave a stylish option, this is a good choice. The 500L is one of the few vehicles in this category with both panache and practicality, and for a reasonable price. Itâ€™s a grown up 500, and it grows on you. b2b
Above: Only from the front does the Fiat 500L resemble its little brother the 500. Left: The tall rear door needs some room to open. Below: The interior is stylish with the two-tone upholstery and red accents.
SPECS AT A GLANCE... BODY STYLE: 5-door compact mini-van ENGINE: 1.4 L Turbo TRANSMISSION: 6-speed automatic PRICE: $22,995 MRSP, as tested: $29,490.
OCTOBER 2013 | 35
By David Taylor
Green fleet vehicles
Reducing cost of ownership – by example
n the early days of June this year, a convoy of 22 disparate “green” vehicles and support crews set out from Ottawa on the second annual Automobile Journalists Association of Canada (AJAC) Eco-Run. The destination? Montreal. This event is not a race of any kind. Neither is it intended to have vehicles compete directly against one another. It is simply a demonstration of a broad range of automotive and engineering technologies currently available to assist owners in reducing their fuel consumption and cost of vehicle ownership–and to perhaps point those individuals and organizations who might be considering new cars, SUVs or trucks in an appropriate direction. After the success of the inaugural 2012 Eco-Run from Brighton to London, manufacturers and automotive journalists alike were keen to participate. Returning partners included the Canadian Automobile Association (CAA); Schneider Electric, Natural Resources Canada (NRCan) and, new this year, CrossChasm and Stantec. Participating vehicles (see sidebar) range from compacts and family sedans to premium full-size SUVs and pickups. The types of powertrains include pure electrics and plug-in hybrids, gas/electric hybrids and a variety of high-efficiency gas- and diesel-fuelled engines. Not only does this event highlight the latest advances by manufacturers to improve fuel efficiency and reduce the impact on our environment, all of the journalists will be using driving techniques that any driver can adopt to reduce fuel consumption–and fuel costs–regardless of the age of the vehicles. Due to the duration of the event, it would be impossible to drive all the vehicles and offer realistic data. So, in
36 | FLEET MANAGEMENT | OCTOBER 2013
the weeks preceding the start date, all participating journalists were asked to provide a short list of those vehicles they would prefer to drive specifically for this pseudo-rally. Our choices? The Ford C-MAX Hybrid; Toyota Prius v; Mazda3 SKYACTIV; Volkswagen Jetta Turbocharged Hybrid; and the Hyundai Sonata Hybrid. It was purely coincidence that four of the five vehicles were hybrids. There were five legs to this drive, varying from strictly city to highway, and a blend of both. It should also be noted that some legs, based upon time of day, encountered that deadly driving combination–construction and rush hour. The first leg was city driving during the morning rush in downtown Ottawa in the Ford C-MAX Hybrid. The C-MAX Hybrid is Ford’s first dedicated hybrid vehicle line in North America. The power of C-MAX Hybrid stems from the combination of a gasoline engine and a battery-driven electric motor. This hybrid will offer a top speed of 100 km/h in EV mode and 195 net horsepower. According to NR Can, it offers fuel economy of 4.0L per 100km city, 4.1L/100km highway and 4.0L/100km combined. Due to traffic conditions (and the fact we managed to inadvertently end up in Quebec), our fuel efficiency rating was 6.44L/100km. After lunch we switched cars. This time, our ride was the Toyota Prius v, the most versatile member of the Prius family, delivering maximum space for people and cargo. Featuring an exceptional 4.5/100km combined fuel economy, the Prius v has been awarded the ecoENERGY award for the most fuel-efficient station wagon two years in a row. We drove from downtown Ottawa on a longer drive
to Chateau Montebello, Quebec and fared a bit better on this leg with a rating of 5.03L/100km. The following morning, behind the wheel of the Mazda3 SKYACTIV, we drove on highway and well-paved country roads to PMG Technologies in Blainville, Quebec. Here the Eco-Run and its drivers became part of the fifth anniversary celebrations at Performance Innovation Transport’s (PIT) open house. The 2013 Mazda3 SKYACTIV features Mazda’s innovative SKYACTIV advanced internal combustion engine technology. Realizing higher torque at low- and mid-range engine speeds results in better drivability with less fuel consumption in everyday driving. NRCan suggests the Mazda3 will achieve a fuel consumption rating of 4.9L/100km using regular gasoline. We hit just over that mark at 5.06L/100km. Later that day, we sat behind the wheel of the Jetta Turbocharged Hybrid for the very first time, with a combination of city and highway driving to our hotel in Saint-Eustache. Given traffic conditions, we posted a respectable 5.27L/100km. Combining a 150-hp turbocharged engine with an electric motor and a Continued on p.38
2013 participating vehicles,(in alphabetical order): •Chevrolet Cruze Clean Turbo Diesel • Chevrolet Volt • Ford C-MAX Hybrid • Ford Focus Electric • Ford Fusion Energi • Honda Accord Plug-in Hybrid • Hyundai Sonata Hybrid • Infiniti M35h • Kia Rio LX+ Eco • Lexus ES300h • Mazda CX-5 SKYACTIV • Mazda3 SKYACTIV • Mazda6 SKYACTIV • Mercedes-Benz B 250 • Mercedes-Benz GLK 250 BlueTEC • Mitsubishi I-MiEV • Porsche Cayenne Diesel • RAM 1500 HFE • Smart fortwo electric drive • Subaru Forester • Toyota Prius v • Volkswagen Jetta Turbocharged Hybrid.
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hybrid powertrain and a highlyadvanced lithium polymer battery mated to a 6-speed automatic transmission, the Sonata Hybrid is capable of operating in pure electric mode at highway speeds for exceptional fuel economy. Natural Resources Canada list combined consumption at 5.1L/100km. Lessons learned during this informative event? First, generally
7-speed transmission, this Jetta delivers performance and enviable efficiency. NRCan suggests a combined rating of 4.4L/100km. On the final day of the event we drove the Hyundai Sonata Hybrid through dreadful traffic and famed Montreal construction. Pulling into the parking lot at École Polytechnique, we registered usage of 5.54L/100km. With a fully-parallel
2013 AJAC Eco‐Run Fuel Consumption Summary Fuel Consumption (L(Le)/100km)
NRCan Ratings (L(Le)/100km)
Ford Focus EV
smart fortwo electric drive
Electric Vehicle Average
Ford Fusion Energi
Honda Accord Plug‐in Hybrid
Plug‐in Hybrid Average
Ford C‐MAX Hybrid
Hyundai Sonata Hybrid
Toyota Prius v
Volkswagen Jetta Turbocharged Hybrid
Kia Rio LX + ECO
Ram 1500 HFE
Chevrolet Cruze Diesel
Mercedes‐Benz GLK250 BlueTEC
Porsche Cayenne Diesel
= Cars we drove
38 | FLEET MANAGEMENT | OCTOBER 2013
better fuel consumption, regardless of the vehicle driven, may be achieved readily if the following tips as suggested by Stantec are used regularly: • Accelerate gently; • Maintain a steady speed; • Anticipate traffic; • Coast to decelerate before applying any brakes; and • Avoid excessive high speeds. Further, by applying some other basic actions, performance may be further improved by regularly measuring tire pressure; removing any additional weight; regulating the cabin temperature with prudent ventilation and use of the car’s HVAC system; and, most important, avoiding unnecessary idling. Were you aware that idling for more than 10 seconds uses more fuel than restarting your vehicle? Once all the data collected with CrossChasm’s MyKarma (OBDII port) devices and verified by NRCan, the overall average fuel consumption for the 22 vehicles was 5.27L/100km–below the average fuel-consumption figures published by NRCan in their Energuide for the same vehicles. The majority of the participating vehicles bettered their official ratings–proving they are attainable when driven in a normal, fuel-efficient manner. And, the overall average achieved bettered the Federal government’s proposed fleet-average fuel-consumption target for 2025–a figure of approximately 5.6L/100KM. The take-home from this exercise? With every passing year, technology continues to improve vehicle efficiencies, and astonishingly better results may be achieved by employing more prudent driving habits. None of which are hard to do–or, for that matter maintain. Fleet managers should note, it may take more than vehicle technology to improve their bottom line on a totalcost-per-vehicle basis. Simple education and positive reinforcement may achieve better results long term. b2b PurchasingB2B.ca
By Kara Kuryllowicz
Pump it up Ottawa boasts 12 new fire trucks
t the end of September 2013, Ottawa Fire Services (OFS) will have taken delivery of the last two of 12 new fire pumpers. The new trucks were manufactured by Kovatch Mobile Equipment, based in Nesquehoning, Pennsylvania, and the contract was worth $5.9 million, tax included. “Employee reaction has been very positive,” says Kim Ayotte, deputy chief, communications and asset management, Ottawa Fire Service. “We created partnerships with the firefighters through a joint OFS Vehicle Design Committee. Firefighters were given input through all phases of the project. This translated into employee ‘buy-in’ and anticipation of the delivery. The manufacturer showcased our new pumpers, featuring the ‘Ottawadeveloped’ innovations, at different tradeshows in both Canada and the US.” City of Ottawa Fire Chief John deHooge stressed safety as a key component in the procurement process for the new apparatus, while Fleet Services and Purchasing were instrumental in ensuring the firefighters’ ideas and requests for innovation were heard and incorporated. Priorities included high-visibility and ergonomically placed equipment to ensure the firefighters’ health and safety. By purchasing multiple units at once, OFS was able to lower the final price and come in under budget. The new trucks are painted white with Reflexite Type 3 material on the lower half. The reflective materials light up under headlights, which silhouettes the firefighters to ensure their protection. Other improvements include an on-board foam system, covered pump panels and a unique design for hose-bed covers that doubles as a fall restraint when firefighters are on top of the truck. In addition, the relocation of the hose lines and nozzles allows them to pull the hoses off without having to climb. The City of Ottawa uses a very open process for procurement which involves posting a tender on Merx and allowing bidders to submit on a public tender document. Made-in-Canada is not a requirement. The average, expected lifespan of a fire truck is 15 years, depending on the type of vehicle and the location of its home station. The total life-cycle cost of the unit is driven by both its age and usage, which also determines the units’ pre-set preventative maintenance schedules. Following major fire incidents, trucks are inspected and assessed for repairs or adjustments. “From a fleet perspective, running a fire fleet is very 40 | FLEET MANAGEMENT | OCTOBER 2013
similar to running other pieces of large and/or complex equipment such as snowplows, ambulances, cranes, graders, backhoes, etc,” says Ayotte. “In general, the same processes are followed for acquisitions, maintenance and disposal, however the main difference is in the specification of the equipment. The larger or more complex the equipment, the more time and care that needs to be taken when writing the specifications and when monitoring the manufacturing of the equipment.” Due to their role in the safety of fire personnel and the public, the fire trucks are maintained to very high standards. In addition, because fire prevention and safety are an important aspect of the OFS’ mandate, the fire trucks consistently appear in parades, special events and meet-and-greets at the firehouses and other locations. Ottawa Fire Services requires a very diverse fleet. In addition to fire calls, OFS responds to a multitude of other incidents such as car accidents, medical calls, carbon monoxide alarms, hazardous materials issues, confined space and trench rescues, structural collapse, water and ice rescues, as well as falls. In addition, they also take responsibility for fire prevention, public education and emergency preparedness programs. OFS’s full time firefighters all hold and maintain at least a full DZ (Ontario) or equivalent. “Many recruits have experience operating large vehicles from previous occupations and only require familiarization with the different vehicle configuration while others complete driver training programs offered by various truck driver training organizations,” says Ayotte. “Operating a fire truck is comparable to driving any single large vehicle over 11,000 kg equipped with air brakes.” Before operating any equipment or apparatus, including the fire trucks, employees receive theoretical and practical training. A driving course gives all firefighters the opportunity to enhance their driving skills. New firefighters practice a variety of driving exercises in their first year. During that time they do not perform any response driving to calls. Refresher driver training courses typically cover topics such as new technology, proper inspections and safe operating practices. Of the 1,524 staff members, 92 percent are firefighters, serving 935,000 residents across 2,796 square kilometers. They rely on a fleet of 266 vehicles—109 fire trucks, with an assortment of cars, pickups, vans, trailers and other vehicle types. B2B PurchasingB2B.ca
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Outsourcing Facilities Management KPMG International survey looks at outsourcing market trends, conditions and demand levels in facilities management and real estate by Michael Power
hese days, organizations are constantly looking for ways to drive out unnecessary costs, boost efficiencies and improve global service delivery and operating models. Among the areas that organizations look at to get these results is facilities management and real estate, says a recent report from KPMG International. The report, called KPMG 2012 Global Real Estate and Facilities Management (REFM) Outsourcing Pulse Survey, highlights trends in real estate and facilities management outsourcing. Answers to the survey came from international buyer organizations that are involved in outsourcing, outsourcing service providers and third-party legal counsel and advisors. The survey looks at areas such as outsourcing market trends, conditions and demand levels; top drivers and challenges for facilities management process improvement and outsourcing efforts; and outsourcing deal attributes. The survey also asked about market characteristics on topics such as priorities, service delivery models and space utilization plans.
“Most end-user organizations today, especially larger firms in western markets, have already undertaken some level of REFM outsourcing, even if it has been to outsource a few services (e.g. janitorial, cafeteria, and amenities services).”
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KPMG International questioned 302 respondents for the survey, with 44 percent of those from end-user, buyer organizations using or arranging REFM outsourcing. The remaining respondents were from legal and sourcing advisory firms that offer outsourcing advice.
How much outsourcing? How much outsourcing organizations undertake in this area varies among companies, the survey notes. Roughly 70 percent of organizations contacted for the survey had done some amount of outsourcing of real estate and facilities management services. Meanwhile, 50 percent said they plan to use outsourced services more often in the future, while fewer than 10 percent of respondents plan to outsource less. “Most end-user organizations today, especially larger firms in western markets, have already undertaken some level of REFM outsourcing, even if it has been to outsource a few services (e.g. janitorial, cafeteria, and amenities services),” the report notes. “Only 15 percent of the companies surveyed have not outsourced at all.” KPMG International polled users of REFM outsourcing services on what process areas they’ve already outsourced, and which they plan to outsource going forward. As well, the survey looks at areas they plan not to outsource in the near future. According to the findings, the most commonly outsourced REFM is workplace services, which includes janitorial, cafeteria and amenities services. The survey notes that 69 percent of organizations that responded to the survey said they had fully outsourced workplace services, while 24 percent have partially outsourced them. The survey also found that another seven percent said they have no plans to outsource this type of work. The next most common outsourced area is facilities services, such as HVAC, electrical, mechanical and building repair, the survey said. A total of 89 percent of respondents either fully or partially outsourced these services, with only two percent having no plans to do so. As well, the least outsourced area was portfolio strategy and planning, with 26 percent of respondents partially outsourcing this more strategic area. The survey results also highlighted market demand, deal trends and characteristics as well as organizations’ future expectations in these areas. KPMG polled service providers on current and expected growth levels for deals in services, as well as third-party advisors and legal counsel that support clients’ REFM outsourcing efforts on demand levels they’re noticing. Service providers, the survey concluded, are less bullish regarding new outsourcing deal growth projections than in the 2011 edition of the survey. When it came to service providers’ projections on buyer demand for REFM outsourcing over the next 12 months, just 22 percent of respondents expect demand to increase. Meanwhile, 44 percent expect demand levels to decrease, a number that’s up from last year’s result of 23 percent. “Just 23 percent of providers and advisors expect demand to increase more than one year out, while 45 percent, up from 12 percent in the 2011 poll, expect demand levels to drop,” the report says.
Outsourcing by industry KPMG International’s survey also asked service providers and third-party advisors about the demand for their services within specific industries. Banking, financial services and insurance (BFSI) are fields that are far ahead of others when it comes to outsourcing, and 61 percent of service providers mentioned this field as the top area for outsourcing. The pharmaceutical and biotech industries come in next at 44 percent, followed by healthcare at 40 percent. For the first time, KPMG asked why buyers hadn’t outsourced certain REFM activities. Just over 50 percent of respondents said that activities were “too strategic” and that “costs would be higher.” This was closely followed by the answer that there was “no compelling business case” for outsourcing. “The argument against outsourcing strategic work is an old one, but over the years, what is deemed too ‘strategic’ has consistently been narrowing,” the report says. “The cost and business case arguments are very client- and activity-dependent and will vary depending on how aggressive buyers want to get with their outsourcing efforts in terms of scope, the degree of control ceded to the provider, and the underlying characteristics of the supporting IT platform.” The survey found that while service providers agreed with buyers regarding the argument related to the business case against outsourcing, they’re much more likely to cite “loyalty to staff” as a reason why buyers don’t outsource certain work. Global sourcing KPMG International also asked service providers and buyers about how their clients go about their sourcing, as well as how they manage and govern the process. Global sourcing is less a factor in procuring services in areas such as janitorial or HVAC, the report notes. This is largely because much of the work in these areas must be performed onsite, rather than coming through the Internet from another, most likely overseas, location. Still, it remains an important component of REFM sourcing. But more important than where in the world organizations source from is the buyer’s maturity level, the report notes. A common disconnect can crop up between what an organization wants to accomplish through global sourcing and the skills, experience and resources it has to drive those results, the paper says. “These skills involve selecting providers and locations, accounting for and managing risk, and governing a growing number of sourcing efforts spread across multiple providers and locations,” the report notes. KPMG International also polled buyers on how they manage existing global REFM sourcing efforts and how they plan to manage new efforts going forward. A total of 38 percent are taking a “portfolio approach” to managing existing deal, with 22 percent using an enterprise sourcing centre of excellence (CoE) in the process. As well, 16 percent use less sophisticated enterprise sourcing council, the report says. Meanwhile, buyers using new REFM outsourcing efforts are more focused on manPurchasingB2B.ca
aging them globally, the report said. In this case, 74 percent are taking a global model using either a sourcing centre of excellence or council. Meanwhile, 30 percent still manage and organize efforts around geography, business unit or function, the report noted. Historically, buying organizations have viewed global sourcing as separate and discrete options and capabilities, the report notes, rather than as an integrated continuum of services. But this view may be changing, the survey reveals.
“A common disconnect can crop up between what an organization wants to accomplish through global sourcing and the skills, experience and resources it has to drive those results.”
“Organizations today are more frequently developing a holistic strategy and operational model to support the totality of their business and IT services operations,” the report says. “This includes how to source and manage these capabilities as well as how to continually improve their overall efficiency and effectiveness.” The report also notes that the ability of many buyers to source and manage a diverse portfolio of services doesn’t always keep up with the scope of what those buyers want. But the good news, the report says, is that this is a more often recognized problem than before, with more firms facing and overcoming this challenge. The final section of the report looked at the characteristics of outsourcing deals from the providers’ perspective. In this section, seven percent of providers noted contract profitability is improving in new deals, while 50 percent said that profitability had decreased since the previous year. As well, 14 percent expect improvements in contract profitability in existing deals that have been running for more than one year, while 22 percent said existing deal profitability is going down. B2B
OCTOBER 2013 | 43
Par Cheryl Paradowski
Offres toutes nouvelles d’une association nouvellement créée
e lancement de l’Association de la gestion de la chaîne d’approvisionnement (AGCA) apportera son lot d’événements nouveaux ou remaniés afin d’en offrir toujours davantage aux membres et à l’ensemble de la profession. Le premier événement, le Forum des leaders de la chaîne d’approvisionnement inaugural, s’adresse aux hauts dirigeants de notre secteur d’activité et est organisé conjointement par l’AGCA et le Schulich Executive Education Centre de l’Université York. Ainsi des administrateurs, vice-présidents, directeurs généraux et chefs d’entreprises de tout le Canada seront conviés à des présentations dynamiques qui susciteront un dialogue stratégique sur les enjeux et tendances actuels en GCA. Ne manquez pas cet événement le lundi 18 novembre
<< Sinon, nous vous invitons à adhérer à l’association et à constater par vous-même toutes les possibilités qu’offre l’AGCA! >>
44 | OCTOBER 2013
2013. Vérifiez auprès d’Amanda Cormier à firstname.lastname@example.org si votre nom peut être ajouté sur la liste des invités. Le même mois s’amorceront les inscriptions au premier concours national d’études de cas en gestion de la chaîne d’approvisionnement à l’intention des étudiants. Des équipes d’étudiants issues d’établissements postsecondaires du pays exposeront leurs solutions à un problème de gestion réel. Les éliminatoires régionales prévues le 21 février seront suivies de la finale nationale le lendemain. Prenez part au déroulement de l’événement à titre de juge, en participant à des séances d’information professionnelle pour étudiants ou en soumettant aux étudiants un problème de gestion qui vous donnera droit à de nombreuses consultations gratuites. Il s’agit pour nous d’une formidable occasion de susciter un intérêt pour notre profession, de cibler des talents émergents et d’énergiser la prochaine génération de leaders. Au début de 2014, surveillez la nouvelle phase du programme Smart Way - recherche opportune sur la durabilité dans le transport commercial. Peu importe votre rôle au sein de la chaîne d’approvisionnement, que vous vous procuriez ou fournissiez des services d’expédition ou gériez le budget total comprenant le transport, les implications de cette recherche et les avantages de Smart Way ne vous laisseront pas indifférents. La recherche et des séances d’information régionales seront présentées de pair avec Ressources naturelles Canada. Aussi, des changements ont été apportés au symposium international sur la gestion de la chaîne d’approvisionnement, qui aura lieu les 10 et 11 juin 2014. Dorénavant, cet événement annuel traditionnellement présenté en automne aura lieu tous les
deux ans; il coïncidera cette année avec le congrès national d’Edmonton, ce qui favorisera davantage la réunion du milieu de la recherche et des secteurs d’activité pratiques. Des chercheurs du monde entier seront invités à rédiger des articles qui mettront votre organisation au parfum des tendances qui s’imposent en GCA. Sur le plan de la formation, le programme menant au titre de p.g.c.a. a été offert en ligne pour la première fois dans la foulée du lancement de l’AGCA en septembre. Le programme se caractérise par sa rigueur, à l’instar d’une formation en classe, et propose un forum de discussion instructif. Il est enfin plus accessible pour les membres éloignés des grands centres et ceux dont les obligations personnelles ou professionnelles exigent un horaire d’apprentissage flexible. Contactez votre corporation pour obtenir tous les détails concernant les services offerts dans votre secteur. Et il n’est question ici que des activités canadiennes! Plus tôt cette année, la Saskatchewan et le Nouveau-Brunswick ont tenu leur tout premier congrès régional. Les membres de l’AGCA Québec se sont de nouveau réunis en septembre, l’AGCA Colombie-Britannique a organisé son événement annuel à Kelowna en octobre, les membres de l’AGCA Ontario ont pris part récemment à leur congrès annuel à Toronto et l’AGCA Alberta met sur pied un nouvel événement de concert avec le salon national Buy and Sell en novembre. En somme, il s’agit d’une période emballante pour l’association et le milieu de la gestion de la chaîne d’approvisionnement au Canada. Si vous êtes déjà membre, nous espérons que vous tirerez le maximum de votre nouvelle association. Sinon, nous vous invitons à adhérer à l’association et à constater par vous-même toutes les possibilités qu’offre l’AGCA! B2B
THE PROFESSIONAL By Cheryl Paradowski
Brand New Offerings from a Brand New Association
e couldn’t think of a better way to launch the brand-new Supply Chain Management Association (SCMA) than by launching some brand new events, and putting a new twist on some existing events, in order to offer even greater value to our members and to the profession as a whole. The first event is going to be targeted at senior executives in our field with the inaugural Supply Chain Leadership Forum. Hosted in partnership between SCMA and the Schulich Executive Education Centre at York University, this invitation-only event for Directors, VicePresidents, General Managers and members of the C-Suite from across Canada will showcase a dynamic line-up of speakers who will engage participants in strategic dialogue about current issues and trends in supply chain management. Mark your calendars for Monday, November 18, 2013, and contact Amanda Cormier, email@example.com, to see if you qualify for the invitation list. Also in November, registration will open for the first National Student Case Competition in Supply Chain Management. Student teams from post-secondary institutions across the country will compete to present their solutions to a real business problem. Regional heats will be hosted across the country on February 21st, with the national finals the following day. There will be many ways to get involved in this event: volunteer as a judge, participate in career information sessions for students, or consider whether you might like to benefit from a lot of free consultation by presenting a business issue for the students to review. This is a wonderful opportunity for us to generate interest in our profession, identify some emerging talent and energize our next generation of leaders.
Early in the New Year, watch for the next phase of the Smart Way program timely research into sustainability in fleet and distance transportation. Of interest to all parts of the supply chain, whether you’re procuring shipping, offering shipping, or managing total costs that include transportation, you will want to understand the implications of this research and the benefits of the Smart Way program. Research and regional information sessions will be offered in partnership with Natural Resources Canada. For a new twist on an existing event, look for changes to the International Supply Chain Management Symposium, June 10-11, 2014. Traditionally held in the fall every year, this program is transitioning to a biannual event that will move to align this year with the National Conference in Edmonton, affording an even greater opportunity for the worlds of academic research and practice to come together. Papers will be invited from researchers around the world and you won’t want to miss the chance to gain insights for your organization into where the field of supply chain management is trending. On the education front, the SCMP designation program was offered online for the first time starting right after SCMA’s launch in September. With all the rigour of the classroom format and a dynamic discussion forum as an alternative to classroom peer learning, the SCMP program finally becomes more accessible to members outside of major city centres, and those who require the flexibility of self-scheduled learning to accommodate work and home commitments. Check with your local Institutes for specifics about what’s available in your market. And all this is just at the national level! Earlier this year both Saskatchewan and New Brunswick launched their first ever
regional conferences. SCMA Quebec members gathered once again in midSeptember, SCMABC moved its annual event into the interior in Kelowna this year in early October, SCMA Ontario members were back in Toronto recently for their annual conference, and SCMA Alberta is launching a new event in partnership with the National Buy and Sell Show in mid-November. All in all, it’s very exciting times across the association and for the supply chain management profession in Canada. If you’re already a member, we hope you’ll take advantage of all of the opportunities available from your brand-new association. If you’re not a member, we hope you’ll consider joining us and finding out for yourself what being a member of SCMA has to offer! B2B
“If you’re not a member, we hope you’ll consider joining us and finding out for yourself what being a member of SCMA has to offer!”
OCTOBER 2013 | 45
Laying The Foundation of Contract Design The four cornerstones for solid contract architecture by Paul Emanuelli
46 | OCTOBER 2013
o leverage their purchasing power and manage their supply chain, purchasing organizations need to integrate contract design concepts into their procurement cycles. This article will introduce the four cornerstones of contract design: contract anatomy; contract architecture; contract assembly; and contract award; it will also explain how these elements serve as the foundation for effective contract management. Purchasing professionals need to understand the anatomy of their contracts at an organic level. They need to dissect the terms and conditions and understand how the various components should work as part of a living agreement between the contracting parties. The organs of any properly designed procurement contract include performance terms and payment provisions. The performance terms should clearly define the requirements, performance standards, warranties and delivery schedules. The payment provisions should establish payment structures and schedules and connect those components to the performance terms. This basic DNA of contractual anatomy is the foundation onto which more specialized terms can be added to adapt the procurement contract to the industry and transaction. These specialized terms can include, among other things, change control provisions, confidentiality clauses, insurance and indemnity terms, limitation of liability clauses, dispute resolution and termination protocols, and document retention and audit provisions. Understanding basic and advanced contract anatomy helps to avoid complicating contracts with unnecessary provisions. The components of a contract can be housed in different architectures. Some contract structures are designed for speed, others for long-term endurance. The most evolved architectures synthesize speed and endurance with multi-module formats that allow purchasers to lock down standard terms while permitting the rapid incorporation of more complex components as required. Organizations need to direct their purchasing into appropriate format streams.
Proper contract design takes pressure off the system by allowing purchasers to direct standard “one-time delivery” transactions into rapid use purchase order formats while also identifying situations that call for more complex legal agreement formats. It enables implementation of user-friendly multi-module formats that can help to quickly navigate the middle ground between these two extremes. Contract assembly is the third critical cornerstone of contract design. It takes skill, judgement and experience to assess the specific situation and incorporate the necessary elements of contract anatomy into the appropriate contractual architecture. Some situations are more self-evident than others. While a onetime delivery of a standard commodity can often be handled through simplified purchase order terms, a 15-year outsourcing deal will typically require a formal legal agreement with a complex set of tailored schedules and appendices. These conceptual extremes may be easy to identify, but it’s the unclear middle ground that often bogs down purchasers in a contractual noman’s land. It’s in this legal grey zone that proper contract design can bring the greatest gains through implementing a contract assembly process that enables the rapid creation of modularized contracts tailored to the industry’s nuance and adapted to the requirements of the good or service. Contract award is the fourth and final pillar of contract design. There’s no use having a perfectly assembled contract that no one will sign. Since it takes two to contract, purchasing organizations should incorporate commercially reasonable terms into their contract design process. Building a sustainable contractual relationship, particularly with strategically significant suppliers, often requires the precision of a scalpel, rather than the blunt force of a “standard form” hammer. While an adversarial winnertakes-all approach may be suited for certain courtroom situations, getting mired in a “battle of the forms” with suppliers and their lawyers will only lead to gridlock. To avoid unnecessary legal entanglements, the right starting point is to establish a proper contract design process that allows purchasing professionals to adapt to the circumstances, identify deal-breakers, and distinguish fundamental terms from the nuisance clauses that unnecessarily bog down the process. Purchasing professionals are under increasing pressure to find efficiencies and create competitive advantages for their organizations. Those purchasing institutions that properly adapt to today’s challenges by integrating contract design concepts into their procurement cycle will be better positioned to survive and flourish in our competitive marketplace. B2B Paul Emanuelli is the general counsel of the Procurement Law Office, which was recently rated by Global Law Experts as Canada’s top public procurement law firm. Reach him at firstname.lastname@example.org
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Published on Oct 21, 2013
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