PurchasingB2B February 2018

FEBRUARY 2018

CANADA’S SUPPLY MANAGEMENT MAGAZINE

THINK GLOBAL Wael Safwat and international procurement success SUPPLIER COLLABORATION EMERGENCY PURCHASING LA & DETROIT AUTO SHOWS

PURCHASINGB2B TURNS 60!

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Table of Contents

Vol. 60, No. 1 • FEBRUARY 2018

Features 1 0

12

33

36

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KNOWLEDGE IS POWER Wael Safwat on professional associations, technology and more.

WORKING TOGETHER The benefits of supplier collaboration.

THE VALUE OF PREPARATION What public procurement can do when an emergency hits.

22

CYBERSECURITY How prepared are you to deal with the threat of online crime?

Also inside

4 6

UP FRONT BUSINESS FRONT

7 3 8

9

FINANCE CORNER THE LAW

33

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Cover: Joel Robertson Photography

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

Features KEEPING UP WITH THE TIMES

Five ways to adapt procurement and sourcing to multi-channel commerce.

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Up Front 302-101 DUNCAN MILL ROAD TORONTO, ONTARIO M3B 1Z3

Procurement’s emergency role

www.PurchasingB2B.ca PUBLISHER/ADVERTISING SALES

Dorothy Jakovina 416-441-2085 ext 110, djakovina@PurchasingB2B.ca

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his year plays host to a series of rather notorious anniversaries in the history of Canadian emergencies. In January 1998, 20 years ago, both southern Quebec and eastern Ontario experienced five days of up to 100mm of freezing rain and ice pellets. About half of Quebec’s population and over one million people in Ontario went without power—some of them for several weeks. At least 35 Canadians lost their lives because of the catastrophe.

This year is also the 15th anniversary of the northeastern blackout of 2003 that affected much of Ontario and the eastern seaboard of the US. Just after 4:10pm on August 14 2003, a power outage throughout Ontario and the northeastern and Midwestern US saw 10 million Ontarians and 45 million Americans in the dark for days. In some regions, the outage lasted a week or two.

A third such observance is due to the five-year anniversary of the Alberta floods. In the days leading up early June 2013, Calgary saw heavy rainfall that lead to catastrophic flooding. Overall, 32 local states of emergency were declared and 28 emergency operation centres activated. Over 100,000 people were displaced during the emergency.

I don’t mean to create a heavy mood. Rather, I wish to call attention to the critical and potentially life-saving part that procurement plays in such situations. The role of first responders, healthcare professionals and others in emergency situations can’t be overstated. Their contributions to maintaining order, getting the power on and cleaning up are essential, their value incalculable.

But procurement is there too. In this issue, we decided to take a look at procurement’s function during emergency situations. During adversity, it’s essential that procurement be able to get the goods and services needed to keep communities going.

Our public procurement article (see page 33) looks at the role of procurement in such situations. The article touches on how procurement helps, what happens to standard tendering procedures during emergencies and other points.

There’s nothing like adversity to highlight the importance of essential services, and past experiences can be a teacher for the present and future. Including procurement on emergency planning committees and disaster response teams is essential. Instituting emergency procedures so that procurement can continue to function in the absence of the usual due process is also important. Let’s not forget how significant that role is, or the importance of ensuring preparation.

On another note, we’ve decided to place our event, ProcureTech, on hold. The event was scheduled to take place this upcoming September 10 and 11. Please stay tuned for updated details in the near future.

Michael Power

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EDITOR

Michael Power 416-441-2085 ext 111, mpower@PurchasingB2B.ca ART DIRECTOR

Barb Burrows CUSTOMER SERVICE/PRODUCTION

Laura Moffatt 416-441-2085, ext 104, lmoffatt@iqbusinessmedia.com CIRCULATION

circulation@PurchasingB2B.ca

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| February 2018 | PurchasingB2B.ca

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Business Front

The New Workplace McCarthyism Unspecified “insensitive” statements can lead to unemployment

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

By Michael Hlinka

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n high school, we were taught about McCarythism, a temporary period of madness that occurred in the US during the 1950s. There was an American senator, Joe McCarthy, who made a name for himself by asserting that there was widespread infiltration of Communist agents in American government agencies.

A series of hearings followed that ruined many careers with little or no evidence. McCarthyism is now understood as the practice of making accusations in the absence of hard proof, requiring the accused to prove his or her innocence…if even given the chance.

This turns jurisprudence as we know it in North America on its head. A critical principle of the justice system is innocent until proven guilty. There is and should be a heavy onus on the accuser to make the case. When I was growing up, it was said that better 1,000 guilty men go free, then one innocent be convicted. But that was then. This is now.

higher-ups would have reached the same conclusion. However, the words were spoken, and they could not be taken back.

After the meeting, one of his colleagues came to him to discuss what had transpired. The protagonist of this story was somewhat worked up. He ended up saying—and he admits to this—that he attributed some of her behaviour to her ethnic background and upbringing. (Neither the male employee nor female supervisor had been born in Canada.)

I avoid making these types of generalizations. I do my best to treat everyone as individuals, not as members of a group. That being said: I remember something that happened in the wake of the 9/11 attacks.

One of my students was an international student from Afghanistan, and shortly after the US invasion of her native country, I ran into her on the street. I asked if everything was okay at home, and that if she was ever worried, there were counsellors at George Brown College and my door was always open. She smiled in thanks, and I patted her forearm in a show of support.

I will never forget the look on her face. She clearly interpreted this gesture (which was and I hope you trust me on this one, innocent) as a sexual come-on. And as a result, I have been very conscious to treat students “The male employee was called into a room with from certain nations differently than I a couple of people he didn’t know. He was told do native-born Canadians.

I digress. Sort of. The bottom line is that he had made a serious transgression and that a comment was made and it got was offered an immediate severance package.” back to the supervisor in question who subsequently reported it to the organiI am going to tell you a story. One important caveat zation’s human rights division. in advance: I have only heard one side of the story.

Here’s where the McCarthyism stuff kicks in. The male employee was However, I know the individual in question and I think called into a room with a couple of people he didn’t know. He was told that this is a reasonably honest presentation of events. that he had made a serious transgression and was offered an immediate It starts with this eight-year employee who occupied severance package. He asked for the opportunity to give his side of the a position in mid-management with a leading publicly story and was told that they weren’t interested in hearing it. traded company. His work record was excellent: he He was scared and wasn’t thinking straight, so he quickly agreed. He had always been an above-average performer accordfigured that with his experience and contacts, he could land on his feet reling to his performance reviews. A new supervisor atively quickly. And he was smart enough to realize that his career had hit joined the department, and there was a general conan insurmountable wall with that employer. sensus that she was not particularly competent. The However, what he didn’t realize was that this was part of his severance workplace situation started to deteriorate until there documentation. That is, he was being released because of unspecified was a meeting, where the eight-year employee openly “insensitive” statements. And now he’s searching for work and he has no challenged the new supervisor’s ability to do her job. idea what his former employer will divulge if and when it is approached.

Not the smartest thing to say. Had I been asked to This is McCarthyism, pure and simple. And my belief—and fear—is provide advice in advance, I would have suggested that that there will be many more incidents of this sort, because if you are truly he keep his mouth shut. If she was indeed as incompeincompetent and happen to be a member of a group deemed “historically tent as suggested, it is possible that sooner or later the disadvantaged,” this is the best hope you’ve got. B2B

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| February 2018 | PurchasingB2B.ca

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Finance Corner

Managing Your FX Risk Tips for handling the heightened risk exposure in the global marketplace

Dave Dominy is CEO of Firma Foreign Exchange

By Dave Dominy

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rocurement and supply chain professionals are no strangers to risk. From changing trade tariffs, to unexpected changes in transportation costs, disruptions from extreme weather and political instability, any number of outside forces can wreak havoc on your flow of goods.

Fluctuating exchange rates are another risk factor that must be considered. And while global currencies have always moved, the fact that we are now so closely linked to the global marketplace has heightened our exposure to their movements.

for risks outside of your control and protect future deals against unexpected fluctuations.

Hedge against budget and pricing uncertainty

When negotiating international contracts or signing deals that have foreign exchange elements, it’s valuable to identify your exposure to currency market fluctuations. This will help you develop a plan to minimize, and in some cases eradicate, any risk to the profitability of your purchases or contracts.

One option is to use forward contracts. This currency solution allows you to lock in a predetermined exchange rate the day you sign a contract and for a set period of time, ensuring you know the exact exchange rate you’ll receive when it comes time to make “When negotiating international contracts or receive a payment. For example, you or signing deals that have foreign exchange might not know that the Canadian jobs report is expected in the next couple of elements, it’s valuable to identify your exposure weeks, and you’re unaware of the fluctuto currency market fluctuations.” ations in USD/CAD exchange rates this Without a currency plan or the in-house expertise might cause. A forward contract will enable you to lock in an exchange rate to manage the risk of fluctuating exchange rates and for a business deal you are conducting at the time indicated in the contract. the resulting complexity of international payments, This way, you will be protected against any potential unknown movement smaller companies can be very susceptible to their of the currency for the duration of your contract, protecting your profits. potential negative impact on profit margins. The key While the downside of establishing a forward contract means that you is knowing that there are a number of strategies availmight not be able to take advantage of market highs, the certainty of knowing able to manage this risk and experts who can execute a your exchange rate in advance, can be critical in maintaining profitability. plan designed for your business.

Explore payment options

Currency market movements

A good start is having a topline understanding of what drives currency markets. Typically, these can be summarized by eight key factors, including: 1. Political and economic conditions; 2. Rates of inflation or deflation; 3. Interest rates; 4. Monetary policies; 5. GDP; 6. Fiscal policies; 7. Commodity prices, particularly oil; and 8. Unemployment rates.

The inability to predict which of these factors will affect the currencies that matter to your deals can be scary. Even in early 2018, we’ve seen USD/CAD rates jump by over 200 points in five minutes. A specialized foreign exchange firm can keep you informed about as many potential influences as possible, so you can plan

In addition to helping you establish a plan to manage currency risk, currency specialists can also ensure your international payments are transferred to and from your bank accounts quickly and cost effectively.

Perhaps you have a list of international vendors from whom you regularly purchase supplies. If your business is sending a wire transfer to each of those vendors every month, you could be spending a significant amount of money on fees. A currency specialist might be able to help you save money by using another, more cost-effective form of electronic fund transfer, using their access to international banking networks.

Missed or late payments can also cause costly delays. Most foreign exchange providers can quickly and easily provide transfer confirmations—regardless of the financial vehicle used to send the money. That means your vendor can rest assured that your payment is on its way and won’t hold up your schedules.

Understanding the various factors that influence currency markets can have a big impact on your business, and working with someone who understands this and can ensure payments are sent and received quickly and cost effectively, means you’re not managing this risk on your own. Currency is complicated, but the solutions to manage your risk don’t have to be. B2B PurchasingB2B.ca | February 2018 |

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Education and Training Certified Supply Chain Management Professional Internationally-recognized, the Certified SCMP designation is the highest level of professional education in supply chain management in Canada.

TO ADVANCE YOUR CAREER, LEARN FROM INDUSTRY EXPERTS. •

•

•

Taught by supply chain practitioners Our instructors translate real-world experience into meaningful classroom discussion.

Supply Chain A-Z Whether you’re new to supply chain or managing at the highest levels, SCMAO offers programming to meet your needs.

On-Going Support As a full-service association, SCMAO offers networking opportunities and career building events.

Diploma in Procurement and Supply Chain Management Developed for skilled supply chain professionals at the intermediate level.

Supply Management Training Foundational courses and seminars in tactical and operational knowledge.

Professional Development Seminars Keeping you informed of emerging trends and supply chain practices.

Corporate On-Site Training Customized and cost-effective training delivered conveniently in your own facility.

For more information on our programs please contact the SCMAO office at education@scmao.ca or Christopher Lau at 416-977-7566 (ext 2145).

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Connect. Invest. Grow

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2018-02-09 3:22 PM

By Johnny Thorsen

How Smart Is Your

CONTRACT?

The time has come for business travellers to forget about paying

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s 2018 gathers momentum, we are already seeing several impressive examples of innovation in a number of areas that bode well for the life of the frequent business traveller in the future. One of the most static and outdated areas of workflow in the corporate trip lifecycle is the process of payment, as it continues to evolve around the traveller presenting a credit card either in its actual, physical form or as a virtual card which still requires the presence of the credit card details in some way.

However, there is hope on the horizon.

A combination of multiple new technologies has the potential to change completely how we pay for business travel

complete the automated expense reporting process. By this point, the traveller hasn’t even reached the airport for the flight home.

The above scenario is actually possible from a technical perspective today, but there are no available solutions yet in the corporate travel technology universe.

But this is bound to change, most likely before the end of 2018.

So what is a smart contract?

A smart contract is the default name for software running on top of a new type of database platform called blockchain.

Unless you have been hiding under a rock or living on a deserted island for the

A smart contract is immutable (cannot be changed) once it has been created. It can only be cancelled and replaced by a new version. services in the future. Most likely, the future means the next three-to-five years.

Imagine a scenario where the traveller simply walks into a hotel, goes to the room number designated by the arrival assistant bot about five minutes before entering the reception. Once the room door is opened a smart contract is informed about the room activation and executes an instant payment using a digital token representing the value decided by the smart contract. When the traveller leaves the hotel two days later, a similar action happens at check out. The smart contract executes the payment for the optional services used by the traveller in the hotel during the stay based on the agreed corporate rate, while sending a final update to the general ledger to

past 12 months, you have probably heard about the most famous blockchain product, Bitcoin, and the many other crypto coins and tokens that have been launched recently.

The purpose of this article is not to go into the technical details of blockchain.

Rather, it’s to outline some of the new services that can be developed using this technology. So please read on even if you are not a crypto developer.

The smart contract built on blockchain has two important characteristics that make it perfect for corporate travel buying. These characteristics are: • A smart contract is immutable (cannot be changed) once it has been created.

It can only be cancelled and replaced by a new version; and

• A smart contract is self-executing once it has been stored. Therefore, it does not require any human involvement and has a complete audit trail.

Furthermore, because the contract is self-executing it can process a large number of data set bookings and reach different conclusions about the outcome (price) for each booking subject to the rules defined. In other words, a smart contract can provide dynamic pricing regardless of how a booking was made and assign the correct price without relying on a manual approval.

Using a corporate hotel rate as an example, this allows for the creation of a smart contract that calculates the correct hotel rate for each booking and then subsequently executes the automated payment once a booking is activated (for example, when the room door is opened) and transfer the relevant information directly into the general ledger at the same time.

The savings potential for both the hotel and the buyer is significant as the merchant fee for credit card processing, as well as the cost of loading and distributing rates into multiple traditional systems, can be eliminated completely.

Other new capabilities could include the ability for the hotel and the buyer to look at the exact same data set at any given time providing both parties with a single version of the truth in terms of number of room nights or total spend during a given period. B2B Johnny Thorsen is VP, global travel strategy & partnerships at Mezi.

PurchasingB2B.ca | February 2018 |

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KNOWLEDGE IS

POWER

Wael Safwat, Chartered Fellow, CIPS (FCIPS), brings a global perspective to procurement and supply chain in Canada

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ael Safwat, Chartered Fellow, CIPS (FCIPS), has had a 22-year career in procurement that spans several continents and industries. He holds designations from the Chartered Institute of Procurement & Supply (CIPS) in the UK, the Supply Chain Management Association (SCMA), and the Institute for Supply Management (ISM). He is the first CIPS Chartered Fellow Procurement & Supply Chain in North America and the seventh globally. Additionally, he is a Fellow of the Chartered Management Institute (CMI) and a Fellow of the Institution of Leadership and Management (ILM). Below, Safwat offers his thoughts on the direction of procurement and supply chain as well as advice for those looking to advance in the field.

establishment and growth of the Chartered Institute of Procurement & Supply (CIPS) in the UK and across various countries. I have represented the CIPS institution in the capacity of chair of the Canada branch. I also joined the Supply Chain Management Association of Ontario (SCMAO) board of directors in 2015 and chaired the awards committee. In 2016 I received the SCMAO board of directors Leadership Award for promoting procurement and supply chain across Canada. I am currently director of procurement at Black & McDonald Limited. As head of procurement my focus is to lead the transformation of procurement capabilities across the enterprise with the objective of creating value while enabling business growth across North America.

Q

Q

What’s your professional background and current role?

I am a UK-chartered procurement and supply chain fellow. I’ve led and delivered award-winning procurement transformation programs and global SAP and Ariba implementations. I’ve had a 22-year career and held various senior roles as a head of procurement for Fortune 500 companies in the UK, Asia-Pacific, North Africa and the Middle East. I have expertise in both direct and indirect spend categories with transferable skills across a number of industries including oil & gas, retail, real estate, and properties management. I have been recognized for my dedication and contribution to the procurement and supply chain professions and am a key contributor to the 10

What’s your educational background?

I’m very proud to be the first CIPS Chartered Fellow Procurement & Supply Chain in North America and the seventh globally. In addition, I am a Fellow of the Chartered Management Institute (CMI) in England and a Fellow of the Institution of Leadership and Management (ILM) in England. I hold an MBA with distinction from Maastricht School of Management in The Netherlands and I am a certified project management professional (PMP).

In addition, I hold various procurement designations including the CSCMP (Canada) and CPSM (ISM-USA). I have been a senior lecturer in the field of procurement and supply chain and I’m also a frequent keynote speaker at conferences

and industry forums, including executives and CPO roundtables. I have written for a number of international publications in the UK, North Africa, Asia-Pacific and North America.

Q

Why is involvement with professional organizations such as CIPS and SCMA important for procurement professionals?

Knowledge is power, and in my view to be successful in any career you should be connected. Joining or getting involved with some of the leading procurement and supply chain associations, including but not limited to CIPS, SCMA and ISM, opens the doors to any professional to stay connected with the latest industry developments, leading practices, supply market and, more important, provides networking with peers while seizing the opportunity for continuous professional development. I had the privilege of engaging at the strategic level with both CIPS in the UK and SCMAO in Canada to promote the procurement and supply chain profession while enhancing the service offering for members so they gain the maximum value from their membership. For example, with CIPS I was part of a global taskforce that developed the CIPS global standards—a procurement and supply competencies framework that individuals and organizations can leverage to build capacity while developing capabilities. Likewise, with SCMAO, I chaired an awards committee with the objective of building an engagement strategy to

| February 2018 | PurchasingB2B.ca

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Q

Tell us something about yourself that most people wouldn’t know?

I like photography and I would welcome the opportunity to study and practice to become a professional photographer. I also love to play table tennis and enjoy travelling.

Image: Joel Robertson Photography

Q

recognize members for their commitment and contribution to the profession.

Though such involvement may require dedication and commitment, it’s also very rewarding.

Q

What does a typical day in your job look like?

Interestingly, with procurement you can’t plan your day. Every day comes with a new challenge and this is what makes procurement different than any other profession. As head of procurement I would always focus on stakeholder’s alignment, value creation, sustainable performance, digitization of procurement processes, strategic suppliers’ management and, more important, continuous investment in attracting, developing and retaining competent procurement professionals. Procurement is a selling job and

everyone who works in procurement should have the attitude of being customer-centric and work to unlock potential value to the business.

Q

What plans do you have in the field for the future?

My focus will be on how the organization can leverage technology’s evolution—Industry 4.0, IoT, robotics and blockchain—through automation and digitization. Analytics, Big Data and so many other trends could be key levers to evolve business competitive advantage.

But also, it could be very challenging due to the upfront investment required and the expected ROI along with the value creation. Procurement should be a strategic partner to the business to enable business growth while providing various vehicles on how to manage the risk.

What skills, knowledge and education will procurement need in the future?

Cleary, soft skills will sit at the core of procurement’s competencies. The ability to influence people, engage customers, manage emotional intelligence and engage in behavioral thinking will equip procurement professionals to think out of the box while being creative in leveraging the technology trends to demonstrate their ability to create value. Continuous professional development is the key to gaining knowledge and expertise while obtaining professional certification—not only in procurement and supply chain but also in project management and leadership. This provides evidence of a commitment to self-development as well as possession of some of the leading practices and competencies through third-party benchmarking.

Q

What advice would you give those considering a career in procurement and supply chain?

In my view, three traits will help any procurement professional to progress in his or her career. First, having the right attitude to engage, listen and to learn.

Second, strive for a commitment to your career, to continuous professional development and to create value no matter where you go and for whom you work as well as to ethical and leading practices.

Last but not least, be willing to get out of your comfort zone. Your career is a journey, not a destination. The more you know, the more you know you don’t know.

At the end of the day, where there’s a will there’s a way. B2B PurchasingB2B.ca | February 2018 |

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COLLABORATION I The advantages of the growing practice of closer engagement with suppliers

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usinesses have long realized the importance of teamwork and collaboration for the effective operations of their departments. This need for partnerships applies not only to internal groups, but also to external businesses as well. In sourcing, forward-thinking organizations are also working to foster that same spirit of collaboration with suppliers. By doing so, many of those organizations are reaping the rewards.

And those benefits are real. In 2012, McKinsey & Company surveyed more than 100 large, global companies on their supplier collaboration practices. Among the organizations that could show their collaboration efforts, the survey revealed that the EBIT (earnings before interest and tax) growth rate was twice that of their less-collaborative peers. As well, a 2016 survey of CPOs by Deloitte showed that 39 percent of global procurement leaders said they planned to increase their level of supplier collaboration.

But how can sourcing professionals actually go about collaborating with their suppliers in order to get those benefits?

A primary rule of closer collaboration with suppliers is, perhaps ironically, don’t treat them like suppliers, says Ankur Thakur, sourcing manager with Dimplex North America. Rather, treat those suppliers like strategic collaborators.

Suppliers don’t want to feel undermined or that they’re any less important than customers, says Thakur. In such partnerships, no question, answer or suggestion from suppliers is wrong or rejected out of hand. He suggests approaching suppliers to work through issues, as well as brainstorming with them to find solutions.

Whether it’s asking for help reducing lead times or letting them know the company needs a cost reduction and asking if and 12

how they can help make it happen, collaborating with vendors in a transparent way can help organizations realize some of their goals.

Thakur also suggests involving suppliers upfront. For example, he suggests inviting vendors to meetings at a corporation’s headquarters and sharing with them the organization’s plans for its future for a period of, say, the following five or seven years. “It’s carrot and carrot rather than carrot and stick,” Thakur says. “Give suppliers a sense of ownership and they feel much more empowered,” he said.

This greater collaboration comes with advantages, both to buyers and suppliers, Thakur says. When suppliers feel that they’re treated like business partners

“It’s a bad approach to just tell them what to do,” Thakur notes. “You just can’t say no if they come back with a cost increase. It could be due to rising labour costs or commodity prices. You’ll gain respect from the supplier, and there’s more sensitivity. There are advantages on both sides. It’s a win-win for everyone.”

The bottom line, Thakur says, is to treat suppliers like a valued business partner rather than simply the provider of a product or service. Good ideas and innovation can come from anywhere, so it pays to remain receptive to suggestions from them.

He also recommends creating a task force that can meet monthly to brainstorm innovative best practices, discuss potential cost reductions or other strategic goals.

“It’s carrot and carrot rather than carrot and stick. Give suppliers a sense of ownership and they feel much more empowered.”

Ankur Thakur they are more engaged. When approaching suppliers for ideas on how to realize, for example, a seven-percent savings, an organization can offer that—if savings exceed that percentage—the supplier can pocket the difference. Not only does such an arrangement help to keep a supplier motivated but also provides a tangible example of how they are providing value to the company they serve.

This approach can help to keep suppliers engaged rather than simply giving them marching orders and expecting them to follow those decrees, Thakur says. Benefits to an organization can include reduced costs or better lead times.

Collaboration also takes into account the issues that suppliers face—a more realistic approach to the relationship.

During meetings with strategically important suppliers, procurement can not only share an organization’s vision but ask for advice. Pick the brains of suppliers for innovative ideas for altering a product in order to meet goals such as cost reductions. Thakur says that he’s had suppliers suggest, for example, changing materials that a product is made from in order to realize savings. “We’re giving them the power,” Thakur notes.

Power balance

But not every relationship with a supplier will develop into a collaborative partnership, says Hasnain Millwala, partner at Insideseed. When power lies with one company, negotiations and terms are always one sided, he notes. But Millwala

| February 2018 | PurchasingB2B.ca

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agrees that when the relationship is more even—involving a mutual respect and a power balance between vendor and the buyer—companies have seen collaboration unlock more value than conventional strong-arm tactics. This sort of relationship, says Millwala, can often develop due to increasingly easy access to technology that makes collaborative pilots easier.

“Companies try [the technology], test it and if they derive benefit move forward,” Millwala says. “This pilot approach has resulted in some exciting opportunities.”

But despite the fact that not every relationship between buyer and supplier develops into a strategic partnership, the advantages to procurement of this greater collaboration include reduced costs and, more important, always having enough product available to sell to customers, Millwala notes. The single-biggest motivating factor in all of this, therefore, is service level. If a company invests in sharing information and creating visibility with a supplier—through sharing sales data, forecasts, better collaboration around purchase orders and so on—the expected return on investment is measured mainly through that improved service. “In addition, as a fringe benefit due to better planning, suppliers have some savings that they may pass on to you,” Millwala says.

This improved visibility means better planning (which results in fewer changeover costs), less inventory carried and a higher level of service, he notes. All of this helps suppliers through improved business predictability. Passing market knowledge along to suppliers can also help them come up with better products that feature a financial benefit (first dibs on new volume output, lower prices than competitors, and so on).

In terms of best practices for supplier collaboration, the starting point is to share forecasts and sales data, Millwala

By Michael Power

says. This allows improved planning for the supplier and helps to improve immediately both service levels and the relationship. Second, strong-arming your supplier results in a strained relationship. If, in the long run a company needs a favour from a supplier, that supplier won’t be enthusiastic to help if the relationship has benefited only one side. “Engage in joint product innovation exercises, since you are closer to the end customer than your upstream supplier, share market feedback back up the chain so your supplier can use it to refine products,” Millwala recommends.

“I have seen companies engage in annual product strategy reviews with key suppliers to this effect.”

There has been a “tremendous shift” in the relationship between buyers and suppliers, which has moved from the adversarial approach of the past towards a more collaborative exchange between the two parties, says Wael Safwat, director of procurement, North America, at Black & McDonald. This shift, he notes, is driven largely by the increased maturity of both buying and selling organizations in a globalized supply chain. The primary advantage to this arrangement is business continuity. At the same time, organizations can use supplier collaboration to enhance competitive advantage to great benefit.

“Managing risk is also a key advantage while driving efficiency and optimizing costs, in addition to supporting corporate social responsibility,” he says.

For the suppliers’ part, collaboration helps enable them to invest more confidently while developing their capabilities—a process that helps them to meet or exceed their customers’ expectations. This is good news, as creating value is the name of the game for suppliers and buyers alike, Safwat says. Sharing industry developments and practices allows procurement to create that value not only by understand-

ing trends but also how those trends can help to create competitive advantage.

Awareness, communication, detail

Jim Wells of East Coast Tubulars in Paradise, Newfoundland & Labrador, notes his organization has, for the past 10 years, worked to enhance supplier relations and increase its supplier base. That means visiting the mills that supply the company to make them aware of the East Coast and the projects the region offers.

“From the relationship side it’s ‘how can we share with them what’s happening in this marketplace,” Wells says. “It’s awareness and communication and detail.”

Wells notes he encourages suppliers to spend time in Newfoundland and Labrador. The experience can be an eyeopener when suppliers realize how many global players operate there. Such collaboration provides a win on both sides, he says. From Wells’s perspective, greater collaboration means multiple bidders can come to the table. Paradoxically, in a logistically challenged location like the province, rather than long-term contracts with a limited number of suppliers, it makes sense to expand the number of vendors. And for the suppliers, bragging rights afforded by marketing a product in a harsh environment such as Newfoundland & Labrador provides an added feather in their caps.

Communicating the reality of the situation—while maintaining a professional distance—can be key when collaborating with suppliers, Wells notes. While you don’t want to give away too much, it helps to give those suppliers a sense of what’s coming down the pike. “They wouldn’t have that information if we weren’t collaborating from a procurement standpoint,” he says. “It’s open communication about what’s happening, what’s going to happen and what’s changed.”

Collaboration can involve not only procurement and the supplier, but also the end user, Wells notes. Procurement often acts similar to a mediator or go-between in the equation, he notes. There are times when there’s value in putting vendors and end users together. And while that scenario might appear to jeopardize the procurement role, that’s not the case provided that procurement continues to bring value to that exchange. B2B PurchasingB2B.ca | February 2018 |

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UTE.ORG AFAINSTIT N | IA N R LIFO HEIM, CA -27 | ANA APRIL 24

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FEBRUARY 2018

16 NAFA INSTITUTE & EXPO

What to expect at the 2018 NAFA Institute & Expo in Anaheim, California.

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18 FLEET CARDS

As technology and user expectations change, so too do fleet cards.

20 MOBILITY TRENDS

Cutting edge technology from international auto shows.

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22 NEW REVEALS

Highlights from the Detroit and LA auto shows.

26 TRUCK KING CHALLENGE

See who drives away with the mid- and full-size pickup win.

28 FLEET INITIATIVES

Strategies to drive the bottom line.

30 ALL-AROUND STUNNER

A test drive of the 2018 Honda Accord.

© 123rf.com/nito500

Canadians worried about texting and driving A Canadian Automobile Association (CAA) poll finds the majority of Canadians think texting and driving is getting worse, despite moves to crack down and extensive public education efforts. Over four out of five Canadians (83 percent) believe texting while driving is a bigger problem today than it was three years ago.

Overall, 96 percent say that drivers who text and drive are a threat to their safety on the road. CAA has been tracking what worries Canadians when it comes to road safety for several years. Texting while driving hit the top-10 list of concerns in 2011. Since then, Canadians’ views on the matter continue to get worse. Canadians also believe other forms of distraction are increasingly an issue, such as emailing while driving, drivers talking on phones and engaging with their in-car technologies.

Fleet Management is a special section of PurchasingB2B magazine, running in the February, June, August and December issues. It is an important resource for Canadian procurement professionals who recommend, select and manage fleet vendors and service providers.

Editorial inquiries: Michael Power, MPower@PurchasingB2B.ca.

Advertising inquiries: Dorothy Jakovina, 416.441.2085 x111, djakovina@PurchasingB2B.ca.

Geoff Seely named VP and GM of ARI Canada Fleet services provider ARI has announced that Geoff Seely has joined the organization as vice president and general manager for Canada. Before joining ARI, Seely most recently served as chief financial officer for Sym-Tech Dealer Services. Throughout his 25-year career, he has held leadership positions in fleet, insurance and professional services with companies including Element Fleet Management, Jones DesLauriers Insurance, and KPMG Canada. Seely graduated from McMaster University and holds his CPA, CA designation. He will work with Rick Tousaw who will provide support for ARI’s Canadian business in addition to his global responsibilities.

Canada among first in AV adoption A new report from KPMG International shows Canada well down the road in readiness for self-driving vehicles. The 2018 KPMG Autonomous Vehicles Readiness Index (AVRI) examined factors needed for countries to meet the challenges of self-driving vehicles, ranking Canada seventh in readiness. The AVRI examines where countries are regarding AV technology. The index evaluates countries according to four pillars. These include: policy & legislation; technology and innovation; infrastructure; and consumer acceptance. Canada ranked behind Germany, the UK, Sweden, the US, Singapore and the Netherlands (which ranked first).

FLEET MANAGEMENT | PurchasingB2B.ca | February 2018 |

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2018-02-09 3:25 PM

By PurchasingB2B staff

NAFA INSTITUTE & EXPO 2018

The North American Fleet Association’s I&E heads to the Golden State

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he North American Fleet Association (NAFA) is holding it’s annual Institute & Expo (I&E) this year at the Anaheim Convention Center in Anaheim, California from April 24 to 27. NAFA’s I&E is the fleet management industry’s largest event and offers the chance to get the tools needed for success and to increase networking power. The I&E provides opportunities to: network; peruse the floor for the latest services and products; get cutting-edge education and training; attend special events and hear from keynote speakers; and more. Those who manage fleets for corporations, organizations and public agencies across a broad spectrum attend the event.

Tuesday, April 24 The conference kicks off on Tuesday, April 24 with education sessions and networking opportunities. For example, Stewardship and Standards in the Era of Big Data (10:30am) focuses on how fleet managers can understand data definitions and procedures to capture quality information and manage Big Data. The session will also discuss how to leverage electronic logging device (ELD) data to see safety, maintenance and administrative savings. Attendees will also learn how to identify the ROI benefits with ELD data from examples provided by their industry colleagues. Also that day, the Canadian Legislative Update (2-3:30pm) features Canada’s legislative council providing background information and an update on current legislative issues affecting the fleet industry.

Wednesday, April 25 The following day also features education opportunities, including a session entitled All Charged Up: Planning your EV Infrastructure (8:30-9:45am). The session presents issues and solutions associated with infrastructure supporting electric vehicles.

Considerations include matching charger capacity to vehicle usage, remote charging needs, networked chargers and alternatives for data gathering, and installation/operation to minimize capital costs and electricity charges. The Latest and Greatest 16

Technolog y for a Safer Fleet (10:15-11:30am) will look at everadvancing technology such as training drivers using virtual reality goggles and safe-driving apps, while identifying opportunities to adopt advanced technologies. Another session, Fleet Savings Initiatives to Start Today (11:45am-12:45pm), looks at areas for cost reduction such as policy implementation, driver management, fleet structure and data management.

Thursday, April 26 Sessions on I&E’s third day include Fleet Complete: Integrated Supply Chain Strategies to Control Fleet Costs (2-3:15pm). Attendees to this session will hear from experts from each link of the supply chain process, and the session will present an integrated approach to managing that supply chain strategically. They will also learn about the use of advanced data analysis to provide enhanced transparency across multiple vendors and platforms. Attendees can also take in Fleet Disrupted: Lifecycle Management for the Future (3:45-5pm). The industry is poised for a shift from vehicle ownership to “mobility,” or transportation-as-a-service. This will require new processes and technologies to be successful, including new ways to manage vehicles in the new paradigm of shared consumer fleets.

Friday, April 27 On the final day, attendees can join Tom Johnson and 2018 nominees for the 100 Best Fleets (8:30-9:45am) while they discuss their award-winning strategies. The session’s group setting will provide strategies to improve fleet operations as well as to get industry recognition for ideas. Those managing a sales fleet can check out Peer to Peer Learning and Networking for Healthcare & Pharmaceutical (Sales) Fleets (10am-12pm). The session (for fleet managers only) is an opportunity to ask questions and learn best practices from peers. Questions will be answered on general policies such as AWD vs. FWD; personal use fees or vehicle selectors; holding drivers accountable for safe driving, policies, and procedures; tips for handling taxable benefit processing and more. Attendees will receive a copy of the Annual Pharmaceutical Fleet Manager Survey. B2B

Image: City of Anaheim

NAFA preview

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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Image: City of Anaheim

The 2018 Nissan Titan XD with Cummins® Turbo Diesel Engine* offers superior capability and performance. With over 12,000 lbs of towing capacity** and 555 lb.-ft. of torque, you can trust that a fleet of Titans can handle anything your workers throw at it. Or in it.

2017 model shown. *Available feature. **Maximum towing capacity when properly equipped. Based on internal testing of pre-production vehicle.

Final capacity may vary. Cummins® engine only. Towing capacity varies by configuration. See Nissan Towing Guide and Owner’s Manual for proper use. ®The Nissan names, logos, product names, feature names, and slogans are trademarks owned by or licensed to Nissan Canada Inc. and/or its North American subsidiaries. Always wear your seatbelt, and please don’t drink and drive. ©2018 Nissan Canada Inc. All rights reserved.

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ADD A FEW HARD WORKERS TO YOUR CREW.

By Kara Kuryllowicz

FLEET CARD EVOLUTION Fleet cards continue to change along with the times

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echnology and user expectations are driving the evolu- • Avoid obvious PINs such as birthdates, addresses, phone tion of fleet and fuel cards with enhanced security, data numbers and basic numeric or alphabetic sequences; and capture and fraud analytics to control and reduce costs. • Regularly change PINs. PIN-enabled transactions that also require drivers to input Biometrics is a hot topic, but fleet experts note that as much odometer readings are more common although still relatively as corporations want to eliminate fraud, biometrics may be a new to fleets. The PIN improves security and helps pay-at-the- long way off due to cost and privacy concerns. Element’s Provan pump convenience while the fleet card transaction data, includ- notes installing biometric point-of-sale equipment and software ing the odometer reading, is captured and shared with various at fuel stations may be prohibitively expensive. Biometrics may systems, such as telematics, for more advanced analytics. come into play on mobile pay apps if the mobile device already “We’ve seen fraud decrease dramatically for a wide vari- has that capability. However, a Statista December 2017 report ety of reasons, including the fact behaviours change when driv- also finds that little if any mobile POS payment will come from ers know that someone is paying attention,” says Wayne Rose, fuel sales, although Canada’s mobile POS payment will grow 77 senior vice-president, Jim Pattison Lease, Toronto. “Drivers are percent to over $1 billion in 2018. less likely to leave their fleet cards and PINs lying around, but As smartphones become predominant, apps naturally evolved they also recognize that our monitoring systems will indicate if the to offer more online services and give drivers quick, easy access card was used for multiple transactions, for example, two fill-ups at the same location between 7:01 and We’ve seen fraud decrease dramatically for a wide 7:03am on the same day.” variety of reasons, including the fact behaviours Adds Ian Unger, key account manager, Shell Canada, “The transparency, fleet policies and change when drivers know that someone is paying parameters work with the real-time data and stan—Wayne Rose attention. dard and custom reports to decrease card misuse.”

Today, transaction and telematics data converge to give the opportunity to manage operating costs and fleet pro- to services. Element’s proprietary mobile application let drivductivity. As Rose puts it, “telematics was the missing link” and ers find the closest fuel stations, the locations offering the best the reporting and dashboard capabilities allow fleet managers to prices and to book service appointments. Other features include “slice and dice” data to assess costs as well as vehicle and driver personal use reporting and trip logging, new vehicle ordering performance then identify appropriate actions. and order status, preventative maintenance notifications, a proIdeally, fleet card and telematics data are used together for var- active to-do list for common vehicle-related tasks, vehicle and ious analytical purposes says Glenn Provan, manager, customer service card information views and company policy documents. services, Element Fleet Management. For example, the respec- The app can be used to report lost or stolen service cards and tive fleet card and telematics fuel transaction records for a specific receive manufacturer recall notifications. vehicle can be compared to prove the vehicle was actually at the Shell offers its Mobile Pay option in the US and Unger says, station and location where the fuel was purchased. Such analy- “It’s quick, convenient and secure for drivers and their fleets so sis lets fleet managers refine their fleet policies and management we’re looking at it locally and globally.” Meanwhile, drivers in strategies to increase their fleets’ productivity and efficiency.

Canada are using mobile apps to find vendor locations and keep Security certainly starts with the drivers and ends with the up to date with news on Shell promotions and products. experts who note that education and regular communication Although capabilities vary across vendors’ systems depending regarding best practices, fleet policies and the proper use of on infrastructure and POS systems, fleets can apply geographic, the fleet card and PINs is crucial. As Provan points out, the transaction frequency, type and amount limits. Managers may Canadian Bankers Association states that secure PINs that are be alerted, cards disabled or transactions blocked if limits are never shared play a key role in fraud prevention. The CBA’s reached. Before introducing a fleet card, managers must look at PIN strategies include: what they need. Level-three data is valuable when identifying • Use a combination of upper- and lower-case letters, numbers patterns and anomalies that can be addressed with drivers, but and symbols; the data is useless if it resides in the system unseen. “Develop a • Use different passwords for different cards and sites; coherent fleet card policy, ranging from parameters, emboss• Create easy-to-remember PINs; ing options, communications and FAQ documents to manag• Secure access to PINs if they must be recorded; ing different dollar limits on the cards,” says Provan.

B2B 18

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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Best Retained Value canadianblackbook.com

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SUBARU’S AWARD WINNING LINE UP With a great model lineup to suit your business needs, it simply makes sense to add the safety, value and reliability of Subaru symmetrical full-time All-Wheel Drive vehicles to your fleet. Thanks to the Subaru symmetrical full-time All-Wheel Drive system, all Subaru vehicles are uniquely equipped to offer unsurpassed control and safety in all types of weather conditions and on all types of road surfaces. Affordable acquisition costs, high residual value and volume fleet incentives make Subaru vehicles an excellent value and a smart investment.

Designed around everything you love doing. fleet.subaru.ca or call 1-877-293-7272

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2017-11-28 4:21 2018-02-09 2:12 PM

MOBILITY TRENDS 1

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little over a decade ago, the hottest reveals on the auto show stages included the sleek and sexy concept cars, with a few hybrid models to showcase the latest technology. While the alternative fuel movement was growing, many people still looked upon hybrids as an unpleasant necessity— something the automakers were obligated to develop to prove their environmental conscientiousness. But automobile technology is not only leaping forward, it’s a giant snowball gaining strength and momentum.

The recent wave of announcements from major automakers has focused on electrification and artificial intelligence—and could be the beginning of the end for internal combustion.

Volkswagen Group’s CEO, Matthias Müller, recently announced at the Frankfurt Auto Show, an $84 billion initiative dubbed “Roadmap E” in which all 12 brands under the VW umbrella will be electrified by the year 2030. General Motors has committed to having 20 all-electric vehicles in their portfolio by 2023, and announced their plans to eventually phase out gas-powered vehicles. Volvo, Mercedes-Benz and Jaguar Land Rover also plan to electrify their entire line-up in the early 2020s while Renault, Nissan and Mitsubishi—as well as Toyota and Mazda—have formed consortiums to develop new hybrid and electric technology.

Mobility has come to mean a lot more than transportation from A to B. Over the last 10 years we’ve seen in-car technology grow from simple connectivity, to sophisticated camera and radar-based systems that are the next best thing to a vehicle’s self-awareness. Safety technology has become integrated and complex, with myriad systems monitoring the vehicle’s stability, correcting its trajectory and even sensing and helping to prevent collisions.

But it hasn’t stopped there. The last few auto shows, from Tokyo, to Los Angeles, and recently, Detroit, have been a showcase of advanced technology, from super-efficient power trains 20

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to the ongoing development of self-driving cars and artificial intelligence.

To call autonomous driving technology a “game-changer” is an exercise in understatement. It has evolved from the simple adaptive cruise control systems once found only in the most exclusive segments and now common across the industry to complex hands-free operation requiring no driver input. While legislation has yet to catch up to innovation, many of the top automakers vow they’ll have self-driving cars on the road by the early 2020s.

Culture shift

It’s an industry that could change us from a car-owning culture to one that makes use of transportation services. Summoning a ride with a phone call or touch of a button will do away with high maintenance costs and the need for public parking areas.

Most of the larger manufacturers have displayed wildly imaginative concept vehicles at recent shows, loaded with autonomous technology and featuring sleek, futuristc interiors.

Audi showed off a pair of autonomous, all-electric concepts recently—Elaine and Aicon—boasting Level 4 autonomy. Using a more advanced form of Traffic Jam Pilot called Highway Pilot, the Elaine concept’s more advanced processors and sensors enable it to travel unassisted for long distances; even changing lanes without driver involvement. Elaine can also familiarize itself with you using a PIA (personal intelligence assistant) to respond to voice inputs and anticipate such needs as climate control, navigation, parking spots and music.

Aicon takes it even further, and is essentially a transportation pod on wheels. With no steering wheel or pedals, the Aicon is a fully-autonomous luxury EV with configurable seating space for four. Passengers can use one of several entertainment displays, while exterior screens communicate with pedestrians and other vehicles. Aicon will reportedly have a range of more than

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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By Lesley Wimbush

DS

Auto Shows foreshadow upcoming new technology

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1. Audi showed off its autonomous, all-electric concepts—the Aicon—which boasts Level 4 autonomy.

2. Honda NeuV Concept uses artificial intelligence to detect stress or fatigue in the driver by analyzing voice and facial expression. Using that data, it can employ driver safety assistance if needed.

3. Toyota’s “Fine Comfort Ride” Concept is a six-passenger hydrogen fuel cell vehicle that can reportedly travel up to 1,000kms on a single refuel.

Images: Lesley Wimbush

4. Volkswagen’s fully autonomous, all-electric Sedric can be summoned using a universal remote that will allow customers access to other vehicles when travelling.

800km on a single charge. Audi predicts that these vehicles may be capable of travelling independently to special AI Zones for wireless charging.

Volkswagen’s fully autonomous, all-electric Sedric boasts fully automated technology. The interior has no wheel, nor pedals, but features large infotainment screens and seats that swivel around to face each other. Sedric can be summoned using a universal remote that will also allow customers access to other vehicles when travelling.

The North American International Auto Show (Detroit) showcased the vast array of new technology supporting the auto industry in a separate hall called AutoMobili-D. Reflecting technology’s explosive importance to the industry, the AutoMobili-D display, which was only launched last year, has grown by 30,000 to 150,000sq-ft of autonomous vehicles, advanced powertrains, cybersecurity, connected car and various other mobility-focused exhibits. Canadians were well-represented on this important international stage. Magna International, the Toronto-based global automotive supply giant that’s increasingly focused on forming close partnerships with tech-start-ups, entrepreneurs and universities, sponsored about a quarter of the hall. Programs such as WatCAR (Waterloo Centre for Automotive Research)

represent a valuable talent pool for OEMs and suppliers to draw from—particularly in autonomous software technology, an industry that’s potentially worth trillions in the near future.

Symbiotic partnerships like the one with Magna, are crucial to support the development of these emerging technologies. Last October, Canada’s first public demonstration of a driverless vehicle linked to the local infrastructure was successfully carried out using WatCAR software in partnership with Blackberry, who developed the operating system. The test was done on a closed course in Ottawa’s Kanata Technology Park— and all the traffic lights on the course were equipped with transmitters, and lane and road markers repainted. With Ottawa’s mayor and a city council member as passengers, the customized Lincoln MKZ used its onboard sensors to read the traffic lights and road markings and successfully navigated the course.

Once a struggling smartphone producer, Blackberry, another Canadian company, is making a name for itself as a premiere innovator of cyber-security tools and autonomous driving software for the automobile industry.

Magna also unveiled a new high-definition radar in Detroit, which it plans to bring to market in 2019. Based on technology used by the US military, Icon Radar continuously scans the environment in four dimensions—distance, height, depth and speed—for a range of 300 metres. It’s able to differentiate between hard static obstacles and soft moving objects like pedestrians, bicycles and pets. Communicating with the vehicle 50 times faster than the blink of an eye, the advanced radar system is a major step towards fully autonomous driving.

While the concepts and emerging technology seem wildly futuristic, they’re slowly but surely making their way into mainstream vehicles. General Motors has finally debuted its longawaited Super Cruise in the 2018 Cadillac CT6 sedan. Unlike other systems that demand drivers re-grasp the wheel after 30 seconds of hands-free operation, Super Cruise can look after steering, braking and acceleration without frequent driver intervention. Super Cruise brings us even closer to full autonomy, but it does have its limits. It won’t operate above 136kms/h or in major snowstorms—and if it senses the driver is too inattentive, it will cut out completely.

Audi’s new A8 full-size sedan debuts with some of the AI technology we saw in their Aicon and Elaine concepts, and marks the first use of its Level 3 autonomous “traffic jam assist.”

The next step in semi-autonomous driving lets the car operate at speeds up to 60 km/h, temporarily freeing up the driver to look after work emails or other tasks.

The driver can remotely park the car, then monitor it using a smartphone app. Optional tech packs offer such safety features as active pedestrian detection, rear cross traffic assist and traffic jam assist. The A8 can even tap into the Audi hive mind using its onboard infotainment and navigation systems to communicate with other vehicles via the cloud. “Car to X” technology lets connected Audis communicate to each other and provide traffic information, accident warnings, or weather conditions.

Clearly, the auto-industry is on the brink of a major re-invention, with electrification and autonomy leading the way. B2B FLEET MANAGEMENT | PurchasingB2B.ca | February 2018 |

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TOP TEN

Auto show season closes with one of the biggest events on the circuit, in Los Angeles, and opens with another in the Detroit Motor Show. While they may not be the largest in size—that honour belongs to the Frankfurt Auto Show, which encompasses 12 entire buildings—LA and Detroit are traditionally the venues for some of the industry’s biggest reveals, particularly the domestic brands. Here are some of the highlights from North America’s two biggest shows:

Image: BMW

Image: Subaru

reveals from Los Angeles to Detroit

2019 BMW i8 Roadster According to BMW Canada’s national product planning manager Matt Wilson, Canada is the BMW i8’s fourth largest market. Apparently, over half of those customers have been clamouring for a topless version of the hybrid coupe. With the Los Angeles Auto Show debut of the i8 Roadster, those wishes have been fulfilled. Aside from the power retractible soft top, the two-seat convertible features a new high-voltage battery for an extended all-electric range, and a retuned electric motor/ gasoline engine power train that now puts out a total of 369hp.

2019 Infiniti QX50 Unveiled in LA, the Infiniti QX50 belongs to the new sports activity coupe segment—raked-back, sporty crossovers bearing a “coupe” designation. But the big news is it debuts Infiniti’s new variable compression turbo (VC-T) engine. An impressive piece of technology two decades in developing, the VC-T delivers the torque of a turbo-diesel without the emissions. Thanks to some sophisticated variable stroke engineering, it can alter its compression ratio from 8:1 for high performance, up to 14:1 for better efficiency.

2018 Jeep Wrangler The 2018 Wrangler unveiled at the LA show was a milestone for this iconic off-roader. When it comes to re-inventing a company’s most important vehicle, there’s a lot at stake and no margin for error. But Jeep wanted to add some refinement to the Wrangler’s on-road manners, and loaded it with performance, comfort and infotainment technology. It’s also available with a choice of engines: a 2.0L turbocharged 4 cylinder with 270hp and mild hybrid capability, an updated version of the 285hp, 3.6L V6 and a 3.0L diesel with 260hp and 443lbs-ft of torque.

Image: Jeep

Image: Infiniti

2019 Subaru Ascent The US-built Ascent is Subaru’s largest vehicle to date, a threerow, eight-passenger SUV equipped with Symmetrical allwheel-drive. Powered by a 2.4L, 260hp turbo-charged engine, the Ascent features Subaru’s “Eyesight” driver assist technology as standard on every trim level. This includes adaptive cruise, lane departure warning, reverse automatic braking, side/rear vehicle detection, steering responsive headlights with high beam assist and a front view monitor to reduce blind spots. It has a max towing capacity of 2,270kg (5,000lbs).

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| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-09 3:32 PM

A friendly tip, don’t be Bill.

Pinpoint areas of cost escalation and what to do about them—ahead of time.

SeenItComing.com

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2018-02-09 3:33 PM

Image: Ford

Image: Mazda

2019 Ford Ranger With the return of the mid-size truck segment, Ford has decided to resurrect the Ranger. While the compact Ranger was discontinued here in 2012, the badge has been worn by mid-size trucks in other global markets since 1998. Available with a 2.3L Ecoboost four-cylinder and 10-speed transmission, the Ranger will come in either two- or four-wheel drive versions and in Super Cab or full SuperCrew configurations. Thanks to the same Terrain Management System found in the F-150 Raptor, the new Ranger should be fairly handy over rugged terrain.

2019 Volkswagen Jetta Hoping to gain background after their recent global emissions scandal, Volkswagen unveiled a bigger, yet less expensive version of their compact Jetta at the Detroit Auto Show.

Understandably, it was introduced with a 1.4L 147hp gasoline engine only, which comes with either a six-speed manual, or eight-speed automatic transmission. Approximately $100 cheaper than its predecessor, the new Jetta is also wider, taller and longer—probably in hopes of luring back buyers from increasingly popular SUVs and crossovers.

2019 Ram 1500 Trucks stole the show in Detroit, as another venerable pickup made its debut in the Motor City. The new Ram 1500 sheds 225lbs, gains a mild hybrid boost, and a massive set of new front brakes. Instead of the usual starter and alternator, the 3.6L, 305hp Pentastar V6’s new “eTorque” mild-hybrid technology uses a 48-volt electric motor to start the engine, provide boost when needed, and provide power for start/stop technology. Also available is the 5.7L, 395hp Hemi V8, with optional eTorque system. Both engines are mated to an 8-speed transmission.

2019 Mercedes G-Class For nearly four decades, the “G-Wagen” has represented the ultimate in off-road cachet—a tough-as-nails bushwacker with a luxury sedan price. The G-Class’s first revision took a bow in Detroit, retaining the boxy shape, but offers the refinement befitting its customer base. The biggest change was eschewing the straight front axle for independent suspension, but the three locking differentials and a low-range transfer case return, along with an optional adaptive suspension system. The interior offers 12.3in widescreen displays and massaging seats.

2019 Chevrolet Silverado 1500 A trimmer, more svelte Silverado rolled onto the stage in Detroit with a flowing design similar to the top-selling midsize Colorado. Thanks to extensive use of high-strength steel and aluminum panels, the new truck sheds 450lbs, and now claims the deepest, widest box in the segment with 63cu-ft of cargo space. The 4in longer wheelbase also allows the cabin space to increase by three inches. There are six engine choices, including a new 3.0L diesel with10-speed automatic transmission, and eight different trim levels.

Image: Chevrolet

Image: Mercedes

Image: Dodge

Image: Volkswagen

2018 Mazda6 Mazda’s stunning Vision Coupe Concept turned out to be the talk of the Tokyo Auto Show, but more important, it heralded a new direction for the design of Mazda’s future lineup. Unveiled in LA, the Mazda6 is sleeker, and is also more sophisticated than its predecessor, with a minimalist approach to interior space. The vehicle is powered by a 2.5L engine, or the new 2.5L turbo charged engine also found in the CX-9. Either vehicle is available with a 6-speed automatic or six-speed manual.

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| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-09 3:34 PM

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1/30/18 3:51 PM 2018-02-09 3:35 PM

UCK

T PAR

II

2018 CANADIAN TRUCK KING CHALLENGE The Chevrolet Silverado HD drives away with this year’s win

T

By Howard J. Elmer

his year’s challenge consisted of mid-size, full-size and HD entries—ten trucks in all—vying for a win in what is now the 11th year of the Challenge. The HD segment was tested in late 2017 (see the December 2017 issue of PurchasingB2B). But now we move on to the midsize and full-size pickups to complete the rest of the 2018 entries. A complete list of scores by model follows, revealing our choice for winner of the 2018 Canadian Truck King Challenge.

FUEL ECONOMY: Each year we use electronic data recorders during testing to capture real world fuel economy. An outside company, FleetCarma, collects and translates the data from each truck giving us a unique fuel economy report—one that shows not only empty consumption, but also consumption while loaded and while towing. For these 2018 models the study is available in its entirety as of late February at our website: www.truckking.ca

The Canadian Truck King Challenge does what we call “real-world testing”. Our journalist judges drive the trucks on a prescribed course empty, then with payload and finally towing a trailer on this same route one after the other, back-to-back. Judges drove more than 3,000kms during testing while scoring each truck across 20 different categories.

These totals are then averaged across the field of judges and converted to a percentage out of 100.

This year the HD trucks and the midsize category used our Head River test loop while half-tons were tested on a new loop in Halton Hills.

Midsize trucks carried a payload of 500lbs and towed 4,000lbs. The half-tons hauled payload of 600lbs and towed 7,000lbs; while the ¾-tons towed 10,000lbs and used 1,000lbs for payload. The weights we use never exceed those published manufacturer limits.

2018 MID-SIZE TRUCKS

THE TESTING METHOD:

26

2018 Chevrolet Colorado ZR2 Engine: 2.8L Duramax diesel Horsepower: 186 Torque: 369lbs-ft Transmission: 6-speed automatic Drive: 4WD—2-speed transfer case; front and rear electric lockers Wheelbase: 128.5in Cab: Crew Cab—4-door Box: 5’2” Rear axle ratio: 3:42 GVWR: 6,200lbs Payload limit: 1,100lbs Bumper Tow limit: 5,000lbs Special feature: off-road tires; skidplates; suspension lift; DSSV shocks Base MSRP: $42,215 Price as tested: $45,485

2018 Toyota Tacoma TRD Pro Engine: 3.5L V6 Atkinson cycle engine Horsepower: 278 Torque: 265lbs-ft Transmission: 6-speed automatic Drive: 4WD—2-speed transfer case;

rear locker

Wheelbase: 140.6in Cab: Double Cab—4-door Box: 5in Rear axle ratio: N/A GVWR: 6,000lbs Payload limit: 1,000lbs Bumper Tow limit: 6,400lbs Special feature: all-terrain tires;

aluminum skidplates; Fox racing shocks Base MSRP: $53,295 Price as tested: $53,295

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-12 11:46 AM

2018 HD Pickups

80.7 (FINAL SCORE OUT OF 100)

nology and improving its diesel engine. It’s now, in the opinion of the judges, the best 2500-series HD hauler on CHEVY SILVERADO the market. This 2018 version LTZ 2500 of the Silverado HD came to us DIESEL equipped with a new generation of the 6.6L V8 turbo-diesel. It’s been redesigned with a new cylinder block and heads. Its oil and coolant flow capacity has been increased and the turbocharging system is now electronically controlled. Horsepower has increased to 445 and torque now reaches 910lbs-ft. As well, 90 2018 Midsize Pickups 2018 midsize segment percent of both numbers are achieved at just 1,550rpm.

(FINAL SCORE OUT OF 100) The midsize segment was A new two-piece oil pan makes the Duramax quieter and also particularly interesting this houses an integrated oil cooler, with 50-percent greater capacyear, as both the contend- ity than found on the current engine. Of particular interest to ers were specific off-road Canadians will be the new Duramax cold-weather performance. models. Toyota supplied us With microprocessor-controlled glow plugs the engine requires CHEVY with the Tacoma TRD Pro less than three seconds to preheat in temps as low as -29C. These COLORADO ZR2 and Chevrolet sent us a ZR2 new ceramic glow plugs adjust current to each plug based on Colorado diesel. We were for- outside temperature. This new engine continues to be coupled tunate to get these early in the fall, to the Alison 1000 six-speed automatic transmission, which has when there was lots of rain and mud. As with all the a stellar reputation. contenders this year, we shot video matchups, which you Also new is a redesigned air intake system that uses an intecan view at our YouTube channel. Through our website grated hood scoop that traps snow, sleet and rain. It drains it away www.truckking.ca just look for Truck King TV. from the intake allowing cool dry air to get to the engine without clogging it up. The original Duramax sold over two million 2018 Half-Ton Trucks copies since its 2001 introduction.

The half-ton segment, which makes up the bulk Past the mechanical updates, this Chevrolet 2018 Full -Size Pickups of the Canadian pickup market, was fully repimpresses with the number of electronic driver (FINAL SCORE OUT OF 100) resented in this year’s challenge. We tested assist features that make moving loads easier trucks from Ford, Chevrolet, Ram, Toyota and safer. Among many are—a new Digital and Nissan. Each manufacturer supplied a Steering Assist that improves road handling. A truck of its own choice. They decided which new tire pressure monitor system now includes trim or accessory package to apply, as well as a tire fill alert. All full driver alert package FORD F-150 FX4 the choice of engine. includes lane departure warning, forward colliPLATINUM The winner of this year’s challenge is a truck sion alert, safety alert seat and front and rear park that has been refined year after year, adding techassist. GM’s longtime StabiliTrak stability control system has been updated to include rollover mitigation technology, a tie-in to the trailer sway control and hill start assist.

2018 CTKC FINAL SCORES Visual help is found in the Chevrolet MyLink with an 2018 Full -Size Pickups eight-inch-diagonal touchscreen. The camera system broadcasts Chevrolet Silverado Z71 1500 LTZ 71.4 Ram 1500 Limited Tungsten edition Crew 4x4 75 on this centre mounted touchscreen (now standard on all models WINNER IN THE HALF-TON CATEGORY with cargo box). It shows reversing images that make hooking up Ford F-150 FX4 Platinum 75.6 easy—whether it’s to the bumper hitch of the in-bed fifth wheel.

4x4 Toyota Tundra DBL Cab LTD 65.7 An around–the–truck view assists in parking maneuvers. While Nissan Titan Pro 4X 68.5 driving the signals now activate cameras in the mirrors show2018 HD Pickups ing images down the side of the truck, highlighting the blind RAM 2500 Limited Tungsten – diesel 72.4 spot. Other improvements include: an available Gooseneck/5th WINNER IN THE 2500 HD CATEGORY & OVERALL CANADIAN TRUCK KING CHAMPION FOR 2018 Wheel Trailering Prep Package that includes a spray-in bedChevy Silverado LTZ 2500 – diesel 80.7 Ford F-250 FX4 Lariat - diesel 75.3 liner. Electronic upgrades include wireless phone charging and remote locking tailgate and the 4LTG Wi-Fi right in the truck.

2018 Midsize Pickups Congratulations to all the participants and winners in the WINNER IN THE MID-SIZE CATEGORY 2018 Canadian Truck King Challenge. For more details on this Chevy Colorado ZR2 75.9 Toyota Tacoma TRD Pro 66.4 year’s entries visit www.truckking.ca. B2B

75.9

75.6

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2018-02-12 11:46 AM

5

The top

A

strategic fleet initiatives to drive the bottom line

t the core of it, there are really only three ways in which to cut fleet costs—operate fewer vehicles, pay less for the ones you have, while getting more out of them. It’s that simple of an equation. Where the challenges and complexities lie is in the execution of these strategies.

Assuming that the overall fleet size is consistent with the organization’s needs and moving past the obvious cost-cutting measures such as concession agreements with OEMs or transitioning to vehicles with better fuel economy, there are five key strategic initiatives to consider to lower total cost of ownership (TCO). Three of these initiatives are largely foundational in nature, requiring organizational discussion and buy-in, while the last two are transformative, made possible by the emergence of big data analytics.

1

Policy and governance

Appropriate fleet policy and governance is fundamentally based on who should have a vehicle and what the responsibilities are when operating it. The focus should be on vehicle assignment and utilization. Specific criteria for a work vehicle can include job role, utilization or expected kilometres driven per month. These factors and their relative importance should be formally included in the fleet policy, with regular reviews to ensure they continue to meet both the company’s and employees’ needs. Including these criteria into a fleet policy can help to eliminate unnecessary vehicles.

Similarly, if a pool solution is in use, it is critical to have visibility to which employees are using those assets and why, to ensure vehicles are being used in accordance with the policy.

The other component of policy is around driver engagement and compliance, specifically around preventative maintenance and, most important, safe driving. Safety compliance could include driver abstracts (where applicable) and driver training. Investment and employee buy-in for proper safety training reduces accident frequency, decreases wear and tear on the vehicles and ensures that employees get home safely to their families every day.

2

Integrated supply chain

Many fleet operators view supply chain as simply vehicle order to delivery. A more comprehensive approach starts earlier with the initial specification of the asset.

When building out vehicle specifications, particularly involving trucks or special equipment, there is tremendous value in partnering with upfitters as well as with vehicle specialists to better understand the functional requirements of the drivers.

Determining a key set of “must haves” allows for a standard specification to be built that can be utilized anywhere within 28

By Jeff Cole Jeff Cole is director of strategic services at ARI.

the fleet. Once a standardized selector is developed, the focus shifts to moving vehicles through the supply chain using the most effective and efficient means possible.

Upfitters specialize in any modifications or additions required to make a vehicle job-ready. These can be as simple as special racks or storage installed on a work van to a complex built out chassis on large utility truck. For upfitting requirements, there are significant efficiencies that can be gained from using a ship-thru model (instead of a ship-to model), which allows for improved communication and data throughout the cycle.

The ship-thru model involves a vehicle being sent directly from the OEM factory to the upfitter as part of an integrated supply chain process. This provides greater visibility to any challenges that may occur mid-cycle so the appropriate corrective action can be taken to move the process forward.

In a ship-to environment where a vehicle is sent to a local dealer and then has equipment installed on an ad hoc basis, there can be significant losses in efficiency as well as a loss of leverage due to lower volumes. A fully integrated supply chain, utilizing standard specifications and ship-thru, allows fleets to leverage their full volume scale and lower the total cost of ownership for their vehicles.

3

Centralized versus decentralized

This final foundational initiative requires an organizational discussion and potential restructuring. Fleet management best practice suggests that centralized environments provide the most consistent results for governance and more accurate cost forecasting. In this sense, a fleet department is no different than other shared services (such as payroll, HR or accounting) where value comes from consistency and accountability. In a decentralized or regionalized model there are local players making local decisions, which may be suited for local or short term needs, but generally do not allow for an optimized TCO. A centralized model allows for a more holistic view, taking into account the complete fleet lifecycle. From a corporate standpoint, having a centralized structure to make decisions and drive standardization provides the greatest opportunity to leverage volumes as well as exert greater control over strategic decision-making and governance.

4

Leveraging technology

Technology is having a transformative impact on fleet management driven by new in-vehicle technologies and more robust reporting with big data. OEMs have and continue to do an excellent job of integrating technology into their vehicles. Touch screens, Apple CarPlay, continued on page 32

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-09 3:36 PM

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2018-02-02 12:20 PM 2018-02-09 3:37 PM

By David Miller

AN ALL-AROUND STUNNER The 2018 Honda Accord

S

AS TESTED

ing not to rock the boat. There’s been ince its inception in 1976, the Price: starts at $26,490 for 6-speed; plenty of safe, uninspiring creations save Honda Accord has been a sales $27,790 for CVT. Tops out at $38,790 for a couple, but that all changed in 2017 success story geared for the family. for Touring when Honda-rival Toyota came out with With over 870,000 units sold in Canada, Engine: 1.5L four-cylinder; 2.0L its all-new Camry. there’s a good chance many have expefour-cylinder A modern, cutting edge design laid the rienced the Accord at some point in its Power (1.5L; 2.0L): 192hp, 192lbs-ft path for a new breed of sedans, and the illustrious 41-year history thanks to a of torque; 252hp, 273lbs-ft of torque Accord quickly followed suit. Many of Holy Trinity recipe of quality, safety and Transmission (1.5L; 2.0L): 6-speed the 2018 Accord’s design comes from its comfort. manual or continuously variable smaller Civic sibling through sporty cut Over the past few years, there’s been transmission (CVT); 6-speed manual lines, sleek LED headlights, a slickeda changing of the guard from sedans to or 10-speed automatic. back silhouette and a low-to-the-ground SUVs that has placed vertically chalRated Fuel Economy (L/100km): seating position. lenged passenger vehicles, especially in City 8.2/ Hwy 6.8 (1.5L Touring CVT); Despite its lower frame, the Accord the mid- and large-size variety, in a state City 10.4/Hwy 7.4 (2.0L Touring auto) increases by 55mm in wheelbase and of uncertainty. To combat the flux in the 10mm in width for increased visibilindustry, Honda rejuvenated its midObserved Combined Fuel Economy ity, a plethora of rear seat legroom and size Accord to a level that borders lux(L/100km): 6.9 (1.5L Touring CVT); 7.9 (2.0L Touring auto) class-leading trunk space. Honda is able ury. According to Steve Hui, assistant to enlarge the Accord, yet lower its weight vice-president, Honda sales and marketing, the new Accord isn’t simply being treated as an upgraded by an average of five percent through more high-strength steel product, but one “that can define the segment and rekindle a used in its construction.

Inside, the width expansion becomes apparent with a beaupassion with Accord.”

A lot is riding on those claims in these trying times for sedans, tifully stretched out cockpit featuring a freestanding, eight-inch but after a walk-around and drive around the rocky and pic- infotainment screen that takes over for the one-and-done comturesque landscape of Jasper, Alberta with this new Accord, plicated dual screen experiment. The touchscreen infotainment there are plenty of reasons for optimism starting with its sharp unit is colourful and easy-to-understand, as well as surrounded look and vast amount of technology and being cemented by its by buttons and knobs for those who prefer that method.

Complementing it is a seven-inch, full-colour TFT screen sitsmooth and fuel-efficient engines. uated in front of the driver featuring a new fully customizable Everything starts with design heads-up display that includes turn-by-turn, traffic indicators, For a while, the mid-size sedan segment was status quo fear- along with the usual speed and tachometer readings.

30

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-12 11:48 AM

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THE TOP 5 STRATEGIC FLEET INITIATIVES TO DRIVE THE BOTTOM LINE, continued from page 28 Android Auto, backup cameras, lane departure warnings and sensors are quickly becoming standard features. More so than in the past, fleet operators should review in-vehicle technology as part of the specification development process as this technology can have a significant impact on driver safety and vehicle resale. Typically, fleet assets operate in three-to-five year cycles.

Many advanced in-vehicle technologies are offered as options today but will likely be standard equipment in three years. This means when those assets enter the resale market in three to five years, they will be competing against newer vehicles with the latest technology. This is an area where a fleet management company’s remarketing experts can help improve future resale positioning with specific, calculated efforts to target in-vehicle technologies that could generate future value.

Today, purchasing a vehicle based solely on price will not yield the best net result to drive TCO. Big Data analytics allows fleet operators to better prepare for the future by bringing all of a fleet’s information together to not only review past trends, but also project future trends. Companies must leverage advanced analytics platforms or partner with fleet management companies that offer them as part of their management services. Using vehicle replacement analysis and tools like a fleet health card can help address the issues that are driving expenses. Big data reporting allows fleet operators to pinpoint what they are spending and why, as well as how to mitigate some of that expense moving forward. The key to fully leveraging this data and technology is to use the insights gained to implement change. By partnering with a fleet management company to find out what is going on in the fleet and determine a plan for the future, fleet operators can eliminate unnecessary recurring expenses.

5

Employee cost index For years, the fleet industry has been concerned almost solely with the asset—optimizing the vehicle and finding the lowest total cost of ownership. Another factor has a large impact on optimizing the TCO of a fleet asset—the driver. Through telematics, analytics and reporting, the driver’s impact on their asset can now be determined. From aggressive starts, hard stops, accident ratings, driver safety and training, there are now effective ways to measure at the individual driver level the costs they are impacting above a vehicle’s projected TCO. ARI calls this the Employee Cost Index (ECI).

We calculate the ECI value for each employee by taking the forecasted TCO for a vehicle and comparing this to the actual TCO to determine the driver’s total impact. Utilization data can be collected from telematics devices and other tools like ARI’s Driver Scorecard, which uses data to benchmark drivers against other drivers in the fleet as well as other companies in similar industries. The more data collected, the easier it is to provide custom solutions to correct negative trends and minimize driver impact. A driver’s ECI can be linked to an annual review or performance bonus. Gamification—a program that rewards safer, less aggressive driving—can be implemented to lower a driver’s impact on their vehicle and reduce the risk of an accident.

Using fleet to drive value comes down to three things—fewer vehicles by adhering to fleet policy and governance, paying less by leveraging an integrated supply chain and a centralized model, and getting more from vehicles through insights collected from Big Data analytics and the ECI. Optimizing these areas puts any fleet in a position to drive business success. B2B

AN ALL-AROUND STUNNER, continued from page 30 The Accord shows off a comfortable and elevated side in its Touring trim filled with soft leather and faux wood. It’s not flashy in any way and the wood treatments could be improved on, but the Accord focuses more on a clean, comfortable and supportive look and feel that should potentially resonate with the average, more conservative Honda customer.

As a bonus, the Accord comes standard with Honda Sensing, a suite of safety technology that includes Traffic Sign Recognition, Collision Mitigation Braking System, Road Departure Mitigation, Adaptive Cruise Control with lowspeed follow and Lane Keeping Assist. More technologies are found on upper trims, but Apple CarPlay and Android Auto connectivity will be found in all.

Smooth, quiet sailing

Honda drops the V6 for 2018 to be replaced by two four-banger turbo engines in a 1.5L base unit that produces 192hp and 192lbs-ft of torque and a more powerful 2.0L that ups the ante to 252hp and 273lbs-ft of torque. The base can be matched to an 32

improved CVT or six-speed manual transmission; while the 2.0L found in Sport and Touring trims receive that same six-speed or a new ten-speed automatic—a first for a front-wheel drive sedan.

The numbers may get your attention in the 2.0L, but the volume-selling base engine provides all the power one might need for this segment. On initial acceleration, it starts at smooth and that feeling continues up to cruising speeds in a quiet, relaxed manner. Don’t worry about the CVT either, hardly any droning noise can be heard, and it is calibrated for exceptional fuel economy numbers that reached as low as 5.6L/100 km on a downhill section. For the total drive in the base engine, the Accord managed a 6.9L/100 km.

As for handling, the Accord was everything you can ask it to be. It was direct on handling, especially during some windy bends, and it performed brilliantly with precision and balance.

During those stretches only small steering inputs were needed and the Accord did the rest. When braking was needed, the sedan did what was expected with quick precision, all the while maintaining that cabin quietness. B2B

| February 2018 | PurchasingB2B.ca | FLEET MANAGEMENT

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2018-02-12 11:49 AM

PUBLIC PROCUREMENT

ARE YOU

READY?

What procurement needs to know when an emergency hits

By Michael Power

C

anada is a country of diverse climate and terrain. Snow, rain and other weather events can disrupt the usual flow of goods and the purchasing cycle. This year marks the 20th anniversary of the January 1998 North American ice storm, which saw both southern Quebec and eastern Ontario experience five days of up to 100mm of freezing rain and ice pellets. About half of Quebec’s population and over one million people in Ontario went without power—some for several weeks—and at least 35 Canadians lost their lives.

Also, 15 years ago this year, we saw the northeastern blackout that affected much

of Ontario and the eastern seaboard of the US. On August 14, 2003, a power outage throughout Ontario, and northeastern and the Midwestern US saw millions of Ontarians in the dark for days.

This year is also the five-year anniversary of the Alberta floods. In the early summer of 2013, Calgary saw heavy rainfall that lead to catastrophic flooding—32 local states of emergency declared, 28 emergency operation centres were activated and over 100,000 people were displaced.

All of these events—along with many others in Canada’s history—affected the country’s municipal activities, including procurement. So what lessons have been learned? And how should today’s procurement leaders prepare for the kinds of nat-

ural disasters and states of emergency that have disrupted its operations in the past?

With regards to public utilities and the electricity networks run by municipalities, it all comes down to spare management, says Francois Bouffard, associate professor of electrical engineering at McGill University. Municipalities can look at how many spares they hold of items like pole-mounted transformers. There are a finite number of sizes and, after the 1998 ice storms, poles had to be replaced because they had fallen down or were damaged. Municipalities must answer the question, ‘how many do they have to hold in stocks in each of their depots?’ Or alternatively, do they rely on suppliers to have them shipped?

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PUBLIC PROCUREMENT

Bigger pieces of equipment might require a lead-time of a year to get a new one in the field. So municipalities should consider the risks and the cost-benefit analysis regarding what types of spares, how many of them, where they’re located and so on. Society expects reliable electricity and utilities need to keep at least a minimum stock available to do a repair job relatively quickly without having to wait for suppliers, he says.

“But again, these are not burgers,” Bouffard says. “They have some leadtime in terms of when you have to have them shipped to the customer. I think that was probably one of the biggest lessons learned: how many spares utilities want to keep ready to be deployed in the field if something that dramatic was to happen again?”

At the same time, ice storms and the like are low-probability, high-impact events that are hard to predict, Bouffard notes. The best that governments can do is to have a plan and know what

34

resources can be shared with neighbouring jurisdictions. “For municipalities, I think they have a great incentive in trying to federate their resources to be able to re-dispatch their own resources to their neighbours if disaster strikes,” he notes. “The best you can do is to know what your neighbours have at their disposal and if they can share, so that in the end we can have the best use of resources without having a lot of idol capacity on the ground or in garages.”

These days, municipalities are generally better prepared for such situations, Bouffard notes. But going forward, he recommends burying as much infrastructure as possible. Doing so is a costly undertaking. But putting infrastructure underground makes it more resilient in the face of emergencies. Doing so also makes the environment more attractive due to fewer visible wires above ground. “That’s probably the biggest lesson but sometimes the density of population might not justify it,” Bouffard notes.

“That’s really where the difficulty is— you’ve got to make a good case for it.”

Procurement’s role

During an emergency, procurement’s primary role is to buy what the municipality needs on an emergency basis, says Jerry Paglia, director of procurement for the Regional Municipality of York, north of Toronto. The region—an upper-tier government—has an emergency management plan in place and, if a state of emergency is called, there’s an emergency operations centre that also goes into effect. There are, Paglia says, a few ways that such a state can be called. For example, Ontario’s Lieutenant Governor or Premier can call a state of emergency, as can the chair of York Reion. Any of the region’s lower tiers can also do so, in which case the regional government would offer its support.

In the case that a state of emergency is called, procurement would then get a seat at the logistics table, Paglia says. And as

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when the lights go out. “Suppliers, if they don’t have their own business continuity plans in place, they may not even be able to supply the goods,” Paglia says.

Safety first

During a disaster, supply management’s first priority is to ensure people’s safety, including that of city employees, say Nicole McAlister, manager, performance & quality, supply management at the City of Calgary. The department moves beyond being the buyers and warehouse staff to supporting the whole

These relationships are critical and it’s important to keep communication lines open. The most obvious shift is that the municipality and its suppliers work more as partners. “We’ve also learned that everybody wants to help during a crisis and businesses of all sorts approach us because they too want to help the larger community,” McAlister says.

“Experiencing this in the last few events has been a real shift in the way we work with local business.”

During emergencies, procurement processes take a backseat to safety, she says.

This can lead to uncoordinated buying throughout an organization. Therefore, it helps to clarify roles and responsibilities for essential emergency processes— not only for supply management but also across the municipality. The city also has a business continuity plan that helps in this regard. Emergency situations

“Everybody wants to help out during a crisis and businesses of all sorts approach us because they too want to help the larger community.”

Nicole McAlister, The City of Calgary

community and the “state of local emergency,” or SOLE. That role could also include procuring for partner agencies that are involved during the emergency through the city’s centre of operations: the emergency operations centre (EOC).

If an emergency is declared, supply management falls under the Emergency Municipal Act, she says. “Prior to the SOLE, and once the event is no longer deemed a SOLE, the trade agreements apply,” McAlister says.

Supply management helps to ensure that frontline workers who are responding to disasters have the resources they need.

Some goods and services will be required regardless of the situation, McAlister notes. “Pre-empting the need—whether it’s planning for the quick issuing of items on hand or anticipating the request to procure goods and services—is one way that we can mitigate risk,” she says.

Relationships with suppliers change quickly during emergencies, she says.

also mean the city deploys a lot of staff and both light and heavy fleet vehicles, McAlister says. To ensure a sufficient fuel supply, the municipality has, in the past, opened all 17 of its city-owned fuel stations to partner organizations responding to the crisis. “We were able to meet these challenges by being proactive and including contingencies into our fuel contracts in the event of emergencies,” she says.

Preparation is key during any emergency, McAlister notes. Supply management need not always be responsive. In fact, a proactive stance can mean being prepared for the first 24 to 48 hours of a situation—a period that’s often crucial. The city also regularly runs practice drills and test events to ensure it’s prepared. “Through these practice drills, we are able to streamline, learn and build trust—all that is necessary to deliver the goods and services required by staff and citizens during natural disasters.” B2B

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PUBLIC PROCUREMENT

director of procurement for the region, he has duties at that table. He must ensure logistical support, including for the operations and call centres. Other areas may also be functioning during an emergency and procurement must help to ensure that those centres are staffed and have the resources—including food and accommodations, among other things—they need to continue operating. “The big piece is to assist in any purchases under emergency purchasing providing provisions of the emergency bylaw,” he says.

In times of difficulty, organizations may have to suspend some regular business processes. This applies to procurement as much as any other area. For example, the region’s purchasing bylaw has an emergency purchasing section stating that the department can buy certain items without calling for bids, Paglia notes. Procurement must seek the best value during an emergency using the fairest method possible. As soon as is reasonable, procurement must then report to council regarding what was bought.

There is also a “critical supplier list” that allows procurement to buy essentials, Paglia says. Items bought in such situations can include potable water, cots and blankets, folding tables and chairs, sandbags, gas and diesel medical supplies and other expenses.

Under normal circumstances it’s the clients—rather than the procurement department—that figures out where to buy. In an emergency, procurement would take over and run that process rather than having the oversight of clients. Procurement may then also have a role in communicating with purchasing groups in other municipalities. Such communication helps facilitate cooperative purchasing if needed. “There’s a supply and demand issue,” Paglia notes. “If everybody’s buying something it may be hard to get.”

Business continuity is crucial to organizations during an emergency, Paglia says. But that need for continuity isn’t confined to the buying organization, so it pays to ensure that suppliers have their own policies in place to deal with a crisis like a flood, storm or similar situation.

There’s no point in having a supplier on the list if they can’t provide their product

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Supply Chain CYBER CRIME Security on the web is everyone’s responsibility

By Ed Dubrovsky

M

any years ago (information changed) I was called in to support security at a large organization’s supply chain operations. When I arrived, the manager of the ERP system exclaimed that the production line for the most important widgets was down because the ERP system crashed and the team was unable to bring it back online.

That ERP system interfaced with numerous third-party suppliers and the entire production line was reliant on JIT ( Just In Time) processes. But when someone tired to bring the system online, all computing resources overloaded and the system came crashing down.

The company tried the usual things, including vendor support, and even authorized emergency purchasing to increase computing resources to handle the load. This could not have happened at a worse time, as it was just before the high season for retail purchasing. It was estimated the outage cost the organization several million dollars per hour not to mention the possible impact to brand and revenue if consumers decided to purchase elsewhere. Technology professionals were troubleshooting, with focus on the ERP system, the database, the network and servers. Things were not going well.

Our team took about four hours to review activities and information, and another 30 minutes to realize that a thirdparty connection was making bizarre calls to the system and crashing it. Once access to the ERP system was blocked for the offending third party, the system was running and normal operations restored (except the third party, that had to rely on manual processing until the issue was further investigated and corrected).

What does this have to do with cyber security? Truth is, it was a cyber attack that involved compromising a vendor to 36

attack the target, the widget company’s supply chain. It was never clear who perpetrated the attack, however, they spent time infiltrating the partner, then analyzed the applications and connections they would make to the ERP system, discovering the application calls they needed to generate, using the partner’s systems to overwhelm the ERP. It was estimated that the incident cost over $200 million.

It could have been avoided, with a little due-diligence, well-designed processes and some technology components. We estimated it would have cost $100,000 to procure and maintain the security of the system annually.

This was in early 2000s. Cyber attacks are not new. And for every attack we read about, there are hundreds that never make the headlines. These days, cyber attacks are now evolving and staying the same. For example, the Nigerian prince, rich widow, or some political figure who have lots of money and want to share their fortunes with you. These scams still manage to hook some people. More complex attacks require intelligence gathering from the social web we all use.

Information about anyone can be collected in seconds and data analytics allow criminals to create a profile of anyone.

Let’s assume Jane Doe has just been promoted. She posts something on LinkedIn, perhaps the press release. Perhaps she even posts something on Twitter or Facebook.

A professional cyber-criminal monitors

press releases and extracts the information about Jane available on social websites and search engines. He generates a profile and can now make his approach.

Perhaps he’ll send a connection request on LinkedIn, browsing Jane’s connections and pretending to email her from a familiar address. The attack doesn’t happen right away, rather after a few exchanges.

Another example are breaches due to an email to a decision-maker, such as in purchasing or finance. The emails look legitimate, but have been sent by malicious software that infected a legitimate contact’s computer and their list to email replies to previously received, legitimate email threads. These emails contain malicious attachments in the guise of an invoice, or some other document.

These are just some of the low-tech examples. Between system bugs (or vulnerabilities) that allow attackers into an organization, to human-nature that aches to be helpful, attack avenues are rising.

Cyber-crime “dark web” marketplaces are growing, and the cost to purchase specialized attack tools is decreasing.

The barriers to entry for an aspiring cybercriminal are non-existent, the risk of prosecution is extremely low and the rewards increasing. Couple this with society’s increased reliance on digital assets and services which include information (structured data) and documents (unstructured data) and we have a perfect recipe for cybercrime market that is growing.

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Organizations face key cyber challenges: n Non-targeted attacks: phishing; exploitation of vulnerabilities; and n Targeted attacks: spear-phishing; targeted identification and exploitation of vulnerabilities; attacks via trusted third parties; internal attackers.

These are some of the most common.

Many attacks result in the following major compromises: n Credential theft; n Exfiltration of valuable data; and n Use of computing resources to attack other parties.

Obviously, there are significantly more complex scenarios. The most frequent question is a variation of “how do we protect ourselves?” The answer isn’t simple and depends on context. But in the context of supply chain and procurement, the following are some common tips we can offer: • Stay informed: both awareness of evolving threats and intelligence gathering. Intelligence gathering means establishing trusted peer groups where information can be shared to minimize risk. Tactics are evolving and we should

always learn about how this takes place.

Some tactical actions can include: • Reading reliable news-sources; • Attending industry-specific conference featuring cyber topics; and • Engaging with a cyber defense firm that has the resources to monitor the dark web and is aware of what the bad guys may be plotting. n Fundamentals: focus on basic actions within your responsibilities. We talk about the “human firewall,” meaning we’re all responsible for cyber security.

Of course, how you impact your organzation’s cyber posture varies by role.

But we can always influence decisions, our actions (think before you click on a link or attachment) or how we influence and educate others. Key tips include: • Ensure your own devices are patched and the software is current and legal; • Use technology such as firewalls, anti-malware software; • Be suspicious of external emails (some external emails may appear internal); • Don’t open unexpected attachments,

if the sender appears legitimate, perhaps a phone call to verify; and • Don’t click on any links and be suspicious of any web pages that are asking for your credentials n Preparedness: It’s “if” but “when” an attack happens. Preparation could be the difference between a minor security incident and major breach. This means organizations should: • Regularly assess information security posture; and • Have an incident management plan and test it regularly.

Cyber security is not a technology problem and it’s everyone’s responsibility.

While there’s no one solution, managing risks should be ongoing. The more savvy you are the less of a target you’ll be. B2B Ed Dubrovsky is managing partner for Cyber Breach response at Cytelligence Canada where he manages a team of experts protecting organizations before, during and after a cyber-attack.

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The Law

Procurement And Trade Agreements A practical perspective on CFTA and CETA

Debby Shapero Propp is a commercial lawyer focusing on supply chain, technology and health law, providing practical legal and educational services in the private and public sectors.

Sharon Rubinstein is a procurement specialist and project manager focusing on the delivery of public sector procurement projects and the customization of procurement tools and processes.

By Debby Shapero Propp and Sharon Rubinstein

E

ach New Year is a time to reflect. In 2017 at least two changes occurred that affect supply chain practices. On July 1 the Canadian Free Trade Agreement (CFTA) and on September 21 the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) came into force. Both trade agreements have a significant impact on procurement in the public and broader sectors.

If your organization is required to comply with these trade agreements and has not yet made the necessary procedural, practice or document changes, 2018 is the year to ensure compliance.1 This article offers some practical considerations for organizations that are required to comply with these trade agreements. n Limited tendering: Single and sole source lists and non-competitive approval forms, both part of most organizations’ procurement toolkits, now require some review and changes. These exceptions and exemptions, now collectively referred to as limited tendering, have changed substantively.

One notable change that will require unpacking and reflects challenges faced in IT procurement is to allow limited tendering if a change of supplier for additional goods or services cannot be made for economic or technical reasons (such as requirements of interchangeability or interoperability with items procured under the initial procurement) and would cause significant inconvenience or substantial duplication of costs.

Additionally, organizations should be prepared to engage in relatively more competitive processes for services by licensed professionals as the list of those professionals in the CFTA non-application provisions has decreased from the Agreement on Internal Trade. n Use of prior experience: The use of prior experience as a routine evaluative requirement in procurement documentation should be scrutinized. In establishing conditions for participation, consideration must now be given to whether the prior experience is essential to meet procurement requirements. n Technical standards: The internal technical standards that organizations have been using for prescribing technical specifications for goods or services being procured should be examined. In keeping with the principles of non-discrimination, the trade agreements 38

have somewhat curtailed the use of internal technical standards and instead focus on documentation approved by recognized bodies and international standards, if they exist, otherwise on national technical regulations. n Notices and posting award: One area many organizations have addressed is the revision of pre-release notices and post-award publications. Some electronic tendering systems have made this practice easier by providing templates to enable compliance. Alternatively, the applicable provisions of the trade agreements read as an easy-to-follow checklist, however, care should be given as CFTA and CETA are not entirely aligned. New is the requirement to include whether the procurement will involve negotiation or electronic auction. n Prequalification: While the practice of selecting prequalified suppliers, such as vendor of record and supplier lists, continues to be supported, some details for managing these everyday practices have changed.

Organizations should review whether certain requirements to allow suppliers to be added to the list at a later date are addressed and the exceptions for the same. n Low bidding: To address a concern in a competitive marketplace, a refreshed approach in dealing with low bids should be considered. With a new price verification protocol in place, if a low bid is received, an organization may verify with the supplier that it satisfies the conditions for participation and is capable of fulfilling the terms of the contract. n Supplier debrief: An adjustment to debrief processes to support more detailed disclosure requirements is needed. In addition to providing reasons why a tender was not selected, organizations are now required to include the relative advantages of the successful supplier’s tender. This comparative approach adds a different dimension to the debrief process and becomes even more complex when balancing the need for disclosure with the requirement for confidentiality of supplier information. Developing a debrief manual or adjusting existing documentation may be helpful.

While the current environment has necessitated a number of immediate changes, other areas will continue to unfold. Keep your eyes open for developments regarding a single point of contact for electronic notices and a formal review body for the escalation and resolution of supplier disputes.

These new obligations can provide an opportunity for updating procurement procedures, practices and documentation. Many approaches are available that recognize the fiscal pressures under which public sector entities operate, optimize value for money and mitigate risk associated with non-compliance. We suggest that 2018 be the year for trade agreement compliance. B2B • The content of this article is not intended to provide legal or comprehensive advice on the subject matter of this article. Specialist advice should be sought.

1) We note that on certain matters these Trade Agreements are not aligned with each other.

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Who Said Conferences Can’t Be Fun?

April 16 -18, 2018 Hyatt Regency Toronto

The

EPIC Awards are coming to

Canada!

The Premier Celebration of Professional Achievement for Indirect Procurement The EPIC Awards are an annual celebration to recognize and celebrate the most innovative, dynamic, and accomplished procurement leaders. ProcureCon is pleased to announce that we’ve partnered with PurchasingB2B to bring the awards to Canada.

The 2018 EPIC Awards categories are for individual and team innovation, rising star, lifetime achievement, and supplier excellence. The awards are a great opportunity to motivate your team and recognize their hard work, while also celebrating your sourcing success. The winners of each category will be announced and showcased at the ProcureCon Canada conference in April.

Visit www.PurchasingB2B.ca/Awards for more information about the awards!

The EPIC Awards are brought to you by

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