"Euro Delegates Look to Trade in Sustainability" by Vancouver Sun
Purchasing B2B
1. Also inside:
A view from the CPO’s suite
ProcureCon Canada 2014
Contract Management Strategies
THE CASE FOR
INCLUSION
PM 40069240 $18.00
The Future of Procurement
FEBRUARY 2014
Supplier Diversity and ROI at the 2013
National Supply Chain Forum in Calgary
Canada’s magazine for procurement and supply chain management professionals
PBB01_OFC.indd 1 14-02-18 2:33 PM
4. 4 | FEBRUARY 2014 PurchasingB2B.ca
Buylines
WEConnect Honours Supplier Diversity Efforts
A
BC Group Inc., a plastic automotive parts supplier, was
recognized with a WEConnect Canada President’s Award
for contributions to the progress being made in Canada
in opening supply chains to women-owned businesses. The Tier
1 supplier to organizations like General Motors is both certified
as woman-owned (WBE) and also demonstrates its commit-
ment through its own supplier diversity program.
WBE certification is an internationally recognized standard
for businesses that are majority-owned (51 percent), managed,
and controlled by a woman or women, and is recognized by mul-
tinational and government procurement programs as a way to
expand supplier diversity.
WEConnect has created six awards. A second President’s
Award went to WEConnect Canada regional partner,
Newfoundland Labrador Organization of Women Entrepre-
neurs (NLOWE) for advancing local engagement of corpora-
tions in supplier diversity and specifically for helping the oil
and gas industry expand their efforts.
Otherwinnersoftheinauguralawardsinclude:
•WBEWinningBusinessAwardWesternRegion: ImprintPlus
•WBEWinningBusinessAwardOntario:EmergitelInc.
•WBEWinningBusinessAwardQuebec: DOCAssociatesInc.
•WBEWinningBusinessAwardEasternRegion:CoronaCollege
Satellite contract for MDA
M
acDonald, Dettwiler and Associ-
ates Ltd, a global communications
and information company, has
been selected for additional robotics work
for the US Defense Advanced Research
Projects Agency (DARPA) Phoenix Pro-
gram. MDA has started work under the next
phase of the Phoenix Program, with related
contracts expected to total roughly US$10
million. Both MDA and SSL will do the work.
Already a participant in the DARPA Phoe-
nix program, MDA said it will provide a va-
riety of servicing technologies and capabil-
ities that build on MDA’s capabilities.
Under the contracts, MDA is looking to
develop advanced robotic tools, cameras,
tool caddies and a new flexible, small ro-
botic arm for the Phoenix mission.
“We are pleased to be providing the criti-
cal robotics for the Phoenix mission” said
Don Osborne, MDA’s vice-president respon-
sible for this business. “The Phoenix mis-
sion aims to demonstrate several technolo-
gies and on-orbit operations.
5. FEBRUARY 2014 | 5PurchasingB2B.ca
Thenewstrategyintroduces
an independent challenge
function within National
Defence that will question the need for each major capability. Affordability,
especially in the face of declining defence spending, has been a key problem in
many of the programs. The Conservatives have been repeatedly surprised by
the price tags of some projects when it comes time to open the bids.
Another cornerstone of the plan will be consultation with defence industry
contractors before projects go out the door. National Defence will begin post-
ing an annual list of its equipment needs, beginning in June.
Tim Page of the Canadian Association of Defence and Security Industries
said the posting will be a critical improvement for companies who often strug-
gle to anticipate the priorities of National Defence. The new system will also
see increased co-operation among Defence, Public Works and Industry offi-
cials under an umbrella secretariat at Public Works.
The plan rejects creating an independent military procurement board, as
other countries have done, and instead builds on existing structures and
practices.
The government will also become more involved in steering Canadian
defence contractors toward individual procurements.
Last year, former public works minister Rona Ambrose commissioned an
outside report that recommended the government leverage planned defence
spending as much as it can.
T
he equipment needs of the Canadian mil-
itary will be assessed with a more skep-
tical eye under the federal government’s
new system of defence procurement.
The strategy, released February 5, also puts
greater emphasis on arms exports by develop-
ing policies to “support international sales op-
portunities.” The plan, introduced by Public
Works Minister Diane Finley and Defence Min-
ister Rob Nicholson, is meant to fix years of
botched military purchases.
A series of delays and failed plans to
re-equip the military have been a recurring
embarrassment for the Conservatives. The
auditor general’s 2012 assessment of the plan
to buy 65 F-35 stealth fighters left the govern-
ment’s reputation for good fiscal management
in tatters, with allegations that Defence and
Public Works low-balled the price tag. The in-
ability to deliver long-promised supply ships
for the navy, and maritime helicopters for the
air force, have also caused political problems
for the government.
FSC Moves To Strengthen
Aboriginal Rights
T
he Forest Stewardship Council (FSC) has
adoptedaninitiativedesignedtostrength-
en Aboriginal peoples’ rights in Canada by
applying free, prior and informed consent
(FPIC) to FSC’s Forest Management Standards.
More than 80 percent of Canada’s Aboriginal
communitiesarelocatedinornearforestedareas,
saidFSC. Aswell,thesecommunitiesareoftenthe
first and most affected by industrial forestry ac-
tivitiesandcanbethelasttoseeitsbenefits.
“The initiative will be conducted with the
engagement of Aboriginal peoples and other
stakeholders across Canada and will not only
benefit Aboriginal peoples and communities,
but will also provide forest management com-
panies with clear direction and tools to help
them apply the values of FPIC, “ says Francois
Dufresne, FSC Canada president.
FSC Canada will work to improve and
strengthen forest certification requirements
with the primary goal of increasing meaningful
and tangible benefits of certification for Aborig-
inal peoples and communities in Canada. FSC
Canada will work to adopt FPIC values and
strengthen forest certification requirements in
FSC’s Forest Management Standards in Canada.
Tories Announce New Defence Procurement Strategy
The Canadian Press
6. 6 | FEBRUARY 2014 PurchasingB2B.ca
Business Front
It’s About Hours Worked!
I
don’t think that there is a more closely
watched economic indicator than the un-
employment rate. Statistics Canada here
(and the Bureau of Labour Statistics in the
US) release this number each month and
any number of vested interests wait with
bated breath. Politicians, in particular, are
compelled by it. If unemployment is low, it
means the party in power can take credit for
doing a good job—even though their efforts
are almost invariably meaningless in im-
pacting unemployment. If it’s high, the op-
position can go into attack mode, even
though their ideas to fix the situation would
almost invariably worsen it.
Here’s what no one is talking about, ex-
cept me. We should not be looking at unem-
ployment. It’s borderline irrelevant. Rather,
we should be looking at hours worked. I
know we’re treading dangerously close to
hardcore policy-wonk territory—but I can’t
help it. In order to truly understand this is-
sue, you’ve got to understand exactly how
unemployment is measured.
In order to be considered unemployed,
you must be in the labour force. In order to
be part of the labour force, you must either
be working, or actively looking for work. If
you’re unemployed and haven’t made an ef-
fort to find a job recently, you’re considered
a “discouraged worker.” You’re not unem-
ployed and you don’t figure into the unem-
ployment rate.
It gets worse. Let’s say that you’re on a
payroll. It doesn’t matter whether you’re
working 15 hours a week or 50 hours, you’re
still considered fully employed.
Another thing. You’re in school full-time
so you’re not considered part of the labour
force. You could be a full-time student and
working 15 hours a week—or even fifty—and
it doesn’t matter.
My guess is that many of you are thinking:
who were the idiots who decided that this
makes sense?
I can help you with that. It’s the political
classes. They are the ones who stand to gain
most when the numbers are fudged. They
want it like that. This allows government—
and I think the provincial one in Ontario is a
wonderful example—to make itself look bet-
ter than it is by (for one thing) opening post-secondary programs
and cramming students like cattle into programs in which there is
no hope of employment after they’ve graduated. Let me cite On-
tario once more: last year, about 12,000 teachers were graduated
to fill the fewer than four thousand openings across the province.
However, there is a better way to understand the state of the
labour market. There’s a very simple metric that we could use
to give us a true picture of the employment situation at a given
time…and it’s total hours worked.
We’d start by defining the working age population as those be-
tween the ages of 18 and 65. Very few people leave high school
much before the age of 18 and 65 is the most common retirement
age. Based on census data, we know how many Canadians are in
that cohort.
In 2011, 68 percent of the population was between 15 and 65.
So let me estimate—just to make the point—that about 65 percent
would be 18 to 65. That means about 22 million Canadians. A
reasonable assumption is that a full-time workweek is 37.5 hours.
Let’s say, on average, most of us put in 48 weeks of work a year.
That means that if everyone were working full-time, there’d be
about 40 billion annual work-hours annually across Canada.
You see where this is going. We’d survey how many hours people
actually worked, then express it as a ratio of potential work hours.
This would capture what’s really going on in the employment
market. It’s a meaningless distinction whether someone is pound-
ing the pavement unsuccessfully to get a job, or just staying in
bed all day because he or she is too beaten down. Bottom line:
potentially productive hours are being wasted. It’s flat-out silly to
say that someone who is working part-time is as fully employed
as someone who’s working 10 hours a day, six days a week. And
isn’t it a statement on the economy’s health if students who want
to supplement their own education are toiling at part-time jobs?
It’s vastly superior to measuring unemployment, as we under-
stand it today.
Say goodbye to the “unemployment rate.” Focus instead on the
“hours worked rate.” There are good reasons why it shouldn’t be
100 percent. I want young people to train for necessary occupa-
tions like medicine and the trades. It wouldn’t take long until we
understood what rate indicated a strong economy versus a weak
economy and the measure would be much harder to game than
the unemployment rate.
Are we likely to see it anytime soon? Of course not! Whether
it offers meaningful information or not, the unemployment rate,
not hours worked rate, is here to stay. B2B
Toronto-based Michael Hlinka provides business
commentary to CBC Radio One and a column syndi-
cated across the CBC network.
by Michael Hlinka
PBB01_06_BizFront.indd 6 14-02-18 10:13 AM
7. FEBRUARY 2014 | 7PurchasingB2B.ca
Procurement
Profile
A Taste For Variety
Q: How did you get into procurement?
My path to the field of procurement was not my
original career choice. I started as general manager
for an electronics assembly plant in Nova Scotia
that produced high reliability equipment for mili-
tary and government supply contracts. From my early days in
manufacturing, I began to focus more on quality, supply chain
and procurement functions and positions that allowed me to pur-
sue this interest. I decided to specialize in procurement and de-
velop my skills in various aspects of strategic sourcing, procure-
ment and supplier management.
Q: Describe a typical day at work.
In addition to the role as chief procurement officer at Deloitte, I
am also the leader of the business services team, which keeps me
extremely busy and engaged with many aspects of Deloitte’s op-
erations. With my CPO role comes a wide variety of procurement
activities ranging from developing Deloitte’s strategic procure-
ment plan to leading our procurement services team and negoti-
ating complex contracts with suppliers. In addition to my pro-
curement duties, I lead our business services team and deliver
services to our internal firm clients.
Q: What do you like most about your area?
The most interesting aspect of my role and the areas I’m involved
with is the diversity and variety of the activities and tasks. De-
loitte’s internal professional services and management services
provide unique requirements we work to address while striving
to deliver exceptional service and value.
Q: What event/highlight of your career stands out for you?
The single event that stands out in my career was when I left the
Maritimes and moved to Toronto to join the supply chain and pro-
curement consulting practice at a professional services firm. I
gained tremendous experience while being exposed to different
client environments and numerous consulting engagements in
the supply chain and procurement field. Working together with
other professionals provided knowledge and the opportunity to
develop long-lasting business relationships
and friendships with many of my colleagues.
Q: What are your future professional/
education plans?
I am committed to life-long learning and op-
portunities to enhance my skills and knowl-
edge within my field. In my current role at
Deloitte, I work with our member firms and
other global leaders to exchange information
and gain new knowledge and expertise while
working with others in the field.
Q: Tell us something about yourself not
related to your profession.
I am a huge hockey fan and an active player
who still finds the time to play twice a week
in a couple of men’s leagues. I grew up play-
ing hockey, had the opportunity to play at a
competitive level during my university days
and still have the passion to play after all
these years. Although there are a few more
aches and pains after playing, and the dream
to win the Stanley Cup is long gone, there is
nothing like playing a team sport with oth-
ers who share the love of the game.
Q: What advice would you give those new
to the field or planning to enter it soon?
Anyone who has an interest in the procure-
ment and supply chain field should seek op-
portunities to work with as many individu-
als and on as many different projects and
initiatives as possible. The enrichment
gained from working with others is invalu-
able and nothing replaces actual hands-on
practical experience to build one’s compe-
tenciesandcapabilities. B2B
Geoffrey Parsons, Chief Procurement Officer, Deloitte
8. 8 | FEBRUARY 2014 PurchasingB2B.ca
Finance Corner
The Future Is In Finance’s HandsProcurement and supply chain management have much to learn from dealing with
finance departments
W
hile visiting organizations across
North America I’ve noticed a trend.
There is an increasing tendency
for procurement and supply chain manage-
ment functions to report into finance. His-
torically, the majority of supply chain roles
reported into production or operations,
with the minority guided by finance.
Earlier in my career, I was involved in both
structures and found pros and cons for each.
I’veseenmoreprosforthelater.Ifyou’reinthis
reporting structure or transitioning to it, you
may have some biases. Here are a few that
come to mind:
• Finance only cares about cost and returns;
• Finance are overly concerned with risk and
not willing to try new things; and
• Finance doesn’t understand the time con-
straints manufacturing or operations
place on the supply chain.
It’s logical to suggest that you’re already
reporting into finance and have no concerns.
That’s fine. But I’d guess you or your peers
still carry some of the above biases (that
may eventually influence perceptions), so
take a moment to understand why more
supply chain management roles are report-
ing into finance, and what finance offers that
can help to progress the supply chain.
Risk aversity
When I was 25, I cancelled my first supplier
agreement.Itwasanagreementsetoverade-
cade before I arrived at the organization, and
with little documentation to support the
terms exiting it was a bit dicey. So I drove sev-
eralhourstothesuppliersitetomeetanddis-
cuss my company’s desire to exercise it’s
righttoprovide30dayswrittennoticeofcan-
cellation of the agreement. In hindsight, that
wasarookymovethatdidn’tconsiderthesig-
nificant risk I was taking. Finance is extreme-
ly risk averse, which can seem like a barrier
to innovation, however this can offer a broad-
er perspective on the severity and impact of a
project’s risk, component or contractor rela-
tionship. Tapping finance can provide new
ideas, tools and perspectives on how to make
better decisions that incorporate risk.
Reputation
Early in my career I worked with a colleague named Terry, a
great guy who had been my company’s acting CFO for over a de-
cade. If I could demonstrate a cost savings, Terry supported my
decisions—from buying raw materials to resourcing janitorial
supplies. I realized early on that Terry was trusted, retaining
significant respect from the company’s president. He was privy
to financial information and, as such, was a trusted advisor to
the president. If Terry supported an initiative, the president
supported the initiative and anyone who had doubts was cast
aside. Forming a close relationship with finance can help to
boost reputation and lead to increased acceptance of—and
adaptability to—change.
Measuring impact
I presume you’ve got an spreadsheet on which you track cost sav-
ings and cost avoidance. Have you ever been challenged on the
impact changes have on total cost? Do you know what EBIDA is?
Can you demonstrate annualized savings? Are you connecting
ROI with supply or service contracts? It can often seem that fi-
nance speaks a different language, and they do. It’s the language
of business. Outside of our often-sheltered world there are terms
and considerations that C-suite executives use daily in support-
ing decision-making.
By spending time learning about finance (and there is no fast-
er way than interacting with and being mentored by a finance
executive) we can expand our business knowledge. By doing so
we can incorporate this language and approach into our daily
activities, thereby increasing our credibility and the attention
we gain from other senior executives. If you have a desire to
move to the C-suite, you need to expand your knowledge and
vocabulary. There is no better place to start than by learning
more about finance.
Finally, finance professionals are strategic. They’re trained to
be so. Their decisions must be long-term and strategic if the busi-
ness is going to survive. By aligning with and understanding
more about finance the supply chain profession will become
more strategic—a significant challenge when chasing every wid-
get and supplier issue.
If you’re reporting structure has changed to align you under a
financial group, consider the points above and how they can im-
prove your credibility, recognition and knowledge. If you want to
progress in your career, this reporting structure is another rung
in the ladder to your goal. B2B
Shawn Casemore has nearly two decades experience in
supply chain management leadership roles and operates
the consulting firm Casemore and Co. Reach him at
shawn@casemoreandco.com or (519) 470-7697.
by Shawn Casemore
PBB01_08_AskTheExpert.indd 8 14-02-18 10:09 AM
9. Head
byline
Advertorial
On top of negotiating Total Landed Cost, more and more purchasing
pros are now managing the flow of goods or materials, and are
sometimes even responsible for ensuring uninterrupted supply chain
operations. That’s a lot of responsibility. And it can have a big effect
on your bottom line. After all, studies prove that uninterrupted supply
chains are more closely linked to financial performance than any other
operational factor.1
What’s more, a recent study from MIT found that supply chain
performance is more sensitive to mature skill-set and expertise of
logistics-related supply chain professionals than any other operational
factor – including commodity and fuel costs.2
There’s a lot of opportunity for profitability. But chances are if you’re
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After completing these courses, you’ll have the best technical
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No other professional credential says
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Because supply chain logistics has become such a specialized and
sophisticatedfieldwiththeglobalizationofsupplyandvaluechains,cross-
functional certification is becoming increasingly more common among
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qualify for advanced standing towards the CCLP designation.
Visit www.citt.ca/logisticsprofitability for more information. Or
contact us at info@citt.ca or 416-363-5696.
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FEBRUARY 2014 | 9PurchasingB2B.ca
® CCLP is a registered trademark of CITT
1 Henricks, K, Richard Ivey School of Business, University of Western Ontario, Singhal VR, DuPress College of Management, Georgia Institute of Technology. Supply Chain Disruptions and
Shareholder Value, 2005.
2 Simchi-Levi, D, Kyratzoglou IM, Vassiliadis CG, Supply Chain and Risk Management: Making the Right Decisions to Strengthen Operations Performance, Study by MIT Forum for Supply Chain
Innovation and PwC, 2013.
PBB01_09_PDD.indd 9 14-02-18 10:12 AM
10.
11. Head
The Business Case
For Supplier Diversity
Our panel of experts investigates the ROI of implementing diversity into the supply chain
Thought
Leadership
Jenny Larocque is
corporate development
officer at Spirit Staffing,
an Aboriginal, woman-
owned employment and
training agency. Larocque
has been employed there
for the past seven years.
She is involved in the
Aboriginal community
and understands the importance
of a diverse supply chain.
Reginald Humphrey is
supplier diversity
manager at General
Motors. An 18-year
veteran of the company,
Humphrey has led its
diversity program for a
year-and-a-half. He is
responsible for over 200
suppliers with about $3.1
billion in diversity spend. General Motors’
supplier diversity program dates from 1968.
Cassandra Dorrington
is president CEO of the
Canadian Aboriginal
Minority Supplier Council
(CAMSC). CAMSC links
Aboriginal and minority-
owned businesses to
Canadian corporations
and works to identify and
certify businesses as
Aboriginal or minority owned, managed and
controlled.
Charles Varvarikos is
head, facilities sourcing,
at RBC Bank. Varvarikos is
an architect and works in
the procurement
department at RBC with a
focus on real estate. His
mandate also includes
corporate social
responsibility in the
bank’s procurement area.
W
hen the concept of “diversity” is used in a business context, listeners might as-
sume the discussion is regarding corporate social responsibility programs. While
such programs no doubt provide organizations with value, their direct contribu-
tion to the bottom line might be seen as difficult to track on an organization’s balance sheet.
Similarly, the term “supplier diversity” may produce thoughts of preferential treatment to
underrepresented suppliers—businesses owned by Aboriginal, women, LGBT or minority
members, among others—for the sake of driving corporate social responsibility goals. But a
panel discussion held at the National Supply Chain Forum (NSCF) at Calgary’s BMO Centre
from October 28-30 sought to test that assumption, as well as show supplier diversity’s
positive impact on the bottom line. The panel, organized by PurchasingB2B magazine in
partnership with the Canadian Aboriginal Minority Supplier Council (CAMSC) included the
following participants: Cassandra Dorrington, president and CEO of CAMSC; Charles
Varvarikos, head, facilities sourcing, RBC Bank; Jenny Larocque, corporate development
officer, Spirit Staffing; and GM’s supplier diversity manager Reginald Humphrey, who partici-
pated in the panel session from Detroit via Skype. PurchasingB2B editor Michael Power acted
as moderator for the session.
by Michael Power
FEBRUARY 2014 | 11PurchasingB2B.ca
12. 12 | FEBRUARY 2014 PurchasingB2B.ca
HeadThought
Leadership
To begin the discussion, the group worked to define
what’s meant by the term supplier diversity. Dorrington
acknowledged that the expression can lead to “a blank
stare” when mentioned within the Canadian marketplace.
She stressed that supplier diversity didn’t represent a quo-
ta system, a charity or a “set-aside”. Rather, the concept
was about utilizing new, under-utilized suppliers.
“For us, it’s a proactive program or process set in place
by an organization that ensures an inclusive supply
chain,” she told the audience. “We’re trying to make sure
your supply chain expands beyond what’s traditional,
whether it be women-owned businesses, LGBT business-
es, minority businesses, or Aboriginal,” she said. “It’s
about being proactive enough to recognize there are sup-
pliers out there who can meet the need.”
Varvarikos agreed that inclusivity was key to supplier
diversity. The concept, he noted, embodied equal oppor-
tunity for diverse businesses to get their goods or ser-
vices in front of corporations looking to buy them.
“Whether it be Aboriginal, women-owned, visible minor-
ities, it’s about offering people opportunity to compete,”
he said. At RBC Bank, he said, supplier diversity didn’t
mean awarding business based on an organization’s di-
verse status. Rather, it meant offering opportunity and
building value. Larocque agreed, noting: “As Spirit Staff-
ing is a diverse supplier, we have to compete equally with
other suppliers to get businesses.”
Meanwhile, Humphrey said that supplier diversity
strengthens GM’s value chain at the Tier 2 level as well as
the Tier 1. It’s easy to forget that supplier diversity
appears all along the value chain, he said. Essentially, in-
cluding diverse suppliers allows GM to leverage under-
utilized companies in specific regions or within ethnic
groups. “Supplier diversity is a unique network of corpo-
rate, it’s a unique network of suppliers and it’s definitely
a unique network of how we work together,” he said. “I
haven’t seen any other discipline in my career at General
Motors where so many companies will collaborate to
share best practices. Supplier diversity allows us to
leverage these best practices and these suppliers to
optimize our value chain.”
The panel then broke down supplier diversity into its
components, providing the audience with an image of
what an organization’s supplier diversity program might
look like. The metrics used to analyze such a program in-
clude everything from spend to hiring practices and the
impact those decisions can make in the community, said
Humphrey—although supplier diversity programs focus
largely on contract awards, he noted.
One of the first necessary steps when instituting a
supplier diversity program is to understand fully an
organization’s corporate strategy, Humphrey said, which
helps the organization realize why such programs are
important. For example, he noted, diversity drives
creativity and smaller entrepreneurs tend to be more
agile and can sometimes react faster than larger organi-
zations. “First, it starts with corporate strategy and
alignment,” he said. “Then it comes to assessing your
supply base, your needs, your supply and demand. And
then it comes down to using the network to fulfill those
gaps, performance issues, innovative technology issues
that you want. Lastly, on the execution side, it’s
allowing to share best practices on how you communi-
cate those metrics.”
As well, no organization should try to implement a full
supplier diversity program in too short a time, Humphrey
said. “The biggest mistake people make is trying to force-
feed a diversity program down a corporation’s throat,” he
said. “Identify what’s important to your company today
and how can the diversity network influence and
enhance those already established goals and objectives.”
“How many opportunities are you
affording people? How many suc-
cesses are there? Are you giving out
programs? There are so many differ-
ent components you can add into a
supplier diversity program.”
~ Charles Varvarikos
PBB01_10-15_CALGARYroundtable.indd 12 14-02-18 2:43 PM
13. FEBRUARY 2014 | 13PurchasingB2B.ca
Varvarikos noted that once an organization has a
strategy in place, it’s time to put together a plan. The first
step that RBC took was to identify supplier diversity ex-
perts. The bank reached out to organizations such as
CAMSC for expertise, which included access to its data-
base of diverse suppliers. As well, Varvarikos recom-
mended tracking and monitoring supplier diversity ef-
forts to help ensure a program is successful. “How many
opportunities are you affording people? How many suc-
cesses are there? Are you giving out programs? How
many mentorships have you done in the last year or two?
How are your surveys on those mentorships? There are
so many different components you can add into a supplier
diversity program,” he said.
Dorrington stressed that organizations must provide
top-down support for supplier diversity, and such pro-
grams can’t be a “one-man show.” As well, she recom-
mended organizations perform a baseline survey of sup-
pliers to identify whether it already employs diverse
suppliers, and if so how many. “It takes a while to get to
that process,” she said. “There are some fairly straight-
forward practices regarding how to get there. But it
starts with a willingness to say, ‘We want to be able to do
it, where do we start?’”
What’s the ROI?
The panel discussed the business case for supplier diver-
sity. For the supplier, the advantages include building ca-
pacity and learning how to compete, said Varvarikos. For
the buying organization, an inclusive supply chain means
a more diverse pool of thought and talent. “By accessing
diverse suppliers we access a lot of companies that are
very innovative,” he said. “Some of them are smaller, but
usually they’re more nimble because they can act quicker
and we obviously do a lot of business with the giant
companies as well. But a giant company can only move so
quickly. When you have immediate business needs you go
to your smaller suppliers and there’s a good opportunity
to get something done quicker and quite innovative as
well.”
Supplier diversity offers a cyclical value chain, said
Humphrey. As organizations do business with diverse
suppliers, those suppliers become more sustainable and
able to attract diverse talent. That translates into wages
and expendable income, which in turn means increased
buying power. “That buying power, for General Motors,
means a lot,” he said. “It can lead to diverse products, to a
diverse customer base. We need loyal customers that will
align themselves with General Motors. If I’ve got a
diverse company who has an embedded loyalty to
General Motors because of the investment we put in
them, now they’ve got wages. Now they can spend that
expendable income. It becomes profit to General Motors
and guess what? Now we’re able to reinvest in those same
suppliers.”
Humphrey noted a female, Native American entrepre-
neur in Detroit who put together a joint venture with a
Tier 1 supplier to create an organization called Detroit
Manufacturing Systems. That organization went from
having 80 employees to over 700. The average time that
the company’s employees had been unemployed was 14
months, Humphrey said. “They suddenly have pride, they
have economic stability,” he said. “Now, they’re connect-
ed by loyalty to a company that gave them a fresh start.”
Creating that wealth within a community (rather than
supplier diversity simply being charity work) was an in-
telligent business strategy, said Dorrington. By way of
example, she cited an organization that CAMSC worked
with that was able to get a 25-percent cut in costs by
bringing in a diverse supplier. That’s because the new
supplier was able to offer the organization an innovative
“I haven’t seen any other discipline
in my career at General Motors
where so many companies will
collaborate to share best practices.
Supplier diversity allows us to
leverage these best practices and
these suppliers to optimize our
value chain.”
~ Reginald Humphrey
PBB01_10-15_CALGARYroundtable.indd 13 14-02-18 2:43 PM
14. way of looking at a business situation. “That’s not to say
it’s all about cost, but it’s all about the new innovation and
flexibility that comes with introducing this into your sup-
ply chain,” she said.
Laroque agreed, noting that supplier diversity results
in long-term investment and growth, which creates value
for the community. To sustain a competitive advantage,
organizations must explore several resources, she said,
and businesses can’t thrive while relying on a single ap-
proach. Diversity is a critical element in building an effec-
tive workforce and efficient supply chain. Strategically
selecting diverse suppliers helps add value and create
social benefits that support the demographic group of
their workforce and customers. Diverse suppliers like
Spirit Staffing can work with customers for tailored ap-
proaches to business needs, Laroque noted, agreeing that
small businesses offered flexibility and were open to cre-
ative business solutions. “As an Aboriginal, woman-
owned business, it not only classifies us as a diverse sup-
plier, but also enables us to supply a diverse workforce,”
she said. “We’ve been a second-tier diversity supplier to
an international oil and gas company working in partner-
ship under their first-tier international supplier for the
past eight years. We’ve contributed significantly in sup-
plying an Aboriginal and visible minority focus contin-
gent workforce and have been able to compete and per-
form alongside their first-tier supplier with great
success.”
Supplier diversity metrics
With any large corporate initiative, tracking progress is
one of the key steps towards realizing success, and sup-
plier diversity programs are no exception. The panel dis-
cussed metrics and how organizations can benchmark
whether their supplier diversity programs are realizing a
return on investment.
For Varvarikos, the key is to look at trends regarding
supplier diversity, which Canadian organizations have
been able to do for about 10 years. While still relatively
young compared to such programs south of the border,
Canada has seen good progress towards a more diverse
supplier base, Varvarikos noted. He echoed Dorrington
in calling for baseline tracking of areas like diverse
spend, opportunities available for diverse suppliers,
how many diverse suppliers a company mentors and so
forth. “It’s all about improving and carrying on year-af-
ter-year improvement, making sure the program works
and that RBC is getting the benefit as well,” he said. “Are
we saving money through it? What about the quality of
our products and services? So there are any number of
metrics you can use. It probably makes sense to start
simple with a few metrics and then build them up as you
get more sophisticated.”
It’s also important to track success stories, said
Varvarikos. For example, a woman-owned architec-
ture firm that attended an RBC mentorship workshop
ended up on the bank’s bid list for architecture servic-
es, Varvarikos said. It’s a success story because while
the firm plans to bid on a large RBC contract, it’s al-
ready done four projects for another Tier 1 supplier
that the owner met at the mentoring workshop.
A simple metric that organizations can use is looking at
money spent at the Tier 1 and Tier 2 levels, added Hum-
phrey. As well, companies can employ a snapshot of
where the organization stands in terms of the lifecycle of
current contracts. For example, if an organization has
200 suppliers with an average contract lifecycle of two or
three years, it’s relatively easy to project what a supplier
diversity program will look like in a few years. “Part of it
is understanding your new business awards,” he said. “At
GM, we not only track the number of suppliers—the
spend—but we also track the new business awards every
quarter so that we can understand the sustainable curve
and what our program will look like in the out years,
based on the average contract life cycle.”
As well, organizations can integrate everyday corpo-
Thought
Leadership
“As an Aboriginal, woman-owed
business, it not only classifies us as a
diverse supplier, but also enables us
to supply a diverse workforce.”
~ Jenny Larocque
14 | FEBRUARY 2014
PBB01_10-15_CALGARYroundtable.indd 14 14-02-18 2:43 PM
15. rate metrics into supplier diversity programs, Humphrey
added. His team at General Motors looks at diverse sup-
pliers in terms of cost savings, quality, delivery and so
forth. “We want to make sure that they’re getting the
same level of exposure that some of their bigger, non-mi-
nority, non-diverse companies are getting.”
Tracking the number of bids to which diverse suppliers
have been invited allows organizations to see whether
those suppliers are offering valuable goods or services,
said Dorrington. From there, organizations can track
whether the number of bids increases and if those bids
turn into awards. “Dollar spend, that’s hard if you’re just
starting out,” she said. “What are the steps you’ve done
along the way in developing that community and develop-
ing the suppliers? That’s where we start to see some real
success.”
Organizations can define success in several ways, not-
ed Larocque. “But once you actually have a program
rolled out, you need to measure it by quantifying the data
and then comparing it to your organization’s goals to en-
sure that you’re hitting those targets.”
Supplier mentorship
Another way that organizations can get involved in sup-
plier diversity is through mentorship, and both RBC and
General Motors have such programs. RBC holds an annu-
al event, with roughly 100 attendees, focusing on net-
working. The event features roundtable sessions, panel
discussions and presentations on how organizations can
best position themselves to compete, navigating around
large corporations, establishing relationships and so
forth. The bank also provides one-on-one mentorship,
where it pairs RBC procurement professionals with di-
verse suppliers for a year. “It’s a reciprocal mentorship
program,” he said. “Each person learns from the other.
The RBC counterpart learns what the gaps are in our sup-
plier diversity program and how we can improve it. The
diverse supplier looks at how to be more successful when
competing for business at corporations like RBC. Both
programs have been quite well received and we’re look-
ing to expand them further.”
Laroque told the audience that she had recently been
accepted to participate in RBC’s reciprocal mentorship
program. The focus will be on evaluating RFPs and what
larger organizations look for from suppliers. “From our
perspective that knowledge is so valuable,” she said.
“We’re a small supplier—we have the capabilities of com-
peting alongside other agencies and other companies.
And so just the learning from it is so valuable.”
General Motors has a program called the diversified
development program, said Humphrey. The program fea-
tures a two-year timeframe with key components that
include the executive director meeting quarterly with
the owner and top leadership of the company to go
through action items to ensure they get addressed. Sup-
pliers graduate from the program after the two years.
General Motors currently has eight suppliers enrolled in
the program, Humphrey said.
Dorrington recommended that organizations talk to
diverse suppliers to ensure both sides are clear regard-
ing expectations of the process. Typically, she said, sup-
pliers are looking to build a relationship that results in a
contract. Meanwhile, a corporation’s role is often to grow
the supplier’s ability to bid, and these two differing view-
points can lead to misunderstandings regarding the
goals of a program. “Make sure there’s management of
the expectations at the front end,” Dorrington said. “You
have to say, ‘what do I want my program to deliver? Is it
simply to grow the supplier’s knowledge or is it to grow
the supplier?’ Those are distinctly different elements
that you have to be aware of.”
During the discussion, the panel produced a definition
of supplier diversity, described the elements of a supplier
diversity program and put forth the business case and
best practices for implementing a program. Those look-
ing to implement or expand policies should have ample
new ideas to work with. B2B
“For us, [supplier diversity] is a
proactive program or process set in
place by an organization that en-
sures an inclusive supply chain.”
~ Cassandra Dorrington
FEBRUARY 2014 | 15
PBB01_10-15_CALGARYroundtable.indd 15 14-02-18 2:43 PM
16. by Michael Power
On Course For Success
Boston summit highlights tools to navigate the role of chief procurement officer
W
hat gets procurement practitio-
ners fired up in the morning? Lou-
is Berard, senior research analyst,
global supply management with Aberdeen
Group, said the organization considered that
question when approaching speakers for the
2013ChiefProcurementOfficerSummit,held
last October 29-30 at the Seaport Hotel in
Boston. The event allows procurement exec-
utives to learn, network and develop a vision
ofprocurement’sevolving role.
To succeed, procurement needs to under-
stand its spend, Berard said. The world is
growing, he said, which leads to innova-
tion. But business faces new challenges.
Procurement practitioners must ask if they
have visibility into supply chains and the
talent to advance; all while facing corpo-
rate pressure to do more with less.
“Everybody thinks they’re unique but re-
ally, we’re all facing the same challenges,”
Berard said. “Sometimes you need to chal-
lenge the system to move forward. That’s
what we’re going to do.”
Success means navigating global change
with a clear path, acquiring the right tools
and skills and keeping communication
open, he said.
Conference speaker Tony Abate, chief pro-
curementofficeratCigna,aConnecticut-based
health insurance and health services compa-
ny, took up the theme of charting a course dur-
inghisdiscussion,BeyondProcurement:Man-
aging Supplier Relationships to Build
Competitive Differentiation. On a voyage, the
traveller considers the right perspective, plan and crew, he said.
That’sachallengeinhealthcare,whichseesafluxuatinggovernment
role, changing delivery systems and engaged consumers.
The global rise of the middle class will present opportunities,
he said, like lower prices, more affordable goods and more ex-
ports from here to emerging markets. But negative develop-
ments will include job losses as economies adjust, he added.
“We’re in transition from the lower wage jobs that we moved to
(other) countries to higher wage jobs,” Abate said.
So should organizations globalize? Abate said it’s less painful
to begin operations offshore than move them abroad later. Cig-
na works to compare business complexity with supplier matu-
rity, targeting mature functions that are low in complexity.
In 2011, the company developed strategies for each business
area, Abate said. The result was a shift from a commercial to
retail supply chain, resulting in more “entrepreneurial relation-
ship” with suppliers.
The company focused on three things: the right people, the
right processes and the right technology. Cigna performed re-
search and built relationships with the C-level in other coun-
tries to make it easier to get data. As well, those involved in any
procurement transformation must be on the same page, Abate
noted. “If you’re not aligned, it’s not going to work,” he said.
Following Abate’s session, a four-member panel looked at
ways in which the supply chain management practitioner’s role
has changed over time—as well as risk mitigation strategies.
The panel devoted time to outlining ways in which they’ve re-
moved silos with the C-level. John Dillon, vice-president of sup-
ply chain management at Nordson, noted he attends meetings
with the C-level, but that much of what was discussed remains
unknown to operations managers. The company has created a
process to align the operations teams so important information
is integrated into development and operations plans.
Dillon recommended that organizations develop a mission
statement to boost customer collaboration. Nordson also asks
Future of
Procurement
16 | FEBRUARY 2014 PurchasingB2B.ca
PBB01_16-18_FutureProcure.indd 16 14-02-18 10:31 AM
17. customers about new products and how they will be used.
Panelist Wade Winters, vice-president of supply chain at Au
Bon Pain, described the risks involved in the food supply chain.
Food-borne illnesses, for example, could devastate a restau-
rant’s business. Bad weather can lead to no deliveries. Winters
recommended organizations develop disaster recovery pro-
grams to mitigate risks. “We’re all in the supply chain business,
but we’re also all in the risk management business,” he said.
Disclosure from suppliers can be a challenge and some suppli-
ers are reluctant to open their books, said Winters. But key sup-
pliers often cooperate. Working with those customers to discover
what’s driving their costs can result in lowering those costs. The
more you share, the more new approaches can be developed.
Leading from the centre
Also presenting at the summit were Tom Hogan, senior VP and
CPO at CBS Corporation and Ken Naughton, the corporation’s VP
of spend analytics and sourcing strategies. The two spoke about
the organization’s centre-led procurement function.
Naughton noted that a challenge the broadcaster faced was
supporting an environment in which business units remain sep-
arate in order to develop content. A related challenge was find-
ing talented people who could thrive in that environment, he
said. The group needed procurement practitioners who could
collaborate across the organization. The group cast a wide net
to find such talent, looking beyond sourcing practitioners.
“It was worth being patient to get the right people and not
settle for someone else,” he said. “I can’t stress enough the im-
portance of casting a wide net.”
Procurement at CBS houses four main areas: project manage-
ment, travel, procurement/administration and analytics
strategies. Naughton, who heads analytics, began with roughly
30 accounts payable systems. The first step in simplifying the
system was installing repeatable processes on spend analysis.
Naughton said his group stays on top of supply market intelli-
gence to discover what the market indicates costs should be. In
one example, the team ran a seven-percent price decrease from a
supplier through a should-cost model to find that a 10-percent
increase was appropriate.
The team also established a procurement council in 2008, al-
lowing CBS business units to talk about op-
erational issues. Also that year, they began
an e-sourcing system and a contract man-
agement tool, among other changes.
The result was the corporation now has a
centre-led sourcing function supporting all
CBS divisions, engagement with the C-suite
in various divisions and sees a large amount
of savings. “The average project savings far
exceeded what I projected coming into the
company,” said Naughton.
Another speaker, Eduardo Jonas of Amer-
ican Axle Manufacturing (AAM), also spoke
about his organization’s move to a centre-
led procurement model. To support the
transformation the company established
“Pillars of improvement” like a centralized
strategy, increased communication and
other changes.
Among the re-works that AAM developed is
the use of a commodity database, Jonas said.
Re-useofpartsiscommoninthecompany’sin-
dustry, and the database helps the company
think about several elements of the decision.
AAM has also ramped up its focus on com-
munication, Jonas said. The company holds
global staff meetings that now boast up to
95-percent attendance. Regional staff meet-
ings take place weekly, as well as annual pro-
curement meetings in Detroit for purchasing
directors. The company set up a supplier coun-
cil that meets four times a year. The result has
been the establishment of early sourcing and
increased intra-regional support, Jonas said.
“Wegetabettervisionofwhat’sgoingoninour
global organization,” he said.
Among the other recent trends discussed
at the summit was the changing landscape
of the workforce, with one panel discussion
focused on how managing the contingent
FEBRUARY 2014 | 17PurchasingB2B.ca
PBB01_16-18_FutureProcure.indd 17 14-02-18 10:31 AM
18. 18 | FEBRUARY 2014 PurchasingB2B.ca
workforce was blending into traditional re-
cruitment strategies. Pressure to do more
with less means a larger contingent work-
force, said panelist Dawn Evans, president
of executive sourcing network SIG. Most
businesses have policies for contingent
workforces; but she noted those policies
are rarely followed. The “war for talent” is
complicated by workforce age differences
and technological advances, she noted.
Meanwhile, Regeneron Pharmaceuticals
has almost completely outsourced the
staffing function, said the company’s vice-
president of human resources and panelist,
Ross Grossman. When he began his posi-
tion, he said, the HR function was disorga-
nized—so Regeneron bought a staffing
company to improve the process. The main
driver in that decision was the need to ac-
quire resources. While Regeneron uses a
handful of contingent workers, the organi-
zation usually searches for employees who
are looking to stay for the long term. “There
are people in every generation who want
their jobs to have meaning,” he said. “Our
Millenials are staying because they believe
in what they’re doing.”
A view to the future
A CPO must know where the organization wants to be, said Len
DeCandia, CPO for The Estee Lauder Companies. During his ses-
sion, DeCandia stressed his employer’s reputation as a prestige
beauty products supplier meant the unique supply chain chal-
lenge. The company had to move quickly and execute flawlessly;
all while staying a “high-touch company.”
Accomplishing that while managing costs represents a chal-
lenge as CPO, DeCandia said. The company has a talented and
skilled staff, he stressed, including both computer-savvy Mille-
nials and those who have been in the field for decades. To de-
velop that talent, Estee Lauder has rotational programs so staff
can go to different regions, categories or parts of the business.
DeCandia noted that a CPO must also develop communication
skills, honing the use of language used by internal business
partners. The position also called for the ability to translate in-
ternal needs to a supplier base that’s most likely dealing with
various buyers simultaneously.
Quality remains the most important factor when dealing with
that supplier base, DeCandia noted, since Estee Lauder’s suppli-
ers must meet the high standards of the company’s customers.
“We want them to be the best at what they do because that’s
what our customers want,” he said.
In conclusion, the summit offered forward-looking topics to
set procurement practitioners on a course for success. Certain-
ly, 2014 and beyond will be both challenging and rewarding for
the profession. B2B
Future of
Procurement
PBB01_16-18_FutureProcure.indd 18 14-02-18 10:31 AM
19. Addressing issues affecting Canada’s public procurement professionals
PurchasingB2B.ca FEBRUARY 2014 | 19
A
discussion entitled Total Cost of Owner-
ship (TCO): Strategies Beyond Pricing at
the Canadian Public Procurement Fo-
rum 2013 drew a large crowd as panel mem-
bers David Davidson, Bruce Gorman, Eddy Jin
and Terry Kyritsis talked about the vast chasm
that can loom between the cheapest cost and
the lowest price and what the total cost of own-
ership means at their educational institutions.
Jin, director of procurement services at the
University of Toronto, opened the session by
explaining that his department handles a bud-
get of $2.4 billion and buys items for everyone
from rocket scientists to molecular geneticists.
Yet they don’t have a huge staff compared to
other universities. The answer to handling the
overwhelming demand on their services is
through e-procurement. Making a purchase on-
line can save several hours over the cost of a
phone purchase, which results in huge produc-
tivity savings. As well, vendors are often happy
to waive such costs as shipping charges for the
convenience of having uniform order forms,
contracts and payment schedules. The result is
enormous savings in both productivity and to-
tal price, significantly reducing the TCO.
Gorman followed with a discussion of pro-
curement practises at Memorial University of
Newfoundland, which does not have a central
procurement department. The university is
highly decentralised and all faculties, schools
and administrative units can create their own
purchasing orders and control their own pur-
chasing decisions. As well, the NL Public Tender
Act defines the best bidder as the lowest bidder.
The university is currently reviewing its pur-
chasing policy to factor the total cost into its
purchasing structure including transportation,
scheduled maintenance, equipment calibra-
tion, extended warranties and training.
Kyritsis, CEO of the Ontario Education Col-
laborative Marketplace, described cost and
price as similar to an iceberg, with price (the
amount paid to the supplier) being the relative-
ly small section above the water and cost (in-
ternal practises, processes and requirements)
T
he Canadian Public Procurement Council
hosted its annual forum in St. John’s, New-
foundland and Labrador, last November
3-6. The conference, which carried the theme
“Rock Solid Procurement,” featured a mix of ple-
nary and concurrent sessions.
This issue of PurchasingB2G is the second in-
stallment of articles covering selected confer-
ence sessions. The first article details the poten-
ital gap between cheapest cost and lowest price,
and the meaning of total cost of ownership.
The second article describes how govern-
ment e-procurement is heading to the cloud.
This report looks at two concerns for public
organizations when looking at cloud computing
as an option: data security when that infor-
mation isn’t stored on site, and regulatory
compliance.
A third and final article investigates how to
use key performance indicators (KPIs) to con-
tinually improve methodology in a public pro-
curement environment.
Best Price Versus Lower Cost
Tracking KPIs among the tools to help public organizations focus on the actual
costs of goods and services
Keeping Public Procurement Rock
Solid
by Denise Flint
PBB01_19-21_B2G.indd 19 14-02-18 11:47 AM
20. 20 | FEBRUARY 2014
T
he cloud is coming, so get used to it. That
was the basic message behind the talk by
Sanjeev Juneja and Adam Fischer at the
Canadian Public Procurement Forum 2013, held
last November 3-6 in St. John’s, Newfoundland
and Labrador. Juneja is the director of public sec-
tor sales and alliances for Ariba’s North American
division and Fischer is the co-founder of OPTIS
Consulting Network. Ariba is a software and in-
formation technology services company that
helps businesses and organizations to facilitate
and improve the procurement process, and OP-
TIS is a data management service for human re-
sources, employee benefits and risk management.
In the traditional model for managing comput-
er resources, a company buys the software it
needs and depreciates it over time. With the cloud
model, multiple companies use a shared infra-
structure and pay as they go, essentially trading
in real server hardware for virtual hardware.
The new paradigm is vaunted to help companies
avoid upfront infrastructure costs, improve man-
ageability and decrease maintenance. Users can
benefit from existing technologies without hav-
ing expertise in them, enabling them to focus on
their core business instead of IT.
Yet governments everywhere are slow to adopt
the technology. Canada, in particular, lags behind
Japan, the UK and the US where a cloud-based
mentality is increasingly taking hold. Two factors
contribute to this reluctance. The biggest one
involves concerns about security. Without data
being stored on site, how can governments
ensure it’s properly protected?
The other problem is regulatory compliance.
The federal and many provincial governments
have policies preventing personal data from leav-
ing Canada. Yet the actually hardware supporting
cloud-based computing could physically reside
anywhere in the world.
Juneja insists that the security measures in
place for cloud-based networks are as stringent
as that of internal systems. Worrying about it
isn’t realistic, he said. Although he admits there
are concerns over privacy issues, he questions
whether servers need to be in Canada in order to
address the problem and since most clients aren’t
individuals, personal privacy isn’t an issue.
To put a case for the increased efficiency of
cloud network support, Fischer used the example
of a crown corporation in Western Canada that
has $1billion in direct and indirect spending per
year, 2,000 employees and 150,000 transactions
per year. With a host of problems, including
lengthy turnover times on invoices, their direc-
tive was to reduce P2P costs, pay suppliers on
time and automate P2P transactions.
Yet there was little executive support for
change. Fischer said they had to change the cul-
ture of the organization and they had to do it fast
before people were able to muster much resis-
tance. When they were finished, 95 percent of in-
voices were paid on time—up from less than 60
percent and there was significant improvement
across the entire procurement process. The cor-
poration saved $1 million in the first year, a num-
ber that should grow over time to $5 million.
“Stop saying ‘Are you guys going to do this?’
and move to ‘How are you going to implement
it?’” Fischer challenged. B2B
Benefits of the cloud
Paradigm avoids upfront costs, boosts manageability and lowers maintenance
by Denise Flint
being the much larger part hidden below. He il-
lustrated his point with a description of the
way sand is purchased for kindergarten play
tables. Cheap truckloads used to be delivered
to a central storage unit where it was bagged
and distributed to schools across the prov-
ince—a very time consuming and labour inten-
sive process. Switching to direct delivery of
smaller quantities to individual schools result-
ed in huge savings even though the apparent
price was higher.
Total cost of ownership is a philosophy, a
methodology and a tool that must include ac-
quisition costs, ownership costs and post-own-
ership (disposal) costs, Kyristsis concluded.
Davidson, CEO of Interuniversity Services In-
corporated, reported that for every dollar
spent by the 18 post-secondary institutions for
whom his organization provides services they
receive five to six dollars back in savings.
“The total cost is the real cost and the lowest
unit price is not the professional procurement
way,” he told the audience.
According to Davidson, the way to keep the
focus on the real cost of procurement is through
key performance indicators because decisions
based on numbers are easy to defend.
“It’s not about the quality of the pen—most
suppliers get their stuff from the same manu-
facturers—it’s about the actual cost.” B2B
PBB01_19-21_B2G.indd 20 14-02-18 11:47 AM
21. FEBRUARY 2014 | 21PurchasingB2B.ca
When Good Enough Isn’t
Good Enough
The case for key performance indicators
H
ow do you measure process performance
in a public procurement environment? It
can hardly be compared to a manufactur-
ing environment in which a specific product can
be tracked and tested for flaws. Performance
processes are administrative and not necessarily
standardized and repetitive.
And yet, without putting any measurements in
place it becomes almost impossible to improve,
—or at least to recognize when an improvement
has taken place. And improvement in organiza-
tions is crucial because in many cases good
enough simply isn’t good enough. Even working
at 99-percent efficiency, the US Postal Service
would lose 20,000 pieces of mail per hour and
American hospitals would perform 5,000 incor-
rect operations each and every week. As well,
there would be two bad landings a day at most
major airports and 200,000 incorrect prescrip-
tions that get filled every year.
Francois Emond, the executive director of the
Canadian Public Procurement Council (CPPC), be-
lieves that he has the answer. In a session pre-
sented at the Canadian Public Procurement Fo-
rum 2013, Emond explained how to use key
performance indicators (KPIs) in order to con-
tinually improve methodology in a public pro-
curement environment.
KPIs measure the business health of an orga-
nization, ensure that everyone is on the same
page regarding goals and strategies and also
provides a focal point for enterprise-wide stan-
dardization, collaboration and co-ordination.
Although KPIs are usually thought of as private
business measures, they can also be used in the
government. It’s possible to apply the notion of
defects to services and administration as well
as pens and machinery.
“Remember, data is objective,” Emond stressed.
“It will tell you what your performance is.”
To that end, indicators can be used to identify
and improve ineffective processes—those that
don’t meet expectations; inefficient processes;
those that are expensive or require a lot of effort;
and non-existent processes, as well as to resolve
quality problems. However, in order to improve,
organizations must establish a baseline that will
measure the performance, isolate the trouble
spots and identify areas that are ripe for im-
provement.
Emond used the Six Sigma methodology to il-
lustrate how to make improvements. The pro-
cess begins with defining a project and deter-
mining the priorities.
A narrow, well-defined process is identified
for improvement, which is then measured—
what are the sources of variance and waste,
analysed—what critical factors lead to the cur-
rent performance, improved—implementing
any corrective modifications, and controlled—
maintaining the gains that have been achieved.
This process is often referred to as DMAIC.
The most important phase is defining the pro-
cess to be improved, while the most neglected
is control, Emond said.
“Youthinkyouhaveaccomplishedsomethingand
then you move on,” he told the audience . “This leads
to neglect.”
Emond also warned against falling victim to the
beliefthattheendresultisforthebenefitoftheinstitu-
tion. Too often, he noted, indicators such as the num-
ber of purchase orders are used by those looking to
measure efficiency. But those numbers mean nothing
towhatshouldbetherealfocusoftheexercise.
“This is not done for the organization,” Emond
said. “It’s done for the client. And what are clients
concerned about? ‘When can you do it?’ and ‘How
much will it cost?’” Those are the figures that
have to be improved.
“Client satisfaction is the goal, not just internal
efficiency.” B2B
by Denise Flint
“KPIs measure the business
health of an organization,
ensure that everyone is on
the same page regarding goals
and strategies and provide a
focal point for enterprise-wide
standardization, collaboration
and co-ordination.”
PBB01_19-21_B2G.indd 21 14-02-18 11:47 AM
22. ProcureCon Comes To Canada
A
procurement event with a decade-
and-a-half history is poised for its
inaugural conference in Canada.
ProcureConCanadahitsTorontoMarch17-
19 at the Hyatt Regency Toronto. The focus of
theevent,whichhasbeenaroundfor15years
internationally, is on procurement practitio-
ners learning from each other, said Sara
Mueller, ProcureCon Canada’s program di-
rector. In putting together the event’s agenda,
Mueller says she spent several weeks talking
to procurement professionals to learn about
their challenges, initiatives and objectives.
“The whole event is very interactive in
format, so that peer-to-peer learning is fos-
tered,” said Mueller.
PurchasingB2B is proud to be a leading
media partner for the event. For more in-
formation or to register for ProcureCon
Canada, visit www.procurecon.ca.
Day 1
Opening Ice Breaker Discussion
Finding, Attracting, and Retaining High
Caliber Procurement Staff—New Strate-
gies for 2014 – 9:05am
Attendees will interact with those at their
table and learn how they’re tackling
staffing challenges.
Opening Keynote Workshop
Procurement Transformation: Creating
an Effective and Efficient Procurement
Model – 9:35am
This session highlights building a case for
change; developing the right procurement
model, finding the right people and more.
Meet the New CPOs: Guardians of the
bottom line – 11:20am
Delegates will learn what separates
outperformers from the rank-and-file,
using industry leader insights; strategic
sourcing savings strategies and more.
Implementing a Rock-Solid Fully Auto-
mated P2P Solution – 12:05pm
Ensure you’re leveraging your procure-to-
pay tools to drive efficiencies and better
manage spend and vendor management.
Evaluating Addressable Spend by Seeing the Invisible – 1:50pm
Public Mobile’s strategic sourcing director Eugene Fernandez
shares best practices from the top 25 global supply chain
organizations like IBM and Dell.
Building a Collaborative Approach to Mitigate Product
Delivery Risk in a Global Procurement Organization – 2:35pm
Learn how Pratt Whitney Canada used ACE continuous
improvement operating system to deploy a new transformational
initiative.
Determining If Outsourcing Your Procurement Function Is
Right for your Organization – 3:20pm
Blackberry’s Mathew Moore shares how outsourcing helped
the company increase visibility and insight on spend and
reduced cycles times.
Closing Keynote Workshop
Creating Competitive Advantage Through Your Third
Party Expenditure and Key Suppliers – 4:20pm
This workshop focuses on optimizing supply chains, trans-
forming organizations to spend money wisely, driving pro-
curement proficiency and more.
Day 2
Opening Keynote
Determining Key Elements to Build—And Realize the
Benefits of—Sustainability in Your Organization – 8:45am
Learn how Shaw Communications built sustainability in many
of Canada’s leading organizations, including Bombardier
Aerospace and Ford.
CASE STUDY: Streamlining Your Procurement Process
To Achieve Better Business Results – 9:05am
Canada Post’s Bill Michalopulos discusses transforming a
procurement model to procure-to-pay, identifying business
results from the transformation, the importance of change
management and more.
PANEL: Determining The Most Effective Procurement
Tools to Reach the Market and Create Efficiencies in
Your Organization – 9:25am
Panelists share tools for success so delegates can decide which
tools will enhance their sourcing and data analytics capabilities.
Uncovering Travel Management Opportunities within your
Hotel Program – 10:05am
Discover hidden risk and savings potential in your hotel
program, learn to identify the right hotel partners/suppliers
and maintain costs.
Conference brings together procurement practitioners for peer-to-peer learning
ProcureCon
Canada 2014
22 | FEBRUARY 2014 PurchasingB2B.ca
PBB01_22-23_procurecon.indd 22 14-02-18 3:53 PM
23. 10:55am – Interactive Roundtable Discussions
PANEL: Optimizing Spend Analysis and Visibility to Maintain
Cost Reductions – 11:55am
Learn to measure if you’re truly saving money; analyzing the
cost of service quality, productivity, labour savings, record
keeping and more.
Implementing Effective Corporate Governance to Ensure
Success in a Global Approach to Procurement – 1:35am
Hanesbrands’ Joe Vaughn shares accomplishments like
establishing a corporate governance model to define how your
company procures, incorporating ethics standards and
training and documentation and understanding commodity
trends.
Avoiding Common Contract Pitfalls to Achieve
Greater Savings – 1:55
Learn a new perspective on contract management to set
your firm up for success.
Contract Lifecycle Management To Achieve
Compliance Success – 2:15pm
Key learnings include: assessing how you’re monitoring contracts
for compliance; automating contract creation and finalization;
organizing, locating and reporting on contracts and more.
Implementing Strategies to Manage Global and Domestic
Supply Chain Risk – 2:35pm
Hear strategies to manage everyday and exceptional risks to
reduce vulnerability and ensure continuity.
Thriving in a World of Trade Actions and Antidumping
Regulation – 2:55pm
Learn how to manage trade actions and antidumping
regulation so you always have quality inventory.
3:45 pm – Concurrent Tracks
5:05 pm – Interactive Roundtable Discussions With
Afternoon Speakers
Day 3
Leadership in the Supply Chain – 8:30am
SunRype’s Warren Sarafinchan discusses driving supply chain
change to be successful even during challenging periods.
Partnering with your Suppliers to Bring Innovation to your
Company and Remain Competitive – 8:50am
Learn to select and engage suppliers that can offer innovation
and move your company forward.
PANEL: Driving Sustainability in Procurement and Supply
Chain – 9:10am
A panel discusses how to maximize sustainability and how
sustainability programs increase profitability.
Setting the Foundation for Long-Term
Success and Strategic Expansion: The
Road from Tactical to Strategic
Procurement – 10:20am
Victor Dixon, VP of supply chain at Com-
posites Atlantic, and his team focus two
years out and on where they want to create
success.
PANEL: Having the Latest and Greatest
Centralized Contract Documentation in
Place to Protect Your Company –
10:40am
Panelists discuss optimizing their contract
documentation and reporting.
Executional Excellence: Setting The
Supply Chain Management Organization
Up For Success – 11:20am
Learn steps to create executional
excellence and tools for a sustainable
structure and practices.
11:40 am – Interactive Roundtable
Discussions
Exploring How Tech-Driven Companies
can Best-Leverage Their Spend As
Technology Quickly Evolves – 1:45pm
Michael Johnson of Shell Canada shares
strategies for negotiating large-scale
contracts to develop and deliver technology.
Running Away and Joining the Circus:
A Procurement Tale on Establishing Value
Added Service – 2:05am
Cirque du Soleil’s Nadia Malek talks about
centralizing procurement processes,
overcoming challenges of procurement
policy implementation, tracking and
improving procurement processes and
more.
Establishing a Supplier Diversity
Program to Reap the Benefits of
Working with Diverse Smaller
Organizations – 2:25pm
Learn the benefits and challenges of
diverse suppliers, as well as components
of a supplier diversity program.
2:45 pm – Interactive Roundtable
Discussions with Afternoon Speakers
3:15 pm – Conclusion of ProcureCon
Canada 2014
FEBRUARY 2014 | 23PurchasingB2B.ca
PBB01_22-23_procurecon.indd 23 14-02-18 3:53 PM
24.
25. PurchasingB2B.ca FEBRUARY 2014 | 25
26 FLEET PROFILE
Filling holes in Montreal
28 LAUNCH CONTROL
New cars show the strength of the auto sector
32 CROSSOVER HITS
The newest hot vehicle segment in Detroit
36 TRUCK STARTS
Ford’s aluminum F-150 and the GMC Canyon
38 Road Test
Three executive cars
InthiseditionFEBRUARY 2014
Fleet Management is a special section of PurchasingB2B magazine, running in the January-February, March-April, May, July-August, October and November-December issues.
It is an important resource for Canadian procurement professionals who recommend, select and manage fleet vendors and service providers.
Editorial inquiries: Emily Atkins, 416.510.5130, eatkins@bizinfogroup.ca. Advertising inquiries: Dorothy Jakovina, 416.510.6899, djakovina@bizinfgroup.ca.
32
Madden in at PHH Arval
PHH Arval has appointed Scott Madden vice-president
of business development for Canada’s central and eastern
regions. Madden joins PHH Arval with more than 20 years of
transportation and logistics experience. He most recently served
as a manager at Purolator. His responsibilities there included
sales strategy, customer and vertical market segmentation, con-
tract negotiation, sales operations and implementation. Madden
began his career at FedEx Canada, where he held positions in
operations and sales.
Madden graduated from McMaster University with a
Bachelor of Arts.
Nissan tests autonomous drive
Nissan Motor Corporation has carried out the first public
road test of Autonomous Drive on a Japanese highway. A
Nissan LEAF electric vehicle equipped with the technology
took to the Sagami Expressway in Kanagawa prefecture,
southwest of Tokyo, with the prefecture’s governor, Yuji Ku-
roiwa, and Nissan vice-chairman Toshiyuki Shiga, on board.
The vehicle operated fully automatically on the highway.
“Nissan seeks a safer, more comfortable and environmen-
tally friendly mobile future,” Shiga said. “Through these tests
on an expressway, we hope to further advance our techno-
logical development, with the goal of soon implementing
Autonomous Drive vehicles. When starting a new project,
serious effort is required to gain an understanding of all the
variables involved. We were able to conduct this important
testing on the Sagami Expressway thanks to the strong sup-
port from Kanagawa Prefecture.”
The milestone event in the development of next-generation
mobility took place near the Sagami Robot Industry Special
Zone, an area being revitalized with the help of the local gov-
ernment. The public road test conducted in the special zone will
help Nissan to develop Autonomous Drive towards its goal of
being ready with commercially viable vehicles by 2020.
Hyundai appoints Romano
Donald Romano has joined Hyun-
dai Canada in the newly created
position of chief operating officer.
Romano’s key responsibilities will
be sales, marketing, parts, service,
product and strategic planning, and
public relations. He will report to
Steve Kelleher, president and CEO.
With the addition of Romano,
Kelleher will spend more time
managing the organization’s overall
strategic direction as well as leading the company’s IT, legal,
human resources, and finance departments.
After entering the automotive industry with Nissan North
America in 1985, Romano joined Mazda Motor Corporation in
2000. He progressed through a number of sales and marketing
positions before becoming the managing director and presi-
dent of Mazda Canada in 2006. In 2010, his responsibilities
at Mazda expanded. With the added title of Chief Marketing
Officer, he led the company’s marketing activities across North
America. In 2012, Mr. Romano became the senior managing
director and chief marketing officer with ALJ International.
38
26
26. PurchasingB2B.ca26 | FLEET MANAGEMENT | FEBRUARY 2014
C
anadians in colder climes have long had issues with
potholes, but as global warming alters weather
patterns, the peculiar mix of deep freezes and balmy
thaws has exacerbated the problem. Asphalt, a mix of gooey
bitumen, oil byproducts, gravel and curatives, repels snow
and rainwater but once it loses its structural integrity, snow
and rain seep in through the cracks. As the water beneath
the surface contracts and expands through the freeze-thaw
cycles, it pushes out dirt and gravel to eventually create a
divot and then a pothole.
Last year, between December 7 and 17 alone, Montreal
crews filled about 5,000 potholes. But in early January
further weather weirdness had car owners calling 311 to
report growing craters, leading city workers to a second
round of repairs. The city typically fills between 35,000 and
50,000 potholes annually both manually and with the help
of two contractors and their equipment: Environnement
Routier NRJ Inc and Jean-Paul Trahan.
“We fill potholes year-round, but the volume increases
during the winter and the spring when we have the worst
potholes, which when they’re at least two feet in diameter
and six inches deep, can damage a vehicle’s suspension, tires
or wheels,” says Champagne. “We call on the contractors
and their specialized equipment when we have to repair
5,000 to 10,000 potholes in one or two weeks.”
Which is best, a manual or machined repair in terms of
durability and efficiency?
“It’s difficult to track because there are so many and we
don’t tend to revisit the intact repairs but one of our assess-
ments did show us the machined repairs usually last at least
until spring and up to half last at least two years,” says
Champagne, noting that the weather conditions during the
repair and the integrity of the surrounding pavement affect
the results.
Machined repairs are more efficient because a single
operator handles the repair from start to finish and simply
drives the entire unit from pothole to pothole. A manual
repair can require a crew of five or six people, who have to
exit the truck to load and unload materials and equipment
for each hole. However, it does provide more flexibility in
complex situations.
NRJ currently owns and operates five of Schwarze
Industries’ Roadpatcher machines, which automatically
repair potholes and other road defects. The machine blows
compressed air into the hole to remove as much dust, debris
and water as possible. To create a binding surface to which
the asphalt fill will properly adhere, an asphalt emulsion is
sprayed into the hole. The Roadpatcher accurately controls
the aggregate through a positive-flow conveyor system while
the asphalt is applied with a spray ring. The unit’s boom has
a tube stabilizer that allows the operator to precisely control
and place the patching material.
“A few years ago, we hired a lab to calibrate the machines
for us and develop an asphalt recipe that suited our weather
conditions,” says Steve Bastien, assistant general manager at
Environnement Routier NRJ Inc. “You need to tailor the
machine and the asphalt mix to the environment.”
The Roadpatcher units, which cost about $200,000
apiece, have a lifespan of 10 to 15 years if diligently and
rigorously maintained, which is crucial since they toil
primarily through Montreal’s cold winters. The focus is on
daily fluid and pressure checks, lubrication and of course, a
walk-around to ensure everything is as it should be. Opera-
tors even verify the accuracy of the thermometers to ensure
the emulsion is at the manufacturer-specified temperature.
“Because our Roadpatchers are at work in the extreme
cold, we customized them to perform and last through
Montreal winters by installing a heating element around the
spray nozzle and insulating the pipes that carry the asphalt
emulsion to the front of the Roadpatcher to keep the
mixture hot enough,” says Bastien.
Each machine requires a single operator to direct the
machine to the potholes. On a frigid winter day with a biting
wind, the operators certainly appreciate the Roadpatcher’s
cab which lets them monitor all functions from within.
“It’s more comfortable but most importantly, it’s safer,
because they’re protected from the traffic,” says Champagne.
The more experienced Roadpatcher operators train the
employees who are new to the Roadpatcher. In addition to
learning how to operate the Roadpatcher, they’re also taught
how to clean, maintain and troubleshoot it.
“We know that what we’re doing is effective because we use
our GPS systems to take us back to the potholes we’ve repaired
and year after year they’re still in place,” says Bastien. B2B
By Kara Kuryllowicz
Montreal’s pothole patching
crews use specialized equipment
Going hole hog
The patching machine needs only one operator who drives it from pothole to pothole.
27.
28. PurchasingB2B.ca28 | FLEET MANAGEMENT | FEBRUARY 2014
M
ore than 22 vehicles saw world debuts at the LA
Auto Show in November, that along with numerous
North American reveals, made the event a real
showcase for the auto industry’s current success.
World debuts included the Nismo Juke RS. Mercedes-Benz
had the brand’s North American introductions of the GLA
250 and the S63. Porsche revealed the Macan, the highly
anticipated SUV crossover vehicle. BMW, Chevrolet, Ford
Honda, Hyundai, Jaguar, Land Rover, MINI, Subaru and
Toyota rounded out the list, all with global introductions.
Here are some of the highlights:
Chevrolet Sonic
Chevrolet announced two new sedan options to its Sonic
lineup in 2014—the performance-inspired RS and the
style-conscious Dusk. The Sonic RS sedan joins the RS
hatch in the lineup and is powered by the Ecotec 1.4-L
turbo motor rated at 138hp with 148lb-ft of torque. Chevy
claims that unique transmission gearing in the six-speed
manual, or a 3.53 final drive ratio for automatic-equipped
models, along with a sport-tuned suspension and lowered
ride height, enhances the car’s performance feel.
Subaru WRX
The 2015 WRX boasts a brand new 2.0-litre horizontally
opposed direct-injection turbocharged (DIT) engine, a
stiffened body and chassis, and a new six-speed manual
transmission. There’s also an automatic with the “Sport
Lineartronic” transmission that offers an eight-speed
manual shift mode. The WRX’s DIT engine claims
improved performance over the outgoing model, pro-
ducing a maximum 268hp at 5,600rpm and 258lb/ft of
torque from 2,000 to 5,200rpm.
Kia K900
Kia took the wraps off its new flagship K900 rear-drive
sedan. The all-new 2015 K900 is poised to challenge the
full-size rear-drive luxury sedan segment, and will be offered
with a V6 or a V8 motor. The range-topping V8, equipped
with the VIP Package, will add additional amenities includ-
ing reclining outboard rear seats. The K900 Premium V6
will launch with an available Luxury Package and Technol-
ogy Package. The K900 is expected to go on sale during the
first quarter of 2014, and pricing was not yet available.
Hyundai Elantra Coupe
The updated 2014 Elantra Coupe now has a standard
2.0-litre Nu Gasoline Direct Injection (GDI) engine,
which adds 25 more horsepower (a 17 percent increase)
and 23lb/ft of torque from the prior model year’s 1.8-litre
engine. In the Elantra Coupe, this power plant produces
173hp at 6,500rpm and 154lb/ft of torque at 4,700rpm.
Toyota Highlander Hybrid
Toyota launched the all-new third-generation gas-elec-
tric mid-size hybrid Highlander SUV. The exterior has
grown in length by approximately three inches from
the previous version, while width is increased half an
inch. On the tech side, a newly designed 4.2-inch
colour LCD provides information including an Eco
driving indicator and energy monitor, and is available
on XLE and Limited models. This Multi-Information
Display is linked to the 8-inch touchscreen navigation
system, and will display turn-by-turn directions
immediately in front of the driver. The third-row seats
will be 60/40 split bench for up to three passengers
and added storage flexibility and convenience. Rear
cargo space behind the third row has also increased.
Mini Cooper
The new Mini, available in March 2014, offers two newly
developed power plants. The Cooper has a 3-cylinder
engine with a peak output of 134hp. The 4-cylinder engine
in the Cooper S makes 189hp. A 6-speed automatic
transmission is optional for all engine variants. The new
car is a little longer than its predecessor and offers an
additional 50L of cargo capacity. The John Cooper Works
concept version was revealed at the Detroit show.
Story and photos by Emily Atkins
LA and Detroit shows reflect
robust car biz
Launch Control
29. PurchasingB2B.ca FEBRUARY 2014 | 29
Photo:GMPhoto:Nissan
BMW
The BMW i3 electric vehicle was available for test
drives in LA. This is a futuristic car, with full carbon-
fibre construction, materials chosen for their eco-
friendliness and a no-frills experience. It is, however,
superb to drive. With all the instant torque of an
electric drive car and feather-light construction, the i3
is supremely quick off the line. This power is well
managed by BMW’s renowned handling. The i3 is
destined for arrival in showrooms in the spring.
Honda FCEV
Honda’s next generation fuel cell-electric vehicle launch-
ing in 2015 will feature the world’s first application of a
fuel-cell powertrain packaged completely in the engine
room of the vehicle, allowing for efficiencies in cabin
space. The next generation Honda FCEV is anticipated
to deliver a driving range of more than 300 miles
(480km) with a quick refueling time of about three
minutes.
Honda Civic
Canada’s perennial best-selling passenger car is
building on its 2013 refresh with enhancements that
include a new optional CVT, optional display audio
with 7-inch touchscreen, better engine performance on
all models except the Hybrid, and available lane
departure warning, blind spot display and smart entry
with push-button start.
Nissan Sentra NISMO Concept
Among the Sentra Nismo Concept’s many departures
from a production 2014 Sentra are its race-inspired
exterior with enhanced aerodynamic performance,
Nismo-tuned suspension, steering and transmission
and motorsports-style cockpit. Under the hood, the
concept adapts a 1.8-litre direct injection turbocharged
engine producing more than 240hp and 240lb/ft of
torque, mated to a 6-speed manual transmission. B2B
Subaru WRX
Chevrolet Sonic
BMW i3
Mini Cooper, John Cooper Works edition
shown in Detroit
Honda FCEV
Nissan Sentra Nismo Concept
30. Advertorial
Breaking Down
Your Fleet Spend.
Knowing your fleet costs is the first step in controlling them.
Despite being a significant annual expenditure,
many organizations still struggle to get a clear
handle on just what goes into their fleet spend and how
best to manage it, let alone contain it. As Canada’s largest
provider of fleet management services, ARI collects
operating and expense information on over 150,000
Canadian vehicles, and over 950,000 across North
America. From that, ARI has been able to develop a
profile and breakdown of the typical Canadian fleet spend,
which includes depreciation, fuel, maintenance, license
and taxes, interest, tires, management fees, and accidents.
“Only by identifying each element that goes into the fleet
spend, can you focus on containing the individual items
as well as overall costs,” says Peter Nogalo, marketing
manager at ARI.
Depreciation
Depreciation is really just the fixed cost of owning or
leasing vehicles. Whether it is leased or owned, it is
essentially your fixed cost of ownership from the time the
vehicle is purchased until it is sold.
“Many organizations focus on the up front costs when
looking at depreciation, but actually what happens on the
back end can have as much or more impact on the total
depreciation,” says Nogalo.
Determining market conditions and what a
used vehicle will be worth several years
out can be challenging, says Nogalo.
“This is where the role of your fleet
management company becomes
critical. While it may seem like
there is some sort of alchemy
involved, at ARI we actually use
historical, regional, published and
internal benchmarks to determine
the future value of the vehicle and set
depreciation rates accordingly.’
Fuel and Maintenance
Fuel has historically been the second
largest fleet expense, but over the
past few years it has actually
challenged depreciation for top
Typical Fleet Spend
31. Fleet Management Fees
While often the focus of sourcing professionals, fleet
management fees typically make up less than 3% of the
total fleet spend. In many ways, fleet management fees
are one of the most interesting line items, says Nogalo.
“In some ways, they receive disproportionate attention,
and other ways not enough.” At such a small percentage
of the fleet spend, the attention should be focused on
what value is being delivered from those fees.
“At ARI, we have focused on the 97% of fleet costs that
can be managed down. Our role is to work with our
clients to identify potential cost savings through process
improvements and best practices. We report on those
targets and return the savings back to our clients, which
are often more than the fees themselves,” says Nogalo.
About ARI ®
ARI is the largest vehicle fleet management provider in Canada, and second
largest in North America. ARI operates in Mississauga, Laval, Ottawa, Calgary,
Edmonton, and Burnaby. ARI manages over 950,000 cars, trucks and
equipment globally, including 150,000 in Canada. This year marks ARI’s 65th
anniversary in providing fleet management solutions.
spot. “The situation with fuel has been very interesting,”
says Nogalo.
“Of course, we all know that higher fuel costs are the new
normal, but the fact that depreciation costs have not risen
is what’s also affecting that balance.
According to Nogalo, the used vehicle market has been at
historic highs over the past several years, which has taken
the pressure off of depreciation. “The more a vehicle is
worth on the backend, the less your depreciation will be.”
One piece of good news on the fuel front is the introduction
of new, much more efficient technologies. While you can’t
control the cost of fuel, you can control how much of it
you use, at least to a certain extent, says Nogalo.
“By replacing older, less efficient technology with newer
models, you can benefit from a strong used vehicle market;
reduced maintenance expenses on newer, warranted
vehicles; and reduced fuel expenses, not to mention
improving the overall environmental performance of your
fleet,” says Nogalo.
Once again, your fleet management partner should be
able to help you with a comprehensive fleet replacement
schedule that includes a lifecycle analysis, standardization
options, fuel usage and green performance, as well as all
associated costs and potential savings.
For a comprehensive analysis of your
existing fleet spend or to learn other
best practices to drive down costs,
contact ARI at 1-800-361-5882 or visit
www.arifleet.ca
Advertorial
“Only by identifying each element
that goes into the fleet spend, can
you focus on containing the individual
items as well as overall costs.”
32. PurchasingB2B.ca32 | FLEET MANAGEMENT | FEBRUARY 2014
I
f 50 is the new 40, is the crossover the new sedan? With the
auto manufacturing sector making a strong recovery, new
vehicle sales are on the rise. And while the compact car
segment, with a healthy 22 percent, continues to hold the
largest share of the market, the compact crossover’s popular-
ity has exploded. With over 250 percent growth in the last
decade, it’s the fastest growing segment in the market. Aimed
at young couples or “empty-nesters” looking to downsize
from large sedans and SUVs, the compact SUV is red-hot
and showing no signs of leveling off.
It’s not surprising then, that virtually every major
manufacturer had their own diminutive crossover on
display in Detroit. Even the luxury automakers have joined
in, attracted by the 17 percent market share created by the
mainstream players.
Not that long ago the idea of luxury automakers building
SUVs and crossovers was considered blasphemy. But other
premium automakers have realized that Porsche made a
boat-load of money with the Cayenne—the vehicle which
almost single-handedly pulled them through the economic
implosion of a few years ago. So, when Porsche’s compact
Macan debuted recently in Los Angeles, it was met with
enthusiasm, instead of the outraged betrayal Porsche
loyalists showed the Cayenne.
While Chrysler, GM, Ford, Honda and Toyota still
dominate the compact crossover market, the recent inclusion
of premium brands made this one of the most interesting
segments to observe at NAIAS.
Here are a few of our favourites:
Volvo Concept XC Coupe
A three-door crossover hatchback, the Concept XC
Coupe is more than a design exercise, it represents
the fresh new direction Volvo is enjoying under new
leadership. In matte and glossy white, with soft grey
vinyl cladding and orange trim, the XC Coupe paints
a striking picture. Huge, 21-inch rims and a stream-
lined rooftop cargo container proclaim its sporty
intentions, but there’s no information available yet
on what the powertrain will be. While it’s unlikely
this attractive crossover will ever see production,
many of its elements—the squared-off grille, T-shaped
LED lights and signature C-shaped taillights—will
likely appear on the next XC90.
Compact crossovers take
centre stage at NAIAS
Story and photos by Lesley Wimbush
Continued on page 34
Volvo Concept XC Coupe
Infiniti Q30 Concept
