Supply Professional February 2023

POWERING UP THE SUPPLY CHAIN

Ocean shipping

AI in manufacturing

DIGITAL INTEGRATION

If you’ve had your fill of uncertainty over the past three years, as I have, it’s not particularly fun to mention that we’re likely in for more. Supply chain disruptions, workforce shortages, geopolitical strife, rising interest rates and other factors all but guarantee our collective crystal balls will remain cloudy for a while yet.

There’s a need to use any advantage we can against this uncertainty. That means, those who haven’t already begun doing so should work towards digital transformation.

Data is more important to supply chains than it’s ever been. You’re likely going to need even more data going forward. At the very least, you’ll need visibility into the data you already have access to.

It’s supply networks, not supply chains, that will power organizations going forward. That will mean access to data, protection from cyberattacks, and digital integration across an organization will be more important than ever.

We all need to be sure that data can flow across our organizations and their systems seamlessly, so that all operations run as smoothly as possible. An increasingly and continuously interconnected world means the need for interconnected data.

In fact, a recent whitepaper by IDC notes that this sort of digital integration can help to create a competitive advantage for organizations that engage in it. According to the whitepaper, 80 per cent of respondents noted levels of improvement – including the cost of handling and sharing information, staffing efficiencies, and KPI improvements – after automating a range of collaboration documents.

Digital integration can help to harness the potential of technological innovations like data analysis, machine learning, the Internet of Things (IoT) and others.

As another example, artificial intelligence (AI) used in supply chain can act as a tool to increase visibility, track sustainability, and increase cybersecurity and worker safety. Online shopping giant Amazon, for example, is using AI to recommend products to online shoppers, predict consumer demand, and optimize delivery routes, among other uses. Natural language processing allows warehouse workers to voice-pick. This keeps their hands free, thus making their jobs safer. We take a look at the various ways in which supply chains are using AI in our article on page 18.

In this issue, we also look at how digitally integrated inventory management can increase efficiency and effectiveness of the supply chain, for example by helping to foresee future demand, prevent shortages or excess inventory and so on. You can check out our inventory management article on page 16.

Whatever the status quo is now, it’s bound to change at some point. That means, whatever the industry, digital integration and adapting technology can help operations run smoothly.

EDITOR

MICHAEL POWER 416-441-2085 x7 [email protected]

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ALEX PAPANOU 416-441-2085 x1 [email protected]

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EDITORIAL ADVISORY BOARD

LORI BENSON Procurement Compliance, L&D, Engagement and Knowledge Lead | Business Enablement, Ernst & Young LLP

THOMAS HUDEL Manager, Purchasing and AP, Esri Canada Ltd.

WAEL SAFWAT Procurement Director, Black & McDonald

SHERRY MARSHALL Senior Manager, Meetings, Travel & Card Service, PwC Management Services

KIRUBA SANKAR Director, Program Support, Purchasing and Materials Management— City of Toronto

JEFF RUSSELL Corporate Purchasing Manager & Inventory Manager, Miller Waste Systems Inc.

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If you’re a baby boomer (which means you were born between 1946 and 1964) you may be familiar with the book, Zen and the Art of Motorcycle Maintenance, by Robert Pirsig. It’s a great work, but in my opinion his second novel, Lila, is even better. In it, he discusses the inability of traditional thinking to place the animal, platypus, into the conventional categories understood by zoologists. Specifically, mammals suckle their young while reptiles lay eggs. But low and behold, the platypus lays eggs and then after those eggs are hatched, it suckles its babies. So, what is a platypus? A reptile or a mammal?

Apparently, this question created quite a stir in the zoological community. What a paradox! But as Pirsig points out commonsensically, there really isn’t any paradox. Platypuses are doing what is natural for them, what they’ve been doing for thousands of years. The real mystery – and here I’m using Pirsig’s words verbatim –“is how mature, objective, trained scientific observers can blame their own goof on a poor, innocent platypus.”

This story came to mind in the wake of the Bank of Canada’s decision on January 26 to raise interest rates for the eighth time in the past 12 months. What it is responding to is an economy that it believes has systemic inflation built into it. Raising interest rates is the traditional response that central banks all over the world have used when they believe there is an inflationary spiral. Except the Bank of Canada is missing the point. We are not in an inflationary spiral and the inappropri-

ate response of hiking interest rates is almost certainly going to lead to a prolonged period of slower economic growth than is necessary.

My guess is that if you studied macroeconomics either in high school or university, you learned about the business cycle. The core of this theory is that in the developed world, the economy tends to grow over time, but not in a linear manner. There are extended periods of expansion, then contractions, before the recovery and subsequent re-expansion.

The two most important indicators to determine where we are at any one time in the business cycle are inflation and the unemployment rate. And this is why today’s central bankers are raising interest rates: inflation is higher than the desired two per cent and unemployment is extremely low. It currently stands at five per cent while the historical norm is 7.6 per cent.

A DIFFERENT ECONOMY

But here’s the rub. Today’s modern economy is fundamentally different than it was when the current theories were developed. Specifically, manufacturing is not as important as the service sector, which is far less cyclical.

Think of the most important services that you use routinely, health and dental care; or basic government services like getting your driver’s license renewed or mail delivery. These are not cyclical. I would agree that if this were the 1970s and the indicators were pointing in a similar direction, then the appropriate response would be to raise interest rates. But things are different now,

and when things are different, they are not the same.

If the Bank of Canada is incapable of reading the economy correctly, at least we can. I’m looking at a graph of the price of oil and a barrel is pretty much identical to what it was one year ago. At the same time, it’s significantly lower than it was from an extended period that stretches from March to August 2022. When the inflation numbers come out several months from now, we’re almost certainly going to see readings that are either benign or even disinflation which means lower prices compared to a year before.

And we have to correctly understand the unemployment rate. Yes, unemployment stands at five per cent which is about 2.5 per cent lower than the historical norm. But as of December 2022, the participation rate was 65 per cent. The participation rate measures the percentage of the working age population that is either working or actively looking for work. Historically, it has been about 67 per cent and if you adjust for that, you immediately understand that the unemployment rate is pretty much even with its historical norm.

I read the news every day and one large organization after another is slashing its work force. This suggests that this is not the time to be hiking interest rates.

So why are interest rates going up? A critical reason is that those who make these decisions are themselves exempt from experiencing the real economy. Tiff Macklem is the Governor of the Bank of Canada. He earns approximately $500,000 per year. My guess is that he’s not carrying a mortgage.

He and the other decision makers are so out of touch with the reality of most Canadians that we can’t reasonably expect them to craft sound economic policy. Which is why they don’t. SP

“We are not in an inflationary spiral and the inappropriate response of hiking interest rates is almost certainly going to lead to a prolonged period of slower economic growth.”

MORPHING RETAIL SUPPLY CHAINS HIGH CUSTOMER EXPECTATIONS MEANS REVISING YOUR PRODUCT DISTRIBUTION

Consumer behaviour, technology, globalization, environmental and social concerns, economic fluctuations, and more are among the challenges that companies face trying to serve consumers that are more demanding than ever.

Among organizations, 67 per cent consider meeting customer expectations for speed of delivery a critical factor impacting the structure and flow of their supply chains over the next 12 to 18 months. That’s according to a report from KPMG International, called The Supply Chain Trends Shaking Up 2023.

In the report, KPMG notes these key trends will need to be managed. Countries will be skeptical about cross-border trade cooperation. Cybersecurity will be a concern, while key material access will be in turmoil. Manufacturing footprints; retail and distribution supply chains are morphing and supply chain investments are accelerating. What outcomes could we expect if retail and distribution supply chains morph? Here are some of the possibilities:

Automation and data analytics could help to increase efficiencies;

Omnichannel retail and contactless delivery could help to improve customer experience; Visibility could be improved through digital platforms and data analytics enabling decisions about stock levels, production, and logistics;

Focus on sustainability and environmental impact and improved working conditions; More agility for retailers who reduce dependency on single location and diversify their sup

ply chain while reducing supply chain disruption; and Increased flexibility to demand and disruption while adapting to the latest trends and market conditions quicker and more effectively.

Why should companies be concerned about retail and distribution supply chains morphing? The following impacts are among the potential outcomes:

Consumer impact – Production, distribution and sales have a direct impact on prices and availability.

Business impact – Companies will need to adapt their supply chains to stay competitive and how they evolve will impact their ability to meet customer demands, reduce costs, and increase efficiency.

Environmental impact – Evolving supply chains affect carbon footprint, water usage, and waste.

Social impact – The direct impact of how goods are produced, distributed, and sold will have significant impact on the well being of workers and their communities.

Economic impact - As a significant part of the economy changes in the retail and distribution industry will have ripple effects throughout the economy.

Innovation impact – Embracing modern technologies and trends to identify new growth opportunities.

We are used to having so many choices in terms of availability and price. However, the COVID-19 pandemic changed our supply chains and our options. These options include:

Buy online, pick up at store; Buy online, delivered to home or other location;

I n store purchase, delivery to home or other location; Drop ship from warehouse or manufacturing to store, home, or other location; Buy online, return at store or online; and Buy online, return online.

I recently experienced a new option: store-to-warehouse pick up. It was a hot summer day when we pulled off one of Canada’s busiest highways. I was dropping off our youngest son at the duplex where he would be living while attending university. My vehicle was full of clothes, toiletries, and his belongings, along with sleeping bags I had packed just in case we needed them.

Once unloaded, the priority was to get him a new mattress. This might seem like a simple-enough task in a large city with lots of retail stores within a half hour’s drive. Our criterion was to find a queensize mattress in a box that didn’t cost a fortune and would fit in my trunk, as I have a small SUV. Our search started out fine but grew more frustrating as we went from store to store. No one had stock or, if they had stock, it was far more than what I was willing to pay.

We were running out of time and patience, but finally found a mattress in a box for a reasonable price at a major retailer. Unfortunately, they did not have the stock on site. We had to pay and then pick up the mattress at their warehouse which was closing within the next half hour. The warehouse was about 20 minutes away. We paid and made it to the warehouse, just in time.

While this aside illustrates at least one challenge that can arise

in retail distribution, KPMG suggests some steps to better manage it going into 2023. For example, consider the future of your distribution and micro-fulfillment centre locations. As well, enhance and advance your e-commerce and omni-channels into true unified commerce process and technology. Review sourcing and supplier strategies to reduce risks, and consider implementing control tower visibility in a predictive environment, leveraging AI and ML.

It will be interesting to see what strategies companies adopt to get ahead of these trends and how it will affect customer experience. SP

“Enhance and advance your e-commerce and omnichannels into true unified commerce process and technology.”

Penske Driver app certified in Canada

The Penske Driver mobile app from Penske Truck Leasing has been certified in Canada as an electronic logging device (ELD).

The app meets the requirements of the Canadian ELD Mandate, requiring commercial carriers and drivers to electronically log their hours of service (HOS).

Penske Driver provides a secure and reliable solution for logging HOS, while also streamlining the process, the company says. The app provides real-time visibility into driver performance, allowing fleet managers to track driver productivity and can view real-time vehicle performance to keep fleets running smoothly.

With the app, truck drivers can take advantage of technology while complying with regulations in both the US and Canada.

Companies to speed up supply chain innovation

A total of 59 per cent of surveyed companies say they’ve sped up their investment in innovation over the last two years, according to findings from a supply chain and logistics study from Descartes Systems Group.

As well, 65 per cent plan to increase their technology spending over the next two years; however, 87 per cent say they face internal inhibitors to supply chain and logistics innovation.

Descartes Systems Group released findings from its study: Supply Chain and Logistics Innovation Accelerates, but Has a Long Way to Go. The study examines how technology innovation is changing supply chain and logistics operations and plans for investment. The study analyzes the connection between innovation and business success, the drivers of supply chain and logistics innovation, benefits of innovation, and the obstacles. It also examines where innovation is considered to be the strongest and the weakest, the degree to which key innovative technologies are deployed, and innovation focus areas.

Imports using child or forced labour increases

Connections to child and forced labour have worsened, says a report by World Vision Canada. The Supply Chain Risk Report 2023 reveals that the value of Canadian imports of products like electronics and clothing, that risk being produced by child or forced labour, has increased to $48 billion as of 2021.

The report shows a surge in imports of risky goods of over 50 per cent in the last 10 years, including a 71 per cent increase in electronics to $22.1 billion, and more than 869 per cent increase in imports of protective rubber gloves to more than $800 million in 2021.

Report highlights net-zero advice

Canada’s Net-Zero Advisory Body (NZAB) released its annual report, Compete and Succeed in a Net-Zero Future, featuring 25 solutions to move Canada towards a net-zero economy.

Canada has committed to reducing greenhouse gas emissions by 40 to 45 per cent by 2030 from 2005 levels and reaching net-zero emissions by 2050.

The report to Steven Guilbeault, federal Minister of the Environment and Climate Change, includes 25 recommendations across the NZAB’s

Digital adoption strengthens supply chains

A significant gap in supply chain efficiency lies in the adoption of modern, digital technologies, says a new IDC whitepaper, sponsored by OpenText.

Companies further along in their business-to-business (B2B) digital transformation perform better in revenue, profit, customer satisfaction, and responsiveness rate, the study suggests. Over 78 per cent of respondents reporting that B2B integration has improved supply chain performance.

Climate change, conflict, COVID-19 and rising costs are leading to conditions that mean the number of child labourers has increased for the first time in two decades. Now, 160 million children are trapped in child labour.

The report urges parliamentarians to pass Bill S-211, the Fighting Against Forced Labour and Child Labour in Supply Chains Act. If passed, this bill would require companies to publicly report on their efforts to prevent the use of forced labour and child labour within their global supply chains.

“B2B integration represents the backbone of a digital-first, resilient supply chain and should be a top priority for those companies that

three areas identified for 2022-23: net-zero governance, net-zero industrial policy, and net-zero energy systems.

This advice came through consulting with industry experts, academia, non-governmental organizations and associations, and Indigenous rights-holders.

Launched in February 2021, the NZAB provides independent advice to the Minister of Environment and Climate Change regarding achieving net-zero emissions by 2050.

remain encumbered by manual paperbased processes,” said Simon Ellis, program vice-president at IDC. Although supply chain resiliency is critical, companies have faced difficulties in detailing the business case, justifying ROI, and building internal capabilities. While 71 per cent have increased supply chain investments, only six per cent reported being at the highest level of maturity for digital supply chain resiliency.

When asked about supply chain improvement by automating different collaboration documents, 80 per cent cite levels of improvement, including the cost of handling and sharing information, staffing efficiencies, and KPI improvements.

The study highlights artificial intelligence (AI) and advanced analytics – 44 per cent reported using AI/ machine learning (ML) to generate predictive insights and 17 per cent reported they use basic analytics.

THE WATERS AHEAD

WHAT’S IN STORE FOR OCEAN CONTAINER SHIPPING IN 2023

Everyone in supply chain remembers that 2021 saw record-high ocean rates, caused by a combination of high demand and restocking during the post-pandemic recovery, while shipping lines worked together to limit supply. This led ocean carriers to unprecedented profits. For example, the Aponte family, who owns Mediterranean Shipping Company, became the richest family in Switzerland, and CMA-CGM became the most profitable company in France.

Last year saw a brutal return to more normal rate levels: traders found themselves overstocked, plus the Russian invasion of Ukraine caused abrupt spikes in energy and commodities, inflation, shortages, slower economic growth, all this leading to a near-recession in the developed world and misery in the developing world.

The summer and fall of 2022 saw ocean rates continue to go down, particularly from Asia to North America and Europe, with the tradi-

tional “peak season surcharges” nonexistent. As 2023 began, ocean rates returned more or less to pre-pandemic levels, with some exceptions. The Westbound transatlantic trade, for example, remains strong. In the short term, everyone will watch developments in China after the Lunar New Year holidays. Just before the New Year, China saw a strict lockdown under the Chinese government’s “zero-COVID” policy, which had a substantial impact on economic activity, including a slowdown of exports.

WAIT AND SEE IN CHINA

Following widespread mass protests in December and in an unprecedented move, the Chinese government reversed its policy, lifted restrictions and it was “business as usual” for the Lunar New Year. But one factor may put a damper on the post-holidays boom in China: COVID -19. The whole country experienced high infection rates before the holidays and it will likely get worse when people return from their travels and get back to work. The vaccination rate in China is very low, compared to Western countries. The homemade vaccine is not very effective.

We will see what happens when China gets back to work. What will the Year of the Rabbit bring us? Will we see a surge in activities, increased exports and a resulting strong demand for ocean space or will the recovery be more subdued. As always in situations like this, ocean carriers are limiting supply with more blank sailings, cutting them in half, hoping to stabilize freight rates.

Looking at developments on the shippers’ side, several large retailers had started to operate their own shipping lines with chartered tonnage during the pandemic, in order to move their cargo in a timely fashion. In the meantime, many of them have terminated these ventures as container space is now available and rates affordable. Ikea is one of them, having sold its containers and stopped their chartering activities. Incidentally, Ikea also announced they were shifting more production from Asia to Turkey, in order to shorten their supply chain for European customers. Other shippers like Costco and Aldi went through the same process and ended their in-house ocean shipping venture.

On the carrier side, a surprise announcement was recently made, with Maersk and MSC parting company and ending their vessel-sharing partnership, known as the “2M,” formed in 2015. Other carriers had made similar agreements, pooling tonnage together under the Ocean Alliance and “THE Alliance” banners. These partnerships together control about 75 per cent of the global container capacity and

we can expect some reshuffling of partners in the coming months. Another tricky development in ocean freight is that, as trade slows and rates are at their lowest, bigger containerships keep coming on stream. In January, Evergreen received its giant 24,000-TEU containership, the Ever Acme from its Chinese shipbuilder four months ahead of schedule. This is the third 24,000-TEU containership delivered to the Taiwanese carrier, the first one, the Ever A lot was handed over in June 2022 and the second one, the Ever Aria, in September 2022. For reference, these are 20-per cent bigger than the Ever Given which was stuck in the Suez Canal in March 2021. Other carriers, Maersk, MSC, CMA-CGM, and so on, have bigger ships coming on stream, which raises the prospect of severe overcapacity in the trade, potentially leading to yet lower rates, unless the world economy picks up, unlikely while Russian aggression in Ukraine continues.

AIR CARGO IMPACTS

What about the impact on air cargo? The steady fall of ocean rates has triggered some modal shift from air to sea: with ocean rates from China at US$25,000/ container, airfreight can become an attractive alternative, whereas with ocean rates closer to US$4,000, air becomes prohibitive, so this dramatic lowering of ocean rates is good news for ocean lines and bad news for airlines.

This will not have a huge impact for ocean carriers, as volumes carried

23_000098_Supply_Professional_FEB_CN

by air represent a fraction of what is transported by ocean. But any shift from air to ocean will have an impact on airlines, in an already somewhat depressed market. Why would this be pertinent for ocean carriers? It’s because several of them, in particular Maersk, MSC and CMA-CGM, have invested some of their extraordinary profits into cargo planes, at a time where air rates were at their highest. But as the air cargo market softens, we’ve seen for example CMA-CGM, leasing out their recently purchased freighters to established cargo airlines, instead of operating them themselves.

As the year is still young and economic prospects uncertain, we have to watch developments in China, as exports coming from there have a huge influence on developments in ocean shipping, the lanes China to North America and China to Europe being the busiest and the most profitable for ocean carriers. But we have to take notice of the growing importance

of India. As China’s population is shrinking and its economy experiences slower growth, India is firing on all cylinders and could soon replace China as the factory of the world. Who knows if in 10 years, or even before, we won’t be watching ocean movements around India’s national holiday, Diwali, instead of China’s Lunar New Year. SP

“Ocean carriers are limiting supply with more blank sailings, cutting them in half, hoping to stabilize freight rates.”

POWERING UP THE SUPPLY CHAIN

KAREN FRITZ ON HOW SUPPLY CHAIN HELPS TO SUPPORT ENERGY TRANSITION

From the age of five, Karen Fritz dreamed of becoming an architect. Fritz has long been interested in art, building, and structures. She came from a largely blue-collar family – her father was a welder, and her uncle owned a concrete company – and she was drawn to the notion of building things.

“I love doing art,” she says. “I’m not the best artist, I’m not a true artist, like most successful architects. I think it just drew me.”

To pursue her dream, Fritz enrolled in the architecture program at Toronto Metropolitan University, then known as Ryerson University. Then, during the program, Fritz had a change of heart and plans. She realized that, compared to many of her peers in the course, while she was good at the design aspect of architecture, she truly excelled in other areas. She steered her

education away from architecture and into a different stream. At the time, she didn’t realize that shift in direction would lead eventually to a career in supply chain.

“About halfway through the program, I really figured out that I liked project management and construction,” Fritz says of her decision.

“So, I graduated with a degree in project management instead of architecture and I worked in construction for a few years. I really liked it. And then I had an opportunity to come to Ontario Power Generation and work here as a planner and coordinator. And so, 25 years later, I’m still here.”

Ontario Power Generation (OPG) is a Crown corporation and “government business enterprise” responsible for about half of the electricity generation of Ontario. It has about 10,000

employees. It’s generation portfolio includes 66 hydroelectric stations, two nuclear stations, and one each of biomass, solar and dual-fuelled (oil and gas) stations. It also operates four combined cycle gas turbine generating stations through its subsidiary, Atura Power.

Fritz spent much of the first 20 years of her career at OPG working in planning, project management, construction, and other areas. Her portfolio included multi-billion-dollar projects such as “outages” – in which a reactor undergoes service and major refurbishment.

After her first two decades at the company, Fritz took a position in supply chain as OPG’s chief supply officer. The move followed Fritz’s successful management of several large commercial contracts on a project. During her time at OPG, she has worked at all three of the large nuclear facilities in Ontario – the Bruce, Pickering, and Darlington facilities. Fritz views herself as embedded in the province’s nuclear industry, and she also realizes that a corporate role in supply chain at OPG means that her and her team’s work affects the entire organization.

“OPG is quite a large company, we have about 10,000 employees, over 100 sites in the province, so, my team supports everybody,” she says.

Since starting in the role five years ago, Fritz has also been active with industry organizations. She sits on three boards, including the Supply Chain Management Ontario (SCMAO) board. She has taken several courses and executive programs, including through the Rotman School of Management at the University of Toronto and at Queen’s University in Kingston, Ontario.

She has also taken courses offered through OPG, such as the company’s five-month internal nuclear operations course for management, held at Ontario Tech University in Oshawa. The course is designed for management employees who will never actually work in the control room of one of the organization’s facilities, but who may need to be involved in making decisions related to operations.

“It’s been a lot of internal development,” she says. “OPG is fairly strong at doing that.”

A MIXED ROUTINE

With about 300 people working on her team, each day brings a mix of tasks and routine, Fritz says. The enterprise-wide focus of her position sees her travel to sites across the province It’s a routine that can see Fritz divide her time between her Toronto office, or one of the organization’s renewable-generation (RG) facilities which includes hydroelectric facilities or nuclear plants.

She also spends time in vendor meetings discussing performance and future plans with

them. Her role involves visiting potential vendors to see what they do in their shops, as well as what they manufacture. Other times, Fritz meets with vendors onsite, while they’re working on some of OPG’s major projects.

“(It involves) talking to the project teams about performance of vendors – any challenges that we’re having,” she says. “And really, a lot of our vendors are very close partners. We’ve worked together for decades. It’s really about helping them be successful, and vice versa.”

She also recently visited GE Hitachi’s headquarters in North Carolina to discuss supply chains for small modular reactors in Canada and across North America. As part of her duties, Fritz also attends industry conferences. Those events can see her speaking on panels and working to forge connections, particularly with diverse and Indigenous businesses. Last December, she spoke at a conference in the UK regarding international advanced manufacturing for the nuclear industry. She and others were able to visit other nuclear facilities, including an operating plant and a fuel facility.

The year before that, Fritz attended the World Nuclear Exhibition in Paris, the “event of the year” in the nuclear industry. The event can draw 800 nuclear vendors, and as many as 80,000 attendees over three days.

“People want to talk to OPG,” Fritz says. “People want to talk to me about how they can work with OPG. So, it’s about going to find vendors. But also, just providing the platform so people can have conversations and find out more about us. People have a lot of questions about nuclear and about our hydroelectric development projects. OPG is also working on hydrogen and electrification through some of our subsidiaries. So, there are lots of questions, and there are lots of supply chain questions, as well.”

Several projects stand out as career highlights for Fritz, including working on refurbishing OPG’s Darlington Nuclear Generating Station, located on the shores of Lake Ontario, east of Toronto. The $12.8-billion refurbishment represents the largest clean energy project in Canada, Fritz says, noting her role on the project included working on a significant turbine generator upgrade.

“It was tons of fun, and I worked with vendors in five different countries around the world,” she says. “That project is still in flight

because it’s on four units at that power plant. And making a difference at Darlington so that we can have clean energy coming out of that power plant for the next 30 years, that’s really the contribution that we all make, but particularly in that role.”

Another career highlight came in October 2021, when OPG released its Reconciliation Action Plan, Fritz says. The organization has also committed to growing its economic impact for Indigenous communities and businesses to $1 billion over the next 10 years. The company went from having, at one time, almost no Indigenous vendors, particularly in the nuclear field, to last year hitting its purchase order target as well as exceeding its target for new vendors brought on board.

“I feel like that is one of the best things that I’ve been able to contribute to at OPG in the last few years,” Fritz said.

Positively affecting communities is important at OPG, Fritz notes, and she especially appreciates that the organization includes Indigenous companies in its operations.

Fritz considers herself fortunate for the opportunity to appear on Bears’ Lair, a television series appearing on the Aboriginal People’s Television Network (APTN). The show is similar to CBC’s Dragons’ Den, in which entrepreneurs pitch their ideas and products to a panel of judges. Fritz appeared as a guest judge, or Bear.

“I met a lot of great Indigenous leaders and Indigenous entrepreneurs,” she says of the experience. “I’d have to say that was definitely a highlight, something that you don’t get to do every day.”

The plants that OPG operates require materials that get consumed rapidly, Fritz notes. That makes security of supply especially important to the organization. Yet that security can be threatened if material is unavailable due to a rail strike or border closure. OPG has in place risk mitigation plans to help ensure that continuity.

“It’s my job to make sure low-cost electricity is provided to the people of Ontario, including high-quality products to maintain security of supply,” she says.

Vendor relations are critical to organizations in helping to ensure that security, she says. It’s essential to understand vendors’ challenges and capacity, as well as what’s happening in the market, such as global market commodity fluctuations, supply volumes and so on.

“We need to make sure that we understand what’s happening in the markets for the materials that we use, and we don’t get surprised,” Fritz says.

STAYING INVOLVED

Looking to the future, Fritz says that she wants to continue her work on the boards of various organizations. She has been on SCMAO’s finance and audit committee for two years and has just recently begun a term on its board of directors.

When she first got involved with SCMAO, she knew less than she does now about the supply chain field, she says. Yet, at the time, she had worked at OPG plants for years and already realized that the organization had an outstanding supply chain.

“But other than that, I didn’t know too much about it,” she says. “So, I reached out to the organization (SMCAO) and started going to some of their events. Then, right at the time when I became chief supply officer, I saw the board member posting, so I applied. At the time, I was asked to be on the finance and audit committee as sort of a start, and really loved that experience. And so, I applied to be a board member and was accepted.”

She looks forward to learning more about the industry, she says, while connecting with peers through the organization. “I’ve found that it’s very helpful for me in that way.”

Fritz is on a few other boards, including for Ivy Charging Network, a company owned by OPG and Hydro One, as well as PowerON, a subsidiary of OPG that, among other projects, is working to electrify the Toronto Transit Commission’s (TTC) fleet.

Fritz wants to continue working with Indigenous communities to provide economic opportunities and engagement as they partner with the energy industry. She would also like to work on business development projects with Indigenous and diverse leaders, as well as building a supply chain for small modular reactors across Canada.

Supply chain organizations operate in myriad industries. Yet some of the challenges that practitioners face are relevant regardless of the industry.

A trait that has served Fritz well during her professional life is curiosity about what is happening in supply chain, she notes. Speaking with other supply chain professionals across

industries to learn about what they’re doing regarding warehousing, data management and analytics, or other areas, has benefitted her in her own role at OPG

“Just how do logistics work? How does a freighter make it from Europe through the St. Lawrence to get basic things to us? It’s important to be really curious about how things get to us and what’s happening in the markets,” she says. “And, in terms of getting into supply chain, certainly SCMAO offers professional training.”

Supply chain is also a field that offers many potential directions for practitioners to take, depending on their professional interests. Competency in skills in areas like commercial management, contracts, negotiations, and market information can help those looking to develop their careers, Fritz says.

Those skills are in such high demand that some supply chain positions remain vacant for months because of the challenge in finding someone with knowledge of, for example, market commodity intelligence, she notes.

“Experts in this field have a lot of opportunity across the global market and it’s important to hire and retain key professionals with these skill sets to support the energy transition in Ontario,” she says.

Outside of work, Fritz and her husband, Grant, have been married for 20 years, and enjoy travelling – mainly to Nova Scotia –with their 10-year-old son, Kenzie. She enjoys surfing in Nova Scotia as well as on Lake Huron, and Kenzie is currently also learning the sport. The family also has a Whippet puppy, named Ghost.

Overall, Fritz says she has enjoyed her time in supply chain. Her impression of the field has changed over the past five years regarding the value it brings to a business and an enterprise.

“It’s important for supply chain to not be so reactionary but, more so, to be a forward-looking organization,” she says. “Supply chain always needs to consider global impacts on behalf of the organization in order to set up an enterprise for success. I really think that if someone wants to get into supply chain and they have a strategic mind and enjoy looking at very big-picture problems and challenges, it’s a very exciting place to work, so I highly recommend it.” SP

“A lot of our vendors are very close partners. We’ve worked together for decades. It’s really about helping them be successful, and vice versa.”

THE STAFFRETENTION PANDEMIC POST-COVID, ORGANIZATIONS STRUGGLE TO KEEP AND ENGAGE EMPLOYEES

The COVID-19 pandemic may have started more than three years ago, but just like ‘Long COVID’, it’s side-affects are still being felt on a global scale today.

Employers have not only been challenged by COVID-19 itself, but also by the many aftershocks triggered from continued employee isolation. Companies initially were forced to pivot and adapt to overwhelming changes in the way they do business; but now, they’re also dealing with the added mental, physical, and technological stressors on their isolated employees.

The mental trauma of surviving a lengthy lockdown has taken a toll, creating a pent-up desire in some staff to interact and live life to the fullest outside of a job that is still, years later, being conducted remotely.

We survived the pandemic only to struggle again by conducting

online business at all hours. Smartphones, project management apps, and social media have evolved with everyone checking their devices nonstop and managers and clients expecting rapid replies. COVID-19 and online video conferencing platforms have contributed to an expectation that workers be constantly online and reachable, causing additional mental trauma and burnout while eroding any sense of work-life balance.

At the pandemic’s start, record numbers of workers voluntarily quit their jobs and the ‘Great Resignation’ took hold. In March and April 2020, Canada lost more jobs than it had in the past three recessions combined. We have since recovered the majority of them, but the rate of employment gains has slowed.

The remaining employees struggle with shouldering an added workload covering for staff no longer there, reduced support, and ongoing employment volatility, among other reasons.

There’s a new pandemic coming, caused by employers that ignored the needs of remaining staff. Employee retention is spiraling downward, with dissatisfied workers looking to change jobs for a better work-life balance with firms possessing an improved company culture. The “come-on-back” proclamation from some employers is being met with a “we-don’t-necessarily-want-to-return” reply from some staff.

More and more employees are setting stricter boundaries, and only doing the bare minimum of what has been previously expected of them. This phenomenon, called quiet quitting, sees workers keeping their jobs but not volunteering for anything extra, unavailable outside of normal work hours and typically not participating in other workplace activities. In the US, Gallup estimates that at least 50 per cent of the US workforce is quiet quitting, and that number could get worse. Quiet quitting is having a dramatically negative affect on company culture, causing not only problems with productivity, but the retention of existing staff as well.

Today, employees are dealing with additional stressors such as inflation, increasing prices, a fluctuating economy, and myriad political and social issues affecting supply and value chains. As a result, according to a recent Robert Half survey, 61 per cent of workers are now looking for a higher salary, 37 per cent better benefits and perks, and 36 per cent want greater flexibility to choose when, where and if they wish to work. Retaining staff continues to get much harder. What can employers do to increase employee satisfaction and keep staff retention high?

COMPETITIVE COMPENSATION

Evaluate and adjust salaries regularly. If you can’t increase pay right now, consider providing other forms of compensation, such as bonuses, improved healthcare benefits, and appropriate retirement plans.

PERKS AND APPRECIATION

Perks can make your workplace stand out to newcomers, revitalize current staff, and boost employee morale and retention. Flexible work schedules and remote work options are perks that many professionals value. However, employers should also develop improved wellness offerings to help employees feel supported and motivate them to prioritize their health and well-being. Counselling and stress management programs, reimbursement for fitness classes, elevated trust, empathy, and recognition by company leaders are examples of what firms should do to acknowledge employees’ efforts post-pandemic.

WORK-LIFE BALANCE

Since the pandemic, people are more passive and value work-life balance, even more than a higher salary. A work-life balance is essential to job satisfaction and employee retention. People must know their managers understand they have lives outside of work and recognize that a healthy balance can be more challenging working from home.

Managers should encourage employees to be proactive and set working boundaries themselves and take their requisite vacation and related “me time” to destress. Workaholism from people who toil for extended periods (50 hours a week or more) can lead to increased mental and physical health consequences. Isolation adds to this. Employers must recognize that creativity, productivity, efficiency, and retention are all in jeopardy when staff don’t function effectively because they neglect to include non-work balance in their lives.

Staff are struggling with the demands of prolonged isolation and working at home. It’s the chronic strain that staff experience when they don’t feel their contributions are fully recognized and compensated that’s causing them to leave.

Employers that overlook compensation adjustments, flexible work schedules, and remote options feed a staff retention pandemic.

It’s a candidate-driven market. Employers must show they care through diligence in reviewing and improving staff communications, constantly evaluating, and providing superior staff benefits, while being mindful of and encouraging a healthy company culture now, to lessen and possibly of a staff retention pandemic later. SP

CHARGING AHEAD ADVANCING BATTERY TECHNOLOGY HAS INCREASED THEIR SAFETY, SUSTAINABILITY, AND USAGE

Twenty years ago, the most popular battery type found in commercial and industrial applications was a flooded lead-acid battery. It was the go-to for general purpose applications such as fleet vehicles. It was also standard for industrial equipment with minor variations, depending on its usage such as voltages (6V to 80V or more), post or terminal mountings, cell and plate composition like lead, cadmium or calcium. Still, the “little black box” of power remained static. These conventional batteries exist to this day along with both slight variations such as sealed, gel and no-maintenance options to full-blown smart batteries and everything in between.

Traditionally, industrial vehicles and equipment have used the common lead-acid battery known for its performance, relatively low-acquisition costs, and minor maintenance requirements like fluid top-ups (either water or sulphuric acid). These hardworking powerhouses are what most think of when you mention a battery. They’re commonplace and offer good performance, although they have significant drawbacks such as safety concerns related to handling and storage. For example, their shelflife is six-to-12 months, depending on battery type and storage conditions. As well, there’s the possibility of acid leaks, exposure to hazardous materials such as lead terminals and the potential for fires or explosions due to poor ventilation during charging, which is the result of off-gassing.

These traditional models work for most applications, especially when constrained by budget. Some of the first steps in battery evolution came in the form of sealed batteries, which reduced spillage and explosion risks due to the reduced off-gassing when charged correctly (overcharging still poses a risk) and combined with their limited maintenance requirements. For example, there are no fluid top ups needed and only charging between uses.

INDUSTRIAL VEHICLES

Combination battery and charger options have become commonplace in forklift and automated vehicle applications. This eliminates the need for an external charger, freeing up valuable floorspace and reducing the downtime required to disassemble and set up the charging operation. It also means not tying up valuable operator time with maintenance functions. Rather, it frees them to perform value-added, operational functions. This combination solution also addresses the risk of potentially misusing the incorrect charger with the battery.

One of the most significant advances in commercial battery technology is the use of lithium-ion batteries. These have become more widely known, a development driven by their use in electric cars and a growing public acceptance of alternative vehicles. Lithium-ion batteries have countless applications in the industrial space, from forklifts in warehouses to

robotic equipment in manufacturing and UPS backup power stations across many sectors.

These batteries are lighter than conventional lead-acid batteries and can store more energy in a smaller space. They also require less maintenance, as they do not need to be topped up with water and don’t produce gas while charging. This makes them more convenient, safer to handle, and cost-effective to use. Additionally, lithium-ion batteries have longer shelf-lives and can hold their charge for longer, making them a great backup option for applications where needs are inconsistent. The lithium-ion battery’s quicker recharge time, as compared to conventional lead-acid varieties, make for a solid option during unexpected demand spikes. This has led to an increase in their use in forklifts and other industrial vehicles such as bucket trucks in utilities fleets, as they are more efficient and environmentally friendly.

Another technology that is impacting batteries in industrial vehicles is the use of wireless connectivity, a service provided by companies such as E-Motec and TI Automotive. With the increasing digitization of industrial vehicles, wireless connectivity has become a critical component in battery management systems. This allows for real-time monitoring of the battery’s health, including its charge level, temperature, and other important parameters. The data can be used to optimize the charging and discharging of the batteries, leading to increased efficiency and longer battery life.

BATTERIES IN THE CLOUD

Artificial intelligence (AI) cloud-based battery management systems are increasingly popular, with manufacturers that include NXP and the well-known European automotive brand Bosch. These systems allow for the remote monitoring and management of batteries, a great option to use in remote locations. This is particularly useful in large manufacturing or warehouse facilities that use multiple forklifts and other industrial vehicles. By monitoring the charge level of the batteries, technicians and operators can ensure that the vehicles are always ready for use, reducing downtime and increasing operator efficiency. The seamless communication and integration between battery, motor, operator, and technician provides real-time data and activity which can help with emergencies or accidents in remote areas or in lone-work scenarios. Additionally, this data can be used to schedule maintenance, especially during seasonal slowdowns, to avoid downtime and improve the battery life.

Predictive analytics is another technology that is impacting batteries in industrial vehicles. Predictive analytics can be used to predict when

applications. This can help to reduce downtime and improve the overall efficiency of the operation.

As battery technology has evolved, so too has battery recycling. No matter the type, batteries will eventually need to be disposed of. Conventional lead-acid batteries are easily recycled through smelting operations to recover valuable materials, such as lead and polypropylene; making these products over 90-per cent recyclable. This not only helps to conserve resources, but also reduces the environmental impact of batteries. With advances in technology, battery recycling is becoming more efficient and cost-effective, leading to a more sustainable use of batteries in industrial vehicles. The cost effectiveness of recycling newer battery technologies is still in its infancy. Still, the main materials can be recycled, including nickel manganese cobalt oxide, sodium-ion, lithium iron phosphate, lithium carbonate and lithium hydroxide. These are not widely used, and don’t yet offer comparable efficiencies as their lead-acid counterparts. Still, advances are on their way, both in North America and globally, as demand for spent lithium batteries grows.

The battery evolution continues to advance. Newer materials are coming onboard as they are refined and scaled to balance performance with cost. Zinc-manganese oxide, for example, has been researched by the US Department of Energy’s Pacific Northwest National Laboratory. These batteries may have large-scale energy applications such as for an electrical grid, gold nanowire gel electrolyte (researched conducted by the University of California) or organosilicon electrolyte (researched by the University of Wisconsin-Madison) which produces a less flammable or explosive option than the lithium battery. Batteries play an increasingly pivotal role as organizations look to more sustainable and mobile power options to flex based on changing business needs from environmental conditions to locations. Battery technologies, although stagnant for much of the last 100 years, have taken tremendous leaps forward as related technologies have evolved. This is especially true in transpor tation, with lithium batteries and the Internet of Things (IoT) incorporated into smart batteries to enhanced battery health monitoring.

“Artificial intelligence (AI) cloud-based battery management systems are increasingly popular.”

THE RIGHT STUFF

KEEPING THE CORRECT AMOUNT OF INVENTORY IS HARDER THAN BEFORE

Shortages of products, parts and components have become common across the supply chain. Regardless of the causes – the war in Ukraine, the pandemic’s lingering effects –organizations must ensure they have the right inventory, at the right amounts and locations, so that customers get what they need.

What inventory looks like depends on what products are under discussion, says Mike Mortson, CEO of Supply Chain Game Changer (supplychaingamechanger.com).

“At this time of year, if you’re looking for cold medication as an example, it can be very difficult to come by,” Mortson says. “Same if you walk through many of the grocery store shelves. It’s probably difficult for almost anybody to go into a grocery store with a shopping list and come out with all of the things that you normally would.”

The just-in-time model of inventory management collapsed during the pandemic, forcing many organizations to look for other strategies, he notes. The recent automotive chip and baby formula shortages are examples of what happens when there’s a single point of failure. To remedy this, companies should seek out

more than one source for goods and components, Mortson advised. That way, if one node in the supply network fails, other sources are available.

Another tactic involves creating more strategic stock, Mortson advises. That doesn’t mean keeping all SKUs in excess stock; rather, look to establish buffers for critical material.

“It could be on a site, it could be placed with a supplier, but something that represents more of a long-term investment to ensure continuity of supply if there is a disruption of any kind,” he says.

As well, focus on supply chain basics, Mortson says. Look for ways to simplify your supply chain, disintermediate the process and reduce the number of handoff points. For example, ship direct to the consumer or a facility, if possible, rather than sending goods through multiple points at distribution facilities or warehouses.

“Then what you’ve done is simplified the supply chain,” he says. “You’ve reduced the amount of time it takes to get goods to market. You’ve made your supply chain both more robust, more responsive, and more resilient.”

DEALING WITH VOLATILITY

The volatility caused by disruptions won’t resolve anytime soon, says Bernie Uhlich, president and managing director of Uhlich Associates Inc. Companies must therefore plan for a lack of stability regarding inventory. Companies should also avoid overreacting to that instability by buying too much or too little inventory.

The unpredictability of today’s supply chains has sped up digital transformations for many organizations, Uhlich notes. Organizations can use technologies like AI to run various scenarios regarding inventory and pick one that provides a suitable demand profile or supply need. “Now you can base the action on some kind of an intelligent thought process,” he says. “And that’s where IT systems really help.”

Uhlich lays out several steps in managing inventory, with the first one being to find the true problem and define your goals. “Do you have a problem with too much or too little inventory? Do you know what it should be? Figure that out,” he says. “That’s step number one: make sure that you know your goal and your target, because then you’ll know whether you’re in good

shape or bad shape, and it’ll help you figure out what the plan is to recover from that.”

A next step is to take a holistic view of inventory management across the supply network, Uhlich says. Map out how much inventory you have and where it is to determine if you have the right amount. “And then, if you look at the holistic view, you understand how the things interact and it’ll help you get a better picture of where your problems are,” he says.

How to handle inventory largely depends on what commodities or products an organization is looking to stock, says Tony Iampietro, director of strategic sourcing at JLL, a commercial real estate company. Yet it’s helpful across industries to forge strong relationships with suppliers, he notes. That way, suppliers are more likely to make the commitment to your organization when it counts.

Last year, organizations pushed to stock up as much as possible because it was uncertain when products would be available again. That tendency is less common now, as organizations try to balance the need to keep stock on hand and the risk of stock outs.

Finding that balance, Iampietro says, depends largely on working closely with suppliers.

“Have constant dialogue around what’s happening in the marketplace so that you’re dialed in,” Iampietro says. “If you’re buying, for example, consumable products, high volume products that are typically made offshore, look at if the company has the capacity to provide those products at a competitive price domestically. If not, how’s their relationship with their contractor in Asia or in China? Really provide that insight so that you’re able to plan more accordingly, stocking inventory.”

Technology is also playing a larger role in helping organizations manage inventory, Iampietro adds. Technology can, for example, help to take large datasets and build algorithms to predict swings in consumption, either up or down.

“All that’s really doing is automating processes,” he says. “Essentially, taking some of the work away, just your mundane work, and having bots do the work. That kind of helps with inventory management, as well. They’re able to take lots of datasets and make recommendations around what to buy, when to buy, and what price to buy.”

LEAD TIMES

John Down, business improvement specialist at Norcan Fluid Power Ltd, agrees that the environment has become more volatile in recent years. In dealing with his company, certain manufacturers had a program through which they would deliver certain SKUs within 10 days. Sometime last year, that timeframe went up to three months, then, two or three months after that, up to six-months.

“And now we’re looking at nineto-15 months for some of these SKUs,” Down says. “It’s really hard to trust your system and it’s hard for the system to react to changes that quickly. If you’ve got orders in the pipeline already, just adding more orders, it’s going to create more of a bullwhip effect.”

The company has looked for creative solutions to deal with this, he says. The organization talked to customers and manufacturers for strategies to potentially mitigate those lead times.

“It’s been actually relying less on what the current system is and kind of listening to what’s happening in the market, just seeing what’s happening with manufacturers, what’s happening to their lead times, he says. “What are they struggling with on their product lines and where can we pivot.”

The company has also done a lot of front-end buying to ensure inventory remains available throughout the fiscal year, Down says. Some of the organization’s branches probably do 50 per cent of their buying in the first three months, with the balance of the purchasing happening throughout the rest of the year.

Certainly, the past few years have added volatility to the already unpredictable field of supply chain. When looking at inventory management, avoid focusing on individual components of the process, like lead times, says Mortson of Supply Chain Game Changer.

“There are so many dynamics at play, that if you don’t take a holistic view, any savings you think you make in one area, you will lose on another area,” he says. “You have to look at the whole thing in its entirety, and if you don’t, if you’re so focused on the trees, you will have lost sight of the forest.” SP

“If you’ve got orders in the pipeline already, just adding more orders, it’s going to create more of a bullwhip effect.”

LETTING AI CALL THE SHOTS

ARTIFICIAL INTELLIGENCE PROMISES TO EASE THE SUPPLY CHAIN DECISION WORKLOAD

The runaway popularity of ChatbotGPT, Open AI’s portal that was launched in November, has brought the power of AI to millions of online users, prompting a scramble by Google and other major tech players to gain a foothold in AI. This heightened interest coincides with an urgent need for faster and better-informed supply chain decisions.

AI is already providing guidance about supply chain vulnerabilities. In a joint project, the Association for Supply Chain Management (ASCM) and management consulting firm KPMG have developed an AI-powered index to quantify the stability of US supply chains.

“Our supply chain stability index, which is the first of its kind, was built in collaboration with KPMG using AI and machine learning to measure the stability of the supply chain,” says Douglas Kent, executive vice-president of corporate and strategic alliances, ASCM. “We used about 15-years-worth of data for that and 30 different underlying variables. And what it clearly indicates is that we’re twice as fragile as we were pre-pandemic. That’s a massive jump in a relatively short period of time.”

The report was by no means restricted to the most obvious conclusions. “Traditionally, the contribution to instability comes from big changes in market demand, or big changes in available supply,” says Kent. “Those are there, but perhaps the biggest shock in the release of the report was that fulfillments – being able to fill orders – was causing the highest degree of instability.”

FROM DATA TO INSIGHT

The big push for supply chain operators is to gain visibility of a much larger range of potentially destabilizing factors. “Everything that companies are asking us for leads to gaining visibility of these factors earlier so that they can react sooner,” says Sherief Ibrahim, GM, business applications, Microsoft Canada. “We’ve done a lot of work with Kraft-Heinz, so I’ll use that as an example. They had to re-evaluate the mix between eating out and eating in and what that means for packaging, and for distribution channels. So how do they take the insight that they’re getting from all these different systems, and from social sites and other sources, and actually make a decision about how they might change?”

Long, multi-tier supply chains have a particular need for expanding visibility. “We spoke with a CEO of an industrial manufacturing company earlier this week,” says Patrick Van Hull, senior director of industry solutions, o9 Solutions, AI-powered supply chain planning solutions, “and that company is so far upstream in the supply chain, and there are so many tiers between it and the end user, that no data is reliable. So forecasting demand tends to be guesswork.”

Progressing from data to actionable insights, however, is a formidable undertaking calling for a disciplined, long-term approach. “Companies are sitting on reams and reams of data,” says Ibrahim. “What they need is a data strategy, and that can take some time.”

The key is taking a structured approach. “The data we’re looking at is extremely hetero-

geneous,” says Dr. Alexander Wong, University of Waterloo engineering professor, Canada research chair in the area of artificial intelligence, and a founding member of the Waterloo Artificial Intelligence Institute, “so I usually tell people to do this in steps.”

Wong suggests gaining traction with straightforward projects and then progressing to some of the more complex ones. “If you rely on tweets and other social media posts to predict supply and demand, that’s much harder to get at,” he says, “because that data is very unstructured, and you don’t know how reliable it is. So unless you’re already very advanced, that’s an area I advise people to not get into yet.”

Microsoft recently launched Supply Chain Platform, an AI-powered platform which helps bring these data sources into a single database and then correlates that information with KPIs and other variables. “In Supply Chain Platform, you can connect your internal and external systems and then apply business logic to that data,” says Ibrahim. “For example, it could make decisions based on whether the delivery is tied to an SLA.”

“The major tech vendors have built up substantial AI teams to be able to help manufacturers and other companies build systems that are quite useful and impactful,” says Wong, “but at the end of the day, it still relies on the actual companies to figure out what their problems are so that people can build proper solutions. So it’s not a solution problem – in many cases it’s figuring out what has the most impact on your company.”

Some initiatives are completely off target. “We’ve seen situations where manufacturers are relying on forecasting when their biggest problem is mitigating issues with their production,” says Wong.

The need to articulate needs in the context of data places new demands on supply chain personnel. “The problem is that when you accelerate adoption of new technologies, oftentimes the human skill sets of the individuals who manage them may not have kept pace, and that’s certainly what we’re seeing here,” says Kent. “There’s no organization that I work with today that doesn’t have or is not looking actively for increasing data science and related capability inside of the organization.”

ASCM, Kent notes, has recently upgraded its training programs to reflect the need for a higher level of data literacy.

REPETITIVE TASKS

Automating decisions with AI is similar to automating factory work in that the best ROI comes from freeing employees of mundane and repeti-

tive tasks. “What the technology ultimately does is help companies reduce the time-consuming tasks in order to free up employees,” says Ibrahim. “Being able to identify that you have low stock in one location, high stock in another, and then making a decision to transfer an order from one to the other sounds fairly rudimentary and basic. But when you have to pull so much disparate data to make that happen, it makes sense to let the AI actually make that recommendation.”

The presence of AI in the workplace causes employees to fear that they will lose their jobs, Kent says, but the thrust behind AI is not replacing workers but making them more productive. “If I use these technologies to remove the non-value redundant activities that I have today in my current role,” says Kent, “then I as an individual should remain employed and find more satisfaction in my work, because the work I’m not doing matters more to the company.”

One example of that is that employees who are free from mundane tasks are more likely to get involved in sustainability initiatives, which might require, for instance, a strategic shift to alternative fuel sources.

Kent hopes that the upskilling of employees will make the profession more appealing. “Supply chain tends to get undersold at the entry level,” he says. “But if you’re a warehouse worker, and you’re getting introduced to technologies like robotics and machine learning, where else could you gain knowledge of these technologies at the entry level?” SP

“AI in the workplace causes employees to fear that they will lose their jobs, but the thrust is not replacing workers but making them more productive.”

SUSTAINABLE OFFICE INTERIORS THE IMPACT OF SUSTAINABLE DESIGN ON THE FURNITURE INDUSTRY

More than ever, there is a need to incorporate sustainability practices into all stages of commercial furniture production. Environmental concerns have prompted many businesses in the furniture industry to set goals of protecting the environment and prioritizing societal values by making changes to benefit the people and communities in and around their operations. The production and operations stages get the most attention when addressing environmental concerns. This is because, for most manufacturers, the supply chain accounts for the bulk of their environmental footprint due to significant energy use and waste products from production to transportation. However, is the production stage the best time to start thinking about sustainability? The short answer is no.

APPROACHING SUSTAINABILITY

In practically every project, the planning phase is crucial as it establishes the framework and process. This process is not different in the furniture industry, making the pre-production design stage the ideal moment to talk about sustainability.

Before sustainable design, manufacturers followed the traditional design process of making furniture. Introducing green design meant adding more steps to the standard design process, and some organizations were unwilling to dedicate time and resources to change. However, realizing that to protect the environment and have the edge over competitors, some manufacturers have shifted their design view from a product development tool to one promoting sustainability.

Product design is integral to green manufacturing and supply chains in the furniture industry. If a manufacturer is dedicated to creating commercial furniture sustainably, they must start with an environmentally conscious product design.

WHAT SUSTAINABLE DESIGN LOOKS LIKE

During design, a sustainable approach ensures that decisions consider the product’s end life. Often, this impacts the supply chain by affecting materials selection, the product life span, and the location of suppliers.

These sustainable product design choices may include prioritizing a simple design using a few high-quality, long-lasting, durable, reusable, and recyclable materials. While making furniture from recycled materials is an important aspect of green design, it is vital to confirm that these products are recyclable. Not everything recyclable is made of recycled materials, and not everything with recycled content can be recycled. However, a sustainable furniture piece is recycled and recyclable. This is essential to maintain a circular economy, ensuring nothing is wasted.

Similarly, sustainability can be achieved by designing products to tolerate long-term use and be reused and reconfigured, thus serving multiple purposes. A furniture piece that can be repaired, reupholstered, and refurbished is an example of one that will surpass its original lifespan. Products with a longer lifespan are less likely to end up as landfill waste.

Another way of designing sustainably is creating lightweight furniture that requires little packaging – even better if the packaging is eco-friendly. This means reducing packaging waste and decreasing the per-unit carbon emissions from transportation.

INCORPORATING SUSTAINABLE DESIGN

Many leading furniture manufacturers are showing that green design is the future by embracing the design of sustainable commercial furniture. For example, Haworth has expressed their commitment to “designing products with the people in mind while making the best use of the earth’s resources for a sustainable future.” This is part of their support for a circular economy where recycling and repurposing allow resources to be used perpetually, creating a closed-loop system that reduces waste. Recently, they launched an innovative, biodegradable textile made from 100-per cent, post-consumer waste material to reduce carbon footprint. Another example is Emeco, a manufacturer whose philosophy is exploring and innovating new ways to use consumer and industrial waste and environmentally responsible resources to create simple and timeless furniture. Around 90 per cent of Emeco’s product range is made from recycled materials.

TRADE ASSOCIATIONS

Not only furniture manufacturers are championing sustainability in design. Trade associations like the Business and Institutional Furniture Manufacturers Association

(BIFMA) and American National Standards Institute (ANSI) have created the e3 Furniture Sustainability Standard that includes criteria for measuring office furniture sustainability. Additionally, in 2009, BIFMA introduced LEVEL, a sustainability certification program for furniture that focuses on four primary areas, including materials selection and usage, which is part of the design process.

There are three levels to LEVEL; the higher the number, the more criteria have been met. Certification encourages furniture manufacturers to think of sustainable design through all stages of product development and fabrication.

ENCOURAGING SUSTAINABLE DESIGN

Our role as furniture buyers and end users is critical to ensuring sustainable design continues to be incorporated into furniture manufacturing. First, we need to research the furniture manufacturers we support, confirming that they care about the environment and opt to purchase high-quality pieces that have been designed and produced sustainably. Then, to extend our furniture’s lifespan, we should reuse and repurpose them, and when they become unusable, recycle them.

Let’s envision a world where every piece of commercial furniture in the market is designed and manufactured using sustainable materials and processes. That’s the world we want to see, and together, we can help achieve this by pushing the furniture industry toward a greener future. SP

Fuel primerpump

1.

The rise and fall of fuel costs is more complex than many realize

Moving into 2023, fuel costs for fleets are both a question mark and a planning priority. Because pricing is so volatile, we know it is tough to forecast fuel budgets. However, that fact doesn’t change our need to plan. So, if not a solution, here are some of the factors that are driving this unpredictable fuel market and maybe one thing that can be done about it.

When we look at the price of fuel, the question that comes up every time it increases is: why? While in the end it’s a moot question (as we still have to pay no matter what the reason) it is worth understanding the forces that influence price. That knowledge can help with future budget planning.

The first thing to know is that gasoline and diesel availability and price are world issues – there are no local markets where fuel is concerned. In fact, the sourcing of oil is such that when it’s ordered by the refinery, they can’t tell you the origin of the crude. It’s much like getting a drink of water from the tap. You know the water comes out, but do you know the source? For this reason and others, we keep hearing that the war in Ukraine has driven

up our fuel prices. Why? Because Russian oil production is simply part of the worldwide pool, and this disruption has caused waves everywhere.

So that’s the geo-political view. Closer to home though, there are other forces at work. Have a look at the tax structure and EPA standards (Natural Resources Canada here) on fuel. These are making diesel, in particular, both scarce and expensive.

For years now, diesel pricing has been choked with new emissions standards. As more of these looming federal regulations come online it’s costing oil refineries billions of dollars in forced upgrades. All these costs must and will be passed on to the consumer. This brings up the other inequity in the diesel equation, which is the cost of the fuel. On paper, diesel fuel is cheaper to produce than gasoline – yet it costs more. But why is the fuel more expensive? In two words, it’s taxes and supply.

Fuel tax breakdown

Let’s look at fuel taxes in Canada. When it comes to gasoline, the federal government charges 10 cents

per litre, while provinces add 10.81 cents per litre. The federal/provincial carbon tax adds another 10.25 cents per litre. You then slap on an average of 9.2 per cent HST/GST. You now have a minimum tax of 36.78 cents on a litre of gasoline.

Regarding diesel averages, the federal government charges four cents per litre, while province add 11.34 cents. The federal/provincial carbon tax is 12.33 cents per litre for a total of 27.67 cents. Now add the average 9.2 per cent HST/GST. That brings in a minimum tax of 31.82 cents per litre.

Tax on diesel in Canada is lower than gasoline. So why the higher price? Here is where it gets interesting. There are only three refineries in Canada that produce diesel fuel. Transport costs are higher to regional markets. That’s one reason. The other is that these refineries are the same ones that supply us with winter home heating fuel (it’s the same stuff as diesel). This demand, affected by weather, also pushes up prices through the summer/winter cycle.

However, as we know north of the 49th parallel, what happens in the US often dictates what happens

in Canada economically. Today, North American refineries, (mostly American) are exporting more than a million gallons (378 million litres) of diesel per day to Latin American nations and Europe to help that continent as it abruptly separates from buying energy from Russia because of Moscow’s invasion of Ukraine. Since these countries are willing to pay more than we do for diesel, North American producers profit by selling to them instead of us. This then drags up the world price. And, in a free-market economy, there is no loyalty that demands fuel made in North America stay in North America. If you haven’t heard about any of this – you are not alone. Our government will not discuss it or interfere in this offshore export of our fuel. That’s simply bad news for us.

Is there a solution to this? One is currently being offered – electrification. For the fleet market, Ford is now offering the F-150 lightning pickup and the Ford Transit Van as a fully electric alternative to petroleum powered vehicles. Both the Transit van and the F-150 Lightning are currently available to order,

though supply has been a problem. This all-electric solution is also being applied to larger delivery vans, such as the new delivery van offering from GM’s Brightdrop factory in Ingersoll, Ontario.

The BrightDrop Zevo 600 is an electric light commercial vehicle that is powered by Ultium batteries and Ultium drive motors and purpose-built for the delivery of goods and services over long ranges. The Zevo 600 was created with the intention of combining zeroemissions driving with a range of advanced safety and convenience features more common in consumer electric vehicles. Zevo 600 features and benefits include: Estimated range of up to 400km on a full charge;

Peak charge rate of up to 270km of EV range per hour via 120kW DC fast charging; Over 600 cubic feet of cargo area; Cargo area security system with motion sensors to help keep cargo secure; Front sliding pocket doors, wide cabin walkways and a large auto-open cargo bulkhead door all contribute to optimize driver efficiency; and Available at a GVWR of less than 10,000lbs.

Production of the Zevo 600 has already begun in Ingersoll and Brightdrop has announced significant deals with companies like DHL and FedEx. A smaller Zevo 400 version of the van is also coming online.

Hydrogen power as an ICE alternative is somewhere on the horizon and hybrid gas/electric trucks are also a possibility. But for today, it appears that if you want to get off the world oil price hamster wheel, all-electric is the answer. FM/S

The BrightDrop Zevo 600 is an electric light commercial vehicle powered by Ultium batteries and Ultium drive motors. The company has announced significant deals with companies like DHL and FedEx.

The first thing to know is that gasoline and diesel availability and price are a world issues – there are no local markets where fuel is concerned.

What’s a fleet to do?

1.

Responding to ongoing vehicle availability challenges

It has been referred to as ‘the perfect storm.’ The COVID pandemic caused the demand for vehicles to decrease significantly. As a result, the overseas manufacturers of semiconductor chips needed to support the automotive industry decreased production or shifted to chips for entertainment products that were in high demand during lockdown. Once the economy started to improve, getting access to the chips proved exceedingly difficult because they had been allocated to consumer electronics by the overseas chip suppliers.

Current projections

This has not been an easy situation to resolve. The semi-conductor chips were manufactured overseas, and domestic production has not been able to make up for the shortages. With vehicle availability shortages now expected to continue into 2024, most manufacturers are taking measures to keep supply flowing. Some are making vehicles without chips for certain (non-safety related) features. The manufacturer

may provide incomplete vehicles that are safe to drive to be installed later by a dealer.

1. Operating budget increases

2.

Even with these measures, there have been many cases where organizations are promised a nineto-12 month wait time for a vehicle, only to have the order cancelled nearer to the expected delivery time.

In addition, buyers have been paying a premium to get vehicles since the crisis began. Fleet buyers must expect inflated prices until the situation is resolved but there are indications that the inventory situation is improving with new inventory levels increasing 1.5 per cent from October to November 2022 and nearly 37 per cent compared to October 2021.

It is far too early, however, to see actual consequences of these increases.

Impacts on fleet

This unprecedented situation has impacted fleets around the world. An unreliable supply and increased prices of new vehicles has resulted in many challenges.

Older vehicles staying on the road longer means an increase in the number of services and repairs needed. Older vehicles are typically less fuel efficient and fuel costs will be higher.

2. Capital budget increases

Naturally, capital requirements do not increase when there are no replacement vehicles to purchase. As vehicles do become available, however, inflation is pushing acquisition prices up.

3. Maintenance and repair service increases

The cost of maintenance is a starting point for the impact of delayed replacement on an organization.

As a fleet ages, the need for maintenance increases. Current facilities and staff may have to be augmented to accommodate these increases.

4. Safety decreases

Vehicle manufacturers are constantly investing in safety technology and new vehicles are safer

vehicles. Delaying the introduction of new vehicles means the retention of older (less safe) vehicles.

Finding solutions

There is no crystal ball to predict how or when this will end. There is no magic wand to fix the current vehicle availability issues. Fleet managers have reported a number of creative practices to help in the short term.

In one example, an organization was forced to make the difficult decision to retire assets with excessive maintenance costs while retaining several units that were in marginally better condition than the rest. Before disposing of the assets, however, they retrieved much-needed items such as winter tires to reuse on retained assets.

Another organization had never rotated vehicles between departments. As a result, vehicles had a wide range of accumulated mileage. They instituted an unpopular vehicle rotation program in order to smooth utilization and reduce the need for replacements.

Many organizations continue to emphasize the importance of a multi-year replacement plan even if strict adherence to the plan is currently impossible. Understanding the impacts of delayed replacement and adjusting the plan as those delays happen puts the organization in an informed position when vehicle supplies increase. These and other local solutions may ease the pain to an extent, but a coherent and comprehensive plan is needed to address the damage done and the continuing challenges ahead.

How to respond

There is no ideal solution. Inevitably, fleet professionals have to act counter to what they know is best practice to meet the priority goals of their organizations. Accepted practice is to replace vehicles at an optimum point in their lifecycle where the total cost of ownership (TCO) is minimized. This is not possible if replacement vehicles are unavailable. Where delayed replacement is inevitable due to vehicle availability (or lack thereof), fleet managers should take the following steps to ensure that informed delayed replacement takes place.

1. Understand when vehicles will actually be available

There are few guarantees right now so use relationships with trusted suppliers to ensure you know the truth. Generous promises and rosy predictions will not help. An organization can only make a workable plan when they have accurate information on vehicle delivery dates (as grim as they may be).

2. Evaluate the short- and longterm costs and impacts

Once accurate information is available, it is possible to assess the consequences of vehicle replacement delays. Organizations should consider financial, safety, staff, and policy impacts. Additional

operating costs to fuel and maintain older vehicles may be the easiest to quantify. Safety may be impacted by delaying the introduction of newer, safer vehicles. Employees may be negatively impacted by having to maintain and operate older vehicles and policies may have to be updated to show new lifecycles or rotation guidelines.

3. Educate decision-makers on these impacts

The information gained in the previous assessment needs to be shared with decision-makers who may control access to the budget increases needed and who may approve the policy changes.

4. Explore the least costly options

With a realistic view of the situation and ongoing impacts, decisions can be made that take overall costs into account and minimize their impact on the organization.

5. Implement wisely Flexibility and innovation need to be part of any implementation plan. A dogmatic adherence to a 20-year replacement plan will fail – the replacement vehicles are simply not available. Organizations that are willing to adjust that plan as circumstances warrant will be more successful in overall cost control.

As the fleet industry struggles with these unprecedented challenges, it is more important than ever to reach out to industry colleagues and share ideas and solutions. Vehicle availability and price inflation will not be resolved overnight so a longer-term strategy is needed to weather this perfect storm. FM/SP

Vehicle availability and price inflation will not be resolved overnight so a longerterm strategy is needed.

Kate

Snow safety Including ADAS in your winterization plan

For many regions, winter lasts long into March and it’s not uncommon to have snowfall in April. This means fleets must have a comprehensive winterization action plan that lasts several months, and a strategy based off the entire calendar.

Winter servicing

The process of winterization continues to evolve from just a few years ago, and advanced, sophisticated truck technology means fleets and their maintenance personnel must take a wide look at their trucks today. As an example, it’s becoming more common to have advanced driver assistance systems (ADAS) as part of the specs when ordering and operating equipment today. This technology is crucial as it is designed to guide drivers in getting to their destinations safely, and includes adaptive cruise control, automatic emergency braking, blind-spot detection, and forward-collision warning systems.

Features like lane departure warning systems use video, laser and/or infrared lasers to detect visible road markings that are covered by snow, slush, salt, or ice. Forward-collision warning systems use front-facing cameras or radar to take corrective action. These sensors may also be affected by snow, slush, salt, or ice.

1.

Communicating with drivers

Communicating with drivers can be key in properly maintaining these technologies, especially during the winter months. It is important to discuss with drivers that ADAS isn’t there simply to assist with safety and driving. Drivers still must be in control of the vehicle at all times and recognize when roads are slippery and that stopping distances will need to increase even with ADAS. They may also need to clean the sensors, radars, and cameras for the lane departure warning and forward-collision warning systems more than once during a trip when driving in snowy or icy conditions.

This process of communication with drivers has recently taken centre stage for many fleets, especially as organizations look to recruit and retain their drivers through better safety measures. After reigning as the top industry concern for five years in a row, the driver shortage concern dropped one position in 2022 to the second-highest concern on the American Transportation Research Institute’s (ATRI) 2022 report.

Listen to drivers, as they can provide feedback when it comes to what the ADAS system is doing and how it is operating. As an example,

some of the early versions of forward collision radars were detecting everything and the drivers were reporting that the trucks were hard braking on their own, which is not ideal. These issues were likely rectified from their feedback and evolution of the technology.

Up to speed on ADAS

Fleets must also ensure their technicians are trained on the latest ADAS technology. Technicians must be able to use diagnostic software to check for power, ground, and data link connections. Lack of knowledge on these items can lead to increased costs and a broken system. Training technicians on original equipment manufacturer (OEM) and aftermarket ADAS systems, as well as providing them with refresher training is critical in keeping up with this ever-changing technology.

Also, learning how the system interacts and communicates with the truck is a key component in diagnosing issues.

The most significant culprit with ADAS issues typically centres around a drop in voltage. It takes as little as 0.2 volts to set off a sensor; and any corrosion in any part of the wiring has the potential to cause this. Technicians must start their diagnosis with the obvious point of corrosion, the battery.

Fleets should add ADAS to their PM (preventive maintenance) schedules now. Servicing the ADAS is just as important as an oil change or tire rotation. Proactive monitoring will mitigate potential issues, even if the ADAS just needs a software upgrade.

Itemizing M&R costs

ADAS repairs as well as other maintenance parts replacements can be costly for fleets but having the visibility to break out line-item costs allows the operations department to better align maintenance and repair (M&R) strategies to preserve the overall bottom line. When fleet personnel have each cost centre broken out individually, they can go line item by line item and review efficiencies in each bucket – how are rising repairs and parts costs affecting the scheduled maintenance, preventative maintenance, tire, and brakes replacement, and so on?

The type of lease structure utilized by a fleet can further impact overall M&R and ADAS costs. Depending on the lease structure – full-service or unbundled – fleets may have a choice when understanding what is included in their M&R services and costs. There are variable inputs that make up these costs and it’s not as simple as look-

ing at M&R as a single bucket. Fleets must be able to dissect all critical M&R parts and components like tires, brakes, service and repair, and ADAS systems such as lane departure warning.

If a fleet typically runs 500 tractors, and there was an expected downtime of eight to 10 per cent, they may see their parts costs increase and their labor increase

when they’re tied to a non-negotiable full-service agreement over a period of time. However, with an unbundled agreement, these fleets aren’t tied to any one parts supplier, freeing up the fleet organization to shop around for the best system price and availability.

Fleets that have the right visibility into their M&R costs, unbundled lease structure flexibility to apply

to their M&R and safety strategies, and proactive communication between drivers and fleet personnel will have a better competitive advantage this winter and beyond. Including drivers in the conversation around safety initiatives and acknowledging their input is important for their safety and retention. Also, your drivers and insurance company will both appreciate

that you are spec’ing the latest and greatest safety features.

As more fleets replace aging trucks with newer, safer equipment on the roads, they will keep drivers and others on the road safer, retain drivers at a higher rate and enjoy substantial savings in reduced accident and litigation costs as well as lower maintenance and repair expenditures. FM/S

Listen to drivers, as they can provide feedback when it comes to what the ADAS system is doing and how it is operating.

Refreshed ride

The 2023 Subaru Ascent features several technology updates, including to its cameras

Subaru’s three-row SUV, the Ascent, receives a mid-cycle refresh for the 2023 model year, four years after its 2019 launch. Much of the Ascent’s technology has been updated, but so has its price. For the fleet buyer, this means the 2023 version comes with upsides and downsides.

Among the positives: the latest Ascent comes with some important safety updates. Two important upgrades have been made to the EyeSight safety system found in every Ascent: the main cameras that scan ahead of the SUV now provide a 68-per cent wider field of view, and a third camera is mounted in between to improve the system’s

response times to pedestrians and cyclists during low-speed operation and when entering intersections.

Updated control software and a new electric brake booster have also been added. Plus, automatic emergency steering helps to avoid collisions at speeds up to 80km/h. While the IIHS hasn’t yet rated the 2023 Ascent, the 2022 model was already rated as a Top Safety Pick+ before these upgrades.

The eight-inch infotainment screen that was previously standard has been replaced across the line-up with a portrait-oriented 11.6-inch screen, the same one found in other Subaru vehicles such as the Outback, Legacy, and WRX. This includes

over-the-air updating for the infotainment system and the built-in navigation system that’s equipped on the top two trims, Limited and Premier. Since wireless Apple CarPlay and Android Auto are now standard (although a wireless charging pad is not available), on-board navigation may not be important to some buyers. However, Subaru’s navigation comes with What3Words, a technology that can navigate to any location on Earth with precision by entering its corresponding three-word identifier. This is one of the most affordable vehicles on the market with built-in W3W functionality, so this could be of significant benefit to fleets whose

drivers regularly travel to locations without street addresses. Subaru’s DriverFocus system, a camera-based driver attention monitor, is also new to Ascent for 2023 and is standard on its top two trims.

Camera updates

The updated Ascent receives a significantly improved backup camera that comes with a standard camera washer that functions with the rear wiper washer. A surround-view camera and digital rear-view mirror are exclusive to the Premier trim. The latter offers a camera-based view out the back of the vehicle that maintains visibility even when the cargo hold is full,

1. Subaru’s 2.4-litre turbocharged engine with four horizontally opposed cylinders is standard and creates 260hp and 277lbs-ft of torque.

2. The eight-inch infotainment screen that was previously standard has been replaced across the lineup with a portrait-oriented 11.6-inch screen.

though this camera is mounted higher on the rear door and doesn’t come with a washer, so it’s more prone to collecting debris.

With this refresh, the powertrain sees no changes. Subaru’s 2.4-litre turbocharged engine with four horizontally opposed cylinders is standard and creates 260hp and 277lbsft of torque.

As is typical of Subaru SUVs, all-wheel drive is standard, here with brake-based torque vectoring. Despite its size and 22 centimetres of ground clearance, the low-mounted engine and high-torque CVT give the Ascent’s a lower-than-average centre of gravity, which gives it surprisingly good handling. All trims

but the base Convenience are capable towing up to 2,270kg or 5,000lbs and include Trailer Stability Assist.

Even with no changes here, one of the downsides of the 2023 Ascent is its slight increase in fuel consumption ratings over the 2022 model. The 2023 Ascent uses 12.3 litres per 100 kilometres in city driving, 9.4 on the highway, and 11.0 combined (as opposed to the 11.7/9.0/10.5 seen in 2022). Our as-tested rating over several hundred kilometres ended at 12.8L/100km, though this was with some idling and mild offroad testing.

The other downside is the Ascent’s price increase. Previously, the Ascent was a bargain as a three-

row, all-wheel drive SUV. For 2023, pricing starts at $40,995 for the base eight-seat Convenience trim, which is an increase of $3,700. While it’s unfortunate to see the Ascent’s base price push past $40,000, this is in line with the segment, and its new features justify the increase. Pricing tops out at the Premier trim at $53,995 (freight and PDI are $1,995 extra). For 2023, it now costs the same to order the Limited and Touring trims with either a middle bench seat or second-row captain’s chairs.

While higher prices and increased fuel consumption may give some fleet operators pause, some fleets will benefit enough

from the improved technology in the 2023 Subaru Ascent that it continues to warrant serious consideration. FM/SP

As Tested

Price (incl. freight and PDI): $55,990

Engine: 2.4-litre turbo four-cylinder

Power: 260hp, 277lbs-ft of torque

Transmission: CVT

Rated Fuel Economy (L/100km): 12.3 city/9.4 hwy/11.0 combined

Observed Combined Fuel Economy (L/100km): 12.8

The updated Ascent receives a significantly improved backup camera that comes with a standard camera washer that functions with the rear wiper washer.

ADVANCING INNOVATION OPENING COMPETITION THROUGH DIALOGUE RFPS

Unnecessarily strict procedures, overly narrow evaluation criteria, and overly prescriptive specifications serve to stifle competition and expose procurement processes to unnecessary litigation. To avoid tender compliance disputes and enable innovation, purchasing institutions should deploy negotiated Requests for Proposals (RFPs) with competitive dialogue stages.

Bidders are increasingly challenging what they perceive to be overly restrictive evaluation criteria and performance requirements.

In fact, in its October 2022 report entitled Improving health care through pro-competitive procurement policy: Digital Health Care Market Study Part 2, Canada’s Competition Bureau recommended that government institutions use fewer prescriptive evaluation criteria and specifications and use negotiated RFPs to enable bidders to propose market-based solutions rather than being tied to unnecessarily narrow government requirements. As this report cautioned, “Canada is at risk of falling behind international best practices for digitally-enabled health care treatments” and that adjustments were required to government purchasing rules to “ensure that Canadians continue to have access to the best care possible.”

The Competition Bureau attributed current restrictive practices to a lack of government expertise in defining requirements and to a lack of market intelligence. As the report cautioned, “it is important to get RFP requirements right” since “failing to do so can create barriers to market entry, particularly for innovative companies and SMEs.” The report concluded that “improp-

erly scoped RFP requirements can make procurement policies needlessly complex and, at their worst, can reduce competition and innovation to the detriment of the Canadian health care system.”

Similarly, in its July 2022 Annual Report 2021-2022, Canada’s Office of the Procurement Ombudsman cautioned against the use of unnecessarily restrictive evaluation criteria, noting that concerns over unfair, overly restrictive, or biased evaluation criteria were the top issues raised by its industry stakeholders. In fact, those stakeholders felt that government procurements were unfairly biased for and influenced by incumbent suppliers. The industry stakeholders also raised concerns over the flawed interpretation of evaluation requirements and the application of hidden criteria, such as Canadian education requirements that were never disclosed in the government’s solicitation documents.

LEGAL CHALLENGES

The use of unnecessarily restrictive requirements can lead to successful legal challenges, as evidenced by two high-profile legal rulings involving Canadian provincial governments whose procurements were struck down for breaching open competition rules under applicable trade treaties. In its February 2022 decision in The Ministry of Highways for the Province of Saskatchewan v. West-Can Seal Coating Inc., the Saskatchewan Queen’s Bench dismissed the Saskatchewan government’s appeal of a trade treaty arbitration decision. That arbitration decision determined that the government breached open competition rules by applying

local labour requirements under a “community benefits” scheme that awarded highway maintenance work to a Saskatchewan company.

Further, in its June 2022 ruling in Thales DIS Canada Inc. v. Ontario, the Ontario Superior Court of Justice – Divisional Court struck down an Ontario driver’s licence and health card RFP after the government failed to justify domestic production restrictions on security and privacy grounds. The Ontario government sought leave to appeal the decision, which was granted by the Ontario Court of Appeal in fall 2022, setting the stage for a higher court ruling on the use of restrictive requirements by Ontario government institutions. While government institutions should avoid setting the competitive bar too high with unnecessarily restrictive requirements, setting the technical bar too low and proceeding with low-bid awards can also stifle innovation. For example, in its September 2022 report entitled Audit of Zero-Emission Buses – Sprint 2 – Tendering Process for 40-Foot Electric Buses, the City of Ottawa’s Office of the Auditor General found that the City’s draft RFP for a fleet of electric buses contained no rated technical evaluation criteria. Instead, the draft solicitation set minimum technical requirements and proposed to award the contract to the lowest compliant bidder. The Auditor General concluded that the proposed approach failed to allow for innovative solutions that could address the City’s future needs, stating that “this procurement approach could have resulted in awarding the contract to a proponent with the lowest proposed

price that met the stated require ments, but not necessarily the pro ponent with superior technical capabilities.” The City ultimately decided to cancel its proposed RFP. As this audit illustrates, pub lic institutions continue to struggle in implementing dialogue process es that open the door to innovation and need more guidance in effec tively leveraging these strategies.

Rather than locking their pro curements down with restrictive procedures, and stifling innovation with anti-competitive requirements, public institutions should be lever aging negotiated RFPs with com petitive dialogues so they can open their competitions to more suppli ers and open the door to more innovation. SP

“Bidders are increasingly challenging what they perceive to be overly restrictive evaluation criteria and performance requirements.”

MEET THE GROWING DEMAND

Asper Master of Supply Chain Management and Logistics