FEBRUARY 2024
THE PUBLIC GOOD
Carl Bonitto on volunteering, education, and working in the public sector Cybersecurity in shipping
Supply chain resiliency Layering in returns The Ford Super Duty SME robot adoption
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VOL.66 No.1 FEBRUARY 2024 SUPPLYPRO.CA COVERING CANADA’S SUPPLY CHAIN
@SupplyProMag facebook.com/supplyprofessional linkedin.com/company/supplyprofessional
COVER: DANIEL EHRENWORTH PHOTOGRAPHY
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FEATURES
ALSO INSIDE
8 TRACKING THE SUPPLY CHAIN It’s important to know where your goods are, as well as where they’ve been.
16 EMBRACING AUTOMATION More SME manufacturers are adopting robotics.
4 UP FRONT
10 PROCUREMENT AS PUBLIC SERVICE Carl Bonitto on volunteering, education, and working in the public sector.
18 THE FINAL PUSH Last-mile performance can boost customer experience.
6 IN THE FIELD
13 STAY STRONG Post-pandemic, supply chain resilience is crucial.
20 THE LINGUISTIC WAVE Large language models are a powerful tool for supply chains.
30 THE LAW
14 SUPPLY CHAIN CYBERSECURITY New technologies are fighting cybersecurity threats.
22 COMBATTING FORCED LABOUR New law seeks to stop forced labour in the supply chain.
5 BUSINESS FRONT
7 INDUSTRY NEWS
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UP FRONT
GET ON BOARD WITH TECH Within a short span, the world has become a largely digital, connected, and tech-heavy place. In my house alone, the family uses three laptop computers, a smart TV, a Bluetooth-enabled speaker, and two smart phones. My phone connects to my bathroom scale. It also connects to my car. Heck, it even hooks up to a rarely used skipping rope that can track how many skips I do. And I’m probably missing something but that’s what comes to mind. And it’s not particularly unusual in Canadian homes these days. Businesses arguably use even more technology, although somehow, supply chain is somehow seen as a laggard in technology adoption. Yet there are several reasons that organizations should invest in technology. One reason is that technology can boost productivity. Among OECD nations, Canada recently ranked 18th in terms of our productivity. Technology adoption can upgrade and modernize supply chain and manufacturing functions, helping to improve productivity. Technology can help to build resiliency. Supply chains are increasingly complex and face global concerns: the war in Ukraine, China flexing towards Taiwan and the Asia-Pacific region, conflict in the Middle East, low water levels in the Panama Canal and so on. Consumers now want to know where goods came from, and whether forced labour was used. Organizations can use technology to track and trace their goods. Another challenge in need of continuing vigilance is digital security. In his article in this issue, contributor Christian Sivière notes that more connection means more risk. Companies can counter that by investing in tools and technology to safeguard against attacks. The above examples are all, of course, challenges. Yet to paraphrase a common saying, each can be transformed into an opportunity. Technology adoption can help increase productivity. Cybersecurity threats increase, yet technology can help to guard against those risks. As well, technology adoption can help connect different parts of the supply chain, such as operations, transportation, procurement and so on, turning the process into an interconnected system rather than distinct siloes. Doing so means that we must prioritize education and skills development so that employees have the knowledge they need to thrive in a digital environment. If companies are to update functions using technology, supply chain professionals must improve their skills to keep pace. This becomes more important for an aging workforce, as technology takes over mundane, physical tasks unsuited to older workers. So, adopting technology forces us to reimagine how we train our workforce. The more training that supply chain professionals get, the better they can use technology. That in turn can increase productivity. Sounds like a virtuous cycle to me.
EDITOR MICHAEL POWER 416-441-2085 x7 [email protected] PUBLISHER FARIA AHMED 416-441-2085 x 5 [email protected] DESIGN Art Direction ROY GAIOT Design Consultation BLVD AGENCY
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. iQ BUSINESS MEDIA INC. Vice President STEVE WILSON 416-441-2085 x3 [email protected] President & Executive Publisher ALEX PAPANOU
PUBLICATION MAIL AGREEMENT NO. 43096012 ISSN 1497-1569 (print); 1929-6479 (digital) CIRCULATION Mail: 126 Old Sheppard Ave, Toronto ON M2J 3L9 SUBSCRIPTION RATES Published six times per year Canada: 1 Year $ 99.95 CDN Outside Canada: 1 Year $ 172.95 USD Opinions expressed in this magazine are not necessarily those of the editor or the publisher. No liability is assumed for errors or omissions. All advertising is subject to the publisher’s approval. Such approval does not imply any endorsement of the products or services advertised. Publisher reserves the right to refuse advertising that does not meet the standards of the publication. No part of the editorial content of this publication may be reprinted without the publisher’s written permission. © 2021 iQ Business Media Inc. All rights reserved. Printed in Canada.
MICHAEL POWER, Editor 4 FEBRUARY 2024
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BUSINESS FRONT—BY MICHAEL HLINKA
TIME TO GET SERIOUS NEW YEAR’S RESOLUTIONS FOR THE ECONOMY I began thinking seriously about my first Supply Professional column of 2024 on January 1. When I was starting to make rough notes, I got an e-mail from a friend I hadn’t spoken to in a while. He wished me well, then asked if I had any resolutions for the upcoming year. I replied that my resolutions for 2024 were identical to those of 2023. I resolved to put on 15 pounds of weight, drink more alcohol more frequently, and take up smoking. Then I noted that I had succeeded last year with the first two but for the life of me I simply can’t bear inhaling tobacco products. Of course, I wasn’t being serious. But it strikes me that I’m living in a country that is singularly not serious. A BRIGHT FUTURE It would therefore be wonderful if our Parliamentarians spent their time thinking systematically about what is best for Canada and what could be done to ensure the brightest future for this blessed country instead of the matters that seem to occupy their attention. But if they’re not going to, I will. And here are three resolutions that would propel Canada to become a global economic powerhouse: 1) become the world’s number-one producer and refiner of oil and natural gas; 2) become the world’s foremost manufacturer of semi-conductors; 3) balance budgets at all levels of government, municipal, provincial, and federal. Let me take these one at a time. I don’t know if anyone in Parliament noticed, but at the end of 2023 there were wars raging in both Eastern Europe and the
Middle East. The reason why this impacts the world so profoundly is because combined, Russia and Saudi Arabia account for in excess of 25 per cent of global oil production. Let’s face it, if Canada doesn’t pump out oil, someone else will. According to the Canadian Association of Petroleum Producers, this industry contributes approximately $12 billion in average annual revenue to government coffers. We should commit to double production, which would mean another $12 billion in revenue. Spending by all levels of government (according to Statistics Canada) totalled $963 billion – 24/963 is not an insignificant percentage. And there is legitimate fear that China might make a move on Taiwan and its 25 million citizens. Why is this so concerning? It’s because this tiny nation (Ontario is approximately 30 times its size) is the world’s leader in semiconductor production. Why is this so? Because it wanted to be. Taiwan gave subsidies and tax breaks to the industry, as well as focused on educating technicians and engineers in the field. Canada should double its own tax breaks and credits, close every liberal arts department in every university, then reallocate those resources to meaningful degrees that generate real economic growth. Either of these geopolitical situations could easily escalate into something wider and more serious. Everyone prays that this doesn’t happen and, somewhat magically, peace breaks out. But a pretty good adage when it comes to almost anything is to hope for the best, then prepare for the
worst. If we were dragged into a global conflict, it would require massive deficit spending. But here’s the problem: we’re already currently running a $40-billion deficit. FISCAL RESPONSIBILITY I’m old enough to remember that in April 2015, newly elected Prime Minister Justin Trudeau promised that his government’s platform would be – and here I’m quoting – “fully costed, fiscally responsible and a balanced budget.” If anyone lied this openly and baldly in a court of law, we would call it perjury. In the political realm, we call it business as usual. There is a self-selection process that results in, how can I put this nicely, not the best and the brightest, nor the most honest, ending up running for office and ultimately elected. So, at the end of the day, we get the government we deserve. For what it’s worth, those are my three economic resolutions for Canada in 2024. Unfortunately, I’m absolutely certain that this country won’t follow through on any of them. SP
Toronto-based Michael Hlinka is a tenured professor at George Brown College. He hosts a weekly podcast about wagering on professional football. His website is www. michaelhlinka.com
“If we were dragged into a global conflict, it would require massive deficit spending. But here’s the problem: we’re already currently running a $40-billion deficit.”
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IN THE FIELD—BY LISA FENTON
WELCOME TO THE TALENT WARS FINDING THE RIGHT EMPLOYEES, AND KEEPING THEM, IS GETTING TOUGHER Many of us fall into our supply chain careers. For instance, decades ago I worked for a global company as a customer service representative. I wound up buying replacement parts from one of the company’s US divisions. My interest in the buying side of the transaction increased, and soon I was looking for a supply chain position closer to home. I prioritized getting my foot in the door and thought the best way to do that was to send out as many resumes as possible. I put little thought into an appealing work culture, growth prospects, or alignment with my career goals. I eventually found a local buyer position and was excited to transition into supply chain. In the late 1990s, McKinsey & Company published an article entitled The War for Talent, a phrase that would ultimately grow more popular. I have heard of and lived the 5S journey – a Japanese quality tool for workplaces – but I’d never heard of the 5Bs of workforce shaping. The 5Bs of workforce shaping is an ongoing scenario-based activity. It’s also probabilistic. Workforce shaping should be undertaken by a small, resolute team to update constantly the most likely workforce scenarios. The aim is to inform and make decisions about the optimal composition of the workforce. Five helpful considerations are: Buy – Who to recruit from the external market. Build – Who to upskill and reskill, and in what areas. Borrow – Which tasks to outsource. 6 FEBRUARY 2024
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Bot – Which tasks to automate. Base – Where to locate roles, and where the base of operations (including hybrid and virtual) should be. LABOUR SHORTAGES A paper from KPMG, called The Future of Supply Chain, mentions labour shortages impacting supply chains. If there aren’t enough people with future-fit skillsets, it’s understandable there would be a war for talent. What does a future-fit workforce look like? It includes leaders who can adopt a digital mindset while emphasizing human skills, awareness that everyone is an innovator, a growth mindset, the courage to act and challenge, and a people strategy featuring industrial and employee relations. Criteria include: Who – Includes various levels from entry level to executive roles. What – Challenge of acquiring top-tier talent when there is a scarcity of individuals with high-demand skills and expertise. When - Concept has been around for decades, with the phrase popularized in the late 1990s. Where – Highly industrialized regions, economic hubs, global logistics hubs, emerging markets, demographic factors, technology clusters. Why – Globalization, technology advances, retirement of experienced professionals, e-commerce growth, complex supply chain networks, and specialized skills. If there are so many positions available and so many individuals seeking opportunities, why is there a war for talent? One trend in 2024 is The Great Reprioritization, as
highlighted in The EWS article, Top Talent Trends for 2024. The Great Reprioritization involves the rise of the selective candidate. These candidates only explore new opportunities if they fit certain criteria, typically around working patterns, culture, and non-compensatory benefits. Crucially, even for roles where there is a good competency fit, if these criteria are not met, selective candidates say “no” far sooner. A major challenge for recruiters is the selective candidate who turns down opportunities if it does not fit a certain lifestyle. A company must offer intangible variables and focus on areas like green and sustainable practices. It is not surprising that many top trend lists note that talent is the primary concern for the C-suite because there are simply not enough people to run supply chains. We are not alone on trying to figure out how to do more with less. It’s therefore understandable that organizations are turning to digital transformation and artificial intelligence (AI) as productivity boosters. As well, many industries have an image crisis among entry-level candidates. The stats are bleak, with estimates of 60 million baby boomers retiring by 2030 in the US and more than five million in Canada. It’s baffling that companies have candidates jump through hoops for a position, yet with virtual interviews making the process easier, candidates may accept a position sooner with another company. Companies must realize they are not only competing with each other, but also with their future selves. Workers are looking else-
Lisa Fenton is supply chain and inventory manager, Custom Plastics International Limited.
“Talent is the primary concern for the C-suite because there are simply not enough people to run supply chains.”
where to find opportunities more often than you may think. Solutions include being a place where people want to work; giving people what they want; offering flexibility; recognizing mistakes; acting fast to outpace change; and being a cultural role model. For job hunters, keep sharing updates, insights, and results. Focus on attending events, conferences, and online sessions. Include personal notes, show interest in others’ work, and network. Your value and visibility will keep you top of mind in the war for talent. SP SUPPLY PROFESSIONAL
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INDUSTRY NEWS
ASCM launches resilience certificate
Vancouver Airport expanding cargo capacity The Vancouver International Airport will see up to $74 million in funding through the National Trade Corridors Fund. The money will fund the airport’s expansion, equipping it to handle more cargo, improve its facilities and efficiency, and reduce pollution, the government said in a release. The project will enable larger aircraft to move between cargo facilities and the runway, as well as increase parking capacity for four more widebody freighter aircraft. It will also upgrade an access road and prepare the site for a new air cargo warehouse. The government estimates the project will reduce truck travel by up to 229 million kilometres of 30 years, improving highway safety and reducing greenhouse gas emissions. Improvements are set to boost the airport’s cargo capacity by 160,000 tonnes.
Survey highlights rise of technology in supply chains Over half (52 per cent) of companies currently host critical enterprise applications in the Cloud, while 76 per cent believe AI will be an important part of their supply chain in the next three years, according to an annual report by software company Loftware. The report, which surveyed over 300 labelling, packaging, and supply chain professionals across industries in 55 countries, found that investing in technologies like cloud computing, AI, and IoT, is now an enabler for business growth and agile supply chains. This shift is driven by supply chain disruptions, consumer expectations, and sustainability. The report revealed that sustainability has become a strategic and operational priority; 78 per cent said they have adopted sustainability initiatives. As well, 79 per cent flagged global traceability as a priority.
Orders rebound lifts global trade activity Data from Tradeshift show a modest uptick in global trade activity during Q4, with a strong surge in orders. The company’s Index of Global Trade Health shows global trade transaction volumes improved to four points below the baseline, having sunk to six points below anticipated levels in the previous quarter. Tradeshift’s analysis of purchase orders and invoice traffic on its global platform reveals an increase in ordering activity during Q4. Order volumes grew five points above the expected range in the final quarter of 2023,
having tracked below expected levels for the preceding nine quarters. Demand for freight capacity remained six points below baseline in Q4, suggesting the recent rise in orders at a macro level isn’t significant enough to alter the decline pattern over the past 18 months. Manufacturing transactions remained consistent with the previous quarter, ending the year six points below the anticipated level. Trade in China also stayed contracted, showing modest improvement from a mid-year slump.
Canada Post to sell SCI Group to Metro Supply Chain Canada Post and Purolator Holdings Ltd. plan to sell SCI Group Inc. to Montréal-based Metro Supply Chain Inc. SCI is a Canadian (3PL) provider specializing in warehousing fulfillment, supply chain solutions, and transportation management. It operates independently with more than 75 locations totalling over 4 million square feet and employs approximately 3,000 team members. The potential sale began in 2023 after a review and assessment of Canada Post’s long-term strategic plan. A comprehensive, multi-stage RFP process followed, involving ex-
ternal legal and financial experts to evaluate options and proposals. Canada Post is finalizing the transaction with Metro Supply Chain, which is subject to regulatory approval.
The Association for Supply Chain Management (ASCM) has launched a Supply Chain Resilience Certificate, providing supply chain professionals with knowledge of the concepts, practices, and trends of supply chain resilience. The ASCM Resilience Certificate helps them to adapt and find solutions while ensuring the supply chain remains robust and efficient in the face of challenges. After finishing the courseware (six modules) and passing the exam, certificate earners will be able to integrate resilience into supply chain management; manage risk; make data-driven decisions; strengthen supplier relationships; and prepare for disruptions using data and planning, the organization said.
SOTI research focuses on supply chain visibility Supply chain optimization in the retail industry is critical, as Canadian shoppers now demand real-time information, efficient product availability, and rapid delivery both in store and online, says research released by SOTI. The industry faces a juncture where Canadian consumers see a disconnect between shopping expectations and in-store reality, the company said in a release. As retail markets evolve, the industry grapples with rolling out in-store technology and integrating advanced AI, while continuing to optimize the supply chain and address growing security concerns. According to the research, 46 per cent of Canadian consumers expect to pick up items ordered online from a store the same day, 77 per cent expect to always know the status of their orders, highlighting the need for supply chain visibility, SOTI said. SOTI conducted the research between September 3 and 14, 2023, via 11,000 self-completed interviews from nine global markets, including 1,000 Canadian respondents. SUPPLYPRO.CA 7
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BY MICHAEL POWER
LINE OF SIGHT
TRACEABILITY REMAINS CRUCIAL FOR POST-PANDEMIC SUPPLY CHAINS The COVID-19 pandemic highlighted how important supply chains are. Now, emerging from the pandemic, only to face fresh challenges ranging from the Ukraine war, to unrest in the Middle East, to drought-induced shipping woes in the Panama Canal, knowing where goods are, and whether they were sourced ethically, is more important than ever. Lack of visibility has ranked high among challenges that supply chains have faced over the past few years, says Abe Eshkenazi, CEO of the Association for Supply Chain Management (ASCM). That’s put risk mitigation and crisis management high among organizations’ priorities. Supply chain professionals are no longer able to claim they don’t know what’s in their supply chains. “The challenging part is that you now know everybody in your supply chain, and there are activities, or there are players or actors there, that perhaps are unethical or that use practices that would not be in compliance with either regulatory or ethical practices,” Eshkenazi says. DATA IS KING Thriving in this environment is all about having access to high8 FEBRUARY 2024
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quality data. That’s notion shared by many players in the field. “As we saw everything returning to normal, (we saw) just how critical it was to provide visibility at every stage of that supply chain,” says Brian Krejcarek, co-founder and CEO of Reelables, a company specializing in smart labels that aid in supply chain data tracking and visibility.
This means everyone is looking for efficiency, Krejcarek says, with no one wanting excess inventory sitting around doing nothing. There’s also a trend toward automating points in the supply chain. Reelables, for example, offers active beaconing Bluetooth labels with a range of about 250-to-300 feet. The labels send a signal when pal-
lets arrive at a warehouse, for example. Digitally captured data can the translate to better accuracy and fewer human errors. Accountability within the supply chain has emerged as a vital concern for organizations. Blockchain holds the potential to bolster that accountability, as a public record of transactions residing in the Cloud. By way of example, Krejcarek cites temperature-controlled vaccines that can be damaged if left in the sun on a loading dock. Blockchain can potentially trace where such anomalies happen, preventing them in the future. Theft is another risk that the technology can lessen. “That’s one of the core problems in the industry, is to be able to provide accountability as to where something went awry or where something went wrong at every leg,” he says. Several upcoming international regulations surrounding sustainability and human rights mean that organizations must ensure traceability within their supply chains, says Stanton Thomas, senior vice-president, sustainable solutions, at o9 Solutions, which provides an AI-powered integrated planning platform. The EU’s Corporate Sustainability Due Diligence Directive (CSDD), for example, obliges companies to operate fairly and sustainably. Meanwhile, the US Uygur Forced Labour Prevention Act and Canada’s own Forced and Child Labour in Supply Chain Act are exerting similar pressure. “You’re going to have to provide a certain level of traceability for the products and services that you source,” Thomas says. “So that’s an important driver. But there are other drivers, such as competitive advantage. If you’re in a competitive marketplace, and if you can provide some hard information on the traceability and the verification that there were no issues such as deforestation or forced labour, or conflict materials involved in the production of your product, then that’s something that’s near and dear to a large segment of the consumer population. And it’s ultimately the right thing to do.” Supply chains are often several layers deep. Yet companies can SUPPLY PROFESSIONAL
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sometimes lack visibility beyond their first tier of suppliers unless they have invested in auditing its supply chain. Companies sharing data, for example through blockchain, can help to increase that visibility, Thomas says. One issue to overcome with that technology is the need for all supply chain participants to be on the same blockchain network. Even if you create an industry-level blockchain, you won’t necessarily be able to get everyone using it. “The other aspect of supply chains is they’re always changing,” Thomas says. “You could audit your supply chain tomorrow or next year and it might be different. The trading partner relationships, particularly upstream where the extraction and processing happen, are dynamic. So, while technology is essential, it’s not going to solve the whole problem. There has to be cooperation and a business culture for sharing that kind of information.”
“You now know everybody in your supply chain, and there are activities, or there are players or actors there, that perhaps are unethical.” UPDATE YOUR TECH Brendan Heegan, founder of fulfillment company Boxzooka, agrees that the multiple players in the supply chain would benefit from talking to each other better. Organizations often still rely on “stone-aged” technology, and there can be a lack of a centralized system in place, he says. Those factors can add up to fragmented visibility. Yet supply chain traceability enables access to the right data, which then lets organizations mea-
sure properly, Heegan says. That in turn allows them to plan better, so they can avoid problems like keeping too much or too little inventory. “Data tells us how to make decisions and when to make decisions,” Heegan says. “And you can’t manage what you don’t measure. There’s also a public relations advantage to having a sight on where your goods are coming from in terms of sustainability and making sure that forced labour or things like that aren’t embedded in the supply chain along the way.” Traceability has been extremely important since the pandemic and that priority will only grow with time, agrees Vinny Licata, head of logistics at Fictiv, an operating system for custom manufacturing. COVID-19 restrictions reduced visibility in ports and other choke points, causing customers to focus more on where their goods were. The pandemic may be in the rearview mirror, but geopolitical ten-
sions are keeping traceability high on the priority list for companies. Technology, combined with good communication, can help here. Fictiv works to get data to its customers through alerts when the potential for delays come up. For example, the company sends an alert to a customer if there’s a customs delay, notifying that customer when they need to get involved to ensure clearance of any goods if more paperwork or other information is needed. That proactivity allows the company to meet 98 per cent of its transit times. “We’re trying to use the technology so we can be proactive and work those exceptions, rather than wait for our customers to call and say ‘hey, we don’t have the parts that are supposed to be due today. Where are they?’” Licata says. Post-pandemic, traceability of goods is as important as ever. Fortunately, technology and access to high-quality data is more available than ever for supply professionals. SP
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BY MICHAEL POWER
GIVING BACK THROUGH TEACHING AND VOLUNTEERING IS A CAREER HIGHLIGHT FOR CARL BONITTO As an upper-tier municipality, the sheer range of procurement needed to keep Ontario’s Northumberland County running should come as no surprise. Just ask Carl Bonitto, the county’s purchasing and risk management services manager. At any given time, Bonitto can find himself buying construction services for social housing, new software, vehicles, consulting services, or many other goods and services. The county’s size means that Bonitto gets to purchase that variety of goods and services. That provides a diversity in his day-to-day routine that he likely wouldn’t get in a position focused on a single commodity. And Bonitto’s diverse experience means he’s up to the challenge. His first exposure to supply chain and procurement came early. The business program he studied at Ontario’s Loyalist College in Belleville, Ontario had an emphasis on production, operations, and materials management, with the last year of study exclusively focused on those sorts of topics. While studying, he did summer work for Quaker Oats in Trenton, Ontario. 10 FEBRUARY 2024
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During that experience, Bonitto was exposed to areas like production and warehousing, among others. His curiosity drove him to learn how large operations work. While he was completing his co-op placement, Bonitto attended a job fair. One of the companies at the fair was Celestica, and Bonitto spoke with representatives at their booth about what the company did. Celestica ended up hiring him before he finished his placement. “The school recognized that (work) as real-life experience,” he says. “I graduated and was hired as an inventory analyst. That’s where things really started for me in the supply chain world, working for a multinational company such as Celestica.” By this time, Bonitto had begun racking up accolades for his work. He developed an inventory process for the company. Bonitto and his team received an internal award for that achievement during a meeting. The award came as a surprise and encouraged him to continue working hard in his newfound field.
SWITCHING TO THE PUBLIC SECTOR His manager at Wilson supported continuous learning. That encouragement helped push Bonitto to take the Supply Chain Management Professional (SCMP) designation program through Supply Chain Canada. Earning his designation in 2009 helped to propel Bonitto into his position at Northumberland County, where he has worked for the past 15 years. “The reason why I got the job was partly because of the designation – and my experience, of course – but the designation was huge,” Bonitto says. “The hiring director and the CAO at the time were looking for someone who was designated. So that was huge for me in getting my position.” Along with his SCMP, Bonitto has a threeyear diploma from Loyalist College, a degree in business management from Athabasca University, and a master’s certificate in public sector leadership from the Schulich School of Business at York University. Responsibility for both procurement and risk management means a varied schedule, with no two days the same, Bonitto says. Priorities can change quickly. For example, a day he hopes to devote to procurement can suddenly be filled with risk management duties, which includes the county’s entire insurance portfolio. “I get to do all the insurance for the entire county,” Bonitto says. “My team and I deal with all the claims that come to the department. Anything from a legal claim from a motor vehicle accident to a slip and fall at one of our locations, and everything in between, potholes or SUPPLY PROFESSIONAL
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DANIEL EHRENWORTH PHOTOGRAPHY
THE PUBLIC GOOD
“That was huge, because it was a process that improved the record keeping and visibility of some of the inventory,” he says. “That (award) always kind of stuck with me as something that drove me.” Bonitto worked at Celestica’s Toronto office for some time before starting a new position in the automotive industry. That job was at automotive parts company Linamar’s facility in Batawa, Ontario, about halfway between Toronto and Kingston. His position was production planner and buyer. Bonitto now credits that job as a deeper step into the world of supply chain and procurement since, as part of his duties, he purchased all the packaging for the plant. From there, Bonitto got a job at Wilson Sporting Goods. He worked at the company as a racquet sports buyer for about seven years in his first strictly purchasing job. That position, combined with his experience with Linamar, allowed Bonitto to position himself strictly as a buyer in procurement, rather than also as a planner – a shift that he says suited him well.
DANIEL EHRENWORTH PHOTOGRAPHY
whatever it may be. And also, lawsuits – if we’re sued in an action, that comes to my desk. Then, I act as the intermediary between (the county) and the lawyer that we hire, or the insurance company, depending on what action we decide to do. So that’s my day to day, but it changes. It could change so that tomorrow I could go into work and I’m dealing with a claim, and it may take up a good portion of my day. Or I’m looking at a construction build or procuring some other commodity.” Bonitto’s office is in Cobourg, Ontario, close to Highway 401. Northumberland County extends along a large area facing Lake Ontario. Yet when asked where the county is, Bonitto references the “Big Apple.” “What people know more than anything is, when you’re driving down the highway and you see this Big Apple,” says Bonitto, referencing a nearby roadside attraction, a 12.1-metre-tall apple-shaped structure attached to a restaurant and a pie factory. “That’s Northumberland
County, so that’s why I always say ‘well, then you’re in Northumberland County, as soon as you see the Apple.’” Bonitto enjoys giving back to the supply chain and procurement field, for example through teaching and volunteering. He has taught for the Ontario Public Buyers’ Association since 2010. The association offers introductory courses for those going into the profession, and Bonitto teaches five or six courses in the program. He also recently became an instructor for the National Institute of Government Purchasing (NIGP). Bonitto also speaks at conferences in the US and Canada which, along with teaching, are highlights from his 20-plus year career. Making connections and mentoring new professionals, along with seeing their careers grow, is rewarding, he says. Many former students stay in touch and Bonitto still mentors them when they call to discuss challenges. He is also involved with several industry boards and associations.
Professionally, Bonitto takes special pride in projects that affect the community positively, such as fire halls or paramedic stations. Driving by one of those buildings can remind him of his involvement in the project and of that positive impact. Another highlight is Bonitto’s involvement in establishing the NIGP-CPP, a certification for public-sector procurement workers. The certification is now three years old. Bonitto was on the governing board for the NIGP for two years and is now on the member council serving 17,300 public procurement professionals across North America. To date, over 1,200 professionals have gotten the certification. “That’s something I’m extremely proud of, just to be part of that team and to do that, and
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“I want to grow in supply chain. I want to grow my to advance the profession,” Bonitto says. Since graduating in 2001, he’s been a memposition in the community. ber of an advisory committee at Loyalist College, helping to create its supply chain manageI’m always looking for ment and global logistics program. new challenges.” PROCUREMENT CONCERNS
Rising costs remain a concern that supply chain and procurement professionals must still grapple with, Bonitto says. To deal with this, have back up when talking to suppliers about those costs, he advises. For example, ensure that you ask suppliers to provide information about why prices are rising and what the impact is. Have strategic partnerships with suppliers, Bonitto says. That allows for better communication when challenges arise, or if those suppliers see potential price changes in the future. “In public procurement there is a lack of strategic relationships, so I think there needs to be more,” Bonitto says. “That’s one of the things that we could do more of with our awarded suppliers, and then certain contracts can potentially be longer where possible. We don’t do a lot of that. Coming out of the pandemic, one of the lessons I learned was that if I didn’t have a long-term relationship with my key suppliers, I may not have gotten some of the PPE that we needed for our paramedics. And that was key. I heard stories of those that didn’t have contracts that couldn’t get stuff. But the reason why I got stuff was because of the partnerships that I had built.” Bonitto also recommends having an escalation/de-escalation clause in contracts, since suppliers can add cost increases quickly but often don’t decrease prices when their costs drop. “This is something to monitor in your high-value contracts or other significant contracts,” he says. “Contracts that are linked to the cost of fuel or a specific building material would be a good example.” Using technology to create efficiencies is another challenge. One such area is in process mining and mapping – looking for improvements to processes. Supply chain and procurement professionals should use artificial intelligence (AI) when useful, for example. Some suppliers already use AI in RFP responses. Currently, it’s possible to have AI help develop specifications, and supply chain and procurement should consider using it to evaluate RFP responses, if and when the technology can do so. That can save time and streamlines the process. “Things like that are an improvement and engaging technology is something I see, with current technologies that are coming out, to overcome some of the challenges that we have with staffing or improving processes to save 12 FEBRUARY 2024
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dollars and time internally,” he notes. Supply issues within the supply chain remain a problem, Bonitto says. To fight this, he advises understanding the entire supply chain. It’s tempting to look just at one’s own suppliers and how they’re affecting business. But understanding your suppliers’ suppliers, right down the chain, helps you realize how issues affect what you’re buying. That helps you evaluate risks and build a better plan. “You can’t eliminate the risk completely, but having a plan with viable alternatives helps lessen the impact when things do erupt.” Networking and benchmarking are also important, Bonitto stresses. The supply chain community is large, and it’s easy to overlook making connections. Speaking with others to see where they’re improving, how they’re tackling challenges, and to share information is important. The public sector excels here because, unlike private industry, there’s little competition. Even among private businesses, he says, it’s possible to speak with those in other sectors. “You could go to somebody in another industry and say ‘hey, how are you doing the procure-to-pay process? Are you using something to improve that process?’ A lot of times, they’re more than willing to help.” As baby boomers retire, many companies must plan how they’ll fill jobs. Partnerships between workplaces and colleges can help to attract young employees into supply chain and procurement careers. “It would help to get in there and say ‘hey, there are careers here. This is how we can partner to get people to fill those entry-level roles,” Bonitto says. “That’s a huge issue right now, to fill those spots. There are a lot of jobs out there and they seem to be growing.” To map his own career, Bonitto creates fiveyear plans. That’s a good amount of time to look at a goal, such as earning a new designation, and decide how to get there, he says. Going forward, Bonitto plans to expand his network while learning from others, passing on his knowledge, and teaching internationally. “My future plans are always to grow,” he says. “I want to grow in supply chain. I want to grow my position in the community. I’m always looking for new challenges that come my way.”
Outside of his career, Bonitto enjoys reading and music. He hosted a Saturday-night radio show for three years while attending Loyalist College. He is also active at the gym. He often works out five times a week. Whether it’s lifting weights, running, playing basketball, or other pastimes, he enjoys physical activity. He even got certified as a personal trainer in 2014. That was mainly for his own benefit, although he has also trained friends over the years. “I’ve got a lot of free time now that my children are older,” says Bonitto, who has a son and daughter. “It kind of frees up a lot of time for me to do these fun things. I volunteer a lot more. They’ve got their own lives, and I also like spending time with them.” INTERESTS AND EXPERIENCE Bonitto encourages those new to supply chain and procurement to explore the range of careers available. He advises his students to consider their interests and experiences when choosing career avenues. As well, speak to those in the profession to ask what a specific job is like, whether they enjoy it, what their day-to-day tasks are, and other questions to help decide whether you’re interested in a similar path. If not, look at other areas of supply chain. Never stop learning and asking questions, Bonitto says. Everyone, whether new to the field or a veteran, should focus on continuous improvement. Doing so will help supply chain professionals push their organizations forward. Join a professional association and work to build your network, he says. Volunteering on a council or committee can be professionally and personally rewarding. Finally, Bonitto says, consider working in government. He was well into his career in supply chain and procurement and studying for his SCMP designation before discovering the public sector as an option. Had he known, the move could have come earlier. “One of the things nobody ever told me is that there are careers in government,” Bonitto says. “A lot of my work at the college is letting them know that a career in the public sector exists in supply chain or procurement, mostly procurement. If you know that early, you may make that decision. That’s where you could market yourself.” SP
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BY MATT WELLER
“Cost effectiveness and sustainability are cost will be minimal. That’s especially important if your competitor can natural outputs of recover faster than you. A lack of strategic system thinkresilient supply chains.” ing in supply chain management and comprehensive risk planning for decades preceding the pandemic was the real culprit in 2020. As was the failure to see supply chain management as a strategic asset over an administrative cost. Though these conditions still exist, more companies are working to improve upon them.
SUPPLY CHAIN RESILIENCY THE ABILITY TO RECOVER IS CRITICAL TO SMES AND THE ECONOMY During the COVID-19 pandemic, the term “supply chain resilience” became ubiquitous. People who had never heard of, or cared about, supply chains suddenly became aware of how quickly a system failure can impact the simplest aspects of life. Companies were willing to acknowledge that they “don’t know what they don’t know” about supply chains, because there was no shame in admitting to the same challenges as everyone else. While circumstances were obviously not beneficial, the increased awareness around supply chain risk and resilience was. Supply chain resilience is a measure of how quickly your supply chain operations (and operations they support) can resume previous performance levels after an adverse event. While it is impossible to anticipate risks and avoid such events entirely, if your supply chain systems are resilient, your bounce-back time and
WHY IT MATTERS These problems impact more than just the supply and demand of materials, services, or resources. The interconnected nature of supply chains also impacts employment. Managing supply chains requires decentralized, distributed operations and decision making, which support and inform separate functions like marketing, sales, finance, engineering, R&D, service, and production. If your supply chain is impacted or stops, so too will these roles. If your supply chain is resilient, these functions (and your company) will benefit. Employment is an impact that passes beyond the factory walls into local and global economies. According to Innovation, Science and Economic Development Canada, as of 2020, $90.5 billion in wages came from manufacturing, which happened to be down from the previous year by $6.7 billion, and 93.2 per cent of these manufacturers have 99 employees or less. 6.2 per cent have 100 to 499 employees, and only 0.6 per cent have more than 500 employees. Total revenues for 2020 were $678.4 billion, down from $748.2 billion just a year before. As well, 4.5 per cent of our GDP comes from manufacturers. These numbers illustrate that nearly all of them are small to medium in size. Few companies in Canada’s manufacturing sector are large to global in size – but likely contribute disproportionately more to GDP than the majority of small companies. So making these small- and medium-sized manufacturers more resilient should be a concern. These firms are the least able to adapt quickly to
changing business environments due to limited resources and capacity. The result is, they stagnate or fail. The “winners” are those that pivot faster than the competition, with the least increase in fixed or variable costs. In other words, it’s a competitive advantage to have supply chain resilience that’s effective and affordable within a business’s specific operating realities. Aren’t our larger manufacturers the best place to focus on resilience, due to their economic contributions? From my experience, in the longterm the answer is no. The reasons are simple. What happens when a major manufacturing firm, which generates such a large economic contribution, decides to pull up stakes, for any of a number of possible reasons? The results are devastating on local communities, and long-term. Furthermore, Canada’s manufacturing is predominantly low volume, high value/mix/customization goods. Unlike any volume manufacturing (think consumer goods), these products have their own supply chain challenges that are often overlooked by the volume-based best practices of the large manufacturing firms. The future landscape of Canada’s manufacturers includes far more small and medium firms and fewer large ones because needs will be decentralized, with local specializations and requirements. REDEFINING CANADA’S PLACE Geopolitically, the world is changing fast. In North America, a large portion of the population is retiring, and they are pulling in their own capital to fund it. This means declining capital for R&D, funding for new companies and other longer-term investments. Several parts of the world are entering a population implosion, meaning that political and trade challenges aside, some key supply partner nations will soon
Matt Weller, CPIM, CSCP is a 23-year supply chain veteran, and founder of Naviga Supply Chain.
no longer be able to produce our goods competitively. We will return (more-or-less) to the pre-Second World War era where countries will survive or fail based on their own natural and internal resources, their abilities to process those resources, and their ability to produce the goods they need to maintain their living standards. In Canada, we have outsourced (or retired) most of our processing capability and knowledge. Now, the long-term survival of our nation’s independence falls on a rapid reacquisition and scaling of these capabilities. More broadly, finding effective solutions to climate change, poverty, and economic instability depends on the integrated system thinking inherent in supply chain resilience principles. Beyond re-shoring, we need a reindustrialization. We have the natural resources, but we must build on our processing capacity and make it resilient. Our small and medium manufacturers can be the foundation for this reindustrialization. And why not? Besides our natural resources, we are well positioned to do this with methods that are more sustainable and efficient than before. After all, cost effectiveness and sustainability are natural outputs of resilient supply chains. We will always need goods and resources. Our ability to produce them will depend on our supply chain resilience, or we will be at the mercy of someone else’s. Our small and medium manufacturers should be the foundation on which to secure our future prosperity. SP SUPPLYPRO.CA 13
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BY CHRISTIAN SIVIÈRE
CYBERSECURITY IN SHIPPING ADVANCING TECHNOLOGY MEANS INCREASED CYBER RISKS What is cybersecurity? The term refers to technology and practices designed to protect organizations, computers, servers, systems, mobile devices and data from unauthorized access or malicious attacks while mitigating their impact. It protects individuals and organizations against viruses, malware and ransomware attacks that can be costly and halt operations. The more connected we are, the more risks we face, and we often see in the news that retailers, banks, government agencies, and even hospitals can be targeted. There was an example in mid-January when the Securities and Exchange Commission’s social media account was compromised with a fake announcement of a bitcoin exchange-traded fund. It’s ironic because the SEC is the US Government’s oversight agency responsible for regulating securities markets and protecting investors, but even they are at risk. And they had to announce that the social media post was unauthorized, adding it was hacked. The irony is that cryptocurrencies are pseudo currencies that don’t exist and have zero value in the tangible world. They are a pure product of the cyber world themselves, fuelled by speculation and greed. Also in January, Microsoft announced that some of their corporate emails had been hacked by a group linked to Russia’s foreign intelligence agency. Luckily, Microsoft confirmed the hackers did not access any customer accounts. 14 FEBRUARY 2024
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There are various types of cyberattacks, ranging from phishing attacks, when deceptive emails, messages or websites are used to obtain sensitive information; ransomware, when software is designed to encrypt files and demand payment for their release; denial-of-service by overloading a system or network to disrupt normal operations; man-in-the-middle or intercepting and manipulating communication between two parties without their knowledge; SQL injections, code injection techniques used to gain unauthorized access and/or attack data-driven applications with malicious commands inserted for execution, cross-site scripting, injecting malicious scripts into websites viewed by users, and more. As technology advances, making our work easier, cyberattack opportunities increase. Before looking at their impact on shipping, let’s see if this topic is a priority for companies generally. RISK TOPS THE LIST The annual Allianz Risk Barometer report released in January confirms it is the top priority. The survey incorporates the views of 3,069 respondents from 92 countries, large, mid-size and small companies surveyed in October and November 2023, who were asked to name the three risks they believed the most important for their business. The first one overall was cyber incidents at 36 per cent (up from 34 per cent in
2022). In the survey, cyber incidents were broadly described as cyber crime, IT network and service disruption, malware, ransomware, data breaches, and resulting penalties. In Canada, business interruption risks came first (57 per cent), cyber incidents second (46 per cent) and natural catastrophes third (43 per cent), while in the US, cyber incidents came first (36 per cent), business interruption second (33 per cent) with natural events third (29 per cent). Therefore, we can see that companies are indeed aware of this challenge. In the civil aviation sector, an activity characterized by its extensive interconnectivity, this issue is well recognized. Over the years, with continuous demand for air transport, this industry went through several digital transformations, leveraging the power of technology to enhance its efficiency and capacity. These digital advances exposed the sector to cybersecurity threats, potentially impacting continuity of service, and the safety of people and facilities. Industry systems and data flow through national borders, and close collaboration between countries and relevant stakeholders is vital. Montréal-based ICAO, the International Civil Aviation Organization, oversees industry efforts to address aviation security globally. It has developed standards, procedures, guidance material and recommended practices on aviation security, raising awareness and supSUPPLY PROFESSIONAL
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porting aviation cybersecurity capacity building, supported by countries and the aviation community. Thankfully, there is a global framework in place that keeps aviation safe, as long as countries follow international rules. It’s a little different in ocean transportation. There is an international framework on basic navigation and safety issues via the London-based IMO (International Maritime Organization), including guidelines and maritime cyber risk management. But it’s a largely deregulated industry, where virtually anyone who operates a seaworthy vessel can start an ocean service from port A to port B in another country. So, it’s left up to individual ocean carriers to protect themselves from cyber security risks, prevent fraud, identity theft and unlawful release of cargo. The old-fashioned practice of releasing cargo at destination only against presentation of a duly endorsed original ocean bill of lading has been largely replaced by ebills and automatic releases, adding risks. But theft and unlawful release of cargo to the wrong party happen on land, so let’s look at the situation in overland transportation. In the trucking and logistics sectors, like everywhere, the cybersecurity landscape is evolving as more operations become integrated, relying on technology and to a certain extent, automation. This applies to offices, distribution centres and warehouses but also to trucks themselves, as technology is more and more present in vehicles. The ELD (Electronic Logging Devices) mandate that automatically records driving time in a vehicle is a good example of that. Trucks have become mobile computers, store vast amounts of data and are electronically connected, creating opportunities for hacking.
“In the trucking and logistics sectors, like everywhere, the cybersecurity landscape is evolving.”
rection attacks, where stolen data and identities are used to obtain freight and misdirect it. Criminals are getting more tech-savvy, with internet-enabled crime spreading. To counter that, the industry must invest in the necessary tools and technology. According to Penske’s Third-Party Logistics Study, 87 per cent of shippers and 94 per cent of 3PL providers agree that adopting emerging technologies is vital to secure supply chain growth. We will see in the coming years, if having additional technology helps to mitigate cybersecurity risks.
Christian Sivière is president at Solimpex.
The other element is increased awareness and education. Shippers and logistics providers themselves must become more tech savvy too. In addition to mastering technology and tools, let’s ask ourselves a question: how much of our life depends on technology, how much of our professional and personal information is stored, on our devices or someone else’s system? Technology is great but freedom might come from disconnecting from technology, when doable. We don’t have to have everything connected. SP
CAUSE FOR CONCERN? The 2023 Travelers Risk Index survey found that 55 per cent of transportation leaders were worried either a lot, or at least somewhat, about cyber risks. And nearly 25 per cent said their company has been the victim of one sort of cyberattack, with about half taking place within the past 12 months. To quote CISA, the US Cybersecurity and Infrastructure Security Agency: “as we become increasingly dependent on technology designed to make our lives easier and more efficient, we also become more exposed to vulnerabilities.” CISA works with the transportation sector to ensure organizations understand the risks they face. Cargo theft is on the rise. According to CargoNet, thefts in Canada and the US increased 59 per cent in the third quarter of 2023, compared to 2022, and the majority were shipment misdiSUPPLYPRO.CA 15
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2024-02-05 4:09 PM
BY JACOB STOLLER
SME ROBOT ADOPTION ROBOTIC AUTOMATION BECOMES FEASIBLE FOR MORE SME MANUFACTURERS Forecasts of exponential growth in collaborative robot (cobot) shipments, which are expected to nearly double every two years until 2030, reflect the assumption that a growing number of SME manufacturers will bring robots into their facilities for the first time. “The big players in automotive and aerospace have had automation figured out for many years,” says Kristian Hulgard, general manager – Americas at OnRobot, based in Irving, Texas, “but most of the SME companies that we visit are just beginning to think about what they can automate.” Despite the realization that the worker shortage is not likely to abate, few SME manufacturers have working robots in their facilities. “The latest statistic I saw is that 90 per cent of SMEs in the US don’t have a single robot,” says Hulgard. “Even if that figure is high and it’s only 60 per cent, that’s a massive proportion. And with the labour shortage, plus all 16 FEBRUARY 2024
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the reshoring that’s going on, we’re expecting huge demand.” Cobots are attractive to SMEs for several reasons. Because of their size and safety features, they can operate in physical environments designed for human workers. Their price point – often as low as CDN$120,000 for a complete robotic solution – enables a return on investment of two years or less. Introducing robotics, however, requires a way of looking at processes that is unfamiliar for many manufacturing managers, even if they’re experienced with other forms of automation. “Companies invite us into their facilities when they have a process in mind to automate,” says Hulgard. “What we find many times is that it’s more complex than they expected, and they might not be able to benefit financially from it.” Many companies find this out the hard way, notes Arie Barendregt, president of Beamsville, Ontario robotics integrator Triple Automation. “We see lots of robots
just sitting in corners because facilities are unsure of how to implement them properly into their processes,” says Barendregt. “Customers are sold on the ‘ease’ of collaboratives. However, they still require technical abilities.” While the current generation of robots can work in theory in an unlimited range of scenarios, matching the right tool to the job requires considerable expertise. “Today’s robots are extremely flexible, but it’s not like you can throw everything at it,” says Barendregt. Some limitations can only be understood by experienced robotic engineers. For example, singularities – zones in a robot’s working trajectory where it loses functionality – can make some applications difficult or impractical. “There are certain restrictions in how the robot can move,” says Barendregt. “If you don’t have basic programing knowledge, you may fall into a hole of believing that the robot is capable of every movement.”
The other important limitation is safety, both from a practical and a regulatory standpoint. “In Canada, our safety regulations are high compared with any other country in the world,” says Barendregt, noting that there are severe restrictions on how a robot can move if it’s in proximity to people. “Those things you see on videos with people working shoulder-to-shoulder with cobots would be almost impossible to get approved here.” TRIED AND TRUE SOLUTIONS These constraints have led to a trend that took place decades ago in the software industry – the development of pre-engineered solutions for SMEs. The most rapidly growing solution areas for these are generic processes that don’t have complex interactions with other processes. “Our approach is to try to sell pre-engineered solutions, because they are very inexpensive, most of the work has already been done, and there’s a proven ROI,” says Hulgard. SUPPLY PROFESSIONAL
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“Then we’ll involve an integrator that has worked with that solution. Typically, they can get it up and running within a week. This is a dramatic change in how you can install and deploy robotic automation.” One growing area is cobot-powered palletizing automation. “Palletizing is a good example,” says Hulgard. “Two or three years ago, end-of-line palletizing was something that wasn’t promoted much. But now, there are all kinds of companies selling standard solutions that they just roll in.” These generic processes are so ubiquitous, Hulgard says, that most companies don’t even think about them as opportunities. “Companies typically don’t know where the opportunities are,” says Hulgard. “Naturally they’re not robotics
experts, so sometimes the easiest opportunity is right in front of them, but they don’t see it.” Triple Automation uses flexible end-of-arm tools from OnRobot and robotic arms from robotics manufacturer JAKA to create pre-engineered solutions for the food and manufacturing sectors. The company operates a test environment in its Beamsville facility, where each customer solution is assessed, engineered when needed, and tested before delivery to the customer. “Creating a proof of concept on our floor with our team creates ease at the customer site when implementing a solution,” says Berendregt. The firm also provides videos to customers which they can show to safety inspectors.
“Whenever you install automation, there’s a change in culture in that facility.” While the implementation period is short, companies need to be careful about the implications of introducing automation for the first time. “Whenever you install automation, there’s a change in culture in that facility,” says Hulgard. “It’s actually a more difficult part of the process to make sure that everyone on the floor understands the changes, what the benefits are, and how to work with the automation.”
Another point is that currently, there is a significant price gap between pre-engineered and custom solutions. “Everything’s possible in automation – it’s just a matter of how many zeros you want to write on your cheque,” says Hulgard. “But even if you’re willing to spend the money, we’re limited by the fact that the demand for robots is outgrowing the supply of engineers.” That said, opportunities for simple pre-engineered solutions with a straightforward return on investment are for the most part untapped by SME manufacturers. “I don’t think that we’ve ever been into a company where we’ve closed the door and said there was nothing we could do here,” says Hulgard. “I don’t think that’s ever happened.” SP
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BY JOHN MCCLYMONT
LAYERING IN RETURNS
John McClymont is principal at Operations and Logistics Solutions.
THE MASSIVE HIT THAT AT-HOME PICKUP HAS ON LAST-MILE EFFICIENCY Last-mile delivery is simple to understand. In the parcel world, it’s the last step of the delivery process when a package is moved from a transportation hub to its final destination – a personal residence. This is the most critical step in the delivery process because it is the point where that online click results in a physical good in a consumer’s hand. It’s also the most expensive part of the delivery process. Last-mile fulfillment can account for 40-to-60 per cent of a product’s overall delivery costs. This is because residential deliveries are often spread across diverse and widespread locations, with less predictability and lower chances of first-time delivery success. In this article I’m going to share the economics of operating a last-mile service, the productivity levels that make those services possible, and why the current proposals for at-home returns pick-up are doomed to fail. DIRECT-TO-CONSUMER ECOMMERCE The eCommerce activity in the US and Canada is booming, and 2023 was a stellar year for revenue and activity. The US market was expected to see sales of $1.14 trillion while in Canada sales finally crossed the $100-billion threshold. This translates to about 50 million packages per day in the US and one million packages per day in Canada delivered to people’s homes.
With an average return rate of 20-to-30 per cent, there’s a growing tsunami of eCommerce product bumping its way back through a system that was never designed to move this much volume in reverse. It’s easy to understand why people are looking at the revenue potential and launching services to capture more of the returns market. DENSITY RULES A successful last-mile service is all about one thing, density. The better your density, the more transactions per hour you can achieve and the more revenue you generate. Another reason that density is so important is because of the behaviours and expectations that have been created around eCommerce delivery - namely, that it should be free. If you are going to offer your customers free delivery, you want that cost to be as low as possible, so as not to erode the profitability of your business. The higher your density (or a better way to think of it – transactions per hour), the lower your overall cost to serve. That means you can charge retailers less to ship each package. LAST-MILE ECONOMICS If density is the yin, then time is the yang. There are three major buckets that draw on time when operating a last-mile service: administration,
driving, and delivery. Think of the total shift length a driver will work as a pie. You must cut the pie into three pieces, but they don’t have to be equal. Whatever time you can remove from one of those slices immediately goes back to the others. In case it’s not obvious, the only value-generating piece of the pie is the delivery activity – always work to make that the biggest. Last-mile delivery routes are a fixed cost system. A 10-hour day on route A, should have similar operating costs as a 10-hour day on route B. Understanding this, there are only two variables left to master: your rate (what you charge per delivery) and the amount of time spent per customer interaction (the delivery). That’s because the more you charge, the fewer deliveries you need to make to generate enough revenue to cover your costs. Consequently, the faster you can make a delivery, the more deliveries you can make and the lower you are able to charge per delivery. Whether or not you agree with how Amazon, UPS, FedEx, and so on operate, I can assure you that their delivery routes aren’t inefficient. An Amazon route, for example, can be anywhere from 80 locations and 120 packages in a low density area to 286 locations and 400 packages in a high density area. How do they achieve so much activity over a 10-hour shift?
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Route optimization for sure, however that can only take you so far. The current level of parcel delivery efficiency in the US and Canada comes from the ultrafast drop-and-go delivery interaction at the customer’s door. In some of the modelling I have done, I have estimated that this is around 31 seconds for the activity. While most people think in terms of hours or minutes, it’s seconds that matter for last-mile success. Keeping with our Amazon example, a delivery time change from 31 to 90 seconds would mean that your typical urban delivery route would make $1,756 less per day as a result of the drop in the amount of deliveries they could accomplish over the same period of time. THE AT-HOME RETURNS PICK UP DILEMMA The reason why I am so firm that at-home returns pick-ups is a doomed endeavour is simple – it’s too slow. What providers are pitching is something like this: The customer will receive a text when the driver triggers some estimated
“The bottom line is, your last-mile execution has massive potential to improve your customer experience.” ETA. The package cannot be left outside and must be manually handed to the driver. The driver arrives, exits the vehicle, goes to the customer’s door, rings the bell then waits for the customer to answer. The customer must hand them the package, the driver needs to ensure it is packaged properly and has the label, scans the label, then has to end the interaction with the customer, make it back to the truck, then leave. There is no way you can add elements of customer interaction in the returns process that
aren’t in the delivery process and somehow be the same speed. This means that your interaction time will go up, your transactions per hour will go down – making the returns process more expensive to complete than the initial delivery. The biggest problem? A more expensive service for an activity that is generating no revenue for the retailer or eCommerce brand. The bottom line is, your last-mile execution has massive potential to improve your customer experience while creating differentiation from others in the marketplace. It can be used as a loss leader to enhance the offer to a customer; free shipping, free returns and at home pickup are examples that do exactly this. While I don’t see all of these things being able to continue as they are today, the core offers are good and can be woven into a broader customer and market strategy – the key is to understand and appreciate the nuance in the details. Do I think that we should give up on the returns market? No. Do I think that there are ways to make services like at-home pickup realistic? Yes. SP
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BY MAHMUD KHAMIS
Mahmud Khamis is a supply chain professional in Mississauga.
SUPPLY CHAIN’S LINGUISTIC REVOLUTION
THE EVOLUTION AND IMPACT OF LARGE LANGUAGE MODELS The advent of large language models (LLMs) is a remarkable transformative epoch, reshaping long-held contours of data processing and decision-making, and embarking us on a journey into a new evolution of man and machine. These fast-approaching applications are promising a future of enhanced human life, productivity, comfort, and well-being. The growth rate of these applications is remarkable, with the introduction of OpenAI’s GPT-2 in 2018 demonstrating unprecedented language generation capabilities. In 2019, the expansion of GPT-2 showcased enhanced language understanding and generation capabilities. In 2020 GPT-3 emerged as a colossal language model with 175 billion parameters, setting a new benchmark in language processing. That was followed quickly in 2021 by the integration into diverse applications. Today, GPT-3(4) has become widely integrated into various applications, spanning content generation, language translation, and chatbot development. LLMs have seen tailored implementations in sectors such as healthcare, legal, and customer service, showcasing domain-specific proficiency alongside innovation and ethical considerations. In 2024 we anticipate future applications and the integration of LLMs into smart homes, healthcare diagnostics, and personal20 FEBRUARY 2024
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ized education tools, shaping a future where LLMs enhance various facets of life. THE RISE OF LLMS The genesis of LLMs also heralded a technological renaissance in procurement and supply chains. These linguistic juggernauts emerged as powerful tools, liberating professionals from manual processes. They streamlined procurement processes, as LLMs orchestrated efficiency while making routine tasks more productive. These LLMs became more adept at comprehending and generating human-like text. Today, LLMs have seen targeted refinements to address industry-specific needs. In supply management, they have started orchestrating efficiency by comprehending historical data, automating vendor interactions, and optimizing supply chain and logistics. This has paved the way to integration with ERP systems. As LLMs matured, integration with enterprise resource planning (ERP) systems became a focal point. This integration streamlined the historical intricacies of supply management processes, offering real-time insights and forecasting capabilities. Anticipated developments involve LLMs catalyzing further innovation. Advanced predictive analytics, demand forecasting, and dynamic supplier relationship management
are poised to become integral facets of LLM applications in procurement. The impact of LLMs isn’t confined to supply management. Their influence permeates various aspects of life. In customer service, LLMs power chatbots with linguistic finesse. Language translation services leverage their capabilities to bridge global communication gaps. Content creation benefits from their linguistic prowess, generating high-quality, relevant material. LLMs also facilitate decision making. They not only answer questions, but also provoke critical thinking and provide insights. In the face of cultural diversity challenges exacerbated by the pandemic, LLMs became indispensable, swiftly processing diverse perspectives to facilitate that decision making. LLMs are used in HR decision-making, helping to craft unbiased job descriptions to attract diverse talent. They analyze language nuances. This helps companies foster inclusivity and avoid unintentional biases in hiring. For supply chain optimization, LLMs process vast datasets to optimize routes, predict demand, and identify potential disruptions. They enhance decision making by considering multifaceted factors, ensuring efficient and inclusive supply chain operations. LLMs power chatbots and virtual assistants and enhance customer support decision-making. SUPPLY PROFESSIONAL
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They understand and respond to diverse customer queries, adapting language and tone to ensure inclusive and effective communication. Despite the advantages, there are also challenges to using LLMs. For example, they can inadvertently perpetuate biases present in training data, leading to decisions that reflect existing societal prejudices. Efforts are ongoing to mitigate bias, but challenges persist in achieving completely unbiased outcomes. While LLMs excel at processing vast amounts of data, they can also suffer from a lack of common-sense understanding. This can lead to misinterpretations and inappropriate responses, especially in nuanced or ambiguous situations. Overreliance on LLMs without human oversight can also raise ethical concerns. Decisions made solely on algorithmic outputs may lack ethical considerations and moral judgment. Using LLMs involves processing significant amounts of sensitive data. Ensuring data privacy and security measures is crucial to prevent unauthorized access and potential misuse of sensitive information. As well, LLMs often function as black boxes, making it challenging to understand the reasoning behind their decisions. Lack of explainability can be a drawback when transparency is essential for trust and accountability. EFFICIENCY AND AUTOMATION LLMs contribute to automation, reducing the burden of repetitive and time-consuming tasks. This allows individuals to focus on the more complex and creative aspects of their work. Humans benefit from LLMs in decision-making processes, as
“For supply chain optimization, LLMs process vast datasets to optimize routes, predict demand, and identify potential disruptions.” these models provide insights, suggestions, and relevant information. This collaboration means more informed and effective decision making. LLMs enhance access to information by quickly processing vast datasets. This can empower individuals with comprehensive and up-to-date knowledge, fostering learning and innovation. Yet this raises concerns about job displacement. Certain roles involving repetitive linguistic tasks may decline, potentially impacting employment. Overreliance on LLMs may lead to skill erosion in areas where human expertise is traditionally valued. Dependence on automated systems may diminish certain linguistic and creative skills over time. The impact of LLMs in supply management and beyond is undeniable. From streamlining operations to augmenting decision-making precision, they stand as beacons of progress. The future promises an even more intricate tapestry of applications, enhancing human life, productivity, comfort, and well being.
We anticipate impacts on procurement, purchasing, supply chain, and logistics in the following areas: Operational efficiency: LLMs contribute to operational efficiency in procurement and supply chain management. Automation of routine tasks, data analysis, and document processing streamline operations, allowing professionals to focus on strategic decision making. Enhanced decision making: the precision and insights provided by LLMs empower professionals in procurement and purchasing. Advanced linguistic models facilitate better decision making by analyzing vast datasets, market trends, and complex scenarios, leading to more informed and strategic choices. Time and cost savings: professionals experience time and cost savings with LLMs. Automation accelerates processes, reducing the time needed for tasks like contract review, negotiations, and data analysis. This efficiency translates into cost-effective operations. Global collaboration: LLMs enable communication and collaboration in a globalized procurement landscape. Language translation services powered by these models break down language barriers, fostering efficient communication and collaboration among international teams. Job displacement concerns: automating routine tasks by LLMs raises concerns about job displacement in some roles within supply management and logistics. Professionals may face challenges as repetitive tasks become automated, meaning upskilling for evolving requirements. Data security risks: increased reliance on LLMs for data analysis raises concerns about data security in supply management processes. Safeguarding sensitive information and preventing breaches become critical as linguistic models handle substantial amounts of data. Dependency challenges: overreliance on LLMs may lead to dependency challenges. Professionals relying on linguistic models may face difficulties when technology disruptions occur or nuanced human judgment is required for complex negotiations and relationship management. Integration challenges: the integration of LLMs into existing procurement systems may pose challenges. Neutral impact is observed as professionals navigate the complexities of integrating linguistic technologies, ensuring seamless interoperability with existing processes. Training and adaptation: adaptation requires training and upskilling. Professionals must invest time in acquiring the necessary skills to leverage the full potential of linguistic models. Going forward, we have no choice but to embrace this linguistic wave, steering towards a future where LLMs contribute to human betterment. The sooner we realize this, the easier our transition will be. SP SUPPLYPRO.CA 21
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BY REJEAN PROVOST
“Uniquely, Bill S-211 imposes personal to combat modern slavery. Reports must detail policies, risk assessliability on business ments, and remedial actions taken. A vital aspect of this legislation leaders for any is its emphasis on transparency, necessitating the publication of company offenses these reports on a publicly accessible website. The inaugural reportthey directed or ing deadline is May 31, 2024. This date is critical, as non-compliance authorized.” could result in fines up to $250,000.
COMBATING SUPPLY CHAIN SLAVERY NEW LAW DEMANDS ENHANCED TRACEABILITY IN RETAIL SUPPLY CHAINS
Uniquely, Bill S-211 imposes personal liability on business leaders for any company offenses they directed or authorized, heightening the law’s enforcement potential. By some measures, the new bill may be the most sweeping supply chain due diligence law in North America, even more than the US’s Uyghur Forced Labor Prevention Act (UFLPA). Where the UFLPA specifically targets goods produced in China’s Xinjiang region, Bill S-211 focuses on supply chain due diligence obligations for businesses operating in Canada, irrespective of the origin of goods. While Canada’s Bill S-211 and the UFLPA address overlapping concerns, they differ in requirements and scope, highlighting the growing complexity of global compliance for multinational corporations and underscoring the necessity of digitalizing supply chain operations.
Canada kicked off the New Year by affirming its commitment to eradicating modern slavery and enhancing social sustainability. On January 1, the sweeping new supply chain law, “Fighting Against Forced Labour and Child Labour in Supply Chains Act,” took effect. This legislation requires brands, retailers, and importers to scrutinize and prevent forced labour and child labour within its global supplier networks, mandating that domestic and international businesses with $40 million in gross worldwide revenues, $20 million in assets, or an average of 250 employees or more must conduct comprehensive due diligence in their supply chains. The law requires these companies to report their actions annually
VISIBILITY Complying with Bill S-211 will pose challenges, especially for brands and retailers that must navigate complex global supply chains of hundreds of suppliers. That requires coordination, accountability, and visibility, but thankfully it’s made much more manageable by a multi-enterprise platform, also known by Gartner as a multi-enterprise collaboration network. These cloud-based platforms support collaboration between businesses, their suppliers, and their third-party partners, introducing visibility into a supplier base, from vendors to factories to raw material providers. To comply with the law, supply chain managers will need to establish systems and processes to identify and address any instances of
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modern slavery or forced labour within their supply chains. This involves enhanced supplier vetting, auditing, and monitoring mechanisms to ensure compliance and ethical practices – all of which can be simplified through the supplier relationship management (SRM) tools of a multi-enterprise platform. These platforms create a window into an enterprise’s supplier base, enabling the traceability and transparency that Bill S-211 requires. Through their supply chain mapping functionalities, businesses are granted a fuller understanding of their social and environmental footprint, including where all transformations of raw materials occurred, how much carbon they’re emitting, and whether their downstream suppliers abide by ethical labour practices. End-to-end platforms like this let businesses document the chain of custody of every material they use in every product they make, so they can prove that no forced labour was involved. Multi-enterprise platforms also foster collaboration with industry associations and non-governmental organizations (NGOs) that can prove invaluable in navigating supply chain management complexities in light of Bill S-211. TradeBeyond’s multi-enterprise platform integrates with sustainability databases from business associations and non-profits like amfori and Worldwide Responsible Accredited Production (WRAP), which monitor and certify the social sustainability of thousands of factories
Rejean Provost is the Team Lead, ESG Strategy for TradeBeyond.
and suppliers. To further enhance their capabilities in ensuring compliance with Bill S-211, TradeBeyond acquired Pivot88. This brings Pivot88’s AI-powered traceability tools into TradeBeyond’s suite of solutions, offering a more robust means to trace and monitor their supply chains. Multi-enterprise platforms create other efficiencies, for instance by saving retailers and brands time through automating the onboarding process for vendors and factories and ensuring new suppliers have read and consented to the company’s terms. From the earliest stages, there’s transparency about your ESG standards and expectations. SAFEGUARDS This SaaS platform enforces a company’s social and environmental standards by preventing merchandisers from booking orders with non-compliant suppliers and preventing shipping departments from booking shipments with these vendors. Bill S-211 will be a tough adjustment for many businesses, but it’s a necessary one. By leveraging multi-enterprise platforms, businesses can not only comply with the new legislation but also enhance consumer trust and contribute to a more ethical global supply chain. This proactive approach ensures the long-term resilience and competitiveness of businesses, aligning them with evolving global standards for ethical supply chains. SP
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Fleet Management
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Fleet News News highlights from the fleet management world.
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Fuel prices What will happen to the cost of fuel in 2024.
Fleet Management is a special section of Supply Professional magazine. It is an important resource for Canadian supply professionals who recommend, select and manage fleet vendors and service providers.
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Road test We test drive the Ford Super Duty truck.
EDITORIAL INQUIRIES: Michael Power, 416-441-2085 x110, [email protected]
ADVERTISING INQUIRIES: Faria Ahmed 416-441-2085 x5 [email protected]
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Fleet Management
Research improves 3D object detection for self-driving cars
Transit bus manufacturer Nova has landed a five-year contract for up to 53 LFSe+, a 40ft long-range battery electric bus model, by the City of Regina, Saskatchewan. The first seven buses are scheduled to be delivered in 2025, with up to 46 buses in option for the remainder of the contract. Regina’s Energy and Sustainability Framework has selected battery electric for the transit’s fleet. Regina Transit plans to purchase only battery electric models as of 2024, for a gradual fleet replacement with alternative technology vehicles by 2040. “These will be the first battery-electric buses in Regina Transit’s fleet,” said Brad Bells, director of transit & fleet with the City of Regina. “The addition of these electric buses will
support the City of Regina’s goal of becoming a 100 per cent renewable city by 2050 and is in line with our Energy and Sustainability Framework.” The long-range electric bus provides reduced maintenance costs and improves air quality by eliminating emission of pollutants and GHGs, the company said. “We’re proud to have accompanied Regina Transit in its transition to electromobility, first with our hybrid bus model and now with the all-electric LFSe+,” said Ralph Acs, president of Nova Bus. “We strongly believe transit agencies and cities such as Regina are paving the way for the success of this important transition to clean transportation, which will support our collective efforts to reduce GHG emissions.”
Work Truck Week 2024 kicks off in March Work Truck Week 2024 serves as the world premiere for the biggest stars in commercial vehicles, with new EVs, internal combustion commercial vehicles, and the components, equipment and services debuting at the show. The event runs March 5–8, 2024, at Indiana Convention Center in Indianapolis, Indiana. It encompasses Green Truck Summit, The Work Truck Show, NTEA Annual Meeting, Ride &
Automotive Revolution at the 2024 Canadian International AutoShow The Canadian International AutoShow is set to take place February 16 to 25 at the Metro Toronto Convention Centre, with tickets for Canada’s largest auto expo now on sale. The AutoShow offers Canada’s largest display of new vehicles, concept cars and innovative automotive technologies, with a spotlight on the newest developments and a showcase of the way mobility is evolving. 24 FEBRUARY 2024
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“The Canadian International AutoShow is the place for consumers to get informed, educated and excited about all that is new and electrifying in the automotive world,” says Jason Campbell, the show’s GM. “Our attendees thoroughly enjoyed the increased focus on interactive exhibits and hands-on experiences at the 2023 AutoShow, so we are continuing to push the experiential
images and 3D LiDAR data gives more accurate results, it still faces challenges detecting small objects. The team has developed an approach to make multi-modal 3D object detection more accurate. The scheme, called Dynamic Point-Pixel Feature Alignment Network (DPPFA−Net), uses an arrangement of multiple instances of three modules: the Memory-based Point-Pixel Fusion (MPPF) module, the Deformable Point-Pixel Fusion (DPPF) module, and the Semantic Alignment Evaluator (SAE) module. Using a 2D image as a memory bank reduces the difficulty in network learning and makes the system more robust against noise. The network achieved average precision improvements up to 7.18 per cent.
component of the show even more in 2024 and opening up an entire new floor of exhibit space and added feature content to further enhance the experience.” Features that consumers can look forward to include an EV test track; Electric City, a one-stop destination to learn about electrification; Auto Exotica, for a selection of exotic vehicles; and other highlights.
IMAGE: NTEA
Regina acquires up to 53 batteryelectric buses
Researchers have developed a network that combines 3D LiDAR and 2D image data for better detection of small objects by self-driving vehicles. Currently, robots and autonomous vehicles can use 3D point clouds from LiDAR sensors and camera images for 3D object detection. However, techniques combining both data types struggle to detect small objects accurately. Japanese researchers from Ritsumeikan University have developed DPPFA−Net, a network tackling challenges related to occlusion and noise from adverse weather. Scientists have developed multi-modal 3D object detection methods that combine 3D LiDAR data with 2D RGB images taken by standard cameras. While fusing 2D
Drive, educational sessions and more. Attendees can review new products ahead of time by visiting the product gallery at wtw24.mapyourshow.com. They can also experience commercial vehicles with the latest advanced technology, fuel, sustainability offerings and propulsion systems during Ride & Drive, March 6–7. Featured vehicles incorporate advancements that promote reduced fuel usage, greenhouse gases or particulate matter. Green Truck Summit focuses on the evolution of the commercial vehicle landscape amid the shift toward zero emissions. Commercial vehicle manufacturers will share their latest chassis specifications and designs, review body and equipment installation options and provide insight into future vehicle plans during 15 Chassis update sessions. FM/SP SUPPLY PROFESSIONAL
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CNW GROUP/MAZDA CANADA INC.
Mazda reveals 2025 CX-70 Mazda Canada has announced the first-ever 2025 Mazda CX-70, a vehicle that the company said emphasizes driving dynamics, elegant yet sporty design cues, and generous cabin and cargo space. The CX-70 is engineered with electrification in mind, and all CX-70 power-
trains feature electrification technology. Customers can choose from an e-SkyActiv-G 3.3L Inline Six Turbo engine with M-Hybrid Boost, or an e-SkyActiv-G plug-in hybrid (PHEV). The CX-70 has a wide and low front fascia and chiseled front end, the company said in a release.
Mazda said it emphasized CX-70’s dynamic look with contrasting black accents throughout the exterior, and available black metal and machine cut finished 21-inch wheels. The interior features contrast grey metallic inlays, and available Garnet Red Nappa leather with red stitch detailing throughout the cabin. There are remote-folding rear seats, and a rear cargo area with additional compartments and hooks. Assistance technologies include an addition to Cruising and Traffic Support, called Unresponsive Driver Support, that adds an emergency-only system to decelerate and stop if the driver is unresponsive to escalating alerts. CX-70 also features a Trailer Hitch View with a viewfinder that guides the driver when connecting a trailer. On certain models, CX-70 offers towing capacity up to 5,000-pounds and 1,500W power output. There is also the integration of Amazon Alexa for hands-free commands for certain prompts.
Accidents rise after Ontario changes driving test: study Changes to the G license driving test in Ontario in 2022 resulted in a 7.8 per cent increase in accidents involving new drivers, says a study by insurance comparison website MyChoice. In January 2022, Ontario introduced changes to its G road test, aimed at addressing the backlog of drivers waiting for testing due to the COVID-19 pandemic. The changes removed certain test elements deemed duplicative, like emergency stops, three-point turns, parallel parking, and driving in residential areas.
Two years later – MyChoice studied 4,800 Ontario G-licensed drivers, comparing those who got licensed at any point in 2022 with at least one year of driving experience; and those who got licensed any point in 2021 with at least one year of driving experience. MyChoice looked at 2,400 G-licensed drivers from each category mentioned above, picked randomly, from the overall quotes completed on their website. The company focused on the percentage of drivers involved in accidents for each period.
The findings indicate that after the test changes, the percentage of novice drivers involved in accidents increased by 7.82 per cent. This uptick in accident rates suggests that removing certain driving test elements may have had unintended consequences on road safety, the company said. MyChoice’s study comes after the office of the Auditor General of Ontario conducted a formal audit of the changes, in which it stated that the test changes were made without proper review and may have impacted road safety.
ChargeHub, Holman collaborate to simplify public EV charging ChargeHub and Holman are collaborating to help commercial fleet operators simplify public charging for their electric vehicles (EVs). The solution leverages ChargeHub’s application to provide access to over 80,000 charging locations across Canada and the US, while processing payments and
streamlining the transition to EVs. The ChargeHub mobile app helps users locate public charging stations and process payments. Fleets can access charging stations from different public charging networks through one account. Fleets can also monitor and track charging costs in one location.
“ChargeHub’s vision for the optimal EV ownership experience aligns perfectly with the experience we strive to provide to our customers and their drivers, and we’re excited to leverage the natural synergies of our organizations to provide this innovative solution to fleet operators throughout North America,” said
CAA Insurance calls for action on auto theft CAA Insurance is urging stakeholders including government, insurers, and vehicle manufacturers to collaborate and develop a plan to combat an auto crisis it says is unfolding across Canada. The group says that according to industry experts, in 2022, auto theft exceeded $1.2 billion in claims, a number only expected to rise without action. “Consumers are at a tipping point, and they will soon feel the tangible effects of the auto theft crisis,” says Elliott Silverstein, director of government relations, CAA Insurance. “If the rate of vehicle theft does not decrease, it will lead to an increase in auto-related costs that could become unbearable for drivers in Ontario, many of whom are already struggling with affordability.” The ongoing shortage of microchips and vehicle availability is intensifying the situation, making vehicle rentals and replacements time-consuming and costly, with wait times for new vehicles sometimes exceeding a year. With interest rates high, the vehicle purchase or lease costs for a new vehicle will become a further burden. Drivers can make adjustments to safeguard vehicles, the organization says, including using steering-wheel locks, brake pedal locks or similar devices; store you key fob in a Faraday box to prevent signal hacking; avoid leaving vehicles unattended while running; among other things.
Emily Graham, director of sustainability & electrification as a Service, Holman. The ChargeHub application’s eMSP service is powered by ChargeHub’s Passport Hub, which enables e-mobility service providers of all types to access the charging stations of multiple charging point operators without adding more business and legal agreements, technical integrations and reconciliation processes. FLEET MANAGEMENT SUPPLYPRO.CA 25
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Fleet Management By Howard J Elmer
The cost of gassing up 1.
What will happen to the price of fuel this year? The first months of the New Year is the time we usually plan for the rest of the year – and hope that the goals we set will not be too far off the mark when 2024 closes. For businesses where fuel is a significant cost, looking ahead and budgeting is important and often frustrating. Fuel costs in particular are influenced by so many factors that accurate forecasts are heavily speculative. Still, collecting and analysing the best information available will give us some strong indicators of what the next 12 months have in store. First of all, let’s look at the raw cost of oil. The CBC recently reported that global oil prices will probably be stuck at low levels for the next couple of years. This analysis from Deloitte predicts an average West Texas Intermediate (WTI) price – typically regarded as the benchmark for crude oil – of US$72 per barrel this year. That depression in price is because of cuts from major producers, record production in the US, and slowing growth in demand, according to its report. That’s good news. The price of oil is at its lowest in two years, with 26 FEBRUARY 2024
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prices hovering around 2021 levels. As for gasoline, 2023 saw prices fall gradually over the year. The price surges of 2022 (at one point hitting a record 214.9 cents per litre in the Greater Toronto Area) are behind us as several geopolitical factors have settled, if not disappeared. Looking at this trend, CTV news speculated that, “we shouldn’t see significant increases in gasoline (prices) over the course of 2024.” As for those who are more concerned about diesel prices, particularly those who do cross-border shipping, it appears weeks of diesel pump price declines have finally slowed, as the new year starts with a $3.876 per gallon national fuel average. Both diesel and gas prices began 2024 lower than a year ago. Even so, the nation’s diesel prices are 70 cents lower than this time last year, with the Lower Atlantic subregion, Midwest, Gulf Coast, and Rocky Mountain regions all averaging prices less than US$4 per gallon.
Heating fuel’s influence
In Canada, as of January, the average price of diesel fuel is $1.31 a litre.
Diesel fuel prices have also come down here at home from a high of over $2 in 2022. However, they don’t move in tandem with gasoline prices – often staying higher. Of course, winter is always harder as home heating fuel (same stuff as diesel) demand can influence price overall. Still, most industry watchers predict that lower prices will remain steady throughout this year for diesel. In terms of price, there is another significant factor that must be calculated into the mix of pricing overall – the government. Currently the carbon tax that the federal government has levied on fuel continues to increase. This is a cost that is at least predictable. However, at this time, with fuel prices being high anyway, dumping further taxes onto the voluble price of fuel is simply painful. Energynow.ca reports that these new costs are being layered on top of the current carbon tax that Prime Minister Justin Trudeau has hiked three times since the onset of the COVID-19 pandemic. By 2030, the current carbon tax will cost nearly
40 cents per litre of gas and ding a family more than $1,100 annually even after the rebates. “The Trudeau government has also made it harder to increase the supply of Canadian oil and gas through its “no more pipelines” law, its discriminatory tanker ban on the West Coast, and when it rejected the Northern Gateway Pipeline and moved the regulatory goalposts on Energy East. To be clear, the government knows it could reduce the price of gas by up to about 30 cents per litre through tax relief. It’s not like Ottawa’s politicians have been working so hard that they haven’t noticed governments around the world cutting fuel taxes” said energynow.ca.
Cheaper fuel elsewhere
US President Joe Biden is pursuing fuel price relief south of our border and in Europe it is currently a goal of the European Parliament’s largest political party to bring down fuel prices. In Ontario, Premier Doug Ford recently announced he was extending the 5.7 cent tax cut on gas till FM/SP SUPPLY PROFESSIONAL
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Fuel prices have been on a gradual slide throughout 2023. Supply seems to be steady and there is no anticipated surge in demand.
at least this coming summer. The government launched that cut in July 2022 and has extended it several times since. Now the reduction – along with a 5.3-cent cut to the price of diesel fuel – will remain in place till June 30, 2024. To sum up, fuel prices have been on a gradual slide throughout 2023. Supply seems to be steady and there is no anticipated surge in demand. In fact, a softening economy and possible slip in interest rates may slake the world’s thirst for fuel even further this year. However, price decreases will probably come to a halt this year. Still, you can anticipate a steady supply and no price increases in the coming 12 months. FM/S FLEET MANAGEMENT SUPPLYPRO.CA 27
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Fleet Management By Stephanie Wallcraft
Up to the task
The Ford Super Duty claims bestin-class towing and payload capabilities A heavy-duty truck is an irreplaceable tool on fleets and at work sites across the country. But much like the half-ton trucks that have become common on suburban driveways, today’s heavy-duty trucks come with higher expectations than ever. Their owners demand performance, functionality, connectivity, and a comfortable commute to boot. Fortunately, these trucks have come a long way and are up to these tasks, and none more so than the Ford Super Duty. Now entering its fifth generation, you might not spot the differences from the outside, but there’s plenty that’s new below the surface. Ford Canada invited us to TroisRivières, Quebec, to test these 28 FEBRUARY 2024
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changes through a series of trials and demonstrations. The changes start under the hood, where you’ll find two new engine options. First, the base engine has been upgraded from a 6.2-litre V8 (385hp, 430lbs-ft of torque) to a new 6.8-litre V8 creating 405hp and 445lbs-ft. The upgrade gas engine, a 7.3-litre V8, is unchanged apart from a slight bump in torque, from 475 to 485lbs-ft to go with its 430hp. Among the diesels, the base 6.7litre PowerStroke V8 carries forward creating 475hp and 1,050lbs-ft of torque. If that’s not enough twist, you can now option a high-output 6.7 PowerStroke V8 and have access to 500hp and an eye-popping 1,200lbs-ft of torque.
With these power figures, Ford claims best-in-class towing and payload capabilities. Ratings vary by configuration, but you can max out gooseneck towing at 40,000lbs by choosing a regular cab Ford F-450 with the high-output diesel engine and the Max Tow package. If you need the most fifth-wheel towing capacity, you’ll be able to pull 35,000lbs in a Ford F-450 dually. And if it’s peak payload you require, choose a Ford F-350 dually in XL trim with rear-wheel drive and the Heavy Duty Payload package, and you can cram 8,000lbs into the bed.
Towing and loading
Tools to support towing and loading are equally impressive. Options
include: a 360-degree trailer camera; a blind spot monitoring system that extends to include gooseneck or fifthwheel trailers; a navigation system that factors trailer dimensions and avoids low bridges and tight turns; and a trailer theft alert system that notifies you if a trailer is being tampered with. With Pro Trailer Hitch Assist and Pro Trailer Backup Assist—which use a dial and cameras to simplify reversing and aligning the hitch to a trailer’s tongue—it’s much easier for a driver to connect and maneuver a trailer solo. The onboard scales use lights built into the taillights to help drivers confirm trailer tongue weight and payload capacity. Not all these features are new, but they’re powerful when combined. FM/SP SUPPLY PROFESSIONAL
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1. The large infotainment screen is part of a suite of technology features including a digital instrument cluster, a 5G modem with connection for up to 10 devices, and over-the-air updates. 2. The base engine has been upgraded from a 6.2-litre V8 (385 hp, 430 lb-ft of torque) to a new 6.8-litre V8 creating 405hp and 445lbs-ft.
The changes start under the hood, where you’ll find two new engine options.
1.
2. One feature that is new to Super Duty is Pro Power Onboard. This equips an outlet and can deliver up to 2kW to power tools such as table saws or battery banks. The more powerful 2.4kW and 7.2kW versions found on the Ford F-150 Hybrid are not offered here because they require that truck’s larger battery. Still, the 2kW system saves carrying an external generator to many types of work sites. A new tailgate-down camera and reserve sensing system is an industry first. Here, a set of sensors and a back-up camera are built into the top of the tailgate. This allows a driver to back up to within a foot of an obstacle with the tailgate down. For drivers who routinely use
loading docks, this could be a very helpful feature.
Off-road features
The Tremor trim offers off-road features like a trail control system and Ford’s Trail Turn Assist, which locks the inside rear wheel to tighten the truck’s turning radius on low-traction surfaces. Upfitters can use the Ford Pro Upfit Integration System, eliminating the need for a third-party bank of switches by allowing functions to be built directly into the Sync 4 infotainment system via custom software builds through Ford Pro. This large infotainment screen is part of a broader suite of technology features including a digital instru-
ment cluster, a 5G modem with connection for up to 10 devices, and over-the-air updates. For 2024, the Ford Super Duty line-up starts at a fees-in price of $61,374. The majority of the features listed here become standard at the King Ranch grade level – which starts at $103,254 including fees for a 2024 Ford F-250, $106,254 for an F-350, and $119,940 for an F-450 – but many of them are available in lower trims. Most heavy-duty trucks sold today are roughly equivalent in drivability and technology. But when it comes to work-oriented feature and outright utility, Ford’s Super Duty line-up has this corner of the market locked. FM/SP
As Tested (Ford F-250 4x4 Crew Cab King Ranch) Price (incl. freight and PDI and dealer fees): $116,154 (2023) Engine: 6.7-litre PowerStroke V8 Diesel Power: 475hp, 1,050lbs-ft of torque Transmission: 10-speed automatic transmission Rated Fuel Economy (L/100km): Not rated Observed Combined Fuel Economy (L/100km): No relevant data FLEET MANAGEMENT SUPPLYPRO.CA 29
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THE LAW—BY PAUL EMANUELLI
A FAIR PROCESS ESTABLISHING PROPER APPROVAL PROTOCOLS In the public sector tendering process, the evaluation of bids is typically delegated to an internal team who scores competing offers against pre-established criteria and makes a contract award recommendation to a higher-level oversight body for a formal award. Since these procedures are subject to strict due process standards, public institutions should establish award protocols that protect against improper interference, guard against conflict of interest, and properly balance the competing duties of transparency and confidentiality. Providing the ultimate contract award approvers insufficient or misleading information can prevent them from making an informed contract award decision, which can prove fatal to the legal validity of the resulting contract. For example, in Rapiscan Systems Inc. v. Canada (Attorney General) the court struck down a contract award after determining that a public institution ran a non-transparent, unfair, and arbitrary process and then misled its board into believing that they were awarding a contract based on an open and fair competition. This case underscores the importance of establishing proper reporting procedures. However, a careful balance must be struck since providing too much information to the final approvers can open the door to out-of-scope interference with the evaluation process, which can also undermine the legal validity of the final award decision. In fact, when internal award procedures are not clearly defined, there is a heightened risk that the ultimate approvers, who 30 FEBRUARY 2024
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can include a federal or provincial cabinet, an internal governance board or office, or an elected body in the municipal or school board sector, will overreach in the scope of their oversight function. Senior approvers do not have the authority to change the evaluation rules after bids are submitted. This significantly restricts the scope of decision-making once an evaluation team makes an award recommendation. While the ultimate award decision may remain with the senior approvers, those approvers cannot change the ground rules midstream by introducing new evaluation criteria or procedures that were not part of the original tender call. Nor is it typically appropriate to revisit the scoring decisions made by the evaluation team since, as proven by a long line of recent rulings across multiple jurisdictions, this can result in improper interference with the independent authority delegated to the evaluation team and undermine the integrity of the award decision. Public institutions should therefore clearly define the scope of oversight performed by the ultimate approving authority. FREE FROM CONFLICTS To be defensible, a public procurement process must also be shielded from conflicts of interest. The individuals involved in the process, from project team members who draft the solicitation document, to bid evaluation team members, to the senior officials who ultimately make the contract award decision, should be free from conflicts. The more levels of approval required for the ultimate award, the more
complex the conflict vetting process. Before an award is made, each member of the approval body should be screened for conflicts and recused from any decision where conflicts may be present. The Canadian federal government’s WE Charity sole-source controversy offers a recent high-profile case study where recusal protocols were not properly administered. In that case, the Prime Minister ultimately acknowledged that he should have recused himself from the award decision due to the perception of personal conflict. Even more recently, Canada’s federal trade minister breached the federal conflict law by awarding two sole-source contracts to a friend. The fact that Canada’s federal cabinet has recently faced multiple conflict controversies raises serious questions about how other public bodies are managing these same issues. Contract award approvals also remain subject to confidentiality duties, even when the ultimate approval authority is a body, such as a municipal council or school board, that typically conducts its business in a public forum. For example, in the recent decision in Fallis v. Orillia (City), an Ontario court found that a municipal councillor breached a municipal code of conduct by disclosing confidential information about a public procurement process to his private lawyers. The court found that the disclosure of internal legal advice and the disclosure of other information about the bidding process were both breaches of the municipal code. As this case illustrates, public officials, including elected
Paul Emanuelli is the general counsel of The Procurement Office and can be reached at paul.emanuelli@ procurementoffice. com.
“To be defensible, a public procurement process must also be shielded from conflicts of interest.”
officials, should avoid disclosing confidential information relating to a public procurement process. That information includes sensitive business information contained in competing bids, since bidders have the right to shield that type of information from public disclosure. In recent years, the courts have been enforcing that right with increasing frequency. Moving forward, public institutions should establish proper approval protocols to ensure that their contract awards are administered in accordance with the complex due process standards that apply to public procurement. SP SUPPLY PROFESSIONAL
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