December 10, 2012
by By Michael Power
With the heading of “Lead the Flow,” the 15th-annual conference of the Ontario Institute of the Purchasing Management Organization of Canada (OIPMAC) took place in Niagara Falls from October 19 to 20. The event, held at the Scotiabank Convention Centre, brought together speakers to address the evolving role of supply chain management within organizations across the province. More than 300 OIPMAC members attended the event.
Robert C. Worthington, author of The Procurement Law Handbook, kicked off the conference with a discussion of current trends in contracting. Worthington’s time at the podium included describing exclusion of liability in contract law. One case saw the courts decide 5-4 that the BC government couldn’t use such a clause to exclude itself from all possible liability, he noted. Going forward, there will be an increase in the number of attempts to use exclusion clauses, Worthington said, and the courts appear to be trending towards allowing them.
During another session Jennie Chan and Clifford Strachan of Kroll Advisory Solutions provided an overview of procurement fraud in Canada. According to a worldwide survey on fraud and its effects on business during 2011, 42 percent of companies described themselves as highly or moderately vulnerable to vendor, supplier or procurement fraud, they said. As well, 20 percent of respondents noted they had been affected by such frauds. Chan and Strachan also described different types of procurement fraud and signs that employees might be involved in such dealings.
For example, employees living beyond their means may be a sign they’re taking bribes or kickbacks. As well, organizations should watch for the same people winning bids—or certain relationships between bidders—as potential signs of bid rigging. Unnecessary work or approvals made by one person can be signs of false invoicing or phantom vendors, they said. Meanwhile, watch for invoices below the approval threshold, as that can mean invoice splitting.
International sourcing has its advantages, said Jon Heppenstall, director of strategic sourcing and supplier strategy at Staples Promotional Products, during a presentation on the topic. For example, opportunities exist for competitive advantage or maintaining market share. But those organizations sourcing from abroad can also see manufacturers or suppliers go bankrupt, and there can be delays in production and delivery. As well, a supplier’s factory can relocate on little notice. Vendor agreements can therefore be advantageous, as they show intent from the beginning of the relationship of what’s to be achieved and what the relationship will be like, he said.
In terms of product safety testing, it’s better to find out early whether there are any issues and communicate with clients or consumers that a product may be late or won’t pass at all, noted Heppenstall. One restaurant chain imported 12 million glasses for promotional purposes, only to learn the glasses contained too much cadium. All the glasses needed to be recalled, he said, which can hurt a small chain’s brand image.
There are changing requirements in terms of product safety, and staying on top of those changes can be tough for smaller businesses, he said. Consumers are looking not only at a product’s country of origin but also where various components in a product came from. It’s all about traceability, he said, and consumers are asking companies to be more careful.
“They want to know where the 25 components came from,” Heppenstall noted. “There’s a new generation of consumers out there.”
The conference boasted several other speakers. During his keynote address on October 20, Jim Holbel, practice leader, IBM Emptoris services procurement, discussed how technology is transforming procurement and supply chain organizations. As well, Kathryn Pottruff of Pottruff Consulting spoke about getting supply chain projects started right while Lionel Laroche, president of Multicultural Business Solutions gave tips on managing a multicultural supply chain. b2b