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Procurement's rising tides [July-August print edition]

PMAC hits Moncton for its 87th annual national conference


August 29, 2012
by By Michael Power and Emily Atkins

MONCTON—When not enjoying lobster and local music on the historic Pointe du Chene wharf, pub-crawling through Moncton or simply basking in Maritime hospitality, PMAC members managed to fit in an array of educational sessions, keynote speakers and networking opportunities at this year’s national conference.

The 87th-annual Purchasing Management Association of Canada (PMAC) National Conference hit the banks of Moncton’s Petitcodiac River June 6-8, drawing procurement professionals from across Canada. For the kick off, PMAC members braved chilly temperatures and drizzle to enjoy lobster dinner and local entertainment at Captain Dan’s Seafood Bar & Grill at Pointe du Chene wharf in nearby Shediac. The next day, fiddle music greeted delegates as the conference began at Moncton’s Delta Beausejour Hotel. This year’s theme was “Rising Tides” and conference chair Bill O’Donnell noted PMAC chose the title to reflect the nearby Bay of Fundy.

As in previous years, much of the conference’s focus was on networking and building relationships. For Pete Luckett, founder of Pete’s Frootique, relationships stand at the core of business. Never lose sight of the relationships that make a business work, Luckett counselled during a lively and humorous opening keynote address. Doing so is difficult, he said, but necessary as business becomes complicated and multi-faceted. “You have really got to spin a few plates at once,” he said. “And if you can’t ride two horses at once, you shouldn’t be in the circus.”

Years ago, Luckett left his native England on “a crazy adventure around the world” that ended with him broke in Saint John, New Brunswick. He had sold produce in a market in his native Nottingham and decided to continue that line of work in Canada. Business has changed vastly since those days, he told the audience. Customers know more and are constantly appraising organizations, so keeping up is critical. “You can judge your age by the amount of pain you feel when you come into contact with a new idea,” he said.

Delegates then attended an array of education sessions throughout the day. One session, led by National Education Consulting Inc president Maureen Sullivan, discussed whether procurement professionals can produce RFPs without using Contract A. The answer, she said, was yes. But the key was using specific language. Sullivan’s session focused on the fallout from the Tercon case. In that case, the courts ruled 5-4 that Contract A had existed and that the BC government had breached the contract. So what should procurement professionals do in similar situations? Sullivan recommended making deliberate choices, planning properly and working with legal advisors. As well, use language that’s as specific as possible to avoid leaving it to the courts to determine if Contract A exists.

Ducks and cheetahs
The conference’s second day didn’t lack for motivation, as keynote speaker Guy Cabana stressed that nothing is impossible and there are no limits to what one can achieve with the right mindset. “No one is born to fail,” he told the audience. “Everything starts with a dream. How many dreams have you left unfulfilled?”

At 21, Cabana said, his dream was to work for Canada’s largest company. He chose Bell Canada and advanced quickly. Due to his negotiation skills, he began getting offers to conduct seminars and training sessions. As the offers increased, he realized his calling was as a facilitator, communicator and speaker. Don’t be afraid to change and refocus depending on your skills and calling, he said. “A duck can’t run as fast as a cheetah, even if it wants to,” he said.

Web-based procurement
During another session, High Liner Foods CIO Peter Burns described a web-based procurement module the company had begun working on 10 years ago and continues to work on to this day. That doesn’t mean the module’s not functioning, Burns said during his presentation. Rather, development and refinement of the project is an ongoing process.
“The only way to eat an elephant is one bite at a time,” he said. High Liner’s procurement team resides throughout 30 countries and deals with a limited number of trusted suppliers. All product is inspected at the source and suppliers must comply with Global Food Safety Initiative regulations.

The company recognized the need for the sourcing hub as a strategic objective, Burns said, and its leadership was focused on the change. The objective was to use technology as a differentiator from the competition. The web-based system allows all the stakeholders in the inbound supply chain to see each step in the process. Suppliers can see product specifications through the procurement system interface. Product can be tracked from the supplier, to clearing Customs, to when the truck is scheduled to arrive at the plant. Visibility is so good the location of products can be pinpointed within the container they’re arriving in, a feature Burns says is crucial for saving time in the quality control process. Suppliers can check how the quality inspections went and can see when invoices are paid.

According to Burns, High Liner benefits from the system through better communication, fewer errors, saved time that allows for a focus on improving products and processes, faster decisions, more accurate inventory control, better quality and smoother supplier management. The process also supports sustainability and traceability.

Time to diversify
Also on June 8, a panel moderated by Cassandra Dorrington, president of the Canadian Aboriginal & Minority Supplier Council (CAMSC), discussed approaches to supplier diversity. Participants included Courtney Betty, president, Diversity Business Network; Craig Hall, COO, Aboriginal Human Resources Council; and DavidLePage, team manager, enp – Enterprising Non-Profits.

Betty emphasized the business case for diversity, citing research that showed the Canadian economy could be $13 billion richer every year through using diverse suppliers. The key, he said, is getting Canada’s diverse population contributing. The steps are simple: assess current diversity efforts and develop the business case and a strategy. Next, develop processes and systems and communicate objectives. Last, measure your progress.

David LePage noted the ripple effect in the marketplace from every purchase. If you want to integrate social values into your procurement policies you must integrate your suppliers, he said. He also recommended setting social impact goals, then prioritizing and scoring them, evaluating bids, monitoring implementation and finally, reporting to stakeholders.
Craig Hall reiterated the importance of the assessment, noting it’s the key starting point for supplier diversity programs. As part of the process, organizations must ask themselves if they have a list of indigenous suppliers and if they recognize diversity’s importance.

Evolve or die
Another session had its eyes firmly fixed on the future by presenting the theme that procurement groups must evolve or risk becoming obsolete. Three practice managers from consulting firm Deloitte made the presentation. Rob Bucciarelli, Ryan Ernst and Isabelle Leclerc shared perspectives on the procurement landscape and offered strategies procurement managers can use to help move their organizations forward. Several factors influence how procurement interacts with the business it’s in, Ernst said. These include:

• Changes in the talent pool, with a massive cohort about to retire, changing demographics and insufficient postgraduate education in the supply chain;
• Globalization, with free trade agreements making procurement less effective as an economic stimulus tool;
• Technological change providing opportunities for more automation of administrative tasks, freeing up time for strategic activities;
• Higher risks, requiring more focus on risk management; and
• Expanding socio-economic aims, both customer and socially driven, putting pressure on procurement.

According to Ernst, procurement is moving from an administrative function to value creation. “Procurement is becoming key to effective and prudent financial management,” he said.

He noted that failure to evolve leads to lost money, higher costs, lost opportunities to innovate, increased supply risk and quality issues and fragmented management of supplier relationships. Rob Bucciarelli explained what procurement groups must do to start the evolution. Leadership is needed to establish relationships within the organization, and leaders must set the tone that strategic procurement is a priority. They must also support initiatives demonstrating the value of procurement’s strategic role. Credible and supported incentives must be established, using metrics that suppliers trust. As well, procurement organizations must have an experienced and credible team with a sound understanding of their business partners’ technical requirements.
The place to start, said Bucciarelli, is performing a critical assessment of capabilities in spend visibility, category management, supplier relationship management and demand management.

PMAC’s 2013 national conference will be held in Ottawa. For more information, visit PMAC’s website at www.pmac.ca and go to the events section.