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Canadian Pallet Council presents awards
Cobourg, Ont.—The Canadian Pallet Council (CPC), a non-profit cooperative pallet pool, held its annual general meeting in April.
A new board of directors was announced, with Ed Treacy, senior vice-president of logistics and engineering with Sobeys Inc., continuing as chair for a second year. The new board includes members from companies such as Coca-Cola Bottling, Maple Leaf Foods, Loblaws Companies, Shoppers Drug Mart and Erb Transport.
Two members were presented with achievement awards at the event. Carmen Fontaine, who works in pallet control at Sobeys Quebec, won the 2005 Les Smith Award for Excellence in Pallet Administration. Fontaine was recognized for the success of Sobeys’ distribution centres in Quebec City and Riviere du Loup.
The Bernard Brunet Award for Excellence in Pallet Management went to Alex Bird of Fideliter Consulting Ltd., for his lead role in setting up a web-based container tracking system.
PMAC: It’s a wrap!
The Purchasing Management Association of Canada (PMAC) held its 80th annual conference in Winnipeg June 1-3. For photos and other coverage of the event, please see Purchasing b2b’s June e-newsletter, coming out June 15 (to add your e-mail to the distribution list, please contact Janice.Bishop at Janice.Bishop@industry.rogers.com). We will also include coverage in our regular July/August issue, published August 18.
Strong first quarter at Fraser River port
Fraser River—Canada’s Fraser River Port Authority saw a 13 per cent increase in cargo during the first quarter of the year, compared to the same period in 2004.
Container volumes increased 34 per cent, helping to solidify the port’s position as the second-largest container port in BC (behind Vancouver). Fraser River is also Canada’s largest fresh-water port.
An increase in exports was led by growth in lumber shipments, which were up 148 per cent. Imports were also up—by 17 per cent, with steel and auto imports leading the growth. Domestic short sea volumes were up 14 per cent.
Software piracy increasing in Canada
Toronto—A recent survey shows Canada is not keeping pace with the worldwide decline in software piracy.
The study, conducted by the Canadian Alliance Against Software Theft (CAAST), shows piracy rates in Canada increased from 35 per cent in 2003 to 36 per cent in 2004. In comparison, the worldwide rate declined to 35 per cent.
Canada continues to fall behind the US, where the piracy rate declined one percentage point to 21 per cent in 2004. The independent study was conducted by research firm IDC, and released by CAAST and the Business Software Alliance (BSA).
Piracy is costing the Canadian economy $1.1 billion in lost retail sales each year, according to CAAST. Globally, piracy resulted in a loss of $41 billion in 2004, a $5-billion increase from 2003.
The Alliance also announced settlements—totaling almost $270,000—with several companies using unlicensed software. The payments ranged from $18,000 to $65,000, from companies in industries such as automotive, engineering and marketing.
“These settlements demonstrate that companies of all industries and geographic locations are at risk of becoming a target of a BSA/CAAST investigation if they do not implement an effective software management program,” said Jacquie Famulak, president of CAAST.
“Companies should conduct periodic software audits, centralize documentation of software purchases and educate their employees about the respect for copyright.”
Software piracy can often occur innocently, according to the companies who contributed to the $270,000 payback.
“This unfortunate situation evolved, without our knowledge, as our business grew, and it is a lesson for any growing company,” said a spokesperson for IP Marketing in Toronto. “We have now implemented proper controls and can be satisfied that we will remain up to date. We would urge all business owners and managers to do a self-assessment, and to tackle this potential problem before it tackles you.” b2b
Federal government overhauls purchasing
By Lisa Wichmann
Ottawa—The federal government plans to shave $2.5 billion off its procurement budget over the next five years.
The plans were announced by Scott Brison, Minister of Public Works and Government Services Canada (PWGSC), in an April speech to the Economic Club of Toronto.
Several strategies will be deployed, including:
•aggregating volume throughout government to achieve bulk savings;
•conducting e-procurement;
•encouraging more use of standing offers;
•establishing special committees to track commodities for better pricing;
•using strategic procurement.
It also plans to centralize purchasing, giving more control to PWGSC. “Budget 2005 confirmed that Public Works and Government Services is going to be the procurement arm of government, rather than scattering it among 98 separate departments and agencies,” Brison said.
Suppliers protest
The government also announced new rules for standing offers. These documents aren’t contracts, but offers from suppliers to deliver goods and services at pre-arranged prices, when and if required.
As of April 1, 2005, suppliers have been asked to provide a “voluntary 10 per cent volume discount” on standing offer prices. The request applies to a range of goods and services, including information technology, motor vehicles, furniture, office equipment, fuels, lubricants and professional services. In return, these suppliers can expect an increase in business, according to Contracts Canada.
Many suppliers are riled by the news. The CATAAlliance, which bills itself as the largest high-tech association in the country, called the new rule “short sighted,” in a press release. About 2,600 vendors will be affected by the price cut.
“If the market is open and competitive, you don’t have to impose arbitrary cuts. It doesn’t make any sense. People are going to competitively bid in any case,” said John Reid, president of the CATAAlliance, in an interview with Purchasing b2b. “It raises more questions than it answers. What commodities does it apply to? If you’ve already bid, do you have to go back and lower your bid by 10 per cent?”
He said PWGSC is operating as an “island,” and failing to relate its efforts to the larger Innovation Strategy under way at the federal government. He would prefer to see the government focus more on strategic procurement to find savings. He’s also dubious of how effective the 10 per cent discount will be on information technology acquisitions.
“If you’re buying, for example, pencils and carpet, then it makes a lot of sense to make sure you’re getting the lowest cost. But if you’re looking at information technology and systems…a value-based approach might be a better,” Reid said.
“In other words, the lowest cost might not always be the best because you may want to work with a smaller boutique because they provide you with better…personnel support.”
The CATAAlliance has a campaign in place, called VendorACT, to try to ensure vendors are dealt with fairly as the government continues its procurement renewal.b2b
Reader poll
In the May issue of Purchasing b2b’s e-mail newsletter, we asked if your company fully values the strategic role played by purchasing. Of 28 total votes, 19 (68 per cent) said “no,” and nine (32 per cent) said “yes.”
Letters to the editor
E-marketplaces jeopardize relationships
Regarding your April cover story, (“b2b Shakeout”), I just want to point out the other side of what these auctions can do to a marketplace.
I recognize that all companies want to trim their costs, but they should still be able to do that by inviting five companies to meet briefly for 30 minutes before narrowing the list to three companies who can make formal presentations to earn your business. This is less time consuming and would be very cost effective.
These online auctions generally come down to only price. That old phrase, “You get what you pay for” is true!
Vendors are also guilty when partaking in these auctions, because some of them don’t know when to hold at their bottom line. As a result, they erode margin levels across the whole industry.
I think what both sellers and buyers should strive for is honesty, credibility and a price that is fair to both sides.
In corrugated sales, I have to work with my buyers on a repetitive basis and I do not want them or myself feeling at any point that we are making too much money from them. It will affect our relationship, which will jeopardize the business between us. Most vendors that have won these auctions, come to regret that customer as it taxes their resources for little if any margin.
All businesses are trying to make a profit. The good ones make more profit than others. I respect what a difficult job purchasers have. They have management continually looking to cut costs and they have many different items which they are responsible to purchase; add in the many calls from prospective vendors, many of which are probably horrible cold calls that they must listen to.
A good sales representative should and does regularly look at ways to help their customers cost-save. By doing this they cement their good relationship with the purchaser and eliminate any thoughts of having to tender their business in the future.
Just some perspective from the other side.
—Lance Davidson, sales consultant
Kruger Packaging
Pitfalls of electronic procurement
I enjoyed your cover article (March) regarding the challenges faced by buyers in the public sector.
I have been in public purchasing for about 15 years, and have been fortunate to be employed in various levels of government over that time. My experience is that the higher-level governments are able to drive change downward to their constituents and supply base easier than the lower levels.
At the federal and provincial level, for example, the suppliers can be mandated to respond to competitive bids in a particular way ( i.e. through Merx). At the municipal level, I find that we are more face to face with the taxpayer and therefore, do not have the ability to mandate our supply base to respond to bids in a particular way. We have to be able to accept bids in the traditional paper-based format and will likely have to continue that for quite some time.
There are several challenges that we face in this environment when it comes to electronic processes:
1. Municipal budgets are typically 70 to 80 per cent capital related. We typically buy services and construction with very little operational supplies. We don’t buy “stuff”; we build things. Electronic purchasing is not really set up to handle construction-related bidding.
2. Yes, electronic signatures are legal, but no one wants to be first, especially when a contractor will sue at the drop of a hat, just to see what they can get. No one seems to understand yet how we handle electronic bid bonds or performance bonds and the original signatures and seals that are required to make them legal. If they have to be included with the tender submission, how does that happen? How do we know that the submission of bonding documents occurred at the same time as the tender documents? In the construction industry, we will have contractors outside our door on the phone five minutes before tender closing, still finalizing the costs from the sub contractors. How does that fit into electronic purchasing? When seconds mean the difference between disqualification or not, when is the document considered received? When it begins to transmit or when it is completed?
3. Who pays for services electronically? Technology is not cheap. We at the municipal level are always getting complaints from suppliers that they do not want to pay for access to documents. They figure they pay their taxes and should be entitled to free access when they want, if they want. We certainly do not have sufficient budgets to fund the whole process. Typically our sector does not use MERX because of the high cost of documents for the suppliers.
Here in York Region, we have pooled our resources with Bidnavigator.com and all the municipalities and school boards here have standardized an electronic, web-based supplier registration process, as well as access to bid documents on-line. A supplier can register for free and be notified automatically by e-mail of any tender opportunity that might fit their profile. The supplier can register to be a potential supplier to four municipalities and two school boards in one single process. If they want to see what bids are open, they can do that in one easy step. If the supplier wants to go further and “subscribe” to Bidnavigator for an annual fee, they can download the documents from the Web site, and order and pay for the documents without ever having to leave their desk. That is about as close to true electronic tendering that anyone has been able to get to that I am aware of.
—Paul Cook, C.P.P
Supervisor of supplies and services
City of Vaughan
Business Front
Our aging society
By Michael Hlinka
This past weekend, I sat down with The Economic Implications of Aging Societies, by Steven Nyce and Sylvester Schieber. In excruciating detail, these gentlemen document the “graying” of developed countries like Canada…and warn us that life for our children and grandchildren will be much different than it was for us, mostly because they’ll have us around to take care of!
Just a few statistics bring this into stark focus. In the year 2000, the number of people in Canada classified as “inactive population 55 years plus” was 16 per cent of the total population. In other words, there were six people for every retired senior citizen.
In 2020, which is only fifteen years away, that will increase to 24.4 per cent. There will be only three people for every single elderly retiree. The implications are frightening.
In Canada right now, about five times as many health care dollars are spent on someone sixty-five or older, compared to under sixty-five. This tells me that we’ll look back on 2005 as the good old days when it comes to things like waiting lists for elective surgeries!
On one hand, an aging population sounds like gloom and doom. But along with the problems of an aging society, there are associated opportunities. My belief is that wider employment choices will be opened up for everyone—particularly more senior workers with more refined skill sets.
Someone like a purchasing manager will be able to write his or her ticket. Perhaps it won’t be Freedom 55 anymore. More likely, the model will be permanent part-time with generous vacation time to boot, a lifestyle that combines the best of working life and the benefits of retirement. b2b
Michael Hlinka provides daily business commentary to CBC Radio One and a bi-weekly column that is syndicated across the CBC network. In addition, he conducts financial planning courses.
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