In a post on Chrysler’s website titled ‘Not Exactly, Tesla,’ the automaker called out its electrified counterpart over claims it paid off a $451.8-million loan, becoming “the only American car company to have fully repaid the government.”

Awarded in 2010, the loan was from the U.S. Department of Energy (DOE) was part of the Advanced Technology Vehicle Manufacturing program.

For months, Tesla had been boasting it would pay off the loan in less than half of the allotted 10 years granted by the DOE.

Tesla announced it made the final payment May 22.

But Chrysler cried foul immediately following Tesla’s announcement, saying the “information is unmistakably incorrect.”

In June 2009, the U.S., Canadian and Ontario governments provided bailout loans to Chrysler amounting to approximately $6.7-billion.

Chrysler, which was struggling to keep its head above water as the Great Recession took hold and eroded its global sales, received $5.1-billion from the U.S. Treasury Department and $1.6-billion from Export Development Canada.

On May 25, 2011, Chrysler announced it had repayed, in full, all loans with interest, totaling $7.6-billion.

“Repayment of the government loans closes an important chapter in our history, but we still have a great deal left to accomplish before regaining our rightful place in the automotive landscape,” Chrysler Group CEO Sergio Marchionne said during the repayment announcement two years ago.

In the eight years since the BrandZ report was first published in 2006, Toyota was crowned brand value leader in the automotive sector six times, and second on two separate occasions.

The rankings this year are as follows:

1. Toyota. Value: $24,497 M. Change, year over year: +12%
2. BMW. Value: $24,015 M. Change, year over year: -2%
3. Mercedes-Benz. Value: $17,952 M. Change, year over year: +11%
4. Honda. Value: $12,401 M. Change, year over year: -2%
5. Nissan. Value: $10,186 M. Change, year over year: +3%
6. Volkswagen. Value: $8,790 M. Change, year over year: +3%
7. Ford. Value: $7,556 M. Change, year over year: +8%
8. Audi. Value: $5,545 M. Change, year over year: +18%
9. Hyundai. Value: $4,000 M. Change, year over year: +11%
10. Lexus. Value: $24,015 M. Change, year over year: +2%

Developed for WPP’s operating companies by Millward Brown Optimor, the BrandZ Top 100 Most Valuable Global Brands ranking is now in its eighth year. It is the only study to combine measures of brand equity based on interviews with over two million consumers globally about thousands of global ‘consumer facing’ and business-to-business brands with a rigorous analysis of the financial and business performance of each company (using data from Bloomberg and Kantar Worldpanel) to separate the value that brand plays in driving business revenue and market capitalization.

Consumer perception of a brand is a key input in determining brand value because brands are a combination of business performance, product delivery, clarity of positioning, and leadership. The ranking takes into account regional variations since, even for truly global brands, measures of brand contribution might differ substantially across countries.

In April 2012, the GBTA Board of Directors created the Chapter Task Force, a group of experts representing the needs of all local and global stakeholders. This task force embodies a diverse set of local chapter and GBTA members who bring perspectives from a variety of different industries and all levels of corporate management. The Task Force was led by GBTA Board Directors Donna Kelliher of Dominion and Doug Payne of ALTOUR. Their objective has been to review the needs of the local chapters and the association overall and create an optimal path forward for the USA Chapters.

During the March GBTA Board of Directors meeting, held in New York City, the co-chairs presented the recommendations and the board unanimously approved the plan.

The Chapter Task Force Co-Chairs and leadership from the USA chapters gathered in Salt Lake City, Utah, to discuss the task force’s recommendations. The discussions were productive, said GBTA, and leadership worked to develop the next steps and refinements to the plan. The following is a summary of the key points discussed at the meeting:

• The approach is fiscally equitable and clarifies expectations and establishes accountability for all parties. It is based upon a sustainable game plan that recognizes the value created by all involved;
• All components of the plan are “opt-in” for the USA chapters, who are currently under an affiliation agreement, originally developed in 1993 and executed by all current USA chapters; and
• Each entity can stay under the current affiliation arrangement, or move to an upgraded chapter charter agreement which will include participation in the GBTA Chapter Technology Initiative as well as the opportunity to participate in future co-operatively planned initiatives.

“We are very pleased with the outcome of the meeting. This meeting was an important next step in the process of building for the future success of the USA Chapters. As always, it showcased the power of the volunteer leadership within GBTA. We have a bright future ahead together,” said Michael McCormick, GBTA’s executive director and COO.

CEO Louis Chenevert told analysts May 21 that airline profitability looks better for 2013 than in recent years. And he said the Hartford, Conn., conglomerate’s $18.4 billion purchase of Goodrich Corp. and a $1.5 billion deal by Pratt & Whitney to buy out Rolls-Royce from a joint venture that makes engines for the Airbus A320 are paying off.

Chenevert said North American commercial construction is improving—good news for its Carrier heating and ventilating business. And orders were up 22 per cent in emerging markets in Brazil, Russia, India and China.

Chenevert said United Technologies expects to pay down $2 billion in debt this year and set aside $1 billion for acquisitions.

“Hailed as the most travelled Secretary of State, Hillary Rodham Clinton is a testament to the value of travel and face-to-face meetings,” said Michael W. McCormick executive director and COO of GBTA. “She visited more than 112 countries as Secretary, and in doing so demonstrates the key role that travel plays in diplomacy, government and business.”

Clinton served as the 67th Secretary of State of the US from January 2009 until February 2013, after nearly four decades in public service as an advocate, attorney, First Lady, and senator. As First Lady, Clinton advocated for health care reform and led bipartisan efforts to improve the adoption and foster care systems, reduce teen pregnancy, and provide health care through the Children’s Health Insurance Program. She also travelled to more than 80 countries as a representative of our country, winning respect as a champion of human rights, democracy, civil society, and opportunities for women and girls around the world.

In 2000, Clinton was the first First Lady elected to the United States Senate. After September 11, 2001, she advocated for rebuilding New York and addressing the health needs of first responders who risked their lives at Ground Zero. In 2007 and 2008, Clinton made a campaign for president, winning 18 million votes, and more primaries and delegates than any woman had before.

KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, power, industrial, civil infrastructure, minerals, government services and commercial markets.

The company said the purpose of the project is to process shale gas produced from British Columbia’s North Montney region into LNG that is suitable for export. The contract calls for FEED and early detailed engineering work for a two-train LNG plant with a yearly capacity of 12 million tons and associated shipping facilities. Associated facilities include utilities, storage, loading, ship berthing and personnel accommodation facilities.

“We’re pleased to play an important role in this world-scale facility,” said Mitch Dauzat, president of KBR gas monetization. “This award is further indication of KBR’s position as a leading provider of gas monetization solutions for our clients around the world. We look forward to working with Pacific NorthWest and our partner JGC Corporation on this historic LNG export facility.”

The conference will be held June 17-18, 2013 at the Marriott Calgary downtown in Calgary, AB.

By early afternoon in Europe, benchmark crude for June delivery was down 60 cents to $96.11 a barrel in electronic trading on the New York Mercantile Exchange. The contract gained 69 cents to close at $96.71 on Monday.

On Wednesday, Fed chairman Ben Bernanke will appear before Congress and the central bank will release minutes of its most recent policy meeting. Traders will be looking for hints on what the Fed might be preparing to do in light of recent data that has pointed toward a sustained economic recovery.

There is ongoing speculation that the Fed might want to scale back or modify its super-loose monetary policy and its massive, $85 billion-a-month program of bond purchases intended to keep interest rates low and prop up the recovery.

“We hear some testimony from Big Ben Bernanke this week and we can only think that he’s going to stick to his mantra. Meaning that he’s status quo; the economy is moving along well, we would like to see it move faster, but we’re doing all we can,” said Carl Larry of Oil Outlooks and Opinions in an email commentary.

Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.

Data for the week ending May 17 is expected to show draws of 1.2 million barrels in crude oil stocks and of 200,000 barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department’s Energy Information Administration—the market benchmark—will be out on Wednesday.

Brent crude, a benchmark for many international oil varieties, was down 76 cents to $104.04 a barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

• Wholesale gasoline fell 2.9 cents to $2.8634 a gallon;
• Heating oil lost 1.28 cents to $2.9283 a gallon; and
• Natural gas added three cents to $4.12 per 1,000 cubic feet.

Defence planners expressed concerns about maintenance costs a year after the Conservatives signalled they wanted the jet, the documents show. Internal briefings released under the Access to Information Act show air force officials worried in 2011 about the project’s “affordability,” and the impact on future operation, maintenance and national procurement budgets.

The Harper government announced in 2010 it had selected the F-35 as the country’s next manned fighter.

More than 1,120 pages of documents, obtained by The Canadian Press, highlight concerns about the radar-evading jet and its potential impact on both the military and the federal treasury.

Retired air force colonel Paul Maillet, a critic of the F-35 program, said he was surprised by several aspects of the briefings, describing the sustainment plan as a potential “rabbit hole for money.”

The government put the project on hold last fall and launched a market analysis of other fighter jets, but the F-35 remains a contender.

A spokeswoman for Public Works Minister Rona Ambrose emphasized no decision has been made, and that promises made in the aftermath of last year’s scathing auditor general’s report are being implemented.

“No money has been spent on the purchase of new fighter aircraft and we will not purchase a replacement aircraft until our seven-point plan is complete,” Amber Irwin said in an email Tuesday.

A 2011 slide-deck presentation by the F-35 project’s sustainment manager noted long-term affordability was an “issue,” and that a “bow wave” of higher costs was expected when the jet entered service, then expected between 2016 and 2020.

The stealth fighter is still in development and the system of spare parts and weapons delivery will be globally operated and under the control of the U.S., Maillet noted.

“I would not be comforted by this model that they have here,” he said. “It really, really gives them (the US) a lot of control over our defence capability.”

Unlike previous military aircraft, there will be no mid-life upgrade on the F-35s. Rather, the jets, which are largely run by computer will receive regular software and hardware upgrades in a system known as blocks.

Because there are several partners, each country will have to pay into a collective pool for those computer upgrades, something that will be expensive, Maillet said, especially if Canada wants specific features such as those dealing with Arctic operations.

“We have no idea how much these block upgrades are going to cost,” he said. “Canada will have to participate in the sustainment and upgrade over the life of the airplane and presumably of all the owners…These are phenomenally expensive things you are being asked to commit to without any idea what is it going to cost.”

The auditor general in an explosive report released last year said Defence didn’t have a handle on sustainment costs and that planners were still developing their assumptions for operating the fleet.

In testimony before a Parliamentary committee last year, the former top civilian at National Defence insisted sustainability wasn’t an issue and that the stealth fighter would cost the same to fly and maintain as the existing squadrons of nearly 30-year-old CF-18s.

But the documents show that at least a year before Robert Fonberg’s testimony and the auditor’s report, the project planners had not only identified the issue as a major consideration, but warned of a “significant funding shortfall” related to base infrastructure.

When asked about the contradiction, a Public Works official would only point to what was written on the Defence Department website, noting that the next version of the F-35′s long-term budget will be submitted to the federal Treasury Board this year.

“The estimated sustainment cost for the F-35A is also affordable within the department’s long-term budget prorated over the entire life cycle of the fleet,” says the website. “To the extent that the sustainment costs could rise beyond the department’s long-term budget, despite the substantial contingency allowances built into the estimate, the department will manage pressures through adjustments to the use of the aircraft and/or adjustments to the long-term budget.”

That means the radar-evading jets would be flown less often compared with the CF-18s.

In keeping with government requests the nature of the facilities and agency involved cannot be identified, said Viscount.

“We continue to work closely with US federal government agencies to continue to make Freedom the most effective and cyber secure physical security system available,” said Stephen Pineau, president and CEO of Viscount. “The original benefit of Freedom for US federal government agencies was the cost savings of eliminating control hardware. The system was enhanced to include cost savings on software through being the first PACS solution with built-in CRL (certificate revocation list) and enrollment software. Now, and more importantly, Viscount’s vision of physical security systems being an extension of logical security and identity management will give the company a major compliance advantage with the US government expected to implement many of the core design elements of Freedom with the release of FIPS 201-2 in the coming months.”

“This was yet another accident involving a small commercial operator,” said Wendy Tadros, chair of the TSB. “In Canada, 91 percent of commercial aircraft accidents in the last 10 years involved these operators, and together, these accidents accounted for 93 percent of commercial aviation fatalities. We need to look at new ways of bringing these numbers down.”

The turbine-powered DHC-3 Otter, operated by Black Sheep Aviation and Cattle Co. Ltd, was flying from Mayo to the Rackla Airstrip in the Yukon, a 94-mile flight, says the TSB. About 19 minutes after departure, an emergency locator transmitter signal was received and a search and rescue helicopter was dispatched. A few hours later the wreckage was located on a hillside northeast of Mayo. The aircraft broke up in flight and the pilot, who was the sole occupant, died.

“Without recorded information, we were not able to determine why this aircraft broke up in-flight,” added Tadros. “Data from lightweight flight recorders will certainly help the TSB investigate after an accident, but more than that, it will give Canada’s smaller carriers information they can use to prevent accidents. We see it as a win-win and ask Transport Canada to get the ball rolling as soon as possible.”

The companies were selected based on their performance in 2012, said Spirit AeroSystems, and the award took into consideration quality, on-time delivery, commitment to cost reductions and willingness to partner with Spirit for overall improvement in value delivered to Spirit and subsequently to Spirit’s customers. The platinum suppliers were honored at Spirit’s Annual Platinum Supplier Recognition Event.

“In today’s aerospace environment, it is increasingly important to seek suppliers that provide the best total value for cost, quality and delivery,” said Rob Mattinson, Spirit vice-president, corporate supply chain management & global strategy. “Our 2012 Platinum Suppliers were committed to providing best total value through cost reduction initiatives while maintaining quality and delivery standards contributing to Spirit’s competitive global cost structure.”

The list of the Spirit 2012 Platinum Suppliers is as follows:

• All Metal Services Ltd—London, England;
• Dynamic NC—Udall, KS USA;
• Globe Engineering Company, Inc—Wichita, KS. USA;
• Labinal Services—Wichita Office—Wichita, KS. USA;
• Logistics Resources, Inc—Wichita, KS. USA;
• M.Torre—Pamplona, Spain; and
• ZTM Inc—Wichita, KS USA.

“If you have a happy customer that’s coming into your store and he’s leaving satisfied it helps to get him to come back,” Robert Sawyer, a former food retailing executive, said after speaking to shareholders for the first time.

He said lessons he learned in the highly competitive grocery business are just as useful in the home renovation industry.

Sawyer said his predecessors didn’t do a bad job but were unable to digest years of acquisitions once the recession hit.

“So I have to get back to basics, to look at merchandising, procurement, supply chain and marketing to see how we’re going to address to our consumers all over every region in Canada,” he told reporters.

That could mean producing regional flyers that cater to varying consumer demands instead of offering uniform specials across the country.

Sawyer said he plans to unveil his strategy next quarter, but the chain has decided not to sell its network of big box stores outside Quebec even as it focuses on smaller, proximity stores.

“We have all the ingredients for success. Now we need to optimize the recipe to achieve the full potential of this magnificent organization,” he told shareholders.

Prior to his arrival five weeks ago, the Quebec-based company said it was taking “a hard look” at either selling or reducing the size of its 30 big box retail stores outside Quebec that generate about $750 million of annual sales but together are losing money.

But Sawyer said most of the stores are profitable and selling them would have a big impact on the company’s distribution network.

Rona chairman Robert Chevrier said the stores are part of a network of stores of varying size that provide a competitive advantage over US-based rivals such as Home Depot and Lowe’s.

Selling the stores would diminish the value of the remaining network and tarnish how people perceive the brand, he said.

Chevrier conceded that the company’s new leadership is under pressure to turn things around.

“It’s obvious that if collectively, the people up here, Robert’s team, does a bad job I think we deserve to be kicked out,” he said.

Rona will announce in a few weeks whether it will sell its commercial and professional division that has about $500 million of annual sales.

Its current strategic plan calls for the closure of 10 underperforming big box stores and reducing the size of 13 others. Five stores have been closed so far.

In Quebec, the company has also started to reposition its Reno-Depot banner as a warehouse by reducing the number of products, but offering bigger quantities at better prices.

Rona said it has achieved $17 million of savings, or about 40 per cent of the up to $45-million target from administrative job cuts and the renegotiation of major service agreements.]

Revenues were $929.4 million, down $4.6 million from a year ago. Same-store sales fell 0.8 per cent, or three per cent in the retail division as cold weather caused a 28 per cent drop in the sale of seasonal items.

The company’s distribution segment experienced higher sales but that was offset by lower revenue from Rona’s retail and commercial segments.

Rona attributed the weaker results to disruptions in its operations due to changes at its Reno-Depot and Totem banners, increased costs of building materials, difficult market conditions and a late spring.

“We expect that fiscal 2013 will be another demanding year, because of the repositioning that will temporarily disrupt our operations,” said chief financial officer Dominique Boies.

He said the outlook for 2014 is better as Canadian housing starts are expected to increase and Rona will fully benefit from cost reductions.

Irene Nattel of RBC Capital Markets said that with a new CEO and chief commercial officer, 2013 “is best viewed as a transitional year.”

“Weaker than expected first-quarter results underscore the macro headwinds and operating challenges,” she wrote in a report.

From the small Northern French town of Onnaing, near Valenciennes, TMMF will now export its vehicles to more than 40 countries, including destinations like South Africa, Egypt, Canada and the US.

“With Quebec accounting for 65 percent of Yaris’s Canadian sales, a warm welcome will be assured for this ‘Made-in-France’ vehicle,” said Seiji Ichii, president and CEO of Toyota Canada Inc.

The Toyota Yaris became the first vehicle ever produced in France to be certified with the new “French Origin Guaranteed” (“Origine France Garantie”) label. This certificate was created in order to help customers identify products that have more than 50 percent of their value manufactured in France. On the occasion of the ceremony at TMMF, Yves Jego, Member of the French Parliament as well as founder and president of the non-profit organization Pro France, in charge of promoting the brand “France” and the label “French Origin Guaranteed”, officially presented the certificate to TMMF.

The Cornwall, Ontario campus of St Lawrence College will be welcoming its first cohort of university and college graduates who are looking for some supply chain training. The three-semester graduate certificate program will be divided into two parts: two semesters of in-class instruction and one semester of job placement at a local 3PL or DC.

Frank Lockington, director of the St Lawrence College Foundation, said students will graduate with a wide range of skills, from purchasing to materials handling to using computer-based logistics tracking tools.

“When they come out they should be qualified to be a management trainee in any aspect of the supply chain,”he said.

“The curriculum is actually based on what companies in the area have told us are their requirements, and an examination of what else is being offered across the country for curriculum at this level.”

The program, which is the third in supply chain topics developed by the college in recent months (the others are an ongoing 15-week supply chain techniques course for entry-level workers and a now-finished eight-week materials handling course for warehouse workers) has gone from idea to reality very quickly.

“It was expedited for us. With a new program we’d normally have 18 months to get things up and running, but with what’s happening in the Cornwall region right now, the Eastern Canadian distribution centre for Target is scheduled to open in a few weeks, so their needs will be huge. Rather than wait a whole year for this to roll around, we’re going to try to bring in enough students to make it run in the first year,” Lockington said.

In addition to Target, Cornwall is also home to a Walmart Canada DC operated by SCM Inc and a Shoppers Drug Mart DC run by Matrix Logistics Services Ltd, adding to the heavy demand for supply chain employees.

The curriculum has been approved and the Ontario Ministry of Training, Colleges and Universities has granted approval for the course. No teachers have been hired yet—Lockington said they will mostly be drawn from local industries and will teach part-time—but the student recruitment process is already underway.

The college will be recruiting students locally and from across the country and further beyond. International students with a credential from their home country, can come to Canada, study for a year and then get a visa to stay in Canada and work for a year. The students will be ready for their placements beginning in April 2014.

FROM THE MM&D PRINT EDITION

By early afternoon in Europe, benchmark oil for June delivery was down 71 cents to $95.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 35 cents on Friday.

The stronger dollar is causing oil prices to fall, analysts said. The dollar has risen in recent days against the euro and last week passed the 100-yen mark for the first time in four years.

Since oil is traded in dollars, a stronger dollar makes crude and other commodities less appealing to investors with other currencies.

“This, like the stock market, ends up pulling a lot of money out of commodities and into more reliable risk,” said Carl Larry, president of Oil Outlooks and Opinions, a research analysis firm.

An increase in OPEC’s output, which grew by 280,000 barrels to 30.46 million barrels a day in April compared with March, also helped drag down prices by boosting concerns about excess supply.

“The oil market remains oversupplied, with US crude oil stocks at a record level,” said a report from analysts at Commerzbank in Frankfurt.

Brent crude, which is a benchmark for many international oil varieties, was down 91 cents to $103 a barrel on the ICE Futures exchange in London. In other energy futures trading on Nymex:

• Wholesale gasoline fell 2.53 cents to $2.835 a gallon;
• Heating oil lost 1.09 cents to $2.8953 a gallon; and
• Natural gas added 0.5 cents to $3.915 per 1,000 cubic feet.

Describe your educational background and work history.
I studied business administration at Memorial University and completed my PMAC Certified Professional Purchaser (CPP) designation in 2002. In 2009 the CPP was changed to the current Supply Chain Management Professional (SCMP) designation.

After about 15 years in sales, I moved to supply chain. My first position was with a mechanical engineering firm, responsible for all supply chain aspects, then a major manufacturing firm where I was responsible for procurement, logistics and inventory control. After six years I went to a supervisory procurement role for Newfoundland & Labrador Hydro, eventually moving to my current position as manager of supply chain management & administration for Nalcor Energy. I’ve facilitated supply chain modules and workshops at Memorial University for the SCMP certification program. I serve as the chair of PMAC’s national board of directors and have worked with the Newfoundland & Labrador Institute of PMAC since 2002.

How did you get involved in procurement and supply chain?
After 15 years involved in various sales roles, an opportunity arose in what was then a materials management area. I did everything from procurement, logistics, expediting, receiving goods, quality assurance and accounts payable—the full supply chain! Over the years, opportunity drove me to larger firms with a more specialized role in procurement.

Describe your current role
I’m manager, supply chain management and administration for Nalcor Energy. I have ultimate responsibility for the supply chain management functions. Nalcor is the provincial Crown Corporation responsible for the management of all energy assets in Newfoundland & Labrador, including power generation, oil and gas and development of new projects.

What do you like most about your position?
My position keeps me in touch with the entire supply chain, giving me the opportunity to work with professionals in all areas to improve how the supply chain works for our users. I have great people working with me who ensure we continue to take the right steps to move forward.

What do you like most about your geographic location?
Newfoundland & Labrador is a great place to live and work. While some people may consider it somewhat remote, the advantages of living here far outweigh the travel time to get here. The location makes logistics that much more challenging, and strong planning skills become even more critical when strategically managing inventory levels and production requirements. Contrast that challenge with the great environment, and a safe place to raise your family within a strong community setting, and it is all worthwhile.

What’s your proudest moment?
My greatest pride comes from my family, and the many accomplishments we continue to achieve. Professionally, I have many moments I am proud of. I enjoy a senior position with a progressive employer. I’ve had the pleasure of volunteering with PMAC at the institute and national level, and serve as chair of the national board of directors. My proudest professional moment is earning my CPP/SCMP designation, demonstrating the culmination of learning and experience needed to be considered a supply chain management professional.

What are your future plans?
I have a little over a year left with the PMAC board of directors. We’re working on our strategic plan for the next three years which, based on plenty of stakeholder feedback, will give us direction as we grow the association to better serve our profession, including employers, members and other stake holders. Nalcor is a growing entity and opportunities are all around for improvement. I look forward to continuing to meet new challenges and contributing to this great effort.

What’s the value of PMAC membership and the SCMP?
Belonging to a community of like-minded professionals who share ideas and explore new concepts through networking and life-long learning is one of the most important aspects of PMAC membership—along with the salary premiums and increased advancement opportunities the SCMP designation brings. My experience validates that; I feel much of my professional success has come from my association with PMAC.

What can PMAC members expect going forward?
PMAC is developing its strategic plan for 2013-2016. The most important change will be our focus on educating employers that qualified supply chain management professionals provide strategic contributions to their organizations. We started this outreach in 2012, with our president Cheryl Paradowski visiting over 100 employers to educate them on the value PMAC members bring to their organizations and learning what they want to see from PMAC. We’ll build on that by revamping our marketing program and continuing to align our education programs with industry expectations. The benefits of this increased focus on employers will be enormous for our members—we’re looking forward to several positive changes.

What skills will supply chain management require in the future?
We consistently hear that the biggest skill gaps are between tactical vs. strategic thinking and in soft skills development, like leadership and communications. Our SCMP designation program includes an emphasis on both areas, which should help address these skills shortages as more and more graduates make their way into supply chain management positions. We must also continue to maintain our focus on the entire supply chain to understand how the cross functional interaction contributes to success.

What advice would you give those looking to advance professionally?
If you’re looking to progress in supply chain management, professional development is key. It will make a world of difference in advancing your career. Employers are looking for supply chain professionals who demonstrate leadership, can see the bigger picture and understand how their strategic contribution helps an organization achieve its goals. Continuous professional development, a firm foundation of work experience in the supply chain and a strong work ethic have been major contributors for many of the people I meet in leadership roles.

Tell us something about yourself that’s unrelated to supply chain management.
I’m fortunate to have a family that tolerates my time away from home, and at times 
encourages it! My wife Anne Marie and I 
celebrate our 25th wedding anniversary this year, and have two children, Benjamin and Laura, who are both accomplished young adults. My father worked in supply chain management most of his career, 
and credits my mother with having so effectively managed the supply chain at home with eight children. Guess it was in my blood all the time!

Buyers rarely challenge this reasoning effectively, according to a recent whitepaper from London-based Efficio Consulting, entitled Commodity Management in Strategic Sourcing: How to optimise the sourcing of commodity-driven categories. The paper explains the value of treating commodity-driven categories differently and explores strategic sourcing for commodity management.

A commodity component exists within the value chain of most products and services, the whitepaper says. While the influence those commodities have on final price varies, their significance is often overlooked. Buyers seldom investigate the cost of materials or services and their relationship to established commodities. Without a commodity management strategy buyers fail to benefit from falling commodity prices while increases are often transferred to suppliers.

The whitepaper notes several factors underpinning this. Buyers must diffuse sourcing efforts among several categories and likely give higher priority to some raw materials than others. Conversely, suppliers have full insight into cost breakdowns and are closer to the information.

Some commodities are more volatile, says the whitepaper. Unless commodity prices are monitored and managed closely, price fluctuations might mean lost opportunities. Fluctuations have bearing on the final price if the commodity represents a high proportion or weight within the make-up of a good or service.

Successful commodity management emphasizes certain steps in strategic sourcing, the whitepaper says. Buyers often jump into RFPs and negotiations without laying the groundwork for the tender process, which can become detrimental due to a lack of data 
and category insight. One study of tier-2 suppliers showed over 20 percent of the cost was traceable to a commodity, the paper notes.

The whitepaper recommends category profiling to gain an understanding of the category and related supply chains and stresses the importance of investigating the upstream supply chain for commodity components. Some benchmark and spend figures may be internally available, and incumbent suppliers should be the key contact for gathering that data.

Another step is supply market analysis, with commodities identified during category profiling then analysed by trading currencies, supply sources, price trends, volatility and so forth. The paper recommends establishing a market index or price reference to benchmark purchase price. The commodity content must be considered within the cost of ownership and treated as any other purchase cost element.

Buyers should be able to speculate on the suitability of various sourcing levers, like formal tendering, long-term contracts, 2nd-tier agreements or low-cost country sourcing. If the goods are commodity-driven, for example, the whitepaper recommends focusing on either long-term indexed agreements or spot buying. Well-structured tenders count when evaluating a supplier’s bid, and a superior RFP eases the stress of response analysis while showing the buyer’s competence.

If a strategy involves indexed agreements for commodity driven goods and services, the RFP should solicit inputs on criteria including the weight of a commodity within total price, the proposed index to be used and the agreed spread of commodity price fluctuation. If spot buying is the strategy, the whitepaper recommends minimizing negotiation costs while maximizing their effectiveness. Automated tendering tools are recommended to shorten process time, reduce costs and boost negotiation effectiveness.

With long-term agreements, a sound RFP gives buyers an apples-to-apples comparison of submissions. By fixing the commodity component as market-dictated, the remaining cost constituents become the bid differentiator. The increased transparency creates negotiation opportunities on cost components, especially if the pricing of individual suppliers shows irregularities.

A contract for a long-term agreement should include special emphasis on indexing, the whitepaper recommends. A commodity’s weight, chosen index, price spread and review period should be incorporated into the final contract along with monitoring and reporting mechanisms, the paper says.

In conclusion, the whitepaper says, securing market prices for commodities is a substantial achievement for organizations, as market prices represent a transparent foundation for buyer-supplier relations.

But sourcing abroad can result in even more potential pitfalls. Whether it’s the risk of overseas political unrest, tainted children’s toys from China, the threat of natural disasters or simply longer lead times, risks abound on international waters.

Given these threats, how popular is international sourcing these days? And what are the challenges—and benefits—of sourcing abroad?

China is still perhaps the most 
popular and best-known destination for international sourcing. And the 
country remains an attractive destination for companies looking overseas for opportunities, says Garland Chow, associate professor, operations and logistics division at the University of British Columbia’s Sauder School of Business. In fact, China has stayed popular despite losing ground on some of the advantages (such as low wages) it had a decade ago.

“It hasn’t disappeared,” Chow says. “But relative to wages in both developed and near-sourced countries (the cost) has gone up relatively. The exchange rate has also had an impact there, so they’ve lost some of their advantages. But there are some circumstances that will keep production in China for the foreseeable future.”

China’s production capacity remains intact, Chow notes. China’s labour force buttresses that capacity, as well as its infrastructure and supporting industries. Clusters of related industries have sprung up surrounding several Chinese suppliers to provide them with inputs.

“For example, in apparel, while the factory may stitch things together you must have suppliers for many of the components—specialists who might do certain processes and so on,” Chow said. In China these days, those specialists might be around the corner.

Low-cost labour was one of the factors that drove North American companies to source from China in the first place. But while other Asian countries like Vietnam, Thailand, Indonesia and India have lower labour costs, China has seen several improvements in its production quality over the past decade. The country has increased its capacity, worker skill set and many companies have relatively new equipment. As well, its supply chain is relatively good.

“(China) has very nice highways, the railway systems have improved substantially and, of course, they have great ports,” says Chow. “They have the capacity, infrastructure and supply chain and they’ve been making these products for 10 years. Even if the lowest-level employee is floating from place to place, the management and techniques are there.”

Even lower labour costs may cause some organizations to look at other countries as potential sourcing destinations—but remember that many locations lack China’s capacity, Chow says. Product shortages would likely be the result for a company switching its entire production to a country like Vietnam.

“They just don’t have the capacity yet to take all that production and I don’t think they ever will,” Chow notes. “But those countries are just like China 12 years ago. They have low labour costs, their supply chains are weak—they’re just learning. The difference is, while they have lots of labour it’s not as large as it was in China.”

Just a commodity
The increased commoditization of products has also driven organizations to source abroad, says Mickey North Rizza, supply management analyst and vice-president of strategic services at BravoSolutions. The more commoditized (when goods with their own attributes wind up becoming simple commodities to consumers) a product becomes, the lower its costs. Those low costs put pressure on margins and can drive companies to search overseas.

“More companies have been doing this over the last two years,” she says. “No matter what new product comes out, it’s (all about) how quick can we commoditize it, how quick can somebody else get their hands or name on it? How do we lower the price point? If you think about our global environment, that’s putting more pressure on commoditizing things faster.”

Companies are working harder to connect supply and demand, North Rizza notes. Organizations are asking questions like the cost to ship a part, how much does extra inventory cost, whether that inventory will sell, what’s the inventory carrying costs and so forth. “It’s beyond total landed cost; it’s really total cost-to-serve,” she says. “You’ve got to factor in what geography you need it in and how many other products it needs to go to—you start looking at what it actually costs to serve that market. Sourcing is a very big component of that.”

When it comes to sourcing from up-and-coming locations like Vietnam, North Rizza recommends looking at the entire equation. You may get lower wages, she says, but you may have to source at high volumes. As well, consider other risks like the potential for intellectual property theft or sub-par infrastructure that lengthens lead times.

Get it in writing
Sourcing abroad can give organizations an edge over competitors, says Jon Heppenstall, Canadian director of strategic sourcing and supplier strategy at Staples Promotional Products. Although commoditization makes it more difficult, companies can sometimes find unique products when abroad, he notes. There are several steps organizations can take to protect themselves against the risks inherent in sourcing overseas.

Recent fires at factories in Bangladesh and Pakistan have thrown into relief the risks of sourcing from some locations or regions. Factory fires in the Pakistani cities of Karachi and Lahore on September 11, 2012 are considered the worst industrial factory fires in the country’s history. The Karachi facility (which saw at least 300 people die) had its SA8000 certificate, issued by New York-based Social Accountability International.

“There’s the risk that even though you’ve done all you think you can do, you can still run into problems,” Heppenstall says. “What’s that going to do to your brand?”
One mitigating step is to set up formal vendor agreements, he notes. Those agreements signal compliance is important to an organization, he says. Independent factory audits (like those done by Bureau Veritas or SGS) are also useful, as is product safety testing. Try to ensure third-party auditors are reputable, Heppenstall warns, since factories have been known to pass audits when they shouldn’t if money has changed hands.

Agreements with vendors are even more important as consumers become savvier about what they’re buying and insist on traceability of the components in a product, he notes. At one time, knowing where a product was made was sufficient for most consumers, Heppenstall says. But some consumers now insist on knowing the history of the parts that make the whole. Organizations can ask for sections in their agreements that provide traceability to the product.

“The consumer has become much more educated and demanding with companies to ensure we understand what we’re buying as well as what they end up buying and, ultimately, what goes into the consumer’s hands,” Heppenstall says. “In the last 10 years, that’s probably the biggest challenge in the marketplace.”

In conclusion, global sourcing appears to be here to stay. New locations—not to mention risks—will continue to appear, so staying informed remains as important and useful as ever.