Strategic Sourcing

Strategic sourcing is a collaborative and holistic approach to supply chain management that uses fact-based analysis to acquire the organization’s current and future needs at the lowest total cost of ownership (TCO) and risk. This concept causes the purchaser to focus on the needs of the entire organization, rather than just the current needs of one area. For instance, focusing on fully understanding your own value proposition as well as the end customer’s needs and procurement processes, market conditions, and supplier capabilities to achieve the company’s overall, broader goals.

It’s about leveraging your position to find the best value supplier or offer the best value solution within the marketplace. That is, your ability to improve quality, pricing and contract terms to suit your organization’s and your customer’s larger goals. Over time, the process creates a cycle of continuous improvement in quality and contract terms between the purchaser and supplier, leading to increased efficiencies in both parties.

In many instances, especially in the case of SMEs where there is not always excess time in making sourcing decisions, these decisions are heavily based on cost and delivery schedule. This process is mostly reactive to the organization’s immediate needs and often doesn’t take broader goals into consideration.

From the perspective of strategic sourcing, the cost and delivery from the supplier are just the tip of the iceberg. The approach is meant to take into account the total cost of the procurement as well as future opportunities, including internal processes, demand drivers, procurement practices, specifications and operational procedures. Ultimately, any organization even if they are a supplier or SME can gain a competitive advantage by utilizing strategic sourcing processes. These advantages can include cost savings, increases in quality, and access to new suppliers. In the instance of Canadian SMEs, strategic sourcing practices can be used to ensure that your company is offering the best value solution through an efficient and competitive supply chain.

If you are interested in learning more about strategic sourcing and how it can help your organization, join OMX and industry experts for our webinar on Friday December 16th at 2pm EST.

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Canadian Surface Combatant (CSC): Canada’s Largest Defence Procurement

The Canadian Surface Combatant (CSC) program will replace Canada’s aging destroyers and multi-role patrol frigates (the Navy’s Iroquois and Halifax class ships). The project is the largest procurement in Canadian history, with initial estimates placing it to worth around $26 Billion. As part of Canada’s National Shipbuilding Procurement Strategy, the CSC ships are set to built by Halifax’s Irving Shipbuilding, with the warship designer and combat systems integrator to be chosen in the coming months.

After much anticipation, the official RFP for the CSC program was released on October 27th, 2016, marking the beginning of the competition to select a warship designer and combat systems integrator for Canada’s new warships. Canada is looking to choose an existing Commercial off the Shelf (COTS) design and has combined the design and combat systems integration into one RFP. By utilizing an already proven design, the Government believes that the first ships will be delivered close to two years sooner than if Canada were to choose a new design.

Irving Shipbuilding is the Prime contractor for the CSC program and will choose the warship designer and combat systems integrator from a shortlist of pre-qualified bidders. The Government will oversee this process to ensure a fair and open competition.

The list of prequalified bidders includes:

  • Alion-JJMA Corp. (U.S.).
  • Lockheed Martin 
  • BAE Systems Surface Ships Ltd.
  • DCNS
  • Fincantieri 
  • Navantia 
  • Odense Maritime Technology 
  • ThyssenKrupp Marine Systems 
  • Thales

Bidders will have six months to put together their full bid package, including identifying their Canadian partners and suppliers for the program. As for most large defence procurements, the Industrial and Technological Benefits (ITB) policy will apply and will require the winning bidder to spend the equal value of the contract price back into the Canadian economy, primarily through sourcing a Canadian supply chain.

As part of the ITB policy, all bidders will be required to submit a Value Proposition as a part of their bid. The Value Proposition will outline the bidder’s plans to bring high-value work to Canadian firms as a result of being awarded the CSC contract, including identified transactions with Canadian partners, investments in research and development and providing export opportunities to Canadian companies. Once awarded a contract, the bidder will be legally held to its identified commitments to invest in Canada and partner with Canadian companies. If you are interested in learning more about how Value Propositions work, click here. Many of the approved bidders have already been identifying Canadian partners to include in their Value Proposition over the past few months.

CSC has been designed to further develop Canadian industry and thus offers an exciting opportunity for Canadian companies, across industries, to be included. The bidders can include ITB transactions for both direct work for the CSC project and indirect work on other programs being undertaken by the bidders. Additionally, many of the required Market Segments offers opportunities to companies that may not typically work in defence. This allows for a broad range of companies, not traditionally in defence or shipbuilding, to benefit from the CSC procurement.

If you are interested in learning more about how the procurement works or how to be included on one of the bidder’s Value Propositions, please contact us.

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What’s new at OMX

At OMX, we value our responsibility to keep on top of industry trends. Keeping this in mind, here’s what’s been happening lately at OMX.

We realize that it may be hard for companies, especially SMEs, to keep on top of all of the opportunities in the industry. This task could warrant hiring a specific employee for the job, which isn’t always feasible for small businesses. We’ve taken this feedback from our users and are offering a dedicated Account Manager to all of our clients.

The role of your Account Manager is to be aware of the opportunities in the industry and to let you know when an opportunity matches your capability. Think of your Account Manager as an extension of your sales team – they are more boots on the ground and will ensure that you get your best value engagement from your use of the platform.

At OMX, we also have an obligation to both sides of the supply chain – we have a responsibility to both the primes and the suppliers to provide value. This role is where your Account Manager comes in. Not only do they have a responsibility to make sure that you are aware of opportunities, but they also need to make sure that the prime contractors on the other end are finding the best Canadian suppliers with the capabilities that they need.

Meet your Account Manager:

Godfrey graduated from Rotman Commerce at the University of Toronto with a BComm in Management. Since graduating, he has gained extensive experience in the Information Technology industry in functions including sales, recruiting and operations. With this passion for startups and the technology sector, Godfrey has co-created a digital space to share experiences and best practices, and is host of a podcast series featuring young, upcoming entrepreneurs. Godfrey is passionate about encouraging innovation by connecting Canadian SMEs with opportunities in the industry.

In his spare time, Godfrey enjoys playing rugby, and is currently the first team Flanker for the Toronto Buccaneers Rugby Club (Go Bucs!). On a weekend morning, he can often be found cheering on his beloved Manchester United, or tuning into the latest news in politics, economics, and global affairs. He also loves ice cream, but happens to be lactose intolerant.

On the tech side of things, OMX is always updating the platform based on our users’ feedback. In the past weeks, we have updated our payments system from Paypal to the more user-friendly Stripe. OMX’s integration with Stripe will make it easier for our users to change their subscription levels and monitor their payments. It will also make all subscription level changes automatic so that you will no longer have to wait for someone on the OMX Team to confirm your changes.

Additionally, we have upgraded our user registration process to make it easier for users to create their account and claim their company profile. Users can now associate their user account with an existing company profile directly from the registration page.

OMX has also added increased filtering to the organization profile, including options for women-owned and veteran-owned companies. These changes will make the platform more applicable to global users and will specifically help prime contractors find suppliers that meet their needed capabilities.

What’s coming up?

We’ve spent the past few months ramping up for two large shipbuilding procurements that are taking place this fall – the Arctic Offshore Patrol and Joint Support Ships In-Service Support (AJISS) contract and the Canadian Surface Combatant (CSC) contract.

OMX has been busy over the summer preparing for the AJISS contract. In-Service Support contracts are the maintenance of equipment and often last for 20-30 years, bringing long term, sustainable business that can be very beneficial for Canadian SMEs. AJISS is estimated to be worth $5 billion by the end of the contract. The bid is closing and primes have to have their Value Propositions prepared by October 25th.

CSC is the procurement for Canada’s future warship integration and design. The RFP is set to be released by the beginning of November. Although the RFP has not be formally released yet, all of the Primes intending to bid have already started identifying suppliers to be included on their Value Propositions and many are using OMX to do so. This contract is one of the largest procurements in Canadian history and is estimated to be worth $26 billion.

Our team at OMX has been reaching out to Canadian suppliers to make sure that they are aware of these upcoming procurements and know how to reach out to the Prime contractors bidding on them. If you are interested in engaging the bidders for these programs, login to your OMX account or contact one of our team members at support@theomx.com.

By: Katherine Jacome, Project Manager

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You asked, now I’m answering

Thank you to everyone that came out to listen to my speech, Innovation: More than just a Buzzword, at GOCA on Wednesday. Due to the time constraints, I was unfortunately unable to respond to all of the questions submitted using the GOCA app.

Here are my answers if I was unable to get to your question.

Are there tools within OMX to qualify suppliers?

Yes. OMX has advanced search filtering that draws from information entered into the company profile. Users can search for companies based on capability, size, certifications, location, and exports, as well as woman and Aboriginal-owned.

Additionally, we have built the “verify” badge to allow companies to certify the quality of suppliers that they have worked with.

In the event that another infrastructure for similar programs is developed elsewhere (ex Malaysia), can your application be installed there?

Yes. OMX is currently working on integrating with other platforms. This year, we are going to be able to integrate with platforms such as SAP, Dassault Air Design software, and others.

Additionally, OMX is developing a specific government dashboard that will allow primes to report directly to various governments through the platform.

You’re measuring economic and social impact in Canada. What about measuring such impact in other countries. Do you have examples?

OMX is broadening its ability to do full socio economic impacts to include impacts to woman owned, veteran owned, and Aboriginal owned, as well as the impacts to the research, academic and entrepreneurial communities and clean tech sector.

My company has its own ERP software. My commodity managers will only use this system. How can OMX be integrated without adding work for me, the offset manager?

OMX’s API integration will be able to interact with various ERP software, allowing data entered on the platform to integrate with other platforms used by your company.

How does OMX ensure that data inputted by companies and how often are companies asked to update their data?

We have taken a similar approach to user data input as LinkedIn. When a user logs on and updates their company information, they are responsible for ensuring that the data they have entered is accurate. We have built a “claimed’ badge that will appear on a company profile when it has a user behind it. We encourage users to update their company data at least every six months and users can see the last time a profile was updated.

That being said, OMX has built a “Verify” feature where Primes can vouch for suppliers they’ve worked with to let other companies know that what they’ve said in their profile is true. We are in the process of building additional rating features where suppliers can be rated by companies that they have done work for. These ratings will only be visible to Prime contractors and suppliers won’t be able to see their own rating.

Obviously innovation cannot be mandated or forced by governments but in your opinion what can government do to create fertile ground for innovation culture?

There are a few things governments should be doing. First, they should be incentivizing large corporations, such as contractors with offset obligations to work with and invest in innovative companies. They can do this by allocating more points in evaluations for innovation or by providing high multipliers against the offsets. Second, Government should be funding innovation at the very early stages of a product’s development. I like the terminology “Government in, Government out” which they describe in this podcast: A History of Manufacturing in 5 Objects (http://one.npr.org/).

How have you recognized an employee for innovation?

In a team environment, I don’t believe that innovation comes from any one person. I think most of the time it works by one person having an idea and other team members responding by adding to it and critiquing it. This is especially true in the case of OMX, where our team is small and often works together in a collaborative environment.

What shampoo do you use?

This is really the most technical question. I usually just use the little hotel bottle shampoos, but I don’t steal extras I swear. When I’m just coming into the office, the team is lucky if I have washed my hair in the morning 😉

***The OMX team had a productive week at GOCA and encourage Canadian businesses that are interested in gaining business from offsets to partake in the conference. GOCA offers a forum for companies involved in offsets and countertrade to meet, discuss opportunities and promote trade.***

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Leveraging Defence Spending: A Guide to Market Segments

When talking to different suppliers and users on OMX, we often run into confusion regarding Market Segments and how they work in procurement programs. Specifically, how small companies that don’t often work in defence, aerospace or shipbuilding, or have never worked in these industries can leverage Market Segments to win business from large companies with offset obligations.

So here’s the gist of it:

In February of 2013, Tom Jenkins identified his Key Industrial Capabilities (KICs) in his report, Canada First: Leveraging Defence Procurement through Key Industrial Capabilities. These served as a way to analyze the capability within Canada’s industrial base and were identified as potential areas for growth within Canada’s defence industrial base.

The KICs identified by Jenkins are:

  • Arctic and Maritime Security
  • Protecting the Soldier
  • Cyber Security
  • Training Systems
  • Command and support
  • In-service support

As a part of the new Industrial and Technological Benefits (ITB) policy that was announced in the Defence Procurement Strategy (read more about that here), bidders for large government procurements will have to respond to a series of identified market segments through transactions in their Value Proposition. These market segments are rooted in Jenkins’ KICs but are created custom on a procurement by procurement basis and do not have to match the identified KICs. The market segments for a given procurement are established based on the capability or capabilities that the Government of Canada wants to target or further develop through the procurement program.

Some examples of market segments could include: Shelter Systems, Marine In-Service Support or Aircraft Maintenance. However, they are not always so straightforward or directly related to the procurement program and this is where it tends to get slightly more complicated. In certain upcoming procurements, we have seen the Government choose to target areas of Canada’s industrial base that seemingly have nothing to do with defence, aerospace or shipbuilding.

In these instances, primes and eligible parties will have to target their transactions towards suppliers within that specific market segment using Direct and Indirect Transactions. In short, government contractors have two ways to fulfill an obligation: a direct or indirect transaction. A direct transaction is one that is directly related to the procurement program that the obligation is tied to. For instance, aircraft parts for an aerospace procurement. An indirect transaction is a transaction where the work itself is not related to the procurement program, but the purchasing or spending on the transaction is a result of the obligations associated with the program. An example of an indirect transaction is a transfer of work for another division within the contractor company to Canadian suppliers for the purpose of fulfilling the offset obligation. Thus, although an identified market segment may not be a capability that is directly related to a procurement program, government contractors may still have an obligation as a result of the program to spend in that area.

Why should this be important to you and your company? If you are a supplier that fits within a targeted market segment on a procurement program, you should be reaching out to the primes or eligible parties bidding on the program. These companies have a requirement to identify suppliers in their Value Proposition and spend in those areas specified under the Market Segments – even if they may not seem relevant to the procurement program itself. Market Segments, especially when they aren’t directly related to a procurement, represent a great way for companies that normally do not work in defence to leverage offset spending to gain business.

By: Katherine Jacome, Project Manager, OMX

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OMX companies…”Verified”

Since nearly Day 1 of launching OMX, we were asked by both the world’s largest procurement departments and some of the smaller, but most experienced suppliers, to have layers of “verification” in the profiles. In other words, some level of endorsement, authentication, recommendation, a social “I know him/her and they do the following work…” cross over to the online platform. You’ve seen it on Linkedin and elsewhere, and now it is here on OMX to stay.
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Now that it is officially here, live on the OMX platform, “Verified” rules of engagement are as follows:
  • Any organization in OMX can be verified by another company that is also verified.
  • The idea behind a company being verified is that someone proactively “vouches” for that company – in other words, that you know the organization, and as far as you know, their OMX profile is an accurate reflection of what they offer
  • It will remain anonymous whom verified whom, just that certain companies are indeed verified by other verified companies in OMX.
  • All of our major prime contractors and Tier 1s with significant presence in OMX, will be verified by the OMX team.

verified_screenshot_4

Like Linkedin (vs the Twitter “verified check mark” where you have to have a team of PR professionals lobby Twitter to verify you), OMX believes in allowing the community to work on its own, while it serves as the technology platform powering the connections.
By encouraging another verified company to endorse you, that may just be your leg up that distinguishes you from the crowd!
Happy Verifying – Nicole, Founder, OMX
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How to get the most out of Canadian Government Infrastructure spending

There has been a lot of talk in the media about infrastructure spending. The Liberals campaigned on a promise to create jobs from Infrastructure spending, and then their recent Budget laid out a plan to spend Billions in infrastructure over the next decade. So how do we maximize the benefit to Canadian industry from these infrastructure projects? Ensuring Canadian companies and people are hired to do the work itself, since we are trying to maximize economic impact to the country, is important. This direct work will have long term spin off effects to the economy, but there are also other considerations which will have potentially longer term impacts.

First, is a focus on investments in Canadian technology and innovation. If Canadian start ups develop IP to help with infrastructure projects, sell their innovation as a result of these upcoming immediate Government projects, and then in turn export – there will be longer term value to the economy.

Second, are a consideration for hiring Aboriginals and Aboriginal owned businesses. I have talked about the benefits and importance of including Aboriginals and Aboriginal owned businesses in Canadian supply chains, well this is an easy way to do this.

Lastly, there are a lot of inefficient, highly bureaucratic intensive ideas that we have as Canadians to help the environment. Our commitment to the Paris Agreement commits us to reduce Carbon emissions. Well, one simple addition to infrastructure spending could be to incentivize the use of clean technologies. We want to encourage Canadian made and Canadian owned IP of these technologies. If they can be first sold into infrastructure projects, then exported, then a sustainable business model has been developed and sustained.

Sometimes, there is more to consider beyond price. It doesn’t necessarily justify paying a lot more, but incorporating a small budget to encourage infrastructure projects focused on delivering the best product for the best price AND delivering long term economic impacts to Canada would be a good thing.

Some of my additional thoughts can be found in one of the latest Op Ed pieces I contributed to in the Globe and Mail:

http://www.theglobeandmail.com/report-on-business/small-business/sb-managing/we-should-consider-more-than-price-when-handing-out-government-contracts/article28552457

Also – here are the details on OMX’s Economic Impact studies: theomx.com/analyze.

-Nicole Verkindt, President, OMX

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