Take Control and Do It, I Dare you! How public sector can take ownership of their supply chains

 By Dan Munshaw, City of Thunder Bay

Dan Munshaw is the Manager of Supply Management, City of Thunder Bay and a seasoned supply professional drawing on thirty-five years’ experience in government, mining and manufacturing. As a Nourish innovator, he is is leveraging policy and procurement to see how food spend can contribute towards enhancing quality of life and regional economic development.

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 Caption: Successful Food Partnership between City Thunder Bay, Long Term Care and Regional Producer Belluz Farms

Caption: Successful Food Partnership between City Thunder Bay, Long Term Care and Regional Producer Belluz Farms

It is estimated that if every household in Ontario spent $10 a week on local food, we would have an additional $2.4 billion in our local economy at the end of the year and create 10,000 new jobs.
— - Sustain Ontario, The alliance for healthy food & farming, Avalon, 2012.

Working in the government sector, I see that public procurement continues to use dated tactical procurement tools with an overly narrow focus on price. Although change is happening slowly, governments are beginning to recognize that implementing more strategic public supply operations can offer value creation beyond low price. Value can also be created through regional economic development, job creation, and innovation. In fact, governments can increase impact through the economic multiplier effect. Sustain Ontario estimates the multiplier effect for every dollar spent on local food has returns of up to 2.6 times. Social and sustainable procurement is also gaining momentum as championed by leaders such as Canada’s supply chain expert Larry Berglund and social procurement advisor Sandra Hamilton.  

There are many opportunities for Canadian governments to strategically leverage local purchasing. Effective July 1, 2017, Canada’s new Canadian Fair Trade Agreement comes into effect promoting an open, efficient and stable domestic market within Canada. In this new agreement, local food is considered so important that three provinces –Alberta, PEI and New Brunswick– have the stated right to buy local foods. The remaining provinces can continue to specify and purchase local foods through their right to support regional economic development.

For government, effective procurement should be measured by social, environmental, and other benefits to the community. Balancing price with these qualitative dimensions is at the heart of effective best-value procurement in the public sector.
— - Honourable Madam Justice Denise Bellamy, Ontario Supreme Court of Justice

My own journey and work in transforming the City of Thunder Bay’s food supply chain with an annual spend of over $2 million to better align it with the Thunder Bay Food Charter was inspired when I participated at a local food “speed dating” event. At this event, I reflected on my lack of food knowledge coupled with my desire to transform the City’s supply chain from tactical to strategic.

At the beginning, it seemed that every time I tried something related to food, I was told it can’t be done. Therefore, an early step was to focus on researching the facts. This included reading policy documents such as the Ontario Long Term Care Act, Ministry of Health Guidelines, internal and international trade agreements, procurement case law and much more. Armed with these facts, I learned that federal/provincial and local acts, legislation, agreements and laws don’t have to limit you, but can actually support almost anything you want to do. However, company policy and culture, vendor strategy, vaguely worded contracts, and resistance to change are the real barriers to change to tactical procurement thinking.

Listening to key stakeholders and understanding their variety of needs was also fundamental to my success. For example, while long-term care residents and their families wanted taste and nutrition in their menus, food services needed to work within budgets and regional growers wanted assurance of supply and control over their product quality.

By blending rigorous research and careful listening, we developed and adopted a procurement tool from the commodity and energy sector called hedging or forward buying. This procurement tool enables purchasers and suppliers to collaborate on contracts for the procurement of certain items, at a certain time in the future, in a certain amount at an agreed price, quality and any other agreed terms and conditions. Strategic use of this procurement tool with growers has successfully allowed the City of Thunder Bay to work with farmers to place many forward food buys for crops like carrots, potatoes, tomatoes, cucumbers, onions and zucchini. We’re continuing to explore new contracts for veal, strawberries and oyster mushrooms, and are also brainstorming with regional growers to create and launch a food harvest wall blending in long-term care facilities to combine recreation therapy by growing and harvesting healthy foods indoors year round.

 Caption:  Building and promote community inclusion through a brand identify

Caption:  Building and promote community inclusion through a brand identify

Our journey thus far has led to achieving a 38% local food spend in 2016 and we’re excited to explore new ways of increasing this value. We attribute our success largely to relationship building, listening, creative use of procurement tools, education, training and enabling free time for cooks to play with local ingredients.  With input from Nourish, the City of Thunder Bay is also embarking on a pilot project to rebrand and test a food concession operation in one of our community stadiums/arenas that will offer healthy and traditional foods in the fall of 2017.

In my supply tenure, I’ve learned that many public institutions across Canada contract out food service operations. However, these contracted companies are for-profit organizations with the mandate of maximizing shareholder value, and they achieve this by developing efficient operations and lean food supply chains that drive low unit costs. Their obligation to the customers is primarily financial: they will deliver services within the price quoted as defined in their contractual obligations,

Healthcare organizations and government agencies, as accountable owners, need to remember that they can take ownership and control over their supply chain by writing into contracts specific and measurable criteria that they want their contractor to embody and deliver.  As owners, they must also monitor, measure annual performance and hold contractors accountable to contract terms; otherwise, they will be “spinning your wheels” on trying to make any meaningful change on the food supply chain.  

For example, if you are asking:

  • Can we get more local/regional foods?  Simply, state what you want in your agreement
  • Can we get annual velocity reports?  Simply, state what you want in your agreement
  • Can we get less pre-processed & healthier foods?  Simply, state what you want in your agreement.
  • Can we get more ethnic/traditional food? Simply, state what you want in your agreement
  • Can we get more pay?  Sorry, can’t help you there.

The steps to making change are simple, but the effort is not. Are you ready and willing to take control and shift from tactical to a strategic and sustainable supply chain?  Then, take control and do it. I dare you!