Purchasing power

Calgary’s burgeoning supply chain sector is a key to economic growth

Author

Mario Toneguzzi

Although taken for granted, there is a very efficient system in place that moves product into the hands of consumers and businesses. That process is supply chain management (SCM) and it’s become a burgeoning sector in Calgary — a critical component of the economy, ensuring products are delivered from point of manufacture to their consumer destination.

“Nearly everything we do now in operations is effectively supply chain. We have to rely on those partnerships to provide our customers with the solutions that they need,” says Gavin Exon, MBA’14, director of operations for Exchanger Industries Ltd., which handles engineering procurement and manufacturing for heat transfer equipment for the global oil, natural gas and petrochemical industries.

Exon says it’s a value-added component for the company’s customers that it handles that piece of the supply chain.

“International sourcing is complicated. It’s fraught with risks and challenges and just about anybody who has done global outsourcing or has done any kind of international supply chain knows that those challenges and those risks are there. For us, we’ve heavily invested in hiring good people and developing processes to manage those complexities to really add value for to the end customer,” says Exon.

The growth in the industry is a trend the Haskayne School of Business has identified. In 2012, there were eight students taking the supply chain management concentration. Enrolment today is up to 80.

“Over the past two decades there has been significant growth in the SCM sector. This comes from various sources. First, the oil and gas industry has embraced supply chain management. Second, Calgary has become a logistics hub for Western Canada with companies like Walmart and Canadian Tire having major logistics hubs locally,” says Haskayne’s Jaydeep Balakrishnan, professor of Operations and Supply Chain Management, and director of Canadian Centre for Advanced Supply Chain Management and Logistics.

“Further, service organizations such as Alberta Health Services and universities have created supply chain organizations to reduce costs and help operations. I believe the existence of a strong logistics industry has probably blunted the effect of low oil and gas prices. Currently, because of low oil prices and the end of major oilsands projects, the Calgary SCM sector is facing some challenges in terms of employment. But the long-term trend is positive due to the value provided by effective SCM, not only in the oil and gas business but also in other industries.”

Supply chain professionals have the skills to allow better informed decisions to be made within the supply chain. This results in both cost savings and more effective operations.

“We’ve moved well beyond the ‘three bids and a buy’ approach to just buying. We do need a high level of sophistication, purchasers not buyers,” says Exon. “The distinction I would draw between the two is purchasers are more strategic in how they do a commercial arrangement and build deals beyond the basic economics. More strategic in terms of how they manage their supply chain, in how they generate more sales and in their operations planning. They are looking toward building networks rather than just a list of suppliers.”

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Gavin Exon, MBA’14

Gavin Exon, MBA’14

Photo by Kelly Hofer