What does supply chain have to do with technology innovation?

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1 Engineering Construction Metal Fab. Industrial Prod. Process Control Prof. Services Technology Supply Chain Canadian Energy Supply Chain(s) Canadian Energy Supply Chain Forum Page 1 New! Technology Innovation the 2014 Canadian Energy Supply Chain Forum About the Canadian Energy Supply Chain Forum (CESCF) The Canadian Energy Supply Chain Forum has been successfully bringing together buyers and sellers along the supply chain of the Canadian energy industry for over 15 years to discuss important industry issues, and for customers and suppliers to explore ways to improve the overall effectiveness of the Canadian Energy Supply Chain and ensure it can meet the demands of Canada s energy producers. See Appendix A for some history about the Forum. While this core purpose has largely remained the same, the specific themes and programming elements of the event change over time to keep up with the needs of industry. And in recent years, a conversation has been steadily growing around the need for the Canadian Energy sector to increase its pace of new technology innovation - especially to help solve a number of major environmental challenges, which now threaten the industry s social license to operate. What does supply chain have to do with technology innovation? Our view of the Canadian Energy Supply Chain is a comprehensive one. We recognize the energy industry has a diverse and complex mix of supply inputs - from engineering services to construction to fabricated steel to manufactured products to professional services, and everything in between! And increasingly, the energy industry is buying and deploying more and more advanced technology - everything from ICT & Big Data solutions to instrumentation to advanced Clean Technology that helps the industry improve its environmental performance: Canadian Energy Producers Tier 1 Suppliers Tier 2 Tier 3

2 Canadian Energy Supply Chain Forum Page 2 The Rapidly Growing Technology Supply Chain Deployment of advanced technologies is rapidly increasing in Canada s energy industry. In fact, technology is viewed by most energy companies as the key to solving two of the industry s top challenges: (1) lowering cost of production; and (2) improving environmental performance. But just as industry continues to work on improving its supply chains for key inputs like construction, engineering, and module manufacturing, the industry has significant (and in some cases greater) challenges when it comes to its technology supply chain The pace of innovation is slow. Relationships between energy companies and technology innovators are immature. Energy producers (and now producer consortiums such as COSIA) struggle with engagement models and how to source and evaluate innovations from the market. And supply chain models for technology sourcing are inconsistent, and in many cases very under-developed. The Technology Supply Chain Challenge The Canadian Energy Industry s Technology Supply Chain Challenge is summed up nicely in this recent statement from a Calgary-based supply chain professional with over 25 years of experience working for one of the world s largest energy producers: When we go to market for something like an oilsands module, we have detailed specs, we can seek out & compare suppliers, we can pick a partner who s best meet the challenge at hand, and we can help them (and therefore ourselves!) get the job done. But when it comes to high tech & cleantech challenges, we need to go to the market often with little more than: I have a problem that I need to solve Can you help me solve that problem? That flips our engagement model on its head. We also put up walls and don t like to let anyone in to see our operations. We re not comfortable admitting we have problems that need solving and when we do, we can t articulate those problems very well. We don t like the unknown, or the idea that we would go to market without specifications. We have legal departments who tell us going to market without specs will invite high prices from the market. We also don t speak the same language as many of the really smart people who can probably solve our problems. And we often don t how to help these guys be successful! We really need to re- think our supply chain model to make it work for high tech! These are simple, yet insightful observations that demonstrate, in a nutshell, the technology supply chain challenge of the Canadian energy industry.

3 Canadian Energy Supply Chain Forum Page 3 Our the 2014 Forum While we have addressed the technology supply chain challenge in past Forums, a partnership opportunity has emerged for the 2014 Forum that would allow us to take this on in a much more comprehensive manner. The forum s presenting partners: JuneWarren-Nickle s Energy Group (a Glacier Media Company), The Supply Chain Management Association of Alberta (SCMA), The Canadian Manufacturers and Exporters (CME), and the Alberta Government have been presented an excellent opportunity to expand our technology component by joining forces with the producers and partner networks of the Canada 3.0 technology conference as well as the Alberta Cleantech Industry Alliance (ACTIA), who we ve worked with over the last 2 years to create innovation-focused sessions at the Forum: The Canada 3.0 network, ACTIA, and their various innovation partners and networks represent a wealth of experience in the world of technology innovation & commercialization and their collective membership bases represent most of the various technologies being deployed in the Canadian Energy Sector. So in line with our core mission of Building a World-Class Canadian Energy Supply Chain, we will introduce a significant innovation component to the Forum in 2014 focused on: Building a World- Class Technology Supply Chain for the Canadian Energy Industry. Proposed Technology/Innovation Audience On the innovator side of the equation, Canada 3.0 and ACTIA have an extensive network of innovators and innovation partners and organizations that they work with. And on the customer side, we will leverage our existing relationships into the energy sector (both producers and large suppliers). We would also like to propose that COSIA join as a partner to ensure strong participation of producers. Finally, a number of key innovation ecosystem supporters such as the CCEMC (who had already committed to being a partner of Canada 3.0), the Alberta Government (also already a partner), the Alberta Innovates Corporations, Innovates Calgary, TEC Edmonton, and other such innovation players in Alberta s rapidly evolving innovation ecosystem. See the next page for a visual map of the innovation ecosystem or supply chain - that we propose being part of the Forum

4 Canadian Energy Supply Chain Forum Page 4 The Forum s Proposed Audience (a microcosm of the Canadian Energy Industry s Technology Supply Chain ) THE TECHNOLOGY CUSTOMERS : THE INNOVATORS / TECHNOLOGY SUPPLIERS : (Canada 3.0 and ACTIA Innovator Networks) (Visit: for links to each of these organizations.) TECHNOLOGY SUPPLY CHAIN SUPPORTERS & CONNECTORS: (not yet approached)

5 Canadian Energy Supply Chain Forum Page 5 Technology / Innovation Programming the Forum The Canadian Energy Supply Chain Forum will significantly expand its innovation programming in This opportunity has materialized quickly and we re therefore open to further suggestions and modifications, but we envision the following elements built into the Forum: Call to Action For Canadian Energy Sector Innovation: A plenary session on the main stage near the front end of the conference that re-issues the challenge for the Canadian Energy Sector to increase its pace of innovation, reminds us of the stakes, and why the innovation mission is important. This could be a high-ranking government minister and/or a panel of respected innovation ecosystem players. Challenge & Opportunity Dialogues From Customers (e.g. COSIA Members): While we know that formal challenge and opportunity areas and opportunity definitions are still a work in progress and likely will still be by October 28, we think it would be powerful for the energy sector to at least start and further the dialogue with the innovation community about the kinds of challenges that will be priorities. Case Studies of Successful Technology Collaboration: We know successful case studies exist where customer + innovator (and sometimes + large integrator such as GE) have collaborate well to come up with new innovations for the energy sector. These are excellent cases to highlight through case study sessions as model examples of how we can collaborate to find innovation. Panels / Discussions around how to break down Technology Supply Chain Challenges: Open, frank discussions about how we can start to address the technology-related supply chain barriers that exist, such as the ones articulated above (on page 2) by the senior supply chain professional. Innovation Pavilion with PRE-QUALIFIED Innovators (as defined by energy customers): Rather than allowing any technology vendor who wants to pay enter a new innovation pavilion section of the exhibition, we will seek input from the customer community (such as COSIA) as to the kinds of innovators they might like to see at the event. With that input, we will put our extensive innovator network to work to seek out the right innovators who will have the best chance of making meaningful connections with potential customers in the energy sector. This will be some work and time is limited, but the partners feel we can give this a strong effort over the coming 5 months and test the model. Catalyst for an ongoing, sustainable network and process It is important to point out that the above programming elements and pavilion model could be an excellent opportunity to catalyze an ongoing supply chain innovation network that can live and breathe all year, and can simply use the annual Forum (and other events) as key cornerstone focus points. The innovator networks should be challenged after the event to perform important supply chain roles such as educating their members about effective ways to work in the supply chain, communicate (ongoing) with customers, help screen their member companies based on evolving industry/customer needs, and provide other support services that contribute to the overall technology innovation agenda for Alberta and the Canadian energy industry.

6 Canadian Energy Supply Chain Forum Page 6 Appendix A: History of the Canadian Energy Supply Chain Forum Late 90 s / early 2000 s: Poising For Growth: In it its early days, the Buyer/Seller Forum was simply a gathering place for mostly local (Alberta) buyers and sellers to get together to learn more about eachother, and in particular for suppliers to better understand and prepare for the significant wave of investment and activity about to take off in the oilsands. Mid to late 2000 s: Expanding The Energy Supply Chain / Managing Mega Growth: In this period, the event was aptly renamed the National Buyer/Seller Forum and peaked at over 1200 delegates, nearly half of which were from outside Alberta as the wild period of growth in the oilsands put incredible strains on Alberta s capacity and existing supply chains. The oilsands truly became a national project for Canada, and the industry needed more capacity to keep up. Much of the event in these years was focused on expanding the supply chain, and discussions centered on how we could access more capacity to keep up. This also included a few years of matchmaking being added to the program, as there were many new international oil companies now building projects in Alberta and they were hungry to establish local and national supply chains. So the forum actually helped buyers connect directly with sellers in pre-qualified match-making sessions to 2012: The Aftermath (and reflection period): After the global economic crisis, dramatic crashes in oil & gas prices, and resulting slow-down in new petroleum and petrochemical investments and projects, the Forum (like industry) entered a period of decline. Delegate drop-off was primarily due to the major drop-off of travelling delegations from around the country and the globe, as budgets for travel were cut. There was also a natural pull-back in the desire of buyers to source new suppliers and do things like match-making. In fact, many buyers started contracting their number of suppliers. So the frantic business-development components of the event settled down. However, in hindsight, this offered a very valuable cooling-off period for industry and therefore also the forum - and an opportunity to step back, checkpoint, and take a hard look at the state of Canada s Canadian Energy Supply Chain 2013, 2014, and Beyond: Building a World-Class Canadian Energy Supply Chain. In the first decade of the millennium, Canada s Oilsands rocketed to become the largest industrial engineering project on the planet. However, most industry experts and insiders agree that the Canadian energy industry the companies & people responsible for the development - were forced to scale up and grow up far too quickly. Dozens of simultaneous industrial mega projects worth hundreds of billions of dollars were announced in a province with just over 3 million people and relatively little experience with global-scale industrial build-outs. The resulting issues - including massive cost-escalations, labour shortages, skill/capability gaps, and steadily declining productivity growth - are too many to list. Bottom line: Canada s Energy Supply Chain was stretched beyond its limit and started to fail.

7 Canadian Energy Supply Chain Forum Page 7 The rapid slow-down after while financially painful to many businesses and people - was a blessing in disguise. It has allowed us to take a step back, examine some of the things we ve done wrong, and start to better prepare for the next (and hopefully more paced) round of development, which is now well underway. Our challenge moving forward: To build a sustainable world-class Canadian energy supply chain that will meet the continued needs and demands of Canada s energy industry. This challenge will be the focus of the Canadian Energy Supply Chain Forum in the coming years.