Issuu

November/December 2015 $15.00

LCBO WINS INNOVATION PRIZE LCBO’s patent-pending mixed-case palletizer is recognized with three innovation awards

DEMATIC STEPS UP Waterloo engineering students to receive scholarships

AIRBUS BUILDS IN THE USA European Airbus planes are now made in the USA

HEC MONTREAL STUDENTS WIN BIG INTERNATIONAL APICS CONTEST

Innovation! Publication mail agreement #40063170.

CELEBRATING MADE-IN-CANADA SUPPLY CHAIN SUCCESS

ALSO INSIDE 3 5 22 26 32 34 36 38

TAKING STOCK SUPPLY CHAIN SCAN SUPPLY CHAIN OUTLOOK E-COMMERCE TRENDS MATERIALS HANDLING LEARNING CURVE IT MATTERS LEADING EDGE

We use valuable tools to empower your company’s business strategies. We call it listening. As Canada’s largest temperature-sensitive supply chain provider—with fully integrated logistics service offerings covering warehousing, transportation, 4PL, 3PL and distributor services—we have the expertise and deep technical knowledge to help you improve efficiencies, minimize costs, sharpen your competitive edge and drive performance throughout the value chain. Call today: 1-800-563-COLD. We know your business.

POWER 2

WAREHOUSING

LTL & TL TRANSPORTATION

TRANSPORTATION MANAGEMENT & 4PL

3RD-PARTY LOGISTICS (3PL)

DISTRIBUTOR SERVICES

Performance Driven versacold.com

TAKING STOCK

Canadian innovation www.mmdonline.com PUBLISHER/EDITOR-IN-CHIEF: Emily Atkins (416) 510-5130 EAtkins@mmdonline.com CREATIVE DIRECTOR: Tim Norton (416) 510-5223 tim@newcom.ca ART DIRECTOR: Barbara Burrows SALES: Nick Krukowski (416) 510-5108 nick@ctl.ca PRODUCTION MANAGER: Kimberly Collins (416) 510-6779 kim@newcom.ca CIRCULATION MANAGER: Mary Garufi (416) 614 5831 mary@newcom.ca

NEWCOM BUSINESS MEDIA INC. President • Jim Glionna Vice-President • Joe Glionna HOW TO REACH US: MM&D (Materials Management & Distribution), established in 1956, is published six times a year by Newcom Business Media Inc. EDITORIAL AND ADVERTISING OFFICES: 80 Valleybrook Drive, Toronto, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140. SUBSCRIBER SERVICES: To subscribe, renew your subscription or to change your address or information, contact us at 416-510-5113 or 1-866-543-7888 ext. 3258, or visit our website: www.mmdonline.com/subscribe SUBSCRIPTION PRICE PER YEAR: Canada $84.95 per year, Outside Canada $159.95 US per year. Single copy price: Canada $15.00, Outside Canada $32.65 CDN MM&D is published 6 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. ©Contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. DISCLAIMER: This publication is for informational purposes only. You should not act on information contained in this publication without seeking specific advice from qualified professionals. MM&D accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. MM&D receives unsolicited materials, (including letters to the editor, press releases, promotional items and images) from time to time. MM&D, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. PRIVACY NOTICE: From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374, Fax: 416-442-2191 Email: vmoore@annexnewcom.ca Mail to: Privacy Office, 80 Valleybrook Drive, Toronto, ON M3B 2S9 Printed in Canada Publications Mail Agreement #43008019, ISSN: 0025-5343 (Print) ISSN: 1929-6460 (Digital). We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage. MM&D is indexed in the Canadian Magazine Index by Micromedia Limited. Back copies are available in microform from Macromedia Ltd., 158 Pearl St., Toronto, ON M5H 1L3

e’re celebrating several major Canadian accomplishments this issue, and it’s a truly proud moment to see homegrown innovations and successes recognized on international stages, and to be able to share them with you in the pages of MM&D. The three examples I’m talking about are the LBCO’s success in developing mixed-case automatic palletizing capabilities (page 18), two teams of students from HEC Montreal winning an international APICS challenge (page 4), and the growing partnership between Dematic and the University of Waterloo in supporting research into supply chain analytics and processes (page 5). It’s really exciting to hear these stories, and I hope you’ll share my enthusiasm once you’ve read them. I find it inspiring to learn how these accomplishments come about. For the students involved in the APICS challenge and the future scholarship winners at the University of Waterloo, these successes may well be the launching point for a fantastic supply chain career. Starting out with a significant academic credential is a great foundation on which to build a lifetime of achievement. And for the team at the LCBO, figuring out how to automate a labour-intensive, and complex task with patentable, award-winning results has to be an intensely satisfying experience. Supply chain professionals are typically life-long problemsolvers, of course, so being recognized for such a creative solution would have to be a career high. Canadians are sometimes noted for their modesty, especially as compared to our neighbours to the south. So it’s great to see these deserving people get the recognition they deserve for their achievements. Please join me in extending congratulations to each one of them. I’m sure there are many more examples out there that I haven’t heard about yet. In fact, as I write this column, I just received a note from a contact in the business informing me of yet another award won (which you’ll hear about soon). So please, fill me in on your accomplishments, or those of your colleagues, and I’ll do my best to ensure that all you Canadian supply chain operations innovators are recognized in MM&D for your creativity and hard work.

November/December 2015 Volume 60 Number 06 18

LCBO Innovation

2016 Outlook

Canadian Trends

Airbus

Mixed-case palletizer wins awards for Ontario retailer

What’s in store for supply chain in the coming year

Home-grown execs examine the top DC trends

The aircraft maker’s complex, international supply chain

Cover image: Grandeduc, Fotolia.com

www.mmdonline.com | November/December 2015

SUPPLY CHAIN SCAN

SCMAO

CITT

TOYOTA TURNS 25

M+S

Association conference attracts big crowd, p 6

Logistics pros meet in Niagara Falls, p 10

Celebrating a quarter century of building forklifts in the USA, p 15

Appointments and promotions, p 13

Canadian students clean up at APICS By Emily Atkins

wo teams of students in the Master of Science program (Global Supply Chain Management and International Logistics) at HEC Montréal took first and second place in a global APICS student case study competition, The Fresh Connection Global Challenge. The Canadian teams, both from Montreal, beat more than 400 teams from around the world in two different qualifying streams to reach the final. The first place team, “Juice in time”, was Léonard Vincent, Stewart Soh, Vanessa Dalpé, Francis Lapointe, and Sami Birem. The second place team was “Go JIT”; its members were Jingshu Liu, Jing Jin, and Kaiqi Shu. For the preliminary rounds, APICS regions hosted student case study contests, and there was also a global online challenge. Both routes could lead teams to the global final. In January 2015 HEC’s team “Juice in Time” took the Canadian regional championship, securing a place in the final in Las Vegas this October. In May, the second team from HEC, “Go JIT”, took the North American online challenge title, also ensuring their place in the final. In Las Vegas the competition consisted of two rounds, a virtual company simulation that was worth 67 percent of the total score, and a second round in which the top teams after round one presented a strategy to a panel of judges in front of 300 APICS conference participants. For the third year in a row, APICS is using the simulation “The Fresh Connection” (TFC) for the Global Final instead of classical case study. According to the TFC website, it’s the “world’s best professional SCM training tool”. Team members have to cover four functions: Purchasing, Operations, Sales, and Supply Chain. They must work together in order to align all activities and decisions across the functions, with the focus on bottom-line profitability. 4

More information on the challenge is available at: http://tfcstudentchallenge.org/. Lapointe, Sami Birem, Teams had to run a virtual company. At the Vanessa Dalpé, Léonard beginning the company is in a very difficult situation Vincent, Humphrey Vernaus with a ROI of negative eight percent. The mission (District Manager APICS is to save the company and get the ROI as high as Canada), Stewart Soh, Kaiqi possible. Shu, Jing Jin, Jingshu Liu, In two days, all 13 finalists completed four rounds Nicolai Rassolov (Teams’ of simulation. After this, the top teams had to prescoach and Academic VP at ent their strategy, findings, and lessons learned in APICS Montreal). front of judges and conference participants. The two HEC teams came out on top, in first and second place. “Such an incredible achievement is the result of two years hard work and close collaboration between APICS Montreal Chapter, HEC Montreal and APICS District Canada,” said Nicolai Rassolov, vice-president, communications/membership/marketing for the APICS Montreal Chapter and material manager at Galderma Production, who was one of the students’ advisors. “Each decision for the next step was taken thanks to lessons learned from past experience. Each little improvement in preparation contributed to this success.” Other coaches for the two HEC teams were Yossiri Adulyasak, and Julie Paquette, both assistant professors in the Department of Logistics and Operations Management, HEC Montreal. The teams also want to thank Helene Giroux, director of the Department of Logistics and Operations Management at HEC Montreal, the APICS Montreal Chapter board and the APICS Canada board. The teams and their advisors. (left to right): Françis

MM&D | November/December 2015

SUPPLY CHAIN SCAN

Dematic funds scholarships at Waterloo Research relationship helping to build software capabilities By Emily Atkins

ral addition to an already great partnership with the University of Waterloo.” “Waterloo Engineering is delighted that Dematic has launched an undergraduate scholarship in supply chain optimization, an area of specialization in our Management Engineering program,” said Pearl Sullivan, Dean of Engineering for the University of Waterloo. Dematic’s research projects focus on two areas. One is looking at developing an algorithm for mixed-case palletization—primarily in the grocery industry—while the other is working to build an operational analytics product. According to Scott Wahl, director, global software projects in Dematic’s Waterloo office, there are three to four students involved in each project, and beyond the co-op program, one of the post-doctoral students has recently been hired by the company. “Attracting talent is important,” he said. “Without the research projects they wouldn’t necessarily even know who we are.” And the benefits run both ways. Waterloo’s academic staff are also gaining from the partnership. “Through this relationship they’re able to tune and upgrade a number of their internal initiatives to be more in sync with the kind of real world problems that we face, so it’s a good two-way relationship,” Devenyi said.

ematic is funding scholarships for University of Waterloo engineering students studying supply chain optimization. There will be two awards each year, for the next two years, each worth $2,500. They will be granted based on grades and an essay, to one male and one female second year student. The scholarships were created to celebrate Dematic’s first year of operations in its Waterloo, Ontario office. The company opened the location in September 2014 to capitalize on the world-class technology and engineering talent in the area. Shortly after opening, Dematic established a relationship with the University of Waterloo to also contribute to the educational community. Pete Devenyi was brought on in February 2014 as vice-president, global software development, just as Dematic began to “invest heavily and grow its software team and really start to focus on software as a differentiation point within the company,” he said. “It’s all focused to ensure we stay a step ahead in a number of key areas. The University of Waterloo now is recognized inside Dematic as being one of the leading research institutes in this area The University in the world, spoken about in the same breath of Waterloo now is as MIT and Stanford,” he added. recognized inside The software centre has grown in its first Dematic as being year from one to 30 staff and includes a number one of the University of Waterloo graduates. They and leading research other Dematic team members are currently institutes in working on two research projects with the University, funded by a federal Collaborative this area in the Research and Development (CRD) grant and world, spoken a provincial Ontario Centres of Excellence about in the same (OCE) grant. In addition, Dematic is participatbreath as MIT and ing in and supporting the University’s Stanford. co-op education program. “We’ve taken on all sorts of interesting new initiatives,” Devenyi said. “Dematic chose Waterloo because the quality of the tech talent here is undeniable. We wanted to mark our anniversary by investing in the community and the people we hope to recruit and mentor. This scholarship is a natu-

Photo: ImageFlow – Shutterstock

“

www.mmdonline.com | November/December 2015

If you are looking for the most versatile packaging bench, your ship has come in. Pro-Line's Packaging Workbenches (Model CPB) are ideally suited for every packing, shipping and mailroom application. • Modular and customizable, with an extensive array of features including full width storage shelf, bin holder, power strip, paper spool holder and more. • Optional accessories include rotary shear cutter, scale stand, cardboard storage stand, and more. • Our "In-Stock" Program lets you get the exact bench you need in 5 days or less. • All Pro-Line workbenches deliver quality, functionality and unmatched ergonomic design.

www.industrialworkbenches.com

1proline.com (800) 739-9067

SUPPLY CHAIN SCAN

Navigating change By Emily Atkins | PHOTOS BY ROGER YIP

he Supply Chain Management Association’s Ontario region held its annual conference October 22 and 23 in Mississauga. Attended by 441 members of the association and others, the event offered about 20 presentations, running the gamut from supply chain strategy to green procurement. Looking at supply chains from a high level, Steven Melnyk, professor of operations and supply chain management at Michigan State University’s Eli Broad Graduate School of Management presented on “Bridging the Gap between the Tactical and Strategic Supply Chains”.

Steven Melnyck

Melnyck’s thesis is that an innovative business model is the most effective way to improve shareholder value. To get that, a company needs to know its key customer, have a value proposition that differentiates it from the competition, and have the capabilities in place to create value. He pointed out that the way businesses compete has evolved over the past couple decades. In the 1990s it was simply company versus company. Around 2000 there was a shift to supply chain versus supply chain, and now it’s business models going head to head, with Walmart versus Amazon as a prime example. To manage the new world, he says that new supply chain leadership is required from managers who first must make supply chain visible and comprehensible to senior management. They also need to be able to focus on competencies and capabilities to be more integrative and strategic. 6

SCMAO annual conference finds the hot issues

Information sharing really does work

On a more practical level, Michael Haughton, professor of operations and deci- Michael Haughton sion sciences and the CN Rail fellow in supply chain management at the Laurier University Lazaridis School of Business and Economics, shared the results of his study on the benefits that shippers and carriers receive from sharing demand information. The research was motivated by the problem of empty miles travelled by transport trucks. According to the American Trucking Association (ATA), up to 17 percent of large carriers’ mileage and up to 22 percent of that for small carriers is run without a load. Haughton cited research showing empty truck movements cost nearly US$265 billion in the US. There are a lot of factors that result in a positioning run for a truck, and many of them are not controllable. For example, geographic cargo imbalance, hours of service rules and cross-border concerns are primarily out of the traffic manager’s purview. Other factors, such as fleet size, length of haul, intermodal connections, number of stops and time available to wait for back haul loads are more under a manager’s influence. The areas that the manager can truly control are transportation management practices, sharing of information among supply chain managers, and the use of technology. Using a mathematical model, Haughton and his team determined how having earlier knowledge of a pending load provided by the shipper would help the carrier to make more efficient use of the equipment available. Using various scenarios, they modeled 240 experiments. They discovered that by increasing the window of time the carrier knows about a load from 24 to 48 hours yields an average profit improvement of 22 percent. The best results were found when there was a large service region to be covered and for long, loaded trips. For the shipper, increasing notice from one to two days allows the carrier or 3PL to lower rates by an average four to five percent, and improve customer service by providing an eight percent increase in the likelihood of their shipments being hauled by a preferred carrier. Strategic change

Three senior supply chain execs took the stage for a panel discussion about navigating change at the strategic level, along with moderator Pat Cain, vicepresident of business development with the Titanium Group. First to the podium was Robert Wiebe, senior vice-president of supply chain MM&D | November/December 2015

SSI SCHAEFER is a complete, data driven solutions provider. We offer: Consulting & Data Analysis In-house Manufacturing Most Extensive Range of Intralogistic Product Solutions Full Warehouse Management Software Suite Implementation & After Sales Support Give us a call. We will take care of the rest.

Schaefer Systems International, /WG. 8 .7 4.2 2 | www.ssi-schaefer.FD

SUPPLY CHAIN SCAN

with the Loblaw group. Loblaw is now Canada’s largest retailer (measured by number of transactions) and comprises six businesses, 435 locations and will be in 23 countries by 2018. More than 17 million Canadian visit one of their stores every week. All this is supported by one supply chain network, that was, a few years ago, famous for its deficiencies. But that’s all changed now, Wiebe said, citing the smooth addition of the recently acquired Shoppers Drug Mart distribution network to the supply chain. There were significant differences to be reconciled. For example, the size and volume of Shoppers stores meant they required unit picks, while the grocery stores were predominantly case picks or larger. As well, Shoppers stores don’t typically have loading docks or storage areas, and would receive maybe two or three deliveries a week of two or three pallets each time. A grocery store, by contrast, receives eight to ten 53-foot trailer-loads every day. Wiebe said the seamless integration was a testament to the leadership at Shoppers. “We haven’t lost one person in the supply chain team at Shoppers Drug Mart since the acquisition (other than through

Mike Owens

Robert Wiebe

Douglas Harrison

low-level attrition),” he said. It’s critical, he noted, in a transition, to do what you said you would, or people will stop trusting you. Versacold CEO Douglas Harrison followed Wiebe, noting that Loblaw is a client of his company. Versacold operates 31 temperature-controlled facilities, has 40 percent of the Canadian market and employs 2,500. He was brought aboard to help the company transform in order to stay ahead of customer consolidation, globalization and the demand for more services, capabilities and improvement. The company launched a complete review of best practices, markets and metrics from other industries hoping to “steal best practices shamelessly”, not from competitors, but globally. They sought feedback from customers, staff

We make a big deal over the tiniest items.

Old Dominion’s focus on premium service means every item arrives with one of the lowest claims ratios and one of the best on-time records in the industry.

Old Dominion Freight Line, the Old Dominion logo, OD Household Services and Helping The World Keep Promises are service marks or registered service marks of Old Dominion Freight Line, Inc. All other trademarks and service marks identiﬁed herein are the intellectual property of their respective owners. © 2015 Old Dominion Freight Line, Inc., Thomasville, N.C. All rights reserved.

SUPPLY CHAIN SCAN

and other stakeholders. The transformation project was launched from a ‘burning platform” in order to gain commitment from staff, and those who were not aboard were “dealt with”, Harrison said. So far, the company has launched a greenfield business unit, brought in a new technology platform and has experienced positive adoption of a new culture. Concrete achievements include a 98.4 percent customer retention rate, a 48 percent reduction in lost time injuries, a 17 percent reduction in turnover, a 600 percent increase in hits on the company career page, and being on track for 15 percent growth in revenue. Mike Owens retired from Nestle earlier this year, leaving his position as vice-president of physical logistics. In his presentation Owens continued with the theme of the burning platform, saying that major transformation can only be event-driven. Once that platform is identified, it’s time to create a vision that all levels within the organization can understand and buy into. Communicating the vision and progress towards it are crucial he said, as is using the naysaysers to help polish the communications to address their concerns. He also reiterated that you cannot assume senior management understands supply chain. Always be prepared to explain it. Ensuring you have the right team who are all firmly aboard is key. Don’t allow those who are undermining the project to hang around, and do give the

OD Domestic offers:

key people the power to make their own decisions. Just because they may not do it your way does not mean it’s the wrong way. Owens had some practical advice for the supply chain manager: get your professional designation, learn several disciplines and work in them throughout your career, network, and adopt a LEAN approach to business.

• More than 220 service centers nationwide • Competitive transit times and pricing • Proactive shipping solutions

For more information, visit odﬂ.com or call 1-800-235-5569.

DONE DEALS SendOutCards has selected the Snapfulfil SaaS warehouse management system to optimize its fulfillment operation. With over 100 million cards and three million gifts sent worldwide, SendOutCards is the largest first-class mailing company in the US. Amway, one of the world’s largest direct selling businesses, will be using Amber Road’s Supply Chain Visibility tool to increase visibility into its air and ocean shipments and improve its supply chain data reliability.

SUPPLY CHAIN SCAN

Everything you wanted to know about logistics Canada Logistics Conference 2015 informs and entertains in Niagara Falls

rom October 25 to 27, 340 logistics professionals from across Canada gathered in Niagara Falls and online—through live webcasts of the sessions—to take part in the Canada Logistics Conference 2015, CITT’s annual learning and thought leadership event. Participants were treated to many excellent supply chain sessions, including a Canadian regulatory primer, packaging optimization, the St Lawrence Seaway, the PanAm Games, supply chain maturity, sustainability, and an economic outlook. The regulatory landscape

The regulatory primer was presented by David Bradley, president and CEO of the Canadian Trucking Alliance, and Ian MacKay, a transportation lawyer. MacKay kicked off the talk by outlining the many jurisdictions and regulatory standards importers must deal with just to bring items into Canada from China. In the example he cited there would be eight countries or states/provinces, each with different laws, multiple parties would be handling the shipment and there would be likely four modes of transportation involved as well. All this adds up to a massive amount of risk and a huge burden of responsibility for the shipper, he said. Failure to comply with rules and regula- Ian MacKay tions can result in losses, penalties and in the worst case, criminal charges. He cited the example of the tragic Lac Megantic, Quebec derailment and fire. “Everybody got sued,” he said, from the people who extracted the oil, to those who loaded it and transported it. And it was unexpected for most of them. He urged the audience to ensure their company has the right level of insurance and protection against such liability. 10

MacKay also noted changes to air cargo security rules coming next October. Shippers will be able to register as known consignors and provide their own security screening. This will be advantageous for those who can adopt and maintain the complex chain of custody record keeping procedures that will be required. It is, however, a very complex process, and it requires ensuring everyone in the chain is compliant. Transport Canada will be allowing both the old and new processes to continue, so it will be interesting to see who adopts the new program, Mackay said. Game changers

In his part of the talk, David Bradley spoke about three areas that are potential game changers for the transportation industry. These are: hours of service regulations, environmental concerns and the truck driver shortage. He explained the introduction of electronic logbooks, and how it’s been an uphill battle to get them universally mandated. The US has introduced the mandate so that by late 2017 or early 2018 Canadian truckers going into the US will have to be equipped. David Bradley Here at home, the federal government committed to going forward with the program, and Bradley expressed hope that the new government would continue with the plan. But, he said, the provinces also need to get on board so that those who seek to get around the regulations will have nowhere to hide. At present, about half the trucks on Canadian highways have data loggers, and there has been no reduction in productivity. Productivity losses are only seen when the carrier’s business model was based on cheating, Bradley said. Going forward, he noted that there will have to be a lot better planning and better cooperation with shippers to ensure that productivity is maintained. On emissions regulations, Bradley is concerned about the possible imposition of US regulations on the Canadian tractor fleet. It cannot be done, he said, because it wouldn’t take into account the efficiency gains already made here. However, he believes that there can be a made-in-Canada rule set that aligns with the US. By 2020 the shortage of truck drivers is expected to reach 33,000 in Canada alone. Wages are stagnant because Canadian carriers have been passing 87 Continues on page 16

MM&D | November/December 2015

Photo: shutter_m – Thinkstock

By Emily Atkins

“There’s always going to be risk. The issue is how to manage it.” People who know Distribution, know BDO.

The Manufacturing and Distribution Practice at BDO The logistics business has never been simple. And with recent emphasis on supply chain sustainability, higher safety standards, and an evolving regulatory climate, it’s getting more complex. BDO’s dedicated professionals provide an exceptional array of partner-led services to help you keep up with key issues and maximize proﬁtability, even in challenging times. Assurance | Accounting | Tax | Advisory www.bdo.ca/manufacturing

Become a CIFFA Associate Member

Plug Into Your Freight Forwarding Customers CIFFA Associate Members: connect with the freight forwarding community sponsor and attend social events

participate in networking events

enjoy cost reduction programs

For more information, contact membership@ciffa.com or visit ciffa.com/membershipbeneďŹ ts

Canadian International Freight Forwarders Association

MM&D | November/December 2015

SUPPLY CHAIN SCAN MOVERS + SHAKERS Train Trailer’s Anthony Nadon has assumed the newly created position of director of sales for Quebec and Atlantic Canada. He has previously held senior sales positions at the Toronto and Calgary locations of Train Trailer. He will report directly to president Rick Kloepfer and will be based out of the Coteau-du-lac, Quebec location. His responsibilities include business development initiatives for all the company’s services for Quebec and Atlantic Canada. Tom Pauls, CCLP recently joined SCL Search Consultants Ltd as managing director. Pauls is a seasoned recruitment consultant with over 13 years of experience in the supply chain and logistics sector. The OTA Education Foundation Board of Directors is pleased to welcome its newest member, Vicki Stafford, vice-president of resource development for the Cavalier Group of Companies. She has also been involved in Trucking HR Canada, and its predecessor, the Canadian Trucking Human Resources Council. She is also on the board of the Truck and Coach Program in the Peel District School Board.

Juliano Matias

Juliano Matias is WAGO’s new national sales manager for Canada. Matias brings a wealth of knowledge, relationships and business development expertise to WAGO’s growing Canadian sales team. During his tenure as national marketing manager for Phoenix Contact, Matias was instrumental in developing regional dealer networks for a range of industrial components and electronics.

Joyce Carter, Halifax International Airport Authority (HIAA) president and CEO, has been elected to the 2015 Airports Council International North America (ACI-NA) World Governing Board as a regional advisor. ACI-NA advocates policies and provides services that strengthen the ability of airports to serve their passengers, customers and communities. As a regional advisor, Carter will represent North American airports on the ACI World Governing Board. Carter joined HIAA in 1999, becoming CFO in 2006, chief strategy officer in 2008, and president and CEO in 2014. She is past chair of the Halifax Gateway Council. She serves as a member of Dalhousie University’s Board of Governors and is chair of the Audit Committee and a member of their Executive Committee. Carter is a board member of the Canadian Airports Council, as well as the Atlantic Canada Airports Association.

Polaris Transportation Group has promoted Jon Saunders from vice-president of finance to a dual role as CEO of Polaris Global Logistics (PGL). He joined Polaris earlier this year following six years in international banking and leverage finance. Saunders has an MBA from the Richard Ivey School of Business. CITT Toronto Area Council elected its new executive council for 2016. Returning for another term on the Council are: Tom Pauls as chair; Denise Ponte as vice-chair; and Michael Upwood as treasurer. New to the TAC Executive Team are: Yannick Holton as events coordinator; and Bill Carter as secretary. Returning in an appointed role are: Duane Chiasson as executive advisor; Michael Zhiltsoff and Katherine Boodhoo as member at large (events); and Grace Di Marca as member at large. Ian Arthur has been appointed Halifax International Airport Authority’s (HIAA) first chief commercial officer, effective November 2, 2015. Arthur will be responsible for overseeing strategies to increase flights, passengers and cargo tonnage at Halifax Stanfield International Airport. Arthur recently worked for Intrawest Resort Holdings as their chief marketing officer. He was also vice-president of marketing for Republic Airway Holdings and Frontier Airlines, where he led its re-branding. Roadrunner Transportation Systems, Inc appointed John Geertsema as General Manager for Canada. He is a seasoned transportation industry professional with almost 40 years of crossborder sales experience in the truckload and less-than-truckload markets. He joins Roadrunner from FedEx Express Canada, where he was most recently managing director of sales. Vincent Canonico, and Peter Reed are new senior partners at KOM International Inc. Canonico has more than 20 years of experience in supply chain, logistics, warehousing and distribution and has worked on logistics mandates in fifteen countries. He developed a network modeling solution geared specifically for retail and wholesale distribution. Reed’s career in logistics, warehousing and distribution spans 38 years of hands-on experience in various roles with Canadian grocery retailer, Sobeys; including over 20 years as vice-president of logistics engineering with responsibility for the development of the company’s logistics network of over 20 distribution centres.

Are you getting your people fix? Don’t miss our online Who’s

on the Move, every Monday at www.mmdonline.com.

www.mmdonline.com | November/December 2015

TO ADVANCE YOUR CAREER, LEARN FROM INDUSTRY EXPERTS. OUR PROGRAMS As the leading association in Ontario for supply chain management professionals, SCMAO offers professional development and education connected to industry. • Taught by supply chain practitioners Our instructors translate real-world experience into meaningful classroom discussion that you can apply at work. • Supply Chain A-Z Whether you’re new to supply chain or managing at the highest levels, SCMAO offers programming to meet your needs. • On-Going Support As a full-service association, SCMAO offers networking opportunities and career building events allowing for maximum career growth.

&HUWLí HG 6XSSO\ &KDLQ 0DQDJHPHQW Professional (CSCMP) Internationally-recognized, the CSCMP designation is the highest level of professional education in supply chain management in Canada. Diploma in Procurement and Supply Chain Management Developed for skilled supply chain professionals at the intermediate level. Supply Management Training Foundational courses and seminars in tactical and operational knowledge. Professional Development Seminars Keeping you informed of emerging trends and supply chain practices. Corporate On-Site Training Customized and cost-effective training delivered conveniently in your own facility.

ALIGN YOURSELF WITH SUCCESS  LEARN WITH SCMAO For more information on our programs SOHDVH FRQWDFW WKH 6&0$2 RIí FH DW education@scmao.ca or Christopher Lau at 416-977-7566 (ext 2145). SCMAO is the Ontario Institute of the Supply Chain Management Association.

SUPPLY CHAIN SCAN

Toyota at 25 TIEM celebrates a quarter century of making forktrucks in North America Story and photos by Emily Atkins

t was a proud day at the 25th anniversary celebrations of Toyota Industrial Equipment Manufacturing, Inc (TIEM) as the company celebrated a quarter century of building forktrucks in the United States. Operations at the plant in Columbus, Indiana were shut down for the afternoon and staff given half a day off so the 1,500 assembly line staff could gather with senior executives and dignitaries to recognize the achievement. In 1990, TIEM became the first Toyota lift truck manufacturing plant outside of Japan. Since the first one rolled off the line more than 20 years ago, TIEM associates have built more than 500,000 fork trucks, and Toyota has steadily penetrated the US market to achieve and maintain the rank of the number one lift truck brand since 2002. Now most Toyota lift trucks sold in North America are produced at TIEM. The facility has the capability to manufacture a wide range of industrial equipment used in a variety of indoor and outdoor environments including: three-wheel and four-wheel electric lift

trucks, internal combustion cushion tire and pneumatic tire lift trucks, diesel tow tractors and DC/AC inverter assemblies for the Toyota Tacoma. “Toyota’s 25th anniversary manufacturing forklifts in the US couldn’t have happened without our suppliers, customers, dealers and all of the Toyota associates who have helped along the way,” said Brett Wood, president and CEO of Toyota Material Handling North America. “We are proud to call Columbus, Indiana, the home of Toyota Forklifts.” The event highlighted the company’s investment in the community, with multi-million dollar plans to expand the TIEM campus. Toyota recently announced a new $16 million dollar expansion and building renovation. The 50,600-square-foot addition will increase the total facility to 1.1 million square feet of manufacturing and support space. The new building and renovation will provide room to support staff development, new manufacturing technology development, and new product development, along with the company’s Vision 2020 strategic initiatives. The expansion includes a two-story office building, a new cafeteria, a new storm shelter and locker room and expansion space for Toyota’s on-site medical centre for associates and their families. The new building will also serve as headquarters for Toyota Material Handling North America, the North American division of Toyota Material Handling Group. At the event Toyota also announced its partnership with the Columbus Express Soccer Club to sponsor a new local indoor soccer facility that will be named the Toyota Industrial Equipment Soccer Pavilion. p16

1. Brett Wood, president & CEO of Toyota Material

Handling North America (TMHNA), welcomed guests to the anniversary party. 2 . The history of Toyota’s manufacturing operations is illustrated in the HQ building. 3. The first forklift built at the plant sits proudly in the lobby. 4. To commemorate the event, the 500,000th fork lift to roll off the assembly line was specially decorated and on display at the anniversary celebration.

www.mmdonline.com | November/December 2015

SUPPLY CHAIN SCAN

Toyota at 25, continued

Journalists who attended the event were given a tour of the plant before it shut down for the day, witnessing the Toyota Production Method in action on three assembly lines. It’s highly choreographed complexity; forktrucks come off the line with astonishing speed. One line produces a truck in under 25 minutes, and 140 are produced in a shift. Different models are interspersed in the line to maintain a smooth flow, with easier

builds arriving at workers’ stations between the more complex ones. Toyota also took the opportunity to show off some of the seven new models it’s introduced over the past 18 months. These include an AC stand-up rider, three-wheel electric forklift, walkie pallet jacks and two walkie stackers, a new reach truck, an 80-volt electric forklift and a high-capacity IC forklift. According to Cesar Jimenez, director of product planning, technical services and warranty for Toyota Material Handling, USA, Inc (TMHU), 65 percent of trucks sold in the past year have been electric. There’s been a “dramatic shift in the past year” towards AC trucks, he said.

Everything you wanted to know about logistics, continued

percent of efficiency gains along to customers in the form of lower rates. There’s a “demographic tsunami” happening as the average age for drivers is 46, and only 8.8 percent are under the age of 30. The pool of drivers is ageing faster than other sectors. Bradley said the problem is the tough lifestyle, lack of recognition of driver as a skilled trade and lack of respect from shippers, who often don’t do enough to make the drivers’ job more efficient. He called for mandatory entry-level training for truck drivers so that it can be considered a skilled trade. “We have to take on the features of other trades, which includes mandatory entry level training,” he said. Boxing clever

Jack Ampuja of Supply Chain Optimizers presented the case for packaging optimization. Especially now, with dimensional charges being levied for package deliveries, there’s a massive opportunity for savings to be realized through the proper selection of shipping cartons. By no longer shipping air in oversized boxes, companies can save on freight and packaging costs. While the larger, sophisticated shippers such as Walmart can – or even must – invest in automated systems that will select the right-sized carton for outgoing orders, there are ways for smaller players to also optimize their packaging without incurring significant costs. Ampuja offered the following tips: • Downsize packages that have excessive space between the package and product. • Ensure employees are trained on “right-size” box selection. • Packaging vendors can supply boxes that have multiple score lines to facilitate downsizing. • Use durable polybags for light-weight soft goods. 16

• Do not over-fill boxes; bulges can increase dimensional charges. • Check void space in each package in multi-piece orders. • Consolidating orders into fewer packages may improve density and dimensional weight of each package. State of freight

In his presentation on the economic outlook, David Newman, head of research with the Murray Wealth Group, told attendees that although China is slowing, “the US has been a relative area of strength, which should buffer Canada [its largest trading partner] to a degree.” Canada is on a see-saw between global commodity markets, which are slow thanks to China, and US consumer demand, which is growing. The weak Canadian dollar also boosts our exports. Newman said global growth should accelerate again to about 3.5 percent in 2016. For specific modes, Newman said rail is recovering, although demand remains sluggish. Truckload demand is declining, but new regulatory measures are likely to put the brakes on capacity with a resulting increase in rates. Nonetheless, Newman said “truckload has fared relatively better than LTL, although the peak season was softer than expected. While TL somewhat balanced, with recent weakness, LTL has been soft for most of 2015. Yields appear to be hanging in, despite soft volume metrics.” The St Lawrence

From Duluth, Minnesota on Lake Superior to the Atlantic Ocean, the St Lawrence Seaway covers a distance of 2,038 nautical miles (3,700 kilometres) and takes a ship 8.5 days to traverse. Vince D’Amico, manager of market development for the St Lawrence Seaway Management Corporation (SLSMC) gave the assembled crowd an overview of the waterway and its capabilities. About 40 million tonnes of domestic cargo is shipped through the seaway every year, and 10 million tonnes of international cargo travels through. The seaway brings in $35 billion in revenue. D’Amico pointed out that the seaway is the target of US$2.9 billion in infrastructure improvements in Canada and the US, and he described the SLSMC’s marketing initiatives to attract more business. Since 2008 the Corporation has reduced tolls by 20 percent for new business, offered a 10 percent volume incentive for existing cargo customers and an additional 20 percent incentive for new services using the seaway. MM&D | November/December 2015

Bolted Selective Rack Push Back Rack

Double Deep Rack Pallet Flow Rack

Carton Flow No-Bolt Shelving

Cantilever Rack

Mezzanines

Wide Span Shelving

Drive-In Rack

Storage & Material Handling Solutions Calgary 403.720.6900

Dartmouth 902.468.2127

Edmonton 780.413.9910

Moncton 506.854.7835

Montreal 514.461.2287

Oakville 905.337.5710

Ottawa 613.592.6625

Toronto 647.427.8281

Vancouver 604.957.1634

Vaughan 905.660.8031

Story and photos by Emily Atkins

solving THE PALLETIZING PUZZLE LCBO’s patent-pending mixed-case palletizer wins on many levels

eep in the fast-beating heart of the Liquor Control Board of Ontario’s (LCBO) main DC in Whitby, Ontario, a unique Canadian innovation works tirelessly, improving productivity in outbound order processing. The technology is a mixed-case palletizing system that was developed in-house by the LCBO. It’s so good that it’s been recognized with three awards—the 2014 LCBO President’s Award for Innovation in Logistics, the 2015 Retail Council of Canada Excellence Award, and the 2015 CSCMP Supply Chain Innovation Award. The LCBO has also applied for patents for the technology. The palletizer is the brainchild of Bruce Pizzolato, LCBO’s logistics director at the Durham (Whitby) and Thunder Bay retail service centres. “As our business grows, the challenge is getting product palletized and out the door,” Pizzolato says. “I had a dream one night, came to work in the morning and told the team.” His dream was to create an algorithm that would allow automatic palletization of outbound store orders comprising many different case sizes, including wine, beer and spirits. The 500,000-square-foot Whitby DC handles approximately 53 million cases a year, serving more than 500 stores. Every day 200 to 300 orders, averaging 400 to 500 cases each, leave the service centre, and all of them previously headed out the door on manually palletized skids. This is labour-intensive work, requiring 34 people per shift. And, although the LCBO staff are skilled and experienced, this part of the operation was costly thanks to on-the-job musculoskeletal injuries, product breakage, and inefficiencies because hand-built pallet loads are not as dense or stable as they might be, leading to less than optimal cube utilization in outbound truck18

loads. As well, there was no traceability of what was on each pallet, so when an order arrived at a store with a missing case, there was no way to track it. “The end of the line is the only area that wasn’t automated,” says George Soleas, LCBO’s executive vicepresident. “Breakage was atrocious, and it is back-breaking work.” End-of-the line automation

Pizzolato’s dream was to automate the end of the line palletization process, using equipment that was available in the marketplace to solve these inefficiencies. Automatic palletization is nothing new. But automatic palletization of mixed cases posed a new challenge. LCBO store orders are typically made up of 30 or more distinct case sizes. The trick was to develop a system that would allow an off-the-shelf palletizing machine to build a stable, compact load without human intervention. A detailed analysis of the database of 8,000 products revealed that about half the cases were clustered in common heights. For example, 22 to 30 cm and 30 to 35 cm were the most frequently seen. They also found that when several cases from the same product were picked for a single store order, they typically arrived at the store order lane close together. Together, these details told the team that it would be possible to build a stable layer with minimal height variation—which was key to the overall pallet stability. They decided they could allow a five-centimetre height variation in each layer without compromising stability. After extensive research, looking at equipment on the market and sifting through academic papers, Pizzolato and his team started work on software development. They needed an algorithm that would allow cases to be automatically placed in a pattern to create stable pallet layers.

LCBO’s

Durham DC by the numbers • The biggest LCBO DC has been operating since 1984. • 500,000 sqf • 100 inbound TEUs/day • 95-120 truckloads outbound/day • 297 staff (147 FT in DC and 79 seasonal/ casual) • 53 million cases throughout/year • 500 LCBO stores served • 55% of LCBO volumne

MM&D | November/December 2015

Using 3D visualization software to build a virtual pallet, they integrated a “physics engine” to allow for the effects of gravity and friction on the cases as the tiers were built. They then developed simulation software that automatically generated thousands of pallets using an algorithm and historical order data. The algorithm is understandably complex, but in simple terms it has three steps. It creates theoretical tier patterns based on the case sizes presented to it; it adjusts the pattern so it can be created on a standard pallet loader; and, it evaluates the pattern for stability. To do this it groups cases by size and calculates all the possible rectangular sub-patterns. It then fits the sub-patterns into five blocks that will fit on a pallet’s footprint. The process is repeated for the next tier, ensuring that the block sizes vary. With a possible 200,000 sub-patterns for each tier, there could be several million tier-pattern combinations for each pallet. The software also had to be able to work with a standard pallet loader. The machinery is not able to build theoretical patterns and is limited by the preset stops that align the cases before they are shunted onto the pallet. The algorithm was thus set up to emulate the palletizer’s mechanical row transfer, justification and squeezing operations to ensure www.mmdonline.com | November/December 2015

continued tier quality. The tiers are analyzed on many metrics. including case surface area, volume, height variation, overlap, outside boundary, maximum size of current tier and maximum size of the upper tier. Patterns that don’t meet minimum values in each area are rejected. For example, the minimum case overlap has to be 66 percent. It took plenty of tweaking and almost two years of development time, but when they were ready to build a sample pallet using the new algorithm and the existing palletizer, they were delighted. The real pallet looked just like the 3D simulation. “As convinced as I was, I had had a few doubts,” Pizzolato said. “But it worked flawlessly.” The next step was to get LBCO board approval to build the prototype. According to Soleas, the successful simulation convinced them to approve the budget and allow the project to proceed to prototyping. Along the way the LCBO team worked with vendors Millar Systems Integration for the software development, Norpak for the hardware design and development, and Columbia Machine Inc for the palletizer. “We had a sustainable collaboration with the vendors,” Soleas says. “They came in on weekends to do the work” because the warehouse could not be shut down for the implementation.

Left: Bruce Pizzolato points out the automatically generated tag that shows what’s on each pallet. Above: The palletizer is fed by two feeder lines for peak efficiency. A pallet worth of product is staged on one, while the other supplies the palletizer. A hinged conveyor alternates the feed between the upper and lower lines.

Benefits

The prototype was so successful that it was eventually cut over to production, and the team then turned to developing additional lanes. They quickly realized that throughput could be optimized with the addition of a second feeder line for each palletizing machine, with a hinged conveyor alternating between the two (upper and lower) lines. Now the DC has 15 order lanes running, with eight Columbia palletizing machines. The last palletizer entered operation in September 2015. The palletizing boogie

Top: Cases that have been measured sit in the staging bays on either side of the conveyor. Once all 40 bays are full the algorithm models a layer and sends the cases to the palletizer in the correct sequence to build it. Above: Bruce Pizzolato and George Soleas are justifiably proud of the tight and tidy pallets behind them.

Up on the mezzanine built for the automation operation it’s a non-stop palletizing boogie. The software and hardware work seamlessly, piecing together one pallet puzzle after another. Cases arrive constantly and in random order at the store order lanes from the picking area adjacent to the DC’s 100-ft high ASRS dense storage. As they are conveyed to the palletizing area each one runs under an off-the-shelf SICK dimensioner which records the case’s size. After being measured, the cases are pushed to the side in one of 40 staging bays. (Originally there were 50 being used, but it actually offered no speed advantage, as the algorithm had so many more permutations to consider with the extra 10 cases.) Once the bays are full the software starts thinking. As it comes up with a viable layer based on the cases at hand, the cases that will comprise it are pushed back into the feeder line in groups of four or five and roll down to the end of the line. When they get there they are staged and shoved onto the pallet, forming the first block of a layer. Then next set follows closely behind, and then another until the layer is complete. A strap is then affixed around the layer and heat sealed, holding the cases snug. The pallet then drops down so the first layer is even with the inbound conveyor and the next tier is built the same way. When the final layer is reached, at a maximum height of 67 inches, it is strapped and the pallet is shunted down onto the outbound staging area ready for loading onto a truck, complete with a packing list of every case it carries.

The automated palletizers have brought many benefits to the Durham DC. Throughput on the manual palletizing line was 250 cases per person per hour. The automated system can do 1,200, but the team is happy with 1,000. Labour costs at the Durham DC have been reduced by $1.9 million a year. By reducing the number of personnel performing back-breaking manual palletization tasks, lost-time injuries and insurance premiums are also minimized. Product breakage was reduced by 22 percent with the first five lanes, and it is expected that breakage will drop by 60 percent with the full eight lanes operating. The cost of breakage was previously $600,000 a year, so this will translate into a savings of $360,000. Truck cube utilization has improved, and the truck drivers even report feeling that their loads are more stable with the automatically built pallets. At the receiving end, LCBO store staff are also happy. The new pallets are now held together with a single plastic strap around each layer. Manually built pallets are shrink wrapped, creating a large waste issue as well as sometimes offering surprises by coming apart when the shrink wrapping is removed. The more stable pallets are easier to unload, and because every case is accounted for, shortages are eliminated. The team has estimated ROI at two to two-and-a-half years. Inspiration and innovation

The LCBO is applying for patents and looking for ways to market the process. And this unique system was conceived and created entirely in-house, without any funding for the research, in less than five years, overcoming a few obstacles along the way. “This kind of R&D would normally get government funding,” says Gerrard Harrington, the DC’s acting director, “but because the LCBO is a government agency, we couldn’t.” The in-house project team was also “off-the-charts small” at six people, Harrington said. “I couldn’t be more proud of the team I had working on this,” Pizzolato says. “This is a team I’ve always believed in.” And although there were ups and down and “some pretty sad pallets” came out of the machines at first, he adds, the team “was fully engaged.” “It was almost infectious,” Pizzolato recalls. “The enthusiasm grew every time we turned the page.” “This was developed from scratch; it’s never been done anywhere else,” he said. But “if you believe you can do what you say you can, you’re that much closer to success.” MM&D

MM&D | November/December 2015

[ E-Commerce Made Easy ]

SPEEDY ACCURATE COST EFFECTIVE PACKAGES TO YOUR CUSTOMER

D E M AT I C . C O M

Are you

ready

for the

big

NEXT Check out the trends that might affect your supply chain operations

thing? By Luigi Benetton

ew phenomena in Canadian history affected business like the 1970’s victory of the Parti Quebecois and the legislation that government enacted. The timing was good for John Boyd Jr’s father, who founded site selection consultancy The Boyd Company, Inc, in 1975. “Some of our first projects were related to Bill 101,” says Boyd, now the Princeton, New Jersey company’s principal, referring to companies leaving Quebec for friendlier locales. Recent political developments don’t seem likely to create the same upheaval, but a discernible leftward shift has set some business pundits aflutter. While political upheavals have been hogging 2015 headlines, other, equally important macroeconomic factors seem set to affect supply chains. Here’s an overview of developments that may bring changes in the next year. Technology

Andrew Zatlin’s experience tells him that, on net, new technology creates jobs. The founder of San Mateo, California-based Southbay Research, recalls an experience at the port of Oakland where containers carrying RFID tags put an end to workers walking from box to box with clipboards. “There might be job loss on one hand,” admits Zatlin, “but there’s job creation at the internal distribution side.” Game-changing technologies seem set to drive business evolution in 2016 too. 22

Uber trucking

Instead of ordering a cab, many people use Uber on their phones to call a ride. Soon, supply chain workers might use Uber-like systems to move goods at lower cost and greater efficiency. Traditionally, shippers and their customers plan shipment dates well in advance, an arrangement as flexible as waiting for a bus, even if the parties themselves arrange the time when the truck pulls up. Meanwhile, said truck racks up empty miles before and after the trip. Now, several US-based startups are bringing the Uber concept to the supply chain. Customers can enter just-in-time requests for transportation and the system checks carrier schedules to find room on a truck whose schedule and route match the shipper’s needs. If such arrangements pan out, customers can move goods when they want, possibly at prices below current market rates. (Caveat: expect carriers to charge what the market will bear. Real-life Uber experiences suggest Uber-trucking apps would automatically raise rates when and where demand rises.) Carriers would find “drive-by” business they wouldn’t otherwise get. Other motorists might experience less road congestion. Improving the driver’s job

Proponents of modern automatic transmission-equipped trucks claim they reduce driver fatigue and make drivers more productive. MM&D | November/December 2015

Other advances will further these aims even more. Several years ago, I experienced smoothly flowing traffic on Highway 404, just north of Toronto, with hands off the wheel and feet off the pedals. Adaptive cruise control kept the car a safe distance behind the vehicle ahead. Lane-keeping technology ensured the vehicle stayed in its lane. Volvo is already testing trucks that self-drive on the road in Europe. When this “self-driving” technology spreads, drivers may end their workdays with more gas in the tank, both literally and physiologically making them and their vehicles better able to handle any requests for overtime.

unstoppable trend, like e-commerce.” The effects of a ratified TPP may take a long time to materialize, so business will likely have time to adapt. Zatlin notes that trade liberalization between the US and Mexico has led to greater usage of west-coast Mexican ports, with their lower labour costs, to bring goods from the Orient into North America. “But it took decades to make it happen,” he notes. Boyd figures the Pacific Northwest ought to emerge as a winner in the deal. “Asia has an insatiable appetite for US and Canadian-branded food and beverage products,” he says. Real estate

Robots in the distribution centre

Companies like Kitchener, Ontario-based Clearpath Robotics and Boston, Massachusetts-based Rethink Robotics are marketing autonomous robots that manage low-value materials handling and movement. As the cost of their technology falls, expect interest in their evolving offerings to rise. Drones

Young children play with them. Why shouldn’t adults in the supply chain have some fun too, drop-shipping product more quickly than ever before while they’re at it? Southbay’s Zatlin likes the idea at face value, but he contrasts a van filled with packages versus a drone that does one or two deliveries. “I don’t get it yet,” he admits. “Maybe it’s a purely urban experience.” Boyd is bullish. “I think of drones not in the context of George Orwell’s 1984 but in terms of Steve Jobs’s 1984,” he says.

Photo: Medioimages/Photodisc – Thinkstock

International trade deals

On October 5, 12 Pacific Rim countries reached agreement on the Trans-Pacific Partnership (TPP). Ratification isn’t guaranteed, and strong opposition to the agreement remains. But Mario La Barbera figures it’s just a matter of time. “It’s an opportunity for Canadian manufacturers to go global and get bigger, take advantage of economies of scale,” says the president of Quebec-based logistics firm Pival International. He doesn’t see much difference between the TPP or NAFTA, or the FTA before that. “It’s just the evolution of the liberalization of the economy,” he says. “It’s an www.mmdonline.com | November/December 2015

Logistics and supply chain may be the commercial real estate market’s hottest sector right now. Along with that activity comes greater scrutiny of location choices. Access to labour plays a large role in those choices. Colin Alves, a Toronto-based senior vice-president with Colliers International, often talks to clients about “all the things that come into play when headcount becomes a significant part of the operation” like getting labour to and from their facilities, since they’re seeing more people in these buildings. Boyd recalls how, a decade ago, distribution centres “went to hinterlands, where highway infrastructure was the major criterion. Now they’re close to major population clusters with good rail access and proximity to deep-water ports.”

I think of drones not in the context of George Orwell’s 1984 but in terms of Steve Jobs’s 1984. – JOHN BOYD

Fuel costs

Gas prices will remain low thanks to a worldwide petroleum glut that won’t abate any time soon. Even the once-mighty OPEC doesn’t seem to be able to move the needle. “The US is one of the world’s largest oil producers, and Canada is producing a good share too,” says Andrew Duguay, a Boston-based senior economist at data forecasting firm Prevedére Software. “Economies that were reaping the rewards of $100-a-barrel oil will suffer,” he adds. In the days of $140-a-barrel oil, “we saw a decentralization of distribution centres,” Alves says, to cut fuel costs by shortening delivery routes. He figures decentralization will continue even in an era of low fuel costs, thanks to factors like the imperatives of same-day delivery. 23

Influence of e-commerce

Amazon and other e-commerce giants are reshaping distribution centres and delivery networks. “Heights are now being pushed up to 36, 40 feet in some cases to accommodate multi-level mezzanines,” says Alves. Companies increasingly talk about how quickly they can get product to the customer. “There’s a whole conversation around the final mile,” he says. Updated buildings

We need to be more creative in how we make money. – MARIO LA BARBERA

“The next wave of speculative development we’ll see in large North American industrial markets will feature LEED-certified buildings,” Alves predicts, particularly as the industry recycles antiquated industrial real estate. “The old products are being knocked down, if that makes economic sense, and new buildings are being put into production.” Labour

The market for unskilled labour seems tilted south. Boyd says many businesses look with favour upon right-to-work states, where unions are severely restricted. “We regard (Canada) the way we would a heavily unionized state like Connecticut or Massachusetts,” he says. Unskilled labour is easier to find than skilled workers. Duguay’s data shows that wages for qualified labour are rising faster than wage inflation on a national level in the United States. “When you go to college, (distribution) isn’t one of the ‘hot’ industries to get a three- or four-year degree in,” Duguay notes. Energy prices

“I’ve had many clients investigating opportunities across the border for the considerably lower energy costs,” Alves says. Little wonder: modern distribution centre designs call for greater electricity loads. “If you have a multi-level mezzanine, your lighting requirements increase dramatically,” Alves offers as an example. “You’re probably running some sort of conveyor material handling system that draws power. No longer is it simply charging stations for your forklifts.” Tumbling energy prices, cheap water and great infrastructure in North America lead Zatlin to wonder whether companies will bring manufacturing back home. “Let’s face it: manufacturing in China is a hassle,” he says, noting the inconvenience of working across many time zones, quality control and language barriers. “Reliance on cheap energy is fine in the short term,” 24

he adds. “You live by the sword, you die by the sword.” Zatlin also notes mounting interest in clean energy. “It’s easy to say oil’s cheaper, but that’s sloppy thinking,” he says. “We’ve invested untold amounts of money into infrastructure for the oil industry. If we invested a similar amount into renewables, renewables would be much cheaper.” Predicted legislative changes

The Liberal Party won the 2015 federal election. Earlier this year, Alberta bid farewell to its longtime Tory government and elected the New Democratic Party. In Ontario, Kathleen Wynne’s Liberals won a majority government in 2014. These elections indicate a leftward shift in the political spectrum. Does this mean anti-business concerns are justified? Maybe not. Boyd notes many “lefties” implement measures like infrastructure spending and workforce training. Wynne’s Liberals forged ahead with the sale of a part of Hydro One. Some of the proceeds will fund muchneeded upgrades to the province’s electricity grid. The federal Liberals plan to incur debt now that interest rates remain stuck at historic lows (what better time to borrow?) to build infrastructure that ought to benefit Canadian businesses and citizens alike. “During recessionary periods, countries tend to get more focused. Canada doesn’t need to spend on its military,” Zatlin says. “That’s one way to shift the budget around a little. It could also be part of the zeitgeist of Canada.” La Barbera figures change was necessary sooner or later. He recalls a business event where former Prime Minister Stephen Harper asked him only one question: “Did you make money?” “That summarizes how the Conservatives look at things,” La Barbera says. But he also acknowledges the externalities that aren’t always openly talked about. “We seem to be offside with the rest of the world striving to be more environmentally sensitive,” he says. “We may as well face realities sooner. We need to be more creative in how we make money, but not at the expense of the environment.” La Barbera notes that Canada’s corporate tax rate still compares favourably to that of the United States, while US taxes are also rising. Facts like these should assuage any nervousness in the Canadian supply chain. Boyd notes that Prime Minister Justin Trudeau has drawn comparisons to JFK Jr. “He might leverage his celebrity, his brand to attract industry to Canada.” MM&D MM&D | November/December 2015

rapid ADAPTING TO

change

Canadian execs look at DC trends

e talked to Canadian supply chain execs to see how the rapid evolution of retail distribution will affect operations in the coming year. “As convenience-based shopping experiences evolve, companies need to respond quickly and profitably to find new logistics channels to service this requirement,” says Jason Cunneyworth, vice president and general manager at Direct Distribution Centres in Brampton, Ontario. “You have to maintain service levels while aggressively controlling the cost base to manage profitability, which runs the gamut from implementing technology to leveraging tools and processes like Lean and Six Sigma,” says Warren Sarafinchan, vice-president of sales and supply chain at Sun-Rype Products Ltd in Kelowna, BC. “Firms will approach this differently based on their industry and business model, and whether they’re affected by factors such as commodity inflation or foreign exchange rates.” To accurately, rapidly and cost-effectively deliver on service level commitments, firms are leveraging existing technology and creatively optimizing current operations. At Global Distribution and Warehousing in Mississauga, Ontario, Paul Kurrat, director of operations, notes that modifying applications in their existing WMS for a new client brought previously unexplored capabilities to light. “Sweat your technology just like you would any other asset. You always want to get the most out of the investments you make in both physical and technological assets,” Sarafinchan says. “The business case for the technology has to be rock solid. I never want to be way out in front or behind—I want to know the technology has been rigorously tested in market and that there is a base of people who can implement and understand it well enough to get the most out of it.” Labour “availability is now just as important as cost. If you can’t find the staff you need, then it’s your labour 26

issue that demands a rethink around automation,” says Bernard Betts, vice-president of worldwide operations for Montreal-based electronic components distributor Future Electronics. Fully automated and robotic solutions, a significant investment, are particularly relevant in the face of labour-related cost, availability and regulatory challenges, such as limits on the weights employees can handle/lift daily. In these cases companies may consider ROIs in excess of 10 to 15 years. Other concerns include consolidation of DCs to accommodate network design changes being made to adapt to the growth of e-commerce. “Do the analysis well and you will find the right answer, but build as flexible a network as possible, because you know the world will change, you just can’t know how or when,” says Sarafinchan. As firms zero in on that “last mile”, transportation and timelines are being scrutinized. The cost of getting products to market is one of the biggest variables, but transportation costs are as always volatile, and what works will vary business to business. “We’re filtering the warehousing decisions through the lens of transportation cost and required speed to market; our customers fully embrace the local warehouse service if it delivers financial and service wins,” says Cunneyworth. “Thanks to the data, we are able to take an empirical approach,” he adds. “In the past, decisions were made largely on experience, whereas in today’s world, with the available data, you have increased visibility into the financial impact and can identify the gaps in your supply chain.” Data can also challenge a range of assumptions, notes Ian Mackenzie, a senior logistics executive, formerly with Kit and Ace and Best Buy Canada, who has seen hard numbers confirm that an employee perceived as a “sloth” actually accomplished more than anyone else because he’d created his own unique productivity efficiencies. The availability of “big data” can raise more questions than it answers. Is the data being looked at? Is it understood? Will appropriate action be taken? Will it deliver results? Mackenzie adds, “When we’re talking cloud, sensors and data collection, it’s easy to be so overwhelmed that you don’t do anything.” Sarafinchan points out the need for better tools: “I’ve seen some applications specific to logistics but it’s early days, and we’re all still looking for ways to better leverage reporting and data visualization tools.” “The Internet of Things and the technology that can present the data gives us a whole new playing field, but I’m not sure the industry is fully grasping what a game changer it will be,” says Mackenzie. MM&D MM&D | November/December 2015

Photo: Singkham, Shutterstock

By Kara Kuryllowicz

WHAT IF YOU COULD AVOID COSTLY ________ AND ACCESSORIAL

MAKE ________ MORE YOUR COMPANY NAME

ATTRACTIVE TO CARRIERS?

ACCELERATE YOUR ADVANTAGE

Find out more at accelerateyouradvantage.com 800.323.7587 | solutions@chrobinson.com

A COMPLEX SUPPLY CHAIN European Airbus planes are now made in the USA By Christian Sivière

Above: The first A320 forward fuselage that arrived by vessel from Germany being trucked from the port to the Airbus Mobile facility on Sept 10th, 2015

ircraft manufacturer Airbus inaugurated its first US assembly plant in Mobile, Alabama, on September 14 this year. Located alongside the Mobile airport on a 215,000-square-metre footprint, this brandnew plant is scheduled to deliver its first A320 in the spring of 2016 and reach four A320s monthly by 2018. The European Airbus consortium was born in 1967 during a meeting of ministers from France, Germany and Britain at a time when Boeing dominated the industry. Britain eventually pulled out and Spain became a partner in the project in 1971. Airbus’s first aircraft, the A300 twin-engine short- to medium-range widebody passenger jet, flew its inaugural flight in Toulouse, France on October 28, 1972. By the 1990s, the competition between Airbus and Boeing resulted in a duopoly in the large jet airliner market, as Boeing absorbed its rival, McDonnell Douglas in 1997 and other manufacturers, such as Lockheed Martin, Convair, Fairchild, British Aerospace and Fokker withdrew from this market. Today, although the figures vary as new models come on stream, Airbus and Boeing account for approximately 85 percent of the market, with the smaller Bombardier, Embraer, Tupolev and Comac sharing the balance.

Rolled-out in 1987, the A320 became the best-selling jetliner aircraft family ever. The A320 family is based on a common aircraft type with the same wide cabin cross-section, available in four fuselage lengths: the A320 holding 150 seats; the A321 holding 186; the A319 with 124; and the “baby” of the family, the A318, with 107. This comprehensive range enables Airbus customers to build a fleet with maximum flexibility, operating similar aircraft across the whole range of sectors, switching cross-qualified pilots and crews on short notice according to needs. This reduces maintenance costs as well, a significant benefit for airlines. Having its first production lines split between two countries, France and Germany, with major components originating as well from the UK and Spain, and a worldwide array of suppliers, Airbus had to operate first-class supply chain management from day one. Today, Airbus has its own operations in seven countries and three continents. Major components for the A320 family originate from St-Nazaire, France (forward centre and forward fuselages); Nantes, France (wing box); Saint Eloi, France (engine pylons); Hamburg, Germany (centre fuselage and tailcone); Bremen, Germany (flaps); Stade, Germany (vertical stabilizers); Broughton, UK (wings); and, Getafe, Spain (horizontal stabilizers). MM&D | November/December 2015

It’s s never too late to o lose some e waste. All major sh ship ipp ping com ompa om p ni nies es hav a e be egu gun to basse sh s ippi p ng costs on weight and dimension. n Th hat me hat m an ans th hat emp mpty ty De emand n space costs you more money. With h Packsize® On Dema ery Packaging®, you get a perfectly sized box, for eve p oduct, every time. Dont swing and miss on your pr packaging solution—Get Packsized.

The world’s largest companies are switching to On Demand Packaging®

packsize.com

1. A tail for a jetBlue plane is trucked from the port to the Airbus Mobile facility. 2. An A320 forward fuselage being lifted from a vessel at the port of Mobile. Notice the specially-built cradle on which the fuselage will rest until it is moved to the actual assembly line. These cradles are returned to origin afterwards and are re-used to carry subsequent fuselages. 3. When sections are needed urgently Airbus can fly them to Mobile in a Beluga heavy lift freighter.

Following an international freight forwarding career of over 30 years in Europe and in Canada, Christian Sivière now runs a consultancy, Import Export Logistics Solutions/Solimpex. He lectures at Collège Marie-Victorin in Montréal, for the Canadian International Freight Forwarders Association in Toronto, and for other trade organizations.

Final assembly lines are located in Toulouse, France (A320) and in Hamburg, Germany (A321, A319 and A318). A third assembly line began operations in Tianjin, China in September 2008. The first jetliner completed at the Tianjin facility had its maiden flight in May 2009 and was delivered to Sichuan Airlines the following month. Major components are usually shipped from manufacturing sites to final assembly plants by sea. When time is critical, Airbus can airlift them with its own fleet of purpose-built air freighters called the A300600ST and nicknamed the “Beluga”, because of its resemblance to the white Arctic whale. Airbus currently operates five of these super-sized transporter jets, flying components and parts between the UK, Spain, France, Germany and China. So the inauguration of an Airbus final assembly plant in Alabama in September illustrates their strategy of building additional capacity to reduce lead times, increase flexibility and get closer to market. Alabama was selected thanks to its aerospace expertise, competitive labour force and its world-class port in Mobile, capable of handling aircraft fuselages arriving by vessel from Airbus’s Hamburg site. Having some production costs in US dollars is also

advantageous for Airbus as it provides protection against exchange rate fluctuations, since worldwide aircraft sales are generally labelled in US dollars. Of course, another reason for making this US$600 million investment across the Atlantic is the marketing benefit with US airlines of being a “local” manufacturer. The US market is huge, as several airlines need to renew their aging fleet and the market for single-aisle aircraft of the A320 type is estimated at over 4,700 new planes in the next 20 years. Airbus’s and Boeing’s worldwide market share are very close but Boeing remains the market leader in the US, where Airbus only has about 20 percent share. However, their objective of 50 percent appears reachable as they are currently getting around 40 percent of new US orders. Airbus already has several US airlines as customers, the biggest ones being Delta Airlines and United Airlines and the first A320 scheduled to come out of the Mobile assembly line is destined to jetBlue, with the second going to American Airlines. Boeing has meantime embarked on a similar strategy, as it agreed, during the visit of President Xi Jinping to the US in September, to build a B737 final assembly plant in China. MM&D

MM&D | November/December 2015

MATERIALS HANDLING

Warehouse Automation A Primer – Part 2

I Dave Luton

Dave Luton is a consultant in the Greater Toronto Area. dluton@cogeco.ca. 32

n this column we will look at storage, starting with dynamic storage systems, and outbound processes including order selection. Dynamic storage systems are designed to handle full unit loads. The same basic principal is used in carton flow order selection systems. In general, the storage system is loaded from one side—the charge side—and the product is automatically conveyed to the other side—the discharge side—for offloading. Because the storage system itself conveys the product it achieves high-density storage without aisles. The pickface product access makes for efficient loading and unloading, unlike high-density storage systems where the operator has to maneuver in narrow tunnels. These systems automatically achieve FIFO, but like all high-density storage, are generally restricted to high volume usage with a limited number of SKUs. This is because product cannot be mixed in individual lanes. Carton selection systems have been further automated with pick-to-light systems. The pick-to-light system is a methodology to select orders without pick documents. Orbital shuttle systems achieve many of the same results of dynamic storage systems but use a different methodology to achieve in-lane pallet conveyance. In dynamic storage systems pallets use gravity to automatically index the remaining pallets from the charge side to the discharge side when a pallet is removed. Orbital shuttles are high-density storage systems that consist of specially designed storage channels. Into these an in-channel shuttle vehicle, an orbiter, is used. This is combined with a channel docking station that is placed at the end of the channel by a forktruck as an integrated unit. They use a common discharge and charge aisle. Each channel is equipped with a console that centres the channel docking station. Once placed in the channel, the orbiter conveys a pallet to the end and then returns to the docking station. The forklift operator starts putaway by placing inbound pallets on the docking station/orbiter. The orbiter then operates independently of the forktruck allowing the forktruck operator to do other tasks while the shuttle completes the putaway. Instructions to the shuttle vehicle are given by wireless remote. Order picking works in a similar fashion and the shuttle is directed to select a pallet in storage and bring it to the docking station for pickup by the forktruck operator. Automated storage systems for unit loads also include AS/RS (automated storage and retrieval systems) in which the product is not touched by human hands once

it is placed in a pickup and dispatch area. Stacker cranes convey it to the storage area and select it when needed. Unlike dynamic storage systems or shuttles, these allow for greater product selectivity. They function like traditional warehouse storage systems because of the improved product access. These systems are custom designed, and in their extreme form—rack-supported building—the entire structure is designed around the storage system. The same general principle can be found for smaller volumes stored in trays or totes in a mini-load AS/RS. For case or less-than-full case order selection, many automated systems use a principle of bringing the stock to the picker. For smaller-quantity orders automated alternatives consist of: horizontal carousel, vertical carousel, and VLM (vertical lift module). Horizontal carousels operate on the same basic principle as the automated systems you see in a dry cleaning store. By eliminating aisles they are space efficient, and operating them in banks permits an operator to pick from one while the system is indexing stock for the next pick or putaway. The limitation is vertical cube efficiency because of the height restriction imposed by the pickers’ need to access the stock. For slower moving stock this has been partially resolved using lift tables or multilevel picking stacked carousels. To solve the vertical cube issue and use limited space, vertical carousels rotate in the vertical dimension, not unlike a ferris wheel. Vertical lift modules provide many of the same benefits as vertical carousels: • Improved order selector productivity. The software queues orders, and introduces enhancements like batch picking. Then it does the work of finding, and with the hardware, delivering the product to the order selection pick face. Resulting productivity is several times that of traditional shelf picking. • Improved ergonomics. VLMs and vertical carousels present the product at convenient height with a built-in counter. This eliminates the bending and reaching encountered with traditional shelving or horizontal carousels. • The efficient use of vertical cube saves floor space. Overhead space is often wasted and these systems convert them into usable storage space. • Enhanced dust protection and product security. These systems are enclosed and can be locked up. For valuable items like computer chips this provides both product quality and security benefits. MM&D MM&D | November/December 2015

When it comes to shipping cargo, ship with Canada’s largest. We provide direct air cargo services to over 150 Canadian and international destinations, holding global coverage in more than 450 cities through interline partnerships and a vast trucking network. With specialized shipping solutions, sales representation in over 50 countries and a growing fleet of widebody aircraft, ship with Air Canada Cargo today and experience how we go further. Introducing e-Booking. Get a confirmed booking, estimated price and create an e-AWB in minutes. To find out more, discover the new aircanadacargo.com

LEARNING CURVE

Adapt and survive W Tracy Clayson

Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel. tracy@in-transit.com 34

hen web-based job boards first came on the scene in 1999, those resistant to change—mainly people from the personnel recruitment and classifieds advertising worlds—claimed sites like Monster would be the death of both the recruiter and the print-based classified job posting business. A year later The Toronto Star integrated its classified job listings with the launch of the web-based Workopolis, as two formerly separate worlds began to collide. Clearly, traditional human resources and personnel hiring had to either compete with, or figure out how to thrive alongside, the innovative new players on the digital hiring frontier. During this time, numerous groups were focused on ways to optimize use of this new hiring model. They found that job seekers were more than happy to search, apply and post their resumes online, so any company willing to fork out hefty ad fees to job boards could gain access to those applicants. But a tidal wave of resumes not subject to screening or preliminary assessment of skills, qualifications or job fit presented a new problem: too much traffic and not enough quality control. My firm was actually an early adopter of the web technology behind digital hiring. In March of 1996, with the help of our newly employed HTML programmer, In Transit registered in-transit.com. Within our first year of business, we had one of the first operating websites in the recruiting business. In Transit quickly gained access to web-savvy applicants and other early adopters. When a mapping data supplier approached In Transit in 2000 to recruit drivers to provide mapping across Canada, we were ready. Today, companies use sophisticated methods to hire and recruit on their corporate and recruiting sites. They also partner with many popular job sites, advertising employment opportunities through LinkedIn, Facebook, Indeed, CareerBuilder and others. Now applicants can create a single profile on a site, and then begin the process of posting customized or specific resumes while applying for a variety of positions at a range of companies.

Not all have flourished in this new landscape. The influence of print media’s career classifieds model took an irreversible nosedive. However, web-based job posting has opened up opportunities for employers, applicants and recruiters, and it certainly hasn’t killed the recruiting business. In fact, Statistics Canada reports revenue from employment services increased from approximately $9.3 billion in 2008 to $12.5 billion in 2013, in spite of economic downturn going on at that time. (The employment services industry consists of establishments primarily engaged in permanent placement, executive search, contract staffing, temporary staffing and co-employment staffing services.) What does this say about the offerings of web-based job boards and human resources departments? It says they are not going anywhere, one assumes. But questions remain. What does the future hold for recruiting, job searching, career management and talent acquisition in the supply chain field? Is the same talent moving laterally from company to company throughout the industry, or are there new candidates coming in from other sectors, regions, demographics? What is the level of engagement required to keep talent in the business (and not just in the same company or career track)? How does supply chain compare to other industries when it comes to hiring, response to job fairs, on campus career days, referrals, retention and the promotion of talent? Are there other ways to address the talent shortage? Let me answer this long set of questions with one (hopefully) illustrative answer. At a recent conference one transportation industry analyst made a good point. In reference to the lagging response by Canada’s retailers to customer demands to provide more innovative, customized shipping options, he stated: “you can’t out-Amazon Amazon.” Then he called upon industry leaders to “drive their own innovation,” by continually hiring talent with cutting edge ideas that will boost their corporate brain trust. The last thing you want to hear from me is that for you to survive you must innovate. But customers are constantly demanding more. Shippers and carriers may feel they are trying to put a puzzle together with pieces that don’t always fit. Unfortunately that is the nature of the beast, and it isn’t likely to change anytime soon. MM&D MM&D | November/December 2015

Photo: keport, Thinkstock

Web-based recruitment comes of age

THE ENTIRE SUPPLY CHAIN UNDER ONE ROOF

100+ 3,000 5 50,000+ SPEAKERS ATTENDEES STREAMS SQ. FT. OF EXHIBITS

GLOBAL TRADE

TECHNOLOGY

PRESENTING SPONSOR

DISTRIBUTION LOGISTICS SUMMIT

COMMODITIES & COLD-CHAIN SUMMIT

PORT PRODUCTIVITY SUMMIT

P L AT I N U M S P O N S O R

Use code EB30MMD before Jan. 14 to get discounted price and a chance to win free hotel accommodation

GOLD SPONSORS

VIP LOUNGE SPONSOR

CLC-CAFÉ SPONSOR

PRESENTING MEDIA SPONSORS

MAXIMIZE IT

Kevin Squires

With over 27 years of experience, Kevin has a strong track record of distinguished accomplishments in demanding, customer-focused business environments. Kevin made the move to the manufacturing sector back in 2011 and is currently vice-president, business technology for the Econo-Rack Group of companies (Konstant, Econo-Rack, Technirack). He can be reached at Kevin. Squires@Konstant.com. 36

appy holidays! It is at this time that we look back and reflect on our accomplishments and the lessons we learned as we navigated our businesses through the waters of technology. This year we have seen innovation that has had, or will have, an impact on us. We also examined a few ways we can turn the perception of technology in our business from a “cost” to a “contributor” in an everchanging landscape. In 2015 the commoditization of IT continued unabated (and also continues to pose challenges to those leading IT in corporate Canada), “asa-service” is close to becoming the emerging standard for new organizational applications, the cloud is becoming a household word that is referenced a lot but understood little, and the pervasiveness of the Internet has started to invade the sanctity of our homes in not-so-subtle ways. These are just a few areas that have made significant leaps forward over the last 12 months and have IT leaders diligently trying to help their organizations to keep up, and find some way to turn this technology in their favour and create the ever elusive “sustainable competitive advantage”—the holy grail of technology success for any company. To help IT leaders use and even view technology differently in their organization, this column has been my way of sharing with you the lessons I have learned leading IT in Fortune 500 companies, as well as those learned in some of the smaller organizations I have been a part of (which have been equally as valuable.) A constant theme has been the key paradigm shift that some organizations have still not capitalized on as fully as they could: IT is a revenue generator, a powerful growth mechanism that has the advantage of being able to support existing initiatives and make them better —much better in most cases. I’m trying to help those organizations that still think IT’s contribution is e-mail and computers understand technology can help initiate true business transformation. If you have incorporated some of the topics covered in this column over the last year, you will be well on your way to leading an IT shop that isn’t just a bystander

in the business, but has started to be seen as a contributor. You have also started to prioritize your projects with the business so you are working on the most important things first (and not just the ones with the coolest technology.) And you have looked at your environment with new eyes, as if you just assumed your role, and you have discovered all kinds of low-hanging fruit that you were able to address quickly and usually with considerable impact. We also discussed the various models you could choose when implementing new applications, either on premises or using the cloud and the “as-a-service” offering which is cost-effective and very resourcefriendly but does come with some downsides. Finally, in the latter part of the year we also saw the impact of IoT (the Internet of Things) on our daily personal and work lives and the realization that IoT is not slowing down, but starting to really gain traction as major vendors start to build in conduits that read real-time data and make educated decisions on our behalf. With this new technology, as with any other, comes the most important aspect of what we have spoken about: innovation. To truly break free of the old paradigm and use technology to drive business growth and generate revenue, you need creativity and vision to see what would make a difference and innovate around it. That is the true power of technology in today’s market place, and it’s what will set you apart as an IT leader. As a new year approaches, full of the promise of new technological miracles, we need to be vigilant in looking for ways to adapt to the new technology and trends to help us increase customer loyalty and satisfaction, to market a better product or service in a shorter timeframe, to make our product more efficiently so we can decrease operating costs while increasing revenue. Simple? Well, it can be when technology hits that sweet spot in our organization and it makes you step back and say “Wow!” That true eureka moment where everything seems to click and fall into place and you realize the technology you have just implemented is truly transformational to the business. That is the feeling we crave; that feeling when we know we have made a significant difference. That’s what keeps us going, and why we welcome each new year like a child opening presents on Christmas morning with the excitement of never knowing what is coming next. MM&D MM&D | November/December 2015

Photo: koo_mikko, Thinkstockstock

The year that was... And what will be

MM&D November December 2015