MM&D (Materials Management & Distribution)

May/June 2011 $8.00

DC cost benchmarking study

Publication mail agreement #40070230.

Our experts weigh the results

Plus: The

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Taking Stock

Learning in an ever-changing world

I

t must be something about the air. Spring always seems to present a good time to refresh, take stock and learn a thing or two. There are plenty of opportunities to hone skills and knowledge, and we feature stories about several such events in this issue.

The International Warehouse Logistics Association’s third annual spring conference in April gave members information on WSIB premiums, insurance conventions and risks, warehouse HR applications and several other topics.

We also write about the Supply Chain & Logistics Canada’s (SCL) annual conference in May, which featured sessions on short-sea shipping, warehouse metrics and warehouse security.

Supply chain issues also rank among the topics at the Purchasing Management Association of Canada’s (PMAC) National Conference in June

in Whistler, BC. Attendees can check out sessions focusing on topics such as near shoring, new rules surrounding Incoterms 2010, sustainability and new research on supply savings.

As well, MM&D and sponsoring partner RBC Royal Bank are also in the spirit of learning something new. The results of our DC cost benchmarking study can be found on page 14. The all-Canadian research includes DC manager concerns, cost-cutting, in-house vs third-party and DC budgets.

Plus, our Learning Curves columnist Tracy Clayson focuses on the value of executive education in keeping current on supply chain practices.

The importance of learning and professional development is a constant in an ever-changing world. The Conference Board of Canada expects the country’s GDP to grow two percent this year and 2.7 percent in 2012, mostly in central and Western Canada. This is encouraging. It also highlights the

importance of continuous education and skills upgrades. With more and better opportunities out there, supply chain professionals can only benefit from keeping their skills sharpened and their knowledge updated.

May/June 2011 | Volume 56 | Number 3

Contents Features

Columns

14 MM&D’s DC cost benchmarking study Find out how your facility measures up.

33 Materials Handling Are you ready for an oil price shock?

34 Learning Curve The benefits of executive education.

24 Logistics review Reaction to the Rail Freight Service Review. Controlling transportation costs. Lingering effects from Japan’s earthquake. Plus, are airships poised for a comeback?

29 Voice technology Voice is moving from strictly a picking technology to other uses within DCs.

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Departments 3 4 7 9 10

Taking Stock Supply Chain Scan Movers + Shakers Benchmarks Done Deals

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Supply Chain Scan

Gateway a go

Atlantic Gateway secures funding Page 9

Done deals p.11

Inside | Optimism at IWLA p.6

Don’t be a silent partner Tips to get supply chain a voice at the top

overall service levels.

“We gained a very collaborative relationship with [sales and marketing],” upply chain management has long been viewed said Renzi-Fantin. “Gone are the days when we’re finding out when the as a support function humming along in the orders hit our system that we’re going to be out of inventory.” background; brought in only after the big deciLooking back on the situation, Fiona points to best practices that can be sions around sales, new products and markets applied anywhere. She advised delegates to bring ideas forward, instead of have already been made. waiting for instructions from sales and marketing.

But what if supply chain managers were con“Take initiative in meetings so you’re seen as innovative; not just a supsulted as the business strategy was shaped? The port function,” she said. “But we can’t go into a boardroom with a crazy concept has been tested and proven at General idea. It has to be based on fact…We have to take the first step to show we Mills Canada Corp of Mississauga, a manufacturer understand more than our own [function] and how we interact with other of cereal and related food products. [components] of the business.”

Supply chain has a voice in the C-suite at General Supply chain practitioners must also be ready to show they’ve studied Mills, and the results are impressive—sales are up, the risks and drafted a mitigation plan. A longer-term view is another key, inventory is flat, and service levels continue to she said, emphasizing the importance of seeing beyond the next delivery. improve. What’s the trick? That’s what delegates at “We’re starters and we’re finishers. That’s what we do. We get the job done… the recent Supply Chain & Logistics Canada confer- [but] your supply chain needs to be more than flawless execution…You have to ence came to learn, and they weren’t disappointed. ask yourself how much time are you going to spend on [business] strategy?”

“We’re at a time here where the supply chain voice She advised delegates to shape a three- to five-year plan, involving suchas never been more capable, more credible or more cession planning, mentoring, and trading off talent between supply chain necessary, so it’s really up to us how we’re going to and other functions such as sales, marketing and forecasting. The plan leverage that opportunity,” said Fiona Renzi-Fantin, should also include targets and metrics such as cost savings, inventory and director of logistics and planning with General service levels.

Mills, during a presentation at the conference.

“You can’t start out with a three-year plan and abandon it in two years,” she Her team leveraged the opportunity by coming added. Once the plan is in place, managers should make time to re-visit it, even up with a bold idea. “We said we would not be through the hectic day-to-day, and ensure projects and people are aligned. purchasing any more outside storage. It really That kind of senior-level thinking cultivates a voice at the boardroom made people nervous…were we going to have table, and as General Mills has demonstrated, tangible savings and innova[boxes of] Cheerios on the side of the road?” tions across the organization.

Through diligence and cooperation with forecasting and sales, however, the team managed to More SCL conference coverage on the web: eliminate outside storage as promised, reduce http://www.canadianmanufacturing.com safety stock, while growing sales and improving

By Lisa Wichmann

S

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TIA convention sets attendance record

AUTOMATED

www.mmdonline.com

By Walter Weart TheTransportationIntermediaries Association’s 33rd Annual Convention and Trade Show saw a record number of attendees with nearly 700 members from the US and Canada at the event, held in Orlando, Florida in April.

Attendees chose from 16 educational sessions in four separately themed tracks ranging from business fundamentals to topics dealing with how to expand.

Former professional baseball player Jim Morris, the convention’s keynote speaker, mixed humour with a more serious message about the power of dreams.

His life became the premise for the 2002 film, The Rookie. Also during the event, railway representatives spoke about new intermodal offerings.

The association released its new Carrier Selection Framework, outlining steps in creating a carrier selection process. The document, which was developed in response to the new compliance, safety, accountability (CSA) carrier rating system from the US Department of Transportation, is available to TIA members only.

The TIA also announced enhancements to its Watchdog program, used by members to report carriers or 3PLs that have acted unethically. The TIA also announced Agent Watchdog, which allows members using independent sales agents to tell each other about problems. The convention’s trade show attracted 68 vendors from across North America, who showcased software, services and resources.

TIA will hold its 34th Annual Convention and Trade Show in San Antonio, Texas in March 2012.

Publisher/Editor-in-Chief: Emily Atkins (416) 764-1537 emily.atkins@rci.rogers.com EDITOR: Michael Power (416) 764-1538 michael.power@rci.rogers.com MANAGING EDITOR: Deanna Rosolen (416) 764-1533 deanna.rosolen@rci.rogers.com ART DIRECTOR: Stewart Thomas (416) 764-1547 stewart.thomas@industry.rogers.com SALES MANAGER: Dorothy Jakovina (416) 764-1550 dorothy.jakovina@rci.rogers.com SENIOR ACCOUNT MANAGER: Catherine Martineau (647) 988-5559 catherine.martineau@rci.rogers.com PRODUCTION MANAGER: Karen Richards (416) 764-1688 karen.richards@rci.rogers.com

WAREHOUSE

CIRCULATION MANAGER: Celia Ramnarine (416) 932-5071 rogers@cstonecanada.com Rogers Publishing Limited President and Chief Executive Officer: Brian Segal Rogers Business & Professional Publishing Senior Vice-President: John Milne Vice-President, Financial Publishing, Brand Extensions & Online Services: Paul Williams Director of Audience Development: Keith Fulford (416) 764-3878 keith.fulford@rci.rogers.com Executive Publisher, Industrial Group: Tim Dimopoulos (416) 764-1499 Group Editorial Director: Lisa Wichmann (416) 764-1491 lisa.wichmann@rci.rogers.com Corporate Sales General Manager, Corporate Sales: Sandra Parente, (416) 764-3818 Web General Manager, Online Operations: David Carmichael, (416) 764-3820 research Senior Director, Rogers Connect Market Research: Tricia Benn (416) 764-3856 tricia.benn@rci.rogers.com How to reach us: Materials Management & Distribution, established in 1956, is published 8 times a year by Rogers Media Inc. Rogers Publishing Ltd., One Mount Pleasant Road, Toronto, ON, M4Y 2Y5.

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Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available please contact us at rogers@cstonecanada.com or update your profile at www.rogersb2bmedia.com/mmd MM&D receives unsolicited features and materials (including letters to the editor) from time to time. MM&D, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such submissions in whole or in part in any form or medium whatsoever, without compensation of any sort.

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www.interlakemecalux.com MM&D | May/June 2011

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Supply Chain Scan

Optimism at IWLA spring conference

By Michael Power

A

note of optimism kicked off the Canadian chapter of the International Warehouse Logistics Association’s third annual spring conference in April.

Roughly 70 members attended the one-day event, held in Vaughan, Ontario.

The conference’s theme focused on 3PL growth.

Participants began the day with a survey of Canada’s economic landscape by Paul Ferley, assistant chief economist at the Royal Bank of Canada.

Ferley said North America’s recovery is expected to continue, with the economy experiencing gradual improvements. The Canadian economy was less damaged during the recession than the US, he said.

As well, high commodity prices will benefit provinces such as Saskatchewan and Alberta while Ontario will remain more dependent on a continued US recovery. He also noted growth in emerging economies will mean high oil prices.

Blair Wolk, director of development at Orlando Corporation, provided a developer’s perspective on the industrial market.

The 7.1-percent vacancy rate was somewhat high, he noted. And while there had been a jump in the construction of new distribution centres in 2008, many buildings had remained vacant during the recession.

Although the area will see growth going forward, that growth will remain modest, he said.

Wolk cited several challenges in building new DCs. The cost of building a new facility remained high, with a lengthy approvals process. The best bet for those looking for DC space was an existing building with proper zoning already in place, he said.

Susan Promane, director, supply chain, parts and service at Whirlpool Canada, 6

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Supply Chain Scan outlined that company’s recent experience working with 3PLs. In 2007, Promane said, Whirlpool had several providers and multiple contract structures, none of which was performance-based. “We really had an entitlement culture,” she said. “Because they had been doing business with us for so long we had transferred control of the entire network to our third parties.”

The company changed the structure within a few years, Promane said, going from 14 regional distribution centres to three in Canada—plus one in Seattle servicing BC—operated by two providers [see MM&D’s April 2008 issue for the full story].

Whirlpool also consolidated with one transportation provider.

Whirlpool performed a network study and laid out a supplier strategy, Promane said. The company also set up performance-based contracts with providers.

WAREHOUSE

Movers + Shakers Valerie Beattie has been appointed to the Buffalo and Fort Erie Public Bridge Authority for a three-year term. The Buffalo and Fort Erie Public Bridge Authority has owned and operated the Peace Bridge since 1933.

MANAGEMENT

Mississauga, Ontario-based Ranger Group of Companies has appointed John Hatchette director of operations for North America. His previous position was general manager with a multinational freight forwarder.

The Canadian Airports Council (CAC) has named Daniel-Robert Gooch as president. He will oversee the CAC from its Ottawa office.

Francois Lachaine and Harry Stobbe are new directors of business development with health-care-focused 3PL provider Accuristix. Lachaine will be based in Montreal and Stobbe will be based in Delta, British Columbia. They will lead the company’s sales and partnership efforts in eastern and western Canada, respectively.

CEVA Logistics has appointed Sheila Taylor as chief financial officer of the company’s Americas region, based in Houston, Texas. Taylor was formerly CFO of YRC Worldwide, Inc. In her new position, she will report to Matthew Ryan, CEVA’s president in the Americas.

As CFO of YRCW, Taylor had responsibility for a consolidated organization comprising all strategic and operational finance activities of the publicly held company. Taylor joined YRC Worldwide in 2002 and held positions including vice-president of investor relations and treasury before being named CFO.

SOFTWARE

Phil Gaines takes on the title of senior vice-president and chief financial officer of YRC Inc, the largest operating division of YRC Worldwide. Most recently, Gaines held the position of senior vice president of finance for YRC Worldwide. In his new role, Gaines will report directly to Mike Smid, president of YRC Inc and chief operations officer YRC Worldwide.

Domenic Pilla, president of McKesson Canada, is the new chair of the board of governors of GS1 Canada. He joined McKesson Canada in 2001 as executive vice-president. In that role, he was responsible for all marketplace operations, sales and marketing functions as well as for corporate procurement for Canada.

www.interlakemecalux.com MM&D | May/June 2011

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Supply Chain Scan Heavy Loads Can Now Go Where They’ve Never Been Before!

New Bendi B55AC 5,500 lb. (2,500 kg.) Capacity Stacking Aisle 7’ (2.13M) Lift Heights to 472” (12 M)

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“That was a given—we took back control of the contracts,” she noted. “Even before you’re allowed to bid on anything you have to agree on our contractual terms.”

Whirlpool was able to make the changes on time and on budget in a “fairly seamless” way, Promane said. In three years, the company reduced its supply chain costs by $20 million.

Other sessions of the day included one focused on WSIB premiums. Rob Hindrichs, vice-president and chief actuary at Ontario Workplace Safety and Insurance Board, talked about increases to premiums and whether those premiums will hit a ceiling. Hindrichs discussed the WSIB’s funding review, which is investigating ways to make the WSIB more financially sustainable. A final report released to the WSIB will recommend how the organization can improve funding policies. While the report will affect rates, Hindrichs couldn’t say whether premiums would eventually hit a ceiling.

“Is there a ceiling on these premium rates?” he said. “I’m going to waffle on it, because honestly I don’t know where they’re going to go. I know they’re going to go to $2.40 in 2012 so we’ve got to brace for that a little bit.”

The review will have an impact on several areas, such as how the WSIB sets its rates and how it classifies employers.

Other sessions included a panel of insurance industry experts who discussed risk, while another focused on WSIB injury prevention initiatives and the benefits of belonging to a rate group called the transportation safety group. Another session looked at the latest HR applications for the warehouse industry. Tom Hewitt, president and CEO of Upside Energy Management Inc, gave a presentation on the AircoSaver, an HVAC retrofit designed to reduce compressor energy consumption and demand, emissions and operating expenses.

800-428-5655

www.landoll.com/mhp 8

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MM&D | May/June 2011

5/18/11 4:34:14 PM

Supply Chain Scan

Atlantic Gateway’s strategic approach

WAREHOUSE

By Deanna Rosolen

T

his spring, the federal government announced the Atlantic Gateway and Trade Corridor Strategy—designed to boost Atlantic Canada’s infrastructure

...continued on page 10

Benchmarks Schenker of Canada Limited has been awarded the 2011 Brampton Outstanding Business Achievement Award in the Logistics Category.

Winners were announced this spring in Brampton, Ontario. Mike Gilmartin, national director of Health and Safety for Schenker of Canada, accepted the award on behalf of the company. Schenker of Canada was one of two finalists in the logistics category. The awards recognize local businesses that have demonstrated excellence.

STORAGE

At the International Warehouse Logistics Association’s (IWLA) 120th Annual Convention in March in Florida, the IWLA presented awards honouring members for their leadership and service to the warehouse and logistics industry. The IWLA presented its Distinguished Leadership and Service Award to Eugene Kane (who died in 2010 and was honoured posthumously), chairman of Kane Is Able Inc of Scranton, Pennsylvania; and to Jock Menzies, chairman of the Terminal Corporation of Baltimore.

Cat Lift Trucks has announced the recipients of its 2011 Dealer of the Year Award. The award recognizes dealers based on 2010 sales performance, customer relationships and operational knowledge of Cat lift trucks.

Recipients have exceeded expectations in new machine sales, parts sales and customer satisfaction. Canadian recipients for 2011 include Hewitt Material Handling Inc of Concord, Ontario, and Hewitt Equipment Limited of Pointe Claire, Quebec.

SOLUTIONS

Dave Brooks, president of AA Cargo, has won the 2011 Jim Foster Award for Excellence. The award is given by the Airforwarders Association (AfA) at its annual AirCargo 2011 Conference in San Diego, California. The award is presented each year to a person who has made a significant impact on the cargo industry. Brooks has been head of American Airlines Cargo since 1996.

Ford Motor Company has awarded Penske Logistics with Ford’s Gold World Excellence Award. This is the third World Excellence Award Penske Logistics has earned from Ford and it is the second time the company has earned gold. The Gold Awards are presented to suppliers demonstrating superior quality, delivery and cost performance.

The ScottsMiracle-Gro Company has awarded Penske with its 2010 Outstanding Service Excellence Award. ScottsMiracle-Gro says the award acknowledges Penske’s positive working relationship, its collaboration with ScottsMiracle-Gro on a new transportation management system and its help with expanding ScottsMiracle-Gro’s distribution network. ScottsMiracle-Gro presented the award at its annual logistics conference in Florida.

www.interlakemecalux.com MM&D | May/June 2011

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Supply Chain Scan

“Gateway” continued from page 9 and unlock its potential—along with $2.5 million to market the plan.

To date, over $200 million from the Gateways and Border Crossings Fund is earmarked for the region’s strategic trade-related transportation system.

It all comes as good news, says Jean-Marc Picard, executive director of the Monctonbased Atlantic Provinces Trucking Association. “The Gateway has been in place for a few years and last year there were a lot of uncertainties as to where it was going,” he says. “But when you hear that from the government it’s encouraging. The committees in place and the governments are really the drivers of the Gateway, we’re just users of the infrastructure that’s in place now.”

The strategy is a balance of immediate measures and longer-term directions. The Gateway extends beyond infrastructure to address policies, regulations and operational matters. The federal government says private-sector cooperation has been essential in identifying actions related to policy and regulatory measures, innovation and technology and skills development. It’s also helped define the Gateway’s value.

The federal and provincial governments consulted with the private sector in the Atlantic region, identifying marketing as a high priority.

The Atlantic Gateway is an air, rail,

Done Deals The Pritzker Group, a private investment firm, has acquired PECO Pallet Inc. The acquisition will provide PECO with substantial equity capital to fund its expansion throughout the US, Canada and Mexico. Terms of the deal were not disclosed.

Roche and St Paul, Minnesota-based Merrill Corporation, a provider of outsourced solutions for business communication and information management, have integrated voice-enabling technology from Datria Systems Inc. Roche, a pharmaceutical company, is using the technology in its Indianapolis facility to voice-enable existing handheld devices for container and cart picking for its diabetes care and diagnostic products. Merrill is using it to batch pick fulfillment requests, improve efficiency and increase order fulfillment rates.

Bristol-Myers Squibb, a global biopharmaceutical company, has chosen Exel as its third-party logistics provider to handle US distribution. As part of the contract, Exel has bought the existing Bristol-Myers distribution centres in Mount Vernon, Indiana, and will take over operations in the second quarter of this year.

Mitsubishi Caterpillar Forklift America Inc has become the primary component supplier for Egemin Automation Inc’s Hybrid Automated Guide Vehicle (AGV). Egemin introduced the AGV in 2010, officially launching it at ProMat 2011 in Chicago.

A Fortune 1000 global packaging manufacturer has selected the PackManager solution for its contract-packaging group.

PackManager is from Toronto-based Nulogy Corporation.

The customer’s IT group will be using PackManager’s open Application Programming Interface to push and pull XML to integrate with multiple systems.

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Supply Chain Scan

When it comes to fast assembly and breakdown, YOU’RE A ONE-MAN SHOW.

marine and road transportation network providing a secure transportation network between North American markets and markets around the world. The gateway features: • Ice-free deep-water ports that can accommodate the world’s largest ships; • Airports with air cargo facilities; • I ntermodal transportation facilities; • Secure and efficient border crossings; • Class 1 rail infrastructure extending throughout North America; • 64,000 kilometres of highways; • Three main truck corridors, one linking to key markets in Ontario and Quebec, and two to the northeast US. The government and the private sector have been working together to identify Atlantic Gateway priority areas for action. One of those partners was also the Halifax Port Authority (HPA). The strategy has distinct advantages for the region, says Michele Peveril, the HPA’s senior manager, strategic relations.

“There are a multitude of trade and transportation groups that have provided input as the strategy was assembled, and our region does have a wide variety of these partners that work together,” she says. “A cohesive look at the region and an approach that looks to promote our best aspects is helpful.”

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MM&D | May/June 2011

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11

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Professional Development Directory

1_Accelerate_ad_PB2B:1 11-04-14 12:47 PM Page 1

Accelerate your career Get what you need to succeed, enrol in a Supply Chain Management program.

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Does your pay measure up?

Smart supply chain professionals reply on the PMAC/MM&D/Purchasingb2b annual salary survey to find out!

The annual salary survey questionnaire will be available soon. Don’t miss your chance to participate in Canada’s most comprehensive supply chain salary survey. Your contribution helps us produce the best data for our industry. Results will be published in the October issues of MM&D and Purchasingb2b magazines and will be available online in the last week of October.

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5/5/2011 3:14:58 PM

5/18/11 1:54:01 PM

Professional Development Directory Advertorial

Business Emergencies – Are You Prepared?

Is your business adequately prepared to continue operating during an emergency?

Probably not! Experts agree that most companies are not adequately prepared to continue operating during an emergency.

According to RSM Tenon Group Plc. (2009):

• 90% of firms that lose data from a disaster are forced to close within 2 years.

• 80% of businesses without a Business Continuity Plan are forced to close within 12 months of a fire or flood.

• 43% of businesses experiencing a disaster never recover.

• 50% of companies experiencing a computer outage are forced to shut within 5 years.

Many companies prepare for IT emergencies, but don’t think of other emergencies that could jeopardize their business: • Weather.

• Pandemic.

• Terrorist attacks.

• Supply chain failure.

• Industrial action or sabotage.

• Utility service failure.

Why don’t companies prepare adequately for an emergency?

The short answer is “it won’t happen to me”.

The major areas that need to be addressed in any business emergency planning document are: • Personnel • Physical • IT and Communications • Paper Files

What should companies do and where should they start?

• The direction to start emergency planning must come from the top of the organization.

• Designate an individual(s) to be responsible and accountable to develop an emergency plan. You may need advice from governments or consultants.

• Identify and prioritize your risks: key business processes, equipment, suppliers, customers, partners, employees and anything else that could jeopardize your business if it went missing.

• Develop ways to mitigate or reduce your risks and document those procedures.

• Train your staff on how to deal with emergencies.

• Test your business emergency planning document on a regular basis and adjust as necessary.

Doug Burek, CIFFA Education Director

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CIFFA International Transportation & Trade Program Registration Open Can your logistics staff choose the best routing options, do the necessary calculations and complete the required documentation? Do your employees know how to properly use Incoterms?

Deadline for September courses–August 15th www.ciffa.com, go to ‘Education’, ‘Register Online’ education@ciffa.com; 416-234-5100 (225)

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5/18/11 1:51:53 PM

What does your DC cost?

MM&D’s DC cost benchmarking study

Standing L-R: Duane Chiasson, CITT, Pierrock Consulting; Gord Crowther, President, Spectrum Supply Chain Solutions; Jane Henderson, Vice President York Supply Chain, Royal Bank of Canada Commercial Financial Services; Aaron Lalvani, President, Lalvani Logistics Inc.; Reg Sheen, Vice-President Operations, Logistics Services, UPS Supply Chain Solutions Canada; Seated: Dave Wood, Manager Distribution, Mother Parkers Tea and Coffee.

This study and roundtable were made possible through the sponsorship of RBC Royal Bank. The study and editorial report are editorially independent.

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Are your DC costs on par with those of your peers? MM&D’s DC cost benchmarking study offers a look at what Canadian companies spend and how. With a research survey and roundtable discussion, Emily Atkins helps you find out.

I

f you are like most DC managers, keeping costs under control is one of your primary mandates along with ensuring that you are delivering on your performance targets. But like many DC managers, you may be operating in the dark as to how your costs measure up against other similar DCs. That’s where this study and roundtable results may be able to help. In March this year MM&D, along with our partner, RBC Royal Bank, fielded a questionnaire to Canadian supply chain managers asking them to identify their costs as a proportion of their budgets.

We also asked them a number of other questions, including identifying their biggest challenge, how much third party they use, and what kind of actions they have taken in the last year to cut costs.

Once we had the results in hand, we invited a group of knowledgeable supply chain managers to discuss the salient parts of the results. This article is a synthesis of the quantitative and the qualitative research results.

MM&D | May/June 2011

5/18/11 3:42:19 PM

Figure 1: Space biggest concern by budget and DC size

Up at night?

We asked respondents to let us know what keeps Space Issues them up at night regarding their DC operations.

Timing/Deadlines Space issues was the hands-down winner, with 16 Inventory/Inventory Management percent reporting this as their chief concern. Timing Manpower Issues and deadlines tied for second place with inventory Raising Fuel/Shipping Prices management, at nine percent. Other concerns rankCosts/Cost Control ing fairly high were labour issues and transportation Productivity Issues costs, both with seven percent. Six percent were Labour Management/Costs concerned about costs in general.

When we looked at these results in detail, we Motivating Employees discovered that DC managers’ concerns vary Accuracy Of Charges/Materials Shipped depending on their warehousing budgets, and the Profitability size of their DC. Space issues appear to be a bigger Finding New Customers worry for those with smaller budgets, especially Nothing for those with the smallest third-party budgets.

No Answer The companies with mid-size DCs were marginally more concerned about space than those with 0% the smallest warehouses, at 20 and 18 percent, respectively, but those with the largest spaces under management had by far the least concern in this area.

16% 9% 9% 7% 7% 6% 4% 4% 4% 4% 3% 3% 11% 8% 5

10

15

20

What the panel thought: Both Reg Sheen and Dave Wood were surprised that nine percent of DC managers would say concerns about inventory management were keeping them up at night.

Jane Henderson said her client base definitely reflected the survey data, particularly in the areas of inventory management and space concerns.

“I’ve got a customer who does a lot of consolidation and distribution for a large retailer in Canada and managing those inventory turns and understanding what he can do to make things more efficient is something he’s focusing on all the time,” she said.

Aaron Lalvani pointed out that the concerns about space are very different if you are running Figure 2: Average size of warehouse by sector your own warehouse versus having a 3PL run it.

For a 3PL it’s about client acquisition, while for 145.2 National manufacturers it’s more about controlling sea206.3 Retail sonality and ebbs and flows in demand.

Average DC size = 145,200sqf

200.5

CPG

195.6

3PL/Service Provider

Research Methodology Survey type: Online Respondents: Canadian supply chain professional with knowledge of their DC operations budgets and costs.

Fielded: March 2011 Completed surveys: 200 Margin of error: +/- 5.8% eighteen times out of 20.

165.4

Food

158.4

Health & Pharma 139.0

Automotive Industrial Manufacturing

131.6

Natural Resources

131.1 126.9

Other

121.1

Hi-tech Agriculture

88.9

Financial Services

87.5 0’

50

100

150

200

250

Want to know more? See www.canadianmanufacturing.com/?p=31792 for more, detailed results.

MM&D | May/June 2011

03dc.indd 15

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In-house or outsourced Third-party logistics use across the board is at 19 percent, versus 81 percent for in-house warehousing. The smaller the warehouse budget, the larger the proportion of warehousing done by a third party. For those companies with the smallest budgets—under $250,000—12 percent of their activity was accounted for by a third party. For those with DC budgets in the $250,000 to $999,000 range, the proportion was 21 percent third party to 79 percent in-house, while for the companies with the largest DC budgets—over $1 million—the split was 20 percent third party and 80 percent in-house.

Figure 3: Fully reliant on 3rd party warehousing volume by sector 9%

National Average

18%

Agriculture 14%

Hi-Tech

13%

Automotive

12%

Industrial Manufacturing Food

9%

Retail

9% 9%

CPG 7%

Health & Pharma 4%

Other 0%

5

10

15

20

Figure 4: Type of warehousing by budget 81%

National Total

19% 88%

Less than $250K 79%

$250K to $999K

21%

80%

$1M+ 0%

20

40

60

12%

20%

80

100

In-House 3rd Party

On average, 41% of orders are pallet pick; 27% case pick; 26% item pick and 7% partial case pick.

Certain sectors seem more fully reliant on thirdparty providers. Agriculture was the heaviest user at 18 percent all third party, followed by the high-tech sector at 14 percent and automotive at 13 percent.

The health and pharmaceuticals sector came in at the lowest proportion, with only seven percent using only 3PL handling.

What the panel thought: The panel discussed the reasons a company should consider using a third-party provider.

Gord Crowther said it depends on the size of the company and the complexity of the operation.

“Some people should do their own warehousing, and that’s warehousing with a small ‘w’. I’d encourage them to do it better and employ some technology,” he said. “They can acquire technology that they couldn’t afford 10 years ago.”

Lalvani looked at medium-size enterprises with revenues in the $20- to $35-million range. In the retail sector these companies are being called upon 16

03dc.indd 16

Figure 5: Percent of budget spent on 3PL by size and region 6.7%

National Average

4.2%

1–49

5.7%

50–499

13.6%

500+

3.7%

Up to $10M

6.6%

$11M to $50M

9.8%

$51M+

0.8%

East/Quebec

9.6%

Ontario 3.0%

West 0%

3

6

9

12

15

Number Of Employees Revenue Region

MM&D | May/June 2011

5/18/11 3:42:45 PM

Figure 6: Labour costs by sector 37.2%

National Average

54.4%

Retail 47.2%

Health & Pharma

44.5%

Automotive

41.3%

Food

40.5%

CPG

40.0%

Natural Resources

36.7%

Industrial Manufacturing

36.0%

3PL/Service Provider

33.8%

Agriculture 19.0%

Financial Services 13.3%

Hi-Tech

29.6%

Other 0’

50

100

150

200

250

to do increasingly specialized functions in order to do business with customers like WalMart. He noted when they don’t have the labour pool to meet the mandates, they need to have using a 3PL on their radar as a means to manage the demands of big clients more cost effectively.

Reg Sheen pointed out using a third party can help a company get items like debt and buildings off their balance sheet. “One of the reasons why you go to a 3PL is to take advantage of that opportunity,” he said. “It’s their business, their core competency, and they can, in most cases, do it as well or better.”

Chiasson thought there were three inflection points where a company should consider a 3PL: when they are entering a new region and are not sure they need their own DC; if it’s a brand new business wanting to avoid the start-up costs of a warehouse; and when you need your DC costs to be predictable from month to month.

Figure 7: Labour costs top DC budget 37.2%

Labour 9.3%

Utilities

7.8%

Lease/Rent/Mortgage Payments

7.4%

Building Repair and Maintenance

6.7%

Contract Services for 3rd Party Warehousing

5.7%

Equipment Rental/Maintenance

3.8%

Vehicles

3.7%

Capital Investments Expendables

3.3%

Taxes

3.1%

Office Expenses

2.6%

Pallets

2.4%

Employer Expenses

1.8%

Insurance

1.8%

Other

3.2%

0%

0

10

5

20

10

30

15

20

40

25

50

30

60

Where the costs are Labour is by far the largest single expense for any DC. The most notable variable that affects how much of your budget is allocated to labour is your sector.

While the overall national average is 37.2 percent (with a five percent premium for unionized operations), the retail sector average is 54.4 percent. Also coming in above the national average are health and pharmaceutical, automotive, food, consumer products and natural resources.

What the panel thought: Chiasson commented on the cyclical nature of DC work, pointing out that managers can reduce the cost of seasonal labour by “hanging on to the talent during the low season and building up the inventory that you need to get ready for the high season, as opposed to ‘labouring up’.”

35 40 Wood stressed the importance of productivity, which he argued is a product of managers who listen and respect their staff, along with proper training and good equipment. “The biggest thing I find is listening to employees. They know what they’re talking about; they know what their job is.”

Sheen agreed with Wood, and highlighted safety as a key piece of the training and knowledge that DC workers must have. “Safety alone can also impact your costs directly through WSIB penalities and premiums.”

On average, 81% of warehousing is done in-house; 19% by a third party.

MM&D | May/June 2011

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0

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20

30

40

50

60

5/18/11 3:42:56 PM

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reporting live from

Whistler!

As your supply chain management magazine, we’re excited to be attending the 2011 PMAC conference, Reaching New Peaks. We look forward to sharing all the details with our readers in our two special eNewsletters being sent live on June 9th and 10th from Whistler. We’ll also feature additional in-depth reporting in our July-August issue of MM&D.

Don’t miss an issue. Keep reading MM&D to make sure you see these exciting coming features: July/August 2011: Conference report In-depth coverage from the PMAC conference, including on-the-spot reaction from participants and follow-up interviews with presenters. PLUS: The Canadian Food Chain supplement; software selection; supply chain finance and order-picking technologies.

We’re at booth number 30 Please drop by our booth to say hello and fill out a ballot to win one of three SA Creator™ CDs – a value of $230!

To learn more about the Service Agreement tool, SA Creator™, please visit http://pmac.ca/en/tools-a-resources/ procurement-tools.

September-October 2011: The PMAC/MM&D/Purchasingb2b/salary survey Find out if your pay is at par in our hotly anticipated annual benchmark of supply chain salaries. Watch your inbox in the next two months for your chance to contribute to the Canadian supply chain industry survey with the highest qualified industry participation.

November-December 2011: C-Suite Roundtable Find out what our panel of senior supply chain execs sees coming in the year ahead. Plus, we’ll have an intermodal update, risk management strategies,and a focus on pallets and palletizing equipment.

Drop by our booth to say hello or visit our website at mmdonline.com for a free subscription to receive our regular weekly eNewsletter.

Every day: MM&D’s website Visit www.mmdonline.com for fresh industry news and in-depth analysis.

We’d love to hear from you!

Please contact editor Michael Power with your comments, questions and story ideas.

Email: michael.power@rci.rogers.com | Phone: 416-764-1538 For advertising inquiries, please contact Emily Atkins Email: emily.atkins@rci.rogers.com | Phone: 416-764-1537

MM&D_PMACpromo.indd 1

5/18/11 11:46:24 AM

Taking action When we asked whether they had taken any action to reduce DC costs in the past year, an overwhelming 92 percent of respondents said they had.

The most common action taken was to improve warehouse processes (65 percent), followed by improved inventory control (58 percent) and improved IT (49 percent). Changes to DC layout were next with 46 percent, and staff reductions were undertaken by 43 percent. Consolidation of locations was done by 24 percent, and contracting a 3PL was done by 16 percent.

Looking more closely at what actions were taken, (Figure 8: Actions taken by budget) there is a big difference based on how much warehousing budget companies have. Of those who consolidated, 30 percent had DC budgets over $10 million. While only 19 percent of those who shifted business to a 3PL were in that budget range. By contrast, of those who contracted a third party, 30 percent were in the $500,000 to $1 million budget zone while only 16 percent in the budget range consolidated.

Figure 8: Actions taken by budget 30%

30%

30

26% 25

20

19%

19%

16% 15

14% 11%

10

9% 7%

5

5%

4% 2%

0% What the panel thought: 0% Reg Sheen noted that one of the most expensive things a DC manager can Up to $250,000 to $500,000 to $1M to just $2M to just $5M to just $10 M+ $249,999 $499,999 $999,999 under $2M under $5M under $10M do is decide to keep inventory in an additional facility. “The way you leverage those four walls is by looking at how you store your product internally Consolidated 3PL using different racking configurations—VNA or double-deep—and looking for the most optimal way to store products,” he said.

Figure 9: Total DC/3PL budget by size of company/region Gord Crowther agreed, “If you’re racking to the fifth level as opposed to four levels, you’re not $3,963,900 National Average brilliant, but you just got a 20 percent improvement in your space, but you’re paying the same $636,700 1–49 taxes, heat and cooling.” $3,757,900 50–499 On the question of consolidation, Woods noted $9,436,000 500+ that his company, Mother Parkers Tea and Coffee, consolidated a warehouse last year. The change was $764,100 Up to $10M made possible by changing requirements in the food industry—with shelf life of products drop$3,327,500 $11M to $50M ping—plus different elements in the company work$9,739,400 $51M+ ing together to increase turns dramatically. “Based on carrying less inventory, having it all available $1,992,200 East/Quebec on a timely basis, we’re consolidating our facilities $4,047,000 Ontario now,” he said. “And that’s purely based on different $3,740,200 West groups within the company working together.”

Henderson noted another client example, in $0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 which the company opened a western DC to be Number Of Employees Revenue more responsive. “What they found was they had Region more working capital tied up there because they had to store more inventory,” she said. “And often they didn’t necessarily have exactly what was needed to meet the demand so then they were still shipping from Ontario out west. So consolidating was a very good business decision. They were still able to service their customers, they brought their inventory back so they could manage it better and they’ve got less working capital tied up in inventory because they’re not duplicating it.”

MM&D

37% make shunting moves between a plant or facility and the DC

MM&D | May/June 2011

03dc.indd 21

Demographic data The full demographic set is available online at www.canadianmanufacturing.com/?p=31792

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5/18/11 3:43:05 PM

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On the right track?

Weighing in on the Rail Freight Service Review final report

By Michael Power

W

hen a panel of independent consultants called for comments from industry stakeholders regarding Canada’s rail-based freight logistics service, no shortage of strong responses were sent their way. Recommendations—requested as part of Transport Canada’s Rail Freight Service Review—ranged from the need for a commercial dispute resolution process, to dealing with a perceived CN/CP duopoly, to establishing reciprocal penalties for service failures.

Phase I of the review included an assessment by a panel which developed an interim report with draft recommendations that were released for industry comment. Phase II saw 141 stakeholders provide recommendations. The panel released its final report in March 2011 with recommendations in four key areas: • Consultation and notification of service changes; • Implementation of service agreements; • A timely and low-cost dispute resolution process; and • Enhanced performance reporting.

Also in March, the federal government released a response to the panel’s recommendations, stating it would implement several steps: • Negotiate over six months a template service agreement and commercial

dispute resolution process;

• Table a bill giving shippers the right to a service

agreement;

• Establish a commodity supply chain table, com-

prised of those shipping commodities by rail, to address concerns and develop performance metrics; and, • Lead an analysis of the grain supply chain.

Devil’s in the details So what do industry stakeholders think of the final report and government reaction? For the most part, members of the Canadian Industrial Transportation Association (CITA) were pleased with the panel’s recommendations and the government’s response, says Bob Ballantyne, CITA’s president.

“As one would expect, I don’t think we got everything we asked for but, by and large, the results were pretty good,” he says. “I think the fact that

The five must-dos of strategic routing models Controlling transportation costs may be easier than you think operators fail to harvest the potential. Leaders discover that allocating transportation expenses wisely creates greater operating cash. f all costs involved in distributing product, Since transportation costs are so dominant, distribution and logistics the largest single component is transporta- managers should do everything they can to lower costs. All companies tion costs, followed by labour and rent. focus attention on controlling transportation costs—with varying rates of As demand dipped in the recession, operators success. Unfortunately, many of these efforts are procurement-focused struggled to adjust costs. Labour as a controlled tactics, negotiating the lowest possible rates, and not on more fundamental event within the four walls of a distribution centre strategic opportunities. allows some adjustment. Rent as a fi xed cost allows Successful effort to lower overall transportation costs must start with little flexibility to change. strategic efforts. Rate negotiation does nothing to address inefficiencies in Transportation by far is the largest cost and offers supply chains that create waste and drive up costs. Strategic thinking and the most flexibility. In most distribution networks planning are required to improve the value delivered from transportation. transportation is at least one-third the total control- Industry leaders deploy strategy to create cash. lable costs of the distribution operation. In some The challenges facing today’s transportation fleet manager are vastly distribution networks outbound transportation costs different from 20 years ago. Today, customers expect deliveries within tight alone are in excess of 50 percent of the total cost. time windows. There are two to three different routing options between Although transportation is the most flexible delivery points. Sometimes the option with the most distance takes the least in the trinity of distribution expenses, many time due to congestion related to time of day.

By David Schneider

O

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MM&D | May/June 2011

5/18/11 11:47:34 AM

the government even commissioned the service review [shows] they believed shipper complaints warranted investigation.”

Details surrounding some of the government’s responses need to be hammered out, he notes. For example, while a bill giving shippers the right to service agreements is a step in the right direction, there’s no mention of what would be included in those agreements. As well, the rights and responsibilities of both sides in such agreements need to be addressed.

“We’re glad to see the government saying what their plans are but the devil will be in the details,” Ballantyne says. “There’s some cautious optimism but there is some concern the details—once they’re dealt with—will be difficult.”

Ruth Snowden, executive director of the Canadian International Freight Forwarders Association (CIFFA), says simply proceeding with a review has improved Canada’s rail freight service.

When CIFFA surveyed its members in 2009, Snowden says, opinions were almost unanimous the country’s two national railways weren’t meeting the intermodal community’s needs. But that begun to change, she noted.

“Just one year later the change in approach and in rail freight service has been dramatic,” Snowden says. “The review shone a much-needed light on rail service, and the railroads responded.” The process has also prompted shippers, ports, termiGetting the truck to the ultimate delivery point is more challenging than ever. Regulations for the hours that drivers can work and trucks can operate add complexity. These are not just execution issues—they affect strategic planning.

Company sales and marketing teams task their transportation fleet managers to forecast the cost of delivering to a new customer. Intense market conditions and competition intensify pressure where a one percent difference in total cost can mean the difference between winning or losing an account, or the difference between making profit or losing money. Sales professionals turn to the transportation manager and ask for a commitment on when trucks will arrive. They hold the transportation manager responsible if the time is inaccurate.

Based on extensive experience (over 15 years) of transportation optimization and our ongoing research in the marketplace we developed five core requirements that a route optimization system must meet to be considered a strategic tool.

The five must-dos of a strategic route optimization system: MM&D | May/June 2011

03logrev.indd 25

nal operators and others to voice concerns surrounding the issues, as well as offering a forum for potential solutions.

While CIFFA found interesting the interim report’s suggestion for draft legislation in the event that commercial solutions don’t work, any big-stick approach is a bad idea, Snowden notes. Railroads have already introduced new service agreements with major ports and terminal operators across the country.

“Canada’s rail freight service must be efficient and effective in meeting the needs of the marine cargo industry to ensure that Canadian traders are as competitive as any of our trading partners,” she says. “The Rail Freight Service Review has helped.”

A view from the rail industry Aspects of the recommendations and government response have left the railways “somewhat disappointed”, says Cliff Mackay, president and CEO of the Railway Association of Canada (RAC). Specifically, using legislation to regulate commercial relationships poses dangers. For example, imposing solutions through dispute resolution could result in uncertainty, with an outcome unsatisfactory for one or both sides. While dispute resolution was welcome, government regulation of the process would likely slow things down, he notes.

In the logistics world, such delays can be expensive.

“The name of the game is to be able to deal with disputes in a very efficient and quick way so they don’t sit there and burn up enormous amounts of time and money,” he says.

The Canadian Transportation Agency (CTA) could provide the authority to mediate disputes, Mackay notes. The industry needs arbitration from those who understand the field and can provide consistency, he says.

“If our transportation logistics systems are going to work, the commercial parties have to be comfortable with the relationships,” he says. “Forcing that issue strikes me as not very good public policy.”

MM&D 1. The system must support “what if” modelling, using production data without altering current plans or operations.

2. The system must be flexible. Changing the variables should be easy and the system should allow for multiple scenarios.

3. The system must allow rapid update and change. Customer data should be simple to enter.

4. The system must integrate with all other company systems including order management systems, warehouse management systems, GPS systems, purchase order systems, and mandated electronic on-board recorders.

5. The system must be FAST! Complex modeling solutions should take no more than a few minutes to solve. Imports and report generation should be instantaneous. The entire process of importing late orders for assignment to existing routes must take only a few minutes.

Strategic models must be far more advanced and flexible than the majority of the routing models available today. Changes in technology that allow for cloud computing and high-speed data communications have created an environment where strategic models are available at price points far below existing traditional models. Strategic models cost the same as the traditional models, but deliver value through their flexibility and speed.

MM&D David Schneider is president of David K Schneider & Company, a team of expert supply chain and logistics practitioners focused on creating operating cash flow. He can be reached at 877-674-7495 or info@dksco1.com.

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5/18/11 11:47:48 AM

Japan’s shockwaves linger

the Japan earthquake.

The AIAG has cancelled conferences because not enough people have been available to attend,

By Michael Power he says, with many scrambling to keep plants running and little time for much else. ne of the largest issues affecting the automotive industry remains the The search for supply chain information has been earthquake and tsunami that hit Japan March 11, says Jim Zamjahn, stymied by the fact many suppliers are in northeastprogram manager, supply chain, with the Automotive Industry Action ern Japan, which has experienced power cuts.

Group (AIAG).

“Communication has been disrupted and power “Much of our attention right now is focused on getting things in from Japan— is still iffy,” he said. “A chip producer has to have that probably supercedes any local issues,” says Jim Zamjahn, program manager, a reliable source of power to make chips—if you supply chain, with the Automotive Industry Action Group (AIAG). shut it down you might be out for days to recaliA big challenge for automakers right now, Zamjahn says, is access to brate a machine. Not knowing what’s going to information—knowing what’s in the chain and where. More than most happen and not being able to make a commitment other factors, that lack of visibility has slowed vehicle production. Japanese on supply is the issue.” auto makers in North America have been most hard hit, followed by the Another major concern—both from a transUS big three—General Motors, Ford and Chrysler. Korean manufacturers portation and industry standpoint—was the price have seen the least difficulty in terms of parts availability, Zamjahn says. of fuel, Zamjahn notes. While the change won’t Japanese plants have struggled with power cuts and a dwindling supply happen overnight, the industry will likely see a of components as a result of the March 11 disaster that devastated northeastern shift from truck transport to intermodal, or rail, Japan. Toyota’s plants in Canada and the US have been running at 50-percent he says. capacity several days a week, although the company plans to increase produc“Talking to steamship companies, they’re going tion to 70 percent of normal in June—faster than expected. The company is to continue slow-steaming, which is extending the in danger of losing its spot as the world’s No. 1 automaker. pipeline, although I don’t know that they’ll reduce Chrysler also recently announced it has moved up summer shutdowns at speeds further,” he says. “But fuel costs are high on three factories to June from the usual July because of parts shortages due to the list of concerns.”

MM&D

O

This hybrid airship is conceptual but represents the cargo airships Lockheed Martin Aeronautics is developing for Aviation Capital Enterprises Inc.

Airship revival

A

irships are massive, lumbering and fly at lower altitudes than airplanes. While advertisers love to embellish them with slogans as they fly over major sports events, most people don’t associate them with other more practical uses.

That may be changing. A new generation

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of airship may be on the horizon. According to some experts, airships— cargo airships—may eventually take to the skies and change the way oversize cargo gets transported. In fact, some say that once airships are big enough they will carry loads across the oceans more economically than airplanes. To read the full story and learn more about airships, check out our web-exclusive coverage at http://www.canadianmanufacturing.com/?p=32664.

MM&D | May/June 2011

5/18/11 11:48:05 AM

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A bigger say The use of voice technology has extended beyond picking

By Michael Power

V

oice technology has been good to Staples.

The company uses voice for picking in its distribution centres across Canada, including locations in Mississauga, Calgary, Edmonton, Winnipeg, Vancouver, Dartmouth and Luceville, Quebec, near Montreal. Staples has seen a 10- to 15-percent improvement in productivity after voice technology was put in place, says Rod Gallaway, Staples’s vice-president of global logistics, design, strategy and projects.

“We’ll see a decrease in picking errors of about the same amount on an overall percentage,” Gallaway says, noting the company has used voice technology for about 10 years. “Inventory accuracy at your pick location is higher as well. It’s very reliable, robust technology. We don’t have a bunch of downtime or failures; it just runs, and it runs well.”

Voice in distribution centres—traditionally for picking functions—is seeing use in other areas.

Currently, while Staples uses the technology exclusively for picking, Gallaway says the company is looking into deploying it in other areas of its DCs as well.

For example, the company is investigating using voice for truck loading, he notes. When a package is scanned, the technology tells the loader where to put it, allowing him or her to work hands-free.

As well, Gallaway says, Staples is investigating the use of voice for cycle counting. Currently, MM&D | May/June 2011

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workers randomly count different locations several times a year within a centre to ensure inventory is accurate—a process the company now performs using paper. Staples is looking at using voice technology for the process—the worker would go to a location within the DC, scan and count inventory, then use voice to report the information to the system.

The voice would direct the worker to the location, where it would tell him or her whether it was the right place, as well as what inventory—and how much—to count. Currently, Staples is looking at whether the technology is feasible.

“It creates less paper in the supply chain,” says Gallaway of the technology’s advantages. “It’s more accurate than paper picking. It’s very economical and cost effective to put it in. The learning curve is two to three weeks; a person that’s learning it for the first time can function very well in it.”

As with Staples, voice has historically been used in picking and selection, says Tom Murray, vice-president of product management and marketing at Vocollect, Inc. Vocollect did a study last year involving DCs greater than 50,000sqft with a warehouse management system (WMS). Roughly 10 percent of those are using voice, he notes, with the majority being for picking or selection. But that’s changing, he adds.

“Voice, over the past eight years or so, has gone beyond picking,” he says. “What we’re seeing now is some warehouse management systems (WMS) that are accelerating the deployment of voice beyond picking by adding it into their workflows from the very beginning. The anticipation is that’s a trend we’ll see from more WMS is that they’re deploying voice into multiple workflows.”

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A fourth voice trend involves real-time interrupts and updates, meaning the WMS’s ability to update a work order in real time, Murray says. For example, a worker may be halfway through picking an order when it becomes necessary—in real time—to change the quantities of the order.

“The real-time updates come from the WMS, where somebody in purchasing has said, for example, the pharmacy that’s asked us to fill out this order actually needs an extra box or two of penicillin; can you change the quantity of that immediately and have it impact the order that’s going out today?” Murray says. “[That] would give them the new quantities as they’re going through, as opposed to having to create a new order, go back and re-pick the order and so on.”

MM&D

Image courtesy of Vocollect

Other DC applications for voice include put-away and replenishment, he says—as a warehouse’s picking efficiency increases, so does the need for on-time replenishment.

“Customers are saying, well, if voice could do A, B and C for us in picking, is there any reason why it couldn’t do something similar for us in the replenishment workflow?” he says. “They start looking at deploying voice on vehicles. Once you’ve got it on a vehicle you’ve got it for replenishment, put-away and potentially loading.”

Voice-directed work in other areas of a DC eliminates or reduces scanning and keyboard use, Murray says. Using voice increases safety, since drivers don’t need to interact with screens or scanners and can focus on driving.

Another voice trend, Murray notes, is the support for multiple applications within a single voice process. Voice software must be smart enough to know when a worker has stopped talking to the WMS and begins talking to the CRM system. From there, it must be able to switch back to the WMS system where the worker dropped off, Murray says.

“It’s what we call multi-application workflows—workflows where you’re talking to multiple enterprise applications concurrently,” he notes.

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MM&D | May/June 2011

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Materials Handling | Dave Luton

Dealing with an oil price shock?

What you can do to counteract oil price inflation

I

n my last column I identified warehouse sectors that would be affected in an oil price shock like that of a few decades ago. In this column we look at how to protect those sectors.

Last time, I noted the main areas affected by such a shock would be asphalt and conventional tar and pea gravel flat roofing. Asphalt is produced from petroleum and tar and pea gravel roofing also has a significant petroleum component.

All types of roofing are exposed to aging due to chemical and physical stresses. Smaller isolated problems like abuse, stress concentration, and quality of workmanship can shorten the life of a normal flat commercial roof. Without a maintenance plan, these problems usually go undetected or ignored and that escalates the the damage and price of repairs.

Both asphalt and pea gravel have replacement and new construction cycle elements, with lifespans of around 25 years. Proper design and inspection, maintenance and repair can increase the life of both. Roof warranty programs usually require at least an annual inspection.

Inspect quarterly Given the wide climate variation within Canada, I recommend at least a twice-ayear (preferably quarterly) roof inspection.

This inspection may not require a professional other then your normal building maintenance person. If the inspection reveals problems, a roofing professional can be called to examine further and do repairs.

A full roofing inspection by a qualified professional includes roof membrane, flashings, roof deck, sheet metal flashings, masonry parapet copings and traffic walkways. These components are interdependent when waterproofing a building.

One of the important areas to look at is roof drains MM&D | May/June 2011

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and flashing. Drains are critical to proper drainage on a flat roof. They ensure water doesn’t accumulate and cause ponding. In winter, deep snow covers the roof drains so water can’t drain. Even when it does, the freeze-thaw cycle means some water freezes in the drain so even if the water can get into the roof drain, the roof drain is then plugged.

With a lot of flat roofs, eventually that load gets to be too much.

It far exceeds the roof’s design conditions, because the roof was made using the principle that the roof drains are free flowing. Some newer buildings have incorporated heated roof drains to help combat this problem.

Detect problems before failure Even with an ongoing maintenance program a roof will fail over time. The entire roof doesn’t fail at once and advanced inspection techniques can detect problems before they are apparent. The life of older roofs can be extended by a thermographic inspection. Thermography can detect areas that look fine but are leaking.

If caught early, these areas can be isolated and patched, extending the roof’s life.

Likewise for asphalt, maintaining it by sealing lengthens its life. Why bother? As water permeates cracks in the material and settles down at the base, its strength is compromised, resulting in potholes. With cold winters, cracks filled with water are also an open invitation to freezing damage. Even at warm times of the year, grass can grow through cracks on the edges of the surface.

If the asphalt has deteriorated so that potholes have formed, the surrounding surfaces should be cleaned with air compressors to remove all debris. Once the area is dry, apply an asphalt bonding agent (glue). This will help ensure new asphalt sticks evenly without separating.

Next, fill the potholes and patch pave any low areas. Once it’s even, resurface the area with hot mix asphalt to the proper grade and slope. This maintenance should last betwen two and four years.

With age, asphalt gets damaged from ultraviolet rays and oil and gas spills. Sealing is effective to renew asphalt surfaces that have become dry and brittle, to seal small surface cracks and surface voids, and to inhibit loss of surface aggregate. Sealing should be done as soon as any of these problems are noted.

Standard oil base sealant will last up to a year. Higher-priced sealants usually add more durability and a longer life. Some suppliers recommend new asphalt is sealed the following spring.

As asphalt becomes older and more used, it loses oil and begins to deteriorate. You can see this as it turns grey. A spray machine puts that oil back into the asphalt and gives it a longer life.

MM&D

Dave Luton (dluton@cogeco.ca) is a consultant in the greater Toronto area.

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Learning Curve | Tracy Clayson

Supply chain education Go forward, back to school!

W

hat’s a key driver in securing and keeping top jobs in the supply chain profession? Think executive education.

You probably have a university or college degree, maybe a CITT or PLog and it’s been a few years since you were in a classroom. But you can still brush up on your decision-making and strategic thinking skills in one of several executive supply chain programs. As a professional, you want to keep current on the leading supply chain practices and learn what others in your field are doing to stay ahead of the competition.

CM executive education programs have built a strong following from leading corporations that see the value of investing in their employees, both to boost the knowledge base of existing managers and to invite management track candidates to gain insight into broader supply chain practices.

Business success is getting the right product at the right time to the customer. With outsourcing’s growth, globalization and financial demands, supply chain professionals are expected to bring strategic know-how and analytical skills to the table. What better way to inspire your management team to find better solutions and think creatively than to get them away from their desks and into an environment with collaboration, study groups and information exchange. Participating in an executive education program— with a facilitator who has field and/or academic experience—gives employees a chance to validate skills, develop in new areas, challenge assumptions and learn new approaches. Participants meet peers from other disciplines and industries working toward applying top supply chain principles.

Mark Thomas, program director, Schulich executive education, supply chain, says the top factor shaping supply chain today is the flow of information among stakeholders. He explains technology is key for better information flow.

The Schulich supply chain program has been growing in demand since it started over 20 years ago. The course content is developed in collaboration with the SCL Canada. Participants provide input course content they’d like to see more of and what subjects and experiences are most beneficial.

maceutical, technology, retail and natural resources and, with the exception of the PMAC program, executives working in third-party logistics.

The facilitator profile for these programs includes professionals, academics and industry experts. For supply chain professionals, developing acumen in financial literacy, harnessing technology, multidisciplinary approaches and getting insight into executive management perspectives brings value.

Most companies already have a teamwork approach in areas such as distribution, transportation, production, materials management and planning, finance, facility management and procurement.

Programs like those at Wilfred Laurier University, Schulich and PMAC bring a collective approach, giving participants insights on decision making, costs analysis, the relationship between market success and supply chain excellence.

Meeting customer expectations For 3PLs and carriers, executive education programs in supply chain offer an opportunity to learn about customer expectations in a strategic way. As Mark Thomas suggests, supply chain buyers have become much more sophisticated about the tendering process, the costing breakdown, performance measures and consistent results for improved efficiency and productivity.

Courses offer networking opportunities, but acquiring skills to meet performance metrics, cost management and financial planning and innovaGrowing interest in new topics tion opens doors to success for supply chain Sharon Ferriss, former director of public affairs at the Purchasing Management professionals.

Association of Canada (PMAC), notes the increasing interest in topics in Yet another benefit is recalibrating the focus the Supply Chain Management Professional program such as legal issues, so supply chain managers can understand their performance metrics, sustainability and finance. SCMP designation holders contribution from a C-Suite perspective, especially have access to seminars ranging from lean supply chain; legal aspects of around financial performance beyond inventory RFP; finance; global supply chain; strategic planning and more to keep their turns. Executive education also brings attention designation in good standing. to soft skills like leadership, coaching, interperAccording to Ferriss, 70 percent of PMAC participants are employer- sonal awareness and conflict manage-ment. sponsored, roughly 55 percent men and an average age of forty. Mark Thomas Finally, learning offers formalization of theoat Schulich reports roughly the same split between men and women, with retical applications, field experience, supply chain most participants in the director or manager role. principals and benchmarking.

MM&D Most participants of both the Schulich and the PMAC program have lengthy careers in the supply chain field, are management track or have decided on a Tracy Clayson (tracy@in-transit.com) is managnew approach to supply chains, coming from disciplines like engineering and ing partner, business development, of even marketing. The sectors represented at these programs range from phar- Mississauga, Ontario-based In Transit Personnel.

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MM&D | May/June 2011

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