Mmdmayjune2013de

May/June 2013 $8.00

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Inside 3 5 20 22 24 25 26 27 28 29 30

Taking Stock Supply Chain Scan Air Freight Choosing a DC Location Automated Storage Equipment Retail DataCapture Learning Curve Legal Link Materials Handling Crunching the Numbers

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TAKING STOCK

Hitting close to home www.mmdonline.com PUBLISHER/EDITOR-IN-CHIEF: Emily Atkins (416) 510-5130 EAtkins@bizinfogroup.ca EDITOR: Carolyn Gruske (416) 442-5600 x3265 CGruske@bizinfogroup.ca ART DIRECTOR: Stewart Thomas (416) 442-5600 x3212 SThomas@bizinfogroup.ca SENIOR ACCOUNT MANAGER: Catherine Martineau (647) 988-5559 CMartineau@bizinfogroup.ca PRODUCTION MANAGER: Kim Collins (416) 510-6779 KCollins@bizinfogroup.ca CIRCULATION MANAGER: Barbara Adelt (416) 442-5600 x3546 BAdelt@bizinfogroup.ca

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W

e had an earthquake. Technically, an earthquake originated just inside the Quebec border, but we felt the earth roll in our Toronto office. As these types of events go, it was very minor—5.2 magnitude and zero damage— but it was sudden and completely unexpected.

It was also a great wake-up call: another reminder that it’s important to have a disaster recovery plan in place just in case something major actually goes wrong.

Of course as supply chain professionals you constantly deal with the possibilities of things going wrong, of networks breaking down, of suppliers running out of stock and of inventories needing recalls.

But quite often we consider those things as situations that can happen in far-off places and not in our own backyards, and as a result, it’s easy to put off planning for local emergencies in favour of planning for bigger, global events.

So maybe now is a good time for businesses to schedule executive-level meetings with the purpose of playing “what if”. What if a major highway, say the 401, is closed down for an extended period—days instead of hours? What will that mean to the way goods are moved and to just-in-time operations? In the past we’ve seen how SARS can shut down cities, so are we any better prepared today to deal with a similar type of outbreak than we were years ago? Outside of the more earthquake-prone areas of the country, do businesses have plans in place to react to the next tremor? And did we even react well to this one? Did we go into our warehouses and DCs to check if any inventory shifted into more precarious positions on the racks?

Although it may seem silly to waste the time and resources to dream up worstcase scenarios and ways of dealing with them while most of us operate out of seemingly safe parts of the country, it’s an exercise that absolutely has value. Even if a disaster doesn’t hit, just the process of evaluating current networks, processes and operations may lead to discoveries of inefficiencies that can be improved, or potential issues that have been neglected or overlooked. Sometimes putting a fresh set of eyes on old practices brings them into new and revealing light.

Besides, it really is better to be safe than sorry. Nobody wants to say, “I wish we planned better” after the big one hits or the next blackout wipes out comcom munications and shuts down roads and airports.

May/June 2013 Volume 58 Number 03 16

20

22

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Projecting room

Business re-tune

Finding a home

Christie Digital uses VLMS to solve storage problems on the shop floor

Godin Guitars closes European DC and relies on airfreight

Cities entice DCs, 3PLs and transport companies to build in their boundaries

Equipment focus

MM&D | May/June 2013

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Automated storage and handling equipment

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SUPPLY CHAIN SCAN

BENCHMARKS

IWLA CANADA

MOVERS + SHAKERS

Recognition, honours, awards and company milestones. p8

Spring conference discusses regulatory and governmental changes. p10

Appointments at ONE; Contrans Group; Trimac Transportation; Norfolk Southern. p13

Change and the supply chain Supply Chain Canada Conference presenters see change as a driving force activity (including thieves who have presented fake documents in order to drive away with truckloads of merchandise), shifting demographics leading to a shortage of skilled workers such as forklift or truck drivers, and changing consumer behaviour and buying trends.

Partner selection

By Carolyn Gruske

A

lthough it didn’t have an official theme, the 2013 Supply Chain Canada Conference was all about change.

Supply Chain and Logistics Association Canada (SCL) held a briefing at the event to give its members information about SCL’s proposed merger with the Purchasing Management Association of Canada (PMAC)—a move that puts the future of Supply Chain Canada in serious doubt. (See the March-April issue of MM&D for details of the plan or http://tinyurl.com/SCLPMAC) The awards presented—the SCL President’s Award to Michael Buna of WalMart Canada Corp and the SCL Green Supply Chain Award to Novex Delivery Solutions—also had change as a theme. Buna led a project to modify the way tractor trailers are designed and to put the new trucks on the road (see the MarchApril issue of MM&D for the story or http://tinyurl.com/SCLAward). Novex adjusted the way it operates to become more energy efficient, reduce greenhouse gases, and become more ecologically friendly overall.

The idea that change is something to be embraced permeated most of the presentations made to the conference’s 350 attendees.

VUCA world Robert Vallender, head of physical logistics for Nestlé SA in Vevey, Switzerland, told the full house in his opening keynote speech that change is a very familiar part of the business process.

For example, the company modifies products to suit local markets and tastes.

“A KitKat in Malaysia tastes different from a KitKat in the UK,” he said.

Telling the crowd it’s a “VUCA” world (volatile, uncertain, complex and ambiguous) he said most supply chain managers are so good at dealing with change “we fail to convince our management they need to support us.”

Among the changes for the worse Nestlé has encountered are growing criminal MM&D | May/June 2013

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Derrick Lio, operations manager for Lexmark Canada Inc, spoke about how the printer manufacturer undertook a massive change when it comes to its picking its transportation partners.

“Two years ago we had 20 different carriers serving various lanes. With 20 different carriers, one of our challenges was that we had different contract lengths, different terms and conditions. We had different reporting. The datasets we were getting from our carriers had no standardization. We had different invoices coming in weekly, monthly, biweekly. And we actually had different rates for the same lanes.”

Eighteen months ago the company decided to simplify things, and Lio described how Lexmark put out an RFP looking for a transportation provider that could address all of its needs, and handle all of its capacity. Eventually the company picked Ryder Canada to essentially “manage the business for us”.

As a means of providing extra incentive to Ryder to meet all of the agreed upon goals, Lexmark insisted on a “pain and gain” plan in the contract. Under the terms of the agreement, if Ryder does well, and meets its objectives, it gets a bonus.

Labour relations Greg Vurdela, vice-president of marketing communications and government relations for the British Columbia Maritime Employer’s Association (BCMEA) spoke about how the association plans to change the way workers are trained. The association represents 60 members companies, including terminal operators and breakbulkers, operating along the West Coast from Prince Rupert to the Fraser River.

“One way the BCMEA can positively affect the supply chain is through training and through productivity and safety on the site. That’s what we’re going to be providing with what we call a world-class training 5

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SUPPLY CHAIN SCAN facility. It’s five acres of land purchased in the lower mainland of Vancouver.”

The initial stages of development will be completed by the third quarter of the year, and training will begin on handling bulk and breakbulk commodities. In 2014 a crane will be added to the site and used in training individuals how to move containers.

Vurdela says that because the training will be away from work it will be safer, more efficient and not hurt productivity. The other advantage to this program will be the ability to follow graduates’ progress.

“We’ll keep track of them so when they get out there, if they’re not operating on the level we consider optimal, we can bring them back to BCMEA U and give them refresher courses. That will be a first in labour relations in North America.

Nobody else does that.”

He said last year the association trained over 2,600 people and recruited just under 900 workers who were new to the industry. It spent $5.5 million on training, which he says is about average, but this year, that number will go up. Once fully equipped, the training facility will be worth more than $20 million.

Managing a global supply chain Aaron Hutcherson, vice-president of global supply chain planning and procurement for McCain Foods Limited provided the closing keynote (sponsored by MM&D) on the first day of the two-day event. Hutcherson spoke about proactive and reactive change.

Proactively, McCain is currently in the middle of a company-wide SAP implementation.

“Prior to this we had separate reporting and accounting systems around the world,” he said, adding if he wants a global look at sales, production and inventory data “it means gathering data from 10 separate databases in regional offices and integrating that data before decision making. For a global company, this is not fast or efficient.”

The food manufacturer has also been forced to implement change as a reaction to failed initiatives, including a new product launch that fell apart due to unexpected demand. Hutcherson told the audience of McCain’s launch of sweet potato fries into the Australian and New Zealand markets. He explained this product had a 49-day turnaround from production to retailer’s freezer.

When sales of the fries began, McCain had what was projected to be a three-month supply of inventory. At first, sales during the soft-launch phase were right on target, but when nationwide advertising began, sales jumped sixfold in three weeks. “It was the quickest, most successful launch in McCain’s history,” he said.

“But, alas, we were not prepared for this level of success. We scrambled to keep up, big time. We did things like expediting additional production runs. We got additional products shipped from South Carolina. Got onto additional ship sailings from alternate ports...

And we even considered airfreighting shipments from New Brunswick to Australia. At that point I said ‘Stop. We have to declare uncle.’”

The company put the retailers on allocation, halted advertising, and stopped allowing promotions. The efforts slowed demand, but the damage was done. In two months of record sales, the entire supply chain was depleted, and it took an additional five months to restock to the point where customers could be taken off allocation. Hutcherson said sales did return, but they never reached volumes from before the crisis.

In light of that experience, last year when the company launched Continued on page 8 MM&D | May/June 2013

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DONE DEALS Waterloo, Ontario-based Descartes Systems Group has purchased KSD Software Norway AS, an Oslo, Norway-based provider of electronic Customs filing solutions for the European Union.

The purchase price was US$33 million.

Brandon, Manitoba-based railway service provider Cando has been picked by Winnipeg, Manitoba’s Tundra Energy Marketing Ltd to provide railcar loading and switching services at Tundra’s new crude petroleum terminal near Cromer, Manitoba.

The terminal will have the potential to handle crude oil unit trains of more than 100 cars, and Cando will provide locomotives and operational staff.

Penske Logistics will run the BMW of North America LLC parts distribution centre in Nazareth, Pennsylvania. Penske will provide a trained labour force for the after-sales warehousing and fulfillment facility that supplies automotive parts, motorcycle parts, and lifestyle items for distribution to BMW Group dealerships in North America. Penske Logistics will begin operational management of the 875,000sqf facility starting July 1, 2013.

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SUPPLY CHAIN SCAN

McCain’s Hutcherson

have remained steady at approximately eight percent, except during promotions, where they consistently hit 40 percent.

The pair explained there has been no improvement in that figure because organizations continue engaging in escalating forecasting. “Everyone is forecasting,” said Doherty. “When every level is forecasting, everyone forecasts wrong and everyone buffers.” Their solution is to dispense with multiple forecasts (store level, chain level, regional distribution level, manufacturer level) and stick with a single forecast that is done at the retail level and is based strictly on point-ofsale data. They call the solution flowcasting.

To watch an interview MM&D conducted with Doherty and Martin at the conference, see http://tinyurl.com/flowcasting.

Evolution Continued from page 7 a new product in the UK, it changed its approach completely. McCain sourced locally, built production lines with rapid expansion capabilities, and did regional mini-launches supported by local advertising and couponing programs.

Although sales again exploded, this time McCain was able to keep up. “So far, and we’ve been at this for about a year, we’ve been able to handle the demand for this product without going on allocation and while maintaining shelf presence in all the region it’s sold.

And sales are continuing to grow.”

Demand forecasting Mike Doherty, a partner at Demand Clarity Inc, and André Martin, vice-president of flowcasting for JDA Software Group Inc told the audience that despite all of the advancements in the last four decades when it comes to forecasting techniques, there is one important number that hasn’t changed: retail out-of-stocks

Douglas Harrison, chief operating officer of the Day & Ross Transport Group, looked at how external changes and pressures (including consolidation in the market, demographics leading to driver shortages and business owners hitting retirement age, and the growing 4PL trend) affect transportation companies, and also how internal changes can improve the way transportation businesses operate.

He told the audience Day & Ross is finding business relationships are being established using different tools. “We’re seeing pronounced decline in RFPs. We’re seeing far more involvement in RFIs (requests for information) up front, and then narrowing the scope down to a few players.”

He added that the growth in RFIs has led to softer capabilities being played up more than they have in the past. He’s hearing more and more questions along the lines of “What are you doing from a staffing standpoint? What are your human resources practices? Where are you investing capital in the business? What do your financials look like? What are you doing in terms of technology development? And then using all those as acid tests before moving on to economics.”

He also explained how the company hired outside help to assist it in learning how to deal with change. “We brought in change consultants across our organization. We had them challenge us to say what is our service about? How are we going to evolve to meet our customers’ needs and what do we think our customers’ needs are going to be five years from now, 10 years and 15 years from now? Those are challenging statements in a world that is evolving as much as today’s world is.”

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SUPPLY CHAIN SCAN BENCHMARKS Blue Giant Equipment Corp has passed a major milestone. It is celebrating its 50th year in business after being founded by Kurt Larsen. The company held an event in May at its Brampton, Ontario headquarters to mark the golden anniversary.

Shaw Tracking was recognized by Intermec as its service partner of the year and its North American transportation and logistics partner of the year.

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Employees of Cervus Equipment Corp in Calgary earned recognition from Clark Material Handling Co. Clark named Cervus’s Norm Friesz as one of its top service managers in North America, Fred Hnatiw as one of the top sales managers, and Bill Moffat as one of the top sales people.

The CIFFA Central Region Forwarders Choice Awards were handed out recently in front of an audience of 500.

In the air category, Air Canada Cargo won the customer service award, Air France-KLM Cargo won the operational excellence award, Lufthansa Cargo AG won the innovation award. Air Canada Cargo also won carrier of the year, central region. In the ocean category, Hapag-Lloyd (Canada) Inc won for customer service and operational excellence, and OOCL (Canada) Inc took a number of honours including carrier of the year central region.

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The Combined Services Complex (CSC) at the Halifax Stanfield International Airport (HSIA) has earned LEED Silver certification. The 6,000sqm building, which opened in 2010 and houses a maintenance garage, and the airport’s emergency response service team, scored well in the categories of use of renewable power, and efficient use of water.

Lowe’s Canada has given TST Overland Express the company’s gold service award for its LTL shipment service. It is TST’s fourth consecutive award from the hardware retailer.

MM&D | May/June 2013

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13-05-14 1:57 PM

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SUPPLY CHAIN SCAN

Same game, new rules IWLA Canada Spring Conference examines changing regulations

By Carolyn Gruske

N

ew regulations were front and centre at the International Warehouse Logistics Association (IWLA)-Canada Spring Conference, held in Vaughan.

Many of the day’s presenters discussed how the new rules will affect day-to-day business for warehousing companies, 3PLs and transportation firms.

Food handling Peter Wilson, president and CEO of Sonwil Distribution Center in Buffalo, New York, and chair of the IWLA safety and security council, kicked off the event with a presentation about how governments on both sides of the 49th parallel are implementing legislation that will alter the way food is handled, stored and transported.

In the US, the Food Security and Modernization Act (FMSA) was signed into law in 2011, but many

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of its regulations are either still coming into effect or are under pressure by industry stakeholders to be reviewed.

According to Wilson, the Act “is not very clear and not very concise”. He said it also does a poor job of making rules that make sense for the materials handling and warehousing industries. “The FDA doesn’t have a very good handle on how the whole supply chain works.”

As to why it was worth discussing US laws at a Canadian conference, Wilson pointed out “it affects everybody in the world”.

Among the changes under the FSMA, “the new law gives the FDA mandatory recall authority if the responsible party will not voluntarily recall the food.” It also requires written recall plans.

Wilson said the IWLA is working to develop best practices guidelines for its members that will be based on the FSMA regulations. “When we end up with this, we’ll probably end up with our own set of GMPs (good manufacturing practices).”

Wilson said there are concerns about who will be responsible for reporting food items that may be contaminated or otherwise suspect to the online reportable food registry. He gave the example that if he were shipping a product for a food manufacturer and the manufacturer was taking the food back to the plant

13-05-24 11:48 AM

Supply Chain Scan to be destroyed, that he (as the shipper) would be a “responsible party” and would have to report his customer to the FDA on the online reportable registry.

He said the IWLA has been in talks with the government and the government is willing to change the rule, but that hasn’t happened yet.

“We don’t take title to the goods, we’re not responsible for them, we’re not privy to all the biological information. Our customer is, Continued on page 12

Global Focus Goodman Group signs Chinese leases Industrial space developer Goodman Group has signed over 100,000sqm of new leases this year. These include the 42,600sqm Phase One development of the Goodman Wuqing Logistics Centre in Tianjin for Bestseller Fashion Group; 16,630sqm in the Goodman Jinxi Logistics Centre in Kunshan, signed with DB Schenker; and 4,550sqm of warehouse space with logistics provider Tigers, at the Goodman Pudong International Airport Logistics Park Phase One in Shanghai.

Numina Group chooses Australian partner Woodridge, Illinois-based Numina Group has selected Result Packaging’s Process Automation Division to act as its sales and technical support partner for implementing distribution automation in Australia. Result Packaging will support Numina Group’s Pick Execution modular voice and/or pick-to-order picking solution.

Australian surfers pick ERP vendor Global Surf Industries, a Sydney, Australia-based distributor of surfboards, is buying Epicor Software Corp’s Epicor Distribution ERP solution for deployment in its worldwide locations. Besides linking its internal systems, Global Surf says the ERP system will be fully integrated with its B2B and B2C websites.

UPS goes shopping UPS has decided to purchase CEMELOG Zrt, a Budapest, Hungary-based pharmaceutical logistics company. The acquisition adds three additional facilities, comprising approximately 24,000sqm of healthcare distribution space to UPS’s current European network. The deal is expected to close in Q2 2013.

FedEx Trade Networks expands in Latin America FedEx Trade Network is growing its presence in the Latin American market by opening new offices, and developing new partnerships. The company has added locations in both Brazil (Rio de Janeiro) and Mexico (Guadalajara and Monterrey).

It has also entered into an alliance with Brazilian freight forwarder Portlink Logística Multimodal Ltda, and has developed an air consolidation service between Mexico and Brazil, streamlining the movement of goods between the Benito Juárez International Airport in Mexico and São Paulo-Guarulhos International Airport in Brazil.

MM&D | May/June 2013

11

Supply Chain Scan Continued from page 11 and they’re still technically the ‘responsible party’.”

He also spoke about the Safe Food for Canadians Act (SFCA) and how similar it is to the US legislation.

One difference he did point out was what food is actually being regulated.

“The Safe Food for Canadians Act, handles all food.

The FMSA only handles things that are under FDA control. Meats are not under FDA control. Dairy products are not under it. Agriculture is handled by another organization.”

He also issued the following warning to attendees: “Up here in Canada, you are going to get inspected.

The policy that has been enacted in Canada has a sentence in it saying they don’t see any short-term or long-term increase in staff to administer the program. In the United States by the end of 2014 they expect to have on staff 5,000 people. They have a budget right now of $4 billion. So this ain’t going away.”

Chemicals and general safety David Saucier, manager of regulatory and government affairs for the Canadian Association of Chemical

Distributors, also addressed the topic of changing government regulations, but he looked at self-regulation and discipline as a means of keeping new government rules away. Specifically, he promoted the idea of an audited, responsible warehousing program to demonstrate that companies are following best practices models and don’t really deserve any extra attention or scrutiny from legislators or government officials.

He also warned the audience that in the very near future his members will be asking for assurances from their transportation and storage providers that their responsible warehousing plans are in place and that their goods will be stored safely and securely. He said his organization is working with Transport Canada on legislation on the regulatory framework to cover the transportation of dangerous goods.

According to Saucier, by June 2015, Canada will have implemented the Globally Harmonized System of Classification and Labelling of Chemicals (GHS), a UN policy that provides directives on how to label products with clear information regarding their handling requirements and the safety threats they pose.

Saucier also warned the audience to expect a safety blitz at their Ontario facilities.

“You may know this, but everybody in 3PL and warehousing: you’re going to be blitzed. They [the Ontario Ministry of Labour] do publish this. They’re coming after you. They’re looking for trips, spills, falls, that’s a big thing.

“They tell you they’re coming. So there really is no reason to have to have an order issued to you when they do show up. You have X number of months to get your act together, and really little or no excuse,” he said.

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Supply Chain Scan Movers + Shakers Ontario New England Express Inc (ONE), an Ontario-based full-service transportation provider is pleased to announce that Rick Marshall has joined the executive team as VP business development.

Marshall brings over 10 years of sales expertise, and specializes in container freight movement, complementing ONE’s cross-border focus. His responsibilities will include expanding ONE Rick Marshall into a full-service provider for its customers.

John A Schiller has been appointed to the board of directors of ONE. Schiller will be working directly with the president and CEO, David Carruth, to facilitate the transformation from a regional cross-border LTL service provider into a full-service logistics company. Schiller is a respected expert with a wealth of experience and will be taking an active role in developing the sales team at ONE. Contrans Group Inc has elected its 2013 board. Stanley Dunford, Gregory Rumble, Robert Burgess, Archie Leach, and Ross Amos will serve as directors of the Woodstock, Ontario-based freight transportation services provider.

(877) 724-2327

Calgary, Alberta based trucking company Trimac Transportation Ltd has elected its 2013 board. The following people will serve until the next shareholders’ meeting: Rhys Eyton, Jeffrey McCaig, Maurice McCaig, Stephen Mulherin, Jerry Patava, Gerald Romanzin and Andrew Zaleski.

Norfolk Southern railway has made a number of senior executive appointments. James Squires was promoted to the role of president of the Norfolk, Virginia-based company, effecJames Squires tive June 1, after serving as Cindy Earhart executive vice-president of administration. Cindy Earhart, currently serving as vice-president of human resources, succeeds Squires as executive vice-president of administration. Juan Cunningham, currently assistant vicepresident, executive, will become vice-president of human resources. Starting on July 1, David Lawson becomes vicepresident of coal marketing, Michael McClellan will become vice-president, industrial products and Jeffrey Heller will become vice-president, intermodal and automotive marketing.

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MM&D | May/June 2013

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MM&D | May/June 2013

Thank you in advance for your contribution!

15

To see the KardexRemstar VLMs in use at Christie Digital go to http://tinyurl.com/ ChristieVLM

Two VLMs hold 200 projectors awaiting final configuration.

Projecting

room

Christie Digital uses VLMs to save shop floor space

By Carolyn Gruske

H

istorically, the act of projecting a movie has been a relatively simple and low-tech process: shine a light at a series of sequential images captured on film stock and those images would display on a screen. It was a strictly mechanical process that relied on the quality of the film medium and the skills of the projectionist.

But the days when fragile, expensive-to-transport film reels were shipped from movie palace to movie palace are quickly disappearing. Now the act of showing a movie involves transferring digital files to multiscreen theatres and using complex and expensive digital projectors to convert the data into images.

Just as the process of showing a film has become more complex in the digital era, so has the process of building the projectors that display Hollywood’s latest blockbusters.

Christie Digital is one of the world’s leading manufacturers of digital projectors (both of the 2D and 3D varieties), not to mention large-scale video displays used in public venues (such as conference centres, 16

03MMD-Kardex.indd 16

Senior manufacturing engineer Philip Hibberd on the Christie Digital shop floor. Christie assembles digital movie projectors in a Class 10,000 cleanroom environment.

offices or museums), and medical imaging equipment.

The company, which traces its roots back to the projection systems division of Electrohome Inc (which was purchased by Christie in 1999) employs over 1,400 people around the world and over 500 in Kitchener, Ontario. Kitchener serves as the manufacturing and engineering headquarters for the company, which has projectors delivering images to over 28,000 screens around the world.

According to Screen Digest, a UK-based market research and consultancy organization, the market for digital projectors essentially began in 2005, and Christie was there at the beginning.

The beginning is when Philip Hibberd came in. A senior manufacturing engineer at Christie Digital, Hibberd says when he began working at Christie, the business was in transition.

“Five to six years ago the whole business switched to digital projects and our volumes ramped up radically. And then space became an issue,” he says.

“When I was hired into this company—three engineers were hired at the time—we were to transform it and make it a modern manufacturing facility. When I first came, we had no semblance of what you see here today,” he says.

Today there is a bright, modern shop floor populated by workers dressed in white from head to toe. They sport hair nets, safety goggles, and lab coats or jump suits.

The outfits aren’t about making a fashion statement.

Christie’s digital projectors are assembled and stored in a Class 10,000 cleanroom environment. In comparison, the company’s optical room is operated under the even stricter Class 1,000 cleanroom rules. A Class MM&D | May/June 2013

13-05-24 11:56 AM

Photos by Dave Starrett

10,000 cleanroom is designed to never allow in more than 10,000 submicron (0.5 microns or larger) airborne particles of contaminates per cubic foot of air.

The limit for a Class 1,000 is 1,000 particles.

The people working in the lab put together eight basic models of projectors, which in turn can be customized into 20 different configurations, according to the needs of the customer.

“We developed a build-to-order program,” says Hibberd. “We build the projectors to 90- to 95-percent completion. Then we hold the projectors in storage.

When a customer places an order, we configure the base unit and ship it within 24 hours—all out of the KW [Kitchener-Waterloo] shop.”

Once the projectors are assembled they need to be

stored somewhere, which becomes a problem given the size of the units. The basic projector head for a model designed to work on 32-metre screens measures 1194mm by 635mm by 483mm. Even a smaller unit designed for 10-metre screens has dimensions of 697mm by 688mm by 395mm. On any given day Christie has approximately 200 projectors waiting final configuration.

“We looked at various storage solutions, including racking and carts, but the materials handling side of things got messy. It wasn’t ergonomic,” says Hibberd.

Rather than storing the partially finished projectors in carts on the shop floor, the company opted to use a vertical storage solution, and purchased a Shuttle VLM from Kardex Remstar. Of course, given the type

To make it easier for employees to access the stored projected (or load new units into the VLM) a sliding tray whisks the inventory into the open and away from the storage unit.

An operator at the contorls of the VLM. The shop floor system is standalone, but the stores system will be intergrated into Christie’s JD Edwards system.

Christie builds eight basic models of digital projectors which can be configured in 20 different ways.

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03MMD-Kardex.indd 17

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13-05-24 11:41 AM

Weighing 23kg (50lb), the proectors are too heavy for a single person to easily manipulate, so Christie designed and built a hoist to handle the units.

of manufacturing being performed and the location, Christie had to do some investigating to see if the unit would be suitable for its needs.

“Our sampling showed the machine was more than suitable for the Class 10,000 cleanroom environment, but if we had put it in the Class 1,000 room, that would have been a whole different ball of wax. Upgrades would have been needed,” says Hibberd.

“We had to do load factor tests on the floor before installation, to see if it could take the weight of the machine and contents. We had to know what was underneath the floor. It’s an old building.

“There were two 600-volt power cables located. We repositioned them a couple of feet over. One was dead and one was live. Had we not done the scan, potentially we could have had one of the installers drive a support through the cable. They used ground [penetrating] radar. It goes down a couple of feet. The core samples taken for lab testing go down about seven feet. We had to make sure the ground was stable and see how thick the concrete slab is.”

Once Christie received word the building offered a suitable foundation for the VLMs, getting the system installed didn’t take long.

“From the time we placed the order to installation, it was three to four months,” says Hibberd. “The standard size is 8ft by 10ft. If you get a standard, you can source it directly. Ours was non-standard, so they had to source it from the manufacturer in Germany.”

The VLM ordered for the shop floor measures 3.3m by 3.0m by 4.9m (11ft by 10ft by 16ft) and holds 100 projectors. Once it had been delivered, it didn’t take long to set up.

“We installed it off shift. That way we were able to control the environment. We put up plastic walls around the area. Drilling the support holes was the messiest part. There are eight support holes. You’re not allowed to have cardboard or paper in a Class 10,000 cleanroom, so we had to unpack it outside.

Once the pieces were on the floor it became a glorified erector set. It takes about three days to build and a couple of days to calibrate and balance the machine.

After a week it was ready to be handled. It took one 18

03MMD-Kardex.indd 18

day to fill with inventory. The week after we installed it, we were in full operation.”

The VLM has an automatic sliding tray that extends beyond the exterior of the unit, which brings the projector closer to the worker. Since the projectors weigh 23kg (50lbs), on average, they are too heavy for a single worker to lift manually so Christie designed and installed a hoist to help.

“The weight of the projectors make them not ergonomically safe for one person to lift it on their own, and you don’t need two people. With the lift assist, one person can handle everything,” says Hibberd.

The software that controls the VLM is able to take into account Christie’s first-in-first out system and references the manufacturing date of each projector before delivering one to the waiting employee.

The company was satisfied with the first VLM, and installed a second one two-and-a-half years after the first purchase. It stands side by side with the original model.

“The business expanded and we rolled out new models, so we needed more capacity,” says Hibberd.

Currently there are four people fully trained to operate the VLMs, but two primary operators work most shifts.

Four months ago Christie installed its third VLM in the Kitchener facility, but this one entered the stores section of the building and instead of holding nearly finished projectors it holds stock items and parts. The stores VLM has a slightly different configuration from the shop models. It lacks the sliding tray and measures 4m by 3m by 4.9m (13ft by 10ft by 16ft). Hibberd says that at this point it holds about 1,000 SKUs. “It’s almost fully loaded. We’re not under any pressures, so we’ve taken the time over the last six to eight weeks and trained our personnel how to operate it,” he says, adding that the training program takes about two days to cover everything from setting up stock locations to inputting items.

“At the moment there are about six people trained on it but there are two people who are the primary operators. Everybody cross-trains here.”

There is other main difference between the shop MM&D | May/June 2013

13-05-24 11:41 AM

A pick-to-light system on the stores VLM helps employees find the right part. This VLM holds 1,000 SKUs.

VLMs and the stores unit is the stores one will be integrated with Christie’s ERP system.

“We use JD Edwards for manufacturing inventory, inventory control, work order issues, and labour tracking. Integrating the VLM with JD Edwards will speed up the process of work-order-picking. As we load it with raw components, that will go to JD Edwards.” (The VLMs have a light picking system to direct the worker.)

As with the shop floor VLMs, tests had to be conducted to ensure the stores floor was capable of supporting the VLM safely. It wasn’t, so a concrete pad had to be installed first, and before that was done, Hibberd was already planning for the future and for the installation of a second VLM. “We put the pad in so we can go up against the existing machine. We don’t need to leave a space between them.”

And that very likely won’t be the last VLM purchased

by Christie. The finished goods DC located in Cyprus, California (where the company’s head office is) has two VLMs. An off-site warehouse in Kitchener also has two, and the company is considering installing a third.

Putting the VLMs in the Kitchener warehouse meant Christie was able to avoid closing the facility down and relocating to somewhere larger, explains Hibberd.

“Now the topic of moving doesn’t come up. If we need room we say ‘let’s create space for another Remstar.’”

The VLMs, which Hibberd says cost roughly $100,000 each when installed, require maintenance every three months. In particular the belt tension needs regular adjustments.

“The VLM trays going up and down all day long can stretch the belt, but in essence they have not let us down at all,” he says.

“During the initial stage, all of the breakdown calls resulted because we pushed the wrong button.

Somebody forgot their training. And nine out of ten times the problem could be fixed over the phone. The majority of the problems were software related.”

Hibberd says he likes the fact that Johnston Equipment has the service contract for Kardex Remstar, since it means “the guy who comes in also fixes our forklifts.”

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03MMD-Kardex.indd 19

Christie uses a first-in-firstout system, so the VLM’s software needs to take into account the manufacturing date before it plucks a projector from storage.

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13-05-24 11:41 AM

Re-tuning Robert Godin, President Godin Guitars

Instrument maker switches to airfreight, drops DC

By Carolyn Gruske

G

odin Guitars Inc describes itself as the only luthier of electric and acoustic guitars, ukuleles and other stringed instruments that is responsible for the entire process from start to finish.

“They’re entirely made in North America. We start with a log and we finish on stage,” says president Robert Godin.

“We cut and dry the wood ourselves, design the instruments, and market the instruments. We do everything. We do all the steps.”

And now the Montreal, Quebec-based company has added another responsibility to its duties: direct distributor.

Ten years ago, the instrument maker opened a distribution centre in the Netherlands to serve the European market. This January Godin closed the warehouse and committed to a new business model: shipping guitars directly to retailers via airfreight.

It was a shift forced on the 41-year-old business by changing consumer behavior and the need for instant gratification, driven by the Internet.

“Musicians shop online. They read about each instrument. They know the models and the artists using them,” says Godin.

“People aren’t patient. The new consumer wants everything now. They see something and it’s now.

You can’t catch your breath as a manufacturer. It’s an extremely different world than before.”

To keep customers happy, Godin Guitars has had to adapt its Internet sites.

“Before, we had pictures of instruments. Now we have video on each. But I think generally if 20

03MMD-AirFreight.indd 20

you’re in business you have to improve your Internet presentation. Musicians want to hear and see what the instrument looks like with person holding it. And immediately when you show them that you see the results. When you show them image and sound people start to dream about it.”

Admittedly consumer behavior is only part of the reason for the new distribution model. The other part of the equation is Godin’s product offering. The company has six brands of stringed instruments: Godin; Simon & Patrick; Seagull; Norman; Art & Lutherie; and La Patrie, and produces a total of more than 350 individual models.

“Since we have so many models, it’s impossible for a store to carry everything, every model, every colour,” says Godin.

“We had to carry around 4,000 guitars in stock all the time, and you never knew which one was going to sell faster than the other. It was so unpredictable; you were always out of stock anyway. And you’d have items in stock at the factory, not at the warehouse.

But by the time you fill 1,000 guitars in a container, and ship them, it takes a month, and then to redistribute them in each country, it takes time.”

Knowing there had to be a better way to handle the distribution end of the business, Godin started looking for alternatives.

“We started to investigate. We saw Apple computers as an example that was shipping individual computers directly from the factory in China. I said ‘we’re going to have to go that way’, and a couple of years ago I started investigating the major companies to see who could accommodate us.

DHL won the battle.”

Once the decision was made to work with DHL and attempt to move the distribution network to an airfreight model, the company had to make physical and cultural changes to its processes.

On the physical side, Godin had to perform some IT work to ensure the company’s computers were able to interface with DHL’s systems. And it had to alter the way it packaged its guitars for shipment.

“Guitars are perfect for air freight. They’re not heavy. They’re the perfect size” he explains. “We needed better packaging because they’re going to be shipped individually. They’re going to be banged around everywhere. It’s easy to drop them, so you need a drop test at six feet, for example, because with airfreight they’re going to moved by conveyors a lot more and the instrument could be dropped a few feet.”

MM&D | May/June 2013

13-05-24 11:38 AM

the business Changing the packaging required a small investment.

“We thought it would be a lot more expensive. So we put some people on it and found some new equipment, new foam, better boxes, and found they’re not much more expensive. But they are more efficient.

Godin says that after improving the packaging, the company’s damage during shipment rate is very low. “At the moment we have less damage than we had before.”

From the cultural side, it took a bit of persuasion to convince the company’s worldwide retailers to try out the new system.

“The music stores were skeptical we could do that.

And we didn’t even say how much time it was going to take—which was three days—we just said it was going to be very fast, but then they saw the results.

“One dealer in Paris sent us an order Thursday morning (which was late Thursday afternoon for him) and we had the guitar in stock, so we put in on the DHL truck that afternoon and he received it Saturday morning. He couldn’t believe it so he called us asking: ‘How can you do that?’”

Besides Europe, Godin has taken the same approach with other regions in the world. Shipments of top-end models to Australia, New Zealand and Israel are being handled by air. Additionally, retailers in Dubai are also taking advantage of the shipping method to place weekly orders for ouds, lute-like instruments used in traditional Arabian music.

“It’s really something for those countries. They couldn’t afford to take a container. It was a difficult situation for them. Now they can buy four guitars.”

The instruments Godin Guitars manufacturers in its six factories typically sell for between $300 and $3,000, and while Godin admits it is easier to justify the costs of airfreight on the more expensive instruments, overall costs haven’t been a limiting burden for retailers.

“Guitars have gone up five percent on average, but the dealers understand they don’t have to pay

MM&D | May/June 2013

03MMD-AirFreight.indd 21

the inland shipping charges anymore, like from Holland to France. Now it’s all direct and included.

So that makes it okay for them.

“When we ship a guitar it includes transport and brokerage and everything, and when the dealer receives the guitar in three days, he knows exactly how much it costs. There is no surprise.”

Implementing the new system took six months (to test the process and clear out the excess inventory in the warehouse). After the trial period Godin says it was time to close the European distribution centre. And while the manufacturer is very happy so far, the new model has already started causing changes for the 700 employees working for Godin in Canada and the US. “Now this new opportunity is not cheaper for us.

But we offer what the competition can’t offer,” says Godin, explaining that customers who previously ordered three times a year now order every month or every two weeks. Next year, he predicts orders will come in every week from those same clients.

While it could be presumed that closing a warehouse should result in savings, that’s probably not going to be the case for Godin Guitars. As well, changing the business model has created more work—and more complex work—for the staff.

“If anybody tells you it’s easy, no, there’s nothing easy in life. Before we could say we’ll ship 1,000 guitars to Europe, 1,000 to Japan. Now we have to manage and guess ourselves what will sell and build it without the orders, because we receive orders every day. And people pick from the inventory we have,” he says.

“There is more handling, more people. We needed a lot more people internally.”

Godin admits that doing business in this manner isn’t cheap, but he thinks the benefits will be worth the price.

“It costs more but I think it will generate more business. I think we’re going to catch up on volume of sales, better representation, and customer satisfaction.”

MM&D

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13-05-24 11:38 AM

Finding a home Municipalities entice companies looking to set up DCs

By Carolyn Gruske

W

hen Advanced Drainage Systems (ADS) Inc wanted to expand into Eastern Canada, Jason Moore, general manager of Canada and distribution yards had a simple method for picking a location.

“Moncton is truly the hub of the Maritimes, just the proximity and the central location. When I was picking the location, I just drew a circle of a hundred mile radius, and got a sense of what’s there in terms of populations and the cities. That is what sold me.”

While the Hilliard, Ohio-based producer of pipe products had an easy time settling on Petitcodiac, New Brunswick, just outside of Moncton, for its new distribution yard, other organizations may find the process more complicated. Balancing building costs with geographic advantages, examining market size, evaluating support services and amenities, and underunder standing the labour pool are just some of the considerations that play a role in the final determination.

One other factor that often comes into play during the decision making process is input—and influence—from cities, regions, and municipalities. Due to the solid growth demonstrated by the warehousing, distribution and 3PL industries, many areas are actively promoting themselves as supply-chain friendly destinations.

Milton, Ontario The Town of Milton had a population of 84,362 in 2011.

By 2016 that number is projected to grow to 124,645, but even at that size, it’s not a major market.

What Milton offers is location. The town is situated on Highway 401, approximately 50km west of Toronto (population 5.5 million if counting the entire Greater Toronto Area) and about 50km east of Waterloo Region (pop. 553,000). Including the entire Greater Golden Horseshoe, over 8.4 million people (using 2006 Census data) are within a relatively short drive.

Andrew Siltala, senior manager of economic developdevelop ment for the Town of Milton, says geography is a draw.

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03MMD-Municipal.indd 22

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“It’s a very easy task. We’re not doing anything to position ourselves as a [warehousing and logistics hub]. We are that by the nature of our location. What we are is a business-friendly environment that does a very good job of processing permits in a timely manner and meeting business needs.”

In order to ensure there are places new businesses can settle, the town is planning for future developdevelop ments, working with developers on finding plots of land 100 acres or larger.

Milton’s success is primarily built on trucking. CN and CP lines cross in Milton but the businesses don’t really use rail. With so many trucks moving through, not to mention so many regional commuters, highway congestion must be considered a potential problem.

“Traffic is a fact of life. I guess if there is a challenge, it’s working with our partners to make sure the required infrastructure, the larger highways— Highway 401, Highway 407—are widened and are able to support the traffic.”

Halifax, Nova Scotia In many ways, if Milton is positioned at one end of a scale (single mode, no marketing), Halifax, Nova Scotia is diametrically opposed. The Halifax Gateway Council brings together transportation and logistics stakeholders to speak with one voice about the area, to set common priorities, and to market Halifax’s role as a logistics hub says Nancy Phillips, executive director of the council.

Halifax positions itself as a multimodal hub. “You can bring your product in, or export your product through an international seaport. You can move it via Class 1 rail system (CN). We have the largest airport in Atlantic Canada,” Phillips says.

The Halifax Gateway Council makes an effort to point out the region’s other advantages including a balanced import-export ratio and land set aside in the Burnside Industrial Park for supply chain businesses.

Dalhousie University offers supply chain training, and Phillips says the local community college has begun creating a supply chain program.

“Our biggest weakness, and it’s not something we’ll ever be able to fix,” Phillips says, “is that for some companies we are further from market. When we’re out there targeting and working with companies, we’re very up-front: if you’re a major online retailer, for instance, and you offer 24-hour customer turnaround times, we may not be the best choice.”

Calgary, Alberta With the exception of having its own seaport, in many ways Calgary’s pitch has a similar feeling to Halifax’s.

City officials actively promote Calgary as a multimodal hub with strong rail, road and air access.

“The Canamex Highway and the TransCanada Highway cross at the City of Calgary. We also have access MM&D | May/June 2013

03MMD-Municipal.indd 23

to a high-load corridor to the west of the city that carries goods out directly into the Fort McMurray market area.

We have two major rail intermodal yards,” says Tom Dixon, business development manager for real estate and logistics at Greater Calgary Economic Development.

He adds that expansion of the Calgary International Airport (including a new cargo facility and an extended runway), the construction of the Calgary Ring Road, which allows traffic to bypass the city, and the developdevelop ment of warehousing space in the along the Ring Road are also beneficial for logistics companies.

While landlocked, the city is accessible to Prince Rupert and Port Metro Vancouver. There are pre-built warehouses for rent, as well as numerous opportuniopportuni ties for build-to-suit properties.

People who want supply chain training have opporoppor tunities in the area, at the Southern Alberta Institute of Technology (SAIT) Polytechnic Institute, Mount Royal University and the University of Calgary.

Dixon says the Prairie city can’t compete with the greater populations found in Ontario, and in terms of its western neighbours, they also have a few benefits Calgary can’t quite match.

“The biggest disadvantage is our geographic location relative to the oilsands.” In that regard, Edmonton and Leduc have the advantage, he says.

Cornwall, Ontario “Over the last several years city officials have made a conscious decision to focus on the supply chain,” says Bob Peters, senior development officer for the City of Cornwall.

The city has a philosophy that drives it to “build now and secure investments” so it places no development charges on industrial properties and the cost of the land (which the city owns, develops and sells) is $30,000 an acre: “as low as we’re legally allowed to price it.”

Local supply chain leaders have worked with the Cornwall campus of St Lawrence College to establish supply chain training programs, including one to train manual labourers how to work in warehouses and one for college and university graduates.

One other enticement Peters pitches to prospective businesses is the low cost of electricity. Cornwall draws power from Hydro-Québec and can offer it at 10 percent less than in other Ontario locations.

The city is accessed by an interchange off Highway 401. It also has a bridge to the US with a replacement under construction. A CN mainline bisects the city.

Ideally, Cornwall could take advantage of its location on the St Lawrence Seaway, but the shipping season is a bit short, the waters run very fast, there is no rail line to the water and the infrastructure along the river hasn’t been kept up over the years. Peters says none of these issues is completely insurmountable.

“We’re going to keep an eye to what’s possible in the future.”

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EQUIPMENT SHOWCASE

Automated storage and handling systems No touch storage, wrapping and picking equipment 3 1 5

4

6

2

1 Case packer

Designed to handle food, beverage, and personal care items, Standard-Knapp’s 939EZ Versatron Case Packer is constructed with a stainless steel tubular frame. It runs at speeds of up to 30 cases per minute or up to 40 cases per minute while performing tandem operations. It handles cases ranging between 15cm (6in) and 38cm (15in) wide with a tray height of 8cm (3in). The 939EZ accommodates up to eight product lanes. It comes standard with seethrough safety guarding.

2 Plastic film wrapper

The Octopus S Series from ITW Muller is a rotary ring stretch wrapper. All three models (1845S, 1850S and 2340S) have a load stabilizer, a newly redesigned load lift conveyor, and the company’s “No Touch No Tail” seaming device. The S Series operates at speeds of 40-50rpm, processing a maximum of 130 loads per hour. The largest model, the 2340S can wrap a load measuring up to 122cm (48in) by 203cm (80in) by 234cm (92in).

Safety features include load indexing and safety photo eyes, an automatic pass-through, and a safety fence with an electrical lockout switch.

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03MMD-Equipment.indd 24

3 Removable vehicle

The UltraStore AS/RS system from Integrated Systems Design is suitable for buffer order-picking applications, as well as work-in-progress, tooling, machine component, and frozen goods storage. It handles an assortment of storage containers including pallet loads, totes and cartons, with a capacity of up to 907kg (2,000lb). The standard configuration can accommodate loads measuring between 46cm (18in) and 244cm (96in) in length and between 25cm (10in) and 153cm (96in) in width at heights up to 11m (35ft).

During maintenance, the storage/retrieval unit can be removed from the aisle and replaced with a manned vehicle.

4 Automatic stacker

QComp Technologies Inc’s 5G Palletizer stacks bags, cases or trays at the point of production. It has a pick rate of up to 20 per minute. It can handle loads weighing over 45kg (100lbs) at up to 277cm (109in) of pallet height. The 5G is operated by a Rockwell Compact Logix PLC. The modular design allows configuration flexibility. Options include a case clamp and bag, a pallet dispenser, slip-sheet capabilities, a straight-through or over/under layout and stainless steel washdown versions. iPad and iPhone interfaces are also available.

5 Fast moving crane

Muratec Machinery USA Inc’s FX Quad Mini-Load AS/RS uses a mini-load crane capable of travelling 300 metres per minute and hoisting cargo at a rate of 180 metres per minute. It can handle load capacities up to 300kg. Making use of its twin fork and double-deep capabilities, the AS/RS can move up to four cases at a time. The FZ Quad Mini-Load has multiple configurations including single fork, twin fork with belt conveyor, twin fork with double-deep belt conveyor and a free-size rear hook.

6 Interchangeable grippers

The robotpac palletizer from Beumer is available with an assortment of loadbearing modules, including fork grippers, finger grippers, suction grippers and clamp-style grippers that can be swapped out as needed to handle bags, cartons, trays, corrugated boxes, crates or canisters. Under optimal conditions, the robotpac can process up to 1,900 units per hour and can move multiple packages simultaneously. It is controlled via a four-axle rail control system.

MM&D | May/June 2013

13-05-24 11:40 AM

RETAIL

Project organization—Part One Keep the egos and silos out of the process Edward Stevens

O

ver the past five issues—with the help of my colleagues—I have covered everything about building a new retail DC, except for how to get this strategic initiative moving, sustain the momentum, adapt to changes and still deliver what is expected. So now it’s time to tackle those key drivers.

Our initial thought was to discuss the key lessons learned from previous DC expansions, retrofits within operating DCs and new facility build projects. We thought about the importance of engaging the client early in the design process. The client is the operator of the distribution centre, and is concerned with two primary objectives: optimizing efficiency in flowing merchandise, and managing the cost of operations.

The client and each individual stakeholder (including transportation, finance, and real estate) bring their own unique, independent wants and needs to the design table—most of the time without understanding the true impact of their views.

Retail business continues to be a moving target.

Technology advances, consumers become more demanding and competition for their dollars continues through different channels. This is evident today with the advent of new retailers entering the market and the repositioning of current Canadian retailers with e-commerce business models. To accomplish the objectives set out at earlier stages, the project delivery team must be acute, agile and adaptable. The team must make decisions based on experience, skill and knowledge of supply chain requirements.

Design of the facility, processes and product flow cannot be done independently. We have worked with many cross-functional teams and have collaborated successfully by pulling a group of subject-matter experts together. Ensuring productive use of resources in such a group is difficult, but working independently will likely not produce the desired results.

Depending on the tenure of the design/build team, it would be a good idea to have a “how are we going to work together?” meeting. The meeting should aim to establish overall objectives in terms of time, cost and quality, and determine the importance of each. Having the design/build team accept and support the ultimate vision of the building will help ensure success.

Adding or replacing a DC impacts many internal and external stakeholders. They need to be involved from the beginning, to design and assume ownership of the processes that will be adopted in the facility.

MM&D | May/June 2013

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Since there are so many factors involved in the design of a DC, the starting point of any project needs to be the creation of an overarching organizational structure. Developing one is very difficult, but it must be achieved before taking the next steps.

Individuals are advised to lift their focus from a single technology or feature and explore how the technology fits into the end result of an efficient, effective retail distribution facility. This often proves difficult for individual business area owners, since it is a departure from day-to-day operations.

Project organization—the integrator role The best way to create a solid organizational structure is simple: hire an effective leader and facilitator. Unless you have a mature, experienced, strategic-thinking group of cross-functional business leaders, you are advised to solicit the talents of a consulting firm.

An effective approach is to position an independent consultant in the role of integrating the design, construction and implementation. Independent is the key. This individual is motivated only by the successful delivery of the overall project, and he or she is not influenced by corporate politics or self-preservation. The integrator allows the individual business leaders to contribute their area of expertise then return to their primary operational focus. The integrator does not have accountability for integrating the individual business areas into a final design.

Consultation Seldom is enough time allocated to the design and integration phases of the overall project, but it is important to make enough time for consultation and planning. It is advisable—especially early on in the project—to collaborate with construction companies, materials handling vendors, distribution operations and information technology experts to establish controls, determine schedules, project costs and establish how to measure quality.

Next issue I’ll wrap up my series with some words of caution and my final thoughts.

MM&D Edward Stevens is the pseudonym of a professional who has worked in the Canadian retail supply chain industry for over 30 years, with a strategic focus on the physical distribution of goods. He and his colleagues have extensive experience in operations management, engineering, and facility design.

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13-05-24 11:46 AM

DATA CAPTURE

RFID of the future Miniaturization and new technologies coming soon

W

hile RFID technology is already efficient, compact and versatile, there is always room for improvement.

In the report, Plunkett’s Transportation, Supply Chain & Logistics Industry Almanac 2013, Jack Plunkett, CEO and publisher of Plunkett Research Ltd in Houston, Texas, looks at some of the up-and-coming advances in RFID technology and what scientists and researchers are doing to change the way RFID is used. Here’s an overview of his findings.

Carbon nanotube technology Tall and skinny, carbon nanotubes are made from graphene and have a wide variety of properties, including the ability to act as transmitters or transistors. Thin film transistors are similar to computer chips, but with a glass or plastic thin-film base instead of silicon.

Plunkett reports in the Almanac that researchers working at Rice University in the US and Sunchon National University in Korea are collaborating to produce nanoRFID tags using a “process that uses carbon-nanotubeinfused ink to make thin-film transistors”.

Plunkett says the researchers were able to produce tags that could hold one bit of information, but were working on versions capable of storing 16 bits and that could “be printed on paper or foil packaging”.

The other limitation with the experimental tags is their range. In experiments they could be read at a distance of one metre, but the researchers hope to eventually make that distance extend to 300m.

Language Besides changes to the physical components of the tags, researchers are also working on the software and communications systems that allow the tags to share their information. An MIT initiative called EPCglobal has “developed a common language for all RFID chips, thereby substantially reducing costs”.

According to Plunkett, retailers like Walmart and product manufacturers like Coca-Cola and Procter & Gamble are backers of this project.

Silicon ink Moving out of the lab, Plunkett says a Californiabased company known as Kovio is using technology developed by MIT to produce “barcodes printed with silicon ink. Chips implanted in the code can store 128 bits of data and transmit them at 106 kilobits per second.”

Kovio is using the technology in its brand of electronic 26

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article surveillance (EAS) tags known as !FaST. Since the tags can be invisibly embedded into items, the company sees them as a fit for apparel, along with other goods.

Modern microdots And yet more MIT developments come from the Telmex Lab for Communications and Development. Researchers at the lab have developed a 3-mm-wide dot— known as a Bokode—that can be scanned and read by the camera in a smart phone and that can store up to 10MB of information.

New Products Tag for liquids and foils The AD-451m5 label from Avery Dennison Retail Branding and Information Solutions (RBIS) is designed to work on items or packages that interfere with the radio frequencies used by RFID tags and readers. The tags, which will be available in Q3 2013 can be used on FCC or ETSI frequen frequencies and have a high read sensitivity. Products that can interfere with RFID signals include liquids (such as perfumes, cosmetics and pharmaceuticals), metal (including house housewares) and those covered in metal foil packaging.

Compact scanner The QB30 stationary 2D barcode scanner from DENSO ADC has a wide-angle lens allowing it to be placed 4cm away from the barcodes to be scanned. The unit also has a small footprint—it measures 6cm by 6cm by 2.5cm—making it suitable for placement in small spaces. The QB30 scans an assortment of 2D and 1D codes. It can batch scan up to eight codes of two different types at once.

Fast handheld reader The newest versions of the DataMan 8000 series of handheld barcode readers from Cognex Corp are speedier than earlier models in the line. The updated readers use the company’s Hotbars image analysis technology to read 1D barcodes and its 2DMax+ algorithm on 2D codes. They also employ a rapid, dual-focus image acquisition routine that adjusts the decoding process when barcodes of different sizes are scanned. The 8000 series also gives users the option of indicating the difficulty of the code to be read to help speed up the scanning and decoding process (for example setting the DataMan on easy for high-contrast codes allows it operate faster than on the normal setting which can read more challenging codes). The 8000 Series comes in two basic models. MM&D

MM&D | May/June 2013

13-05-24 11:39 AM

LEARNING CURVE

Buying talent on a budget How to strategically outsource your staffing needs

I

n Canada, every region has its share of skill shortages and worker retention/employability challenges.

In our industry, the cost of fixed labour—specifically for full-time employees—is something companies try to reduce to improve financial performance.

To counter such problems, companies in almost every industry connected to supply chain are increasing their use of temp agencies and suppliers of contract employees.

However, to properly manage labour costs and achieve profit performance goals, companies require wellplanned HR programs. Forecasts and budgets must incorporate the corporate labour planning strategy.

Many industries have used a combination of in-house employees and outsourced labour to avoid having their workforce grow beyond market requirements for each cycle, season or project. To do this successfully, companies must take a careful approach to sourcing staff from agencies. Cost savings must be proven through improved productivity, accuracy, customer satisfaction levels and sustainable and consistent results.

Companies must engage good staffing providers.

Done properly, this will lead to a successful new business relationship, benefitting both parties over the long term. Done incorrectly, it could lead to mismanagement, and a pattern of contracting costly and ineffective temporary workers.

Qualifying the staffing company vendor is usually the job of HR. However, the operations department must also stay highly engaged to make sure prospective workers are screened and selected with the appropriate corporate goals in mind. It is also extremely important for a company to clearly communicate performance expectations.

Though good planning can cut the risk of incurring runaway costs for outside labour, even the best laid plans can be dashed. Having a collaborative, positive, productive relationship with a staffing provider will ensure requirements and expectations are met.

This includes finding ways to offset costs. To reduce the cost of temporary staffing services, companies should ensure they have a pre-screening and orientation program consistent with their in-house programs.

They must also measure improvements in performance along the learning curve; reduce overtime; avoid use of temps during statutory holidays; implement a time tracking system; use satellite tracking for temps in the field or on the road; offer fixed shift schedules; and share performance metrics and objectives to improve productivity.

The general labour pool for a staffing company is MM&D | May/June 2013

03MMD-lc.indd 27

no different from any employer, so workers from agencies whose contract assignments are varied tend to have a broader exposure to the industry.

Still, anyone new—either an in-house employee or temporary workers sent from a staffing company— requires full details of the scope of the work. They also need opportunities to build their knowledge base with orientation and training related to the position and duties.

Too often, companies view outsourced staffing as a stop-gap measure. Instead, they should be looking at this as a great opportunity to find candidates with long-term potential. Therefore, it is important to establish a buy-out term up front, or have a process in place for making it known to staffing firms when they intend to hire outsourced staff.

In some cases, permanently hiring temporary workers makes sense, especially given the investment of time that has already been made. Depending on the level of success your recruiting or staffing firm has in finding strong talent, relying on agencies to source your workforce can be a great HR tool.

An effective recruiter with an extensive industry contact database can access temporary candidates which companies hiring directly may not be able to reach, especially since in-house recruiters are unlikely to contact competitive firms.

Some companies may feel their employer brand and in-house recruiting efforts will be effective enough to help build a workforce, but they are the exception.

And though I’d argue that while the ratio of in-house versus outsourced workers hinges somewhat on a company’s cost management strategy, ultimately it’s about how eager hiring firms are to pick up the kind of candidates that can move the business forward.

To stand out from the crowd as the employer of choice, companies must do more than upload job postings and lay out expectations. Today’s talent pool expects to be courted and pursued. And it’s easier for companies to find the good people when they know what their current employees think of them, including their temporary workforce. It provides companies with a better understanding of their hiring challenges and retention success factors.

All this will lead to the hiring of talented, productive employees—no matter what avenue you have chosen to take in order to get them on board.

MM&D

Tracy Clayson

Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel. tracy@in-transit.com 27

13-05-24 11:42 AM

LEGAL LINK

Storage Liens [Part One] A primer on what they are and how they function

I Marvin Huberman

am often asked by my commercial clients, be they landlords, property managers, or carriers—when they are owed money by someone who leaves personal property with them—how can or should they deal with that property, legally and practically. Should they dispose of the property? Store or sell it? Can they invoke storage lien legislation? Or should they apply to the court for a judicial determination of their rights and remedies?

The answers depend on the specifics of each situation. But here are some highlights of an important Ontario statute that can greatly help in the collection of debt in certain circumstances.

the amount required to be paid comes due.

The storer will lose the lien which will be discharged—and cannot be revived—if possession of the liened article is surrendered to, or lawfully comes into possession of, the owner or certain other persons described in the Act. But if valid, a storer’s lien under the Act has priority over the interests of all other persons in the article.

This means that a properly obtained storer’s lien under the RSLA has priority ahead of a perfected security interest in the same article.

The RSLA

Under the RSLA, un unpaid storer who is entitled to a possessory lien, and who gives up possession of the article without having been paid the full amount of the lien, has, in place of the possessory lien, a nonpossessory lien against the article for the amount of the lien claimed that remains unpaid.

The non-possessory lien takes effect from the time the lien claimant gives up possession of the article.

For the non-possessory lien to be enforceable, the lien claimant obtains a signed “acknowledgment of the indebtedness” which may be on the invoice or other statement of account. This acknowledgment of indebtedness is without prejudice to the right of the owner or any other person to dispute in a proceeding the amount of such lien.

The Ontario Repair and Storage Liens Act (RSLA), which was enacted in 1989, and since amended, consolidated the law of repair and storage of articles or personal property and codified in a comprehensive fashion the rights and remedies of repairers and storers, who are entitled to claim a lien for the repair, storage, or storage and repair of an article.

My comments below will be confined to storer’s liens and will not address the provisions of the RSLA that deal with repairer’s liens.

Article The RSLA applies to an article which is defined in section 1 to mean “an article of tangible personal property other than a fixture”.

Storer Under the Act a storer means a person who receives an article for storage or storage and repair on the understanding that the person will be paid for the storage or storage and repair, as the case may be.

Storer’s Posessory Lien Subject to certain limits and compliance with applicable provisions of the Consumer Protection Act, 2002, a storer has a lien against an article that it stored (or stored and repaired) for the amount agreed on or the fair value of the storage (and repair) and other expenses incurred, and the storer can retain possession of the article until the amount is paid.

The storer’s lien arises and takes effect when the storer receives possession of the article for storage or for storage and repair.

The storer may sell the article that is subject to the lien in accordance with the applicable provisions of the RSLA after 60 days following the date on which 28

03MMD-ll.indd 28

Storer’s Non-Possessory Lien

Standard of Care Under section 28 of the RSLA, a lien claimant that has possession of the goods shall use reasonable care in their custody and preservation, unless the law imposes a higher standard. The lien claimant is entitled to recover the commercially reasonable expenses incurred in the custody, preservation and preparation for sale of the article, including the cost of insurance and taxes and those expenses are properly chargeable and secured by the lien on the article.

The lien claimant may also use the article for the purpose of preserving it or its value, demonstrating its qualities or properties in order to effect a sale in accordance with a court order or in accordance with any agreement with the owner.

In Part Two I’ll examine how they can dispose of property obtained via a lien.

MM&D Marvin J. Huberman, LLM, is a Toronto lawyer, mediator and arbitrator. www.marvinhuberman.com MM&D | May/June 2013

13-05-24 11:42 AM

MATERIALS HANDLING

Warehouse meets e-commerce Changing logistics environment forces evolution

“S

ay Hello to Hal, your new warehouse manager” was the title of a column written a decade ago.

It forecast that with continuing advances in computer software and hardware, there would be corresponding gains in (labour) productivity. What it described was a continuing speed-up of management and control that resulted in real-time warehouse management.

This process was complete when the management process directed—in real time—the performance of each worker and when each task was able to be measured against a performance standard, according to management’s directions.

The need for (and importance of) enhanced productivity has greatly increased in the past decade, for a number of reasons. Most companies have reduced the number of warehouses, while the remaining warehouses have become larger and more complex. Also, the number of individual items (or SKUs) has increased with consumer demand for new and diverse products. Larger warehouse sizes create an opportunity for increased automation, but also result in increased difficulty of management command and control.

Historically, in many consumer-facing market sectors main warehouses shipped to an intermediate warehouse which, in turn, shipped to a retail outlet.

Order volumes were larger, featured more SKUs per order, and were easier to pick and pack efficiently.

E-commerce The rapid growth of e-commerce has also meant supply chains have needed to adapt to the new retail model. Now, several intermediate layers of the traditional supply chain are typically bypassed when customers place orders online.

Over the long-term, e-commerce shows the potential to eliminate much of the current volume and diversity offered by retail/wholesale outlets today, not to mention the supply chain operations that support those retailers. The e-commerce practices of free shipping and free returns, for example, offer a strong inducement to lure customers away from physical shops.

While today’s e-commerce volumes only account for a relatively small fraction of total retail sales, the numbers are expected to grow rapidly.

From the customer’s perspective, the possibility exists that retail outlets will offer less volume and fewer SKUs in the future as they will be forced to become specialists offering a smaller selection of niche goods rather than a broad general inventory.

MM&D | May/June 2013

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The implication of e-commerce from a warehousing perspective is that over the long term, the number of direct interactions between warehouses and the end consumer will increase dramatically.

For supplier warehouses this will greatly increase the number of picks and number of orders. The cost pressure is also exaggerated because the average order size is significantly smaller. Additionally, the decreased volume and lower value per item selected creates a double cost whammy.

Historically many product quantities could be divided into unit-load, full-case, sub-pack and individual item quantities. When shipping to retail warehouses (except for repair parts) usually unit-load and full-case quantity unit volumes predominated. In e-commerce, sub-pack and each volumes are the dominant order quantity selected in many product categories.

Warehouse costs also increase with the shift to lessthan-full case order-selection volumes and the associated need to remove the shipping case before order selection. Specialized order-selection areas, commonly referred to as “forward picking” zones, are often created to handle this volume. These have to be complemented by packing and labeling work areas which are not required for traditional full-pallet and full-case product handling.

Dave Luton

Order-volume tsunami While a number of order-selection and packing solutions exist, costs can increase as much as two- to three-times over full-case order selection. This changing environment has the potential to create a pick- and order-volume tsunami for many warehouses.

The real-time command and control forecast a decade ago is now coming true. Some parts of warehouse operations already have this capability in fixed workstation equipment like pick-to-light or carousel systems. Mobile devices such as tablets, or the technology used in smart phones, offer the capability to extend this capability to all sectors of the warehouse and provide a system-wide real-time picture of activities.

In the columns of a decade ago, the forecast was a potential reduction or elimination of the human management element altogether. In future columns, I will discuss how this will work, especially in the context of the changing retail landscape.

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

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13-05-24 11:44 AM

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