MM&D (Materials Management & Distribution)

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October 2012 $8.00

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Plus: Project cargo shipping challenges Social media and job hunting Supply chain university education Ordering and receiving through the cloud Pallets, pallet racks and packaging

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Taking Stock

Beneficial numbers I

n this issue you’ll read a lot about the 2012 Annual Survey of the Canadian Supply Chain Professional.

In addition to the main feature about the survey (starting on page 20), in which a record 2,405 of you participated, you’ll see the survey referenced in a number of articles in the magazine.

But even with all of the coverage, we’ve barely scratched the surface of the results.

Looking through the data, there are little questions and categories, that while not the major pieces of information everybody wants to know, are still revealing.

One set of questions that caught my eye dealt with benefits. Since 2008, the number of people who say a comprensive benefits package is important has declined. It’s not a large decline, but it’s still indicative of a general trend. This year 94 percent of respondents said having a package is important.

In 2008 that number was 97 percent.

That leads me wonder about why the change. Are people happier with their overall salaries so they’re

willing to overlook the benefits? Are supply chain professionals becoming more independent and entrepreneurial in nature?

The question becomes more complicated when you factor in the results of the companion question: how satisfied are you with your benefits package?

Eighty percent of people said they were satisfied with 29 percent being very satisfied and 51 percent somewhat satisfied.

That gap of 14 percentage points indiciates this is one area businesses should address if they want to keep their supply chain staffers happy. That difference, while significant, wasn’t the biggest in the study. There’s a 27 point difference between the importance people place on performance recognition and how well they feel their good job performances are being recognized at work.

Similarly there are 24 point gaps between the importance of having a competitive salary and the actual competitiveness of what respondents are getting paid, and between the importance of advancement opportunities and the opportunities people actually have. For an industry that is so short-staffed, it seems these are issues worthy of attention by HR departments.

For even more about the numbers and some in-depth discussion about what they reveal about the Canadian supply chain, please join in our webinar on November 21. See page 23 for details.

October 2012 | Volume 57 | Number 6

Contents Departments

Columns

Features

3 4 6 9 10 13 14

30 Retail So you think you need a new DC

16 Caterpillar Tunneling Boring through shipping challenges

20 Annual Survey of the Canadian Supply Chain Professional

32 Learning Curve Rewards and recognition

18 The missing link Social media and job hunting

26 LCBO Managing through the cloud

19 Degrees of change Supply chain university education

29 Equipment focus Pallets, pallet racks and packaging

Taking Stock Supply Chain Scan Movers + Shakers Benchmarks Done Deals Global Focus Professional Development Directory

34 Legal Link

Fraudulent actions 33 Materials Handling Keeping up with the times

MM&D | October 2012

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ProMat preview Innovation and education are focuses of Chicago conference, Page 6

RFID

Market growing across the world, Page 12

Inside | WMS sales up, page 12 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

BIG MAGAZINES LP Executive Publisher • Tim Dimopoulos Vice-President of Canadian Publishing • Alex Papanou President of Business Information Group • Bruce Creighton HOW TO REACH US: MM&D (Materials Management & Distribution), established in 1956, is published 7 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. EDITORIAL AND ADVERTISING OFFICES: 80 Valleybrook Drive, Toronto, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140.

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Deep thinking

Port of New York and New Jersey readying for post-Panama world

By Carolyn Gruske

B

ob LaMura, manager of maritime relations for the Port Authority of New York and New Jersey says the authority’s goal is to “make the world a smaller place” but in order to do that, it’s making its harbour deeper and its bridge taller.

The port, third largest in the US and the largest on the east coast, sees 5.5 million TEUs a year, and it is expecting a four percent rate of growth annually over the next five to eight years.

But LaMura told a Toronto audience attending a presentation hosted by the port that it wants to grow bigger and handle more, hence the renovations.

A harbour deepening project is currently under way so larger ships designed to take advantage of the Panama Canal expansion can call on the port. Even the ships calling on the port today could benefit from deeper water.

“Both [ocean carriers] MSC and CMA have brought into the port fully laden container vessels in excess of 9,000 TEUs, so the Port Authority’s strategy is not to play hockey where the puck is but play hockey where the puck’s going to be,” says LaMura.

Currently harbour maintenance and harbour and channel deepening efforts are under way.

“By the end of this year the channel will be 50 feet deep or more in certain areas, and will be able to take the biggest vessels coming to the east coast,” says LaMura.

Work is also being done on the Bayonne Bridge. Ships leaving the ocean and heading to the port’s terminals need to cross under the bridge, but “the problem is it’s too low”, says LaMura, adding that some ships are coming in so low in the water “they are scraping mud”. Once unloaded they sit too high on the water and have a difficult time passing back under the bridge unless they wait for low tide.

“So the issue is the height of the bridge. We’re going to spend US$1 billion dollars to correct that.

“We can’t wait for those bigger ships to be coming through the canal. We can’t wait for those bigger ships to be begging to call on the port. We’ve got to be ready when they’re ready.”

The project is to take six years including four years for studies and approvals and two years to build. It was fast-tracked for approval by the federal government and is now six months ahead of schedule. The scheduled completion date is sometime in Q4 2015.

Despite the construction, there will be no disruption to vessel traffic underneath the bridge as it is dismantled and rebuilt. The bridge’s archway, which is protected for its historical value, will be raised and reinstalled.

Construction is also occurring on rail lines and sidings at the port. The express rail system at the Port Newark Container Terminal (PNCT) is undergoing expansion to double its capacity. That work should be completed by 2014.

A flyover has also been built between the marine terminal and the rail siding.

Continued on page 6

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MM&D | October 2012

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Supply Chain Scan Continued from page 4 Currently, containers off-loaded from ships are placed on trucks and transported over busy public roads to the rail siding.

New siding is also being installed by the Port Authority between the Global Marine Terminal (GMT) and Bayonne. Once all the work is complete, each of the terminals in the port will have its own dedicated rail siding.

Vance Bennett, the director of port development at CSX Transportation also spoke at the event. The rail company is investing in the GMT siding project by building supporting infrastructure, which will likely be completed by the end of 2014, about six months behind schedule.

A large portion of Bennett’s presentation was devoted to CSX’s northwest Ohio terminal, which began full operations in 2011. Between New York and Chicago, it has five state-of-the-art cranes. This terminal will be used as a model for future CSX facilities.

“The cranes actually span eight rail tracks, two truck lanes and three container stacking lanes. Traditionally, rail would come in with a long train. It would be blocked out by city destination, you’d break those blocks and connect them to the appropriate trains,” explains Bennett.

“Now we can pull the trains right alongside those cranes, you can lift the containers off the [incoming trains] and put them on trains staged for departure.”

Bennett says the cranes are mainly computer operated and controlled by the terminal’s operation system. The operator only has manual control for the last 2.4m (eight feet) during the pick-up or drop-off.

“When the train comes in, we have a camera that takes a picture of the train ID for the rail car and the containers on the rail car and feeds it to the operating system, which feeds it to the cranes. The cranes are guided by the computer system so they know where to pick up a container and what train to put it on.”

RFID at the port The port is working with Sustainable Terminal Services Inc, a consortium of terminal operators in the port to implement an RFID-based truck tracking system. It will enable the port authority and the terminal operators to know the content of containers coming to and from the port and the identities and backgrounds of the people transporting and handling the cargo.

Each truck entering the port will have its vehicle identification number (VIN) tied to its RFID tag. The system should be in place in the first half of 2013.

New year, new innovations The latest technology will be showcased at ProMat 2013

By Carolyn Gruske

I

f you’re looking for innovation in the supply chain, you should be able to find it in Chicago in January 2013.

That’s where the next iteration of the ProMat conference will be held. Like past versions, ProMat 2013 will have a trade show and educational seminars, but this year it is adding something new. It is launching the ProMat Innovation Award competition.

Two awards will be given out to companies exhibiting at the show: best new innovation and best innovation of an existing product.

Finalists will be required to demonstrate their products on the show floor, and a special exhibit will feature all of the entrants.

The other new feature returning attendees can expect to see is an extra keynote session.

Steve Forbes, chair of Forbes Media and onetime US presidential hopeful, will open the show with a presentation about how the Continued on page 8

Movers + Shakers The XTL Group of Companies has undergone a management change. Serge Gagnon has been named CEO of the Toronto, Ontario-based transportation company. Marcel Francoeur is now CFO. Genevieve Gagnon stepped into the role of president. Luc Francoeur is executive vice-president.

CP has a new vice-president and chief information officer. Michael Redeker takes on the role and will be responsible for redefining the railway company’s future strategic information technology roadmap, improving asset utilization and shipment management, and employee productivity. He reports directly to CP’s president and CEO Hunter Harrison.

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David Henderson was elected as vicechair of the board of directors of the Halifax Port Authority. He has been a member of the board since 2007 and currently chairs the security, environment and safety committees and serves on the audit and gateway strategy committees.

David Henderson

Klaus Goersch is the new executive vice-president and chief operating officer of Air Canada.

A commercial pilot, Goresch joined the company after holding an executive vice-president’s position at Air Tran Airways. He will work out of Air Canada’s Toronto hub.

MM&D | October 2012

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p e t ro l e u m e qu i p m e nt

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Supply Chain Scan Continued from page 6 incoming American president and his administration will affect future business growth and the state of the economy. (The show’s opening day is also the day the president-elect is inaugurated.)

The other keynote speakers are Henrik Christensen from Georgia Tech, who will talk about how robotics will help businesses drive future growth, and futurist Edie Weiner, who will lead a panel discussion about how material handling and logistics will impact future supply chains.

There are five education tracks. Three are sponsored by the Association for Automatic Identification (AIM), one is sponsored by the Council of Supply Chain Management Professionals (CSCMP) and one is co-sponsored by the Material Handling Industry Association’s Ergonomic Assist Association and the National Institute for Occupational Safety and Health (NIOSH).

“I think there is going to be more focus on education, with the three keynotes, the 100 sessions and the education track sessions. We are offering more educational opportunities, and educational opportunities at different levels. The show-floor sessions will be ranked as beginner sessions, advanced sessions and middle-of-the-road sessions,” says Carol Miller, vice-president of marketing for the Material Handling Industry Association (MHIA), the group that organizes ProMat. Miller says she is expecting over 30,000 attendees and more than 800 exhibitors at the show. As in past years, the show is being held in conjunction with the Automate 2013 trade show, which showcases automation technolo-

gies and solutions.

While there will be lots of announcements at the show, a few companies have decided to provide sneak peeks of their upcoming news.

RMT Robotics The Grimsby, Ontario-based division of Cimcorp Oy will showcase a new layer picking system.

RMT Robotics says by using a combination of vacuum and clamping technologies, the system will able to pick up the vast majority of consumer products on the market, including corrugated or boxed cases, shrink wrapped products, bottles, tubs and open trays SDI Industries Inc Los Angeles, California-based SDI Group USA will bring its new sorting system to Chicago. The SORTRAK is designed to travel on an extremely flexible route through a facility. Its path can include inclines, declines, serpentine corners, Continued on page 10

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Supply Chain Scan Benchmarks Ron Carter has been named recipient of the CITT 2012 Award of Excellence. The award, which will be presented in November at the Reposition 2012 conference in Halifax, is peer-nominated and is designed to recognize a strong commitment to the logistics profession and to CITT. Carter is director of logistics at Clearwater Seafoods in Bedford, Nova Scotia.

The Port of Hamilton’s redevelopment work on Pier 22 has earned the port a place as a finalist in the Brownie Awards. The awards are given out by the Canadian Urban Institute and recognize leadership and innovation in brownfield development. The pier was a former steel rod mill contaminated with a number of pollutants including asbestos and PCB transformer oil. Now it is home to tenants with multi-million dollar facilities and a snapping turtle and migratory bird habitat called Hobson Pond.

Lexington, Kentucky-based Clark Material Handling Company named its top parts, service and customer service managers from across North America and

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there were two Canadians on the list. Dan Zawacki of AR Williams Materials Handling in Edmonton, Alberta was named one of the top parts managers. A top service manager award went to Jim Erwood of Williams Machinery LP in Vancouver, British Columbia.

The Transit Inventory Management Services project (TIMS) run by Metrolinx, the Town of Oakville, the Region of Waterloo, York Region, the Cities of Brampton, Burlington, Hamilton, and London earned a Peter Marshall Innovation Award. The award goes to municipal governments and agencies that demonstrate innovative ways to improve capital and/or operating efficiencies. TIMS consolidates spare parts purchasing and warehousing for transit authorities using a vendor managed inventory service from Neopart.

Raymond Corp is celebrating a major milestone this month. The company turned 90. The company produced its first lift truck in 1922 after George Raymond Sr purchased a small foundry in New York state.

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Supply Chain Scan

Continued from page 8 and multiple levels. It can also incorporate multiple induction stations. The SORTRAK comes with two trays positioned across the sorter, and the sorter’s spin wheels propel the trays along. It can handle sorting speeds of 14,400 trays per hour.

Vidir Machine Inc Vidir Machine Inc, from Arborg, Manitoba, will introduce 10 new models of its Pan Carousel at ProMat. These carousels have a more compact design than earlier models and will include safety light curtains, an ergonomic workbench, and automatic retrieval. The will also come with an assortment of new options including pick-to-light, barcode scanning, security gates, inventory management software, and a wider variety of shelving configurations.

inserts, rollout drawers, intermediate shelves, partitions, dividers and specialty holders.

TMI Pittsburgh, Pennsylvania-based TMI will expand its Screen-Pro roll-up screen product line by introducing Screen-Pro bug screens to control flying pests, Bird-Pro heavy mesh screens to keep birds out and Vinyl-Pro supported PVD doors which separate differing environmental areas according to temperature, dust, debris, fumes and noise.

Done Deals

Kardex Remstar Kardex Remstar, LLC, the Westbrook, Maine-based division of Kardex Group, will highlight its Megamat RS Model 650 vertical carousel. Designed for industrial material operations, it holds up to 650Kg (1,433lb) per carrier with a total unit load of 19,000kg (41,887lb). The Megamat RS comes in a wide range of sizes and with numerous options including

Mullen Group Ltd, based in Okotoks, Alberta, will provide transportation, logistics and oilfield services to two businesses in the Nortwhwest Territories, HCI Holdings Ltd and Red Dog Mtn Contracting Ltd. The deal between the three companies is actually a memorandum of understanding (MOU) allowing for the creation of Canol Oilfield Services Ltd, a standalone company, with Mullen Group holding 45 percent of the shares and HCI Holdings and Red Dog owning the remaining 55 percent.

Universal Truck and Trailer (UTT) has been chosen as the exclusive Atlantic Canada distributor for SaintGeorges-de-Beauce, Quebec-based Manac Inc’s lines of Manac and CPS semi-trailers. UTT will handle sales, marketing and support to customers across Manac’s product portfolio except for vans, which will be handled from Manac head office.

Kenco, a Chattanooga, Tennessee-based 3PL has been chosen to handle US distribution and warehousing for Advantage Consumer Healthcare, a Pittsburgh, Pennsylvania-based healthcare product company.

Minneapolis, Minnesota-based transportation company CH Robinson Worldwide Inc is purchasing Phoenix International Inc, a privately held freight forwarder for US$571.5 million in cash and approximately US$63.5 million in stock. The deal is expected to close by the end of the year.

Jonjo Transport Refrigeration of Mississauga, Ontario has acquired temperature control systems manufacturer Thermo King Eastern Canada, also located in Mississauga. Jonjo will continue the product lines and keep existing Thermo King facilities open.

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MM&D | October 2012

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Supply Chain Scan

RFID adoption to grow

By MM&D Staff

T

he RFID market is expected to boom over the next five years according to a study conducted by London, UK-based ABI Research.

For traditional markets (which ABI defines as the automotive sector and the agricultural sector, where RFID is used to identify animals), researchers

are expecting the value of the market to grow to US$2.8 billion between 2012 and 2017.

But it’s in non-traditional markets where ABI really expects to see dramatic adoption. The growing use of RFID technology in asset tracking, supply chain management, and baggage and cargo tracking, should drive the market to a value of US$4.5 billion in the same timeframe.

Heavy demand for warehouse management systems

By MM&D Staff

L

ast year was a good one for warehouse management system (WMS) vendors, and odds are the trend will continue for the foreseeable future.

This prediction is made by the ARC Advisory Group in a study about the WMS market. According to the report, in 2011 the global WMS market grew by more than 10 percent and the growth occurred both in emerging markets and mature market segments. In total, the WMS market was estimated to be worth US$1.3 billion.

ARC has been producing reports on the WMS market for over ten years, and the author of this year’s report, ARC enterprise applications analyst Clint Reiser, says this period was noteworthy. “I would say the growth from 2010 to 2011 was above trend—above the long-term trend.”

Breaking down the report, Reiser concludes the growth in the mature market segment occurred because the market is bouncing back from the recession and needs to play catch-up with the latest technology.

While mature markets, like North America, may remain strong, most of the growth was seen in Latin America and Asia. In fact, the study predicts emerging markets will drive the future growth of the industry.

The other notable trend was the increasing importance of add-on modules, specifically those addressing areas such as labour management and warehouse

analytics. ARC is “forecasting above average growth rates for the add-ons as more suppliers extend their product lines to include additional add-on options and customers continue to adopt these solutions.”

One other area showing signs of strength is the e-commerce and multi-channel retail segment. The demand is high in this sector for WMS products that support and help manage piece picking, packing and labelling functions.

“The desire to support multiple, integrated channels is creating demand for additional WMS functionality and enhancements that support the information and business process complexity of multi-channel fulfilment,” the report noted.

Reiser says the study produced one result he wasn’t expecting.

“I was surprised by the level of growth in some of the discrete manufacturing industries such as automotive and machinery. I don’t know about expectations, but that was the biggest surprise—the growth in those areas from 2010 to 2011,” he says.

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Supply Chain Scan According to John Devlin, practice director for security and identification at ABI, most of that growth will be in North America during the short to medium terms.

The study broke the market into two segments: active and passive RFID. “For revenues and volumes, the passive market is larger. It has grown more quickly over the years. It’s a lower-cost solution so it’s more likely to be adopted.

But we are seeing growth on the active side of things.

“In terms of number of implementations, it’s not nearly as high as passive. In terms of

Global Focus Eurogate terminal now open The arrival of the MV Maersk Laguna marked the opening of the EUROGATE Container Terminal Wilhelmshaven.

The deepwater terminal is located in Germany at the JadeWeser Port and cost $1.3 billion to construct. It is expected to handle 2.7 million containers per year and will be the only German port capable of supporting larger, post-Panama ships.

revenues, the overall passive market across all applications was approaching US$250 million of which approximately three-quarters was supply chain management and related applications.

“For active it’s almost the same value, but the number of tags and meters were much lower, but they’re much more expensive because they have the battery and additional sensors built into them.”

Worldwide, there are close to two billion passive UHF tags in use, and 10 to 20 million active RFID tags.

“In supply chain, the customer base for RFID is certainly growing. More companies are are seeing the benefits RFID can bring,” said Devlin. MM&D

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Eighth DC for Menlo in Singapore Menlo Worldwide Logistics is building a 400,000sqf warehouse and distribution centre in Singapore.

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It pays to know what you’re doing – and to have the proof on your resume Are you responsible for the movement, distribution and storage of your company’s products? If you are, a professional designation from CITT can help you develop and demonstrate your expertise in warehousing along with the profitable management of materials within larger, integrated logistics and supply chain systems.

There’s a lot at stake CITT knows you’re handling one of your company’s biggest assets. And that you’re also responsible for the cost and time-efficient management of people, resources and ancillary costs associated with managing this inventory. We understand the decisions you make impact your customers and their continuing loyalty. It’s a lot to manage, and a lot to master.

Fortunately, management believes in professional designations Over 80% of employers will pay for the education you need to obtain a designation.1 Human resource experts also report that companies are investing in specialized development of their people, even during tough economic times.2 And CITT can help you get smarter, faster.

A professional designation from CITT is the most respected and widely-held supply chain and logistics credential, outnumbering all others nearly 3:13

CITT is also industry’s most attainable logistics designation: • Only five expert-level, specialized courses are needed for professionals with a college/university degree • World-class business education is available for professionals who need it • It’s accessible, with all required courses available online • It’s affordable and has the best ROI in the business The five specialized logistics courses from CITT provide the greatest depth and breadth of understanding of the silo-free integrated logistics business of any designation program in the industry. Materials Management pros will especially appreciate Logistics Processes, Integrated Logistics and Logistics Decision Modeling to strengthen their operational competencies for more a more profitable supply chain and logistics system. And business courses such as Organizational Behaviour can be invaluable in sharpening managers’ people skills and their ability to motivate.

Visit www.citt.ca for more information and to download your FREE guide to the logistics industry’s most respected source of professional training and most commonly held designation. And get you on your way to higher pay, enhanced professional credibility and other professional enrichments.

Prove you’re a “Logistics Expert”—Add CITT to your professional credentials. And more value to your supply chain. Course work for CITT’s winter semester begins January 16th. Register now to guarantee your spot.

1 ”2010 Salary Survey Results”, Materials Management & Distribution, September-October 2010.

2 Clayson, Tracy. “Learning Curve: What are you worth?” Canadian Manufacturing, Distribution and Transportation News, October 31, 2011.

3 ”12th Annual Survey of the Logistics Professional”, Canadian Transportation & Logistics, January 2011.

CITT11E-PA02-profitability - OUT1 1

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Shipping challenges are anything but boring Tunnel boring machines (TBMs) are disassembled and packed in a specific sequence, shipped to their destinations and reassembled on site.

Even disassembled, Caterpillar Tunneling’s products are project cargo

By Carolyn Gruske

C

“That’s normally done on my own, unless it’s something of a size we have not really built before— something new to us—then I have to go out and source with local carriers and freight forwarders.”

aterpillar Tunneling Canada Corporation is sending five over-dimensional loads and sixteen ocean containers to a customer in Sydney, Australia.

While that may seem like a fairly large order, it’s not. It’s only one piece of equipment: a tunnel-boring machine (TBM).

Locational limitations Caterpillar Tunneling (known as Lovat until 2008 when Caterpillar purchased Besides calculating dimensions and shipping methit) makes the ground-devouring machines used to dig through the earth to ods (it tries to ensure individual loads don’t weigh create underground passages for sewers, utility lines and twin-track railways. more than 90 tonnes), Caterpillar Tunneling works TBMs from Caterpillar Tunneling are in use across Europe and the UK, with the client to determine a shipping order, says the US (one is boring under New York’s Hudson River), Canada (they’re currently being used to expand Toronto’s subway and next month one will be shipped to Vancouver) and in other locations around the world. They’re also being shipped into new markets such as Costa Rica and Turkey (which is taking delivery of two TBMs later this year and two more in 2013).

According to Caterpillar Tunneling’s logistics manager, Aldo Jakasa, a typical TBM is about 6m (20ft) in diameter, but they do get larger.

Designed for dismantling “One machine can be anywhere from five loads to 40 loads depending on the size. Typically, with a machine that’s greater than nine metres in diameter, you can be north of 30 or 40 loads.”

Readying a TBM for shipment isn’t easy. It actually starts while the machine is still in the design stage, says Jakasa.

“I will typically get shipping drawings designed by our engineering department and I will make comments on them before the machine is built, noting if we can ship like that, or if dimensions have to be changed, or if shipping methods have to be changed prior to the build.

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Although the company tries to avoid shipping TBMs by air due to the cost, it has done so when necessary.

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says supply chain manager Avery Schick. lems you find with vessels are delays and vessels not arriving at port on time.

“It’s a process we go through each time we ship We can’t control the weather,” says Jakasa. a machine. The project managers who work with If the weather holds out, the Australia-bound TBM should make pretty good the customer lay out the shipping sequence specifi- time. The first shipments went out the third week in September. The last comcally based on the limitations of the site or the spe- ponents went out on September 27. They were expected to arrive November 3. cific sequence of events. It can vary from a site where The company’s preferred port is Baltimore, but it will use any number of there is all kinds of space for them to build the east coast ports including Halifax, New York, and Philadelphia. Whenever whole machine, to the other extreme where we have possible, it also uses ports closer to home, says Jakasa. a very small confined location in a very populated “If we have the luxury of having large vessels in the Great Lakes in the sumcity area where you can only deliver one load at a mer months and we have a machine that is shipping in that time, we look for the opportunity to cut our inland costs, but that doesn’t happen very often.”

While Caterpillar Tunneling has used airfreight in the past, it tries to avoid shipping TBMs by air simply due to the cost. Airfreight is usually reserved for getting parts to sites quickly to repair the machines.

Not only does the company build TBMs, it also stocks spare parts to keep them running. There are about 12,000 SKUs in its parts warehouse.

If a tunneling machine breaks down, then the whole project tends to shut down, which means somebody winds up paying, says Nick Natale, parts, sales and marketing manager at Caterpillar Tunneling.

“Our end users—the final recipients of our goods—are usually governments with public money, and they are usually not the most forgiving. Neither are the contractors who are trying to hit their target dates. Usually, within their contracts, Over-sized cranes are required to unload and reassemble TBMs. there are late penalties included in what they have to deliver, so there is a lot of time pressure and a lot of visibility, which you don’t always want.” time, and each load sequence has to be exact, with the right one showing up at the site to be unloaded Supply chain quality control and dropped down into the assembly shaft where To ensure the reliability of its TBMs and its stock of spare parts, Caterpillar the machine will begin to mine from.”

Tunneling has placed strict quality control measures on its supply chain.

Other factors include transportation challenges “A document set is created for every TBM we build. Those documents measure (TBMs destined for Costa Rica have to travel over quality parameters of the various components as they go through the manufacjungle roads) plus the availability of the cranes to turing process, or as we receive them or inspect them,” says Schick. handle the pieces and the crews to reassemble them.

Engineered-to-order components are inspected at the supplier’s site before It is the shipping sequence that determines just being shipped. There is no room for error in these custom orders. how the TBMs are disassembled and packed.

“We can’t afford to have it come here and only find something wrong and “If we know we need to start packing at the back have to send it back. It just doesn’t make any sense and costs too much time of the machine, we’ll do that. Or it might be the and money to do so,” says Schick. client wants the front of the machine first, so we’ll Caterpillar Tunneling relies on suppliers both at home and abroad. start from the front. Sometimes they’ll have differ“We have numerous suppliers in Europe. We’ve always done a lot of business, ent launch modes. They might start off in a short historically, in Europe, so from a currency risk standpoint it has always been launch mode with only part of the machine, so a good strategy to have a good amount of material supplied through Europe. they’ll tell us what they need first. That gets com“We also source some materials from China. Also, depending on the ultimate municated all the way down to the floor that that’s location of the machine, we can build some of the larger equipment through how we are to pack and ship,” explains Jakasa. some of our sub-suppliers to make it an easier logistics job to move the whole Disassembly and shipping plans are created machine to site,” says Schick manually. Individualized documents and packaging Ease of transportation is one of the key reasons why the company maintains instructions are created for every TBM. a strong circle of suppliers much closer to home.

“We manufacture and assemble the full tunnel boring machine here. The Transportation methods manufacturing involves all the structures required to build the machine. These The company uses all modes of transportation to are all-round structures that require a lot of heavy welding—I’m talking about move its products, but truck and ship are preferred. plates that are two-inches in thickness or greater. Then there’s the machining “If we are making dimensions that are unable to of all those large fabrications. We do that work primarily in our facility—up to be moved by truck then we have to get rail involved. a certain capacity point. If we exceed that capacity at peak periods of time, we There aren’t a lot of obstacles with trucking, provided source through our network of fabricators within an eight hour travel distance that what you say you’re going to ship is what you because once you get past that it costs too much to ship the fabrications. There ship. Same thing goes with vessel. Some of the prob- are too many transportation issues in getting them here.”

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The missing link

they don’t put a picture up, it seems like a lack of transparency, like they’re hiding something such as not being presentable”.

One trick to making sure your profile stands out is include keywords in it, either in the job descriptions themselves, or in a keyword section.

By Carolyn Gruske It’s important to show activity either by posting updates, joining groups and participating in discusre you linked in? If not, and you’re looking for a job, you could be hurting sions, or adding new contacts. Activity shows you your chances. The 2012 edition of the Annual Survey of the Supply Chain pay attention to the profile and therefore will be Professional (see page 20 for details) indicates many of you aren’t using the more likely to actually respond to a recruiter. newest job-hunting techniques. Specifically, you’re ignoring social media.

“With a recruiter LinkedIn account, I’m only According to the study, this year a mere 52 percent of respondents say they are allowed a certain number of InMails (internal mesusing social media to look for work. Admittedly this is a vast increase from 2010, sages akin to e-mail) per month, so I may be hesitant when only 24 percent of people said they used social media to job hunt, but it’s a to contact a person who doesn’t check their LinkedIn figure that could easily be—and should be—much higher. account,” says Racher.

Human resources professionals Joining discussion groups and and recruiting firms are all turning providing answers to questions are to networks like LinkedIn, and to good ways to boost your profile. lesser degrees Facebook (especially Doing these things makes it easier its BranchOut application) and for recruiters like Davidson to “triTwitter, to find candidates for jobs, angulate” in on people whose skills and if job hunters aren’t on those match open jobs. It also demonsites, they may be overlooked. strates a familiarity with social Steven Davidson, managing media tools, which is a skill of growdirector of Pursuit Placement ing importance to companies hiring Group, a recruiting firm in supply chain professionals.

Edmonton, Alberta, uses social There is one thing you shouldn’t media, especially LinkedIn, to conpost to a discussion board: a notice nect with clients, to post jobs and that you’re looking for a job, espediscussions, and to find passive (he seeks them out) and reactive (they answer cially if you currently don’t have one. ads) candidates for open postings.

“There is a prejudice against the unemployed.

“The platform is built for recruiters,” he says. “It’s built to give both of us—the There’s almost a stigma attached to it in a Catch-22 recruiter and candidate—enough information about each other so there’s a way,” says Stapinski. relatively high level of comfort with each other, with the marketplace and with Posting a ‘I’m looking for work’ notice “has an the company.” element of desperation about it. I don’t like to rule Lindsay Racher, a corporate recruiter for Kinaxis, an Ottawa-based supply anyone out—we look at everybody—but it does make chain management and consulting company, uses social media when hiring. you wonder, why is this person actively looking?”

(Kinaxis has a recruiter account on LinkedIn). She says some supply chain Since LinkedIn is a networking tool, it’s imporprofessionals don’t take advantage of opportunities on social media sites. tant to network. Having too few contacts (or con“I think they’re still learning. Your procurement officers, your purchasing nections), may send up a red flag. Racher likes 50 and logistics people, those types of individuals may not be as heavily online or more. Davidson says because the Canadian supas SAP ERP implementation consultants, or supply chain business analysts— ply chain world is so small, you’re pretty much conthere’s a huge online presence from them, because a lot of their work is done nected to everybody, so you may as well acknowledge online or while travelling. There could be a better presence from those working them. Stapinski’s view is “the more the better” but in the factories and those working in the actual supply chain.” says you should have between two and five written For those who aren’t entirely familiar with LinkedIn as a job search platform, recommendations (short letters of reference attestthere are a few tips to keep in mind. The first, and most important, is to have ing to your skills and qualities) from supervisors. a full profile, complete with the education and work history sections (including Job seekers should follow companies they want meaningful job titles and descriptions) filled in. to work for and should contact recruiters and HR “If they don’t put a lot in there, you’re wondering why they excluded the por- personnel. tions of their work experience they left out, and if they don’t put their education “I have people approach me all the time. As long down, they perhaps don’t have it and that’s an issue” says Andrew Stapinski, as I think there may be a fit, or a fit in the future, manager of marketing and social media at Stoakley-Dudley Consultants Ltd, in I’ll definitely accept an invitation to connect or Mississauga, Ontario. He says it’s also important to attach a photo because “if respond to an InMail,” Racher says.

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Job hunters ignoring social media

A

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Degrees of

change

Supply chain industry is putting more importance on university degrees

By Carolyn Gruske

I

t’s certainly not a requirement today for a supply chain professional to have a university degree hanging on the office wall, but that day may be coming in the near future.

Not only are more and more universities offering supply chain related courses, more and more employers are demanding new hires have not only practical skills, but the letters behind a name indicating undergraduate business degrees, MBAs or PhDs. “There are a lot of programs coming out and a lot still under development. I think the universities are just trying to accommodate the demand in the marketplace” says Tim Moore, president of Toronto, Ontario-based recruiting company Tim Moore Associates.

“A lot of it is being driven by the corporate community. They’ve finally woken up and joined the bandwagon. Employers are demanding degrees. They see the value-add, but it has just taken a while.”

Kevin Maynard, executive director of the Canadian Supply Chain Sector Council (CSCSC) shares Moore’s view.

“I would say over the last two years, universities have seen an opportunity to take advantage of employer demand for increasing levels of skillsets and knowledge by their employees, so universities are starting to take advantage of that market and have begun to develop programming to meet that need.”

Based on the results of the 2012 Survey of the Canadian Supply Chain Professional (see page 20), 41 percent of respondents have a university degree.

Degree holders, however, earn slightly more ($89,299) than the average supply chain salary ($85,178).

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As employers begin to see the value of having degrees, they’re willing to help employees obtain them. Igancio Castillo is a professor of business at Wilfrid Laurier University in Waterloo, Ontario. He says the school’s part-time supply chain graduate students (those holding full-time jobs in the supply chain and studying for their MBAs at the same time) work at “companies that support them with money or time off to pursue their studies.”

Maynard says its common for employers to pay for tuitition or textbooks.

The value employers get from paying for those costs varies. Maynard says when companies look to hire degree holders they “need to see the soft skills developed and demonstrated by candidates, including teamwork, leadership and analytical skills.”

Moore says, especially for current supply chain professionals, going back to school gives them the “opportunity to evolve and keep sharp. They might go five or six years at work before coming across a new dynamic or a new way of approaching something,” whereas in their courses they get exposed to the latest in business trends, theories and practical applications.

Castillo has a similar perspective. “Degrees are not just about the supply chain. Students gain a completely different perspective about the business.”

The appeal of having a broader, better understanding about business as a whole is why he thinks even young students who have just graduated from high school enroll in supply chain undergraduate degree programs. (WLU offers supply chain related-degrees at the undergraduate, masters and PhD levels.)

“The supply chain has been in the media a lot more lately. First it was the Hurricane Katrina issue. Then there was a lot about how supply chain disruptions cause companies to struggle,” he says.

Picking the right university can program can be a bit daunting. The CSCMP has given four universities accreditation (http://www.supplychaincanada.org/ en/accreditations) for their degree-granting programs. Its Education and Training Compendium (http://www.supplychaincanada.org/en/compendium) lists other undergraduate and graduate programs offered by Canadian universities.

Maynard suggests doing a lot of research before picking a program. Look at the faculty, the placement rate, the reputation of the school, the type of research performed, and how strong the ties are between the university and the business community. Make sure the school forces students to apply their knowledge with case studies, presentations, leadership and teamwork exercises, and problem solving opportunities.

Castillo says blending practical experience with academic instruction is key to getting a good education and producing graduates businesses hire.

At the entry level, such as those jobs requiring undergraduate degrees, “businesses want to see people who can do some analytics and data analysis. At the MBA level they want managers that have intuition and insights into problems”.

For an industry that, in the past, has been so focused on promoting people who have years of practical experience gained on the job, Moore says he is starting to see real change in the qualifications demanded by employers. A current client, for example doesn’t want anybody with more than seven to eight years of experience.

“Instead they’re looking for an MBA as a base minimum with a supply chain perspective, with three to five or three to seven years of experience with a sourcing perspective. There’s how fine-tuned it’s getting. The intention is they’re going to move the individual up throughout the organization.”

While the trend is definitely shifting towards degrees, Moore says seasoned pros without degrees don’t have to worry just yet.

“Would they bump out an older, established individual who has 15 or 20 years of experience without the same level of education? I would say not. At least not yet.”

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Two steps forward…

The most comprehensive survey of the Canadian supply chain looks deep into the industry.

Carolyn Gruske breaks down the results.

I

f there’s an overall theme to this year’s Annual Survey of the Canadian Supply Chain Professional, it’s “two steps forward, one step back”.

The survey, a more comprehensive version of the 20-plus-year-old Supply Chain Salary Survey, shows gains in some categories, but also indicates declines in others. Overall the picture it paints is one of a generally improving situation for supply chain professionals, just not completely rosy for everybody.

This year’s survey, which was conducted on behalf of three magazines— MM&D, Purchasingb2b, and CT&L, and sponsored by the Purchasing Management Association of Canada (PMAC)—was answered by 2,405 members of the Canadian supply chain community, the largest pool of respondents in the history of the survey.

The accuracy of the study is +/-2 percent 19 times out of 20.

of 10.3 percent. In comparison, their colleagues in British Columbia only saw their salaries grow by 1.4 percent.

Having a competitive salary is important to 97 percent of respondents, and it seems most people are relatively satisfied with how competitive their wages are. Nineteen percent reported they were very satisfied and 52 percent said they were somewhat satisfied.

This is consistent with previous years’ results.

Most people are optimistic about future compensation. A total of 70 percent of respondents said they anticipate an increase in salary in 2014.

Salary

Job titles and compensation

The figure everybody wants to know is the average supply chain salary. In 2012 As expected, there was a wide spread in salaries it is $85,178. between those at the top of the supply chain ladder In 2011 the average salary across Canada was $82,800. So in 2012 the mean and those on the lower rungs. climbed 2.9 percent, which is better than the 2.2 percent increase between In 2012, those at the executive level reported a 2010 (when the mean salary was $81,000) and 2011, but it’s still a far cry from mean salary of $142,322 (compared with $140,000 the 3.7 percent jump between 2009 ($78,100) and 2010. in 2011). Those at the managerial and clerical levels, As is typical, there was as wide disparity between salaries across the country. and those with professional status (engineers, for Manitoba and Saskatchewan had the lowest average in 2012 at $75,190 while example) also saw slight increases (2.6 percent for western neighbour Alberta paid the most at $101,448. managers, 3.3 percent for engineers, and 3.5 percent While Atlantic Canada is on the lower end of the salary scale, supply chain for clerks and administrators). professionals there experienced the highest percentage of pay increase in the Those who classify their roles as supervisors, concountry. Jumping from $68,700 in 2011 to $75,781 in 2012 represents an increase sultants, tactical/operations and “other” weren’t as As Canada’s leading and largest association for supply chain professionals, the Purchasing Management Association of Canada is dedicated to providing its 6,500 members, and the SCM community at large, with important tools to assist in their professional development. The Annual Survey of the Canadian Supply Chain Professional is one of the leading indicators of industry and employment trends within the Canadian supply chain, and provides invaluable insight into where the profession is headed.

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lucky. Supervisors saw their salaries fall 0.4 percent from 2011 to 2012. Consultants experienced a 0.9 percent drop.

Operational and tactical personnel experienced a major loss, as their salaries came in 6.8 percent lower than the previous year, and those in the “other” category lost the most with a 10.6 percent decrease.

Fig. 1: Mean salary by geographic region $82,836 Atlantic Canada

$101,448

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06MMDsalsur.indd 21

Ontario Manitoba/Saskatchewan

$75,190

Gender differences

As much as it would be great to report the wage gap between men and women has closed, that’s still far from the case.

Women are making significantly less than their male counterparts, and they aren’t getting raises at the same rate.

In 2012, men earned on average $91,181. Women averaged $75,033. That’s a difference of over $16,000.

In 2011, the figures were $88,300 for men and $74,600 for women—a difference of $13,700, so it appears the gender gap took a backward step this year. As to whether it will regress to 2010 levels (where men were making $22,300 more) remains to be seen.

Not only are women falling behind in total wages, they also lost ground when relative wage increases are considered. Between 2011 and 2012, women’s wages grew a measly 0.6 percent while men saw their mean salaries increase 3.2 percent.

Admittedly, this came after a year when the trends were reversed—from 2010 to 2011 women gained 4.6 percent while men saw their salaries decline by 5.7 percent.

Although the amount of work experience can be considered a separate factor in calculating compensation, when sex is looked at through the lens of experience, the results are particularly revealing.

For those who have worked in the supply chain for five years or less, their mean salary is $55,926, with men earning $56,127 and women receiving $55,690. (These figures are all down from 2011 when the average was $64,900 with men getting $68,500 and women earning $60,600.)

Six to 10 years of experience is worth $69,404 on average. Women working that length of time earned $67,531, but men received $71,395 which is 17.4 percent more.

For 11 to 15 years, men were compensated with $83,614 while women earned 19.6 percent less at $69,905, with the combined average being $77,979.

In the 16 to 20 year category, the average was $90,756 with men worth $95,120 and women $82,762, a difference of $17,826. That’s only a 14.9 percent spread.

The greatest gulf between the experience of men

Quebec

$75,781

Alberta

$76,726

British Columbia

$83,207

and women comes into play for those who have worked in the supply chain for 26 years or longer. With this amount of work experience, women earn $88,352. Men earn $107,337. That’s $18,985 less for the ladies than the gents, which gives this pairing a 21.5 percent difference.The overall mean salary for people with this amount of experience is $102,833.

Age

As much talk as there is in the supply chain about doing whatever it takes to attract new talent, younger workers didn’t really see many gains in their wages.

In fact workers under 25 lost a considerable amount this year. Their mean salaries dropped 7.4 percent from $48,600 in 2011 to $44,986. Admittedly those figures come from a small sample (fewer than 50 respondents), but even looking at the rest of the data, it seems younger employees didn’t fare as well as their more senior co-workers.

Workers between 26 and 35 earned one percent more in 2012 than they did in 2011. Those who are 36 to 45 saw their salaries go up 2.6 percent. The next category up, those between 46 and 55, earned 1.7 percent more.

After the age of 56, people found their raises were higher. Those aged between 56 and 65 earned 5.2 percent more and those over 65 got a three percent bump.

6%

Fig 2: If you anticipate an increase for next year, what percentage increase do you anticipate receiving?

3%

2.0% or less

13%

30%

2.1% to 4.0% 4.1% to 6.0% 6.1% to 10.0% 10.1% or greater

49%

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Fig 3: Mean Salary by Classification

Fig 4: Five-year salary overview

$150,000

$100,000

2012

Males

2011

Females

120,000

90,000

84,000

60,000

76,000

$54,000

$54,000

$67,700

$67,700

$80,400

$80,400

$86,400

$86,400

$93,300

$93,300

$76,200

68,000 $76,200

$140,000

$140,000

30,000

2012

2011

2010

2009

2008

Clerical/ Administration

Operations/ Tactical

Engineering/ Professional

Consultant

Managerial

Supervisor

$60,000 Executive

$0

Average

92,000

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$91,019

$88,300

Over 65

$94,061

$89,400

56-65

$93,834

$88,800

Over 55 (Net)

$92,470

$90,900

46-55

$82,035

$79,900

36-45

$68,728

$68,000

26-35

$48,600

Under 25

$44,986

Education paid for education courses.

When broken down by level of education, it seems most people made some Sixty-nine percent work for organizations that gains in 2012, with a few notable exceptions. paid for memberships in professional organizations Even though it may be counter-intuitive (especially in light of the age-related and 63 percent had employers pay for professional figures) high school graduates earned 8.4 percent more this year. Their mean certification programs. salary was $79,261. People with trade school or technical diplomas got 7.8 percent more, which translates to $83,556. The small sample 2012 Fig 5: Mean Salary by Age of CEGEP grads (less than 50 people) had an increase of 9.4 percent, 2011 bringing them to $73,672. Undergraduate university degrees were $100,000 worth an additional 2.7 percent ($87,101) and MBAs received 2.2 percent more ($100,914).

People who attended college saw a decline of 2.5 percent in their salaries. In 2011 they earned $82,800, while in 2012 they got $80,697.

The small sample of people (less than 50 in each group) with PhDs 80,000 and non-MBA masters degrees also earned less. Those with masters had their salaries drop 2.7 percent (they earned $93,500 in 2011 and $91,018 in 2012). A doctorate was worth significantly less— $100,875 in 2012 versus $117,500 in 2011, a 14.1 percent decline.

Having specific supply chain training definitely paid off in 2012.

Those with the SCMP (formerly CPP) designation had a mean sal60,000 ary of $94,835 in 2012. In comparison, those without it earned $83,864. People working on getting the designation are likely looking for a payoff, as they currently earn $71,198.

Other certifications and designations that equated to higher salaries were certified purchasing manager/CPM ($116,350), professional logistician/PLOG ($109,283), professional certified in materi$40,000 als handling/PCMH ($106,300), and certified professional in supply management/CPSM ($102,964).

The survey indicates most businesses will pay for upgrading.

This year, 78 percent of survey respondents said their companies

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Want some insight?

Learn from the pros what the numbers mean Join in the free Annual Survey of the Canadian Supply Chain Professional Webinar on November 21st and find out why salaries are going up and what you need to do to see yours climb too.

Our live webinar will include presentations of the results by our editors and PMAC’s president and CEO, Cheryl Paradowski, along with commentary from HR professionals and recruiters.

Register at pmac.ca/2012AnnualSurvey Wednesday November 21, 2012 - 12 noon EST to 1pm EST

You said… “ Men are paid more for the same work. Workload and variety of tasks is increasing much faster than salary. The field is evolving very quickly and we must be constantly learning in our jobs as well as in the courses we are taking.” 

“ My strategy is to ensure my department is always evolving and changing with trends. My personal strategy is to educate myself in the newest techniques and strategies to ensure I always have something to bring to the table.” 

“ I’m constantly looking at revising standard procedures. I come up with new ideas to old problems.

Most don’t work, but the ones that do change the way we do things. Getting recognized as someone who is always willing to look for a better way leads to advancement opportunities.” 

“ I was able to influence the C-suite to adopt Lean as a corporate strategy within the municipal sector. It is transforming how we do business and provide service and has substantially raised the profile of supply management.”

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Sectors

Supply chain professionals working in natural resources industries earned head-and-shoulders more than their colleagues in other industry sectors. In 2012, the mean salary in that vertical was $101,967.

There was a big jump down to the second place industry. The service sector paid supply chain professionals $86,396, compared with $86,900 in 2011.

Those in the trade or wholesale sector earned $78,478 (down from $80,500 in 2011). Government salaries were $77,968 (compared with $80,500 last year).

Health care workers saw $77,948 (a decrease from $80,200). Those in the manufacturing sector got $77,750 and people in education had a mean salary of $74,597.

Job hunting

Fortunately, almost all of the respondents have work. When asked if they are employed full-time in the supply chain, 96 percent of respondents who were PMAC members said they were, as did 94 percent of non-PMAC members.

Two percent of people said they were looking for work in the supply chain.

The reasons why people are out of the supply chain were varied. Most (26 percent in total—31 percent of PMAC job hunters and 16 percent of non-PMAC job seekers) said they had been laid off. Nine percent said the company went out of business. Eleven percent answered they were forced to move into a nonsupply chain role in their companies and seven percent in total chose other fields in their current companies. Seventeen percent reported they chose to leave their former organizations and hence the supply chain.

It seems respondents feel slightly more optimistic about job prospects in 2012 compared with last year. Overall, 69 percent said there were more jobs in the supply chain compared with five years ago. In 2011 67 percent thought there were more jobs.

It’s possible people’s perspectives about the job market have been influenced by the efforts of headhunters. This year 31 percent (34 percent PMAC and 27 percent non-PMAC) of people said they had been contacted by a headhunter more often than in past years. Eighteen percent reported less contact and 50 percent said they hadn’t noticed a difference.

Not only were most of the respondents employed, the majority expect to remain so for the foreseeable future. In responding to a question asking people where they saw themselves in two years, the vast majority—78 percent—said they expected to be in the same job or be promoted within the organization.

The environment

Environmental concerns are becoming more important to Canadian businesses.

Two-thirds of respondents said their companies have an environmental management plan in place and 55 percent said their company issues reports on environmental performance.

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However, 60 percent said they do not have a formal supply chain management policy for environmental sustainability.

A majority of respondents are satisfied with the sustainability practices of their companies. Seventeen percent said they were very satisfied, and 59 percent are somewhat satisfied. Nineteen percent said they were not very satisfied and four percent are completely unsatisfied.

Fig 6: Mean Salary by Industrial Sector $100,000 2012 2011

The job

80,000

Role of the supply chain

14%

$77,968

$80,500

Government

$78,478

$80,500

Trade/ Wholesale

$74,597

$74,300

Education

$77,948

$80,200

Healthcare

$77,750

$75,400

Manufacturing

$86,396

$86,900

Service

$101,967

Natural Resources

$98,500

Although 24 percent of respondents said they experienced no changes in the nature of the job, most people did report some type of change.

On the positive side, 36 percent said they received a raise, 25 percent said they earned a bonus and 12 percent were promoted. In contrast, 23 percent reported their salaries and job titles remained the same, but 60,000 they now had to shoulder more responsibility due to cutbacks in staff.

The most pressing issue on the mind of supply chain professionals in Canada during the past year was cost control. Thirty-two percent of respondents put it on top of the list of issues they’ve been forced to face in the last year. Other concerns were supplier risk management (eight percent), capacity shortages (eight percent), reorganizations (eight per- $40,000 cent), risk management (seven percent), and forecasting (six percent).

Cost control also tops the list of expected issues for the next twelve months, as 32 percent again said they expect that to be their most important issue. Reorganization and capacity shortages were both listed by eight percent of respondents as their most expected issue, and seven percent picked supplier risk management and risk management as their top choices. Forecasting was the top pick of six percent of respondents. chain and the people who work in it. Seventy-seven While much of their job is spent worrying about what’s going on outside the walls percent of people surveyed said their company realof an organization, Canadian supply chain professionals need to pay attention to izes business wouldn’t function without the supply what’s happening inside their companies as well. A total of 95 percent of respondents chain (only 17 percent disagreed with that statement) said it was important to be able to influence their jobs, but only 70 percent indicated and 71 percent reported their influence has increased they were satisfied with their level of influence (24 percent were very satisfied and within their organization.

55 percent were somewhat satisfied). In a related question, 86 percent were satisfied Those who replied gave a wide variety of answers with the relationship they have with their supervisors, bosses and superiors. when asked how they increased their influence.

Although there may be pressing concerns in the supply chain, it seems respon- Among the responses were monetary savings and dents try not to let the problems and issues overwhelm them. Maintaining a cost reductions (17 percent), strengthened comhealthy work/life balance seems to be a key priority, as 70 percent of respondents munications (10 percent), improved order processes said it was very important and 25 percent called it somewhat important. (eight percent), and increased contact with senior As to whether they’re successful in the balancing act, 30 percent say they are very management (five percent).

MM&D satisfied with their work/life balance and 52 percent say they’re somewhat satisfied.

Fig 7: Has your supply chain budget All of these figures are very similar to increased, decreased or remained the responses generated in 2010, although the same over last year? going back to 2008, it does seem there is a 13% slight downward trend over the years.

Increased Most people are relatively happy doing Decreased what they’re doing. A total of 31 percent of Remained the same 36% respondents said they’re completely satisfied No Answer with their jobs; 56 percent said they’re somewhat satisfied; 10 percent report being not 37% very satisfied and 2 percent are completely unsatisfied.

The people who answered the survey seem to work in places that value the supply

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ground information. We would verify that. We held back all the passwords and user IDs until the weekend before we actually rolled out so they didn’t lose them ahead of time. After they became an administrator, they could sign up additional people from their own office.”

One of the challenges facing the LCBO was the multilingual nature of its supplier base. The software itself is only available in English, but suppliers who had problems due to language were able to call the QLogitek-run support line and receive assistance delivered in their native languages.

WEB PO has all but eliminated phone calls and faxes for regular transactions. Now only exceptionbased incidents need to be dealt with manually. The software handles the rest of the normal, everyday transactions.

“If we issue a purchase order to a supplier for

By Carolyn Gruske 1,000 cases to be delivered for September 1, the supplier can request a change and say, ‘I only have tep-by-step, the Liquor Control Board of Ontario (LCBO) is making business 800 cases and I can’t make September 1 but Āow better by moving some core supply chain procedures into the cloud.

September 15.’ That then comes back to us for us The Ontario government agency, responsible for purchasing and retailing to approve or reject, and it’s all automated. We don’t wine and spirits in the province, has steadily been looking for ways to streamline have to deal with that manually. An alert goes to procedures, reduce errors, and free up staff from clerical duties so they can our LCBO staff. It’s up to them to accept or reject, perform more complex, higher-value work. To that end it has completely reworked but it’s still in the system,” says MacGregor. both its purchase order and inbound delivery scheduling systems, and turned “They’ll actually re-issue the PO, then it goes back them from laborious, inefficient, paper-, fax- and telephone-based processes through the normal channels and the supplier will into Web-based, automated, self-serve systems. see a revised PO come through,” adds Collins.

The LCBO buys alcoholic beverages from roughly 2,700 suppliers in 75 Beyond its automated order handling capabilicountries. Some suppliers are major, multi-national organizations. Others are ties, MacGregor says one of WEB PO’s biggest small artisanal producers who sell only a few cases of wine to the LCBO every advantages is it now gives the LCBO the ability to year. In total the agency issues about 40,000 purchase orders (PO) annually. track supplier performance.

Implementing a system that was both robust enough to handle the number of “We have the audit trail, so we know if suppliers purchase orders the LCBO issues and simple enough that it could be used by its aren’t meeting demands or time frames. That was entire supplier base made choosing the type of platform a pretty easy decision. a key point for us in terms of being able to have “We knew it needed to be Web-based. We knew it needed to be accessible good data to track suppliers’ performance. It’s done from anywhere in the world, around the clock. It had to provide that PO visibility. by data extraction to a vendor scorecard. That proIt had to be secure, and have a secure protocol for access and it had to provide cess is a little more manual in terms of the data online training for problem issues and support problem resolution 24/7. We also extraction, but at least now we have the data in needed it to provide good audit trail tracking, exception reporting and real time terms of being able to identify problem vendors.” visibility,” says Lisa MacGregor, director of supply chain for the LCBO. Not content to roll out one project at a time, The LCBO was already using a few applications, including its new submission MacGregor says the LCBO and QLogitek began system (NISS), developed and hosted by the Mississauga, Ontario-based QLogitek work on the inbound management system (IMS) division of Logitek Data Sciences Ltd, so it returned to that company to create system while WEB PO was under development. a Web-based purchased order management system, referred to inside the LCBO “They were always intended to be developed someas WEB PO. WEB PO, however, was was much larger in scope and was to be what concurrently but WEB PO was the predecessor the first step in a more integrated supply chain management solution. and IMS was dependent on it. So they were two conBecause of the vast changes this system would bring, the LCBO knew it current projects, with one being integrated first.” had to invest a great deal in supplier training and preparation before the system QLogitek’s IMS solution needed more customcould go live, says project manager David Collins. ization than WEB PO, but both pieces relied on “With 2,700 suppliers around the world, getting them registered was a big information from the LCBO’s internal systems. task before roll out. That was the main hurdle for the WEB PO rollout. We “We just had to develop the interfaces from our developed our own in-house application for them to register. We had them internal purchase order generating system, from sign up an administrator. They would provide their e-mail address and back- our sales forecasting mainframe systems, our supply

Lifting spirits

Cloud-based software smooths LCBO’s purchase order and delivery operations

S

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chain management systems. A lot of our software isn’t what you would consider the main ones. We use AquiTec. Our forecasting system is Teradata Demand Change Management...not the big players in the market.”

Like WEB PO, IMS was needed to replace all the manual interventions needed to schedule deliveries to LCBO’s warehouses. WEB PO feeds information about purchase orders to IMS, which uses that data to reconcile deliveries. Before IMS, the 17,000 deliveries a year from the LCBO’s North American suppliers were all managed through Excel spreadsheets by staff who answered phone calls from trucking and 3PL firms who called in to make, cancel and reschedule appointments.

As with WEB PO, early training was key to getting adoption from staff and from outside users.

“We trained the carriers in-house because it’s a much smaller subset—about 25 to 30 users. We do have some vendors who book their own appointments, but mainly it’s the carriers who book the appointments. We use a limited number of carriers.

The in-house training went very well, therefore we had no issues on the roll-out.

“They were both Big Bang approaches. Once we implemented WEB PO that was the only way you could get a purchase order. Once we implemented IMS that was the only way you could get an appointment. You had to book your own appointment. The carriers loved it. They really like looking after their own appointments. We’ve had nothing but positive feedback from them,” says Collins.

IMS has a great deal of flexibility built into it.

Carriers can book and reschedule any delivery up until the warehouse’s cut-off time, typically 3:00pm for an appointment the following day. Originally, they

were only allowed to book appointments up to one day late, but the LCBO team found that restriction generated too many phone calls, so now carriers can rebook deliveries up to 30 days late.

IMS includes some tracking functionality, so carriers who consistently fail to meet their delivery dates or constantly reschedule within 48 hour periods aren’t falling under the radar. Currently, the LCBO doesn’t have the ability to produce carrier scorecards, as it does with suppliers, but that’s in the works.

IMS has improved operations at the DCs, says MacGregor.

“We don’t get more appointments in but we have a better handle on visibility and synchronization and forecasting in terms of the number of appointments we need or when are we going to have to schedule a third shift at a warehouse.

We have much longer visibility versus having to schedule at the last minute.

“It allows us to redeploy and get better utilization out of resources in other areas too, as other areas would get involved in trying to resolve appointment bookings. It has just streamlined everything and made the process much more visible and removed resource allocation to it to. Most of the resources are either savings or being able to redeploy them into higher value added positions.”

Even though these systems are now live—WEB PO was deployed in spring 2010 and IMS went live in spring 2011, they’re still works in progress.

“We are still going through multiple releases of the systems and making them better. We’re just working on our third release of IMS. WebPO is not as complicated as IMS, so we just went through two releases. I think after this release it will be fairly stable. As we were testing the initial release, a wish list did arise and we’ve been pecking away at that wish list, and I think we’re now at a point where there’s not too much left on the table.”

Just because these projects are nearly finished doesn’t mean the LCBO is done innovating. MacGregor says the team is already thinking about the next project. While some businesses may balk at the prospect of a never-ending stream of major software and computer system upgrades, MacGregor says LBCO executives are usually willing to listen to proposals.

“Senior management here at the LCBO is very supportive and proactive in terms of business efficiencies, improving the business, and making us work better. Once you are able to make a good business case, senior management is pretty good to get behind projects that show that.”

According to its own figures, the agency has realized an annual savings of $731,000 annually through the use of WEB PO and IMS. MM&D

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Electronics packaging Storopack’s AIRplus and FOAMplus padding now come in electrostatic discharge film (ESD) versions, which make the packaging suitable for use when shipping electronic components. AIRplus products are protective air bag packaging and bubble wrap. The FOAMplus line includes premolded foam inserts or material produced at the packing station.

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12-10-05 1:50 PM

Retail | Edward Stevens

So you think you need a new DC Asking questions clarifies the decision-making process

W

hen someone says, “We need a new distribution centre,” the first thing to ask is “Why?” The reason to build new or replace a distribution centre must be understood, and it must be justifiable, based on three key elements: the current business needs, the future vision of the business and the project funding.

Some of the best reasons are demonstrated needs for more storage, increased throughput, more pickfaces, operational reorganization (centralizing or decentralizing), managing costs, automating manual procedures, reducing mainteance costs or improving energy efficiency.

When working with clients or in-house teams, our consulting group prepares lists, questions, and flow charts that don’t lead directly to a pre-calculated answer. We do that to get people thinking and talking—which will (at the very least) take the blinders off someone who believes the answer is simple.

The goal is to make senior management understand whether a new distribution centre is truly required. Sometimes we say this establishes the “burning platform”. Skipping this starts a perpetual looping nightmare: no matter how far past that point you think you are, your project is really still at the first step.

Any DC design project has a series of gates that must be unlocked by getting senior management’s approval. Without it, you can’t move forward. If you try skipping a gate, you don’t really make any headway. You end up filling files with endless “what if” scenarios. Scenarios are nice to have in the beginning, but without control they breed like rabbits.

Also, remember that to ensure the success of the project, the ultimate decision maker, or sponsor, should be a very senior company official who can champion the project. The process just to obtain approvals can take a year.

To validate that a new distribution centre is required, start by asking the DC’s operational management whether facility capacity is an issue. They should have a reasonable perspective about product congestion in the aisles, lift truck traffic delays, late or recycled orders.

The facility’s operational management should complete a material handling equipment audit to demonstrate that all reasonable opportunities for improvement within the facility have been exhausted and a new facility is actually needed.

Some important questions addressed in the audit are: • Can narrow-aisle or very-narrow-aisle storage systems be installed?

• Can mezzanine structures be built or high shelving installed?

• Can storage density be increased by double-deep or multiple-deep racks?

• Does the DC need a clean-up of obsolete materials and equipment?

After many years of managing distribution centres, I found that designing one is an art of balancing throughput with storage. Inventory storage capacity may be limited within a distribution centre since most retail facilities are designed to maximize throughput and not storage. Designing and running a distribution centre is also an art of balancing productivity with flexibility.

Having operational flexibility is the key to managing future growth and the annual or seasonal changes in product assortment and packaging.

If extra staff and lift trucks cannot be added, throughput can be increased by operating the facility more hours per day or more days per week. Can you open the DC more than five days a week? Can it run 20 or 24 hours per day?

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If SKU growth is a concern, fixture capacity should match the SKU lifecycle needs. SKU exit strategy should be established to clean up obsolete inventory. If peak seasonal capacity requires a shortterm solution, rented space should be explored.

The next step should be to complete a supply chain network analysis. This analysis helps everyone to understand the first of three key elements introduced earlier: the needs of the business.

The supply chain network analysis evaluates all costs and constraints for future scenarios. For similar facilities the optimal (least cost) scenario is recommended and driven by the supply (inbound) and demand (outbound) transportation costs.

A network analysis addresses number and location of DCs, the product mix, store assignments to a DC, and which suppliers ship to each facility.

A network analysis does not directly address transportation management, staffing, 3PL selection, site selection, facility design, inventory optimization or energy saving initiatives.

A key component of the network analysis is data validation. All information used must be verified for accuracy and must make business sense.

Once you figure out what the facility could look like, it is time to develop a base case, complete with alternatives. Now you start to ask about “game changers”, and about what the business will look like in five to 10 years. A new facility is an opportunity to do more than just create space for more SKUs and inventory. You can also improve product flow.

Automated processes should be considered since they can increase productivity and accuracy. Since buying a new property is very expensive, maximizing the use of every acre helps to justify the costs of automated processes and systems.

MM&D Edward Stevens is the pseudonym of a professional who has worked in the Canadian retail supply chain for over 30 years, with a strategic focus on the physical distribution of goods and the systems (including the people, processes and technology) that make up flexible, cost-efficient and effective delivery design. He and his colleagues have extensive experience in facility operations management, industrial and mechanical engineering, and facility design.

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12-10-05 1:17 PM

Learning Curve | Tracy Clayson

Rewards and recognition

Improving the corporate bottom line improves wages and creates opportunities for advancement

S

upply chain professionals are earning more this year. As reported in the Annual Survey of the Canadian Supply Chain Professional (see page 20), the average salary across the supply chain this year is $85,178, up from $82,800 in 2011, and it’s a raise that is very well deserved.

During lean times, austerity measures often meant wage freezes, reductions in bonuses and cutbacks to paid overtime rates, but if salary increases reflect improvements in corporate earnings, then supply chain managers have certainly contributed to those numbers with a strong emphasis on cost cutting.

Today’s supply chain managers are highly skilled at demanding better rates and offerings from vendors and diligently monitoring and controlling costs.

Supply chain leaders are able to find efficiencies and work with suppliers to increase productivity and reduce redundancy. All of these accomplishments highlight the financial contributions supply chain professionals make, and justify increases in compensation.

In addition to financial management successes, the supply chain is getting better at managing sustainability issues. Supply chain managers are turning to environmentally aware producers and distributors, are making it a requirement to use green technology and transportation solutions, and are sourcing materials from politically stable and socially conscious regions to increase their brand value and consumer approval rating. While there are cost considerations, especially in the short-term, for investing in resource efficiency and conservation efforts, the long-term gains will be worth it, especially as more and more legislation is enacted to enforce compliance and environmentally responsible practices. The efforts will also help turn typical or average supply chains into best-in-class organizations.

Not only are they being better compensated, they are consistently moving up and gaining importance in the corporate world. The focus on cost-effective, environmentally responsible and globally resourceful supply chains makes supply chain managers uniquely suited to executive-level decision making.

The job market seems to be mobilizing and employers are reporting an increasingly challenging recruiting and retention situation as the economy slowly strengthens and supply chain professionals seek better opportunities for both career and personal goals. Attracting strong supply chain talent means offering top wages, great benefits, meaningful work and rewarding challenges.

New entries to the field are a must, and offering competitive salaries will make the difference for some business school grads who have not considered the supply chain as a high profile career choice. So will programs that ensure new hires are provided with training and mentoring opportunities.

Younger leaders bring more technology skills, which better organize workflows and identify bottlenecks in information exchange. They are more inclined to pursue system solutions that improve a range of processes than some of their more experienced colleagues. Older supply chain professionals, however, are not being left behind. The best are staying competitive in the workforce by upgrading their skills and expertise in financial analysis, environmental sustainability, transportation innovations, global logistics models and distri-

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bution, warehousing and sourcing materials.

Unfortunately, it does take an effort for people to keep up with new trends once they’ve been employed in the supply chain for a while. According to Dr John Gattorna, a supply chain expert and author, the older generation of supply chain leaders tends to stay in one position at one firm and have limited opportunities to engage in new thinking.

This leads them to becoming stuck in a maintenance mode of thinking.

There is no reason for this to occur. Historically supply chain leaders have demonstrated they are perfectly capable of adding to their skillsets. Many started with engineering degrees and later added business degrees to enhance their profiles.

Supply chain is a discipline made up of all types of skills and specializations including planning, analysis, procurement, 3PL management, sourcing, compliance, and systems and finance. Gattorna describes the supply chain as a patchwork quilt, stitching together different parts to build the full montage. A broader range of experience, combined with a deeper involvement in core functions of the business can push the supply chain manager up the executive ladder where strategic thinking, inventive approaches and challenges to the status quo are the norm. While finance, sales and marketing have long-standing status in the corporate world, supply chain falls into the category of cost centre. Supply chain leaders have to prove their value by controlling costs, ensuring minimal errors on all deliverables and working closely with an expanding network of third-party players.

The closer one is to the profit and loss statements and balance sheet results, the more directly responsible one is for the overall success of a company.

With corporations placing a higher perceived value on supply chain functions, and with the growing competitive edge supply chains can give companies, it is more and more evident that supply chain professionals make significant and critical contributions to the business world.

MM&D Tracy Clayson is managing partner, business development at Mississauga, Ontario-based In-Transit Personnel. tracy@in-transit.com

MM&D | October 2012

12-10-05 1:46 PM

Materials Handling | Dave Luton

Keeping up with the times

Education needed to keep up with logistics industry

F

rom the perspective of somebody who has spent a long time in the logistics industry, I am constantly amazed by how quickly the technology and business change.

Compared to three decades ago, information of all kinds is widely available in the logistics universe.

More importantly, it is available on a timely, if not a real-time basis. This is especially true since things like in-transit data did not exist previously.

When I first joined the logistics industry, you could get accurate information about shipments and receipts, but much of the detailed intransit information on specific shipments was not available unless you laboriously traced it by phone. Forty years ago, this gradually started to change, first for rail (I can still remember tracing rail boxcar shipments by telex), and then for truckload shipments.

The cost of obtaining this information has also decreased dramatically over the decades. Now, with new technology for tracking and tracing, we can even get accurate information on small package courier and express postal shipments.

The widespread availability of real time logistics information has led to considerable efficiencies in logistics. An example of this is the reduction—and sometimes elimination—of the “just-in-case” inventories many businesses carried. Today, inventory calculations routinely include in-transit inventory.

(As a reference point, the first columns I ever wrote for MM&D over twenty-five years ago dealt with the impact of just-in-time inventories on various warehousing disciplines.)

Historically, many of the logistics disciplines (such as purchasing), commonly operated in an isolated, silo environment where people only reported upward within their own discipline. The arrival of technology has brought with it downsizing and flattening of organizations through the elimination of layers of middle management. As a result, to run a successful logistics environment today, we need to work with a wider variety of professionals on cross-functional teams.

The impact of this changing world for providers of logistics education is clear. In addition to the traditional depth of knowledge within a discipline there is a need to provide training across a wide

MM&D | October 2012

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breadth of associated disciplines. Thus a traditional curriculum for a discipline like purchasing or Customs brokerage needs to be expanded to include elements of materials management, traffic and transportation.

Additionally, education programs need to consider the logistics environment far beyond Canadian borders. Development of free trade zones and international supply chains means that issues beyond our borders increasingly affect logistics functions.

The growing concern with security—both from an anti-terrorism perspective and a crime prevention point of view—has resulted in a demand for shipment visibility from origin to destination, sometimes in real time. This means logistics practitioners have to be knowledgeable about foreign rules and regulations, not just domestic ones.

In the past, Customs dealt mainly with imports since many industries were mainly oriented to the domestic market. (Of course there were always exceptions and export-oriented industries.) Under the Canada-US Free Trade Agreement and the North American Free Trade Agreement (NAFTA), many domestic industries retooled to serve the broader North American market but to did so by offering fewer items.

NAFTA meant that, over time, we were supposed to evolve into a seamless entity, making much of the Customs paperwork disappear and simplifying the logistics process. However, since the 9/11 terrorist attacks, there has been an emphasis on complete visibility into all shipments heading to the US, starting right at (or often before) the moment of shipping. This cross-border situation is just one example that proves a Customs practioner has to be equally familiar with both domestic and overseas rules and regulations that were formerly of little concern.

And it’s not just the Customs broker who needs to worry about international rules. The global nature of the supply chain affects every aspect of a logistics operation. Even people concerned with packaging need to know what’s going on in the world. For example, due to concerns about insect infestation, there are now regulations about the type and quality of wooden pallets that can be moved across the Canada-US border.

Fortunately, technology does provide some relief and helps us cope with this changing world. One way it does this is through long distance education.

With high-speed Internet and e-textbooks, the majority of course material can be delivered electronically.

The use of high-speed Internet allows instructors to upgrade basic lessons into full audio-visual presentations. Now, a lecture on a topic like containerization (including segments on container ports, rail and truck drayage) can be given with video and interactive components and not just still pictures.

For logistics educators who want to take their courses to the next level, creating a long-distance classroom with real time student and teacher participation is the final step in designing a compelling program. Use of technologies like webcams and Skype allow people to engage with each other if they’re on the other side of the country or opposite sides of the world.

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

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12-10-05 1:49 PM

Legal Link | Marvin Huberman

Fraudulent actions

BC court gives transportation industry a wake-up call

I

n the recent case of WS Leasing Ltd v Platinum Equipment Ltd, the Supreme • Knott and Fanning acted together to create docuCourt of British Columbia held two directors of a corporation personally ments that indicated Platinum was in possession liable to pay approximately $500,000 compensatory and punitive damages, of 40 containers and in a position to pass title to plus interest and legal costs, for committing the tort of deceit by making them, when they knew that was untrue. They profraudulent misrepresentations in connection with a sham transaction entered vided those documents to Witt and WS Leasing, into through their corporation in order to obtain funds from the plaintiff. knowing that WS Leasing would rely on the representations contained in the documents, which The Claim they knew were false; The plaintiff, WS Leasing Ltd, whose business was equipment lease financing, • At the time Knott picked up the cheque from WS sued Platinum Equipment Ltd which procured and sold heavy equipment, Leasing, he knew Platinum was not in possession including trailers and shipping containers, and two of its directors, Dennis of the containers, some of the containers were not Fanning and David Knott (the “individual defendants”), who were involved manufactured, and Platinum was not able to transin Platinum’s daily operations and sales transactions. fer title of the containers to WS Leasing; WS Leasing claimed the individual defendants acted deceitfully and made • Knott picked up the cheque personally and deposfraudulent misrepresentations for the purpose of obtaining funds from it. ited it into Platinum’s bank account, knowing Specifically, they purported to sell to it 40 steel shipping containers through Platinum was not in a position to deliver title to their corporation, Platinum, and that the sale transaction was a sham. the containers to WS Leasing; The plaintiff further claimed that in reliance on the misrepresentations • WS Leasing would not have issued the cheque made by the individual defendants, it paid Platinum funds to purchase the without receipt of the invoice and NVIS forms; shipping containers. WS Leasing claimed that when the individual defendants • The fraudulent representations made by Fanning made the representations, they knew Platinum did not have the containers in and Knott were material inducements to the deciits possession, nor could it deliver them. sion to release the cheque; • Fanning and Knott committed the tort of deceit The Defence by making fraudulent representations to WS Fanning and Knott took the position that their corporation, Platinum, was Leasing, which they intended WS Leasing would liable for the debt, and since they were acting through a limited liability correly on to its detriment. The amount of the loss poration, there was no basis for finding them personally liable. They maintained suffered by WS Leasing was $490,974.80, and there there was no fraud or deceit on their part. would judgment against Platinum, Fanning and Knott, jointly and severally, in that amount; The Issues • The individual defendants’ conduct was reprehenThe Court dealt with two issues: sible and the knowing falsification of documents •Should Fanning and Knott be held personally liable for monies paid by WS by dealers of products should be deterred.

Leasing to Platinum Based on the evidence and the application of the •What, if any, damages should be awarded against Fanning and Knott? law to the facts as found by the trial judge, punitive damages were awarded against each of Fanning and The Law Knott in the amount of $5,000.

The Court had to take into account a number of factors in this case including The Court held in the circumstances a punitive the proper award for a victim of fraudulent misrepresentation, and the differ- damage award was appropriate, notwithstanding ences between reckless representations and wanton disregard. that punitive damage awards are an exceptional remedy.

The Decision This case is a wake-up call for directors and officers The Court concluded that Fanning and Knott should be held personally liable of limited liability corporations. The message is: recfor the monies advanced by WS Leasing to Platinum—approximately $500,000— ognize the limits of the limited liability and heed the and it awarded punitive damages against Fanning and Knott in the amount call or pay the price for failing to do so.

MM&D of $5,000 each.

The Court did not find Fanning or Knott to be credible witnesses. Based Marvin J. Huberman, LLM, is a Toronto lawyer, on evidence at the trial, the Court found: mediator and arbitrator. www.marvinhuberman.com

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