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November/December 2010 $8.00

Big Ideas for 2011 Publication mail agreement #40070230.

Our executive roundtable tackles the slow recovery

Inside Canadian Tire’s new Quebec DC

Plus: Exclusive research on transportation infrastructure Making your supply chain sustainable

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Taking Stock

There’s always a story I

n the world of hospitals and health care, it’s easy to see stories and tease out the human element behind them.

That’s the world I worked in before becoming the editor of MM&D magazine, as writer/editor in the communications department of a large Toronto hospital. If there was a story to tell—about a research breakthrough or from a grateful patient— it was easy to see how it affected people. Rarely was it difficult to see how issues affected the lives of patients, visitors, doctors and health-care workers who made up the hospital community.

Compared to the world of health care, how does supply chain management stack up? Pretty well, in fact.

Since beginning this job a few weeks ago, I’ve been pleasantly surprised at how many interesting stories there are to tell. As a newcomer to the field,

it has been an education to observe how far-reaching the issues that affect the supply chain are. Two months ago, I was a consumer like any other, buying products without thinking much about how they got on the shelves in the first place.

Supply chain may not be top of mind for people who don’t work in the field, but issues that affect the supply chain are issues that affect everyone. Take, for example, economic recovery. Looking at our roundtable discussion on page 14, it’s clear that the performance of the economy affects supply chain businesses as much as every other business, or any household for that matter.

The commuter locked in traffic on a major Canadian highway may fret about getting home in time to watch Dancing with the Stars. But read our story on infrastructure headaches on page 17; I would bet the trucker in traffic next to that commuter has more on the line than a television show.

Supply chain has its share of stories. As editor of MM&D, I’ll strive to present those stories to you—along with the information you need—in every issue.

November/December 2010 | Volume 55 | Number 7

Features

Contents

14 Big Ideas for 2011 Our executive roundtable offers tips and insight into how your company can thrive in the slow recovery.

19 Infrastructure headaches Read the results of our exclusive survey on what shippers think about Canada’s transportation infrastructure.

22 Big and fast An inside look at Canadian Tire’s automation solution at its new DC in Quebec.

28 Greening your transportation Practical best practices to make your transportation more sustainable.

Columns 32 Materials Handling All about pallets.

34 Learning Curve Workplace safety through literacy

Departments 3 4 5 8 10 12

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

30 Datacapture New products to streamline your operations.

MM&D | November/December 2010

3

Supply Chain Scan

I.E. Canada

Conference updates new Incoterms and food import regs page 13

Inside | Benchmarks Page 12

Legal lessons Shippers learn at CITT conference in Vancouver

Publisher/Editor-in-Chief: Emily Atkins (416) 764-1537 emily.atkins@rci.rogers.com EDITOR: Michael Power (416) 764-1538 michael.power@rci.rogers.com MANAGING EDITOR: Deanna Rosolen (416) 764-1533 deanna.rosolen@rci.rogers.com

By Beverly Cramp

I

t is unrealistic to expect supply chain managers to be legal experts, but the ability to identify the legal issues that could lead to problems is crucial. That was the message from two lawyers at the CITT’s Reposition 2010 Symposium held in Vancouver, BC, from October 27 to 29.

“When you don’t see what’s coming, that’s when you get into trouble,” said Darin Hannaford, a partner in the Edmonton office of Miller Thomson LLP. “For example, what happens when a freight forwarder goes bankrupt before the carrier delivering a shipment of goods has been paid? Can the shipment owner recover those goods from the shipper, or will they have to pay a second time for the shipment costs? We didn’t see many of these claims before 2008, but it is starting to happen more frequently, especially in those cases where the shipment costs are substantial.”

Hannaford said court decisions are confusing, and sometimes the carrier covers the costs while other times the courts deem the owners responsible.

“The default position is the owner of the goods is responsible to pay the carrier—even if the owner has paid a freight forwarder. However, other issues can sway the courts,” he said. “The ultimate question is if the freight forwarders are acting as agents of the owner or acting on their own behalf as principals. If the shipper can show there’s been a customary trade between both the owner and the freight forwarder, this is evidence that the freight forwarder acts as an agent for the owner. Usually in these cases, the shipper can expect the owner to bear the cost.”

Daniel Kiselbach, a partner in Miller Thomson’s Vancouver office, outlined the Administrative Monetary Penalty System (AMPS), which is a relatively new system for fining shippers who fail to report properly on the time, place and manner of shipping of materials. A company failing to report imported goods, or a company that removes goods without authorization, will incur fines.

Three logistics professionals for the Winter Olympics, held in Vancouver last February, hosted the final session at the symposium. Tony Beck, director of logistical operations for the games, described the enormous challenges. “The magnitude of stuff, people, and events that had to be orchestrated was staggering,” he said. “Over 55,000 staff and volunteers co-ordinated athletes from 82 countries, approximately 10,000 accredited media, and more than 800,000 items of furniture, fixtures and equipment that had to be moved over 80 Olympic sites. All this was carried out against the backdrop of very tight security. No one got into Olympic venues that didn’t have the appropriate permission and paperwork. We accomplished this by testing our people and our processes the year before the games started. Practice made perfect because we accomplished our job. We were the invisible glue that made the Olympics a success.”

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MM&D | November/December 2010

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Supply Chain Scan Done Deals Finland-based Cimcorp Oy, a supplier of automated material handling and picking solutions, has acquired RMT Robotics, a Grimbsy, Ontario-based manufacturer and integrator of robotic material handling systems.

RMT Robotics will continue trading under its current name as a subsidiary of Cimcorp Oy, keeping existing management and staff. The combined staff number over 200, with 25 percent in Canada.

LV Lomas Limited has bought Hacrima Holdings Inc and its subsidiaries Primex Customs and Logistics Inc, Primex Packaging Services Limited, and RV Storage and Assembly Co Limited. Hacrima Holdings and the subsidiary companies will be amalgamated with the third-party logistics business of LV Lomas Limited, which operates under the name Lomas Logistics.

Dematic Ltd has moved its Canadian office to a new location. The logistics and materials handling solutions company moved on November 15 to 6750 Century Avenue, Suite 302, Mississauga, Ontario, L5N 2V8. The phone number is 905-363-6970.

DHL Supply Chain has signed a two-year contract with D&S/Walmart in Chile. DHL provides supply chain services including warehousing, distribution management and reverse logistics to D&S/Walmart’s associate store, Ekono.

LeanLogistics welcomes its first Canadian client, Air Canada, to its list of international clients. Air Canada will use the LeanLogistics On-Demand TMS to improve visibility and performance in its cargo service, carrier and customer communication, as well as implement event notifications.

CP Rail and Teck Resources Limited announced a 10-year agreement to transport Teck’s steelmaking coal from its five mines in southeast British Columbia to Vancouver-area ports. CP will make investments to enhance its coal handling capacity to provide for Teck’s growth.

Supply Chain Scan

Take a risk 3PLs urged to innovate at IWLA Canada conference

By Robert Robertson

T

Eckler said it’s important for 3PLs to put in place the following prescription: • avoid transactional contracts and focus on strategic business outcomes; • ensure outsourcing isn’t a procurement exercise; • source and leverage external skills; • structure compensation to leverage risk and reward; • elevate the innovation agenda; and • stay open to change.

he latest trends affecting third-party logistics (3PL) providers and shippers were in the spotlight at the IWLA-Canada’s recent 3PL Innovation Conference held in Vaughan, Ontario in October. Clearly, the 3PL industry must keep pace with change to succeed in the future.

Jim Eckler, president of Eckler Associates, said it’s important for 3PL Warehouse rooftops go solar providers to innovate and offer differentiated value. Risk was an essential With the growing interest in the use of solar techpart of the formula for success for 3PL companies, he noted. nology on warehouse rooftops, a panel of speakers “They must differentiate themselves from the rest of the pack, as the offered solid advice to 3PL providers and shippers industry has changed and there are some huge challenges ahead,” said considering a move to solar applications with Eckler. “This battleground is about innovation. It can start with a creative their buildings. or new idea, which gives us an added push. A thousand small continuous “If a roof is only three years old, what protection improvements are as great as one major transformational improvement. and insurance would be provided with a rooftop “To be innovative, however, you have to take on some risk. And risk in solar lease?” asked Brent Ellis, director of comthis business isn’t something that a lot of us like. You may have to change mercial warehouses, Wills Transfer Ltd. “This is a the risk profile of the business. We have many names for innovation, such big concern for all of us. Will it (solar technology) as continuous improvement, quality management and Six Sigma. The ques- fall through and cause problems for my roof? There tion is whether you’re getting a real return on investment (ROI) from are more solar companies out there developing day innovation programs.” by day.

Eckler said 3PL providers “When deciding who to have become an important part work with, look for a company of today’s corporate perforthat has knowledge, experience mance. At the same time, he and financial ability. Really be said, the 3PL industry has diligent with interviewing reached a level of maturity and people and research the solar declining growth rate that will industry. The more questions demand the need for even more you ask, the more information innovation. you have.”

Jim Eckler, president of Chris Young, manager “The growth rate for the 3PL David Long, executive Chris Young, manager and Eckler Associates. and director of Canaindustry is declining each year. director, Canadian director of Canadian operadian operations for There was a significant aberra- Council of IWLA. tions for Enfinity Canada Ltd, Enfinity Canada Ltd. tion in 2009 and a little bit of said building owners with warehouse rooftops averaging out in 2010. Overall, however, we’ve had a must do their homework before applying solar declining growth rate,” said Eckler. “When the growth rate of an industry technology. begins to decline it says that you’re reaching a level of maturity. This means “When seeking a solar vendor, it’s crucial to the old model of doing business isn’t going to get you to the future.” find someone who has an endorsement by leading Eckler explained that 3PLs and their clients must focus on innovation financial institutions,” said Young. “To be the within the shared relationship. This includes: embedding innovation in the owner of the building and have a rooftop lease service contracts; developing innovation capacity in the operations; motivat- means your capital isn’t encumbered. Technology ing innovation through incentives; sharing risks; creating a culture of innova- varies, so due diligence is key. tion; and establishing open, transparent, collaborative relationships.

“You should know what you’re putting up there.

“You have to re-think business models, as well as being open and honest Structural capacity must be established before about how you’re going to do this,” Eckler said. “Reinvention could be any technology is selected. No roofs should get fundamental, such as the use of a new product or service, or it could be a solar if roof conditions are unknown. And not cost reduction that blows the walls off. To succeed, 3PL providers have to every panel is right for the rooftop. This is a brand become innovation drivers and introduce innovations that their clients new market and it will explode not only in Ontario, can’t do themselves.” but also across North America.”

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MM&D | November/December 2010

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Supply Chain Scan Movers + Shakers Kim Richardson and Ray Haight have joined Load Surfer Corporation as executive consultants.

Load Surfer will be the first client of TRANSREP Kim Richardson and Ray Haight Company, a corporation Richardson and Haight recently created to provide sales and marketing support to companies offering leading edge products and services to the transportation industry.

Romaine Seguin is the new president of the UPS Americas Region with responsibility for Canada, Latin America and the Caribbean.

Seguin will succeed Stephen Flowers and will be responsible for all UPS Romaine Seguin package and cargo operations in more than 50 countries and territories. She will oversee UPS Supply Chain Solutions operations throughout Latin America, Miami and the Caribbean.

Seguin began at UPS in 1983 as a part-time hub supervisor. In 1994, she became controller for the air district, and was promoted to a senior operational role. She became the managing director of UPS South Europe in 2007, and a year later became COO, UPS Europe, Middle East and Africa.

Kelly Winters is the new vice-president and general manager for the Toronto division of Kelron Logistics.

Winters is responsible for overseeing all aspects of the

operations of the division, including transportation management services (TMS), brokerage and sales, and reports directly to president Geoff Bennett.

Winters brings over 25 years of transportation and logistics expertise. She most recently served for 10 years as genKelly Winters eral manager for a US-based transportation service provider and holds a chartered membership with the Chartered Institute of Logistics and Transport.

CEVA Logistics has appointed Anthony Harris senior vice-president of account management for the Americas. Harris has over 20 years experience in international business, and is a specialist in account management in a service environment.

Harris joins CEVA from Flextronics where for the past 12 years he held several positions, including vice-president of global accounts. He led teams to build and manage complex global supply chains for a portfolio of customers.

Steve Croft has joined JD Smith and Sons Limited as director of business development for warehousing.

Croft has more than two decades of experience in the logistics, warehousing and transport industries. He began his career at the Hudson’s Bay Co, and eventually oversaw inventory replenishment, sales and customer service in various departments. He has also worked with Christie Brown and Nabisco distribution centres.

His 3PL career launched in operations and evolved to working in business development with both global and regional 3PLs.

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Professional Development Directory Advertorial

Awareness-Building and Accreditation of Material-Handler Training Programs

T

he Canadian Supply Chain Sector Council (CSCSC) provides information to help individuals and employers as they plan to meet their education and training requirements. The CSCSC’s Education and Training Compendium, at www.supplychaincanada. org/en/compendium, includes data on supply chain-related education and training available across Canada. It is maintained by the providers themselves to ensure the accuracy of its information.

Users can access information through searches based on location, language and program length.

Any provider of relevant programming may add information to the compendium. Instructions are available on the compendium webpage.

National Accreditation Program Visitors to the compendium will see that some programs and courses are identified as “accredited”. These are offerings that have been reviewed through the CSCSC’s National Accreditation Program (NAP) and are deemed to meet all of the program’s standards.

Submission for accreditation review is voluntary; any education or training provider with supply chain-related offerings is eligible to apply for accreditation of those offerings. Accreditation through the rigorous NAP is recognition of high-quality programming; it enhances the reputation of a training provider and demonstrates that its training programs or courses conform to an industry standard.

By selecting accredited programs for the training of their material-handling workers, employers can make the best-possible use of their training funds with reputable providers, accessing training that will prepare employees to safely operate the equipment they use on the job.

To learn more about the CSCSC’s National Accreditation Program, go to www.supplychaincanada.org/en/NAP. A visit to the CSCSC’s website, www.supplychaincanada.org, will give you access to a multiplicity of HR tools and resources.

Accelerate your career Whether you’re working towards a senior-level position or just getting started in supply chain management, the Ontario Institute of PMAC delivers the program you need to accelerate your career.

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Choosing a training provider is easier than you might think National Accreditation Program for supply chain education and training offerings Accreditation by the Canadian Supply Chain Sector Council is proof that an education or training program – including equipment-specific material-handling training programs – turns out graduates with the skills required by employers. If you’re looking for, or you provide, education or training, find out more at www.supplychaincanada.org/en/NAP. Increase awareness of your training or education offering: add it to the Council’s online national Education and Training Compendium – www.supplychain canada.org/en/compendium.

905-897-6700 or 1-866-616-3468 info@supplychaincanada.org www.supplychaincanada.org The CSCSC is funded by the Government of Canada’s Sector Council Program.

Supply Chain Scan Global Focus Asian supply chain awards The Global Supply Chain Council recently announced the winners of its 2010 CHaINA Awards.

For the fifth year in a row, the Council presented its CHaINA Awards to recognize and honour outstanding achievements and innovative models in supply chain management all across Asia.

The Best Supply Chain IT Solution for China was given to SupplyOn for their SCAN Project at Bosch China.

SupplyOn created a web-based platform between Bosch and all suppliers to enable them to share purchasing information and delivery forecasts to provide complete transparency in procurement. Currently, 200 vendors are connected to Bosch China via SupplyOn. The Award for Best Supply Chain Consulting Partner in China was awarded to Resources Global Professionals for its U2K2 implementation at Unilever China. In a five-month process the Resources Consultant Team managed the system and inventory migration from the legacy system to SAP across all of Unilever’s 55 warehouses, avoiding any business interruptions.

The Green Supply Chain Award in China selected Dell for its green bamboo supply chain. To reduce its carbon footprint, Dell substituted fossil fuel-based polymer packaging with bamboo. The project has saved 18.2 million pounds of packaging since 2008.

Menlo serves Dana in Europe Menlo Worldwide Logistics, LLC, a subsidiary of Con-way Inc, has expanded its services with Dana Holding Corporation to provide logistics services to the company’s 19 manufacturing plants in Europe.

Menlo will manage carrier operations inbound to Dana’s plants and outbound product distribution to European destinations.

Dana supplies driveline products (axles and driveshafts), power technologies (sealing and thermal-management products), and parts for light and heavy vehicles.

Menlo has been facilitating Dana’s North American operations since 2008, providing 3PL services and covering both inbound and outbound transportation to sites in the US, Canada and Mexico.

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MM&D | November/December 2010

Supply Chain Scan Benchmarks CN was recognized for excellence in climate-change reporting among Canadian and global corporations surveyed by the Carbon Disclosure Project (CDP).

CN was named to the CDP’s 2010 Canada 200 Carbon Disclosure Leadership Index for the second year and saw its score on the CDP’s Global 500 report rise to 82 percent in 2010 from 77 percent in 2009. The CDP surveyed 4,700 corporations for the index.

Exel Transportation, an operating unit of Exel (a Deutsche Post DHL company), has earned the Johnnie Walker Blue Award for best overall carrier from Diageo, a manufacturer of alcoholic beverages. Exel Transportation earned the award as a result of the highest cumulative score across Diageo’s four primary performance indicators: on-time pick-up, on-time delivery, tender acceptance and shipment status compliance.

Descartes Systems Group hit a milestone in October with 35,000 connections on its federated Global Logistics Network, the GLN. Descartes’s GLN is a cloud-

based technology platform comprising a dense trading network and application services, used by organizations seeking to optimize their operations. GLN trading partners are connected and able to communicate and collaborate using one platform.

APICS, The Association for Operations Management, has announced the winners of the APICS Corporate Awards of Excellence, which recognize leadership and innovation in the global corporate community. Northrop Grumman Aerospace Systems won the 2010 Education Award of Excellence, while Dispensary of Hope took home the 2010 Innovation in the New Normal Award.

The Home Depot has presented Damco with its International Logistics Service Provider of the Year award.

Damco was named Partner of the Year for excellence in performance criteria, including the accuracy and timeliness of critical operations data, quality of account management, and developing and executing valueadded innovations and process improvements.

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Supply Chain Scan

Change on the menu New Incoterms, food import controls at IE Canada Conference

By Deanna Rosolen

T

he International Chamber of Commerce (ICC) has released the new Incoterms 2010 rules.

The new rules officially launched in mid-September but will come into effect on January 1, 2011.

Ruth Snowdon, executive director of the Canadian International Freight Forwarders Association (CIFFA), tackled the topic at the Canadian Association of Importers and Exporters (IE Canada) 79th Annual Conference in October.

Incoterms are an internationally recognized standard and are used worldwide in international and domestic contracts for the sale of goods.

Snowden says they are critical to banks, importers and exporters, buyers and sellers, insurance companies, freight forwarders and service providers— basically any party “who has a role in getting a product from the seller to the buyer in one piece”.

Snowden explained that some elements are staying the same, including: Incoterms do not apply automatically to contracts of sale; Incoterms apply only to trade of “tangible goods”; Incoterms do not address price or ownership; Incoterms are not “international law”; also, the Incoterm must still be appropriate to the goods, to the means of transport, and to where the seller and buyer agree to transfer risk and cost. The parties must still name a place or port.

Finally, the Incoterms 2010 still emphasize that

dangers will arise when parties alter or add variations to Incoterms.

“Be cautious about making any changes,” explained Snowden, “because they can change risk.”

As for what has changed, Snowden explained that there are now 11 Incoterms—down from 13—and the terms have gone from four groups to two classes. Also, the Incoterms will use international or domestic sales contracts instead of just international sales contracts.

The rules have been developed and maintained by experts and practitioners brought together by ICC and have become the standard in international business rules setting.

CFIA proposes import controls The Canadian Food Inspection Agency (CFIA) is proposing new regulations for importers in an effort “to support a modern approach to food safety,” said Alison Pinsent at the IE Canada conference. Pinsent is acting director of the imported and manufactured food division, Food Safety and Consumer Protection Directorate of the CFIA. She explained that the CFIA, as a commitment to the Food and Consumer Safety Action Plan (FCSAP), is developing regulations intended to enhance the safety of imported, non-federally registered sector (NFRS) products offered for sale in Canada. NFRS products account for about 70 percent of food products sold in Canada.

The CFIA is proposing to enhance import controls in the NFRS by introducing new regulations under the Canada Agricultural Products Act (CAPA). The focus will be to identify and control risks and hazards before they become a larger problem.

The CFIA is also considering user fees, said Pinsent. Importers will be required to renew the licence every two years.

The general provisions will take effect once the regulations are published in 2011. The licensing provisions will take effect two years later. MM&D

Surviving the slow recovery Tips and strategies for keeping your business alive

L-R: Aaron Lalvani, Alan Boughton, Phil King (seated) Patrick Cain and Keith Lambert.

This editorial roundtable is sponsored by

The recession is dragging on and you need new ideas to ease the crunch. Look no further. Emily Atkins passes along the collective wisdom from our Big Ideas for 2011 roundtable.

W

hen it comes to making it through the tail end of this economic disarray—whether you call it a flat recovery or a double-dip recession— there are plenty of challenges remaining. Fortunately, there are also a few seasoned veterans willing to share their experiences and tips with you.

We gathered a distinguished and generous group early in November for the Big Ideas for 2011 roundtable, sponsored by Trailcon Leasing Inc. At the table were Alan Boughton, Trailcon’s president; Phil King, president of Orlando Corporation; Patrick Cain, president of Hyphen Transportation Management; Keith Lambert, senior vice-president of supply chain and merchandising management for the Forzani Group Inc; and Aaron Lalvani, president of Lalvani Logistics Inc and founder of the Retail Trade Advantage program.

To frame the discussion the group first identified the threats and risks and opportunities facing businesses in the coming year. The list of threats and risks was quite lengthy but there was general consensus around the table that these were indeed the challenges that lie ahead. The group identified bad debt, a looming capacity crunch in both transportation and warehouse space, excess inventory, the fragility of the US recovery, loss of manufacturing capacity, soft consumer confidence and a skills shortage.

14

On the other side of the ledger, opportunities identified included: consolidation, nearshoring or re-shoring of manufacturing, growth for wellpositioned companies, collaboration, redevelopment, redefining processes, and automation.

As could be expected, the conversation was wide-ranging and lively. The following are highlights of the ideas tabled to help your company get through the tail end of the storm.

Start with a strong balance sheet and choose your customers wisely There was strong agreement among the panelists that having a strong balance sheet is key to survival.

But there are many pressures that militate against this measure of success.

For Alan Boughton, it’s bad debt: “Because the [trucking] industry’s so fragile, if you lose a good

MM&D | November/December 2010

Survival tips for the slow recovery tart with a strong balance sheet S • Learn from those who survived the last recession • Be agile • Upgrade your systems •

“Information is power,” he says. “It’s reading every magazine, reading three newspapers a day, talking to guys who are bringing stuff in and sending stuff out, if you’re dealing in the US. Try to figure out what the trends are and try to be a little bit ahead of the curve.”

Be agile So how do you stay alive? A key strategy is the scalable supply chain. It’s not simple to achieve, depending on variables such as foresight, your company’s balance sheet, the viability of your customers and your ability to push decisions through your organization.

For Patrick Cain it is the key strategy for dealing with uncertainty. “We need agility in our supply chain network, and whether that’s trailers or whether that’s buildings, they need the ability to flex up and flex down because demand is uncertain. In an ideal world you have a fixed network that delivers against stable demand and you use partners for that unstable demand or the peaks that rise above what you would consider stable demand.

“The problem with that today is nobody is really sure what stable demand is. It was at one level, now it’s at another level. Is it going to come back or not? So it’s this challenge around where do you set your fixed network and then where do you start to work with partners to give you that agility to flex up very quickly, but also bring it back down if the demand isn’t consistent and doesn’t stay there.”

According to Lambert, it’s key to Forzani’s success. “On the supply chain side we’re looking for more scalability than we’ve ever had before. We’re relying more on third-party providers than we’ve ever done before. We

“ Information is power… Try to figure out what the trends are and try to be a little bit ahead of the curve.” in a position with strong balance sheets to acquire other ones are going to do well during the period of uncertainty. And the people who are not are going to fail. That’s been proven time and time again and it’s no different today.”

Pay attention to trends Being able to scale your supply chain successfully demands a certain amount of foresight.

For Boughton it’s about taking in as much information as possible from diverse sources.

MM&D | November/December 2010

15

Photography by Roger Yip

customer and you develop some bad debt along the way—this year our bad debt is enormous, it’s over double the worst year we’ve ever had—the stable customer then has to pay the bad debt for the unstable customer because you have to recover that money somehow.”

Phil King agreed, saying, “We only took tenants that had the stronger balance sheets. And if they couldn’t get a mortgage for a building as a company on their own we didn’t want them as a tenant.

Because when we go out and finance a building, once we’ve built it that company has to have a balance sheet that the bank will lend to. If they won’t, then we don’t want them as a tenant, because chances are they’re not going to be there at the end of the lease.”

The brutal truth, the panel agreed, is that you cannot afford to do business with weak clients.

As Keith Lambert said, “It’s a prime opportunity to feed the pigs, if you will. The people who were

recently made a decision to close the warehouse in Calgary in January of 2010 and consolidate all operations into Mississauga. So on the supply chain side, Phil brought up the point earlier that people are looking for shorterterm leases, I think that trend, in my mind, is going to continue.”

For King, accommodating clients’ needs is a necessity. “We’ve got to do everything we can to keep the tenants that we have. So we try to tell them, ‘You stay with us, we’ll help you grow and we’ll help you shrink.’

“Shrinking is more difficult, growing is easy. And so we say, ‘If you sign a 10-year lease with us and three years in, five years in, or seven years in you need more space we’ll tear that lease up and move you. Now we’ll come to agreeable terms and move you. We have the ability to do that.

“Shrinking is difficult, but we do it. They end up paying more per square foot because of the costs that are in there. They may end up having to carry the larger building, but we’ll help them get out of it. We’ll put them into the right size facility.”

Lambert pointed to Forzani’s experience. The company committed to an enterprise software upgrade before the recession. “We’re currently in the largest—from a technology standpoint— supply chain initiative the company’s ever undertaken,” he said. “And we’re in the midst of an economic recession. We made the decision before 2008 that we were doing a systems upgrade, but at the end of the day, we haven’t let the recession affect that decision to proceed with it. So we have the largest supply chain upgrade that the company has ever seen underway this year and next year—again, on the premise that we’re counting for that returning consumer confidence in our systems.”

Improve your systems and processes It’s not only about scaling your network. Having the right systems, technology and processes in place will enable your company to take advantage of opportunities as they arise.

“As times get a little tougher you’re looking for every opportunity to get more efficient and improve your business so you become more surgical and take more of an engineered solutions approach to it,” Cain said. “And you’re willing to consider supply chain options or strategies you may not have had the time to consider in good times.”

He cited the example of a client that historically resisted intermodal transport options. “There was only one transit day difference between over-the-road and for the inter-modal option,” he said. “And we were able to convince them to re-look at it. And we’ve been able to—for this company alone—take over a thousand loads a year off the road and put it onto the rail.”

Aaron Lalvani looked at the technology side, saying, “We’ve talked about technology as the opportunity, as an enabler. Companies are starting to dig into understanding their cost structures and their processes a little bit better.

And the only way that they can actually gain the efficiencies is to enable them with an ERP and MRP upgrade. And it’s amazing how many major organizations have not upgraded their systems in five or seven years.”

Work with your partners As a baseline, said Lalvani, supply chain partners “need to be talking the same language.” He pointed out that often his clients and their customers measure performance KPIs using different definitions. “I think in order for this collaboration initiative to happen, the partners need to be on the same level. They need to know if I’m talking [about] fill rate percentage, it needs to be clearly defined what that fill rate is based on. And I think that will at least start the ball going in the right direction in terms of understanding each other and measuring correctly.”

For Boughton, the key is commitment. He

“ As a smaller player, and especially in a downturn, you need, more than ever, to enter into strategic relationships with the people you’re doing business with.”

16

MM&D | November/December 2010

Survival tips for the slow recovery

that mindset, you’re willing to share information and discuss cost-benefit trade-offs. You’re • Pay attention to trends approaching it in the sense of, ‘OK, ultimately • Move forward with confidence we need to work together to make this work for the consumer. How can we do that in the most • Always be improving your supply chain effective and efficient way?’”

• Collaborate with suppliers and competitors Lambert pointed out, “As a smaller player, • Choose your customers and suppliers wisely and especially in a downturn, you need, more than ever, to enter into strategic relationships with the people you’re doing business with. And cited the example of a large retailer wanting a maybe even with competitors—to get into a situation where you’re sharmajor commitment of infrastructure, staffing ing space in a distribution centre, using combined volume to turn it into and equipment from their 3PL and other suppliers, critical mass where you can all benefit. I think it’s key for the smaller but they wanted a 30-day walk-away clause in players, that they look towards those types of things to get back on a level their contract. “Not making the commitment playing field with the larger players.”

Be green if it pays The panel agreed that cutting carbon is a great objective, but they also agreed that most companies are not making carbon reduction a key pursuit.

From Cain’s perspective, “The economic impact and environmental impact will go hand-inhand. So if you can engineer your logistics network in the appropriate way to reduce cost, in most cases you’re also having a favourable impact on the environment—because, again, it’s about getting leaner, about a smaller footprint, about choosing the right mode of transportation.

“I do think that the larger organizations that have made corporate responsibility commitments are looking to their supply chain groups to say, ‘How are you going to contribute to this overall objective?’ And it’s not everybody, but it’s certainly the leading companies are doing that.”

Aaron Lalvani pointed out that “A traditional buyer of transportation is not coming to us and saying, ‘Part and parcel of what we want to see here is a reduction in rate, but I want all these other value-added features.’

They’re not saying that.

“And in tenders that are going out more and more these days, they are making note that, ‘We want to know what your initiatives are, but put 10 percent more on there.’ I think that’s where the push-back comes.”

Likewise, Boughton says that prospective buyers are not asking about the environmental benefits of his services. “Because the first question is the only question, ‘How much?’ That’s what’s driving it.”

For King, it’s definitely a pragmatic decision, “They’re doing it when there’s a cost benefit. The biggest thing that we’ve done over the last year and a half—and it’s because of government programs—is changing lights in buildings.” He pointed out that the ROI payback period for changing light fixtures in warehouses is about two years.

Lambert concurs: “I don’t think the trend has shifted enough yet towards where this has become a defining moment or issue…The mindset just hasn’t shifted to that point yet. I think it will; it’s just a matter of when there’s enough public pressure. When there’s enough government pressure, then I think that needle is going to move father over and then you will see that shift to where it just becomes a norm or common practice for [green] to be a part of any solution that people are looking for.”

MM&D

“ If you can engineer your logistics network in the appropriate way to reduce cost, in most cases you’re also having a favourable impact on the environment.” causes problems for everybody up and down the line,” he said.

“What we are doing is trying to shorten the list. We’ve signed a deal with Michelin to do all our tires from Michelin. Not because we got a lower price, but we felt that our service level and the longevity of the product was going to be greater.

“We’re driving our suppliers hard on the price, but increasing the quantity, in order for them to have a better feeling about what they’re doing. So instead of buying a thousand of these a year, we’re going to buy 3,000 of whatever this part is.

“I think that all the people involved have to have enough respect going both ways to recognize that we’re all doing a lot more with less for lower margins, and that we can’t be put in a position where you could put us out of business or put us in harm’s way.”

Patrick Cain pointed out, “most large organizations that I’ve worked with, and whether that’s General Motors or Nortel Networks in their heyday, or Sobeys, they recognize that it’s a win-win situation. They’re bringing you on as a partner in their business. And they recognize that if you fail, they fail.

“It starts with the premise that in the supply chain—retailer, manufacturer, distributor— they’re all partners in trying to get the product to the consumer in the most effective and efficient way,” he added. “And so, if you start with MM&D | November/December 2010

17

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The Problem: “ Traffic and congestion in the GTA is costly in wait-time and lost productivity for local movements.”

Infrastructure headaches Shippers feel the pain

or insufficient infrastructure. A majority—52 percent—also cite increased costs, such as labour or Nearly three quarters of Canadian supply chain professionals fees or penalties, and 25 percent say they have lost report missed deliveries as a result of infrastructure inadequacies. sales due to issues with infrastructure. Additionally, Emily Atkins reports on exclusive new research.

17 percent report warehouse congestion, 14 percent report stock-outs and nine percent report product ransportation infrastructure in Canada has spoilage or obsolescence as a result of infrastructure problems. long been a sore point for those working in These are significant numbers that reflect the growing congestion on our the supply chain. Common wisdom says that we roads, particularly in major metropolitan areas. Those in the industry rate don’t have enough and what we do have is aging transportation infrastructure in Canada’s major cities as only adequate. and clogged with cars and trucks.

On a scale of zero to 10, the average scores ranged from 5.3 for Greater In partnership with our sponsor, RBC, MM&D Vancouver/Lower Mainland to 7.0 for Edmonton. In between were Winnipeg decided to ask our readership what they thought and Montreal at 6.7 out of 10, the Golden Horseshoe in Southern Ontario about infrastructure in 2010. We asked them how at 6.7, and Halifax with 6.8. infrastructure inadequacies affect their business, Five percent rate the infrastructure as inadequate (scores of zero to three and what they would like to see done to improve out of 10) in Greater Vancouver/Lower Mainland, while in the Golden the situation.

Horseshoe/GTA six percent of respondents ranked infrastructure in the We found that a whopping 72 percent have expe- zero-to-three range. rienced missed deliveries that they blame on poor Road congestion was the chief bone of contention, particularly in the Vancouver/Lower Mainland and Golden Horseshoe/GTA regions, as seen in the following Number one supply chain issue verbatim comments from respondents: “As a (percent who rank issue most important) port city, Vancouver needs to step up its infrastructure,” and “Time lost due to congestion in the GTA is the reason for the lower grade.”

Although many respondents report having Security 5% extra costs and delays associated with infrastructure, they do not find that these are the Regulations 6%

T

Labour Issues

7%

Infrastructure Issues

15%

Border Issues

18%

Equipment Availability

21%

Fuel Price

23%

0%

5

MM&D | November/December 2010

10

15

20

25

The Problem: “ Toronto has the best total infrastructure, but it is still inadequate for the relative volumes passing through it.”

19

The Solution: “Better roads and a national transportation plan that is similar to the interstate system in the US. Why does Canada not have a coast-to-coast, four-lane, high-speed highway?” issues keeping them up at night. Respondents are most concerned about fuel prices, with 58 percent ranking this in their top three concerns. Coming in second is equipment availability, with 55 percent ranking it in the top three; placing third is border issues.

Infrastructure ranked fourth, with 38 percent. Regulations, labour issues and security received 29, 28 and 26 percent respectively.

Rising oil prices and a looming capacity shortage appear to be on many shippers’ minds as the recession slowly recedes. These have much more immediate effects on costs and profitability than infrastructure, and can be directly managed. Infrastructure cannot be controlled by an individual or company.

Solutions Solutions to infrastructure problems come in two forms for the users of that infrastructure: adaptation to the failings, and fi xing the problem. First we asked about adapting to the problem.

When asked about work-arounds, 29 percent said off-peak deliveries would be their first choice. Twenty percent said creating more or smaller distribution centres closer to their customers would be their first action, while 16 percent said they would shift their freight to another mode. Twelve percent would divert containers to another port, while 11 percent thought road tolls would be a good interim solution.

Favourite work-arounds (percent who rank solution number one)

Other

2%

Tolls/congestion charges

11%

Container diversion

12%

Modal shift for freight

16%

More/smaller DCs closer to customers

20%

Off-peak delivery

29%

0%

20

5

10

15

20

25

30

Study Methodology The online survey was conducted among 178 supply chain professionals in Canada between September 21 and October 8, 2010. The study was sponsored by RBC Royal Bank and conducted by Rogers Publishing Ltd on behalf of MM&D magazine.

Who participated?

Just under half (47 percent) of respondents move freight within Canada directly themselves, while 70 percent do so through a service provider and 53 percent only use a service provider.

Respondents ship freight both locally and regionally (73 percent), inter-provincially (77 percent), across the country (75 percent), and internationally (71 percent).

Respondents were located across the country and across industries.

Respondents have worked in supply chain for an average of 18.2 years.

On average, their organizations spend $6.7 million on transportation and logistics.

When asked about longer-term solutions to the infrastructure issues, more roads was the clear leader, with 42 percent selecting this option as their first choice of solutions. When aggregated into the top-three ranked priorities, roads lead with 75 percent, and improved rail infrastructure placed second with 65 percent. Less than half (43 percent) rate improved public transit, new toll roads (42 percent), and improved harbour infrastructure (for short-sea shipping) (28 percent) as top-three priorities.

Some other “big picture” suggestions by respondents include: “Governments should take the lead in developing infrastructure that can keep up with growth.

Regulators are all-to-quick to develop plans for growth in major centres without planning for new roads and ways to move people and product.”

It’s clear that shippers have many issues to deal with in 2010. In our post-recession economy, it appears that while infrastructure is on the list of irritants, it’s not at the top. Shippers have to worry about more pressing issues like the price of fuel and capacity if they want to run a profitable business.

When times are better, infrastructure will become a greater irritant, especially as we see freight traffic increase in all modes. Hopefully by then, those responsible will have the funding and will to ensure our infrastructure is adequate to the load.

MM&D MM&D | November/December 2010

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Big and fast

Canadian Tire scales for growth with automation

Our exclusive tour inside the expansive new Quebec DC. Mike Ouellette reports from the inside.

E

very supply chain has interplay between technology and manual action.

The nuances of how a company successfully manages these interactions often represent a significant competitive advantage, and that certainly holds true with the unique structure found in Canadian Tire Corp Ltd. The iconic Canadian company with market capitalization of more than $5 billion employs 58,000 people in roughly 480 stores and a number of distribution centres across the country. Its corporate profile boasts “near-universal brand awareness” and that’s no joke—somewhere between 85 and 90 percent of Canada’s population lives within 15 minutes of one of their big, red stores.

And if you’ve been inside one of those stores (let’s face it, if you’re reading this, you likely have been) you would have noted that they sell just about everything. While that product saturation represents the company’s retail mandate, it also means Canadian Tire commands a vast and comprehensive supply chain that spans the globe.

Supply chains of this calibre comprise partners that invariably possess the most sophisticated technological advances available, be it software

22

applications, warehouse automation or the newest, biggest ocean liners, and Canadian Tire’s supply lines are no different.

“Canadian Tire has a flyer that goes out 52 weeks a year. We have those forecasts going out 26 weeks in advance, so everyone in our supply chain from merchandise suppliers, service suppliers, ocean carriers all have 26 weeks of visibility,” says Dan Chan, vice-president of logistics at Canadian Tire.

“Every Thursday night we send out a new forecast. If you are a merchandise supplier, you’re thinking how many of these white cups do I have to make for week 37. Ocean carriers have to convert that same forecast into containers out of a port.

Warehouses have to convert that into cubic feet of throughput and then into manpower.”

MM&D | November/December 2010

The facility itself is about 1.5 million square feet and has 57 outbound shipping doors and the same number of inbound— with room to grow.

L-R: James Jodoin, manager supply chain major projects, Canadian Tire; Steve McElweenie, vice-president & general manager, Intelligrated; Arnold Cunje, senior sales manager, Intelligrated; Dan Chan, VP logistics, Canadian Tire; Andaleeb Dobson, AVP supply chain major projects, Canadian Tire.

Largest DC in Canada On the strength of consumer response to this flyer, Canadian Tire has recently opened the country’s largest distribution centre in Coteau-du-Lac, Quebec, about an hour west of Montreal. Longtime automated material handling partner Intelligrated was on hand to ensure the facility was one of the most advanced DCs in the world.

“Canadian Tire has a longstanding relationship with Intelligrated that goes back to 1989,” says Chan. “Our automated facility in Brampton was handled by Intelligrated (at that time FKI Logistex) and our Calgary facility also has a lot of Intelligrated engineering on the conveyables side.

“This relationship decreases the amount of lead time because they understand us and what we want to accomplish.”

What they accomplished together is spectacular.

MM&D | November/December 2010

The facility itself is about 1.5 million square feet and sits on 167 acres just off the highway in a mainly rural area. The building is separated into four sections, each bisected with a massive dropdown steel fire door.

The building has 57 outbound shipping doors and the same number of inbound—with room to grow. It is operated under contract by Genco, a third-party logistics provider.

Workers operating 85 lift trucks, aisle surfers, pallet trucks and bicycles cruise through the massive structure, passing bay after bay of racking (more than nine million pounds of it), order-picking modules and more than 20 kilometres of conveyors.

The lift trucks even have cameras so operators need not crane their necks to stash product on 35-foot racks.

The company receives about 25 percent of its offshore shipments from the ports of Halifax while the other 75 percent of imports come through Vancouver, which makes the location in rural Quebec ideal—it is very close to a Canadian Pacific rail head, a key consideration when opting for this locale.

“Around 2005 we looked at our point of sale forecasts over the next five

23

years and it was clear we weren’t going to have enough capacity with the three distribution centres we had,” explains Chan. The increase in sales of bulk items such as lawn furniture was devouring floor space.

That timing corresponds with a shift in global sourcing, which meant more product was shipping from China. This shift had a profound impact on Canadian Tire—and many other companies—because the increased lead-time for products from suppliers overseas meant much more storage capacity was required to sell the same amount of product.

“One of the reasons we had to expand our network is that when you buy things from China you have to purchase them about three or four months in advance because there is a long transit lead time and a long manufacturing lead time,” says Chan.

“Everything is pretty much made to order, as opposed to purchasing from a North American vendor, when you buy things from a finished goods inventory.”

Indeed, overseas product brings inventory turns down significantly. In Canadian Tire’s case, that reduction in turnover—calculated as throughput divided by average inventory—was roughly 50 percent.

Room to expand The company needed more space, fast.

“That, combined with the focus on the bulkier items and the need for as much automation as possible to improve efficiency and labour productivity meant that we needed a building that could handle both bulk and largely automated conveyables,” Chan said, musing: “Not a lot of that just lying around, so we went with this greenfield development near Montreal.”

The company learned from experience with its DC in Calgary that being able to handle the combination of bulk and conveyables with as much automation as possible meant they were able to “minimize the footsteps and fingerprints,” says Chan.

So far, that automated efficiency looks to have taken hold. The facility

Background: The Intelligrated conveyor system builds “slugs” of product and queues them for shipping. It then blasts them down the line to the shipping sorter and along to the trailers.

Bottom right: Canadian Tire receives about 25 percent of its offshore shipments from the ports of Halifax while the other 75 percent of imports come through Vancouver.

Bottom left: The high-speed wedge merge from Intelligrated collects the conveyable product from the picking modules before routing to the distribution sorter.

is capable of operating 20 hours a day with a fourhour maintenance window. Because it processes both bulk and conveyable items, output is measured in cubic feet and, as one could imagine, the output is considerable.

It currently can handle 55 million cubic feet of outbound product in a year—that’s a little more than one million cubic feet a week or more than 22,000 trailers every 12 months.

The company culture is to stuff these trailers to the brim, getting about 2,700 cubic feet of product in each one.

“Our freight costs greatly outweigh our other distribution costs on an annual basis, so getting the most out of every trailer is an obsession,” explains Chan.

That huge amount of output, combined with the size of bulk products and the added storage capacity required to accommodate extended overseas lead times, requires an incredibly sophisticated automation system.

But it gets even more complicated.

Canadian Tire has a unique business structure in which each of its stores is owned and operated independently by a dealer. It’s a big deal because, regardless of the flyer, each store operator is free to order product as he sees fit to satisfy his local market. This means the DC in Coteau-du-Lac must be able to satisfy these orders while storing product for the flyer as well as about 55,000 SKUs to supply the firm’s vast auto repair business.

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Right: Canadian Tire manually picks conveyable product in massive, 150-foot long, fourstorey-tall picking modules.

Left: The facility contains sophisticated technology, including software applications, warehouse automation and controls system.

Background: The distribution sorter collects at high speed and high volume and sends to four shipping sorters, which operate at a reduced rate.

Taking all of these variables into consideration brings into question how any company can manage efficiency in its operations.

Maintaining the balance In Canadian Tire’s case, the key is balance.

“The whole building must stay in balance,” says Arnold Cunje, senior sales manager at Intelligrated. “If you have 28 stores being picked in bulk and conveyable, the whole building must finish that cycle at about the same time.”

This balance becomes critical when the trailers are being loaded, because there are so many stores being picked in a day, keeping this balance maximizes the use of the equipment. Once the balance goes awry, the entire operation waits for the slowest area to catch up.

“If you get too many stores in the queue and the conveyors have to figure out where to put the stuff that’s not ready to go, then you get a log jam, someone has to sort through that and all the efficiency gained by your automation goes out the window,” he says.

Cunje is one of the main players from Intelligrated who managed the implementation, and he walks the floor of the Canadian Tire facility pointing to bits of technology as if they were children.

Intimately familiar with both Intelligrated’s automation solutions and how they were installed and tweaked in the Canadian Tire DC, Cunje beams as he tours the facility. At one point, he actually buffs a smudge off a spiral conveyor housing, of which there are 24, each measuring about 30 feet tall. Together, they are capable of processing a minimum of 3,000 totes each per day.

These conveyors bookend massive, 150-foot long, four-storey-tall picking modules bordered by racking fi lled with product. In these modules, workers manually pick SKUs and boxes from pallets into totes. The totes roll down a roller conveyor line to the spiral conveyor, which hoists them several levels high into a huge conveyor system that sits 30 feet above the floor, spanning the entire facility.

“The design is unique because we collect everything from all of the pick-

26

ing modules and bring them to a high-speed wedge merge,” describes Cunje. “From there, it’s sent through a distribution sorter, which is unique to this facility. It collects at high speed and at high volume and then ships to four distribution sorters at a reduced rate, which travels through 57 lanes of shipping sorting and ends up, ultimately, in the back of a trailer.”

But it’s not that easy. The facility maintains a 48-hour gate-in process, which means product is targeted to be received by the operation within 48 hours of it arriving at the DC—thus, speed is key.

And this conveyor system has speed to burn.

It’s capable of running consistently at 550 to 600 feet-per-minute, however Canadian Tire has so far only required running it at 400 feet-per-minute, saving energy and wear.

These conveyors are not only fast, they are smart. Equipped with photo-electric eyes and a slew of other sensing options—including a proprietary shunting system that knows exactly what package is on tap and where it must go—the system builds “slugs” of product and queues them for shipping. It then blasts them down the line to the shipping sorter and along to the trailers.

While it all sounds very complicated, to Chan, it’s simple.

“Canadian Tire does two things. We source top products from around the world and we sell it in our stores. Getting the product from point A to point B is the challenge for our supply chain.”

MM&D MM&D | November/December 2010

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Could your international shipments be more sustainable?

grid-based power whenever possible.

Which do we use more of—trains or trucks?

Trains are far greener than trucks, emitting nearly two-thirds less carbon dioxide. So use rail for the final leg of your products’ journey whenever you

By Earl Agron can. In addition, look for ports that have on-dock rail operations, which eliminates the need to move or many people, the link between supply chains containers from ships to trains via truck. and carbon footprints is obvious. Raw materiHow efficient is our gate and container yard als and products must be moved from point A to operation? All terminals are not created equal. point B, and their transits invariably have an The way your carriers’ terminals operate can impact on the environment. have a substantial effect on how long truckers However, that doesn’t mean that international have to wait for their drayage loads—and how shippers are exempt from the requirement to be much time they spend idling, consuming fuel good environmental stewards—or that they and creating pollution. Try to use terminals that should consider every drop of fuel they burn to be a necessity. are “trucker friendly”.

With that in mind, take a moment to assess how green your international How efficient is our inbound logistics overshipments are and how much greener they could be by asking yourself these seas? Your overseas suppliers may know the ins 10 simple questions. and outs of their country’s transportation infraAre we transporting our internationally sourced goods via ship or air? If structure quite well, they may not have access to you want to be as green as possible, opt for maritime instead of air shipments or expertise in using the state-of-the-art routing when possible. Water transportation creates far less carbon dioxide per tonne and other freight management tools that can shipped or kilometre traveled than any other mode. In fact, according to data minimize miles traveled. The greener choice might from the Network for Transport and the Environment, air shipments emit be to take responsibility for optimizing inbound approximately 35 times more carbon dioxide than ocean container shipments. overseas deliveries yourself—or to find a global What size containers do we use? When it comes to choosing the container 3PL in that region that can. size best for the environment, bigger (45, 48 and 53ft) is generally better if Would we be greener if we were using goods you have enough cargo, because it results in fewer drayage-to-rail moves produced within our country instead of sourcing or cross-docks. For example, by using 53-foot ocean containers instead of them globally? According to the World Shipping 40-footers your company could require 33-percent fewer containers, because Council, which addressed this same question in it’s possible to fit the contents of three 40-footers into two 53-footers. a 2009 report, the answer is usually no—provided Since 53-foot trucks are routinely used for domestic transportation, using you’re using ocean transportation rather than air them for ocean not only saves any carbon emissions associated with trans- and ship goods to ports located near end users. A loading but reduces operating costs, increases speed-to-market, reduces cargo large containership emits approximately half of damage and minimizes potential theft. Simply put, you’ll have fewer handoffs the greenhouse gases that trains do and one-sixth and less carbon to worry about. Choosing the right size of container will also the greenhouse gases associated with trucks. result in less re-handling and/or consolidation at your warehouses.

So often—as the wine industry found out in 2007 What kinds of fuels and fuel treatments do our transportation providers when it compared the carbon footprint of shipping use? Container yard tractors and container handling equipment running a bottle of French wine to a New York restaurant on biodiesel fuel blends can help reduce particulate matter emissions by as versus shipping a bottle of California wine there— much as 80 percent. In addition, some ocean carriers use cleaner, low-sulfur companies engaging in international shipping might diesel fuel when operating near or at certain ports. actually be greener than companies that aren’t.

How fast are the vessels that carry our goods moving? Slower-steaming There are numerous excellent resources and vessels consume less fuel and emit less carbon dioxide, carbon monoxide, programs designed to help your company succeed sulfur oxides, nitrogen oxides and particulate matter. in its quest to become a greener shipper.

How “electric” are the ships and terminals we use? During a single Taking the time to study up on these promising 24-hour port call, cold ironing (connecting a ship to an electric power industry initiatives will always be a wise use of source so it can shut down its diesel-powered engines) can help eliminate energy.

MM&D approximately 1,000lb of nitrogen oxides emissions, 70lb of sulfur oxides and 15lb of particulates.

Earl Agron is vice-president of corporate security Most modern ports use electric gantry cranes and have ample electrical and environmental affairs at APL and plugs for refrigerated containers. Terminal operators should be using this APL Logistics.

Tips to make your supply chain greener

F

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MM&D | November/December 2010

AT SOME POINT YOUR ENTIRE SUPPLY CHAIN WILL REST SQUARELY ON THE SHOULDERS OF ONE PERSON.

You deal in promises. With Domestic, Expedited, Global and Technology offerings, the people of Old Dominion take the promises

Right down to the driver moving your freight.

In fact, we like to think that whatever business you’re in, that’s the business we’re in.

you’ve made as personally as you do.

HELPING THE WORLD KEEP PROMISES.

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© 2010 Old Dominion Freight Line, Inc. All rights reserved. Old Dominion Freight Line, Inc., the Old Dominion logo and Helping the world keep promises. are trademarks or registered trademarks of Old Dominion Freight Line, Inc.

DATACAPTURE Communications & Commerce

News from the scanning frontier The latest in datacapture products and systems Voice picking integration Psion Teklogix’s Mobile Integration Suite (MIS) version 3.0 has been recertified by SAP for integration with SAP applications. Psion Teklogix’s partners can now offer Psion Teklogix MIS as a solution with SAP-certified integration, allowing customers to integrate MIS 3.0 with existing implementations of the SAP ERP application.

Psion Teklogix’s Mobile Integration Suite 3.0 integrates with SAP ERP 4.7 via the supply chain management–warehouse control systems 4.7 (WM-LSR 4.7) integration scenario.

MIS provides Psion Teklogix’s partners the ability to enable voice-picking solutions through integration with SAP solutions. The Psion Teklogix Mobile Integration Suite is an enterprise-wide middleware solution that provides integration with the SAP ERP application. A key component of the MIS is Psion Teklogix’s TekRF software, which provides mobile barcode and RFID support. Psion Teklogix customers can use the MIS in conjunction with the company’s Speech Process Analyzer (SPA), which tracks user productivity in real-time for instant analysis.

Thermal ink jet The Wolke m600 advanced small character thermal ink jet (TIJ) printer from Videojet Technologies Inc can be used to deal with complex coding requirements often found in the pharmaceutical, tobacco, health and beauty and other industrial markets. The printer enables high-speed coding of serialized data and many types of barcodes, including GS1 DataMatrix, to be compatible with track-and-trace applications.

The printer’s communication capabilities allow integration in compliance with 21 CFR Part 11 for maintaining electronic data records for FDA-regulated industries. Four printhead models allow integration into packaging lines by allowing printing from above or laterally, with print heights ranging from 0.5in to two inches. Universal black ink delivers a combination of long decap time—which keeps ink fluid—and short drying time, allowing it to be used for varnish-free surfaces on folded chipboard boxes and other paper substrates.

Low-cost reader chip Impinj, Inc, a UHF Gen 2 radio frequency identification (RFID) technology provider, has introduced the Indy R500 reader chip, developed to address the emerging market for low-cost hand-held, desktop and embedded RFID readers. Based on the Indy architecture, the R500 enables UHF Gen 2 readers and is drop-in compatible with the Indy R2000. The product is designed to meet regulatory requirements in over 100 countries.

Impinj’s family of Indy reader chips and development tools allow customers to develop RFID reader products for several applications, including retail, manufacturing, asset tracking and access control. With the addition of the Indy R500, Impinj offers a portfolio of reader chip products spanning a range of performance and price-points.

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Continuous tracking Lockheed Martin’s Savi Technology announced a device that can switch from satellite or terrestrial wireless systems to continuously monitor the location and condition of shipments anywhere, at any time. The Portable In-Transit Tracking Unit (PITU) connects communications among Radio Frequency Identification (RFID) devices, GPS location and SatCom systems, global cellular networks and sensors that detect environmental and security changes.

The PITU was developed to automatically track the location and condition of cargo containers and their contents, whether in range of landbased tracking systems or in remote locations such as deserts or oceans.

The system is a three-way communication tracking solution that uses a range of tracking technologies, acting as an RFID tag, a sensor device and a RFID reader, depending on the customer’s needs. Three-way communications enables PITU to capture location data from GPS and RFID-tagged supplies inside the container and transmit that information to either groundbased RFID or telecommunications networks or to Iridium satellite Short Burst Data systems.

PITU leverages the best available system depending on the cargo’s location and customer needs.

PITU is designed to improve the safety and security of sensitive shipments, such as medical supplies, hazardous materials and ammunition by minimizing the high cost of correcting unplanned events such as delays and misroutes or critical system failures.

Expanded code reading Cognex has added the 1DMax, a 1D code reading algorithm, to its range of 1D barcode and 2D Data Matrix code reading tools. IDMax technology allows for a read of almost every type of code, regardless of the size, quality, printing method or surface the codes are marked on.

For 1D barcodes, 1DMax is optimized for barcode reading in every direction and can handle variations in code quality. Cognex image-based readers have a range of features, including CognexConnect Ethernet communications, autofocus capabilities, multiple code reading in a single image and image archiving.

MM&D

MM&D | November/December 2010

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Materials Handling | Dave Luton

Effective unit handling The importance of the humble pallet

O

ne of the benefits of working as a long-time consultant is the opportunity to visit many facilities and see what works well, as well as what falls short.

One potential shortcoming affects all aspects of an operation, and yet many facilities have refused to deal with it for a long time. If not done properly, industrial unitization—including packing and crating—can affect all aspects of warehouse operations.

In the early days of my logistics career I would run into problems surrounding this area surprisingly often. However, with the advent of effective returnable packaging logistics programs, along with more reliance on green logistics, problems with industrial unitization occur less than they did in the past.

This is especially true with the emergence of returnable pallet programs such as the (international) orange pallets of the Canadian Pallet Council (CPC) or the light-blue pallets offered by CHEP. Both vendors offer a range of pallet options for either lease or purchase. In the past, the pallets they offered were usually the popular 48x40in, partial fourway entry pallet.

Over time, returnable pallet programs can lead to several broad benefits to logistics systems. But those benefits aren’t always clear unless you observe the system before and after a facility carries out such programs.

More than 20 years ago, I worked for a major Canadian retailer that didn’t use a standard 48x40in pallet in its large, central distribution centre.

It used a 48x32in pallet adopted a long time before, possibly because the retailer wanted to increase its number of facings.

While much of the merchandise was light enough to be floor-piled, the fact that the retailer’s pallets were smaller than those in more broad use prevented the company from using a logistics system that would have benefited from unit load transfer between trading partners.

It was also interesting that the lack of unit load handling extended down into this retailer’s stores. The organization made its floor-loaded shipments using extensible conveyors, and surprisingly, many of its retail stores did not have proper loading docks to receive palletized shipments. This was for larger retail outlets with 50,000 to 100,000sqf of floor space on one floor.

You can imagine the implications of off-loading tractor-trailer loads of merchandise by hand to support retail operations of that size. With today’s emphasis on flow-through logistics and the increasing emphasis on cross docking, it’s not surprising this retailer is no longer in business in Canada.

The influence of proper packaging and unitization extends throughout the logistics chain, and the use of a common-size pallet throughout a logistics system should be fundamental. Much of the success of many larger logistics systems in industries such as grocery, automotive, chemical, beer, wines and spirits stems from the decision to have an effective unit-load system.

Using a standard pallet within a warehouse has so many benefits it’s difficult to imagine a facility that does not do so.

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The benefits include: • Standard equipment in wide use with economies of scale, both in price and for replacement parts.

The ability to easily replace parts is often overlooked in distribution centre design. For example, I can get eight- and nine-foot racking beams for 48x48in pallets from most racking vendors from stock; • Reduced damage to product and less protective packaging, such as corrugated; • Improved worker safety. Pallets seem often to be overlooked in safety audits of warehouses.

Government inspectors look carefully at racking or conveyors to ensure the standards are met. But it’s rare that I have heard the same emphasis on pallets or unit-load packaging even though every piece of equipment depends on them for successful distribution centre operation; • For successful distribution centre operation there is an increasing need for communication with warehousing transportation partners. As the speed of operations increases, successful transfer of materials at both receiving and shipping docks is essential.

Can you imagine the need to hand-load or unload every carton or package at each stage of distribution? These days, logistics supply chains are worldwide and the process suffers if so much manual labour is needed at each of the transitions.

Most warehouse handling systems are designed to transfer material using bottom supported unit loads. While top-lift equipment such as cranes and hoists are used, such equipment usually supports a unit from the bottom. So if a pallet collapses or is broken, then the system ceases to function.

The chance to see an ineffective unit-load system is a powerful reminder of the things we sometimes take for granted. Damage and risks to employee safety are only two of the many problems. Hopefully, they are problems you never have to face as a warehouse manager.

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

MM&D | November/December 2010

Business growth starts with a conversation.

When growing your business, the most useful financial advice is industry specialized financial advice. RBC® is proud to be an active member in the Supply Chain industry and sponsor of the RBC-MM&D Transportation Infrastructure Report.

To start a conversation today, visit rbc.com/business-advice TM

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Learning Curve | Tracy Clayson

Safety and literacy

Limited language skills lead to accidents

A

n investigator trying to get to the root cause of a workplace accident or disaster will always consider mechanical and human error first. If mechanical error is ruled out, the focus moves to the individuals and organizations involved, as well as the skills, training and overall commitment of the employer to safe work practices.

Another factor the investigator should definitely be considering is whether the accident happened because of someone’s inability to read.

A recent Conference Board of Canada study looked at the role of literacy as a barrier to understanding and performing safe work practices. The study found that organizations trying to reduce injury and accidents need to both assess employee comprehension of any health and safety training received, and determine the risks of employing staff with poor language and communication skills. The Conference Board’s What You Don’t Know Can Hurt You: Literacy’s Impact on Workplace Health and Safety also demonstrated that employers have more confidence in the effectiveness of safety training programs than do employees and labour groups.

In most companies, employees are given training and material about safety policies, but those guidelines may not be understood or followed as diligently as expected. Employers who do not verify how well employees grasp safe work practices may not realize the risks of poor responses to workplace incidents. Injury and accident risks are only two outcomes.

Quality and compliance in areas including food production, construction and auto manufacturing are also vulnerable when there is a language competency deficit.

But how can employers address the language gap and its effects on safety and quality standards in the workplace?

To determine the scope of the problem, assess basic language comprehension in all your departments. You may also need to determine how aware your workforce is of your safety and compliance and quality standards programs.

To bridge any knowledge gaps, you must first get employees to commit to improving their level of aptitude. Then address language and literacy issues by making English as a Second Language (ESL) courses available and adjusting training material to meet the reading skill levels of your workers.

These materials can be enhanced with diagrams, demonstrations and increased interaction between employers and employees as well.

Working newcomers whose second language is English are at the highest risk of injury and accidents because they lack basic knowledge of proper responses.

Recruitment standards can work to prevent hiring those with poor language comprehension, but in many areas of production and assembly scenarios, those with limited literacy skills may still represent the majority.

A 2005 CD Howe Institute study, Public Investment in Skills: Are Canadian Governments Doing Enough?, by Serge Coulombe and Jean-François Tremblay, showed that a one-percent improvement in literacy relative to the national average resulted in a 2.5-percent improvement in workplace productivity and a 1.5-percent increase in gross domestic product.

Programs such as Training for Transportation Vehicle Operation and

34

Inspection, WHMIS, Transportation and Handling of Dangerous Goods, and the Food Safety Enhancement Program are extensive and probably exceed most workers’ level of knowledge. On the other hand, much of the safety training materials provides illustrations, video and presentation images to aid in understanding written procedures.

Ideally, workplaces will conduct emergency response drills, where the application of policies will be demonstrated and guidelines better explained.

It is not uncommon for some workplaces, government offices and public health facilities to display policies in other languages. While all companies may not be in a position to do the same, perhaps employees who are multilingual could be involved in translating training into their own native languages. Literacy competency goals can be made with employees and employers through further ESL courses, in combination with safety training—especially in a multicultural urban setting.

Most companies already have employees working with management on their joint health and safety committees to improve relations and communication. Mentoring programs are a great way to make literacy and safety a company-wide goal, too. Adding interactive workgroups can help identify those who may be falling behind on their literacy skills.

While training materials re-written in simpler English and the inclusion of photos and additional tools to demonstrate safe procedures may help to avoid overloading less literate employees, preemployment language assessments, ongoing evaluation of comprehension and refresher safety training are essential.

The practical cost of investing too little in literacy improvement will be a rise in workplace injury claims. Since the long-term pain associated with any such surge is always substantial, it’s clearly time to improve employee literacy in the workplace.

After all, it is likely to make going to work safer for all staff. It might even save a few lives. MM&D Tracy Clayson (tracy@in-transit.com) is managing partner, business development, of Mississauga, Ontario-based In Transit Personnel.

MM&D | November/December 2010

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