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May/June 2012 $8.00

Plus: Raising the roof on warehouses Designing the supply chain Optimizing the oil and gas supply chain Conveyors and AS/RS equipment

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Taking Stock

Delivering mixed messages E

very person I’ve spoken with since I took this job has repeated the same message: we need to attract more newcomers, and especially more young people into the supply chain.

Great. So how is that going to happen?

While attending one of the sessions at Supply Chain Canada, an exchange took place that drove home the realities of just how hard it is to achieve such a goal.

A presenter who delivered that exact message took some questions from the audience. One of those questions was from a student asking how to find work in the industry, especially as it is so difficult these days to gain access to the people who make the hiring decisions.

The presenter’s answer was simple: don’t be afraid of working hard and getting your hands dirty.

Of course the pull-yourself-up-by-the-bootstraps answer didn’t satisfy the student who then explained that even finding more menial, entry level jobs was difficult, especially if the employers think the student

is likely to work a short time and then move on to better things.

Now maybe the presenter wasn’t expecting that kind of question and didn’t have an answer prepared, but that type of stock response doesn’t do much good for the student asking the question, or the industry as a whole.

But it typifies the types of answers students and job hunters hear on a regular basis, regardless of the industry.

Businesses tell applicants they don’t have the right training. Or they don’t have precisely the right experince. It doesn’t matter if you were taught Software Vendor Offering 1.1 in school, industry is using Software Vendor Offering 2.3, or Competitor Offering 4.7. Yes, you may have experience in the logistics of shipping indigo-coloured warehouse guard cats from the lost city of Atlantis using the northeast route, but not the similar mauve-coloured security felines via the east-north-east route, so you’re not qualified for this opening.

If companies want to attract new talent, they need to take a few risks, invest in training for new hires, and at least crack open the door when people knock.

Supply chain professionals also need to recall how they got their start, especially when most tell the same story: I didn’t have any training when I fell into supply chain by accident, but boy do I love the supply chain now.

May/June 2012 | Volume 57 | Number 3

Contents Departments

Columns

Features

5 7 8 11 12

25 Legal Link Invasion of privacy

14 Logistics review

Operations at Nestlé Waters, GM, Staples

29 Learning Curve Mental health

20 Facility planning CMS raises the roof

30 Materials Handling Optimizing for flow-through

22 Supply chain design A step-by-step approach

Supply Chain Scan Benchmarks Global Focus Movers + Shakers Professional Development Directory

24 Oil and gas Supply chains in the energy sector 26 Equipment focus Conveyors and AS/RS systems

MM&D | May/June 2012

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Supply Chain Scan

Inside | Wecon’s 15, page 10 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 SALES MANAGER: Dorothy Jakovina (416) 510-6899 DJakovina@bizinfogroup.ca SENIOR ACCOUNT MANAGER: Catherine Martineau (647) 988-5559 CMartineau@bizinfogroup.ca PRODUCTION MANAGER: Kim Collins (416) 510-6779 KCollins@bizinfogroup.ca CIRCULATION MANAGER: Barbara Adelt (416) 442-5600 x3546 BAdelt@bizinfogroup.ca

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DISCLAIMER: This publication is for informational purposes only. You should not act on information contained in this publication without seeking specific advice from qualified professionals. MM&D accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. MM&D receives unsolicited materials, (including letters to the editor, press releases, promotional items and images) from time to time. MM&D, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort.

Supply chain advice from around the world Supply Chain Canada showcases national and international expertise

By Carolyn Gruske

J

ust as supply chains reach into all parts of the globe, this year’s Supply Chain Canada conference featured speakers with links to supply chains in Afghanistan, Colombia, Georgia, Boston, Edmonton, Toronto, PointeClaire, Quebec, and many more places around the world. The conference, held in Mississauga, Ontario, treated attendees and visitors to two days of keynote speakers, panel discussions, and case study reviews.

Past CFL commissioner, former Ontario politician and current radio talk show host John Tory opened the conference by telling attendees that the supply chain world needs to make itself better known to the general public and government decision-makers alike, especially in light of the important role the industry plays in the economy.

Other keynote speakers included Robert Martichenko, CEO of LeanCor LLC, a 3PL that operates using Lean practices, Chris Mathers, president of security and risk consulting company Chris Mathers Inc, and Colonel Virginia Tattersall of the Canadian Forces, who was commanding officer of the Mission Closure Unit for Operation ATHENA in Afghanistan.

Over twenty break-out sessions were offered. Among them were presentations highlighting systems and process changes—such as those made by Future Electronics and by the City of Edmonton—and technology briefing sessions, including one put on by Microsoft explaining cloud computing, and one by TECSYS, which looked at various picking technologies and suggested ways of integrating visual and voice systems.

Bernard Betts, vice-president of worldwide distributions and operations for Future Electronics and Karl Hoegen, CEO of Witron North America jointly

PRIVACY NOTICE: From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374 Fax: 416-442-2191 Email: privacyofficer@businessinformationgroup.ca Mail to: Privacy Office, 80 Valleybrook Drive, North York, ON M3B 2S9 Printed in Canada Publications Mail Agreement #40069240, ISSN: 0025-5343. knowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities.

MM&D is indexed in the Canadian Magazine Index by Micromedia Limited. Back copies are available in microform from Macromedia Ltd., 158 Pearl St., Toronto, ON M5H 1L3

MM&D | May/June 2012

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Supply Chain Scan presented Future’s story. The Pointe-Claire, Quebecbased distributor of electronic components, had Witron plan and implement a complete overhaul of its distribution centre in Memphis, Tennessee, and then provide ongoing support as the system continues to change and evolve.

“I knew as soon as I would implement it, I’d want to change it immediately,” said Betts.

Before the project, Future employed 750 people in its Memphis facility. At the end of the project, after all the automated picking solutions had been deployed, staffing had been reduced to 242.

According to Betts, the new system is three times faster, maintains the same extremely high picking accuracy rate, and provides a considerable amount of order consolidation. It also allows Future to measure an ever-changing and growing set of KPIs. The company was so pleased with the changes, it implemented identical systems in its DCs in London and Singapore.

“It’s not automation for the sake of automation.

It’s automation that makes sense,” said Betts.

Like Future Electronics, the City of Edmonton also moved from a manual system to a highly orga-

nized and optimized operation. As part of his duties, Dan Lajeunesse, who holds the title branch manager, materials management, corporate services, is responsible for maintaining the parts supply for the city’s 4,700 fleet vehicles, including buses, fire trucks, construction vehicles and EMS transportation.

Before the project, Lajeunesse described operations as “very reactive”.

“Everybody was rushed. Courier costs were growing exponentially. We had significant non-stock inventory—more than 40 percent. We were a hostage to lead-times from vendors. There was no visibility into non-stock parts.”

A change in management at the city created the environment where a major project could be undertaken to improve the supply chain and improve the relationship between the materials management and fleet service divisions, which Lajeunesse likened to a “master and slave” relationship, with fleet having the dominant position.

Supply Chain Alliance Partners Inc was brought in as the outside contractor to improve network design, replenishment operations, establish rules around processes and standardization, and devise customer service and operational metrics.

“If you can’t articulate performance metrics, you’ll never win. Once you do it takes all the emotion away,” said Mike Croza, managing partner of Supply Chain Alliance.

As a result of the project, the city now is able to take better advantage of its SAP system. It also has new inventory policies, new rules, better inventory stratification, improved forecasting and replenishment, and much more visibility into the parts supply network.

Benchmarks Lexington, Kentucky-based Clark Material Handling Co gave out awards to its top dealers, and a number of Canadian dealerships earned recognition. AR Williams Materials Handling Ltd of Calgary won one of the dealer of excellence awards, which is given out to Clark’s bestperforming dealers. JH Ryder Machinery Ltd in Toronto earned recognition in the next category down, dealers of distinction. Williams Machinery LP from Vancouver was named as dealer of merit.

KUKA systems earned supplier awards from two separate automakers. The Augsburg, Germany-based body shop automation solution provider was named GM global supplier of the year for 2011. The Shanghai division of Volkswagen AG gave KUKA a silver medal in the commercial excellence category.

A World Class WMS Solution

TST Overland Express, based in Mississauga, Ontario, and its American partner, Estes Express Lines, which is based in Richmond, Virginia, won awards from home improvement retailer Lowe’s. TST won the gold carrier award and Estes took silver. The two companies have integrated their operations, marketing and technology businesses in order to improve the efficiency of their cross-border freight deliveries.

RF Pathways is a functionality rich warehouse management system that automates distribution processes. Our system, combined with the recognized expertise of our staff, deliver first class operational benefits.

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MM&D | May/June 2012

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Supply Chain Scan Global Focus Crown expands in Spain New Bremen, Ohio-based forklift manufacturer Crown Equipment Corp has opened both an administrative office and a company-owned branch office in Madrid, Spain.

This follows on the earlier opening of a company-owned branch office in Valencia. The new administrative office will co-ordinate all Spanish business activities and will house Crown’s Spanish technical and sales support centre.

Technicians from the two branch offices will initially be able to provide support to customers in Barcelona, Madrid, Valencia, Zaragoza, Murcia and San Sebastian.

BDP opens Malaysia branch BDP International has grown its operations in the Malaysian market. The Philadelphia, Pennsylvania-based logistics and transportation services company has opened a global services centre (GSC) in Petaling Jaya, Malaysia.

This is the second office in the area for BDP. In 2008 it opened its first GSC in Kuala Lumpur. Both facilities offer the same range of services, including import/ export container and shipment tracking, SAP data entry,

shipment data entry and billing and documentation.

Paramalingam Mahalingam, general manager of BDP GCS will serve as director of both locations.

BabyCare picks 3PL distribution partner The Shanghai, China-based subsidiary of Con-way Inc, Menlo Worldwide Logistics (China), was chosen to provide warehouse management and distribution services to BabyCare Inc, a producer of infant nutrition products headquartered in Beijing, China. Menlo has also been given the task of establishing a direct sales network and implementing an online shopping service, including establishing a new picking and flow system, for BabyCare.

Labelling firm acquired SATO America Inc signed an agreement to purchase Achernar of Argentina. Charlotte, North Carolinabased SATO provides automatic identification and data collection, barcode printing, labelling and RFID solutions.

Buenos Aires, Argentina-headquartered Achernar also offers adhesive labelling solutions.

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Supply Chain Scan

New mentorship program created for supply chain professionals CITT is playing matchmaker.

“If you go into it with an open mind and open attitude, by The organization is pairing experienced supply chain profes- and large you’ll get lots out of it. If you go into it thinking, ‘I sionals with others in the industry who could beneĀt from know everything’, you potentially won’t get everything you some guidance and wisdom in a new mentorship program. want to get out of it.”

“Both sides will gain from it,” says CITT president Catherine Also people need to keep in mind the program’s purpose.

Viglas. “The mentors will gain by practising their leadership “This is not intended to be a networking, try-to-Ānd-me-aabilities. The mentees will gain by speaking with somebody who new-job program,” he said. is more knowledgeable and more advanced in their career and can give them really good one-on-one coaching to get them through some areas of concern or areas where they are stagnating or stumbling or areas where they just need to bounce an idea off somebody. Often you don’t have that in your organization.”

Potential mentors or mentees looking to join the program need to submit an application expressing their interest, listing MATERIAL HANDLING SOLUTIONS THAT WORK their work history, stating what they hope to gain from the program, and detailing THE CHALLENGE: preferences such as language of commu• The client, a 3PL, was hired to roll out a new line of products. nication, geographical location in relation• Manual picking from pallets was inefficient and labour intensive. ship to the mentorship partner, and the • A case handling system needed to produce up to 8,000 orders per shift for degree of importance of being paired with 250 locations. somebody working in the same industry.

• Planned growth over five years to 12,500 cases per shift to more than 300 stores.

“It’s kind of like dating,” says Viglas.

• Potential for the volume to quadruple.

The program will be an ongoing effort THE SOLUTION: with no cut-off date for applicants, although • Elevated 16-lane cross-dock sortation system each pairing will have a time limit of one • Long and low slapper induction line to an overhead accumulation and scanning line. year, so the formal relationship will have a • Order output increased so much that client got a new product line from their customer. clear start and Ānish. It will also earn par• 16 lanes added to sorter without modifying setup, providing over 350 new pallet locations. ticipants credits to be counted towards • Middleware upgrade allowed transition to new WMS. CITT’s continuing education membership • Future volumes expected to exceed 300,000 orders per week. requirements.

Wecon do it!

CITT board chair and Sun Rype Products Ltd vice-president of supply chain, Warren SaraĀnchan, is one of the more experienced members who has signed on as a mentor. He personally knows how valuable a good mentor can be.

“For me the opportunity to provide some perspective, some context, some support to people who are at different stages of their careers—whether they are in the early stages of their careers or transitioning—is always valuable. I’ve had people do it for me, and it’s an opportunity to give back.”

For those looking to join the program WECON SYSTEMS to gain some guidance, SaraĀnchan has 4635 Burgoyne Street some advice to offer.

Mississauga, ON L4W 1V9

Conveyor Solutions That Work

Tel: (905) 624-6499 info@weconsystems.com www.weconsystems.com MM&D | May/June 2012

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Supply Chain Scan

Wecon Systems turns 15

Conveyor manufacturer started in basement and grew into a factory mended that Egerton start his own company.

At that point, Egerton turned his basement into an office, using an old picnic Canadian materials handling equipment manu- table stored in the cellar as a desk. Then he began subcontracting himself out facturer is celebrating a major milestone. to perform service work on materials handling equipment.

Wecon Systems Ltd, which both manufactures Eventually the contract worked picked up enough that Egerton could buy its own conveyor systems and distributes those a used truck and hire his Ārst employee. That employee, hired in September produced by other companies celebrated its 15th 1997, is still with Wecon. year in business on May 2.

His second employee, who is also still employed by Wecon, was hired the For company founder and vice-president of following spring in a sales position because by that point Egerton had been operations, Will Egerton, it’s an anniversary he borrowing time in small fabricating facility from a friend and using it on never expected to reach. Actually, he never expected weekends and in the evenings to manufacture products. to start a business at all and only did so after he was Pretty soon, Egerton’s parts and conveyor manufacturing business grew to goaded into it. the point where he needed his own facility, so he rented 560sqm (6,000 sqf) Egerton, a licensed millwright by trade, was in an industrial strip mall in Mississauga, Ontario. working at another materials handling company.

“I was scared as hell. How was I going to pay the rent? There were lots of His job had evolved into one that involved sales, questions, but there was no business plan. It was just by the seat of my pants, service, management, troubleshooting and pretty but I had enough work and knew enough contacts that I thought, ‘we’ll make much every other task that needed to be done. a go of this somehow.’”

After leaving that business, a friend of his recomThis move led to equipment purchases and more employee hirings. Today, Wecon employs 22 people, with eight of those having worked for the company for ten years or more.

Over the years, Wecon has taken over four additional units in ! w t Ergonomic the same industrial complex and now has over 1,670sqm (18,000sqf) Ne duc Container Unloading o of office, storage, fabricating and testing space.

Pr Egerton is especially pleased with the testing area, as it allows his current customers to come to the office and see the system they are buying.

“We’ve set up an entire cell for them here. That allows us to run and test and commission everything on-site. We now provide the Improve customer with the ability to come here and view this piece of Productivity equipment before it hits their floor, to smooth that transition. We set it up here, we wire it, we test it, invite them over to view it.

Unload They sign off on it here, we disassemble it and take it to their place.”

Faster Currently, Wecon manufactures a flexible conveyor line, a gravity conveyor, both roller and ski-wheel conveyors, a belt Reduce conveyor, and a heavier-duty unit load conveyor.

Injuries The company does all its own assembly, service, installation, design and programming work. It also offers product lines from major North American manufacturers and can integrate proprietary pieces with those of other brands.

“Most of our business is derived from repeat customers, but that limits us. There is only so much people will spend on conveyor Manufactured by: systems. Ongoing service and maintenance is something we’ve Engineered really ramped up in the last year or two, recognizing there is a Lifting ELS large demand for quality service and accountable maintenance.

Systems & Equipment Inc. “We’re not done growing yet. We want to grow the business and get it up to another level. We want a little more exposure. We want to become a common name in the industry.

MM&D

By Carolyn Gruske

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1-800-263-9823 www.destuffit.com

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Supply Chain Scan Movers + Shakers Calyx Transportation Group Inc has made a number of executive appointments. Robert Donaghey steps down as CEO, to become chair of the board of the Concord, Ontario-based logistics firm, while Marcus Pryce-Jones replaces him in the CEO role. Bill Gurd is the new executive vice-president of finance. Both Gurd and PryceJones formerly worked at ATS Group. Terry Jessup joins as chief operating officer.

Jack Bradley is the new vice-president of operations at Mayflower Canada/United Van Lines (Canada) Ltd. His role at the Mississauga, Ontario-based company will be to help lead, mentor and further develop the operations team, ensure cost-effective operations, and support the delivery of customer service. He will also be responsible for strategic business development and contributing to key corporate planning initiatives.

Troy, Michigan-based Meritor Inc has named Chris Villavarayan vice-president, global manufacturing and supply chain management in the commercial truck

division. He will be responsible for enhancing Lean initiatives, improving the supply chain network, enforcing and expanding standardization processes and overseeing global manufacturing operations. Before the promotion, he developed business for Meritor’s India division. Meritor supplies drivetrain, mobility, braking and aftermarket components for commercial vehicles.

Chris Villavarayan

Robb Watts is the new vice-president of Providen Pharmacy Logistics. Watts has a background in IT and will be responsible for managing the Winnipeg, Manitoba-based company’s supply chain IT solution, ensuring Providen’s Robb Watts software systems integrate with those of its pharmacy clients, executing and overseeing all phases of telepharmacy and managing Providen’s automated central prescription drug dispensary.

Professional Development Directory

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Professional Development Directory

Incoming Mail!

Your invitation for Canada’s Annual Survey of the Canadian Supply Chain Professional will be arriving in your inbox soon.

With your participation, this will be Canada’s most comprehensive benchmark study of the supply chain professional ever conducted!

Results of the survey will be featured in the October issues of Purchasingb2b, MM&D, and CT&L, and online.

Thank you in advance for your contribution!

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Professional Development Directory Advertorial

Professional designation versus academic accreditation: What’s the difference?

When deciding whether to earn a professional designation or undertake further academic instruction there are a few things to keep in mind. A professional designation is one of the highest achievements you can attain in your field. It signifies that its holder has completed a rigorous program and adheres to the highest level of professional standards.

Academic accreditation is the foundation for many professionals, but it’s not enough to keep you at the head of a pack of qualified candidates. Too often, a strict academic education lacks the practical, hands on skills needed to excel in business.

Completion of a professional designation, such as the Certified Supply Chain Management Professional, combines a rigorous academic program with real world

application. The program covers a wide range of SCM competencies and prepares you for success in senior roles. As a core component of achieving the designation, candidates must be working in the field while pursuing their designation, which allows opportunity to put classroom principles into action.

Academic degrees often gather dust on the mantle.

A designation is different from completing a degree, diploma or other forms of post-secondary/graduate education because of the ongoing professional development required for maintaining it. New practices and processes are emerging daily and you must continually update your knowledge and skill set to stay at the forefront to remain competitive in your career. This ensures your employer has highly trained, enthusiastic professionals who are ready to drive profitability and bottom line results.

Make a strategic career move and begin your pursuit of the Certified SCMP today.

For further information contact the Ontario Institute of PMAC at info@oipmac.ca or 416.977.7566.

Invest in Yourself With the need for trained professionals at all levels in the field of Supply Chain Management growing, it is more important than ever to invest in yourself and your professional future.

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12-05-16 11:02 AM

Logistics snapshots A glimpse into how three businesses run their global transportation operations Senior executives from Nestlé Waters, Staples and General Motors share their thoughts and concerns about the world of logistics and offer MM&D’s Carolyn Gruske a look at how they keep products and goods flowing at their companies.

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Nestlé Waters Canada

ἀ e old adage is “still waters run deep” but in Guelph, Ontario, bottled water flies out the door at a surprisingly fast pace.

Mike ἀ errien is national transportation manager for Nestlé Waters Canada and regional transportation manager for Nestlé Waters North America. Until he came to work for the company, he Mike Therrien had now idea just how quickly bottled water could flow.

“I wasn’t used to the speed of how much we can produce both in manufacturing and how much we can ship on a daily basis. It was mindboggling. I’ve never seen that before. I’ve only been here a year, and that’s what has surprised me the most about water. I know that when our customers put it on promotion, I see the volume that goes out of here. It’s millions of cases in three or four days. And it all gets sold.” ἀ errien says his record is 150 loads shipped out in a day, and that the typical case of water is consumed within six weeks of manufacture.

Nestlé Waters Canada produces bottled spring water under two of its own brands, Pure Life and Montclair, plus private label brands for a number of other companies. It also imports premium brands of European waters, specifically Perrier, S. Pellegrino, and Acqua Panna. ἀ e company operates two plants and two warehouses in Canada. ἀ e 55-door plant at the Guelph headquarters produces products distributed to eastern Canada, and the plant in Hope, British Columbia makes products sent to BC, the Prairies, Asia, and into Washington and Oregon states. A warehouse in Chilliwack, BC acts as the western distribution centre and a warehouse in Laval receives water imported from Europe and distributes it to eastern Canada. ἀ ere is also a small warehouse in Kent, Washington. In addition, the company offers direct customer shipments.

“Water is a high volume, low profit business, so we are always looking at our bottom line and our cost. So what we’ve done is we’re always looking at costing models, optimization models.”

As part of the larger Nestlé family, ἀ errien doesn’t have too much to worry about shipping imported water from Europe to Canada.

“I don’t control that. We have a Nestlé global team that does that. It groups all of the pur-

MM&D | May/June 2012

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chasing of our finished goods and raw materials, all across the globe for Nestlé Foods, Ralston Purina and Nestlé Waters. They negotiate all steamship shipments, which usually go from port to port. Most large food companies do that anyway.

“I guess you might say I’m part of the team as I do supply them with service issues or concerns, but it’s a larger group that does global contracts.”

tion models, and today the piece of equipment I use 100 percent is tri-axels or tridem equipment. That allows me to put a lot more product and a lot more weight on my trailers. Today, I’m delivering 30 pallets in a truckload. The truckloads vary, based on the gross weight and the vehicle weight limits by province.

“You do pay a premium for tri-axel equipment, however the price they charge and the amount of weight you can put on, offsets the cost for the trailers. In a tandem, I could load 45,000lb to 46,000lb. In a tri-axel in Ontario, I can load 73,000lb. When you work it out on a cost-per-pound, cost-per-pallet or cost-perhundred-weight, tri-axels are a lot cheaper. I could go up to one unit higher, which is a quad, however I wouldn’t be able to add that much more weight, and I’d pay too much for the trailer.”

He is in constant communication with trucking companies, 3PLs, brokers and asset-based carriers.

“I spend a lot of time prospecting. I’m always meeting carriers, talking to carriers. In some cases, I deal with large, multi-national carriers—the top 100 in Canada—but I also spend a lot of time with smaller guys who may only have five trucks and ten trailers, because I want them to grow with us. I keep them happy and each year they add a little more and reinvest. So I’m growing with them.”

Communicating with them is key, especially given the way Nestlé Waters Canada operates.

“All of our freight is live off-loading. We do everything with appointments.

Here, because of our volume, we allow truckers to drop trailers in our yard—or if they want they can do live loading—but we prefer dropping because it provides flexibility to our manufacturing to ramp up or down. We have a full-time shunter, who just moves trailers back and forth—the empties to the dock and puts the loaded ones back to the yard.

Therrien uses PC*Miler routing, mileage and mapping software to calculate the delivery time and mileage and create a must-depart-by date. The carriers use that day when agreeing to tenders. Then appointments are booked and docks are assigned. At that point, the water can be shipped to a customer’s DC or directly to its retail operations.

Offloading It’s once the French and Italian waters reach the ports in Montreal and Vancouver that Therrien’s job becomes more challenging.

“When you’re looking at ships, for us it’s always how many containers arrive at one time. And how fast can we get them off the wharf without having to incur detention and demurrage charges. There are always a lot of difficulties with our carriers going in to pick up loads. It’s not a fairly easy thing to do.

I’ve seen, at the Port of Montreal, where drivers are waiting in line for hours to get in and pick up freight. Direct store delivery Vancouver is not as bad but similar—where it’s very “In the summertime, because we have so much volume, our customers have a difficult to get in and out. Because it is a ship, it’s hard time receiving all that product, breaking it down and adding it to everybody not uncommon to have 30 or 40 containers come else’s products and doing a store delivery, so we work with them to do direct in at one time. In winter, we’ve got to make sure it store delivery. With customers like Costco, the store is the warehouse. So we go doesn’t freeze so we’ve got to get in and out in the directly to every single Costco all across Canada. From that model, we built matter of a couple of days.” something very similar. We say, ‘we can go to your store, as long as you can Storing those 30 or 40 containers when they are accept 15 pallets—half a load.’ When they’re on promotion or on ad and the eventually off-loaded can prove to be a bit of an products are flying off the shelf, that’s a good way to distribute our product. It issue and there are times when Therrien has to turn saves a lot in extra mileage. It’s not uncommon in the summer for me to walk to a third party to warehouse them. into a Food Basics store to see product we produced that day on the shelf.”

Even getting shipments ready to export to Asia Ensuring loads are delivered on time is getting harder in heavily congested by ocean isn’t always easy. urban areas. Traffic is causing Therrien to alter some schedules.

“For us the difficulty is just going to the port “Many shippers like myself have gone to 24/7. A lot of my major customers getting an empty container, getting it to Chilliwack are starting to receive between midnight and 8:00 to get around congestion. or Hope and then getting it back to the wharf.”

Any time you can go in a non-peak time, you’re saving time.”

Besides traffic, gas prices are also an area of concern. According to Therrien, Trucking the price of fuel adds almost 40 percent to his total cost.

While ocean shipping is an important part of his One way to help reduce costs is to allow for customer pick-ups. operations, it’s not the main means of transport. That’s “Walmart does their own. Sobeys does their own. Loblaws does their own, trucks, and Therrien has spent a considerable amount and still I have that kind of volume going to everybody else. And still we seem of time figuring out exactly which trucks to use. to be growing. It’s just phenomenal volume, and I’m always worried we might “We’re always looking at costing models, optimiza- be at capacity someday.”

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view. It’s a trade-off. They’re trying to make money and Lean their operation. But you have to factor in lead time when you look at replenishment.”

Still, shipping times aren’t his major concern when it comes to ocean.

“It’s the stability among the carriers. It’s very much treated like a commodity and long term, that’s not sustainable for either side. Somehow the world is going to figure out how to look at imports and ocean freight delivery in a whole different light.”

Staples

Intermodal By comparison, he’s seeing a lot more stability with North American intermodal carriers.

“Intermodal is a fairly large piece of our inbound practice, particularly domestically in the US and Canada. I think the intermodal folks have done a good job. They continue to improve their service levels and their prices are competitive. If you go back even five years in the past, we didn’t do nearly the percentage of volume we have since we moved to intermodal. To their credit, they’ve become a viable alternative. They’ve invested a lot in infrastructure and systems and it’s starting to pay off.”

Even more than in the intermodal companies, Ralph says he sees growth and investment from the courier companies, mainly as a result on increasing online shopping activities.

“We do about a third of our deliveries on our own trucks, about a third go via parcel carrier, and a third go out via several dedicated courier partners.

Because of the growth of e-commerce there has been a lot more investment in the growth of these third-party couriers and they are much more financially stable than they were five years ago. Investors see this as an area for growth.”

When asked what changes or improvements he’d Retail deliveries like to see in the industry, staffing and technology By comparison, getting goods to the retail stores is a snap. In the US, the stores come quickly to mind. are organized under a centralized distribution model, and they get a delivery “One that’s very high on the list for every supply once a day. That number is higher here, as the Canadian system evolved as a chain officer I talk to is the use of advanced analythybrid direct store delivery model, with shipments arriving from both sup- ics. So it’s about getting the right talent and the pliers and from Staples itself. This, however, is under review and it’s possible right tools. You think about all the data and the that changes will be made to the Canadian operations. number of locations we have and the number of Getting goods out to customers is only half the battle. First Staples has to SKUs we sell, and you step back for a minute and receive the merchandise. realize we’re trying to optimize infrastructure and “We’re a moderate-sized importer, so ocean shipping from Asia is not the inventory and labour costs and transportation costs. biggest piece of the supply chain by any means. About 20 percent of our product Using sophisticated tools to do that modelling is will come from the Far East into North America. We’re operating in 26 countries. very high on everybody’s list. In the last 18 months, We’ve got 40 or 50 trade lanes, so we’re not only moving freight from the Far we’ve hired five PhDs in our supply chain strategy East to North America, but also into Europe, Australia, and South America.” group. Ten years ago you wouldn’t have done that.

Ralph says he can see a difference in the type of speed and service ocean “If you asked me about supply chain, I would tell carriers are delivering today compared to their past services. you absolutely it would be talent—developing and “Ships are slow steaming. You have to factor in the inventory carrying costs of acquiring the talent we are going to need to lead a the extra time versus what they’re saving from a cost and environmental point of global supply chain over the next ten years.”

Even though everything falls under the brand known as Staples, the differences between the retail side of the office supply business and the business-to-business side are vast.

Staples Advantage, or Staples Advantage Canada, is the e-commerce arm of the company that offers online shopping, catalogues and an assortment of delivery options. It offers a broader range of products than the local Staples store.

Don Ralph “The delivery business is much more complex than the retail business,” says Don Ralph, senior vice-president supply chain and logistics for Framingham, Massachusetts-based Staples Inc. “We offer right now about 350,000 SKUs in North America and that continues to grow every year. Now it’s very different by channel. If you’re in the retail channel, for Canada I suspect it’s probably between 8,000 and 9,000 SKUs per store, and it’s similar to that in the US.” Staples operates 79 fulfillment centres in North America, supplying merchandise to 300 service delivery operations (SDOs), essentially small delivery hubs.

Orders placed online are picked and packed that same day for next day delivery.

In Canada, this works out to 7,826 stops per day, made by 160 Staples-owned trucks, and these figures don’t take into account shipments handled by couriers.

Ralph doesn’t just have to worry about getting an order to a corporate customer’s receiving dock. Often, Staples has to make personal deliveries.

“For the IBMs and GEs of this world, they can order up until 5:00 PM and we’ll deliver it the next day. And we’ll deliver it not just to their location, but if they desire what we call insider delivery, we’ll go desk to desk.”

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General Motors

air, for example, is a prime example of getting the best value for the money.

“Traditionally we used air more for premium, so if we need something and we need it faster than the normal mode we go with air, but there are a number of shipments we make every day where air is the best total cost for us. If you’re shipping something that is extremely small, depending on the location, air can be the best decision for you when you look at total cost, when you look at inventory. If you look at the behaviour of the commodity, how often does it change? We look and to a total cost analysis on how we route all material coming into our plants.”

If there’s a mode of transportation available, Christine Krathwohl employs it. As executive director, global logistics for General Motors Co, Krathwohl is responsible for getting Capacity all parts and materials into GM’s assembly plants around According to Krathwohl, air seems to be offering the world and for moving finished vehicles to dealerships. the fewest concerns for automotive logistics provid“I think I use almost every single mode of transportation ers. She says she hasn’t seen any capacity issues with there is. On ocean I use container shipping and I use RORO, Christine Krathwohl air. Trucking also seems fine, as she has enough which does finished vehicles. Also on ocean, there is RORO haul-away capacity in North America. short sea. I definitely use air freight and air charter. Charter is when I take a Rail, however, is problematic, especially as automowhole plane. Air freight is when I put it on FedEx or I put it on either a cargo tive sales forecasts continue to rise and there is or passenger plane. Then there is everything from LTL to full truckload to increased pressure to deliver finished vehicles. milk runs. We have our own consolidation centres throughout the world.

“We are already starting to see some capacity Depending on where I’m at in the world I do rail shipping of boxcars for issues for in the rail network in North America—not materials. I do rail shipping for finished vehicle distribution. I do haul-away, enough equipment availability,” she says. which is the distribution of the vehicles on truck once they leave rail or straight “There are specific cars used for that. We call them from the plant. I think I use almost every mode of transportation out there.” multi-levels, because they are either bi-level rail cars or tri-level. It’s a shared pool in North America across Vast network all the rail networks and across all the shippers. In The vastness of GM’s logistics network is easily explained by looking at the the last five years, railroads have not been reinvesting company’s numbers. in new equipment. But they’ve retired over 5,000 of “Our volume is up quite a bit in 2012—but in 2011, globally we managed these cars due to their ages.

6,500 truckload shipments a day. We managed 25,000 vehicles a day shipping.

“Because of the downturn of the economy in the And we export about 2,300 vehicles on ocean a day. As of the end of 2011, I had last four years, there hasn’t been any investment in 787 logistics service providers globally who managed my business for me.” the railroads to put any additional cars in the market.

She adds that when she puts ocean contracts out for bid next year, there With the market recovering faster than people will be 5,000 unique origin destination pairs in the bid. She also notes GM expected, they’re finding there is a shortage of oversells Chevrolets in 122 countries globally. all rail car availability to ship finished vehicles. This Krathwohl says she only has a small internal logistics team at GM, and that year they’re starting to build a few cars and add a includes an inbound materials logistics director for North America, a finished few cars, which is good news, but we don’t think vehicles director for North America, and single directors responsible for Europe, it’s fast enough or there’s enough being built. The South America and IO (international operations). result is that it takes longer for us to distribute GM requires 100 percent real-time visibility into its supply chain, and relies vehicles to our dealers and this is an issue across on its service providers IT systems for that view. the industry, it’s not just a GM issue.”

“The big difference between being an automotive company and being a retailer, Also of concern is the state of ocean shipping. is if I don’t get one nut or bolt or screw to an assembly plant, I shut down all “The container ocean business—that segment has revenue at that plant immediately. If a retailer, a Walmart or a Target, does not really struggled financially. They haven’t recovered get one SKU or one kind of toothpaste to their store, they are still generating yet. Because the global economy hasn’t completely 99.9 percent of their revenue throughout the day. They might have some unhappy recovered yet, volume is down for them. They’re lookcustomers but their whole revenue generation is still going. For us, if we can’t ing at what ships to take off the ocean, which will then build without that part, I shut down all revenue immediately.” create a bit of a capacity issue in the future, and which Even with the need to have reliability in the system, Krathwohl doesn’t just will drive increasing rates. There wasn’t a single ocean spend money on logistics services without giving them careful consideration. container guy that made money last year.

She needs to create a cost-effective system. Deciding to move some goods by “That’s alarming to us as shippers because they also

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need to be healthy. A significant portion of my business is up for bid with the ocean carriers. We do a lot of analysis to understand the trends and what’s impacting them. We’re looking to understand what the low sulphur impact is going to be when the US makes it a requirement that within so many miles of our coast they have to burn low sulphur. We’re trying to understand what that cost will be to us.”

Co-operation One way of trying to figure out what changes like the low sulphur regulations will mean is by working directly with GM’s transportation partners.

“I’ve started a new logistics forum here in North America, where I have twelve of my key suppliers across all modes who will start participating with me quarterly to talk about things like reducing our carbon footprint—not the day-to-day operations of the business, but things like how do we measure our network and what are best practices we can share across modes and things like sustainability.”

That sense of co-operation isn’t limited to working with suppliers. GM is branching out and partnering with competitors as a way of improving logistics operations and efficiencies.

“We’re starting to collaborate more with other OEMs because logistics doesn’t have anything to do with designing, building or selling the world’s best vehicles. Logistics is how you get the parts there to do that.

“We have a couple of initiatives that we’ve implemented with another OEM where we share the same collection and distribution network. So the supplier will pick up GM parts and parts from another OEM, they’ll take them to a distribution point, then they’ll make pure GM loads and pure loads for the other OEM. That way we are optimizing and making sure the truck is as full as it can be instead of both of us having trucks that are 50 percent full on the road. We have regular meetings with this OEM to look at other opportunities we have to drive efficiencies in the network.”

Ensuring trucks are full is one way of keeping logistics service providers happy, and that’s a key goal for Krathwohl.

“It’s so critical for us to preserve some capacity and run more efficiently. I would say this the most important thing I can do for the supplier relationship, because that truck can haul anything. It can haul for Walmart. It can haul for a lumber company. It doesn’t have to haul my engines.

“My goal is to be the customer of choice. If they want to haul automotive, I want them to say ‘GM is the best person to do business with.’” MM&D

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12-05-16 10:51 AM

up Growing Food company expands warehousing capacity by raising the roof

By Carolyn Gruske

A

s a professional engineer by trade, Suli Braunshtein brings a wide variety of technical skills and experience to his job as director of manufacturing and chief engineer at CMS Ontario Inc. These skills came in handy when the food producer decided to raise the roof.

CMS makes fruit and cheese fillings for its major customer, frozen food producer Fiera Foods Company. Toronto, Ontario-based CMS produces its fillings and stores them a 4,645sqm (50,000sqf) facility. Half of the building is devoted to manufacturing and half is warehouse space. Although the manufacturing half is adequate for the company’s current production needs, the warehousing space had become tight.

This meant there were two options, move or renovate to increase the storage area. The company didn’t want to move, so Braunshtein started looking at ways to renovate.

“As a professional engineer, when I look at something, I think of it from an engineer’s point of

The mechanics of roof lifting Marty Shiff, CEO of RoofLifters Canada, describes what his company does in ecological terms: “What we do is we recycle older buildings. Rather than knocking them down and sending the materials to the landfills, we rebuild them.

“We recycle and reuse 90 percent of the materials in the building. All the walls remain, all the steel in the building remains, all the roof remains. It’s only being added to.”

The process of lifting the roof is pretty simple.

“What we do is separate the roof from the perimeter walls, shore up the outside walls and then raise the whole roof structure.”

And “raise” is exactly what Shiff means. Computercontrolled hydraulic hoists, known as cribposts, are set up beside the existing columns in the interior of the building.

“Once they all get pressurized, we are taking all of the load off the columns and transferring it to our cribposts. So once we’ve transferred all the load, we cut the columns. Then we are in control of that whole

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view: how to use square footage more lucratively than it is right now, how to improve the facility.”

The decision he arrived at was to keep the building’s existing footprint but to expand vertically by increasing the height of the roof and installing taller racking equipment inside the warehouse.

“Originally the building was 14ft high. Now it’s 24ft. The racking is up to 20ft in height. Before it was 10ft to 12ft. So we’ve doubled it.

“We use the same equipment to reach it—we have forklifts—only now we’re using it more efficiently.

We didn’t use our material handling equipment in its fullest capacity before. Now we are, and we can go high.”

Braunshtein says the former storage capacity

roof. They are all hydraulically controlled by one or two central control panels, and they will all go up at the same time.”

Then the steel columns get infilled after the roof reaches its final height.

“Depending on how high you go, you might be required to replace full columns. We don’t do any underground work. What happens is we’ll cut the column at about six inches from the top where it connects to the existing beam and girder structure, because that’s a tough thing to duplicate. And we cut it about an inch from the floor. We’ll actually slide a square column—an HSS column we call it—over the existing steel, so it’s a steel-to-steel connection which transfers all the load down into the existing footing.

“The old roof just lowers back down onto the existing structure. So any of the sprinkler lines that were attached to the existing roof structure, any of the heaters, any of the lighting that was attached to the roof would go up with the roof lift and get reconnected at the higher height.”

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Before

topped out at 2,000 skids. Today the company is storing 2,500 with lots of room to add more.

After making the decision—in full consultation with company owners and executives—that raising the roof was the way to go, the company hired a contractor, Eugene Slutsky, who brought RoofLifters Canada Ltd into the project.

The Toronto-based company requested drawings of the CMS facility in order to prepare preliminary sketches and do projections about the scope of the renovation project.

Then, over the course of a few months, RoofLifters created detailed plans, performed the engineering calculations, got the building permits, and won approval from city hall for the renovation.

Before the construction started, Braunshtein spent a week moving all of the stock into another facility.

“I rented an adjacent building for storage during this period of time and transferred all the storage material and packaging material, everything I used to keep here, to the adjacent building. Freezers I had in another premises. I took everything out so when the building was free, we could work. I had to disconnect all electrical power supply, all security.

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After

Everything was disconnected. Then afterward I had to bring everything back.

So it was a big job.”

CMS managed to keep its production lines operating during the entire operation, as they were in a separate part of the building.

The actual lifting the roof took about four months, as the RoofLifters process increases the height of the roof 2.54cm (1in) per day. [See sidebar on page 20 for details about the process.]

Once the roof reached its final height, the walls were built up to reconnect the roof to the structure. CMS opted for new brick to match the existing building. Internal systems, wiring and plumbing—weren’t fundamentally changed.

“We didn’t have any problems. We made all the wires flexible, so we just straightened out the loops of electrical cables. They just straightened out and were put in the right place.”

The basic structure of the roof was kept the same although since the old roofing surface was leaking, a new surface was installed.

“It was a smart move because we improved the quality of our facility. We made a better looking building from the outside with better working conditions. We put in new lights, a new roof with a 25 year guarantee, new walls and it looks fantastic—a brand new building from an old one. I’m happy with it. Sometimes you waste your time and money, but in this case we didn’t.”

Braunshtein estimates that with the increased roof height, the value of the building has increased 25 percent. And he adds that when CMS is ready to expand and buy an additional facility, he’ll recommend looking for a less expensive building with a low roof and repeating the process.

MM&D 3:40 PM Page 1

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12-05-16 2:39 PM

Transforming the supply chain

By Jeffrey Karrenbauer

W

ith the advent of the Internet and related technologies, the world has become a smaller place.

Customers can now purchase products offered by suppliers around the globe. Competition is now global.

For the enterprise to remain globally competitive, companies have to rethink their supply chain strategies and manage things differently. Supply chains must be transformed to meet this global competition. And since supply chains are not static—market share changes, companies enter new geographic markets, new competitors come on board, companies merge with others or are acquired, new government regulations appear, etc—companies must keep transforming the supply chain on a continual basis.

Transforming the supply chain is about building a strong foundation, from which to make better decisions. Managing change and operational decision-making becomes easier when you have a strong foundation and an understanding of how your supply chain will react under stress.

The cost of the supply chain and the value it provides are no longer a secret, but the discipline to build the supply chain foundation upon the ruins of the internal silos is still a long way from reality in most organizations.

Fundamentally, an organization needs to build a supply chain plan to support the business plan. The plan must allow for variability and provide flexibility to support the inevitable change that occurs in the marketplace.

Building a strong logistics foundation is a multi-step process.

Step 1: Establish project scope Step 2: Describe the network Step 3: Obtain customer demand data Step 4: Obtain freight costs Step 5: Obtain facility data Step 6: Prepare scenario generation data Step 7: Validate the model Step 8: Run optimization exercises Step 9: Analyze solver results Step 10: Implement the results The first steps in transforming your supply chain include getting a baseline of your supply chain network. A baseline of your operation is an overall view of how you operated last year, the service you provided, and an overall view of the economics of manufacturing, transportation, suppliers, and warehousing.

A baseline of your current operation leads to the discovery step, the first step in understanding what drives your supply chain. Scenario review involves utilizing the understanding you gained from the discovery step and participation of a cross-functional team that provides ideas for new ways of operating and serving your customers. As you evaluate scenarios and how they will impact your business, an understanding of what you ultimately want your supply chain to look like emerges.

At this point, you are faced with the task of prioritizing your actions.

Implementation requires involvement from the cross-functional team that

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drives the scenarios. It also involves attention to details surrounding serving your customers as your supply chain evolves.

Before organizations begin the process of understanding the fundamentals of supply chains and the value they provide (or could provide) to customers, companies must understand their infrastructures.

Every organization has a different infrastructure, made up of different pieces including plants, distribution centres, information, partners,suppliers, customers, carriers, 3PLs and co-packers.

Understanding the infrastructure begins with knowing the interrelationship of the parts. A costeffective and flexible supply chain is created by studying the whole system and how the pieces interact, not by attacking a silo or single component at a time.

It is this basic truth that explains why organizations do not focus on the true fundamentals of their supply chain operation—companies are run by departments or silos. The best way to operate on a daily basis may be by dividing the work into departments, but that is not the best way to create or modify a supply chain.

Most organizations are trying to operate the best they can with today’s supply chain, which explains the latest appeal of event management and alerts highlighting changes. The goal is to build a foundation that will allow the organization to handle all the orders and changes that occur over the long haul in the most cost-effective way.

Departments want to focus on their pieces of the supply chain, and change the things they control.

Attacking the total system of moving parts requires changing a business’s way of thinking and reacting.

Most of all it demands that the organization evaluate the supply chain as a whole system.

Baselines Creating a baseline of the business requires capturing how the business really ran over the past year.

The information gathered and analyzed includes all costs, the service levels provided, the flow of materials, and a better understanding of the mission of your total supply chain. This is different from benchmarking. Benchmarking is an attempt to compare the business against other organizations that consultants believe have demonstrated best practices in an area of operation.

Driving costs out and improving service begins with the discovery phase. Build on the understand-

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Steps for understanding and reworking your entire network ing of current operations and identify the real driv- solution to the current baseline, providing a magnitude of available opportunity. ers of the business. Consider things like: costs for A mathematical modeling tool supports the evaluation of different supply transportation, warehousing or manufacturing; chain strategies and is more cost-effective and reliable than guessing or relying service, speed or reliability; customers’ expectations on gut instincts to drive the changes. A supply chain design tool using optiand requirements, inventory deployment strategies mization allows companies to evaluate different strategies, including: for fast and slow movers, emergency parts etc.

• postponement strategies; • hub and spoke distribution networks; Discovery • the impact of time (including increasing service or cycle times) on the Once the baseline is complete, the components of supply chain; the supply chain will be known, and organizations • customizing service for different classes of customers; will begin to discover what makes it operate. This • value of outsourcing 3PLs or co-packers; is often eye-opening, leading to the ability to make • managing capacity; better decisions during scenario reviews. Businesses • product introductions. that have tried to solve problems without completing the baseline and discovery phases are susceptible Prioritizing to cures worse than the original problem.

After evaluating the outcomes of the scenarios, organizations should put together Many times a basic review of current operations a strategic plan and action timeline. This plan includes both short- and longsurprises many in the organization who did not term goals and prioritizes strategies according to time, cost, the amount of realize the over-use of expedited transportation or change necessary, and how much savings or profit will be generated. the poor service given to certain types of customers.

Organizations may want to implement those strategies that require the This phase becomes a key part of the credibility least cost and effort—the “low-hanging fruit”—first. This includes decisions companies need when they start to make changes. such as changing sourcing policies or adding a third shift.

Reviewing numbers and operational practices with When making decisions regarding the priority of a strategy, the ability cross-functional teams and internal customers builds to implement must also be key. A strategy such as building two new districredence. During this stage, seek out data anomalies bution centres, requiring time, money and resources, may be a high priority, and slowly build participation for the study. but cannot be implemented in the short term. Achievable goals must be set This phase helps organizations think about what to reflect the changes the company is both willing and able to make. characteristics the supply chain needs as a whole.

For example, for a high tech manufacturer, flexibility Implementation may be the number one concern, while a consumer Redesigning a network is a catalyst for fundamental changes. Changes to goods company might be better served by a highly the supply chain can range from simple customer realignment processes, structured, process-oriented supply chain. A com- to developing new service standards, to changing the mission of a facility, pany may even need a combination of these two to a major outsourcing effort. qualities. Whatever the case, the discovery phase Since change impacts customers, encourage their participation and help will examine all supply chain issues, determine how them understand the costs associated with required service levels. the supply chain is—and should be operating—and Understanding these costs helps them support the business plans of the make decisions based on what is learned. organization.

The alignment of the changes with the business goals is the first step in Review Scenarios building the implementation action plan. Many times the transportation Evaluating scenarios is about quantifying the short- group is required to rethink transportation procurement decisions and and long-terms plans to turn the supply chain from processes in response to new facilities and flows, while the real estate group a cost of doing business to a competitive weapon is trying to find the right space, and while the CFO is evaluating the impact driving value and providing a true differentiator in on the balance sheet of taking assets off the books. This process is hard, but the market. This quantification phase provides a the benefits are huge—from surviving to creating profitable growth. Leading means of comparison. organizations today are competing supply chain to supply chain. Their effiA recommended first scenario involves evaluating ciency and speed are freeing up money for investment in the constant efforts the blue-sky view of the business and envisioning the to be more efficient, flexible and faster than the competition.

MM&D optimal supply chain and how it would operate. This scenario allows organizations to compare an optimal Jeffrey Karrenbauer is president and founding director of INSIGHT Inc.

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Drilling into supply chain efficiencies

Managing growth and retaining talent in the oil and gas industries

By James McLean

C

ompanies in the energy, utilities and mining fields are juggling increasingly complex demands in their supply chains as they struggle to support growth, compete for resources, secure supply and recruit and retain talent.

The prairie provinces are seeing increases in capital investment across these sectors, driven by the commodity crisis (with the exception of gas). Projects are underway to increase extraction capacity in Alberta’s oil sands and its conventional resource plays. In the utilities marketplace, the expansion of transmission and other generation assets is driving growth. In mining, investment in new mines in Saskatchewan for resources like uranium and potash is growing.

That macro impact is driving those industries and activities to rely heavily on their supply chains to deliver results. Organizations must be innovative and creative in dealing with the challenges of increased demands and tight supply for their resources—whether those resources are equipment or people.

is in its labour supply. As organizations are seeing that there’s an opportunity here that they’re missing out on, people are hiring and expanding their supply chain functions in a tight resource marketplace.

In some cases, companies are moving their supply chain groups to other locations (from Calgary to Houston, for example) where there’s a greater talent pool and where people won’t be poached by competitors at the rate that they are in Calgary.

There is a way to develop and retain talent: evaluate your resources and people then create training and development plans to support your staff.

Navigating risks Risks can be difficult to identify since they can range from the catastrophic (the tsunami in Japan where supply chains that extended into Asia experienced delay and disruption), to the geopolitical (blocked transportation in the Suez Canal and throughout the Middle East thanks to the Arab Spring), to the banal—one oil and gas company had modules fabricated overseas and shipped to its site in big trucks, without taking into account the width of certain roads. Cue Plan B. Companies should develop formal risk management programs to identify and manage inherent supply chain risks. These can include supplier qualification processes, formal risk review and management meetings with high risk suppliers, and setting out clear accountability within your contracts.

A major supply chain risk is security of supply, so integrate your supply chain group with long-term business planning processes in order to understand forward demand for key categories.

Strive to improve the use of marketplace research and technology to provide real-time risk information as it applies to the commercial, operational, and HSE aspects of your projects.

Managing growth As an example, we have a client who went from drilling 30 wells to 200 wells over the course of one year. In cases like this, there’s an opportunity for these organizations to become a lot more strategic in the way they access their supply markets. This type of challenge is certainly familiar to many working in Alberta, and although it can be difficult to manage growth effectively, those who do it well can showcase supply chain management as value-added strategic parts of their organizations, rather than just being about transaction fulfilment.

The key to excelling at supply chain management during a major expansion is twofold: supplier selection is important, and so is your management of execution performance. It’s vital to ensure that you have the appropriate skill set as well as the internal capability to drive performance, particularly when working with new suppliers. Given the fact that the market is tight overall, the best suppliers are able to demand increased rates for their services.

The challenge for companies working under aggressive growth conditions is to find a way to standardize some processes so they can handle the necessary supply chain activity and provide a level of stability and consistency in what they’re doing. If you’re suddenly bringing a much larger quantity of supplies to your remote drilling area, there are significant implications around logistics and inventory management. This can produce considerable health, safety and environmental (HSE) risks, so oil and gas companies expanding capital investment projects should be really focused on how they can apply Lean techniques Summary to identify and reduce waste and cost while improving safety.

Given the tight timelines, massive outlays in capital If you’re a supplier in the oil and gas market, it’s critical to have a strong expenditure, and the level of competition, it’s service and safety focus so that you are able to respond effectively in an industry imperative that companies focus on getting the that is still very reactive. From a cost perspective, succeeding is mostly about most out of their supply chains. It’s no easy feat, the ability to deliver value through the use of innovative technologies or pro- but pulling it off can have significant effects on cesses that drive improved performance and productivity for the operator. the bottom line.

MM&D Cultivating and retaining talent Another area where there is a palpable challenge in the Alberta marketplace

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James McLean is partner, operations and supply chain group, PwC Alberta.

MM&D | May/June 2012

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Legal Link | Marvin Huberman

Invasion of privacy

Keeping personal records safe from prying eyes

I

n a recent landmark decision in the case of Jones v Tsige, the Ontario Court of Appeal created a new cause of action—“intrusion upon seclusion”— based on invasion of personal privacy.

The facts Sandra Jones and Winnie Tsige worked at different branches of the Bank of Montreal. They did not know each other. Tsige became involved in a common-law relationship with Jones’s former husband and used her computer at work to look at Jones’s personal banking information, transaction details and personal information, at least 174 times over four years.

Tsige admitted she wrongfully viewed Jones’s information in violation of BMO’s Code of Business Conduct and Ethics, and her professional responsibilty. She explained she was involved in a financial dispute with Jones’s former husband, and accessed the bank accounts to determine whether he was paying child support to Jones. She apologized for her actions. BMO suspended her for a week without pay and denied her a bonus.

Jones did not accept that explanation and sued Tsige for damages of $70,000 for invasion of privacy and breach of fiduciary duty, and for additional punitive and exemplary damages of $20,000.

The motion judge’s decision Jones brought a motion for summary judgment against Tsige. The motion judge dismissed the claim for breach of fiduciary duty. The motion judge also held that Ontario law does not recognize a cause of action for invasion of privacy, and dismissed Jones’s motion for summary judgment. He granted Tsige’s cross-motion for summary judgment and dismissed the law suit, awarding costs fixed at $35,000 against Jones who he said had pursued the litigation aggressively and didn’t accept reasonable settlement offers.

The Ontario Court of Appeal’s decision Jones appealed to the Ontario Court of Appeal, presenting two issues: does Ontario law recognize a cause of action for invasion of privacy; and did the Motion Judge err with respect to costs?

The Ontario Court of Appeal considered whether common law recognized the right of action for invasion of privacy, and reviewed case law from Ontario

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and other jurisdictions.

The Court confirmed the existence of a right of action for “intrusion upon seclusion”. It felt strongly that the facts of this case cried out for a remedy.

The essential elements of the tort The key elements of the cause of action for intrusion upon seclusion are: • The Defendant’s conduct must be intentional, including reckless behaviour; • The Defendant must have invaded, without justification, the Plaintiff’s private affairs or concerns; • A reasonable person would regard the invasion as highly offensive, causing distress, humiliation or anguish.

The Court emphasized that a claim for intrusion upon seclusion will arise only for deliberate and significant invasions of personal privacy, including matters like one’s financial or health records, sexual practices and orientation, employment, or diary or private correspondence that, viewed objectively on the reasonable person standard, can be described as highly offensive.

It also stated that claims for the protection of privacy are not absolute and may provoke competing claims such as for the protection of freedom of expression.

Damages The Court held that proof of actual loss is not an element of the cause of action for intrusion upon seclusion. Where a plaintiff has not suffered a provable pecuniary loss, the damages fall into the categories of “symbolic or moral” . The amount of these damages will be modest—up to $20,000. Jones was awarded $10,000.

Employers beware Given that the Court of Appeal specifically listed intrusions into one’s employment as a matter that would be described as highly offensive, employers should be aware of their vulnerability and risk exposure to claims of this nature.

Therefore, appropriate steps should be taken by employers to: • Inform employees of potential liability to third parties and other workplace consequences they face for the deliberate invasion of personal privacy; • Keep employees’ records, and information resulting from computer audits and related investigations secure, and limit accessibility to authorized persons; • Better preserve and improve privacy standards within and outside the workplace, including those relating to the use of private investigators who investigate possible insurance or other fraud outside the workplace; • Review and bolster policies relating to computer use, monitoring and access to employee work systems, and those limiting an employee’s expectation of privacy with a computer provided by the employer, and concerning bag checks, locker and desk searches, and GPS devices on employee vehicles.

It must be noted the new tort of intrusion upon seclusion only applies to “deliberate (including reckless conduct) and significant invasions in personal privacy” and at times there are lawful reasons for looking into personal records. MM&D Marvin J. Huberman, LLM, is a Toronto lawyer, mediator and arbitrator. www.marvinhuberman.com

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Conveyors and AS/RS equipment showcase Heavy duty storage and retrieval ἀ e goods-to-person Megamat RS Model 650 Vertical Carousel from Kardex Remstar is designed to house heavy loads. Each carrier can accommodate individual items weighing up to 650kg (1,433lb), and the unit as a whole holds a combined total weight of up to 18,995kg (41,877lb). It comes in an assortment of sizes ranging from 3.18m (10ft 5in) to 4m (13ft) wide, 1.6m (5ft 2in) to 1.7m (5ft 7in) deep and 2.4m (7ft 9in) to 10m (32ft) high. Configuration options include rollout drawers, intermediate shelves, partitions, and dividers. ἀ e Megamat RS Vertical Carousel is available as a freestanding solution or it can be integrated with an existing WMS or ERP system.

Narrow conveyor ἀ e Hytrol ProSort MRT conveyor is a sorter for medium-sized items. It uses multiple narrow belts and rollers that pop up between the belts to move goods off the conveyor at right angles. It is capable of performing two-sided transfers. ἀ e minimum package size it handles is 20cm by 15cm (8in by 6in).

Its maximum package weight is 34kg (75lb) and the maximum package length is 71cm (28in). ἀ e MRT includes an automatic packaging measuring and analysis system. It comes comes equipped with the HyPower Distributed Cabling System Conveyor control Interroll has released its new 24-volt ConveyorControl family. ἀ e SegmentControl model has two RollerDrives and two sensors for controlling two conveyor zones. ComControl is the main interface of the family line and has three inputs and three outputs. GatewayControl is the bus controller which connects ConveyorControl to the network.

CentralControl is the software that allows ConveyorControl to be programmed by a computer.

Configurator is a GUI interface for setting all system parameters including the direction of rotation, the acceleration, and the conveyor speed.

Modular sections Dematic’s Modular Conveyor System is designed so pieces can be assembled to create a conveyor with straight sections, curved corners, inclined or declined elevations, right-angle transfers, or steer-

able wheel diverters. All modules are built on a universal side channel and many of the components are interchangeable. ἀ e system can be equipped with AC drive motors, DC low voltage motor driven rollers, or a combination of both It also offers segmented belts featuring automatic tracking and self-tensioning capabilities.

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Small item storage ἀ e Sintes1 model of MODULA vertical lift modules (VLM) from System Logistics Corp is suited for the storage and retrieval of small items such as tools, electronic parts or pharmaceutical components. ἀ e Sintes1’s metal trays are adjustable on 2.5cm (1in) increments and each tray has a standard net load capacity of 200kg (440lb). It can be configured with an internal delivery area or an external picking bay and set up with either a single- or dual-level delivery system. Its overall height is adjustable in 10cm (4in) increments. ἀ e optional MODULA Green feature recovers the energy produced as the trays are lowered to the picking bay.

Portable storage Sapient Automation’s Mini-Avenger Vertical Carousel is an electrically powered, pick-to-light, cartbased mobile storage unit with ball bearing caster wheels. ἀ e Mini-Avenger can be configured with an assortment of totes, trays and containers, and each shelf can be configured individually. It is designed to fit through standard 1m (36in) doors and hallways.

Angled conveyor ἀ e AS40Z Angled Frame Conveyor line from QC Industries comes in three configurations: L (horizontal to inclined), R (inclined to horizontal) and Z (horizontal to inclined to horizontal). ἀ ey come in an assortment of angles, with 30 degrees, 45 degrees and 60 degrees, standard. ἀ ey feature a 5cm(2in) high rigid-aluminum frame, tension release tails, and QC’s Z-Track design. V-Guide belts are optional. ἀ e AS40Z can carry loads up to 55kg (120pounds) and move at up to 61 metres-per-minute (200fpm). ἀ ey are available in widths ranging from 20cm (8in) to 61cm (24in) and in lengths up to 6m (20ft).

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Learning Curve | Tracy Clayson

Mental health

Employers’ roles in creating healthy workplaces

B

etween May 7 and 13, the Canadian Mental Health Association (CMHA), ran the Mental Health Awareness program to inform the public about mental disorders and showcase those living successfully with mental illnesses, but CMHA is not the only body promoting good mental health.

In Toronto, the Centre for Addiction and Mental Health (CAMH) recently held an event called Transforming Lives, which also gave people opportunities to tell their own stories about living with mental illness. I attended to support a friend who wrote a column in one of Toronto’s newspapers about having survived a period in her life of psychotic episodes requiring hospitalization. Her story of hope includes juggling a happy marriage, raising a teenaged daughter and undergoing a career transition.

In our day-to-day lives, mental illness confronts us in our homes, in our communities and in our workplaces. While mental illness affects both men and women, men seem to have a more difficult time reaching out and discussing mental problems due to the expectation that men must be strong and any sign of mental illness might be seen as weakness.

According to the organization, Partners for Mental Health, stress is the leading cause of mental illness at 23.5 percent, followed by 12 percent due to anxiety and eight percent due to depression.

When we are confronted with employees who struggle with mental health, we need to understand how to navigate through this situation from human resources, leadership and legal compliance standpoints. Striking a balance between performance expectations and accommodating employees with mental illnesses requires employment law knowledge and, even more importantly, sensitivity training on the part of managers and coworkers.

Understanding and recognizing mental illnesses such as depression, bipolar disorder, anxiety disorder, schizophrenia and addictions may not be what employers are trained to do. But having an awareness of how to address employees with mental conditions should be part of human resource training.

There are significant mental health conditions brought on by loss of a loved one, marital breakup, personal or family illness, parenting and care-giving pressures, and financial challenges. Providing resources to address those concerns through an

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employee assistance program is a great start. Promoting mental health as a key objective for all staff and ensuring company culture prevents burnout and pressure are all steps to creating and maintaining a healthy work environment.

Even with work-based assistance programs, some individuals can’t handle their problems and resort to unhealthy habits including working excessive hours, engaging in addictive behavior, and displaying acts of anger leading to violence. With new laws to protect the workplace, it is now the responsibility of the employer to protect staff members from violent and harassing behavior by other employees. Should there be cases of violence—be it bullying, teasing, threats or aggressive behavior—employers under Ontario’s Bill 168 and Canada’s Occupational Health and Safety Violence Prevention in the Workplace regulations are required to respond to incidents and report and document events.

Being responsible for the actions of employees also falls under the duties and responsibilities of those in charge of leadership and management conduct, and providing guidelines to preventing undue and excessive pressure on employees is key to avoiding attrition, work-related stress-leave, and (in some cases) legal action. Employee morale may not seem to be priority number one when companies are in survival or growth mode, but keeping a check on disruptive conduct by managers and providing supportive leadership really needs to be a key priority, and sometimes it can be accomplished simply. Many companies, for example, use newsletters and communication boards to boost morale, inspire healthy lifestyle choices and create awareness of the importance of diet, recreation, and participation in sports and activities as ways to manage the stress.

At no time should an employer make an accusation, or attempt to diagnose or probe into an employee’s health, but pointing out employee assistance programs is advisable. Improper handling of cases of mental health could land an employer before the court in a human rights case.

It’s critical to understand that mental illness, like any medical illness is a legitimate condition which entitles employees the same allowance as one would need for medical treatments. Absence from work, short-term modified working hours, and working from home are all options to allow for recovery and rehabilitation so your employees can return to active employment.

Ignoring mental health concerns comes at a high price. According to Quick Facts: Mental Health and Addictions in Canada, 2009: • Mental illness is the leading cause of workplace disability.

• Employers who offer treatment save between $5,000 and $10,000 in wage replacement and prescriptions.

• Court-awarded settlement cases due to workplace mental injury were up by 700 percent in the previous five years.

• Workplace mental illnesses cost the Canadian economy $51 billion each year.

You can learn more about the mental health and the workplace by visiting the CMHA website: www.mentalhealthworks.ca/employers/faqs.

For treatments related to substance or mood disorders see www.bellwood.ca or http://homewood.org/ or www.camh.net/.

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

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Materials Handling | Dave Luton

Optimizing for flow-through

Keeping goods moving smoothly in the warehouse

A

flow-through centre is very similar to a cross-docking centre, but it usually allows more order selection and it may have a longer goods-holding period than the classic 48-hour window for a cross-docking operation. Ā e first consideration when looking at a building’s suitability for flowthrough is to consider the needs of the truck driver, who is often the most forgotten element in flow-through design.

Simple and inexpensive aids can often provide drivers with great assistance easily and inexpensively. For larger sites, a map and simple instructions (ideally ones that can be downloaded in advance) are a great help. Use the Internet to facilitate scheduling of receipts and giving instructions on the information you want truck drivers to have available in advance.

From the transport drivers’ viewpoint, how they enter a site is important, so include an area where they can safely park their vehicles while they receive their instructions before proceeding to the designated offloading dock. Too many times a driver has to park his rig on a city street and walk to a shipping office or guard house before he can get access to the site.

After reporting in, the driver needs to have sufficient yard space to back and turn his rig so that it can be properly placed in the dock for offloading.

One pet peeve I have with building designers is that, for some reason, they think that we don’t have winter in Canada. In most winters we get snow, sometimes lots of it. We need a place to put the snow out of the way of the main truck working areas.

Another key consideration is the basic size of the facility, as facilities that have 100 truck docks have different needs than those with five truck docks, but all flow-through facilities have some fundamental requirements, whether large or small.

Initially, the distribution centre’s design should incorporate the basic business requirements. You need to analyze what you receive during both average and peak periods, and then ensure that there are sufficient resources—both facilities and equipment—devoted to serve the demand. Ā e design should be able to address the fundamental question of whether there is sufficient loading dock capacity to meet your receiving delivery volumes.

If you handle a large volume of light-density products that cube out a truck’s capacity before reaching maximum weight limits, there is a strong cost incentive to floor-load the vehicle. Manually offloading these shipments can tie up your docks, unless mechanization, like an extensible conveyor system is employed. Ā e design analysis should also consider the volume of the various types of transport equipment, such as containers or straight trucks, as the optimal loading dock design for each is somewhat different. Ā e best dock design for a large volume of ocean containers, for example, uses a higher than normal dock height (or alternatively, a longer leveler) to compensate for the higher transport vehicle bed height often encountered with ocean containers.

Proper equipment for the loading docks is also key to facility design. Ā ere is a wide variety of dock leveler designs including those for non-standard equipment like couriers (scissor lift levelers). Dock safety needs (such as vehicle restraint systems) should also be part of the package.

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Inside, staging requirements are often overlooked when flow-through facilities are designed. In the need to conserve space, they are often sacrificed, resulting in bottlenecks even when there is sufficient loading dock capacity. Particular attention should be paid to sortation and unpacking tasks which require more space to lay out shipments.

Exterior site needs are another often-neglected area, as designers are pressured to minimize land use due to high real estate costs.

Next, no matter what size the facility, you need to ask: is it organized for efficient operations of each size of receipt? For simplicity, assume your facility has three types of receipts: truckload, LTL (less than truckload) and courier or small shipments.

Truckload shipments should always be scheduled so dedicated unloading manpower and equipment can efficiently service them when they arrive. Owing to the large volume they carry, there is a need to get them off-loaded quickly and get the loading dock and staging space freed up for other receipts.

If the flow-through system is to work, it should be co-ordinated with outbound shipping so time in the facility is minimized. Ā e objective is to prevent the products from being put into storage and to keep them moving to their final destination.

My personal experience is that LTL shipments are almost impossible to schedule in big cities. Ā e solution to this can be a combination of facilities and operations. From the facility perspective, designating one or a few (depending on volume) docks as LTL docks greatly helps the situation.

Operationally, taking control of inbound LTL shipments and having a designated carrier pick them up, cross-dock them so they form a truckload, and ship them in as a truckload of LTL, helps. Ā is is widely practiced in the automotive industry where it is called “sweep” and works by consolidating multiple LTL shipments into a truckload.

For smaller-volume courier shipments, having a dedicated loading dock is an advantage.

Of course consolidating all of these shipments with one carrier also will also help.

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

MM&D | May/June 2012

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