MM&D (Materials Management & Distribution)

July/August 2012 $8.00

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Selecting the best software solutions to provide visibility into your supply chain

Plus: Satellite supply chain Rising Tides in Moncton Fork truck innovations RFID, barcoding and scanning equipment

Efficient Picking.

Correct item and quantity . . . delivered on time Bare Escentuals is a cosmetic company that is built around the idea that makeup can actually be considered skin care. To improve their warehouse logistics configuration that serves 200 retail store boutiques and 1400 spas, Bare Escentuals implemented an all new process for picking split case items.

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Taking Stock

Computing the advantages A

s much as I enjoy writing about soft ware and computer technology solutions, it was difficult to find the right balance when crafting this month’s feature on supply chain visibility soft ware. I didn’t want to send the piece in a direction that was too simplistic and basic, and I didn’t want to turn it into a dense mass of computer acronyms.

Usually writers are told to tailor their works to the audience, but when addressing supply chain professionals that’s nearly impossible. This industry isn’t a monolith. It’s highly individualized and specialized operations, all with wildly different budgets, operational demands and business needs.

The degree of variance is demonstrated strongly in this issue. We’re running profi les of two very successful companies. One is a high-tech manufacturer of electronic components for use in space. The other is a distributor of frozen treats and desserts.

The first runs all aspects of its operations through a complex ERP system. The other just installed its first warehouse management system.

Despite their differences, both companies do have something in common: both are on the path of IT evolution, and this is a path that every organization should tread. Even though it can be comfortable to simply maintain systems and technology—the “if it ain’t broke don’t fi x it” mentality—that’s not a smart business move.

Even as businesses look to improve processes, implement Lean methodologies, and find efficiencies, many can only see the costs involved in upgrading hardware and soft ware. They have a hard time envisioning how a new soft ware tool will help them manage their inventory better, or how a new handheld terminal will make order pickers more efficient.

That’s why it’s necessary to have a technology champion in the supply chain department—somebody interested enough in technology to learn about new advances and to promote the need for them. Ideally this advocate will be comfortable liaisoning with the IT department and will be capable of briefing senior management about the business case for the technology. It also needs to be somebody level-headed enough not to get swept up by every minor upgrade or dazzling new interface. Chasing those type of new releases is both costly and unnecessary in terms of achieving business goals, and meeting business goals is what this industry is all about.

July/August 2012 | Volume 57 | Number 4

Departments 3 4 5 6 8 13 14

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

Contents Columns

Features

32 Learning Curve Employee morale

16 Supply chain visibility software selection guide

33 Materials Handling The high-level overview 34 Legal Link When broken promises cause damage

21 Rising Tides in Moncton at the PMAC Annual Conference 22 Satellite supply chain at electronics manufacturer Com Dev 24 Equipment focus: Order picking, barcoding and RFID 25 Equipment focus: Lift trucks 27

MM&D | July/August 2012

3

Sydney’s big plans Slump Cape Breton Region plans to turn harbour into an international container terminal, Page 8

Logistics in US still hurting, Page 11

Inside | Virtual pallet moves with www.mmdonline.com PubliSher/editor-in-Chief: emily Atkins (416) 510-5130 EAtkins@bizinfogroup.ca editor: Carolyn Gruske (416) 442-5600 x3265 CGruske@bizinfogroup.ca Art direCtor: Stewart thomas (416) 442-5600 x3212 SThomas@bizinfogroup.ca Senior ACCount MAnAGer: Catherine Martineau (647) 988-5559 CMartineau@bizinfogroup.ca ProduCtion MAnAGer: Kim Collins (416) 510-6779 KCollins@bizinfogroup.ca CirCulAtion MAnAGer: barbara Adelt (416) 442-5600 x3546 BAdelt@bizinfogroup.ca

biG MAGAzineS lP Vice-President of Canadian Publishing • Alex Papanou President of Business Information Group • Bruce Creighton Executive Publisher • Tim Dimopoulos how to reACh uS: MM&D (Materials Management & Distribution), established in 1956, is published 7 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. editoriAl And AdvertiSinG offiCeS: 80 Valleybrook Drive, Toronto, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140.

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Government promises service level agreement template Consultations with industry concluded

By Carolyn Gruske

I

t’s limbo time for businesses that rely on rail to ship goods and for the railroad companies that handle the cargo.

Both sides of the transportation equation are waiting until the federal government returns from its summer break and tables legislation in the House of Commons to redefine the relationship between those who require transportation services and those who provide them.

The government has promised it will revise the Canada Transportation Act and create a service level agreement template to manage the relationships between rail companies and their customers. But until the document is put before parliament neither side knows exactly what to expect, even though the government did ask for industry input.

The Coalition of Rail Shippers (CRS) was one group that presented its position to government officials including minister of transport, Denis Lebel, and minister of agriculture, Gerry Ritz.

“They follow pretty much from the findings of the Rail Freight Service Review panel,” said CRS chair Bob Ballantyne. “They highlight the issue of market dominance. There are only two sellers in this particular marketplace and there are a number of shippers who are de facto captives to one of the two railroads.

“The shippers essentially want commercial negotiation, but a fundamental principle for commercial negotiations is there has to be a reasonably balanced marketplace. So the shippers are asking for some changes to the legislative framework to act as a surrogate for normal competitive pressures.

“The panel said there needs to be some change in the legislative framework that governs the negotiations between the buyers and the sellers in the rail freight market. That’s what the shippers are asking for.”

The findings Ballantyne mentioned were presented in the Final Report of the Facilitator of the Rail Freight Service Review—or as it is more generally known, the Dinning Report, after facilitator, Jim Dinning.

The report suggests five key changes: Transport Canada should make a service level agreement template available to rail freight stakeholders as a guide to all parties (including small shippers), as they negotiate a service agreement.

Transport Canada should make the commercial dispute resolution process publicly available for stakeholders to consider and use.

Railways should be encouraged to revise their current dispute resolution processes to address rail service issues to make them consistent with the process described in the report.

Industry should be encouraged to review and update the service agreement template and commercial dispute resolution process as business conditions warrant. These updated tools should be available from industry or government sources.

Transport Canada should monitor the use of the service agreement template

4

MM&D | July/August 2012

Rising Tides

PMAC goes to Moncton for its 87th annual conference, Page 21

Done Deals Sealift contract awarded in Nunavut, Page 5

Supply Chain Scan

Canadian Pallet Council software, Page 6 and commercial dispute resolution process. Transport Canada should encour- What the bureaucrats at Transport Canada are tryage all parties to improve the process as required. ing to do is to get as much input from the railways Although it’s impossible to say how well suggestions made by the CRS and and the shippers to make what they consider to be other various parties will be incorporated into the new law, Ballantyne believes the most appropriate and balanced assessment of the process will take everybody’s concerns into account. what’s required to enhance Canadian competitive“If you ask the railway guys, they will probably give you the same answer: ness on the world stage.”

Done Deals The Government of Nunavut has selected Nunavut Sealink and Supply Inc to provide sealift services to 25 out of 26 communities in the Qikiqtani, Kivalliq and Kitikmeot areas. The long-term agreement begins in the 2012 sealift season. Typically, cargo bound for these destinations will be loaded at the company’s dock facilities in Ste-Catherine, located south of Montreal.

Descartes Systems Group has acquired a Dutch software-as-a-service (SaaS) transportation management solutions company. Waterloo, Ontario-based Descartes now controls Infodis BV, which is headquartered in Woerden, the Netherlands. The deal was worth three million Euros (approximately $3.7 million).

Contrans Group Inc, based in Woodstock, Ontario, has purchased Peter Hodge Transport Limited, of Milton, Ontario. Peter Hodge is a bulk trucking business with 92 highway tractors and 140 trailers specializing in open-top dump trailers and liquid tank trailers.

Manitoulin Global Forwarding, which is headquartered in Mississauga, Ontario, has purchased Can-Tran International Inc, a Leduc, Alberta-based company that specializes in moving oil rigs, in addition to offering freight forwarding, Customs brokerage, ground transportation, and distribution and warehousing services.

Six related Canadian business units have banded together under one brand: CareGo. By joining forces they expect to have an easier time entering global markets. The participating organizations are SteelCare, CarePort, CareLynx, Green Age Design, TransCare, and MarineCare.

The Hamilton, Ontario-based company has also opened CareGo Logistics UK and has a contract to install automated warehouse technology in a major British port.

Sysco Guest Supply, a provider and distributor of room accessories and personal care items for the hotel and lodging industry, has implemented a voice solution from Pittsburg, Pennsylvania-based Intermec’s Vocollect business division. Sysco deployed Vocollect Voice in 10 DCs where 130 employees are using the solution to move more than 10 million cases per year. Sysco reports a 28 percent improvement in both throughput and putaway.

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Supply Chain Scan

Moving electrons not pallets

Canadian Pallet Council creates online pallet swapping tool

way and everybody adjust their balances by 1,000, everyone’s balances are reduced by 1,000 owing and s president and CEO of the Canadian Pallet Council (CPC), Belinda Junkin no pallets physically move down the road. has the duty to promote the organization’s new ECT (electronic container “The other type of ECT is where if you create two transfer) software, but even without that responsibility she would still be points on a piece of paper, you have Vancouver on excited about the concept behind the tool. one side and Toronto on the other. You’ve got people “It’s the fact the environmental focus has been on equipment and transportation. in Toronto shipping to Vancouver. You’ve got people This is now talking about leveraging technology and data to be more efficient,” she in Vancouver shipping into Toronto. Both those people said. “Rather than changing truck motors or putting skirts on trailers, this is are back-hauling empty pallets—those trucks are actually not moving loads, or reducing mileage, so to me this is a game changer.” actually passing on the road potentially. If they both ECT is an algorithm that works with the CPC’s pallet and container track- flip pallets—say the Toronto shipper picks up from ing tool CTSWEB. Junkin describes it as sitting on top of the main piece of the Vancouver shipper’s receiving point, they can software and working in the background to automatically come up with trades pick up pallets locally instead of doing that 3,000km. that reduce or eliminate the need to move pallets.

So it is going to find shorter distances as well as elimi“It looks for opportunities to trade pallet imbalances like electronic banking nate moves. You might not be able to always eliminate rather than physically moving the pallets. And it might even be with partners but you might be able to send a truck 50km in the you don’t know or use. It’s just looking geographically: What’s the shortest Toronto area, or 100km versus 3,000km to send it out way to reconcile these balances? It’s not physically moving the pallets, it’s to Vancouver and bring those back.” electronically adjusting balances.

ECT works on an opt-in approach. When a user “And for the non-movement of goods we will create a carbon offset. We will logs in, if there is a possible transfer situation a calculate the amount of carbon saved by the non-movement of the truck, then notification appears. The company is under no obliin the future we will be able to validate that. That’s a future opportunity for gation to participate in the balance offset, and is us to be able to monetize that.” able to decline any offer.

While that may seem a bit complicated, according to Junkin, it’s really very The software, which has been in the beta testing simple in operation. stage for the past couple of years, was created with “If you make a triangle on a piece of paper, A is Toronto, B is Halifax and C is the financial support of the not-for-profit agency Vancouver. If A owes B 1,000 pallets and B owes C 1,000 pallets and C owes A 1,000 Sustainable Development Technology Canada, pallets, each of those are operating in isolation. They don’t see the other parties. which gave the CPC a grant for $1.25 million to “ECT is going to sit on top of that and say: A if you flip those arrows the other cover the development costs.

By Carolyn Gruske

A

Global Focus French logistics company rebrands Paris, France-based Technicolor is expanding its 3PL services and has renamed its logistics division. Now known as Technicolor Global Logistics, the company is trying to grow beyond the direct-to-retail market into consumer packaged goods and other durable products categories.

It manages 15 DCs globally and offers brokerage, load optimization and business intelligence reporting services.

Oil company moves hydrocarbons The largest oil and gas producer in Colombia, Ecopetrol SA, has a new subsidiary to transport the hydrocarbons produced as a byproduct of oil production. Besides being responsible for environmental preservation efforts such as improving the transportation infrastructure to make the trucking network more efficient, Cenit SAS will be responsible for serving the logistics needs of Ecopetrol.

Crown expands to Brazil New Bremen, Ohio-based Crown Equipment Corp opened its first company-owned Crown lift truck dealership in Brazil. Located in Jundiaí, São Paulo, the 3,300sqm facility has a warehouse and showroom and will act as a service and sales centre for Crown products.

Italian takeover Katoen Natie (KTN), an Antwerp, Belgium-based logistics provider, has taken over an Italian rival. Rivalta & Dintorni, which has a 450,000sqm terminal in Tortona, in the Piemonte region of the country, a railway terminal and a staff of 750 employees, is now part of KTN.

6

MM&D | July/August 2012

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Supply Chain Scan

Sydney plans port improvements

“In a lot of ports in eastern North America—in the US in particular—the dredging work that needs to be done tends to be a long process, so that’s why we’re trying to get out there before many of these other ports and see if there is any take-up. We’re fortunate that it only took us a year to do the dredging. In many ports it’s multiple years and hundreds of millions of dollars in cost,” says John Whalley, economic development

By MM&D staff manager for the Cape Breton Region Municipality.

While it may seem like a large amount of money fficials in the Cape Breton Region Municipality don’t seem too concerned to spend on a speculative project, Whalley says the if their plans for the Sydney port earn them a few enemies. They’re con- dredging has been worth it. vinced the benefits will be worth it.

“A fairly significant investment was announced by The idea is to build a container terminal in the harbour able to handle the a company called Provincial Energy Ventures on the oversized ships soon to be passing through the Suez Canal. order of $70 million for the port as a result of the dredgUntil a few months ago, the port wouldn’t have been able to accommodate the ing. They have a coal trans-shipment business they do vessels, but now a dredging project has been completed, making the channel 16.5m through Sydney Harbour. There has also been interest deep, which provides enough draft for the large ships. The dredging costs of $38 from a company called Severstal to create an iron ore million were mostly shared across three levels of government, with some contribu- production facility—an iron ore pellet plant basically— tions from the private sector, including $1 million from Nova Scotia Power. in Sydney Harbour, also as a result of the dredging.

Container terminal in the cards

O

Benchmarks Trailer Wizards has begun construction of its new Winnipeg, Manitoba location. The building, which is expected to be ready for occupation in January 2013, will have 14 mechanical repair bays and two wash bays. The two-storey parts area will encompass 9,500sqf of the 37,700sqf facility. The company also plans new Saskatchewan branches in Regina and Saskatoon.

Two Ontario companies, Grimsby-based Handling Speciality Manufacturing Ltd and Mississauga-based Cargojet, have passed their ISO 9001:2008 recertification audits. ISO 9001:2008 is the international standard for quality management systems (QMS). It provides companies with a set of principles designed to help achieve customer satisfaction through business management practices.

A number of CITT members have been recognized for their academic achievements. Brampton, Ontario’s Ron Bosch earned the organization’s James Mackenzie Memorial Award, which is given to the student with the highest overall academic standing in the graduating class. Rob Jensen of Overwaitea Food Group in Langley, British Columbia, earned the highest combined mark for transportation systems and logistics processes. Jamie Samson of Sobeys Canada Inc in Stellarton, Nova Scotia achieved the highest academic standing in integrated logistics.

Toronto, Ontario-based Nick Nanos, from the Liquor Control Board of Ontario earned the highest marks in transportation law. Lida Sun, from the Wheels Group in Mississauga, ranked the highest in transportation economics. Lawrence Phillips, from Hudson Bay Company in Brampton, Ontario achieved the highest academic standing in logistics decision modelling. Edmonton, Alberta’s Matthew Klassen of Westcan Bulk Transport, earned the highest marks in the organizational behaviour business knowledge course. The awards will be presented in November at the Reposition 2012 conference.

A new material handling manufacturer has opened for business. Next Level Storage Solutions launched its operations in Reno, Nevada. The company makes steel storage systems, including pallet rack and wire decking.

8

Canadian and international carriers took home honours after being named winners at CIFFA’s annual Forwarders Choice Awards. Air Canada Cargo was the big winner in the air category, earning the operational excellence award, the innovation award, and carrier of the year (central region). Air France-KLM Cargo earned the customer service award, Lufthansa Cargo AG won the ebusiness award, and Swissport Canada won the customer service local pick and delivery airfreight award. In the ocean categories, Hapag-Lloyd (Canada) Inc took home three prizes: operational excellence, ebusiness and carrier of the year (central region). COSCO Canada Inc won the customer service award, OOCL (Canada) Inc was rewarded with the innovation award, and Groupe Lafrance earned the customer service local drayage ocean freight award.

MM&D | July/August 2012

Supply Chain Scan “It remains to be seen, however, if we can attract been down in recent years fairly significantly. I’m not sure how Halifax views a container terminal, but even in the absence of the Sydney. I don’t think they view it as a complement. I think they view it as a threat container terminal, I think we can make the argu- as well.” ment that the dredging has proven its value already.”

While he may not be able to look to local harbours for support, he does The site designated for the new cargo terminal is a look to BC’s Prince Rupert terminal for inspiration, especially when it comes greenfield property—82 hectares (450 acres) of unde- to attracting shipping companies. veloped land with what Whalley estimates as 500m of “This is not easily done, but it was done in Prince Rupert. So that gives us waterfront. Plus there’s an additional 60 hectares (150 some level of hope. If you look at traffic numbers for Prince Rupert, they’re acres) of adjacent in-filled property. The municipality growing quite tremendously. And they are in to planning the second phase of bought the land for $6 million. development right now. It gives us hope. I think it can happen.”

A railing siding is relatively close by—about half a kilometre away—and Whalley says the municipality will help connect the terminal to the tracks, and to install other basic utilities.

He admits attracting cargo shipping companies to a blank canvas in an unfamiliar area won’t be easy.

Our core service is, without a doubt, providing industry “There are enormous challenges in attractleading solutions for your full load requirements from ing people into a new port, but as the industry Ontario and Quebec to Western Canada. Other companies changes, it also gives these companies new offer intermodal as a sideline. At Motionology, intermodal opportunities as well and that’s really the pro transportation is the focus of our organization. and con of greenfield sites. Nothing is there but you are also not hooked into legacy agreeAlthough full load intermodal is our core business we ments with labour. You have a free hand in now offer attractive LTL rates to the major points in developing a site that would be consistent Western Canada and to the US. with modern security requirements and developing a site that would be efficient. And this As a “boutique” transportation provider we can and do, is an enormous site within 10 nautical miles customize programs to fit your specific requests. We are of the main international shipping route flexible, capable and resourceful transportation partners between North America and Europe.” for your company and can suggest alternatives to While he is excited about the potential benincrease your bottom line, time and time again… efits of a terminal, especially the tendency they without compromising service or on time performance. have to attract additional businesses and additional terminals, and to give local labourers the opportunity to work at home rather than heading to the western oil patch to find jobs, he admits the project has its detractors.

“There are a lot of doubters even in our own community, and a lot of doubters across the province, and I understand that because we have no experience with this. We are just trying to get something that is completely new to the region. And we’re going to find out if it is possible or not, and we’re going to put forward a very determined effort.”

He also mentioned that the region’s efforts aren’t likely to help foster any goodwill amongst other Atlantic Canada terminal operators.

“There is a port known as the Melford Container Terminal which is not that far away.

They’re also marketing a greenfield property so they probably see us as a threat. I know traffic in Halifax has been variable and has motionology.com 905.670.8681

Full load intermodal

MM&D | July/August 2012

9

26

th

Annual Transportation Innovation and Cost Savings Conference WWW.TRANSPORTCONFERENCE.NET On Wednesday,

October 3rd, 2012

you are invited to attend a one-day conference that has become the largest educational event for shippers and supply chain practitioners in Canada.

Location The Old Mill, 21 Old Mill Road, Toronto, M8X 1G5 For more information, please call Richard Lande at 905-319-1244 or email rlande@cogeco.ca or visit our website www.transportconference.net.

The cost for this event is $875.00 for 1 person or $1650 for 2 people (plus HST).

For information on the Old Mill: www.oldmilltoronto.com

FEATURED SPEAKERS: KEYNOTE SPEAKER: Don Soderquist, Founding Executive of The Soderquist Center, Arkansas, and former Sr. VP Chairman and COO, WalMart USA. Mike Riggs, Chairman, Jack Cooper Holdings, Kansas, recipient of the 2011 General Motors, Supplier of the Year Award.

Wolfgang Spillner, President, Albacor Shipping Inc., Toronto.

Hazem Ghonima, President, TAF Consultants, Ottawa.

George Magliano, Sr. Principal Economist, IHS Global Insight, New York.

Pierre Desrochers, Associate Professor of Geography, University of Toronto.

Susan Moore, Director of Sustainability, Lakeside Logistics.

J. Gardner Hodder, Attorney, Hodder Barristers, Toronto.

Dr. Keith Mussar, VP Regulatory Affairs, IE Canada.

Gary Kissak, Legal Counsel, Fogler Rubinoff and Maurice Law. Professor Wenran Jiang, Project Director Canada-China Energy & Environment Forum and Associate Professor of Political Science, University of Alberta.

John Hanson, SR&ED Technical Leader, MNP, LLP. Kevin Doucet, AVP, Automotive, Canadian National.

Jean Robert Lessard, Vice President of Marketing and Business Development, Robert Transport.

Patricia Mohr, Vice President & Commodity Market Specialist, The Scotiabank Group.

Marian Weilert Sauvey, Sr. VP & Secretary, Atlas World Group, Indiana.

Neil D’Souza, Vice President, Versa Cold.

Loreto Saccucci, CEO, Blue Rover.

Lou Smyrlis, Editor, Canadian Transport & Logistics.

Dr. Sylvain Fournaise, Vice-President, Food Safety and Technical Services, Olymel l.p.

FEATURED MODERATORS: Richard Kunst & Mariela Castano-Kunst, President and Vice President, Kunst Solutions Corp, Plenary Session Doug Munro, President, Maritime Ontario, Plenary Session Adam Gambrione, Former Chair of the Toronto Transit Commission, Plenary Session

Breakout Sessions Automotive Logistics Transport Law Food Safety and Transport Regulations Shipper Carrier Breakout

Mark Feduke, Director of Trade Compliance, VLM Foods Inc., Food Safety and Regulation Session John Fiorilla, Attorney, Capehart & Scatchard, Transport Law Session Patrick Bohan, Manager, Business Development, Halifax Port Authority, Automotive Session Christine Brown, Consultant, Shipper-Carrier Session

Last year, over 300 companies attended the event in order to learn and exchange views on logistics innovation and cost savings. Manufacturing companies from the consumer goods, automotive, grocery industries, as well as trucking, railways and intermediaries, receive an overview of the solutions to a number of current problems in the transport industry. This year we have added a new panel on Food Safety and Transport Regulation.

There will be ample opportunities for networking during our traditional four-course rotational luncheon.

Supply Chain Scan

American logistics industry in jeopardy Recovery from the recession still incomplete

By Carolyn Gruske

W

hen Rosalyn Wilson wrote the 23rd Annual State of Logistics Report for the Council of Supply Chain Management Professionals (CSCMP) in the US, she titled her findings “The Long and Winding Recovery”. But even that less than fully positive take may prove a bit optimistic, as there are some aspects of

the American logistics industry that have a decidedly bleak outlook.

“The one thing that should be highlighted is people should really, really truly—and this isn’t the sky is falling—realize the position the trucking

Conveyor Solutions That Work

Canada outperforming US in logistics Even though the 23rd Annual State of Logistics Report is focused on the American logistics market, author Rosalyn Wilson, who works in Vienna, Virginia, is employed by a Toronto-based company, Delcan Corp, so she takes an active interest in activities in this country.

“I do look across the border.

Interestingly the Canadians are doing much better than us. They’re not feeling the pinch and the hurt.

“US companies are starting to come up to Canada and Canadian companies are having to compete with US companies they’ve never had to compete with, and they’re doing that because there is no business down here. Canada is still investing in infrastructure when we’re just doing dribs and drabs of it.”

Not only are there performance differences between the two markets, Wilson also sees differences in basic operations. For example, she says the Canadian trucking industry is more focused on shorthaul, day trips rather than coast-tocoast runs. As a result, there is more reliance on rail to move goods from one side of the country to the other.

She also said she has yet to hear of driver shortages in Canada being anywhere near as severe as they are in the US.

MATERIAL HANDLING SOLUTIONS THAT WORK

THE CHALLENGE: • The client, a 3PL, was hired to roll out a new line of products.

• Manual picking from pallets was inefficient and labour intensive.

• A case handling system needed to produce up to 8,000 orders per shift for 250 locations.

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

• Potential for the volume to quadruple.

THE SOLUTION: • Elevated 16-lane cross-dock sortation system • Long and low slapper induction line to an overhead accumulation and scanning line.

• Order output increased so much that client got a new product line from their customer.

• 16 lanes added to sorter without modifying setup, providing over 350 new pallet locations.

• Middleware upgrade allowed transition to new WMS. • Future volumes expected to exceed 300,000 orders per week.

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MM&D | July/August 2012

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Contact your local electric utility or visit saveonenergy.ca/industrial

Subject to additional terms and conditions found at saveonenergy.ca. Subject to change without notice.

A mark of the Province of Ontario protected under Canadian trade-mark law. Used under licence.

OM Official Marks of the Ontario Power Authority.

Supply Chain Scan industry is going to be in. You are not going to be able to get a truck. We cannot recover fast enough when the economy picks up,” she said.

Trucking The two biggest problems for the trucking side of the logistics industry are capacity and manpower.

“We’re still leaking capacity out of the trucking side of the industry and we can’t afford to lose much more capacity,” says Wilson.

Warehousing Warehousing is also under pressure. The study points out that “retailers have leaned their inventories on hand and now require their suppliers to deliver only the product they need.

“As a result, retail inventories have been relatively stable while wholesale and manufacturing inventories have increased.”

Penske Logistics is a co-sponsor of the report.

Joe Gallick, Penske senior vice-president of sales, says warehouse situation is troubling.

“My feelings are the prospects of continued buildup or bulge in inventory in the supply chain don’t

seem sustainable over the long run. I think it’s a reaction and a cautionary action taken by companies due to the fragility of the supply chain—specifically global companies protecting supply. There were issues throughout the last couple of years that heightened that.”

Ocean Another area of concern is ocean freight, according to the report: “It was a disappointing year for ocean carriers, 2010’s strong recovery eroded in 2011.

Vessel capacity continued to grow, outstripping demand for much of the year...

By late 2011 the number of idled container ships worldwide roughly doubled to 246 or four percent of global container ship fleet capacity.”

Air Air cargo is another troubled branch of logistics services, says Wilson.

“The air cargo industry is a sad industry right now. Obviously if not much is shipping, even less is shipping by air, as that’s generally a premium service.

They’ve got a lot of underutilized capacity.”

Rail If there is a bright spot in the report, it is in the rail freight industry. What makes Wilson optimistic is the fact rail companies are still spending.

“They have continued to invest. They’ve put in double tracks. They’ve bought new equipment and locomotives. The rail industry is poised really well to take up the slack when we pick back up in volume.”

MM&D

Movers + Shakers There are four significant new hires at Day & Ross General Freight. Adrian Peel is the new associate vice-president of terminal operations. Jeff Gallant has the role of associate vice-president of engineering. Peter Stroud has been appointed director of terminal operations for western Canada. Paul Keery is now vice-president of operations. Day & Ross Supply Chain Solutions division also has a new member. Mike Chisholm has joined and is serving as executive vice-president.

Productivity Unload Faster Reduce Injuries

Lewis-Manning

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Manufactured by: systems

Tony Charaf is the new chief cargo officer at Delta Air Lines. He adds this title to his already existing duties as president of Delta TechOps MRO (maintenance, repair and overhaul) and will work with Ray Curtis, who has been promoted to vice-president of cargo sales. Charaf replaces Neel Shah at the Atlanta, Georgia-based airline. Shah will serve as a consultant to cargo division’s leadership team.

MM&D | July/August 2012

Ergonomic Container Unloading

Improve

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Robert Lewis-Manning is the new president of the Canadian Shipowners Association, succeeding outgoing president Bruce Bowie. Lewis-Manning, a Royal Canadian Navy veteran, has been serving as the association’s vice-president of operations since 2010.

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Engineered Lifting Systems & Equipment Inc.

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

Professional Development Directory

Advertorial

Forwarding Your Career The demand for training in Canada continues to increase for two reasons, regulatory requirements organizations must meet and this tough economic climate that has more people keen to improve their knowledge and skill sets - and their employability. The compliance training currently most in demand includes dangerous goods (air, ocean, and road) and air cargo security. CIFFA offers online or blended solutions to DG training in all modes. Working with Transport Canada, CIFFA has also developed and delivers three levels of air cargo security training that meet requirements for Air Cargo Security Approved Participants and will be available for Third Party Service Providers and Shippers as they join the program.

By diversifying its offerings, CIFFA provides specialized technical or compliance training to organizations with different needs.

To meet needs and demands of a constantly changing

workplace, CIFFA regularly updates its course offerings and invests in new technologies that offer a variety of solutions for learners. Effective training in Canada rests with an online or blended delivery. For students who work full time, live far from a classroom environment, or who like a self-paced training schedule, CIFFA offers a new platform that accommodates traditional online learning elements courses, tests, videos, and webinars. This next wave of online learning also embraces the “informal” learning that happens within a classroom by offering a “social media” element to online students. Now students can discuss a course with each other, form study groups and share ideas, access links and multimedia that enhance this new online learning experience.

As the need for compliance and regulatory training grows, so does the interest in new methods of delivery that save time and money while delivering best in class training.

To learn more about CIFFA’s Training Programs, visit us at www.ciffa.com, education@ciffa.com, or (416) 234-5100 (ext: 225)

Professional Development Directory Advertorial

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

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

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

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

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

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

Prove you’re a “Logistics Expert”—Add CITT to your professional credentials. And more value to your supply chain.

Course work for CITT’s fall semester begins September 1st. Register now to guarantee your spot.

1 ”2010 Salary Survey Results”, MM&D, September-October 2010.

Clayson, Tracy. “Learning Curve: What are you worth?” MM&D, September-October 2011.

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

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Clear vision Selecting the best software solutions to provide visibility into your supply chain Consultants and integrators share their best advice with Carolyn Gruske.

S

upply chain visibility is a simple and obvious idea: know where everything is at all times. Even the means of achieving it—using soft ware to track items and movements—seems pretty basic.

But in reality it isn’t easy to keep an eye on everything, even with sophisticated soft ware solutions. And that’s assuming the right systems and technology have been purchased or integrated properly in the first place.

“To me supply chain visibility is like the Holy Grail. Conceptually people almost look at it like you can sit in an aircraft control tower and you’ve got all this information coming in and advising you, and it all just comes together.

But that’s not true, that’s not how it happens,” says Mike Croza, managing partner at Markham, Ontario-based Supply Chain Alliance Partners.

Marty McGinnis, Toronto, Ontario-based practice leader of supply chain execution systems at KOM, has a similar view.

“Everybody tries to do supply chain visibility and nobody succeeds completely.

The problem is you have to integrate data from multiple sources. That’s really difficult to do. Soft ware does not lend itself to that.”

Even deciding what visibility actually is can prove challenging, says David Choufani, supply chain manager at Deloitte Canada in Montreal.

“I think everybody has their own definition in terms of visibility. Some people may see the information that comes to a company before it hits a distribution

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centre as visibility. If it’s before the fact, it’s about having visibility about what’s coming in so it will help people improve their planning. Some might see it as after-the-fact information like metrics dashboard analysis—it’s more visibility after the fact because they use historical data to understand how the market reacts or how their operation is behaving.”

So before any company sets out to buy and implement a visibility solution, it needs to come to terms with what it means by visibility, and what it hopes to achieve by improving the depth and clarity of its visibility.

Defining the business needs First, it’s important to examine the big picture. What is the company’s goal? What business need is driving the project? Even though supply chain visibility is a hot and ongoing trend in the industry, that’s not a good enough reason to hop on this particular bandwagon without knowing what direction it’s going to take.

MM&D | July/August 2012

Simon Newell, an Ottawa-based senior executive in Accenture’s Canadian supply chain practice explains that a company needs to take a bit of time up front to think about the situation. They should identify their strategic priorities, their vision and what they are trying to accomplish.

“If that is clearly understood, it is easier to get to the point when you say ‘these priorities are really important to us, so there is a value if we have features and functions that can do them. These features are less important, so we don’t need to buy a Rolls Royce; we can live with a Mini in these areas.’

“It all goes back to understanding the business value drivers. If you have an understanding of what those are, people can be better informed and be able to make the right choices because, inevitably, it comes down to making a combination of choices about how far along the scale from basic to progressive you want to be in terms of solutions. So starting with that end in mind you need to ask: what’s the vision, what are the business drivers needed to get there and then how can the technology support that?”

Of course the big picture can’t be filled in without having some sense of the finer details. At this point it’s not about drilling down to the microscopic level—now is not the time to define file formats—the goal for this stage is to not only solve existing issues but make long-term improvements so they won’t become problems in the future.

“What I encourage people to do is think about the business from the standpoint of how can you streamline your processes and your technologies to make them more efficient and in doing so define those things that are most important to your business,” says Bob Heaney, lead analyst in the supply chain management practice at the Aberdeen Group in Boston, Massachusetts. “What is an efficient supply chain for you? Is it lowest cost? Balanced cost and service? Then look at the solutions that will bring the biggest return to your bottom line as possible.

“If you look at your network and the biggest challenge right now is just getting control of inventory and internal locations, then that’s got an investment associated with it and a benefit. Try to define that benefit and try to define that investment, but don’t stop there. What if you take a look at the next tier of information you’d like to have and say ‘I’d like to actually know what is coming in on the trucks inbound to my DCs because then I can include that in my inventory profile’? So now an incremental ROI [return on investment] analysis would ask ‘What’s it going to cost to build that kind of infrastructure?

What kind of partnering do you need to do with your carriers? Maybe they already have solutions you can adopt’ Try to develop a cost-benefit analysis of that.”

MM&D | July/August 2012

Collaboration Just because you want to accomplish a task in a certain way, it may not always be possible due to your partners’ capabilities (or lack thereof). If, for example, you’re dealing with a small supplier in a country with infrastructure limitations, then your goal of having a fully automated system that feeds data automatically may not be realistic.

“There will always be blind spots, but it’s how you plan to manage around them that’s important,” says Newell. “Maybe there is a combination of some manual tools and techniques in certain parts of the supply chain or in certain areas that at least gives you some basic information until you get the product back on the grid where it’s able to be tracked and traced—it depends on the supplier’s level of sophistication. But even some of the smaller guys have ways and means of communicating where they’re at and where the inventory is.

So quite often it’s not nice, neat, end-to-end visibility. It’s kind of a patchwork of different areas that have different levels of visibility and what you have to try to do is join up that patchwork and gradually close down the blind spots over time.”

Businesses also need to understand exactly where they exist in the supply chain, as their role may mean they aren’t in a position to dictate the technology standards or procedures that enable visibility.

“If you’re a consumer goods company that is working with a Walmart you’re already working in some kind of collaboration with them on a system,” says Croza. “It all depends on where you are in the chain. Are you on the top of the chain or the bottom? If you’re on the bottom some stuff may be dictated to you.”

People Not only do businesses need to know their institutional roles, companies need to realize that implementing any large, wide-ranging soft ware system, especially one that is going to provide increased amounts of data and information, is going to put demands on staff. So any soft ware visibility project will require the co-operation and support of employees.

Before a system is even purchased, companies are advised to pull together a cross-discipline team to represent the needs and concerns of the various departments and to offer guidance and suggestions during the evaluation, purchasing and implementation, advises Newell.

“Approaching it that way ensures you have an end-to-end governance structure that can deal with decisions and make the trade-offs. Then you’re not operating in silos where you might be making a good decision for the procurement department but a bad decision for the business overall.”

He stresses that the company’s top executives need to be represented on the cross-discipline team. Without strong corporate leadership, the ability to make tough, binding decisions will be hampered.

He also points out that company leaders need to ensure that any significant soft ware project includes in its budget time and resources for education. If employees aren’t given the training they need to understand and use the new tools, a company is likely wasting money buying the soft ware in the first place.

“At the end of the day it’s people implementing systems and it’s very easy to overlook the impact on the organization and to overlook the training requirements that might be needed and making sure the people who are going to use the soft ware know what the systems are capable of, what changes it involves and what the new procedures are they will need to follow. That’s often an area that is underestimated. If you’ve got a great system and a great tool and you haven’t got the people organized properly to use it, you’re going to get suboptimal returns.”

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Exceptions, predictions, business intelligence and analytics The purpose of any type of supply chain visibility solution is to handle as much as possible automatically—without human intervention. As the volumes of data grow, it is increasingly important for people to focus their attention only on the key issues or the most pressing problems. But how involved staff will be in managing and using the visibility software may depend partly on the types of reporting the system does.

As with the concept of visibility itself, there is a problem with definitions when it comes to speaking about reporting capabilities. Every business, every organization and every vendor seems to refer to similar functions using slightly different terms. Typically the simplest to explain—and hence for people to agree upon when referring to it—is event management. Or exception reporting.

Or a combination of both.

“You have an expected event that is supposed to happen. So you set up your system and say ‘I’m looking at an inbound move globally that’s going to feed into my production line.’ You enter into your system that on June 5 there is a receipt or an induction acknowledgement at the port of Montreal or the port of Vancouver. That’s event management,” says Croza.

“The system tracks if it doesn’t happen, so that’s exception-based management.

“There are systems that are so evolved they advise you and say ‘something is scheduled to happen on June 5’, and if it doesn’t happen it sends an e-mail to flag me to start making changes further down stream. That way I can start investigating why it didn’t happen, or (in a perfect world) I can start making changes to my production schedule and my shipping schedule.”

The next level beyond knowing what did happen is predicting what is going to happen. Generally this more complex task falls under the label of predictive reporting, and while Heaney says it can be tied into and based on exception reporting, its real value comes after a company has built up a repository of data and can use that information to make predictions about the future.

“Once you have a historical database of what’s been happening over time, people can use your supply chain visibility for predicting what they need to do differently: Where do they need to build additional capacity into their systems for the future? Where do they need to build more manufacturing sites based on the volumes shipping today? If I’m going to build in China, based on what we saw last year, we know it will cost X, so maybe we can do it in Mexico.

“People take the information that is there and leverage it from a strategic standpoint to plan capacity. For things that take more time, like restructuring the supply chain, they’ll forecast out what things will look like in two or three years.

“It’s just one input into the process but if you don’t have the data, you don’t have a good baseline to know where you’re going to be,” Heaney says.

Trend analysis is very closely related to the predictive operations. Like the forecasting applications, it relies on being able to dig through mounds of historical data to find useful business planning information.

“Analytics goes beyond business intelligence although some people will confuse the two,” says Choufani, referring to the general reporting tools that are used to display basic business information, such as inventory in the warehouse, often in a graphic manner such as with charts or graphs.

“Analytics takes the data and tries to find if there is something different— something impacting the strategic orientation of the company. For instance,

business intelligence will tell you how much sold everywhere or how much you shipped to a customer.

Analytics will tell you if there’s a specific trend you should pay attention to because you are seeing more selling in an area you hadn’t expected. It’s getting more intelligence from the data to help or improve the strategic orientation of the company.”

Data housekeeping GIGO is an old computing acronym standing for garbage in, garbage out. Essentially it means it’s impossible to make good decisions based on bad information. In terms of supply chain visibility software, that means having accurate, clean data.

So before installing any new visibility software or predictive analytics module or trend reporting tools, it is absolutely crucial to review the data that will be used to populate the new systems.

“You need good housekeeping,” says Newell. “You need to update your data, purge your old data—get rid of stuff that is defunct—have good controls and compliance around adding new data. That’s all part of good housekeeping.

“ Once you have a historical database of what’s been happening over time, people can use your supply chain visibility for predicting what they need to do differently”

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“Then there are a number of things that can be done to clean up the data and get it ready before starting an implementation or building a database or connection points. Certainly, in our experience most systems integration jobs always have a component of data preparation and data readiness. I think this is one of the areas that is increasingly critical to getting right because you can design the system and have exactly the right combination of systems, but if that data is not accurate, then it can cause a lot of problems down the road.”

Standalones, integrated modules and cloud services Once the data has been cleaned up it’s ready to be used by the chosen visibility solution, but what that software actually looks like and how it functions comes down to a matter of finding best fitting compromise for the company.

It will be a compromise because any purchase will have to be made based on a number of possibly conflicting factors including (but not limited to) budget, functionality, and the IT environment in the company. If, for example, an IT department

MM&D | July/August 2012

isn’t willing or able enough to manage a large scale, in-house software implementation, then the business could have no choice but using a software-asa-service (SaaS) solution. SaaS, or Internet or cloud-based products promise to make fewer demands on IT’s resources, and they also hold out the lure of immediate connectivity.

“There are companies out there like GT Nexus or Amber Road whose whole mission statement and purpose is to provide cloud-based platforms for global trade—platforms where they have many, many suppliers, carriers and shippers hooked into one common platform where any given partner in the supply chain can be connected to anybody else in the chain. It’s kind of like Facebook on steroids for their community,” says Heaney.

“All the data flows are predefined but at least you have access to the suppliers without having to build your own technology to get there.”

For businesses with more robust IT departments, or for companies that want more customized options and more control over data formats and usage, they’re left with option of buying standalone, best of breed solutions, or turning to vendors whose software is already in use and asking for more capabilities from their ERP or WMS systems.

“If you buy a standalone, you have to get files and information from one system to the other and you have to build interfaces and you have to build controls. It might cost you more and it might not be as seamless as already having it in the ERP or WMS. But it’s possible the standalone has more capabilities than what they’re offering for the ERP or WMS because that’s the standalone’s core expertise.

Choosing between them is something you have to do during the selection process. You need to compare the functionality between the ERP and the standalone systems,” said Choufani.

No matter which option is chosen, no organization should enter into a software visibility project thinking it will be wrapped up in a few days and the result will be perfectly functioning software, explains Heaney.

“You have to do these things in steps, but at the same time you need to at least define the boundaries of what you’re going to go after and limit it to a phased sequence. You’re not going to build the whole thing blindly without doing a phased approach.

You’ll probably go after the biggest-bang-for-thebuck items and do it almost in concentric circles as you progress.”

In the end, it’s just important for organizations to realize that if they’re they want to embark on projects that improve supply chain visibility, they need to keep their eyes open.

MM&D

MM&D | July/August 2012

Step-by-step software visibility purchasing guide KOM’s Marty McGinnis usually leads his clients through the process of selecting the most suitable software, but he has summarized his basic process for MM&D readers.

1. First figure out exactly what your own requirements are. Ask yourself what do you want to accomplish with this upgrade. Determine who the stakeholders are in your organization. Create a cross-discipline team to evaluate your needs and your options. As McGinnis puts it: “I like to say to clients, ‘Don’t tell me what you want right now, tell me where you’d like to be in your ideal solution.’ Then we’ll work backwards from there in terms of what is achievable and what you can afford.”

2. Look to your own major software vendor—the one who already provides the backbone of your system, such as your ERP application.

If that vendor doesn’t have the software or module that meets your needs, look to the community of vendors who create add-ons to the main software. If neither of those options looks like it will work, then it’s time to check out the best-of-breed, stand-alone solutions.

McGinnis does have one very strong caution to add for this stage: “Whenever I go look for software, the first question I ask is ‘will this vendor likely be here in five years?’“ 3. The next question you need to ask is: does the company have the ability to implement the software or help you implement it? “You don’t want them to dump you a piece of shrinkwrap and leave because this is an area where you’re going through continual evolution and you’ll want to be able to grow your system,” says McGinnis.

4. The request for proposal (RFP) stage is next. When McGinnis helps clients through this stage he gets strict. “We lay out quite specific requirements we are looking for and we also lay out our terms and conditions, so if things go wrong, we know who’s responsible for fixing them.”

5. Then it’s up to the software vendors to respond to the RFP. That’s when McGinnis goes through a checklist, comparing what the companies are offering against the requirements listed in the RFP. 6. Invite the companies with the highest RFP evaluations to demonstrate their solutions. McGinnis recommends providing all of the data the vendors need to create the most representative demo possible, but he also goes a step further. “We also throw them sample data in the middle of a demo, just to make sure it isn’t a PowerPoint on steroids.”

7. It’s at this point McGinis recommends doing site visits to see the software in action in similar environments, making reference calls and doing other independent checks.

8. Invite the leading vendor in for a gap analysis. McGinnis says he pays the likely supplier to come in—usually for around a week—and go through a detailed planning session. This is when the nitty-gritty details are worked out: where the interfaces between the systems will be, what customizations will be required, etc. There are two goals at this stage: fully understanding the entire scope of the project and what it will entail, and negotiating the cost of it. “We want the vendor to come back to us with a price on the software and a firm price on the changes and modifications. What we don’t want is to buy the software then have the vendor sit down and say, ‘okay now everything is a mod and you’ll have to pay retail price.’ The price is never better than before you sign the contract.”

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Procurement’s rising tides Moncton welcomes PMAC annual conference attendees

By Michael Power and Emily Atkins

T

he 87th-annual Purchasing Management Association of Canada (PMAC) National Conference hit the banks of Moncton’s Petitcodiac River June 6-8, drawing procurement professionals from across Canada. This year’s theme was “Rising Tides” and conference chair Bill O’Donnell noted PMAC chose the title to reflect the Bay of Fundy.

Pete Luckett of Pete’s Frootique gives the opening keynote speech to the PMAC audience.

As in previous years, much of the conference’s focus was on networking and building relationships.

For Pete Luckett, founder of produce and grocery retailer Pete’s Frootique, relationships stand at the core of business. Never lose sight of the relationships that make a business work, Luckett counselled during a lively and humorous opening keynote address.

Doing so is difficult, he said, but necessary as business becomes complicated and multi-faceted.

Web-based procurement During a session on the second day, High Liner Foods CIO Peter Burns described a web-based procurement module the company began working on 10 years ago and continues to work on to this day.

That doesn’t mean the module’s not functioning, Burns said during his presentation. Rather, development and refinement is an ongoing process.

“The only way to eat an elephant is one bite at a time,” he said.

High Liner’s procurement team resides throughout 30 countries and deals with a limited number of trusted suppliers. All product is inspected at the source and suppliers must comply with Global Food Safety Initiative regulations.

MM&D | July/August 2012

The company recognized the need for the sourcing hub as a strategic objective, Burns said, and its leadership was focused on the change.

The objective was to use technology as a differentiator from the competition.

The web-based system allows all the stakeholders in the inbound supply chain to see each step in the process. Suppliers can see product specifications through the procurement system interface. Product can be tracked from the supplier, to clearing Customs, to when the truck is scheduled to arrive at the plant.

Visibility is so good the location of products can be pinpointed within the container they’re arriving in, a feature Burns says is crucial for saving time in the quality control process. Suppliers can check how the quality inspections went and can see when invoices are paid.

High Liner benefits from the system through better communication, fewer errors, saved time that allows for a focus on improving products and processes, faster decisions, more accurate inventory control, and smoother supplier management. The process also supports sustainability and traceability.

Evolve or die Another session had its eyes firmly fi xed on the future by presenting the theme that procurement groups must evolve or risk becoming obsolete. Three practice managers from consulting firm Deloitte made the presentation. Rob Bucciarelli, Ryan Ernst and Isabelle Leclerc shared perspectives on the procurement landscape and offered strategies to help move organizations forward.

Several factors influence how procurement interacts with the business it’s in, Ernst said. These include: • Changes in the talent pool, with a massive cohort about to retire, changing demographics and insufficient postgraduate education in the supply chain; • Globalization, with free trade agreements making procurement less effective as an economic stimulus tool; • Technological change providing opportunities for more automation of administrative tasks, freeing up time for strategic activities; • Higher risks, requiring more focus on risk management; and • Expanding socio-economic aims, both customer and socially driven, putting pressure on procurement.

Procurement is moving from an administrative function to value creation.

“Procurement is becoming key to effective and prudent financial management,” said Ernst. He noted that failure to evolve leads to lost money, higher costs, lost opportunities to innovate, increased supply risk and quality issues and fragmented management of supplier relationships.

Rob Bucciarelli explained what procurement groups must do to start the evolution. Leadership is needed to establish relationships within the organization, and leaders must set the tone that strategic procurement is a priority.

They must also support initiatives demonstrating the value of procurement’s strategic role. Credible and supported incentives must be established, using metrics that suppliers trust. As well, procurement organizations must have an experienced and credible team with a sound understanding of their business partners’ technical requirements.

The place to start, said Bucciarelli, is performing a critical assessment of capabilities in spend visibility, category management, supplier relationship management and demand management.

MM&D

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Supply chain to the stars Traceability means Com Dev is confident its products will work in space

By Carolyn Gruske

T

he James Webb Telescope has been created with one purpose: to peer into space and time while positioned high above the Earth—all while enduring temperatures of -230C. The successor to the Hubble Telescope is scheduled for launch into space in 2018. Once at its destination, it will rely on Canadian-designed and built technology to provide a clear and precise view into the mysteries of the universe.

Cambridge, Ontario-based Com Dev International, which designs and manufactures equipment for commercial, government and military space applications, debuted a crucial two-in-one instrument for the telescope in July.

The device consists of Webb’s fine guidance sensor (FGS) which will allow the telescope to locate its celestial targets with an accuracy of one millionth of a degree, and a near-infrared imager and slitless spectrograph (NIRISS) that analyzes planetary atmospheres for water vapour, carbon dioxide and other potential biomarkers such as methane and oxygen.

“Imagine the challenge at hand here: design and deliver technology capable of unprecedented levels of precision to conduct breakthrough science on board the largest, most complex and most powerful telescope ever built,” said Steve MacLean, president of the Canadian Space Agency. “The Webb telescope will be located 1.5 million kilometres from Earth—too far to be serviced by astronauts like Hubble was. At that distance, the technology simply has to work.”

A key part of ensuring the technology will work is knowing exactly where every part and every component in the $136 million Com Dev instrument originated, and being assured of its quality. Much of that responsibility fell to Scott Falcone, director of planning and logistics.

“As far as traceability goes, traceability is king. We’re in the space industry.

Everybody at Com Dev lives and breathes the fact that every part is traceable.

From our suppliers, we expect full traceability from them on raw materials or sub-components they’ve used. We have a full system of maintaining batch traceability all the way through all of our build sequence.

“Obviously the things we use in production—consumables we use—are not part of that. It’s really that level of traceability and the documentation that we deliver to our customers. That’s what they’re buying. The hardware itself is really nothing without the paperwork that proves what we’ve done.”

Com Dev’s supply chain reaches into 12 different countries. Suppliers in North America, Europe, Asia and the Philippines provide materials, and the company keeps a close eye on all of them.

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The Fine Guidance System (FGS) is one part of the $136 million instrument Com Dev created for the James Webb Telescope.

“You’re dealing with different cultures, different infrastructure and their experiences with the types of products we’re manufacturing, so some of the countries with more breadth under their belt are self-managed. We put our processes and our controls in place and we don’t necessarily have to hold their hands.

“In other countries, we obviously have to take a more active role in making sure we’re comfortable with who we’re dealing with and that we have an understanding of their culture and how they work.

I don’t think that’s different from most other organizations that are looking at a global supply chain.”

Taking an active role can mean taking one of many different approaches. Sometimes all that’s needed is a Web-based video conference between Com Dev and the supplier. Other times the company needs to send its own personnel overseas to supervise the supplier.

Understanding exactly what Com Dev needs and delivering the order correctly the first time is critical because of the way the company operates.

“My entire supply chain is really LTL. We are very much what they’d call a job shop or an engineerto-order type of organization, where it’s high mix/ low volume type of products,” Falcone says.

MM&D | July/August 2012

Com Dev’s technology As a high-tech electronics and manufacturing company, Com Dev understands that good IT systems can lead to good results, and that you can’t have a properly working system unless you pay attention to it.

The company has been using SAP since 2000, and although comfortable with its capabilities, Com Dev continually looks at upgrades and new modules that promise improved functionality and process improvement.

“Our SAP system is our trigger point, so everything we procure into the building is assigned a batch number through our SAP system when it comes in the back door. Essentially that batch number follows itself all the way through all of our receipts and transfer postings and goods issue and those types of things. We do use barcoding. We have barcodes on our goods receipts.

We use barcoding on various other areas, our producOf course this means the Com Dev logistics department faces the challenges that come with that type of production environment, both on the inbound and outbound sides of the equation.

“Even where we have the ability to buy larger volumes, it’s always LTL. I don’t have docks, I don’t have trailers sitting here, I don’t have anything like that,” says Falcone. “We strictly use our external supply chain partners. We don’t use any 3PL. We use only secure carriers. Our supply chain partners would be either PIP (Canada Border Services Partners in Protection) or C-TPAT (US Department of Homeland Security Customs-Trade Partnership Against Terrorism) certified.

“The challenges I have are the fact that our shipments are made based on our customers’ contracts and our commitments. If it comes down and it needs to ship today, based on a customer contract, it has to ship. There is no opportunity for load-building or manifesting right now, although much down the road that is something we’d like to take a look at.”

That possibility will depend on the space market opening up to even more commercial projects and, as a result, equipment becoming commoditized. Until then, each order is special, requiring highly individualized components and low levels of inventory.

“If there’s an engineering change notice, we have to figure out what we’re going to do with the part [in inventory]. There’s not thousands of them. We’ve got two. It’s very specific to the product in your hand.

It’s not about next year’s model. When that type of thing comes out, we’ve got a configuration control board. We sit down and say, ‘this is the change and there are various scenarios that can happen. Is it in build already? Can it be adapted. Is it meant for the next build? Do we have to start again?’

“It’s situationally dependent on every single change notice and where it is in the build. It’s a matter of the

MM&D | July/August 2012

tion orders, when we kit our material out to the floor it has a barcode on it that prints automatically. We use a combination of a batch number and a serial number, depending on the material and the level of traceability that’s been defined in our system,” explains Falcone.

The company’s quality control management system (QMS) is documented out of SAP, but it feeds data and information into the ERP system and references transactions that will be done in SAP. “We do all of our build and materials, our material master records, our sales orders, MRP, procurement, inventory control, receiving, that’s all done inside of SAP. It’s a closed loop that way, therefore all your batch traceability is all in there because it’s all hooked together. All of our production control on the floor, our orders, is all from our SAP system.”

right people sitting down in a meeting and saying, ‘What are we going to do with this?’” says Falcone.

Having the right piece at the right time means having suppliers deliver goods when promised. And as much as the company relies on its suppliers to accomplish that, it is proactive in looking for problems that could derail shipments before they happen, especially when dealing with single-source suppliers.

“We have a risk management piece that says ‘what’s the risk to our supply chain if scenario A or B would happen?’ That’s an ongoing process that we have. Obviously the world is changing all the time and the global economy is getting bigger, so some places are easier to deal with now than they were five years ago. But as other countries come onboard, we try to assess the risk and determine what it would mean to our supply chain.”

Beyond working with the right suppliers, for Falcone having and working with the right internal people—both inside his department and across all of Com Dev’s departments—is a defining characteristic of the company.

“I would say as an organization we collaborate very well. My material planning and scheduling team is very integrated with our business units, so drafting, engineering, the lab, we’re very integrated with them because we have to be, because we’re all each other’s customer. We’ve even co-located our team. Our material planning team sits right beside procurement, and we’re also closely located to project management and engineering so that it takes away boundaries.

You get up and walk 20 feet and there’s the engineer you need to speak to.”

Falcone has 35 people in his team: 21 in logistics (Customs, shipping/receiving, traffic and storage) and 14 in planning. Hiring the right individuals takes some effort, but he knows it pays off in the end.

“For me to hire a production scheduler or a master scheduler or even somebody in shipping and receiving, there are lots of folks out there who have that title, but it depends on the industry they came from and how they would fit in here to our culture and with our product.”

That culture includes embracing Lean methodologies, being able to deal with lots of individual items, and understanding why the company places such an importance on traceability and on following quality management procedures.

“Our quality management system clearly defines where those levels of traceability have to be. It’s a solid training program we have with all of our employees so they understand not only the fact that we’re doing it but why. It’s one thing to say to somebody, ‘you’re going to do this because it’s policy.’ It’s another thing for that person to understand their inputs and their outputs and why what they do is important to out next internal customer.’”

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Barcoding, Order picking & RFID Showcase

New tools for the warehouse Automatic barcode printing Tharo Systems Inc’s XML Generator and XLM Monitor work together to generate XML files from a range of different barcode, RFID, and ERP system (including Oracle and SAP) formats, and then automatically send them to a printer for output. The EasyLabel 5 Platinum applications work with Windowsbased software and are able to handle files saved in directories or transmitted as TCP/IP traffic. The XML Generator can also convert existing files to templates that can be modified for future use. Data can be automatically populated into variable fields in the previously designed templates.

Remote access scanner The AccuLazr AL5010 laser barcode scanner has a top speed of 1,200 scans per second and is designed to work with applications moving at speeds faster than three metres per second (500ft per minute) It offers an assortment of connectivity options including Ethernet/IP, Ethernet TCP/ IP, serial port and solid state I/O, along with WiFi or cellular wireless connectivity via iPhone, iPad or standard web-based browsers. The AL5010 has a rugged enclosure and comes with a number of options including a mounting base, a plug-in scan head, and an adjustable (+/- 20 degrees) raster. Its parameter storage modules retain the operating parameters in both the scan head and mounting base.

Hands-free scanning The Gryphon GFS4400 scan module from Datalogic ADC is a small, 2D scanner that can work in a mounted or a hands-free application or in a swipe mode. The unit is constructed with a high-impact resin to withstand repeated cleanings with solvents and disinfectant solutions, and is sealed against water and particulates. The GFS4400 reads highresolution linear codes, stacked codes, postal codes, composite codes and 2D bar codes. It can automatically sense objects and trigger itself, or run in a continuous scan mode. The GFS4400 can also be triggered remotely through software commands or via hardware input from programmable logic controller (PLC) or sensor. The GFE4400 2D OEM engine supports an RS-232 serial interface, a USB HID keyboard and a USB interface.

gases, dusts, and fliers or fibers may be present. It is available in multiple frequency bands including 865 MHz and 900 MHz. RFID for harsh conditions The SlimFlex Tag from HID Global is a pliable UHF RFID tag with multiple mounting options. The tags are designed to be waterproof, to offer high resistance to aggressive liquids (acids or bases that attack metals) and to offer stable readings across fluctuating temperatures.

They can be used on uneven surfaces, and have read ranges of up to 8m (26ft) in dry conditions on nonmetal surfaces or in wet conditions when mounted vertically. The tags have a thermoplastic elastomer (TPE) housing, which tolerates repeated bending.

RFID software locates passive and active tags The STAR (Space Time Array Receiver) 3000 from Mojix is designed to locate passive RFID tags in coverage areas larger than 18,580sqm (200,000sqf) and to read and locate RFID tags at up to 180m (600ft). The system’s eNodes, which can be connected wirelessly or by cable, support up to 16 different reading points per device, and its Master Controller (MCON) collects, processes and manages raw RFID data and uses the EPCglobal Standard Application Layer Events (ALE) interface to provide connectivity to ERP systems. It is accurate up to one metre. As an option, Mojix offers software that turns mobile devices such as smart phones into STAR 3000 readers.

Long distance barcode reader The BHT-1100 series of wireless barcode terminals from DENSO Wave Inc can read barcodes from a Mobilizes readers distance of 7.6m (25ft). They have an expanded scan The Intermec IP30 is an add-on handle for passive UHF RFID readers. The pattern enabling them to read dirty or smeared mounting system is designed to be paired with Intermec mobile computers, barcodes. The BHT-1100 line offers an optional builtmaking them easier to wield and giving the computers RFID read/ in camera. They communicate over stanwrite capabilities. The IP30 offers five wireless connectivity dard 802.11b/g/n networks. options (RFID, wireless WAN, GPS, Wi-Fi, and Bluetooth) The ruggedized units are allowing RFID reads to be associated with time stamps made from shock-absorand location coding, and other data needed for track bent material, to prevent and trace, point of origin, and field, asset and manage- damaged due to a drop, ment. The scanner has near/far imaging capabilities. The non- and have wear-resistant letters incendive (NI) rated version is suitable for environments where on the keys.

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MM&D | July/August 2012

Lift Truck Showcase

Lift trucks

New models and features Designed for efficiency Starke Material Handling’s Energy counterbalance forklifts come with three wheels or four, and with a choice of either cushion indoor/warehouse tires or resilient pneumatic outdoor tires.

These electric forklifts range from 1.5 tonnes to 3.0 tonnes capacity. The Italian SME AC controller on the Energy Series offers a number of main functions including anti-rollback with adjustable ramp stop time, regenerative braking, overheating protection for inverters and motors, and full short circuit/open circuit protection.

Improved braking The new FB16PNT-FB20PNT forklifts from Mitsubishi are suitable for wet or corrosive environments. They come with wet disc brakes and sealed motors for protection from contaminants, such as dust and moisture. This series uses the Mitsubishi PM-1000 controller, and the controlled cornering speed feature, which progressively reduces the forklift’s speed as its steer angle increases. Optional equipment includes pneumatic tires, a full suspension seat, quad masts, sideshifters, and modifications for cold storage use.

Heavy-duty lifting Raymond Corp’s 8000 Series of pallet trucks have reinforced components, strengthened materials, and a five year structural and standard warranty in addition to three years (or 6,000 hours) of coverage for undercarriage components. The operator compartment of the 8000 series comes with added padding, multiple lean points, large storage totes, and accessory bars with lights and fans.

The line includes the 8610 tow tractor, the 8510 centre rider pallet truck, the 8310 walkie pallet truck, the 8410 end rider pallet truck and the 8900 pallet truck.

Wet environment enhancements Toyota Materials Handling is offering a new option on three AC electric pallet truck and walkie rider lines. A galvanized chassis is now an option on the 8-Series AC electric walkie, the 8-Series end-control

MM&D | July/August 2012

walkie rider and the 7-series electric walker pallet truck.

Along with the galvanized metal frames, the modified trucks included galvanized lower linkages, pull rods and connecting links, Teflon-coated Polylube bushings, and a splashguard-protected motor controller. The option makes the trucks suitable for cold storage facilities, chemical and salt and brine industries, or in other humid and corrosive environments.

Narrow aisle design The Jungheinrich EKX 410 man-up turret truck from Mitsubishi Caterpillar Forklift America Inc is designed for pallet put-away and retrieval work and individual box picking in the confines of narrow aisles.

A 48-volt, 3-phase AC motor powers the 1,000kg (2,200lb) capacity truck. The low-swiveling side shifting turret head allows the operator to have a clear field of vision. Strobe lights under the cab and on the back of the forklift serve as warning devices.

Options include RFID ground control, the Jungheinrich warehouse navigation system, and transponder technology.

Tugger and tower The Crown TR 4500 from Crown Equipment Corp can tow a rolling load capacity of 4,535kg (10,000lb). The TR 4500’s frame is composed of heavy-gauge steel and is structurally reinforced at the stress points. It comes with 33cm (13in) tires and an operator compartment with a wrap-around backrest, and an operator-sensing floorboard. The AC drive unit is secured at the top and the bottom, and uses taper roller bearings on the top and shock-mounted rollers at the bottom. It also has steel power-unit doors.

Simple trucks The Utilev line of counterbalance forklifts are designed for light-to-moderate duty by customers who only use the trucks intermittently. The UT25 has a 2,268kg (5,000lb) capacity and the UT-30P can handle 2,721kg (6,000lb). The Utilevs come with multiple engine choices: Mazda 2.2L LPG/dual fuel, Yanmar 2.6L diesel, Yanmar 3.3L diesel. Options include: overhead exhaust, air intake with pre-cleaner, double air cleaner, hydraulic oil filter, cab heater, solid pneumatic tires, and 1.2m (48in) forks.

Ergonomic design Nissan Forklift Corp’s Platinum OP Series of order pickers have a secondary mast on the fork carriage which allows the operator to raise and lower pallets during stacking and retrieving operations. This prevents the operator from having to bend down to pick up pallets. This series also comes with dual control pods, allowing drive and lift/lower functions simultaneously. There are two models, nine different mast heights and an assortment of capacities (up to 1,000kg, maximum) available in the line. Standard features include operator presence system, an antifatigue cushioned platform, a plexiglass mast guard and a cantilevered overhead guard.

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OctOber 23–25, 2012

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news Guidelines for produce EDI A branch of the Newark, Delaware-based Produce Marketing Association (PMA) has designed a set of EDI standards.

The PMA’s Supply Chain Efficiencies Committee designed the guidelines, the “Implementation Guide for Fresh Produce Data Standards and Synchronization,” to help businesses that are choosing to employ EDI. The guidelines describe the 58 of 202 “attributes” defined by global GS1 standards that specifically describe fresh produce

Nanotech packaging reduces mango spoilage Fruit cartons, dividers and wraps lined with nanoparticles extracted from coconut husks and banana plants are expected to help Sri Lankan farmers save more of their mango crops after the fruit has been picked and packed.

The technology is the result of studies performed by researchers at Ontario’s University of Guelph, the Tamil Nadu Agricultural University in India, and the Industrial Technology Institute in Sri Lanka. Guelph professor Jayasankar Subramanian is the lead scientist on the $2.3-million project, which is being funded by the International Development Research Centre (IDRC) and the Canadian International Development Agency (CIDA) under the Canadian International Food Security Research Fund (CIFSRF).

Poor storage conditions in Sri Lanka and India — where mangoes are the third and second largest fruit crops respectively — cause farmers to experience spoilage losses of between 35 and 40 percent of their total crops, amounting to an $800-million annual loss.

In addition to preventing farmers from losing money on their crops, the packaging should help generate income for entrepreneurs, especially women, who will be needed to collect the agricultural waste products necessary to create the high tech packages.

A special supplement brought to you by

items and locations, including the 21 attributes required for the Produce Traceability Initiative. It also recommends best practices for using those GS1 standards to synchronize data between suppliers and retailers. For each of the produce-specific attributes, the guide provides definitions, examples and other information. GS1 standards are platform-neutral and are compatible with third-party service providers.

Refrigerated shipping market growing Even though there may be driver and truck shortages in general, the number of reefers on U.S. roads is growing.

Capacity in refrigerated trailers has been on a steady increase over the last few years. According to the BMO Capital market report Market Heating up for Refrigerated Shipping, “reefer capability for the top-10 reefer carriers has increased 12.5 percent since 2007, while dry-van capacity declined 13.2 percent over the same period.” (cont’d next page)

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BMO attributes this to a number of factors, including “new regulations, stability of the refrigerated transportation industry, and the entrance of big-box retailers in the produce market, [which have] enticed well capitalized, non-traditional refrigerated carriers into the sector, bringing not only rate competition but also expanded service options.”

The study notes the expanded service options include “more domestic intermodal reefer routes and expedited trucking services, which have the capability to transport perishables from California fields to east coast markets in just three days, compared with up to five-and-ahalf days for standard service.”

Shorter shipping times is one of the primary reasons most producers still prefer truck to rail, according to the report. “Rail intermodal service, while improving, is still generally a day or more slower than truckload. Additionally, truckload offers increased flexibility in terms of speed and destination.”

New Products

Agricultural by-product packaging Sealed Air Corp and Ecovative Design LLC used agricultural products to create their newest line of packaging products. The Ecovative EcoCradle Mushroom Packaging line is composed of mycelium — mushroom roots — which is grown around buckwheat husks, oat hulls, or cotton burrs.

The compostable packaging comes in a variety of shapes and sizes, including flat panels, corner blocks and wine bottle shippers, or it can be custom ordered.

Packer catches bottles

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AC Fresh

The 939S Versatron Soft Catch Servo Case Packer from Standard-Knapp Inc. features a lift table that moves up and down to “catch” bottles as they are placed into cases and containers in order to prevent breakage.

The packer is built with a two-axis servo system, and includes label protection strips, a colour touch screen control, and flap opener with a flap scan. The 939S works at speeds of up to 45 cases per minute.

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MM&D | July/August 2012

Case Study

Chill Factor

A customized warehouse management system designed to handle the cold gets a warm reception from ice cream distributor

By Carolyn Gruske Summertime is ice cream season, which means summer is also the busiest time of the year for ice cream distribution and warehousing company TransCold Distribution Ltd. In the past Delta, British Columbia-based TransCold has had to hire extra staff to find, pick and process outbound orders of vanilla, strawberry and rocky road ice cream. This year, the company didn’t need the extra manpower — not because western Canadians are abstaining from frozen treats, but because of operational efficiencies gained through the company’s newly installed warehouse management system (WMS).

TransCold distributes Breyers ice cream and Popsiclebranded products for Unilever in British Columbia, Alberta, the Yukon, the Northwest Territories, Washington and Oregon, and Chapman’s ice cream lines in British Columbia. It also handles frozen products such as SoGood’s frozen soy desserts and Sara’s ice cream cakes.

Until recently, the company, which does over $80 million in sales, had been handling the old-fashioned treats in an old-fashioned manner—manually, using paper-based methods, says Curtis Wright, director of Logistics for TransCold. “We would order product from our supplier, Unilever. They would send the order to us. We’d have that order in an e-mail and it would be printed for the warehouse to check it off when it was received. Then they would manually write down where it was located in the freezer because we had manually labelled the freezer by aisle and row, so that we knew where vanilla ice cream was sitting all the time — where it was in the pick location and where it was in the storage location,” explains Wright.

“Then we’d have to record all the numbers required by the supplier onto pieces of paper and we’d keep them in a manual, which we duplicated so we could have one in the office and one in the warehouse. What was happening was we were finding it more difficult to locate smaller amounts of products.”

The system TransCold chose came from Avalanche Food Inc, an Oakville, Ontario-based technology service provider for the frozen food industry. Avalanche has experience working with SOCS, the order entry system used by TransCold’s main supplier. Integrating that and TransCold’s Accpac invoicing system was crucial. Avalanche also offered features that TransCold hadn’t even considered, such as being able to enter expiry dates automatically.

MM&D | July/August 2012

The new system uses handheld scanners instead of paper and pencils to record product information. Because of the freezer environment, Avalanche had to ensure the technology would work in the low temperatures, says Alan Bush, president of Avalanche Food. “We used really old technology because it’s the most reliable in the cold. And the little handhelds we’re using can handle really low data rates. So that kind of interface is pretty inexpensive. We used old Cisco wireless access points that are only A-band. It’s old and slow, but the terminals we’re using are emulating VT220 terminals so they’re like old green screens from the ’70s. We don’t need the speed. What we want is the reliability and the ability to withstand the cold.”

Information captured by the handhelds is used to feed the cloud-based WMS. Data from the warehouse floor feeds the WMS, which in turn reigns supreme over the company’s other systems, adds Wright.

The cloud-based WMS has been implemented in the company’s main warehouse in Delta, British Columbia. Next it will be rolled out in the Calgary, Alberta warehouse, then in the Nanaimo, British Columbia facility.

TransCold is also working to expand the system’s capabilities. Besides storing frozen foods, the company handles dry goods such as waffle cones and even equipment such as display freezers used in retail outlets. Currently these items aren’t accounted for in the system, explains Wright. “We didn’t even think of it at the beginning, and then a light bulb went off and we said, ‘Hey why can’t we do everything?’ So Avalanche is working on those modules. In fact I received an e-mail, and all I have to do is approve it and they’ll go ahead.”

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Profile

At the forefront Thomas, Large & Singer celebrates 100 years as a major player in the food industry

By Deanna Rosolen Thomas, Large & Singer Inc (TLS) is celebrating 100 years of business in 2012—no small feat for any organization.

Perhaps one reason for its continued strength and longevity is that unlike many other companies, TLS is still headed up by a family member—president and CEO Peter Singer is Earl S. Thomas’ grandson. And there’s the possibility of a fourth generation coming on board. It’s a nice touch of continuity for Canada’s oldest value chain distributor to the consumer packaged goods industry.

In 1912 when the organization was just starting out, it

focused on a relatively new sector in Canada, the canning industry. Thomas, an enterprising young man from Meaford, Ontario, recognized the sector’s growth potential. At the time, numerous canning operations dotted the province, and yet none of these small operations had the means of getting their canned goods to grocery stores in larger centres.

So Thomas left Meaford, where he worked at a canning operation, and set up shop in Toronto, where he began a food brokerage company. From his offices, Thomas began selling canned goods from different small companies to grocery stores. Singer says several factors may have motivated his grandfather.

“He was a young man looking for an opportunity or a vocation. He turned his talents to selling for canning companies,” says Singer.

“In those days, there were all kinds of small food canning plants, even on farms. But they had no means of getting

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MM&D | July/August 2012

products to market. That motivated him. It was an open avenue in a new field, and he jumped on it.”

Over the decades, TLS has jumped into many new food sectors, and has been at the forefront of several food innovations. The company—which also offers warehousing, logistics, trade promotional control, and private label and industrial ingredient solutions—was the first to introduce frozen french fries in the Ontario market in the 1950s.

Other milestones include introducing the market to Rich Products’ frozen dough items for retail in-store bakeries in the 1970s, and the launch of Sea Legs, the first Surimi product to be marketed in Canada in the early 1980s. And in 1992, TLS launched Tropicana orange juice into Canada, which quickly became the number-one selling juice in the country.

Despite its size, the company has remained nimble enough to adapt to changing trends.

For instance, in the last 10 years, says Jim D’Hondt, TLS’s president of Industrial Ingredients, there’s been a strong push led by consumers toward cleaner labels, with many consumers also looking to food as a means to better health. In response, TLS has increased its offerings of ingredients and processing aids that meet those needs for its clients. It’s a challenge, says D’Hondt, “but we’ve been able to meet it with the benefit and help of our principals, who we’ve aligned ourselves with for many years.”

By principals, D’Hondt is referring to the company’s relationships with such firms as Ajinomoto Group, Chiquita Brands, Reinhart Foods, Sanjay’s Foods and Dunbar Foods. Some of these relationships go back 35 to 50 years, a testament to the company’s loyalty and reputation. It’s also one of the reasons why TLS has remained successful, says D’Hondt.

With its history, innovations, relationships and team of employees, TLS is well poised to meet the challenges ahead.

D’Hondt says changes in food law and regulations in Canada, the US and the EU are always difficult. And, adds Singer, the consolidation that’s occurred in grocery retail in Canada does present challenges. But he notes that the company has always refined its business model and adapted to keep up.

“It’s a matter of adapting to the market,” he

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says, “and seeing opportunities where the market needs assistance and filling those gaps. We’ve been successful in doing that, but I also think we remain focused on the food category.

We haven’t gone outside of our knowledge base, but we have gone outside our normal service offerings to be even more relevant to that base.”

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Learning Curve | Tracy Clayson

Employee morale

Businesses can keep employees on the payroll by offering mentoring and professional development

T

he chronic talent shortage in supply chain means companies are trying to win over new hires and attract leaders in the field with enticements of all sorts, but even perks and good pay may not be enough.

Although job satisfaction is rated in salary surveys focusing on compensation and benefits, salary levels may not reveal the real picture of job satisfaction since work environment and business relationships can have a large impact on a person’s employment experience. Putting employees into roles that demand a lot but offer only short-term career gains, giving them heavy travel schedules or expecting them to relocate can create the potential for job dissatisfaction.

Companies need to understand their employees’ needs. To do this they must carry on open dialogues about business and career goals. They also need to make employees understand the demands being placed on them. Without matching employees’ talents and goals with company needs, employers may lose top performers. They may even suffer problems with their customer retention rates due to high turnover of employees who leave for greener pastures.

According to a 2010 survey conducted by the Corporate Executive Board’s Corporate Leadership Council, companies are future stars at a fast rate. “The number of high performers who are also high-potential employees has decreased by almost 50 percent from 2005 to 2010. This is not because they don’t have the ability or the aspiration to be successful, rather they don’t have the desire to achieve their potential at their current employer.”

Perhaps the best tactic to successfully attract and retain supply chain talent is to offer professional development programs—specifically matching experienced leaders with those entering the field. Supply chain graduates and high-potential employees want opportunities to work at companies that invest in new hires and put staff on management tracks with guided involvement in challenging assignments and opportunities to participate in decision-making solutions.

Advantages of having a mentor The Supply Chain Sector Council is one example of an organization taking this approach. It established a mentoring program to match experienced managers with new entries. Dorina Vendramin is one of the mentors and has protégés from PMAC, Humber College and York University. She also has mentors of her own. Vendramin says having mentors means she has somebody to push her further, increase her confidence, and give advice she can trust.

Her mentor, Donna Messor, is a leading networking and coaching professional who owns ConnectUS and published the book Mobilizing Mentoring.

Vendramin also has a second mentor who offers wisdom, insight and business experience. She says the relationship helps build a better understanding of where she is at, how to recognized her own accomplishments, and how to reach for the goals she may have not realized she had.

A mentor of mine used to say, “your reach should be further than your grasp” and that was the approach I took when starting and growing my business. I didn’t limit myself with the idea that something wasn’t attainable. But setting goals and having support to help reach them is different from being thrown into a major

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project with huge responsibilities and minimal orientation, preparation or training. This is a common event in fast-growing companies but it is not an ideal situation for most new hires.

Employers may be putting too much emphasis on salary raises and offering other perks to boost morale and offset the challenge of staff shortages due to downsizing. With a short-sighted view on retention efforts, companies may actually be contributing to the turnover problem due to the lack of resources to coach and guide their talent.

Mentors and protégés are most successful when there are exercises and set goals and chances to challenge both parties to think critically and creatively to work through problems and road blocks.

Also having a set of rules and guidelines keeps the mentoring process on track.

Listening to the protégé and understanding their concerns from their standpoint is key says Messer— giving guidance based on what the mentor would do, think or feel in a particular situation can harm the process if the protégé doesn’t feel the same way about an issue. Also, mentoring programs in a professional context should not involve personal problems that require other types of counseling.

Participants in mentoring programs develop networking skills and get assistance with job searches. They get help identifying key career goals, evaluating professional strengths and weaknesses, strengthening communication skills, writing résumés and practising for interviews. Some of the mentees from the Supply Chain Sector Council are members of the profession but are new to Canada or are in process of entering the Canadian labour market and have boosted their successful employment standings through guidance of a leading professional in supply chain. Mentors can be very effective recruiters and retention strategists.

Companies are only as good as their people, and those who give back to future leaders in supply chain will have a lasting, positive impact.

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

MM&D | July/August 2012

Materials Handling | Dave Luton

The high-level overview

Using narrow-aisle solutions and specialized storage equipment to house slow moving inventory

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veryone would like to perform warehouse order picking at ground level, but for warehouses with large numbers of SKUs, that luxury cannot always be attained. This is especially true for warehouses storing large volumes of slow moving items— particularly when the average quantity stored is significantly less than pallet quantity.

The large warehouse footprint that would be required in these situations makes ground-level order picking an impractical solution. To handle these items, especially goods with slow turnover, a variety of storage and picking solutions are required to make better use of a warehouse’s total capacity.

Some of the alternative storage and handling solutions include: • Multi-level mezzanines using static or flow shelving; • Vertical carousels or stacked horizontal carousels; • Very-narrow-aisle high-level order picking using man-up order pickers or stock pickers. (The narrow-aisle solution can use a variety of storage systems within the same overall order selection system, which creates versatility if a variety of different-sized items are stored and picked.)

Depending on the volumes stored, storage systems are commonly double-row or single-row selective racking for larger volumes or larger cube items, or high-bay shelving for items requiring smaller capacity openings.

Operationally these are case-in/case-out or casein/less-than-case-out volumes in racking. Lessthan-case volumes can be handled in high-bay shelving systems. These are usually slower items like archival materials or spare parts, with picking and replenishment performed in the same aisle.

High-level solutions When deciding to implement a high-level stockpicker, you need to balance out their advantages with their disadvantages.

On the plus side, they offer: • Higher productivity than mezzanine solutions; • High density of pick faces in small footprints; • Improved safety because the picker is boosted to picking level. (This can be enhanced with a picking/ putaway platform or a lifting fork truck);

MM&D | July/August 2012

• The flexibility to be combined with a palletized system if required.

• The ability to combine different types of storage solutions. For example, flow

shelving at ground level can be paired with static storage at higher levels. ability to accommodate different picking vehicles in the same aisle (ie stock picker, mid-height picking vehicle and walkie rider) if order picking can be segregated vertically.

The negatives of this type of storage and handling are: • One-way travel is only possible because narrow aisle prevents passing.

• Replenishment and picking may have to be done at different times.

• Vertical movement between pick locations is slower than ground-levelonly movement.

• Separate licensing and training of operators is generally needed.

• If volumes increase to pallet sized storage and handling needs, generally a wide aisle layout with ground level picking is better.

For static types of storage, replenishment and picking are conducted from the same aisle, whereas for flow shelving separate, discrete picking and replenishment aisles are used.

In a very-narrow-aisle layout, vehicles operate in aisles with very limited clearance between the vehicle and the rack or the overhanging loads. To increase travel and order-picking speeds it is common to use a man-up order picker with rail or wire guidance. The rail or wire guidance provides steering within the aisle, leaving the operator free to concentrate on lift and travel functions.

• The

Guided systems Rail guidance works with side-mounted vehicle guide rollers and angle iron mounted on both sides of the aisle. The truck has four guide rollers mounted on the side to engage the angle iron and guide the truck. Each aisle has entry guides and the vehicle has centralized steering to prevent the truck from oscillating back and forth between the rails.

Wire guidance uses a vehicle-mounted electronic sensing system and a floorembedded wire to follow. A small 3mm (1/8in) wide by 8.5mm (3/8in)deep groove is cut in the middle of the working aisle. A wire is embedded into it and sealed with epoxy. The wire is installed as a loop with a connection to a wall-mounted line driver which generates a low-voltage RF magnetic field through this loop.

Sensors mounted on the vehicle utilize this to steer the vehicle.

Comparing the two guidance systems, wire guidance generally has the following advantages: • It is cheaper for larger systems.

• No loss of vertical storage elevation because of rail guides.

• Easier to change system layout.

• No stress on vehicle or floor/storage system.

High-level order picking is not for every application, but for storing large volumes of smaller quantity slower moving items, it is a proven solution.

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

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Legal Link | Marvin Huberman

When broken promises cause damage Options when business deals become breached contracts

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hat damages can a party recover for breach of a contract, including a technology or supply chain commercial contract?

In Canada, the answer lies in the two-branch rule in the old English case of Hadley v Baxendale.

The first branch of the rule states that “the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, ie, according to the usual course of things from such breach of contract itself.

The second branch states that damages may be recovered where such losses “may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.” And where the defendant has knowledge of the particular circumstances of the plaintiff, an award of damages should be in accordance with “the amount of injury that would ordinarily follow from a breach of contract under these special circumstances so known and communicated.”

Therefore, while direct losses which are deemed foreseeable, are compensable, indirect damages, which may or may not be foreseeable, depend on the communications between the parties before they entered into the contract, and may not be compensable. To be recoverable, indirect damages must be found to be foreseeable in light of the specific circumstances of a case.

While the general rule in Hadley v Baxendale is relatively simple to state, it is often difficult to apply. Not only must the circumstances surrounding the making of a contract be scrutinized, but the terms—express and implied—of the contract at issue must be carefully analyzed to assist in determining what type and amount of damages, including direct, indirect, compensatory, consequential, incidental, special, punitive, and exemplary, are available under the contract.

Of particular importance are limitation of liability clauses which are used to limit or remove liability for certain types of damages. These clauses are often problematic and are interpreted strictly by courts to limit their effects which can lead to harsh or unjust consequences.

Sometimes, a plaintiff is fortunate and is awarded damages—direct and indirect—without the application of a limitation of liability clause by a court in consequence of a breach of a contract.

In TKM Communications Inc v AT Schindler Communications Inc, the defendant supplied to the plaintiff wireless electronic communications equipment which did not work despite efforts by the plaintiff to re-install the equipment and troubleshoot problems. The plaintiff sued for damages for breach of contract and under the Sale of Goods Act (Ontario) on the grounds that the equipment failed

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to work in the required manner and that the goods were not reasonably fit for the particular purpose known to the defendant, in breach of the express and implied terms of the contract.

The Ontario Court of Justice (General Division) found that the defendant fundamentally breached the contract because its communication equipment failed to function as contracted.

The court held that the plaintiff had the right to accept the defendant’s repudiation of the contract, and to treat the contract as being at an end and to sue the defendant for such “at large” damages as the plaintiff may have sustained.

The court further held that the plaintiff was entitled to be put in the same position as it would have been if the contract had been performed, subject to the obligation of the plaintiff to mitigate its damages, and awarded the plaintiff damages in excess of $60,000, not only for the reimbursement of the purchase price of the goods, but also as reimbursement for: • The rental expense of equipment used to troubleshoot the problems; • Costs incurred as a result of the failed project, which the plaintiff was obliged to pay; • Payment made to a sub-contractor; • Wages paid to employees of the plaintiff, excluding the president of the company, for work performed on the project.

That’s what can and does happen when commercial contracts are broken and the law makes the promisor pay significant damages for failing to keep its promise.

MM&D Marvin Huberman, LLM, is a Toronto lawyer, mediator and arbitrator. www.marvinhuberman.com

MM&D | July/August 2012

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