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Taking Stock

Career moves

www.mmdonline.com PUBLISHER/EDITOR-IN-CHIEF: Emily Atkins (416) 764-1537 emily.atkins@rci.rogers.com GROUP EDITORIAL DIRECTOR: Lisa Wichmann (416) 764-1491 lisa.wichmann@rci.rogers.com MANAGING EDITOR: Deanna Rosolen (416) 764-1533 deanna.rosolen@rci.rogers.com ART DIRECTOR: Stewart Thomas (416) 764-1547 stewart.thomas@industry.rogers.com SALES MANAGER: Dorothy Jakovina (416) 764-1550 dorothy.jakovina@rci.rogers.com SENIOR ACCOUNT MANAGER: Catherine Martineau (647) 988-5559 catherine.martineau@rci.rogers.com PRODUCTION MANAGER: Kristen Hrdlicka (416) 764-1692 kristen.hrdlicka@rci.rogers.com

t’s been a while since I’ve written here, thanks to the dedicated efforts of Deborah Aarts, our outgoing editor. I am both delighted and sad to report that Deb has moved on to a new job within the Rogers Publishing family. We will miss her here, but know she will do a great job upstairs at Profit. Her difficult decision to change jobs comes as we are launching the 2010 Salary Survey report. Hopefully, the report will offer insight to those of you who are planning job changes of your own. Good luck to all of you, and thank you to Deborah for her tremendous contributions to MM&D over the past five years.

September/October 2010 | Volume 55 | Number 6

CIRCULATION MANAGER: Celia Ramnarine (416) 932-5071 rogers@cstonecanada.com ROGERS PUBLISHING LIMITED President and Chief Executive Officer: Brian Segal ROGERS BUSINESS & PROFESSIONAL PUBLISHING Senior Vice-President: John Milne Vice-President, Financial Publishing, Brand Extensions & Online Services: Paul Williams Director of Audience Development: Keith Fulford (416) 764-3878 keith.fulford@rci.rogers.com Executive Publisher, Industrial Group: Tim Dimopoulos (416) 764-1499 Director of Audience Development: Keith Fulford (416) 764-3878 keith.fulford@rci.rogers.com CORPORATE SALES General Manager, Corporate Sales: Sandra Parente, (416) 764-3818 WEB General Manager, Online Operations: David Carmichael, (416) 764-3820 RESEARCH Senior Director, Rogers Connect Market Research: Tricia Benn (416) 764-3856 tricia.benn@rci.rogers.com EVENTS General Manager, Conferences & Events: Stephen T. Dempsey (416) 764-1635 steve.dempsey@mtg.rogers.com HOW TO REACH US: Materials Management & Distribution, established in 1956, is published 8 times a year by Rogers Media Inc. Rogers Publishing Ltd., One Mount Pleasant Road, Toronto, ON, M4Y 2Y5. Montreal Office: 1200 avenue McGill College, Bureau 800, Montreal, QC, H3B 4G7 Subscription Price: Canada $62.00 per year, Outside Canada $120.00 US per year. MM&D is published 10 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. Subscriber Services To subscribe, renew your subscription, change your contact information or address, please visit us at www.rogersb2bmedia.com/mmd Publications Mail Agreement #40070230, ISSN: 0025-5343. Return undeliverable items to: MM&D, Circulation Dept. 8th Floor, 1 Mount Pleasant Ave., Toronto, Ontario M4Y 2Y5. Mail Preferences: Occasionally we make our subscriber list available to reputable companies whose products or services may be of interest to you. If you do not want your name to be made available please contact us at rogers@cstonecanada. com or update your profile at www.rogersb2bmedia.com/mmd MM&D receives unsolicited features and materials (including letters to the editor) from time to time. MM&D, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. MM&D accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. MM&D is indexed in the Canadian Business Index by Micromedia Ltd., Toronto, and is available on-line in the Canadian Business & Current Affairs Database. MM&D acknowledge the financial support of the Government of Canada through the Canada Periodical Fund (CPF) for our publishing activities. Our environmental policy is available at www.rogerspublishing.ca/environment

Features

Contents

12 Annual Salary Survey Salaries, why people change jobs, and more! All is revealed in the 2010 PMAC/MM&D/Purchasingb2b Salary Survey. 19 Inside Pirelli’s west coast DC How the tire manufacturer worked with DB Schenker to establish a Vancouver beachhead. 26 Customs compliance in Europe Understanding the new EU regulations. 28 Special report on lift trucks The importance of battery watering, and new truck models. 34 Seven habits of highly successful SME supply chains Follow these tips for a smooth-sailing supply chain.

Departments 3 4 5 8 9 10

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

MM&D | September/October 2010

Columns 37 Materials Handling Used racking: buyer beware. 38 Learning Curve Happy employees mean higher profits.

3PL heads happy Supply Chain Scan

Truckin’

Annual CEO survey shows worldwide optimism in the sector, page 8

Top truckers in Winnipeg, page 8

Inside | UPS leads the green way, page 6

Supply chains face unpredictable demand By Robert Robertson

t the 24th Annual Conference on Transportation and Cost Savings held recently at Toronto’s Allstream Centre, more than 200 attendees learned how to better manage their supply chains. The event brought together manufacturers, carriers, Customs brokers, freight forwarders and software providers. Dr. Mary Holcomb, associate professor of logistics at the University of Tennessee, outlined results from the Drivers of Enduring Supply Chain Management Practice study, which is a culmination of the 18th and 19th annual summary of logistics and transportation issues researched by the University of Tennessee and Georgia Southern University. A total of 802 respondents across 14 different industry sectors participated in the current study. The sample represents more than US$36 billion in transportation expenditures. This is approximately 5.2 percent of the total US surface transportation expenditure. Key issues for study respondents are unpredictable demand, fuel price volatility, excessive supply chain inventory, increased customer demand with respect to price and/or service, and commodity price changes. “Every year, we try to develop a theme behind what is really a lot of data. Depending on company size, we have found there are differences in logistics and supply chain management practices,” said Holcomb. “Across every size of firm unpredictable demand is the biggest issue and challenge that respondents face. “The economy has levelled the playing field for companies and their supply chains. We’ve been seeing a relentless focus on reducing costs, and we don’t see this trend going away. We also continue to find that companies need to understand leading supply chain practices. This includes optimization, profitability, adaptability, velocity and synchronization.” According to Holcomb, insufficient progress is being made in building seamless, end-to-end supply chains. “Managing transportation and distribution is becoming more complex,” she said. “This is being addressed by the increased use of more sophisticated tools and techniques on the domestic side.”

Economic challenges remain With global economic uncertainty continuing to be a priority for many companies, Peter Hall, vice-president and chief economist with Export Development Canada, said the supply chain industry should be aware of a flattening economy. He predicted more volatility before long-term economic growth finds firmer ground, and the Canadian dollar will stay in the low 90-cent range. Hall further added that something isn’t exactly right with key overall global trade indicators. “Many messages have gone back and forth inside of the economic downturn that we’re in. Even on a day-to-day basis, there’s euphoria that turns into abject pessimism. It’s hard to plan strategically with these types of mixed messages,” said Hall. “We went through an extraordinary expansion cycle and then fell into an economic abyss. From this, we’ve had an aggressive

0.0833 in Dr. Mary Holcomb, associate

Darshan Kailly, president and

professor of logistics at the

CEO of Canadian Freightways.

University of Tennessee.

rebound. In the first half of this year, it looked like a regular rebound. Many people were declaring an economic recovery. We now have an economic flattening and nobody really knows what to do.” Carriers need young drivers According to Darshan Kailly, president and CEO of Canadian Freightways and a moderator at the conference, every facet of the company’s business is showing an improvement over last year’s bottom line numbers. Looking ahead to 2011, however, Kailly said it’s difficult to tell how things will be for shippers and carriers. “I’m not a pessimist by nature. So, I’m hopeful the economic conditions will continue, especially if consumer confidence rebounds and stays strong,” he said. “If this is the case, then we could find ourselves going into a solid year. We’ve come off a very steep low, but I think the future is better than it has been.” Kailly said carriers expect to face a growing shortage of drivers. This remains a huge challenge for the trucking industry, particularly with an aging workforce behind the wheel soon set to retire. “For a variety of reasons, young people don’t necessarily want to go into long-haul trucking. We must ensure that we’re recruiting actively and doing everything within our organizations to attract younger drivers,” he said. “We also must have a better connection with technology and our customers. This will provide them with the information they really need. It’s about visibility of the supply chain from the minute you pick up something to end delivery and everything in between.” MM&D | September/October 2010

Trailer trend Trailer companies rebranding in droves, page 10

New boss FedEx Express Canada introduces new leader, page 9

Supply Chain Scan

Couriers persevere despite challenging economic climate Despite the so-called economic recovery that began earlier this year, the operating environment for most transportation companies, including couriers, remains challenging. This fact is reinforced in Breininger & Associates’ 2010 Canadian Courier & Logistics Market Trends report, which indicates that 92 percent of courier company executives believe industry profitability has declined in the last six months. The challenging environment has created cost advantages for professional logistics buyers who use courier services. As the report also indicates, many courier companies have adopted more aggressive pricing strategies in an effort to maximize competitiveness and secure as much business as possible. This strategy is, of course, not sustainable. Having cut costs to the bone over the past two years, the current all-time low rates that characterize the industry are being fuelled by at least some (courier)

companies’ short-term willingness to offer prices that only cover the variable portion of their total costs. Long-term viability depends on covering both variable and fixed costs, particularly for those firms that operate large international networks. In the future, courier companies will increasingly win business and work with customers by focusing on the overall value and wide range of options they are able to offer. One example is a further continuation of the trend towards deferred service options, such as deferred air and ground. Another prime opportunity outlined in the report is the ability of companies to take advantage of the full, and increasingly growing, portfolio of integrated logistics services offered by many couriers. As Gary Breininger, the report’s author indicated, “the consolidation and synergistic benefits of doing this can result in real cost savings for shippers that doesn’t come at the expense of the financial viability of the (courier) company. It’s a true win-win.” The full report contains information on what Breininger & Associates has identified as the top 40 trends affecting the courier and broader logistics sector in Canada. For more information on the report, contact Gary Breininger at gbreininger@breiningerassociates.com.

Global Focus Supply chain research centre for Panama Panama is now closer to its ambition of becoming a trade hub for the Americas—with assistance from the Supply Chain & Logistics Institute (SCL), part of Georgia Tech’s Stewart School of Industrial and Systems Engineering. Under an agreement with the Panamanian government, SCL will run a Logistics Innovation and Research Center (PLIC) in Panama starting this year. The centre’s activities will be built around three main areas: applied research, education and competitiveness. The centre will gather data about logistics and trade and develop analytics on Panama’s capabilities. This knowledge base will also drive educational programming in logistics for students and professionals. The centre will facilitate industry and infrastructure links, leading to new logistics services and jobs. With its strategic location, multi-modal transportation access, and deep-water ports situated on each coast, “Panama is a natural place for a trade hub,” said SCL Executive Director Don Ratliff. “It is well suited for free enterprise growth with convenient air and sea transportation to the rest of Latin America, has an outstanding financial district, and good commercial development infrastructure.” And there’s the canal, presently undergoing a multibillion-dollar expansion. When completed in 2014, the waterway’s capacity will be doubled and allow much bigger cargo ships.

MM&D | September/October 2010

Panalpina launches new service Panalpina is launching a new air freight service including routes from Luxembourg to Johannesburg (South Africa), Luxembourg via Dubai to Hong Kong as well as Hong Kong to Luxembourg and Hong Kong to Huntsville, Alabama. The new all-cargo service will be operated by Atlas Air using a Boeing 747-400F aircraft. Penske opens in Brazil Penske Logistics has opened a new 110,000-sqf distribution centre in Manaus, Brazil. Penske Logistics Brazil will store and ship Whirlpool brand air conditioners and microwaves to the company’s retail customers throughout Brazil. It is the 3PL’s first operation in Manaus. Penske performs warehousing, sequencing, inbound and outbound transportation across Whirlpool product lines in the US, Canada, Mexico and Brazil. Lufthansa Cargo adds to temp control portfolio Lufthansa Cargo has developed a new container for temperature-sensitive airfreight. The opticooler container was developed with cargo equipment manufacturer Dokasch. It requires only electricity and is suited for transporting goods that must not come into contact with carbon dioxide. Because the container records the interior temperature throughout its entire journey, customers have access to more information that makes it easier for them to comply with regulations.

Supply Chain Scan

Count, then cut

As new technologies emerge, it takes trial and error to figure out what works best. Leffin says “it’s more important where you use it than what you UPS offers insight into its carbon-reduction strategy bought,” pointing to electric cars, which he says are still expensive, but have an ROI in areas like London By Erika Duchesne that charge conventional vehicles for congestion. He admits not every technology yields ROI, but hen UPS first started tracking its environmental footprint back in insists sustainability is a “long-term play” and you the early 1990s, all it took was one Excel document. That grew to a need to keep trying things out to stay in the game. 40-tab spreadsheet. More players like UPS are joining that game “It got to the point where if you put a graphic in, you had to take some- according to the Carbon Disclosure Project (CDP), thing else out because Excel just wouldn’t handle any more data,” recalls a global initiative that encourages companies to Steve Leffin, director of global sustainability with the company. measure and report on climate change. UPS invested in a software called Enablon and has since expanded the The CDP’s recent Global 500 report found that 82 database to include each of its 3,000 facilities. percent of Global 500 companies responded to the Leffin says without this data, the company wouldn’t have been able to survey, 10 percent more than the previous year. make huge efficiency improvements, such as the 1.6-million tonnes of Of those respondents, 73 percent disclosed emissions it prevented in 2009 by shifting from air to ground delivery. emissions and 65 percent made their carbon But something funny happened when UPS started measuring all its other counts available to the public. indirect emissions―what the World Resources Institute and the World Business “Disclosure practices are evolving,” says Graham Council on Sustainable Development define as “scope three” emissions. Campbell, associate director, energy, environment The numbers started going up. Scope three emissions increased from and technology with the Conference Board of 2.2 million tonnes in 2008 to 7.3 million tonnes in 2009. Canada, an Ottawa-based think-tank and the “Is that bad? Not really,” Leffin says. Companies should expect to see their CDP’s Canadian partner. carbon counts go up as they learn more about their operations, he says, addCampbell, who also presented at the conference, ing the important thing is to reveal the number, “no matter what it is.” says the CDP “takes tens or hundreds of spreadLeffin presented UPS’s case study at the recent Carbon Economy Summit sheets” for some companies, forcing them to get in Toronto, a forum for industry on climate change risks and opportunities. their “carbon house in order”. Leffin says as you count, then cut carbon, technology will be your best friend. But those organizations that take the time to parUPS uses telematics to get a snapshot of every mechanical aspect of a ticipate can eventually improve their public image, vehicle, from whether it’s idling to how fast it’s going or if the seatbelt is on. competitiveness, and response to climate change. Leffin says the tool has helped make efficiency and safety improvements. “If you’re responsible voluntarily, when the He also credits routing technology and vehicle upgrades for the 10 percent mandatory requirements hit, you’ll be better improvement in ground network efficiency over the past decade. prepared,” he says.

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Supply Chain Scan

3PL CEOs optimistic about recovery By Emily Atkins

EOs of third-party logistics firms around the world are optimistic about the economic recovery and the prospects for growth in their industry. These are among the highlights of the annual survey of the third party logistics industry conducted annually by Dr Robert Lieb of Northeastern University in Boston. The survey is based on interviews with 31 CEOs of 3PLs in North America, Europe and the Asia-Pacific region. Collectively their companies generated revenues of more than US$37 billion in 2009. Although half of the reporting companies failed to met their 2010 revenue growth projections, 25 CEOs reported that their companies were profitable this year. Only three said they were unprofitable in 2010. Future growth projections for Asia were most optimistic, with CEOs foreseeing a 22.5 percent gain. Europe and North America were more cautious, predicting 7.2 percent and 10.4 percent growth, respectively. Environmental concerns are important in the CEOs’ outlook. Fourteen of the companies began new green initiatives in 2010, while 18 expanded existing programs. Twentyfive of the 31 now have sustainability groups within their organizations. North American respondents ranked differentiation from the competition based on their sustainability offerings as the second greatest current opportunity, after market growth. The CEOs also expect to see continued restructuring of the industry through mergers, acquisitions and failures in all three regions. In addition to increased emphasis on sustainability, the North American CEOs also expect to see more pressure to share risk with their customers. MM&D

Benchmarks The National Professional Truck Driving Championships were hosted in Winnipeg in September by the Manitoba Trucking Association. There were 38 competitors in this year’s competition. The winners were graded out of a possible 500 points on written, defects and practical driving tests. The highest scoring competitor was Evan Hirst of Canadian Freightways Ltd in British Columbia who scored 458 out of 500 to win the Single-Single category. The Grand Champion was Dean Grant of BC in the Tandem-Tandem Class driving for Agrifoods International Co-op. Other winners were Randy Smith of Alberta with Canadian Freightways Ltd, John Klassen from Manitoba driving for WM Dyck & Sons, Jeff Maclean of Ontario with SLH Transport, Ken Wiebe of Manitoba driving for EBD Enterprises, and Robert Archambault from Manitoba with Bison Transport. The team award went to British Columbia’s Dean Grant, Dale Scott, Hans Wettstein, Tony Gomez, Evan Hirst, Adam Besse and their team reps: Shaun Garvey and Dave Dressler. The American Association of Port Authorities (AAPA) presented retiring Québec Port Authority president and CEO Ross Gaudreault with the association’s distinguished service award. AAPA’s executive committee bestowed the honour on Gaudreault on behalf of all ports in the Western Hemisphere. This prestigious distinction recognizes a recipient’s efforts, achievements and involvement in the development and enrichment of the Western Hemisphere’s maritime and port industries.

MM&D | September/October 2010

Supply Chain Scan Movers + Shakers Lisa Lisson has been named president of FedEx Express Canada Ltd. She succeeds David Binks, who was appointed senior vice president of FedEx European Operations, based in Brussels. Lisson was most recently vicepresident of marketing, customer Lisa Lisson experience and communications, where she led the innovation and implementation of services to address customer needs and opportunities. She is also involved at a global level with strategic growth initiatives for FedEx Express. Lisson graduated from Guelph University with a degree in marketing. She is a four-time winner of the FedEx Five Star Award, the company’s highest performance accolade. Steve Pow is the new manager of dealer sales and development for Ontario and Western Canada with the Stärke Material Handling Group, a division of Canadian Forklift Distributors Limited (CFDL). Pow’s main responsibility will be to service existing dealers and continue to develop the dealer network throughout Ontario, Manitoba, Saskatchewan, Alberta and British Columbia. Vocollect, Inc has appointed Joe Pajer, formerly chief operating officer, as CEO and president of the company. In this capacity, Pajer now has full executive leadership of Vocollect, Inc. Roger Byford, the co-founder of Vocollect, continues in his role as Joe Pajer chairman of the board and chief technology officer. Pajer’s career spans more than 20 years in senior executive roles in high technology markets including consumer electronics, semiconductors, personal computers and high-end computer networking. Before joining Vocollect, he was executive vice-president and general manager of the Broadband Routing & Switching division of Marconi, Plc. in Pittsburgh. Buckhorn, a Milford, Ohio-based manufacturer of reusable plastic packaging and material handling systems, has named Rob Tieman director of sales and marketing. Tieman assumes responsibility for the company’s sales and marketing initiatives. Before joining Buckhorn, Tieman gained over

MM&D | September/October 2010

19 years of sales and marketing management experience in industrial manufacturing environments. Most recently, he held the position of vice-president, sales and marketing for Gold Medal Products Co in Cincinnati, Ohio, where he focused on servicing distributors and securing key national accounts. Lufthansa Cargo has a new manager for the Americas. Starting on October 1, 2010, Achim Martinka took over from Klaus Holler, who held the position in Atlanta from 2003 and is now starting his retirement. As area manager for the Americas, Martinka will be responsible for all Lufthansa Cargo sales and handling activities in North and South America. Martinka began his career at Lufthansa Cargo as senior manager global accounts in 2000. From July 2006 he was regional director sales and handling for the markets in France, Switzerland and the Benelux countries. Achim Martinka

Supply Chain Scan Done Deals Britannia Trailer Services has rebranded to become Britannia Fleet Services (BFS). For over a decade, BFS has provided custom maintenance programs to 3PLs, for-hire fleets, and major private carriers who rely on BFS to reduce the high cost of breakdowns. BFS offers maintenance services, fabrication, painting, and equipment upfitting services for fleet businesses that require

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the installation and repair of specialized equipment and systems. BFS also stocks a wide range of transport equipment parts and accessories. RMT Robotics, a manufacturer and integrator of robotic material handling systems, has signed an agreement to supply a fleet of ADAM intelligent AGVs (i-AGVs) to Hanwha TechM Inc. Hanwha TechM is the factory automation division of Hanwha Corporation, one of Korea’s largest industrial engineering companies. The fleet will be delivered in the fourth quarter of 2010. RMT robotics will equip each ADAM unit with a conveyor top.

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Stars on the rise

The 2010 PMAC/MM&D/Purchasingb2b Supply Chain Salary Survey The economy may not have recovered yet, but it’s a good time to be a supply chain manager. In general, salaries are up and on-the-job conditions are improving. This is your chance to find out how you compare. Deborah Aarts reports.

he numbers make it official: supply chain’s star just keeps rising. Despite the recession and the still-tenuous recovery, the average salary of supply chain professionals in Canada is $81,000. This is up 3.7 percent from $78,100 in 2009 and $76,430 in 2008. And despite all the cutbacks, only 10 percent took a pay cut in the past year; 37 percent saw salaries plateau; and an even half notched an increase. How do we know all this? For the third year in a row, MM&D and Purchasingb2b magazines partnered with the Purchasing Management Association of Canada (PMAC) to take the pulse of the profession. The survey questionnaire—fielded in this summer to supply chain professionals on the MM&D, Purchasingb2b and PMAC mailing lists—drew 2,209 responses, giving us a vast pool of data and thought-provoking comments. Changes and disparities The past year has been good for men in the industry. After diminishing in 2009, the disparity between male and female salaries widened significantly

this year. The average male salary is $93,600, up a whopping $10,000 from $83,600 a year ago. Female salaries are up as well, but the increase is significantly more modest, edging from $69,900 to $71,300. The 23.9 percent gender gap is up from 19.5 percent and 21 percent in 2009 and 2008, respectively. The numbers vary when measured by years of experience (see Fig 2), but the data show no evidence of a closing gap; the closest male/female salaries are found among those with six to 10 years of tenure, with female salaries 13.7 percent below those of males. The most glaring disparity is the massive 41.7-percent gap between men and women with 16 to 20 years under their belts. Geographically, every region in Canada logged MM&D | September/October 2010

Fig 1: Five-year salary overview

Fig 2: Mean Salary by Sex and Years of Experience

$100,000

$120,000 Average

Males

Females

26+ years

21 to 25 years

16 to 20 years

$40,000 11 to 15 years

$60,000

6 to 10 years

60,000

2010

70,000

2009

80,000

2008

80,000

2007

100,000

2006

90,000

5 years or less

Females

You said: “A comprehensive and integrated skill set seems to be more standard for supply chain management jobs these days, and with more emphasis on supplier and customer relations management than ever before. It’s no longer about procurement, operations or logistics solely, but rather how all of these areas interrelate with sales, marketing, finance, production and IT internally, and with suppliers and customers externally.” a salary increase this year—with the exception of Atlantic Canada, which dropped from $65,100 to $64,600 (see Fig 5 on page 15). The star gainers were Ontario and Alberta, with the average salary climbing 6.3 percent to $82,800 and 4.4 percent to $93,200, respectively. Quebec notched a 3.7-percent average increase, followed by Manitoba/ Saskatchewan (2.5 percent) and British Columbia (0.4 percent). Those in executive positions earned a big raise in the past year, with the average salary climbing from $108,200 to $164,600. Respondents in supervisory, managerial and consulting positions also saw hefty salary increases. Those at the engineer/professional and operations/tactical levels saw a marginal decline and a modest uptick, respectively. Only individuals in clerical and administrative positions saw a notable decrease in salaries, dropping from an average of $57,500 to $55,300 year-to-year. Employment situation After two years of brutal economic conditions, how are supply chain managers feeling about their jobs? MM&D | September/October 2010

Most respondents say they feel more valued on the job than they did before the recession; a full 71 percent—the same as 2009—say the downturn made their skills and experiences more appreciated within their organization. Yet just 57 percent—two percentage points less than last year—say their compensation has kept up with their job responsibilities. We also asked respondents to list how their employment situation has changed in the past year. The results reveal a noticeable lack of mobility this year. A full 42 percent saw no change in their situation. Nearly a third—31 percent—have the same job and salary, with more responsibilities, thanks to staff reductions. Nine percent were promoted, seven percent changed jobs within an organization, and seven percent moved to another organization. That relative stability looks to continue. In the next two years, 43 percent of respondents plan to be in the same job. Some 35 percent expect to be promoted within the same organization. A minority seven percent plan to change careers, four percent want to be self-employed or working for a consultancy and five percent plan to retire. That said, a healthy number—26 percent—say they want to work with another organization within the next two years. Those respondents shared a laundry list of reasons, the top one being higher compensation (52 percent), narrowly edging out limited opportunities for advancement in the current role (50 percent). A full 40 percent say there are more opportunities to advance elsewhere. And a full third of job-hunters say lack of appreciation by management of the supply chain role was motivation to jump ship.

Fact: The average workweek in 2010 is 43.8 hours, up from 43.5 in 2009 but down from 44.1 in 2008. Fig 3: Mean Salary by Classification $200,000 2009 2010

150,000

100,000

$55,300

$57,500

$67,800

$66,700

$81,800

$81,900

$82,100

$75,000

$92,600

$86,400

$94,300

$72,400

$164,400

$108,200

50,000

Clerical/ Administration

Operations/ Tactical

Engineering/ Professional

Consultant

Managerial

Supervisor

Executive

Fact: Most respondents (23 percent) found their current position through in-person networking. That’s followed by using a recruiting or “headhunter” firm (14 percent), an online job board (14 percent), classified ad (13 percent), word of mouth (12 percent) and previous connection to an organization (12 percent).

3% 1% Fig 4: In your opinion, what are the top skills you need to do your job today?

33% People skills Negotiation skills

11%

Analytical skills Planning skills Project management skills Technical skills Financial skills

23% 17%

Sales skills

Expectations vs satisfaction When it comes to job satisfaction, there remains a big gap between expectations and satisfaction. Take the issue of salary. While nearly all—98 percent— say that a competitive salary is important, only 67 percent are satisfied with their salary. This is down from 71 percent in 2009 and 77 percent in 2008. Not surprisingly, the mean salary of those who claim to be satisfied is above average—$93,000— while the average for those who are dissatisfied is far below, at $65,800. Some 95 percent listed performance recognition as a priority, but only 67 percent are happy with how their work is acknowledged. Similarly, 86 percent listed opportunities for advancement as important, but only 59 percent are satisfied with their options. And three-quarters are satisfied with the influence they have on the job. A less overwhelming 92 percent listed support for career/professional development as important, but only 73 percent are satisfied with what their employers provided in that area. The gap is less substantial with regard to other issues. A total of 97 percent cited work/life balance as important, and 83 percent are satisfied with it. Some 83 percent are satisfied with their comprehensive benefits, 78 percent with their pension/ RRSP contributions, 83 percent with vacation time and 86 percent with job security. Co-worker relationships continue to be a bright spot; 94 percent of respondents were satisfied with how they interact with their fellow co-workers. And employer-employee relationships remain strong, with 84 percent satisfied with their relationship with superiors. All told, respondents appear to be pleased with their situations. Overall job satisfaction held steady from 2009 at 86 percent. Education and professional development On the education front, opinion is mixed. At 68 percent, the number of respondents who said they need further education to progress in their careers is down slightly from 2009 (70 percent). But at 75 percent, the number who agreed that a professional designation is a necessary key to success was up, from 72 percent in 2009 and 71 percent in 2008. Furthermore, a professional designation (50 percent) was thought to be the most useful type of education listed, followed by an MBA (32 percent) and industry-specific training (30 percent). There’s some good news for those looking for help in professional development; 81 percent of respondents said their employer will pay for education, up from 79 percent last year (which in itself represented MM&D | September/October 2010

Fact: The average respondent has a supply chain budget of $26 million in 2010, up from $24.1 million in 2009. For 24 percent, the budget increased; for 20 percent it decreased and for 41 percent it remained the same.

Fig 5: Mean salary by geographic region $75,200 Atlantic Canada

$93,200

Quebec

$64,600

Ontario Manitoba/Saskatchewan

$69,500

Alberta

$77,600

British Columbia

$82,800

a major drop from 96 percent in 2008). But the num- and nine percent in 2008. Negotiating skills rounded out the top three, with ber of organizations willing to pay for membership 17 percentâ&#x20AC;&#x201D;the same number as last yearâ&#x20AC;&#x201D;choosing it as the top on-thein professional associations dropped to 71 percent job variable. from 74 percent in 2009 and 77 percent in 2008. What is the top supply chain issue respondents expect to take on in the year to come? As with last year, cost control was the top answer, although The future by a less commanding margin: 46 percent of respondents say it was a priorTo be a successful supply chain manager, it appears ity, down from 54 percent a year earlier. you need good people skills above all else, accordSupplier relationship management came in at number two, with 34 ing to 33 percent of respondents (see Fig 4), up percent citing itâ&#x20AC;&#x201D;the same amount as 2009. That was followed by reorgafrom 31 percent in 2009 but down from 60 percent nization (27 percent, down from 30), risk management (23 percent, down in 2008. A total of 23 percent cited analytical skills from 27) and forecasting (23 percent, down from 25). as the most important, up from 14 percent in 2009 One emerging issue to contend with is the skills shortage; 19 percent say

Fig 7: Mean Salary by Education

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

$150,000 2009

2009

2010

120,000

80,000 90,000

60,000

$70,700 $74,000

$71,900 $67,240

$81,200 $83,400

$78,600 $85,200

College Diploma

CEGEP

Some University

University Degree

$88,000 $136,700

$73,400 $78,900 Trade/Technical Diploma

$80,300 $96,500

$76,800 $74,100 High School or Less

$75,100

$72,500

$76,400

$73,800

$77,200

$71,300

$77,900

$73,600

$83,500

$71,600

$86,200

$83,300

$97,000

$90,800

30,000

$103,100 $110,800

60,000

PhD

Other Masters

Government

Trade/ Wholesale

Education

Healthcare

Manufacturing

Service

Natural Resources

MM&D | September/October 2010

MBA

$40,000

2009

2010

Fig 8: Do you have influence at the C-level?

5% 4%

Yes, I am at the C-level

17%

I have influence at the C-level

21%

I would like to have more influence No, I don’t need to have influence

35%

27%

39%

Don’t know

28%

You said: “As more recognition for the profession is realized, compensation is increasing. I left the workforce for family for five years and re-entered the workforce at double my ending salary with no new experience in between.” it will be an issue to manage in the coming year, up from 16 percent in 2009. Another is the environment and corporate social responsibility mandates; true, only 17 percent cite them as a pressing concern, but that number is

up from 13 percent a year earlier. One thing supply chain managers can definitely expect is to have more influence in the

You said: “How do I add value? Getting the right product at the right price at the right time with consistent quality while maintaining an enjoyable work place where employees know they are appreciated.”

PMAC/MM&D/Purchasingb2b

2010 Salary Survey Briefing Tuesday, November 16th Join us for our Salary Survey Briefing on Tuesday, November 16th. Get the details live and hear from our panel what the trends mean for your career!

Live webcast across Canada at 12:30 pm – 1:30 pm ET Or enjoy a complimentary light lunch in Toronto at Rogers Communications HQ, 333 Bloor St E., 3rd Floor training room at 12:00 pm and stay for the presentation and discussion. (Space is limited, so reserve early.)

To register please visit: www.pmac.ca/salarybriefing For more information contact Amanda Cormier, PMAC Events Manager at 416-542-3860 or acormier@pmac.ca.

Fact: The average respondent is 44.8 years old, supervises 5.9 people, has been in the industry for 15.8 years and in their current job for 6.8 years.

2009 2010

80,000

60,000

40,000

5,000+

1,000–4,999

500–999

50–499

$94,100

$89,100

$98,000

$84,700

$81,900

$78,100

$76,700

$72,000

20,000 $69,200

You said: “Salaries are increasing. Supply chain managers play a much more important role in management teams. Our opinions are sought after by all team members for most important decisions. People management and conflict resolution skills are becoming very important requirements for our jobs.”

$100,000

$69,200

Deborah Aarts is the former editor of MM&D and Purchasingb2b magazines.

Fig 9: Mean Salary by Number of Company Employees

Less than 50

boardroom. A full 39 percent of respondents claim to have influence at the C-level—up from 35 percent in 2009 and 31 percent in 2008—showing that the profession is gaining some clout (see Fig 8). In sum, while things are far from perfect, supply chain managers in 2010 have a bright future ahead. As one respondent put it, “if you are experienced, well-educated, have good people skills and can communicate at the C-level, you are in high demand.” MM&D

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On a roll Inside Pirelli’s Vancouver expansion

It’s a recurring question for Canadian shippers: is one central DC enough, or is it wise to add a western outpost? Deborah Aarts explains how tire manufacturer Pirelli made the call—and how it’s paying off.

Photos: Owen Ellis

uppose your company deals in a product that’s heavy, awkwardly shaped and highly flammable. You import that product from several overseas markets and ship it to clients across Canada—all of whom expect expedient deliveries. It’s your job to co-ordinate all this in a cost-effective way. Do you set up a network of multiple distribution centres across the country or consolidate all the work into one centralized site? Or do you go with a third option, a hybrid of the two? If you’re John Godfrey, you try all three—and settle on the latter. Godfrey is logistics director at Pirelli Tires North America. It’s his job to supervise the import and distribution of thousands of (heavy, awkward, flammable) automobile tires each year. Finding the most efficient way to do this has taken some time. But now, nearly two years after redrawing the map and adding a British Columbia facility to the mix, the rubber’s really hitting the road. Delivery matters Pirelli’s tire business serves two different market channels: the replacement business (which supplies wholesalers and dealers) and the original equipment (OE) business (which supplies automakers). In Canada, the company’s OE business is centralized in Oshawa, Ontario, with a distribution facility serving the Ford Oakville and Oshawa GM plants. For the replacement business, things are less centralized. Years ago, the company maintained several warehouses across Canada to serve this market. But most of those disappeared at the start of the last decade, as Pirelli decided to try serving the country out of a single DC in Dorval, Quebec. While centralizing activity into one hub had cost-saving advantages, Godfrey says it made it difficult to effectively serve customers in far-off regions—specifically, Alberta and British Columbia. Most orders made the trip west as LTL intermodal shipments, and delays were common. “That’s a long distance to travel, especially MM&D | September/October 2010

Special stackable racks contain tires in storage in the Vancouver DC.

during the long winters. Service was really deteriorating, to the point that it was sometimes taking 14 days to deliver to a customer out west,” he recalls. “We couldn’t provide any kind of guarantee that orders were actually going to be delivered on a certain date.” The situation became even more impractical in 2007, when Pirelli opened a factory in China. It just didn’t make sense to ship tires from China to Montreal and then back to Western Canada—especially since the company already had a warehouse in California. After determining the extent of these extra costs, Godfrey and his team started to think that a second Canadian warehouse—located in Vancouver—might be logical. “Our volume didn’t necessarily justify a warehouse, but the shipping cost per tire justified it,” explains Godfrey. Outsourcing time The decision to open a Vancouver DC sparked the choice between outsourcing the management of the site or keeping it in-house. In the past, Pirelli managed its facilities itself, including its previous Canadian sites. But the last decade has seen the company use more and more third-party logistics companies (3PLs), to the point that it now outsources all its facilities in North America— including the Montreal hub—except for its Georgia factory warehouse. It made sense to keep up the outsourcing trend in Vancouver, for two main reasons. The first was size: Pirelli did not need much space, so a shared third-party facility was preferable to finding a suitable small building to lease on its own. The second was risk. While the company was fairly certain the Vancouver facility would pay off, it didn’t want to invest long-term in bricks and mortar, just in case. Schenker associates must unload trailers by hand.

So the company started looking for a 3PL partner. “We had to start talking with providers to see if someone could meet us on the target cost that we had in mind,” says Godfrey. That’s when DB Schenker came onto the radar. Globally, Schenker and Pirelli had some history together, having worked together in Taiwan and on some Customs brokerage in North America. Godfrey met Paula Coward, senior business development manager, key accounts at Schenker of Canada Limited, at an industry event, and started discussing the possibilities. Not long after, one of Godfrey’s colleagues met with one of Coward’s at a similar event. There was plenty of talk, but not much action until late 2008. With the recession entering its darkest days, Pirelli found itself in a hurry to make a change. “The economy was in crisis,” Godfrey says. “We had several cost-saving projects that had to be kicked off as soon as possible at the start of 2009. We couldn’t wait to have them ramp up. The Vancouver DC was one of those projects. And we needed to have it up and running by January 1, 2009.” This sense of urgency explains why, in the week before Christmas 2008, John Ellis, who works in business development at Schenker Pacific Logistics Ltd,

A close-up of tires in the racks.

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found himself rushing to locate a facility for Pirelli, staff it, stock it and get it up and running—all in a timeline of a few weeks. All the while, the worst snowstorm in recent memory hit the Vancouver area. “We hardly ever get snow here, so we didn’t know what to do with it,” Ellis recalls. “We had crews standing by, but none of the deliveries was getting there because of the snow. But we managed to tie it together quickly.” “Once we made the decision to go with Schenker, we had to get racks in there quickly and start putting stock in there right away,” adds Godfrey. Early days Schenker/Pirelli’s initial Vancouver warehouse was a shared facility also used for beer cross-docking. The tight timelines made finding a suitable location

Are you moving at HaliMAX?

difficult, especially considering the list of needs. Tires are subject to ultra-stringent storage rules, including a requirement for high-pressure fire suppression systems. As well, because they carry a particularly strong odour, they can’t be stored in the same facility as anything porous that might absorb the smell. The contract was also short-term so Pirelli could test out the model. Since the benefits quickly became apparent, that first site proved to be a temporary home. Pirelli signed a longer-term contract and Schenker moved the tires into the current facility, a 25,000sqf portion of a 70,000sqf-facility. “We partner with a lot of people out here,” Ellis recalls. “One of our partners suggested a spot; they’d just built a warehouse and were quite keen to fill it. “We share the facility. We have a portion that’s firewalled off.” Over the course of a long weekend, Schenker—aided by two crews—transferred the stock to its new home. Everything was mapped out in the new facility to replicate the layout of the old one, a measure that greatly assisted the transfer process. DC traffic Today, most of the DC’s inbound shipments are trucked from Pirelli’s California DC. A small amount is received directly by ocean container.

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pallets, but rather in a fishbone pattern in a trailer.

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MM&D | September/October 2010

Because tires don’t fit into traditional corrugated packaging formats, they don’t arrive on pallets. Rather, they are laced together neatly in a fishbone pattern in the back of the trailer. While this is the best way to optimize space, it does make unloading a labour-intensive practice, requiring at least two people. Those same parameters mean there’s no conveyors or other automated equipment in the facility; aside from a few forklifts, it’s a hands-on process. Once each tire rolls off the truck, it’s separated according to SKU and affixed with a label, which includes a barcode, a description of the tire and its SKU number. There’s no racking in the warehouse— no conventional racking, that is. Instead, Pirelli provides cage-like modular racks, each of which can hold approximately 20 tires. These nest atop one another to fill the storage space. “You fill them up on the ground, make sure they’re sorted correctly with like SKUs on like racks, and then you simply take the rack up with a forklift and put it where you want,” Ellis explains. Schenker manages the SKUs using the web-based SmartTurn WMS. “We get electronic picking instructions from [Pirelli’s] inventory system,” says Ellis. “We work in tandem with it. We verify our WMS against their system; we’re con-

MM&D | September/October 2010

stantly doing that.” Once orders come in, workers are instructed what to pick—and how many. Those instructions are printed on to what amounts to a pick slip. Workers pick the tires and stage them for pick-up. Many of the orders are bundled into shipments from dealers located anywhere from British Columbia to Manitoba. Not all, though. “We handle a lot of dealer pick-ups,” Ellis explains. “A dealer will come around to the facility and pick up two or four tires for an order.” The dealer factor does complicate matters a bit in the warehouse. Schenker has to be ready to handle these orders quickly, so it’s built a process—and a drive-up dock door—to accommodate the rush. “We like to get our orders the day before we ship them, so we can get

organized,” Ellis says. “That way we’re not running around picking this and that, and then having to stop everything to go and pick another one. “We try to have all orders in by 4:00pm, so we can have everything picked and sorted and ready to go the next day. That way we can make sure we can serve the local guys first.” At any given time, there are about 25,000 tires on site. The inventory turns over about seven to eight times per year. Normally, the process requires two, maybe three, people on staff. But during busy times—in the pre-winter rush, for example, or when a large delivery arrives—as many as six will be on duty. Schenker meets these needs by maintaining a pool of casual labourers. While the work inside the DC is all Schenker’s, Pirelli is not shy about dropping in—often, with very little notice—to make sure things are okay. The benefits So far, the addition of a Vancouver DC has been decidedly positive for Pirelli. “Customers were used to having to put in an order two or three weeks out,” Godfrey recalls. “Now, they’re getting tires within a few days.” The numbers support him. Before, Pirelli was registering on-time delivery rates of about 70 percent. Now, for the Vancouver market at least, it’s achieving 99 percent on-time deliveries. At the same time, while warehousing costs have gone up, they’ve been more than offset by a six-figure savings in transportation costs. Being able to serve dealers directly has been beneficial as well, he says. “They like to be able to go to a warehouse and

The basics

Inside Pirelli’s Schenker-run DC Location: Vancouver, British Columbia Size: 25,000sqf (part of a 70,000sqf facility) Inventory: Approximately 25,000 automobile tires Volume: More than 1,000 shipments annually Employees: Two to three per shift in normal demand; up to six when unloading a trailer Shifts: Five days a week, 7:00am to 4:00pm Forklifts: Toyota WMS: SmartTurn Barcode readers: Symbol Racking: Tire-specific cages provided by Pirelli

pick up what they need. [In accommodating that], we’re able to gain a sale we wouldn’t otherwise get.” While Pirelli’s experience has been overwhelmingly worth it, it wasn’t as easy as it seems. Adding a second DC to the mix can be risky, Coward points out. “It’s the age-old question a lot of Canadian shippers have: should we be in Vancouver?” she says. “If it’s the right product and it improves customer service, it works.” For anyone considering making the move, Godfrey has the following advice. “You have to look at the total costs. You have to take in transportation costs and sum them up against warehousing costs. If you’re doing a lot of small LTL or parcel shipments from Toronto or Quebec to Western Canada, those transportation costs can be extremely expensive.” All told, he is pleased with the move; in fact, his biggest regret is not doing it sooner. “We got the approval to go ahead with this late in the game, and that’s why there was a rush to do it over the holiday period. I only wish we’d done it earlier, because we were delivering such poor service and spending more money than we should have been. We could have had lots more sales and market benefits if we’d done this a lot earlier.” MM&D

Prepare for cOmplexity What Canadian shippers need to know about the new EU ICS requirements By Stefan Busselot

s anticipated, electronic Customs filing mandates are proliferating throughout the world. Like the U.S. and Canadian federal governments, the European Union (EU) has introduced regulations to standardize and automate its Customs filing process. With the EU continuing to be the world’s most important exporter and the second most important importer (according to an October 2008 report from the European Commission), its move to address the security and automation of trade shipments through electronic Customs initiatives will ripple across the global supply chain. While the EU’s Import Control System (ICS) and Export Control System (ECS) processes and requirements to file Customs manifests are expected to be comparable to initiatives in the US and Canada, there are additional complexities to consider. Most notably, the EU is made up of 27 countries operating in many languages. For trade participants to ensure the continuity of goods when the regulations come into effect, they will need to handle the specifications for 27 countries. ICS legislation on inbound cargo will come into effect on December 31, 2010 as part of the European Commission’s Multi Annual Strategic Plan. Since the Import Control System will have an impact on all inbound shipments into the EU from non-EU countries of despatch; this will present a number of process change requirements for Canadian exporters and carriers. By way of explanation, ICS requirements mandate carriers bringing shipments from non-EU destinations into the EU to lodge Entry Summary Declaration (ENS) information with the Customs office of the first EU port of entry. Filing the ENS will allow Customs authorities to perform risk assessment before the arrival of the cargo. The responsibility for lodging the ENS lies with the carrier, although this can be performed by a designated third party under the carrier’s direction. The intent of ENS is to transition Customs from a post-clearance process to a pre-arrival model. As part of this, the European Commission has defined time limits for ENS compliance depending on the mode of transport. For example, for deep sea container shipments, the ENS must be filed 24 hours before loading the container at the port of departure. For long-haul flights, pre-filing should take place at least four hours before arrival at the first EU airport. Not only will this new EU requirement have a significant effect on existing business processes for exporters and carriers, but failing to comply with ICS requirements will lead to delays, rejection of the cargo upon receipt in the EU and in some cases, penalties set by individual EU member states. This is very much in line with compliance enforcement policies in the US, China and Canada. To prevent delays at the EU border upon arrival, it is important that complete and accurate information be provided about the shipment in a timely manner to comply with stipulated ENS timelines. Collecting, re-using and sharing information electronically throughout the supply chain will become increasingly more important to streamline this new process and comply with the new EU legislation.

To ensure compliance, carriers must be ready to provide the following ENS information: • The unique consignment reference, container numbers, seal numbers, goods description, shipping marks and commodity codes; • The names of the consignor, consignee, carrier, person filing or lodging the ENS; • Identification of the consignee and AEO (Authorized Economic Operator) status; and • Route details into, across and out of the EU per transaction. This information is used by EU Customs authorities to conduct a risk assessment of the transaction based on pre-established criteria, including commodity, point of origin and trading partners, among others. A critical challenge faced by carriers is having access to accurate data on a timely basis. In many cases, they only have partial data, and rely on importers, exporters and freight forwarders to supply the missing pieces such as AEO status, commodity and dangerous goods codes, consignors, contents, methods of payment, etc. The complexity of the information required, combined with the fact that each EU country uses different data formats, business logic, communication protocols and certification processes, will make it extremely challenging for exporters to meet ICS requirements in a timely and efficient manner. To collect and transmit the data efficiently and accurately, carriers will require access to sophisticated technology solutions that address all member state requirements and can easily convert and distribute master data in any required format, regardless of the member state. This will ensure all filing and compliance requirements are met prior to distributing the ENS. With ICS deadlines looming, exporters need to ensure that their carriers have the resources in place to support their compliance efforts, and minimize the risk of errors, delays and penalties. This need will only continue to grow as more legislation is introduced in the interests of improving global supply chain security. MM&D Stefan Busselot is product manager for ICS at Descartes Systems Group. MM&D | September/October 2010

Industrial Trucks Review

Battery watering

Why a simple job is so often done poorly By Harold Vanasse

roperly maintained, industrial batteries should provide five years of reliable power. But one of the simplest battery maintenance tasks is also one of the most poorly performed: battery watering. Over-watering a battery can cause “boil-overs,” creating a hazardous condition within the warehouse. But it also decreases the battery’s useful life because during a boil-over, sulfates are washed out of the battery, and sulfates are needed to maintain capacity. For every boil-over, the battery loses approximately three percent of its capacity. Over time, boil-overs can decrease the life of a battery by six months or more. Under-watering can happen when batteries aren’t watered on schedule or when they are manually watered and the operator accidentally skips a cell. When a cell is skipped in a typical watering regimen, it might not get the water it needs for another week. When parts of the battery’s positive and negative plates get dry, battery capacity is decreased. And even when water is re-introduced to the dry cell—for example, at the next scheduled watering—it will not return to its previous performance. In the worst case, a damaged cell would need to be replaced entirely. The most common factor contributing to over- and under-watering is the hand-watering of batteries. An estimated 70 percent of industrial batteries in North America are filled by hand, despite the fact that singlepoint battery watering systems have been available for years. Single-point watering systems offer a cost-effective and safe alternative to hand-watering. The first single-point systems were manufactured with floats that gauge the electrolyte level. Here’s how the pressure-dependent watering system launched in the early 1990s works. It uses water injectors on each battery cell connected to one another with corrosion-resistant plastic tubing. Each injector has its own level-sensing valve, which is powered by water pressure, ensuring precise sensing of electrolyte levels in each cell. To fill the batteries, a hose is attached to the input fitting and a valve is opened. The water flows through the plastic tubing and, simultaneously, into each of the cells. Within 15 to 20 seconds, the battery is filled, with each cell receiving the precise amount of water needed. That’s up to 20 times faster than hand watering.

Some industrial battery suppliers believe so much in the benefits of single-point watering that they strongly recommend such systems for each battery they sell. Kris Carreiro, industrial account manager for British Columbia-based Magnacharge Battery Corporation, says, “We know our customers will be more satisfied with our batteries when they use a single-point system. Their employees are safer and more productive, they’ll have fewer performance problems and their batteries will last longer.” Carreiro also notes that single-point watering systems are a must for rapid and opportunity charging applications, which have become increasingly common. “In rapid and opportunity charging, you don’t have to take the battery off the forklift in order to water it. These rapid charging applications typically increase battery watering frequency, too. So why would you continue to hand water these batteries, which requires taking the batteries off the forklifts, when you can simply use a single-point system to water the batteries in place?” What’s the ROI ? In 2006, Philadelphia Scientific surveyed users of its single-point system to determine the return on investment (ROI). Survey participants considered labour savings from the decreased time spent watering batteries, time saved due to less frequent battery changes and savings from less frequent battery purchases as batteries experienced longer lives with proper maintenance. The survey revealed that in an average 100-battery fleet, a company can expect to save approximately US$26,000 per year with an ROI of approximately 13 months. MM&D

MM&D | September/October 2010

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Industrial Trucks Review

Industrial Trucks Review For many companies, materials handling solutions can eat a large part of their budgets. Lift truck manufacturers have taken note with their latest launches. Low maintenance, fuel economy Cat Lift Trucks delivered its first new P8000-P12000/ PD8000-PD12000 series of internal combustion pneumatic-tire lift trucks to Columbian TecTank. Cat Lift says the switch will save Columbian approximately US$8,000 per month in maintenance costs. This series is equipped with an EPAcompliant purePOWER engine, two-speed forward and one-speed reverse transmission and an LED/ LCD display panel. Crown Equipment Corporation’s new internal combustion all-weather Class V pneumatic tire forklift can also curb costs with its new design. The company says it’s designed to eliminate frequent maintenance, excessive downtime and shortened lifespan that limit operator productivity in heavyduty outdoor forklift applications. The Crown C-5 Series pneumatic model is equipped with an industrial John Deere Power Systems engine, a dual open-core radiator that offers independent engine and transmission cooling, a long-lasting power brake, and solid pneumatic tires as standard features. The forklift, which is available in capacities ranging from 4,000 lbs to 6,500 lbs, can deliver a lifespan up to two times longer than comparable IC forklifts and can lower scheduled maintenance checks by 87 percent. Yale Materials Handling Corporation has improved its Veracitor VX truck series, which comes with engine options designed for

MM&D | September/October 2010

low fuel consumption, minimal noise and reduced maintenance and operating costs. The revamped series also offers a maintenancefree, built-in stability system. Hyster Company has new internal combustion S50CT cushion-tire and H50CT pneumatic-tire lift trucks. The trucks claim excellent fuel economy and an ergonomic design. The models have lift capacities of 5,000 lbs, striking a balance between the number of loads moved compared with the amount of fuel used. They also come with Powershift transmission for smooth direction changes. The new AC-powered fourwheel 4,000-lb capacity VNA Bendi from Landoll Corporation offers greater capacity. The B40VAC has a 32in-wide front axle and slim line three-stage mast making it able to stack from 72in aisles with a 48inx40in load. This new model offers faster travel, greater power efficiency and the ability to climb a 15 percent grade while fully loaded. Harsh conditions A clear line of sight, maneuverability and comfort are critical for operators working in tough dock environments and travelling over uneven floors, especially on stand-up counterbalanced lift trucks. The Raymond Corporation designed its new Models 4150 and 4250 to offer greater visibility, agile steering, a shorter head length and ComfortStance suspension, which isolates operators from impact and vibration, and has only nine parts for simple maintenance. The three-wheel trucks can also perform right-angle stacking maneuvers in a smaller footprint. And because they’re powered by the ACR System, they offer quicker

Industrial Trucks Review acceleration and increased travel and lift speeds. The ACR system also means fewer batteries and chargers are needed on hand. Cold-storage environments In harsher environments, such as cold-storage, companies want lift trucks that offer optimum performance and operator comfort. The new SR 5000 Series, also from Crown, is designed to reduce the impact of cold conditions and ensure optimum performance, energy savings and minimal maintenance.

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The truck’s cold store cabin is completely integrated into the truck to provide comfort and performance. The truck also features Crown’s Access 1 2 3 Comprehensive System Control, which allows the AC technology to deliver power and handling matched to the needs of the operator and specific application. It’s also designed to make it easier for operators to work comfortably through their entire shift. Class IV, LPG powered Linde Material Handling-North America Corporation, a subsidiary of Linde Material Handling GmbH of Germany, has introduced its new 1313 Series of hydrostatic drive, cushion-tire lift trucks. The four models in the series are LPGpowered; have capacities ranging from 5,000lbs (H25CT) to 6,500lbs (H32CT); and are designed for the demanding conditions of the Class IV market. The Linde design team developed the 1313 Series for severe applications, and it offers substantial construction, with a frame constructed of 1/2in steel and 5/8in cross bracing. The 1313 Series uses Linde’s hydrostatic drive system. Energy efficient, durable, and precise, the hydrostatic drive system is used in demanding applications. The system manages the adverse effects of ramps, dust, heat, humidity, pushing, shoving, and bulldozing. LPG engines provide high torque, low fuel consumption, and low exhaust emission levels. The Linde Clear-View mast offers good visibility, residual capacity and electronic limiting of the tilt angle. The company also claims the Twin Drive Pedals allow for increased productivity and less leg fatigue. Additional ergonomic features include extra legroom and a cushioned steering axle. MM&D

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MM&D | September/October 2010

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The seven habits of highly successful SME supply chains By Jim Ramsay

anadian businesses currently stand at a crossroads. Many have seen their markets saturated by new entrants emerging from once docile overseas economies. In response, Canadian SMEs have begun exploring their own international trade opportunities and have discovered significant cost-efficiencies by sourcing materials from multiple locations. While the short-term results have been primarily positive, it is critical that entrepreneurs take a long, hard look at their supply chains to ensure their newfound business success is not suddenly disrupted. The following are seven keys to supply chain management success:

impact the way your goods are treated as they move across international borders. Supply chain managers should also keep in mind that best-in-class logistics providers will also have excellent relationships with these organizations.

The long and short of it Certain aspects of the supply chain should be managed using a long-term approach. For example, identifying overseas export markets and establishing supply chain partners in those markets can be a time-consuming and costly endeavour. Therefore, Practical partners exporters should do a fair bit of long-term risk Nothing happens in isolation within a supply chain, every link affects the analysis before making any major investments. others. Therefore it is crucial for supply chain managers to ensure they have Several considerations should be taken into account, a strong knowledge of their supply partners and direct access to them in including the freight costs associated with the the event of a supply chain disruption. Through direct communication, overseas destination, the volatility of the nationâ&#x20AC;&#x2122;s partners can determine the timing of shipments and who will facilitate the currency over a two- to three-year period, and the transfer of goods from one location to another in advance. Canadian likelihood of a major shift in its economic activity. businesses should work only with reputable logistics providers to get their On the other hand, short-term planning can goods overseas as well as ensure their international partners are taking also help curb excessive transport costs and widen similar steps, since disreputable providers could disrupt the flow of the profit margins. By considering inventory and transsupply chain. Some logistics providers allow importers to pre-arrange return port costs a minimum of 30 days in advance, busishipments so they can avoid the hassle of dealing with the transport provider ness owners can select the most cost-effective mode their overseas supplier uses. of transportation to meet their requirements. Direct partners are only one aspect of the supply chain. Strategic supply chain managers should also develop strong contacts with border services Read the briefs agencies and industry associations. These contacts will become of paramount Peruse the pages of any newspaper or magazine importance in the event of a border delay or supply chain disruption. Staying and youâ&#x20AC;&#x2122;re bound to find a plethora of information connected also keeps your business ahead of any upcoming changes which will on nations that have experienced drought, famine,

MM&D | September/October 2010

hurricane, political coups or some other manmade or natural disaster. Strategic supply chain managers should pay close attention to the news, as these events are likely to impact overseas supply chains. Equally important are fiscal crises, currency fluctuations and elections. While most entrepreneurs are time-strapped, it is critical for them to keep up-to-date with what’s happening in the nations where they do business. Doing so means being able to anticipate prospective problems within the supply chain and mitigate them before they become costly.

would go straight to their competitors if stock is not readily available. In the first case, the SME can afford to have a strictly surface-based supply chain, which will allow significant cost-savings. In the second case, the SME will want to have a strong air freight contingency plan to avoid sending customers to the competitor if an item is not in stock. In this scenario, it is prudent to remember that a shipment of 50 different products doesn’t have to be shipped express by air if only one or two of the products are out of stock. Better to incur the cost of shipping the out-of-stock products by air and save money by transporting the remaining 48 products by ocean or land freight. Cultural cleverness Doing business with like-minded individuals who are ultimately looking to secure a mutually beneficial relationship might seem like something that should come easily and naturally. Yet, many SMEs in Canada have been vexed by unanticipated strains in relations and delays due to miscommunication sparked by cultural differences. It’s important to study the cultural nuances of international supply chain partners. For example, in India shaking one’s head from side to side is not body language for “no,” but rather a gesture indicating that you understand what the other person is saying. Knowing this in advance can prevent embarrassing and sometimes costly subsequent confrontations. It also shows your supply chain partner that you’re respectful of their culture and serious about doing business with them, which goes a long way in building positive relationships with your suppliers and other supply chain partners.

Inventory intellect The recent global economic downturn made the dangers of being overly ambitious in inventory accumulation painfully apparent. As consumer confidence waned, many manufacturers found themselves with excess inventory that they had to store in warehouses at premium storage fees. As a result, many of today’s SMEs have grown reluctant to order more inventory than needed and are instead planning their inventory down to the item. While the approach to inventory has gone from one extreme to another, the good news is that it has gone to the more effective extreme. The majority of inventory planning should be Time sensitive based on real demand, rather than projected One of the biggest hurdles SMEs face when they make the leap into interdemand. While the attractiveness of buying in national markets is recognizing that the rest of the world is still very much bulk to achieve economies of scale may be difficult at work when North America sleeps. A supply chain that extends to countries to resist, an effective supply chain should respond as far away as the Middle East, China or Japan is a supply chain that is to the natural shifts in consumer or partner always in motion. demand. Those SMEs who find themselves with In response, SMEs should invest in staff who are not only well-versed in excessive inventory should consider working with supply chain management, border controls, tariffs and the like, but also a third-party to help consolidate warehousing staff who understand the need for a 24-hour supply chain. This is particuand curb storage costs. larly important for SMEs dealing with sensitive goods which may be delayed when crossing international borders or SMEs who have to keep a close watch Customer catering on the transport status of their shipments. Supply chain managers should Every SME must decide what type of customer look at the cost of these special human resources as an investment rather experience it wants its target consumer to have. than an unnecessary cost or liability. From there, the structure of a supply chain Alternatively, this expertise can be outsourced to a logistics company becomes clear. that can conduct 24-hour monitoring and is able to respond quickly to a An SME that wants to offer a guarantee on inven- kink in the chain, which could potentially save thousands of dollars and tory will have a very different supply chain from the headaches. Whether you choose to stay in-house or outsource, think of SME that wants to offer the lowest available price these experts as a form of supply chain insurance. because having the lowest price usually means havBy following these seven simple guidelines, SMEs can increase the effecing a slower supply chain. Each structure has its tiveness of their supply chains. SMEs should also remember that technology advantages and disadvantages depending on the is critical in navigating the complex global marketplace. Technology-based clientele being served. The key is for every SME to solutions can help manage everything from inventory optimization to know the opportunity costs associated with its sup- exporting to distribution, and an array of other functions to make a global ply levels. Some SMEs, such as those selling rare and supply chain more effective. MM&D premium furniture, are likely to have clientele that is willing to wait until the next shipload of merchan- Jim Ramsay is vice-president of air and ocean freight for UPS Canada. He is dise arrives so they can get exactly what they’re responsible for the strategic development of UPS’s air and ocean freight looking for. Other SMEs will have clientele that services and overseeing customer relations across Canada. MM&D | September/October 2010

Materials Handling | Dave Luton

Buyer beware

Don’t get your racking in the bargain bin

ld timers in the materials handling industry have seen it many times before. The economy goes south and inevitably some firms go bankrupt. These firms are liquidated and some of their equipment comes back on the market. Auctions seem to proliferate at these times. Some warehouse managers in smaller companies also have to contend with bargain seeking owners. “You know that racking you wanted? I got you a great deal at an auction for company X so we can afford all of what you wanted.” Doesn’t matter that it’s the wrong type; you are expected to make do. In the bad, old days, before the regulations which have stopped some of the insanity, I used to run into these every so often. It was a bit of a game to see how many different styles and types I could find in a small warehouse. I remember one that had more than 20 different styles and types in one warehouse of about 30,000sqf. Fortunately for me the company was moving to a new warehouse with twice the vertical cube so it was easy to argue that using the old racking would waste a lot of space. Today, with modern technology we have even taken the old auction to a higher plane. With the internet and websites like eBay it is possible to purchase racking directly from the previous owner. I have seen racking change hands for just the cost of hauling it away. With the new millennium we finally got some standards that have stopped the worst excesses of the old days. Now many Canadian jurisdictions require a competent structural engineer to certify a new or changed rack installation. In Ontario, for example, the Pre-Start Health and Safety program requires that the certification be available to a Ministry of Labour inspector. In a column on racking a year ago I voiced the concern that we ran the risk of being overregulated. In addition to provincial rules, a number of municipalities are getting into the act and trying to regulate racking under their building code standards. While I can see a valid rationale in some instances, each layer of regulation adds complexity and wastes time getting approvals. MM&D | September/October 2010

In such a regime the costs of inspection and recertification can be quite high, particularly for racking of an unknown origin and less than common type. In some small-quantity purchases I have seen the cost of the engineering certification exceed the cost of the so-called bargain purchase. A lot of users do not realize that racking standards are not static and key specs, like capacity, can vary over time, even from the same manufacturer. Until recently there was no formal standard that manufacturers had to meet. This changed in 2005 with the publication of the new CSA A344.1 standard (user guide for steel storage racks) and CSA A344.2 standard (for the design and construction of steel storage racks). Many newcomers to the business do not realize that many beams and frames from different manufacturers are not interchangeable. Even different manufacturers who manufacture to the same profile—like the dominant Ready Rack profile in Canada—have different rack capacities. This is especially true if their rack was manufactured before the publication of the new CSA standards. In the design of racking systems, rack capacities can also vary considerably when beams are set at different heights. A particular problem is encountered if there is a considerable height difference between the warehouse floor and the first load beam. Thus for the purchase of any rack system, new or used, a number of standard questions should be addressed before you select the product you wish to use. They include: • What application is it to be used for? • W hat abuse is it expected to take and as a result what durability and damage protection should be used? • Where will it be placed? As long as it is in good repair, racking can last a very long time. However, many of the historical rack capacity tables are not available to the general public especially as a number of manufacturers have gone out of business. Users therefore have no idea of the weights that the rack is supposed to carry. While this is usually not a problem for a raw material or finished goods warehouse; it is frequently a major problem for a MRO or spare parts warehouse that has a wide variety of different non-standard weights and sizes. To avoid this problem the best method to purchase used racking is usually to purchase what I call “Certified rack”, which is usually sourced from a racking vendor. Certified rack is used racking that comes with an engineering certification, usually as part of a complete design, supply and install package. The product has the necessary information for a Pre-Start Health and Safety Qualification included as part of the package. Without this, a user may face a lot of issues next time a government inspector comes calling. Some very significant fines have been levied on people who did not follow the rules. MM&D Dave Luton (dluton@cogeco.ca) is a consultant in the greater Toronto area.

Learning Curve | Tracy Clayson

Employee engagement

Are people more important than profits at your company?

ith the Canadian economy well into recovery, companies are shifting from cutting their workforces to retention efforts and more hiring. That may be good news for employees who are feeling downtrodden and abused as a result of the recession. Consistent with the drastic cost-cutting efforts by companies to survive and thrive in this new economy is a sense of frustration and dissatisfaction among employees. Hewitt Associates Inc followed 900 companies globally who have consistently conducted employee engagement surveys, and over 46 percent experienced an annual decline in engagement levels over the last two years, marking the most significant decline in 15 years. Don’t underestimate the importance of employee engagement: Hewitt’s study shows a company’s success and profitability is directly tied to engagement levels and shareholder value. Organizations with 65 percent or more engagement report a 19 percent higher average shareholder return. By contrast, those with an engagement level of less than 40 percent have a 44 percent lower than average shareholder return. When employees are not engaged, productivity and quality of work suffer. Employees who have “checked out” due to lack of opportunity, poor communication, declining investment in professional development and an absence of validation for a job well done can become a serious burden to your organization. Engagement research suggests employee satisfaction levels significantly alter the quality of work performance and can be damaging to your company’s reputation and your customer retention. Employee engagement is not a new idea. Progressive companies have polled their employee base to determine job satisfaction, evaluated the effectiveness of leadership using ‘360’ measurements and explored employee expectations and perceptions on a consistent basis. Determining engagement levels within your workforce and the connection to your overall company performance offers many benefits.

Time to think about retention The last few months have shown business increasing and employers to be more concerned about losing their top talent. Some companies are already on top of retention efforts and are conducting engagement surveys, running focus groups, giving individual interviews and taking the engagement research findings and translating them into actionable items to improve the work-life experience among their employee base. A CareerBuilder survey showed that employees are looking for companies that offer open communication, a lower-stress work environment, sense of ownership and belonging, financial stability, growth opportunities and education and training. A Richard Ivey School of Business 2006 research paper by Gerard Seijts and Dan Crim entitled “What engages employees the most or, the Ten C’s of employee engagement” offers insights into building a people-centered company. They tell employers to connect with employees by showing them they are valued, offer challenging and meaningful work, have clarity of vision and goals, convey feedback and expectations, congratulate on achievements, validate employees’ contribution to the company’s success, control the pace and flow

of responsibilities and employers response to needs, encourage collaboration and teamwork toward goals, make leadership credible through genuine efforts to strengthen employee buy-in, show confidence in the company and ensure that executives are role models for high ethical standards. Conducting employee attitude surveys can tell you a lot about your company’s competitive advantage. Motivated and engaged employees drive results. Realizing employees’ full potential requires coaching, creating an open communication environment, allowing them to reap the benefits of their results, acknowledging efforts and achievements, and giving them opportunities to optimize on skills and talents and rise to the challenge. Organizational cultures that operate under heavy control, place unreasonable demands on workers, run with a hierarchical structure where employees cannot freely offer ideas and have a compliance rather than a commitment mentality, run the risk of losing key performers who respond to more autonomy and recognized competence-based leadership. There will be a problem teasing out employee satisfaction levels if the company employs managers who do not value employee engagement. Employees may not give feedback if they feel their information will not be kept confidential or their opinions won’t result in actions by management to improve their work situation. Morale and retention problems develop when employees don’t feel safe or secure in their job and with the people they work for. A great company with great products and services and industry leadership can suffer if the managers are not good to their staff. Georgina Mellas from Hirepower, an HR consulting firm based in Toronto, states “employees don’t leave organizations, they leave their managers.” You may only get a chance to learn about engagement at the exit interview. But if you follow some of these tips, hopefully your organization will be conducting some feedback interviews allowing you to make changes where needed and reduce turnover. MM&D Tracy Clayson (tracy@in-transit.com) is managing partner, business development, of Mississauga, Ontario-based In Transit Personnel. MM&D | September/October 2010

Productivity Solutions in Motion: The Intelligrated Way

With productivity solutions from Intelligrated, you’ll have more time to leave your desk and visit the DC floor.

The Intelligrated Way means that your solution is designed only with your needs in mind. When you choose Intelligrated to provide your next automated material handling solution, you are selecting a local, experienced and passionate team of professionals committed to designing, implementing and supporting your system for years to come. As the new market leader, Intelligrated brings the experience of legends in the material handling industry like Buschman®, Real Time Solutions® and FKI Logistex® and collaborates with our customers to provide the right products, services and solutions to solve their challenges. Contact Intelligrated Canada for your next automated material handling solution, so you’ll have more time to visit the DC floor without sacrificing system visibility.

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