MM&D (Materials Management & Distribution) Sept/Oct 2014 by Annex Business Media

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Taking Stock Supply Chain Scan Cost Saving Roundtable Dunnage Solution Annual Survey of the Supply Chain Professional Storage Solutions Forktrucks & Accessories Legal Link Learning Curve Materials Handling

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TAKING STOCK

www.mmdonline.com PUBLISHER/EDITOR-IN-CHIEF: Emily Atkins (416) 510-5130 EAtkins@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: Karen Samuels (416) 442-5600 x5190 KSamuels@bizinfogroup.ca CIRCULATION MANAGER: Barbara Adelt (416) 442-5600 x3546 BAdelt@bizinfogroup.ca

BIG MAGAZINES LP Executive Publisher • Tim Dimopoulos Vice-President of Canadian Publishing • Alex Papanou President of Business Information Group • Bruce Creighton HOW TO REACH US: MM&D (Materials Management & Distribution), established in 1956, is published 7 times a year by BIG Magazines LP, a division of Glacier BIG Holdings Company Ltd. EDITORIAL AND ADVERTISING OFFICES: 80 Valleybrook Drive, Toronto, ON, M3B 2S9; Tel: (416) 442-5600; Fax (416) 510-5140. SUBSCRIBER SERVICES: To subscribe, renew your subscription or to change your address or information, contact us at 416-442-5600 x3258 or 1-866-543-7888. SUBSCRIPTION PRICE PER YEAR: Canada $84.95 per year, Outside Canada $159.95 US per year. Single copy price: Canada $15.00, Outside Canada $32.65 CDN MM&D is published 7 times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. ©Contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. DISCLAIMER: This publication is for informational purposes only. You should not act on information contained in this publication without seeking specific advice from qualified professionals. MM&D accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. MM&D receives unsolicited materials, (including letters to the editor, press releases, promotional items and images) from time to time. MM&D, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. PRIVACY NOTICE: From time to time we make our subscription list available to select companies and organizations whose product or service may interest you. If you do not wish your contact information to be made available, please contact us via one of the following methods: Phone: 1-800-668-2374, Fax: 416-442-2191 Email: privacyofficer@businessinformationgroup.ca Mail to: Privacy Office, 80 Valleybrook Drive, Toronto, ON M3B 2S9

What you think T

his issue of MM&D is a blockbuster, packed with information. As it turns out, much of our reportage here is based on survey results. Principally, we focus on the Annual Survey of the Supply Chain Professional, our salary and opinion poll jointly produced by the Supply Chain Management Association (SCMA), MM&D, PurchasingB2B and Canadian Shipper magazines. Turn to page 28 for the details of what people in the supply chain sector make and what they think about the issues they face in their workplace. Without offering a spoiler, there are some interesting trends shaping up this year; it will be worth a look! In our news section we’ve also got the highlights of some other important survey results, including third-party logistics CEOs’ outlook, materials handling equipment sales, intermodal stats, 3PL growth and the views of healthcare CEOs on supply chain issues. The news is good, with equipment sales forecast to grow by five per cent, intermodal volumes jumping, and 3PL revenues climbing by double digits. CEOs are taking a brighter view of the future and more than 75 per cent are planning for growth both at home and gobally. The more they invest in their future, the bigger the recovery snowball becomes. Taken together—salary survey results and sector reports—all this points to a happy fact: supply chain businesses are finally experiencing real recovery. You have to admit, it’s a lot easier to get your job done—and done well—when you aren’t always looking over your shoulder for the hatchet man. In the dark days of the recession everybody was worried that they’d be on the block next. Now we’re in growth mode, and it’s a new day. The outlook is rosy for 2015. The great part of this news is that it’s based largely on what you—people working in supply chain jobs—think. And the rest is derived from hard data about business conditions and results. It’s hard to argue with the facts! Next issue we’ll be sharing our Vision 2015 feature. Be sure to read this annual special edition where executives share their view of what’s in store for next year. Given what we’re seeing this issue, it’s bound to be a good news story.

September/October 2014  Volume 59  Number 05 18

Rest Easy

Filling the Void

Survey

Cost Savings Roundtable: solutions to issues keeping you up

Unique dunnage product keeps shipments by rail secure

Annual salary survey points to recovery and gains

Automated Storage

Printed in Canada Publications Mail Agreement #40069240, ISSN: 0025-5343 (Print) ISSN: 1929-6460 (Digital). We acknowledge the financial support of the Government of Canada through the Canada Periodical Fund of the Department of Canadian Heritage for our publishing activities. MM&D is indexed in the Canadian Magazine Index by Micromedia Limited. Back copies are available in microform from Macromedia Ltd., 158 Pearl St., Toronto, ON M5H 1L3

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Tools for storage and retrieval

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SUPPLY CHAIN SCAN

SENSORS

PAIN

3PL

MOVERS + SHAKERS

Air carriers approve in-flight trackers, p 6

Survey reveals pain points, p 8

Study shows revenue climb in Q2 2014, p 14

Appointments and promotions in the materials handling industry, p 10

Growth forecast for material handling equipment G

lobal demand for material handling equipment is projected to increase five per cent annually through 2018 to US$142 billion. An improved environment for fixed investment spending will enable manufacturers to expand and upgrade facilities. Rising standards of living will boost gains, as consumers increase spending on both durable and nondurable goods. According to Freedonia Group analyst Mike Deneen: “Continued growth in mining activity, a byproduct of voracious demand for mined materials in China, India, and other developing nations, will also create material handling product demand.” Growth will be strongest for sales of advanced equipment that reduces the labour needed to operate machinery, helping to curtail costs. These and other trends are presented in World Material Handling Products, a new study from The Freedonia Group, Inc, a Cleveland-based market research firm.

Automated storage and retrieval systems (ASRS) and automated guided vehicles (AGVs) will register the strongest sales growth of any product type through 2018 due to efforts among end users to reduce labour costs, particularly in developed markets such as the US. Lift trucks will remain the largest product group in dollar terms, benefiting from gains in durable goods manufacturing activity. The US experienced strong growth in 2012 and 2013 as manufacturers and distributors filled pent-up demand that had accumulated during the recession of 2007 to 2009. The US will continue to be the world’s largest material handling product market, benefiting from an improved outlook for fixed investment spending, which will boost opportunities for costlier items such as cranes and monorails. India and China will see the strongest gains through 2018, as rising manufacturing output spurs demand for material handling equipment to facilitate production and distribution. Growth in those nations’ motor vehicle industries will be especially beneficial to material handling product suppliers. West European markets include many of the most intensive users of material handling equipment in the world because manufacturers in the region have long been among the leaders in adopting automated equipment as a response to high domestic labour costs. Advances in Western Europe will lag the global average, but demand will benefit from a rebound in manufacturing output.

3PLs hitting their stride amid economic uncertainty MM&D Staff

PL CEOs are confident about the current state and future revenue growth of their companies and the regional 3PL industries. The Annual Surveys of Third-Party Logistics Provider CEOs revealed approximately 75 per cent of the companies involved in the surveys were profitable in 2013. North American and Asian-Pacific CEOs forecasted three-year company growth of 10.77 per cent and 16.2 per cent, respectively. European CEOs forecasted 8.33 percent growth over the same period.

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The CEOs were also asked to project regional 3PL industry revenue growth rates for the next three years in all three regions. North American CEOs projected average revenue growth rates of 6.54 percent; European CEOs projected average revenue growth rates of 4.17 percent; and CEOs in the AsiaPacific region projected average revenue growth rates of 10.4 percent. The results were presented at the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference by its author, Dr Robert Lieb, professor of supply chain management at Northeastern University’s D’Amore-McKim School of Business, and Joe Carlier, senior vice president of sales for Penske Logistics. The findings analyze responses from 27 major third-party logistics company CEOs across North America, Europe and Asia-Pacific whose companies generated approximately $46 billion in revenue in 2013. Continues on page 6

MM&D | September/October 2014

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SUPPLY CHAIN SCAN

Continued from page 4 The report was co-authored with Dr. Kristin Lieb, Associate Professor of Marketing Communications, Emerson College. The survey is underwritten by Penske Logistics.

Results overview Nearly three quarters of these companies either met or exceeded their regional revenue projections in 2013. That represented a major improvement over their performance in 2012. In the North American region, the survey revealed that near-shoring activities—eg customers shifting manufacturing activities from China to Mexico—is growing, with over 75 per cent of North American CEOs reporting some of their customers have shifted some of their operations from China to Mexico. This is impacting the revenue streams of 3PLs with nearly one-third of North American respondents reporting increased volume and revenues as a result of near-shoring. Rising Chinese wages, the benefits of a shorter supply chain from Mexico to the US, and increasing transportation costs have driven this nearshoring trend. In addition, several CEOs also remarked that Mexican government incentives have contributed to the movement. “Near-shoring manufacturing operations to Mexico are often mirrored by an increased 3PL presence,” stated Carlier. “Companies will look to 3PLs to optimize their services from warehousing to cross-border shipping in Mexico; those that have in-market experience navigating the nuances and complexities of the region will reap the most benefits.” CEOs in all three regions noted not only the substantial growth in e-commerce over the past year, but also the long-term growth potential of that marketplace and the opportunities that growth might provide 3PLs. Nearly all of the 3PLs already support some e-commerce customers with services ranging from warehousing through fulfillment and reverse logistics. “The 3PL industry has real opportunities to participate in the growth of both B2B and B2C commerce,” said Robert Lieb. “However, to do so on a much larger scale will involve substantial investments on behalf of those companies. The e-commerce marketplace is very competitive and companies such as Amazon have also moved aggressively in providing logistics services for companies selling their products online. There is

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also an element of risk in that marketplace due to the prevalence of small online retailers and their financial vulnerability.” Nearly 70 per cent of North American 3PL CEOs reported capacity shortages across modes, including: truckload, LTL, intermodal and rail. The capacity crunch has led to higher rates and longer transit times, with 3PLs struggling to meet on-time service goals and cost targets. These companies project relatively little revenue growth related to mergers and acquisitions during the next three years. The primary reasons cited by CEOs are a dearth of attractive candidates, economic uncertainty and integration issues experienced during prior acquisitions. Companies remain committed to environmental and sustainability issues, but the emphasis has shifted to maintaining and expanding existing sustainability programs (55 per cent) over launching new programs (29.6 per cent). Five of the eight European CEOs surveyed operate in Russia, and they cited growing opportunities to support healthcare and retail industries there. However, political turmoil could limit 3PL investment and growth. The 3PL CEOs acknowledged the impact that Amazon has had on the field of supply chain management, particularly in terms of raising customer service level expectations and focusing on shipment visibility. Many of the CEOs noted that in a number of markets Amazon is not only a customer of theirs, but also a competitor in the market for logistics services. They also suggested that Amazon might become a more significant competitor because of scale of the logistics infrastructure the company has built. Twenty-seven CEOs of large third-party logistics companies across North America, Europe and Asia-Pacific completed surveys via an Internet-based questionnaire during the summer of 2014.

Carriers approve use of in-flight cargo monitoring Air carriers, including Air Canada, Delta Air Lines, Hawaiian Airlines, Southwest Airlines, UPS, and others have approved AT&T Cargo View with FlightSafe devices for use on their aircraft. The service allows remote monitoring of shipped assets and helps minimize the risk of damaged, lost or stolen cargo. FlightSafe, a feature included with AT&T Cargo View, makes it possible for a device to automatically transition to airplane mode so that it travels in an FAA compliant mode on the aircraft. Small, light-weight sensor-based devices are placed in shipments to continuously monitor the well-being of cargo. FlightSafe is safe for aircraft and can be used regardless of transit mode. AT&T Cargo View with FlightSafe monitors, records and communicates: •L ocation - Using GPS, the service pinpoints the location of cargo as the aircraft lands so shippers can better support delivery and logistics scheduling • Temperature – It shows temperature levels of sensitive cargo such as foods, pharmaceuticals and other perishables. • Pressure – It monitors items that are more susceptible to pressure changes at different altitudes such as medical supplies and thin glass. • Light – It alerts logistics managers that light is detected inside a container, signaling the cargo might have been accidentally or purposely opened while in transit. Shock – It safeguards that shock levels are maintained so fragile items are handled with care. MM&D | September/October 2014

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SUPPLY CHAIN SCAN

Technology investment key to strategic success Healthcare supply chain execs plan for investment By MM&D Staff

ncreasing risks, complex regulations and continuing cost pressures are impeding healthcare executives from moving quickly to seize untapped industry opportunities, according to the 7th annual UPS “Pain in the (Supply) Chain” survey. Globally, healthcare executives are planning for strategic partnerships and technology investment to mitigate risks and capitalize on growth opportunities. The most significant factors contributing to uncertainty in the healthcare supply chain are more stringent regulations and increased product protection challenges. For the third consecutive year, regulatory compliance is the top supply chain pain point, cited by 60 per

cent of respondents. Further, 78 per cent cite regulatory compliance and increasing regulations as a top trend driving business and supply chain changes. Product protection also is increasingly challenging in a highly global marketplace, with 46 per cent citing product security as a top challenge and 40 per cent citing product damage and spoilage as a top concern. Economic factors are also at play, with 49 per cent of those surveyed still feeling an impact from the economic downturn, six years later. The highest percentage of respondents to express this are in the US, where 60 per cent of healthcare logistics decision makers cite economic concerns. In this global economic environment, cost management remains top-of-mind, with 44 per cent citing it as a top supply chain concern.

DONE DEALS O’Brien Installations Limited (O’Brien), a manufacturer of overhead cranes, jib cranes and workstation cranes as well as a supplier of hoists, announced a sales agent agreement with manufacturer’s agent, Raebrooke Company (Raebrooke) to grow its crane dealer network in select areas across Canada. Raebrooke will represent O’Brien’s existing crane dealers while establishing new dealers in areas to expand O’Brien’s market presence and reach more customers. Partnering with O’Brien will strengthen Raebrooke’s continued commitment to its customers of providing top quality material handling equipment and industrial supplies. “The partnership with O’Brien’s will allow us to expand our product offering in the marketplace and provide more turnkey solutions”, said Doug Coughlin, owner of Raebrooke Company. “This will open up new opportunities which will strengthen our existing distribution channels.”

vans and containers to its fleet, welcome Western Storage customers and employees to the team, and add Kelowna, BC, to its list of Canada-wide locations. The rest of the acquired Western Storage locations align with existing Trailer Wizards locations including Vancouver, Edmonton, Calgary, Regina, Saskatoon and Winnipeg. Trailer Wizards assumes Western Storage’s current trailer and container lease agreements.

A strategic partnership will place Nulogy’s technology at the heart of Jacobson Companies’ packaging operations. PackManager contract packaging software has been rolled out at Jacobson Companies’ flagship 1,000,000 square foot warehouse facility in Lancaster, Pennsylvania.

Hal Leonard Corporation, a printed music supplier that ships about 5,000 packages per day has chosen an Interroll Intelliveyor system with 24V RollerDrives. The Interroll Conveyor allows them to process a wide variety of boxes and totes ranging from one- to 60-lb seamlessly with Zero Pressure Accumulation. The new system is decentralized, which means there is no central motor. In the whole conveyor there is only motion if a box or a tote needs to be conveyed. This type of conveyor system saves up to 50 per cent energy compared to a centralized driven system.

HighJump Software, a global provider of supply chain management software, has named Schmidt Electronics Group Ltd as its newest strategic partner in Asia. Headquartered in Hong Kong, Schmidt is an integrated technology and solution provider with 400 employees in eight countries across Asia. It will expand the reach of HighJump supply chain solutions by delivering the HighJump Supply Chain Advantage suite to fast-growing companies in China, Hong Kong, Singapore and throughout Asia. Trailer Wizards Ltd has acquired Western Storage assets. With this purchase, Trailer Wizards will add an additional 1,500 dry

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XPO Logistics, Inc completed its previously announced acquisition of contract logistics provider New Breed Holding Company for a cash purchase price of $615 million. The acquisition expands the company’s operations to 203 locations and approximately 10,400 employees. New Breed’s former chief executive, Louis DeJoy will continue to lead the operations he has been instrumental in growing since 1983 as chief executive of XPO’s new contract logistics business.

Carmaker Ferrari has expanded its relationship with Infor and invested in Infor Sales & Operations Planning (S&OP). Following previous investment in Infor ERP LN, S&OP is set to replace legacy systems and spreadsheet-based processes. S&OP will provide automated workflows to help Ferrari guarantee the flow of information across demand, from approximately 200 dealers, and supply into production.

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SUPPLY CHAIN SCAN Despite operating in a risk-inherent environment, only 26 per cent of healthcare executives cite contingency planning as a top supply chain concern. Meanwhile, 34 per cent of those surveyed in Asia and 22 per cent in Latin America say more than a quarter of their companies’ supply chains were impacted by unplanned events in the past three to five years. Specific challenges include events being too unlikely or infrequent to warrant planning attention (61 per cent), back-up infrastructure being too expensive to deploy (46 per cent) and little to no prioritization being given to this area (42 per cent) versus other more urgent matters. “Companies that embrace new technologies and transformative supply chain strategies to mitigate risks will be more likely to capitalize on new growth opportunities in the healthcare marketplace of tomorrow,” said John Menna, UPS vice-president, global healthcare strategy.

STORE VERTICAL

Successful strategies The majority of companies that are successful in mitigating risk and increasing competitiveness are leveraging partnerships along with ongoing technology investments. Of logistics decision makers surveyed worldwide: • 78 per cent cite logistics and distribution partnerships as a top strategy to manage supply chain costs; • 65 per cent use logistics and distribution partnerships to successfully access global markets; • 61 per cent use collaboration, including vested logistics and distribution partnerships, to successfully embrace new distribution and go-to-market channels, while 23 per cent use mergers and acquisitions to do so; • 59 per cent are working with a 3PL as a top strategy to increase efficiencies and improve competitiveness. Globally, over the next three to five years, 80 per cent of respondents say they will invest in new technologies.

Untapped opportunities Despite progress in addressing industry challenges, opportunities remain. One of these areas is in leveraging new distribution channels and models to meet changing customer demands as e-commerce, urbanization and home healthcare grow. Over the past two years, 70 per cent or more of those surveyed both years have indicated that they plan to increase their usage of new distribution channels, yet over this same time period their channel mix remains nearly identical. This demonstrates that while the intention to take advantage of untapped opportunities is apparent, actual change is slow. Among the reasons for the slow shift, 68 per cent say they are still building their direct channel strategies. The rise of home healthcare is taking off with growth surges expected over the next decade. Globally, 21 per cent of survey respondents cite the shift to home healthcare as a key trend driving business and supply chain changes. Respondents report that 30 per cent of products will support the home healthcare channel in the next seven to 10 years. Continues on page 12

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SUPPLY CHAIN SCAN MOVERS + SHAKERS

Gabe Mazzetti

Gabe Mazzetti has been promoted to the position of President and CEO of the Econo-Rack Group of Companies (Redirack, Konstant, Econo-Rack and Technirack). Gabe has served as president of the Company since October 2012 and was named to the Board of Directors in August 2013. Econo-Rack Group of Companies provides industrial racking, shelving and storage solutions to customers across North America.

Sanjeev ‘Sonny’ Tara is the new chief operating officer at Packsize, the On Demand Packaging software and manufacturing provider. Tara will be responsible for scaling internal systems and business processes for global operations while ensuring operational excellence across the entire company. He will report to Packsize CEO Hanko Kiessner. Sanjeev Tara Tara was formerly president of Drive Train Products Group, a heavy truck division of Marmon Highway Technologies, a Berkshire Hathaway Company. He was also for-

merly COO of Oshkosh Commercial Group, a segment of Oshkosh Corporation, a manufacturer of heavy commercial equipment and vehicles that he joined in 2006 as CFO. VersaCold Logistics Services has appointed Michael Spence to the position of CFO, reporting to Douglas Harrison, president & CEO, and Joe Sammon to the position of vice-president of engineering. Spence has overall responsibility for the finance and accounting functions, as well as technology strategy and platforms. He was previously president and CFO of Canadian General Tower. Spence holds both Chartered Accountant (CA) and Chartered Professional Accountant (CPA) designations and is current enrolled in the Executive MBA program at Queen’s University. Sammon has overall responsibility for physical engineering within VersaCold’s 33 warehousing facilities across Canada. He also has responsibility for VersaCold’s green energy initiatives.

Michael Spence

Joe Sammon

10 MM&D | September/October 2014

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PROFESSIONAL DEVELOPMENT DIRECTORY

CORPORATE ON-SITE TRAINING WHY CHOOSE ON-SITE TRAINING? On-site training offers a variety of benefits to both employers and staff. In addition to cost savings and convenience, on-site training can be customized to meet different business needs. On-site training ensures consistent learning across the board from a single team to an entire organization.

WHY CHOOSE SCMAO TO PROVIDE YOUR TRAINING? Expert Instructors – Our expert instructors are leading supply chain academics and experienced practitioners who have real-world SCM experience. Our Programs – Our programs are designed to enhance skills development, professional competence and strategic perspective of SCM professionals at all levels of career progression from entry, to mid, and executive levels of functional responsibility. Our Reputation – As the leading supply chain association in Ontario, SCMAO has established a reputation for excellence in education and professional training. Over 70% of our corporate training is provided to repeat clients.

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Become a CIFFA Associate Member

Plug Into Your Freight Forwarding Customers CIFFA Associate Members: connect with the freight forwarding community sponsor and attend social events

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SUPPLY CHAIN SCAN Continued from page 9 Another area with untapped potential is collaborative partnerships. In 2011, 62 per cent of decision makers surveyed cited working with or increased reliance on a third party logistics provider as a top strategy for the next few years, with 60 per cent citing it as a successful strategy over the past 18 months. According to this year’s findings, 59 per cent cite it as a strategy over the past 18 months and also over the next few years, indicating that while the healthcare industry recognizes the importance of implementing these strategies to increase competitiveness, companies are slow to act.

Global market expansion is another area in which healthcare companies are heavily investing that continues to hold new opportunities. Over the past 18 months, 65 per cent have tapped into new global markets to expand their customer base in order to drive new revenue growth. Looking ahead, 78 per cent will expand to new global markets over the next three to five years. These responses closely mirror 2011 survey data, when 81 per cent of executives reported they plan to expand to new global markets over the next few years. The 2014 UPS Pain in the (Supply) Chain survey was a blind, in-depth phone survey conducted by TNS, on behalf of UPS, of more than 530 healthcare executives in the US, Canada, Western Europe, Asia and Latin America. Qualified respondents were senior-level decision makers responsible for supply chain and logistics in the pharmaceutical, medical device and biotech industries. Surveys were conducted between January and March 2014.

Intermodal volumes jumped 8.2 percent in Q2 In a strong second quarter showing, intermodal posted gains across all segments, according to the Intermodal Association of North America’s (IANA) Intermodal Market Trends & Statistics report. International containers increased 9.6 per cent, trailers improved by 4.3 per cent, and domestic containers grew 7.6 per cent quarter over quarter, all indications that the intermodal industry is recovering from a harsh winter and a contracted economy. Due in large part to Q2’s strength, the first half of 2014 averaged 5.5 per cent in total intermodal volume gains, just below the 5.8 percent growth recorded in the second half of 2013 and in line with recent trends. “The second quarter results were indicative of a rebounding economy and higher than predicted import shipments,” said Joni Casey, president and CEO of IANA. “It is also probable the harsh winter that resulted in constricted Q1 capacity contributed to the second quarter’s strong growth, by comparison.” The seven highest-density trade corridors, accounting for 66.2 per cent of total intermodal

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volume, rose 7.4 per cent this quarter, falling below the 8.2 per cent industry average. Five of the seven bi-directional lanes recorded growth near or above industry averages. The Trans-Canada corridor, positively impacted by international intermodal shipments from Eastern Canada to Western Canada, led the way in corridor growth with a 10.5 percent quarter-over-quarter increase. Eight of the nine IANA regions experienced growth in the second quarter, with six areas reporting increases larger than 10 percent. Of these six, all were heavily impacted by strong showings in international intermodal shipments. The Midwest and Southwest, the two largest IANA regions, accounting for almost 50 per cent of total loadings, climbed 6.3 per cent and 7.8 per cent, respectively. Intermodal Marketing Companies (IMCs) posted Q2 growth rates that were more modest than the overall intermodal volume numbers, growing 2.4 per cent from last year. Like much of the broader market, IMCs in part benefited from the robust showing from imports based on transloading opportunities. Average revenue for both intermodal and highway IMC market segments continued its strong growth, with increases of 6.0 per cent and 16.3 per cent respectively. A month-by-month IMC growth comparison indicates that April led the way with solid 4.2 per cent gains, then slowed to 0.9 per cent in May and two per cent in June. In quarter-over-quarter comparisons, intermodal business accelerated 6.7 perc ent. Intermodal Market Trends & Statistics is published quarterly by IANA.

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SUPPLY CHAIN SCAN

Report shows improvements for 3PLs Transportation Intermediaries Association (TIA)’s 2nd Quarter 2014: TIA 3PL Market Report shows its TIA members’ revenue increased. It was an all-around positive quarter for TIA members. Activity increased across all measurements compared to last quarter. Total shipments were up by eight per cent; total revenue climbed by 12.6 per cent; invoice amount per shipment increased by 4.4 per cent; and gross profit margin percent increased 60 Basis Points. In the same period, US Department of Energy fuel cost per gallon decreased modestly by 0.4 per cent. The report is compiled with data drawn from three categories of members based on revenue. The report represented over 1.53 million shipments and over $2.95 billion in total revenue for Q2 2014. The TIA 3PL Market Report separates performance by the core services each 3PL offers. Nearly 98 per cent of all revenue was derived from over-the-road truckload (TL), rail intermodal (IM) and Less-than-

Truckload (LTL). Below is a comparison of performance for the three primary modes in Q2 2014 versus Q1 2014:

MODE SUMMARY Q214 VS. Q114 Metric Total Shipments Invoice Amount/Load Total Invoice Dollars Margin %

TL 9.3% 4.1% 14.7% 80 Basis Points

LTL Intermodal 6.0% 5.6% 2.1% 2.7% 8.2% 8.5% 30 Basis Points Even

“3PLs continued to grow, expand, and change their businesses,” said TIA president and CEO Robert Voltmann. “This is TIA’s 23rd quarterly report on the 3PL industry. The report indicates that 3PLs continue to expand their services. The percent of 3PLs offering intermodal and LTL continues to increase each quarter and 100 per cent of all 3PLs report activity in TL.” Voltmann said. The publication is based on a monthly survey of TIA members who submit real operating data, and answer questions on business conditions affecting the 3PL industry. TIA’s efforts are providing a truly comprehensive report on the trends and practices of the 3PL industry. MM&D

GLOBAL FOCUS Spain allows longer tails Spain has moved ahead of the European Union and is now allowing trucking fleets in Spain to operate fuel saving TrailerTail aerodynamic devices up to 75cm in length on both new and retrofitted trailers versus the 50cm length allowance currently permitted by the European Union on newly manufactured trailers only. Several EU countries are also considering the allowance of higher efficiency TrailerTail devices that are 90-120cm in length by 2015, which would nearly double the fuel savings to as much as five per cent. TrailerTail technology improves a tractor-trailer’s fuel efficiency by streamlining the airflow behind the vehicle, reducing aerodynamic drag. The patented, folding origami TrailerTail designs can be installed in less than 45 minutes, enhance vehicle safety through improved stability and visibility and do not impede cargo capacity or the loading and unloading of the trailer. The TrailerTail AutoDeploy system automatically deploys the device, transforming the vehicle’s shape at 50km/ hour to maximize fuel savings with zero driver involvement. Kerry expands in Oceania Hong Kong-based Kerry Logistics expanded its international freight forwarding (IFF) global network to Oceania through a partnership with Lead Logistics, an IFF company based in New Zealand, to form Kerry Logistics (Oceania). Kerry Logistics (Oceania) offers services in air and ocean freight, customs brokerage and domestic forwarding. Kerry Logistics is now able to provide daily Trans-Tasman airfreight services in the market.

05MMD-News.indd 14

Lufthansa Cargo adds Lagos capacity Lufthansa Cargo is further integrating Lagos into its own network through twice-weekly freighter flights. Since mid-September, a Lufthansa Cargo MD-11 freighter has been leaving Frankfurt for the Nigerian city every Monday and Thursday. Lagos is an important destination for the oil and gas industry in particular. Urgently required spare parts and equipment for oil production facilities can now be transported even faster to Nigeria, and with greater flexibility. A total of 170 tonnes of capacity will be available each week to Lufthansa Cargo customers on this route. Following a brief stop, the freighter will fly on to Johannesburg. The return leg to Frankfurt will include a stopover in Nairobi. Another two weekly flights from Frankfurt to Johannesburg will also stop in Nairobi on the southbound flight. Menlo increases in Thailand Menlo Logistics (Menlo) has opened a new, state-of-the-art, multi-client warehouse facility in Ladkrabang, Thailand. The new facility adds 9,747 square meters (105,000 square feet) of space, increasing Menlo’s total operating space in Thailand to 32,528 sqm (350,000 sqf). The facility will employ more than 25 employees and was chosen in part for its proximity to the points of distribution for international export and domestic distribution. Currently, 65 per cent of the new facility’s space is committed for use by manufacturers of consumer goods products.

MM&D | September/October 2014

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SUPPLY CHAIN SCAN BENCHMARKS CN recognized 11 of its intermodal customers for their sustainability practices that are aligned with the objectives of the CN EcoConnexions program. Under the program, participating companies work to reduce carbon emissions and increase energy efficiency–one of CN’s key sustainability objectives. CN will plant 110,00 trees next spring in recognition of its customers’ commitment to sustainable business practices. The 11 winners are: CMA-CGM, Cosco, Hapag Lloyd, Kruger Products, Maersk Line, MOL, Mondel¯ez Canada, NYK, OOCL Canada, Target Canada and Walmart Canada. UTi Worldwide Inc, a global supply chain services and solutions company, together with its client, Ansell Limited, named Safmarine their Partner of the Year for 20132014 during their annual Ocean carrier performance review meeting in July. The award recognizes the strength of Safmarine’s relationship with UTi Worldwide and Ansell Limited. UTi and Ansell jointly selected Safmarine as a global ocean partner as part of their Strategic Ocean freight Partnership program. Ansell’s relationship with UTi now enters its tenth year. BDP International Inc (BDP) has received a silver-level rating for its commitment to corporate social responsibility (CSR). The rating is based on an assessment conducted by EcoVadis, a collaborative platform enabling companies to monitor the sustainability performance of their suppliers across 150 sectors and 99 countries. Based in France, EcoVadis reviewed BDP’s sustainability practices, including its commitment to the environment, health and safety, labour practices, human rights, fair business/operating practices, consumer issues, community involvement and development, and sustainable procurement. Con-way Freight, a less-than-truckload (LTL) carrier and subsidiary of Con-way Inc, received the 2013 Translogistics Inc (TLI) National LTL Carrier of the Year Award. Con-way Freight provides transportation services throughout North America as a core LTL carrier for Birdsboro, Pennsylvaniabased TLI. TLI’s detailed scorecard assess-

www.mmdonline.com

05MMD-News.indd 17

ment ranks carriers in multiple categories including safety, pick-up percentage, invoice accuracy, on-time delivery, EDI connectivity/ performance and claims-free handling, to name a few. Subjectively, carriers are rated by TLI’s audit department in areas regarding issue resolution and billing; by its client services department on operational responsiveness; and by its logistics department on executive commitment and ease of doing business.

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MM&Dâ&#x20AC;&#x2122;s Cost Saving Roundtable highlights ways to alleviate stress by cutting costs in your operations

Panelists at the MM&D Cost Saving Roundtable. Standing, L-R: Scott Deutsch, director, global marketing, Honeywell; Andrew Bulmer, managing director for Active International in Canada; Greg James, partner, 3D Storage; Jason Cunneyworth, vice-president, Direct Distribution Centres; Colin Alves, senior vice-president, Colliers International. Seated: Vera Friedrich, CEO and vice-president, sales of Dematic in Canada

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MM&D | September/October 2014

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By Emily Atkins

ach time we ask MM&D readers “What keeps you up at night?” we hear the same response. Controlling costs in warehouse and DC operations is consistently the primary concern of the managers responsible. With that in mind, we decided to offer our readers some practical ideas for keeping costs down. While we don’t want to put you to sleep with the article, hopefully some of the ideas in it will help you to rest easy, with less worry about your operational costs. Helping us out at a roundtable conversation on the topic were: Vera Friedrich, CEO and vice-president, sales of Dematic in Canada; Jason Cunneyworth, vice-president, Direct Distribution Centres; Greg James, partner, 3D Storage; Colin Alves, senior vicepresident, Colliers International; Scott Deutsch, director, global marketing, Honeywell; and, Andrew Bulmer, managing director for Active International in Canada. This diverse group brings a wide variety of perspectives to the table. In a far-ranging conversation the panelists discussed everything from inventory optimization and ways to gain value from writing down unused product, to how to maximize space, and find the hidden value in your real estate contracts. Here are the highlights of the conversation.

Real estate Challenged by FedEx Canada to help identify potential cost savings in their lease arrangements, Colliers International established an audit process to help clients manage real estate costs. “It’s really a three-pronged approach,” said Colliers International’s Colin Alves. “It’s a very passive program for our clients. We don’t require much information other than a copy of their lease document and the landlord billing statements.” First, a lease abstract is created, flagging any potentially onerous clauses and highlighting critical dates to avoid missing notice periods. This helps quantify exit costs. Second is a lease audit. Alves said that in about 50 percent of leases they look at, there’s some sort of a discrepancy. According to Alves, it’s not adversarial. In many cases the landlords are appreciative that these things have been uncovered because it may just mean an additional cost to them down the road. The third step is a strategic lease restructure. “We never recommend to our tenants that they actually go ahead and exercise a renewal option because that limits you to simply a rental rate discussion,” said Alves. “We want to take it through an entire renegotiation of the lease to identify those potentially onerous clauses. Let’s shift some of that risk and liability back over to the landlord.” www.mmdonline.com | September/October 2014

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Although it varies on a case-by-case basis, some clients can realize huge savings through this process. “We had a client occupying 50,000 square feet of warehouse space in Mississauga, which is not a considerable amount of space,” Alves said. “Through the lease audit we found they had been overcharged for a number of years, which tallied to about a quarter of a million dollars in savings.” Jason Cunneyworth of Direct Distribution Centres asked if it’s possible to mitigate the high cost of buildings in low-vacancy regions like Toronto, Edmonton and Calgary. Alves said the key is to start the negotiation process early on. “In our business, time is leverage,” he said. “A year to two years out, regardless of where you’re at in the market cycle, it’s going to improve your negotiating position regardless of where you’re at.” Cunneyworth noted the building stock available needs to catch up to the demands of the industry. A proactive approach can ultimately be a money-saver, he believes. “You know, we open one to three sites a year in any 3PL business, and it’s a big deal. My concern right now is that the older buildings aren’t getting torn down that are only 20 feet high, and MHE equipment can be 40 feet now. I need the buildings to catch up with everything else,” he said. “Helping landlords figure out what to build is something we should all be looking at to help us save money. Because if I can get 36- or 40-foot clear, I’m not five high, I’m six or seven high. It’s a lot less costly to go up than it is out.” Alves noted that the Toronto market has the lowest vacancy rate ever seen. “But the interesting caveat to that is all the developers decided to go out and build the exact same buildings. So we’ve got a flood of buildings coming onto the market that are all the same,” he noted. “That’s going to present some pretty significant opportunities to the occupiers of these buildings, if they happen to be looking in that size category.”

 The MM&D cost saving roundtable is an editorial feature, made possible with support of the following companies. The sponsors’ input was made exclusively through their participation in the panel discussion.

The space-labour continuum Vera Friedrich of Dematic moved the conversation from the building itself to what is inside. “Especially with the spaces getting more expensive, we work to reduce labour and real estate costs through high-density storage solutions, mini-load, unit-load, and automated storage and retrieval systems (ASRS). There are also the very narrow aisle (VNA), AGVs that are basically a one-on-one labour replacement, if you have the business case for it.” She explained how automation solutions can be scaled depending on the user’s needs. “A 3PL might go for a lower-end technology solution, or you can take it a step further to store-ready delivery with basically sequencing product down to goods to person stations and eliminate labour there,” she said. 19

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“We look at return on investment for the different solutions. So if you’re looking at a voice solution by itself, it might be a 10-month return on investment that’s possible. It’s not just labour reductions it’s also accuracy. Scott Deutsch from Honeywell noted that expectations for return on investment have changed dramatically over the past couple of years. “There’s a dynamic we are seeing in the marketplace today with everybody wondering ‘what’s the right decision to make to give me the flexibility?’” he said. “Because what we are more afraid of, I think, than people actually touching the cases, is a one percent change to the business that could make whatever you just put in obsolete. So you really need to know. People want flexibility, they want scalability and they want the operational efficiency.” Friedrich noted that flexibility is possible from currently available automation solutions. “It’s not just the floor plan anymore,” she said. “You can actually leverage all your upper space. You can build it over the dock door. What we call the mini load, or multi-shuttles, basically storing totes or parts. “And the scalability is there for all of the solutions and also looking at slow movers versus fast movers. So just dedicating a part of your limited space, you can create additional space from your slow movers.” Greg James from 3D Storage offered suggestions on ways to improve space utilization in the DC. “People put a pallet on the floor. That one pallet sits there for a full year rather than putting multiple shelving levels in there, more SKUs in there so that they, again, don’t have to go out and expand the warehouse or the building,” he said. A pick module will allow you to use more vertical space, and condense the footprint. Likewise, carton

Top Takeaway:

Be proactive. — Colin Alves

flow, will certainly condense products in a given space. If 80 percent of your volume is 20 percent of your products, that lends itself to creating density, whether it’s push-back, flow, or very narrow aisle. “So look at the methods you’re using,” James said. “A good chunk of our business is from the average Joe whose business has grown and he doesn’t want to go out and get another building; warehousing is a cost to him. And it’s our job to come in and try and solve those problems for them to get more products or give him more time so their business can continue to grow.”

Process improvement Deutsch talked about ways to analyze processes in order to decide where savings can be achieved. He suggested starting with the smallest incremental improvement. “That’s actually the way you build business cases,” he said, “without making strategic bets for the business. And in a risk-averse environment that’s still pretty important; people don’t like to risk their careers too often to make a wrong decision.” He said it’s pretty typical for processes to be the way they are because it’s the way they’ve been done for years and nobody has bothered to see if they are efficient. “So maybe it’s really a matter of perspective, and it’s the simple things that add up to big savings for a company.” The first step, Deutsch said, is to really understand the business and actually go through it step-by-step. “Literally sit and watch the pallets,” he recommended. “What are the steps? Are you actually shooting a barcode to make sure the inventory’s been received so your backend systems know what to do with it, from your warehouse management system, from your automated control system? Who’s taking control? What happens to that data? “If you’re looking for increased operational efficiency, if you’re looking for ways of saving cost with what you’re doing today, figure it out: ‘Why do I do that?’ Remove that step. And if I do that step nine million times a year from my 140 workers per building, and it costs me 15 cents each time, there’s your business case.”

Top Takeaway:

Be open to many alternatives. — Vera Friedrich 20

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MM&D | September/October 2014

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Top Takeaway:

Evaluate your processes to improve productivity. — Scott Deutsch

Relationships Working with your customer is a big one for cost savings in the warehouse, said Cunneyworth. He cited the case of a client who wanted three-day delivery across Canada. He suggested a compromise where the top 10 SKUs were made available in a Calgary DC, making it possible for the three-day target to be met. “Those types of conversations, I think, can drive a lot of savings,” he said. “The real issue is how do you get your customers to listen? Because you are one of 500 or 3,000 vendors, they can’t listen to everybody, or not everybody can be right. Because there is a lot of money on the table, I believe, in working with your top customers.” Andrew Bulmer from Active International broadened the conversation to include vendors and customers. “People need to engage their vendors as true partners and not just beat them up on price but really understand how you connect your supply chain with your vendor partners. And engage your customers in the conversation too.” He cited an example from a previous job in which as a supplier, his company worked with the client to streamline supply chain operations. “We moved them from any day, next day delivery across Canada, to once a week,” he said. “That enabled us to reroute our trucks and to consolidate orders, reduce our carbon footprint. It was a complete engagement of the customer. “It took our sales team, all of our folks in our DC

chain to be part of the team and really work with them to unlock those efficiencies. If we’re reducing the number of SKUs we can, in turn, turn to our vendor partners and strip out costs and efficiencies and pass those along. It was a huge win-win.”

Motivation One cost area that’s hard to control is directly linked to employee behaviour. In warehouses, damage to racking can really add up and it’s the managers who are accountable for it. “Damage is always occurring, but nobody knows what shift it occurs on,” said James, relating the story of a client that solved the problem. “They said to every employee who got a bonus at the end of the year that the cost to replace and repair damaged racking was coming out of their bonus.” Every time there was damage a sign showed how much the bonus pool had shrunk. It was a way to “get them to start taking responsibility and ownership for reducing damage,” he added. “Every incentive to drive productivity needs to be tied to a safety one as well, otherwise you will get people cutting the corners, hitting the racks, running instead of walking, driving the machinery unsafely,” Cunneyworth said. “They need to understand that it’s all tied to a safety component—like any lost-time injuries and you’ve lost the incentive for this month.” He added that good labour management practices can also be a powerful way to streamline operations. Making sure people show up and on time is one small measure. But also, it’s key to measure individual productivity and keep those people who are above average on the payroll. “Sometimes it’s unpopular, but I think of it as taking care of those that take care of you and do it safely,” Cunneyworth added.

Top Takeaway:

Be open to change. — Greg James www.mmdonline.com | September/October 2014

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Top Takeaway:

Treat your people well. — Jason Cunneyworth Bulmer advocated exposing staff to as many parts of the business as possible: “Connect the sales team with the procurement supply chain team, right down to having folks ride a truck, work in the back, and understand what you’re selling and what the implication is in the back end of the organization. You know, a lot of consumer goods organizations, those folks start out on the road, on a truck. It’s not an incentive, but it’s the way you incent the entire organization and link the entire organization.”

Inventory management Bulmer explained how corporate trade can help businesses reduce costs by writing down unwanted inventory. “A lot of businesses in Canada are constantly reevaluating their assets and their inventories. They’re evaluating the SKUs they’re selling as the urban market grows,” he said. When there’s a risk of writing down that inventory, it’s possible to provide a mechanism to maintain them at their wholesale value or their book value, ideally. We issue trade credits to them. They’re booked as a prepaid expense. The book does a sale, in essence, for trade credits. They then spend those trade credits back to our business. For 90 percent of our customers, it’s on media and that helps reduce the cash outlay on that media expense. “So for the conversation at this table, folks within supply chain, 3PL, managing the footprint to get product to market, it’s an enterprise solution across finance, across-marketing as well, to identify if there’s obsolete inventory and obsolete equipment, a real estate footprint that they’re looking to write down or write off. We can step in and keep that asset whole. And then reduce the operating costs of the marketing folks as well, with their media plans.”

Measurement The key to succeeding at any of these ideas is measurement, said Cunneyworth. Look at the space, the layout, the WMS features and functionalities, the people—all of the things that are cost-drivers. But the bigger question is how do you measure? Cunneyworth asked: “How do you cut three steps out of the nine? What is the business case to get your WMS to do it a little bit differently because you can save two or three heads, if you were to cut out those steps? “Whether it’s Lean Six Sigma and all of the things that come, go, stay, it all comes down to common sense, to me, and it’s to measure everything,” he said. “The people that I feel really bad for are the ones who say to me, ‘You know what? I don’t have time to measure all that.’ Or, ‘It costs too much to measure that.’ I say to them, ‘hire as many people as you need to measure everything because they’re going to pay you back.’” He cited the example of 3PLs, which all have at least one industrial engineer on staff. They can be expected to recover their salary two or three times every year with these types of improvements, no matter the facility size. “To me, it’s measurement, whether on a spread sheet, a stop-watch, engineers or with a piece of software, measure it all. And then what’s the utilization that you’re getting that gives you the business case with the savings.” MM&D

Top Takeaway:

Engage across your organization and to suppliers and customers. — Andrew Bulmer 22

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MM&D | September/October 2014

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Ever better. That ’s Ryder. TM

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Filling the void Shipment damage prevented with reusable cargo protection By Ed Sullivan

he use of common dunnage materials—such as plywood, matting and cardboard—is highly problematic for many shippers, and billions of dollars are lost annually due to unnecessary product damage. Rather than accept those situations as inevitable operating costs, manufacturers and freight companies are now looking at new dunnage technologies that prevent product damage and other losses. One user who is finding multiple benefits from working with reusable dunnage is Shaw Industries Group, Inc, a supplier of carpet and flooring products. Until recently, Shaw shipped its carpet tile products via rail, truck and containers packed four to five feet high on 53x26-inch pallets, which are relatively long and narrow compared to the more standard 40x48inch pallets. The reason for the narrower dimension is to make it more convenient for customers to transport the pallets through their retail facilities. When double-stacked in truck trailers, however, the carpet tile pallets had a relatively high centre of gravity. In most cases the pallets of tiles would not fit snugly into a trailer or other container, leaving plenty of space for the pallets to shift in transit—unless the dunnage functioned exceptionally well. “In a rail car, just the start and stop of the train could cause a substantial shift of our products, often making them fall off the pallets,” explains Chris Shannon, a superintendent at Shaw Industries Group. “These products are not usually damaged when they tip over, but that problem does require our warehouse employees or customers to spend time re-stacking them in order to unload. That work is time consuming.” To overcome the dunnage protection problem, Shannon’s group tried using air bags that would inflate up to 4ft by 4ft. “We liked that system because it was relatively inexpensive,” he explains. “But, unfortunately, the bags sometimes lost air or deflated during shipment.” The damage limited air bag use to one or two trips. Shaw then turned to Paylode Cargo Protection Systems, a manufacturer of reusable dunnage, which includes 100 percent recycled plastic void panels, spacers and fillers that are applicable to trucking, rail and container shipping situations. 24

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After making a study of the Shaw situation, Paylode engineers recommended Lateral Void Filler separators. These devices fill the spaces between palletized goods so they will not lean and fall into the empty spaces of a load. “These are wedge-shaped plastic fillers that really do the job,” Shannon says. “The Lateral Void Fillers are almost 100 percent reusable. In the eight months we have been using them, we have not yet seen any damage or shifting of our carpet tiles.” For Lentz Milling, a company selling brand-name bakery ingredients, frozen baked goods, and ready-tobake pastries, shipping flour ingredients from various points to a central plant was causing dunnage issues. “Most of our flour is shipped to us by rail,” explains senior purchasing agent Bill Moyer of Lentz Milling. “One of our largest shippers has had an issue with using air bags for dunnage. Even the ‘humping’ from the rail cars as they are hooked up can unsettle a load.” “Every time a bag gets damaged we have to turn the pallet around to dig out the damage, because we don’t want to put any contaminated flour in our warehouse,” says Moyer. “That costs considerable time and labour.” To overcome the problem, Lentz began using the Paylode system in 2013. As with other customers, Paylode sent engineers to review the record of problematic situations so they could propose a solution. “Using these reusable dunnage devices has resulted in a two-thirds reduction in costs due to damage and labour savings,” Moyer reports. “We practically don’t have a damage issue anymore, only about 10 bags per car.” MM&D

Shipment damage and other losses are being resolved by manufacturers and freight transporters worldwide with reusable cargo protection.

Ed Sullivan is a Hermosa Beach, Californiabased writer. He has researched and written about technology, healthcare, finance, and real estate for over 25 years. MM&D | September/October 2014

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Same products, process, people and passion.

UniCarriers Americas designs, manufactures and supports a complete line of material handling equipment that offers features resulting in greater reliability higher productivity and lower total operational costs. Get to know us again or for the first time.

Deval Handling Equipment

Distributor for TCM & Bar rett ttt products (by by UniCarriers) for b f Canada

Visit www.tcmdeval.com or contact our Deval dealers for details Become a Deval dealer: Inquire about the dealerships available in your area

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Our authorized Deval dealers will be pleased to serve you! ONTARIO Advantage Forklift Ltd. Brantford Sandra McDonald-Souter sandra@advantageonline.ca A-Lift Industrial Belle-River (Windsor) Jeremy Prince jeremy@alift.ca All-Lift Limited Brampton (GTA) Greg Bennett greg@all-lift.net All-Lift (Scarborough) Limited Scarborough (GTA) Tom Feeney tom@allliftscarborough.com Carrière & Poirier Equipment Alfred (Ottawa) André Poirier apoirier@hawk.igs.net Equipment North Inc. Lively (Sudbury) Ryan Matusch ryan.matusch@equipmentnorth.com Future Lift Truck Service Barrie John Cassis info@futurelift.com Halton Lift Truck Inc. Oakville Barry Peddie barry@halton-lift.com

Lift Depot Ltd. London, Stratford, Cambridge Mike Cunningham mcunningham@liftdepot.com Lift Line Machinery Ltd. Niagara Peninsula Bill Alton bill.alton@liftline.ca Mister Mechanic Lift Truck Mississauga, Oakville René LeTendre sales@mistermechanic.com Modern Fork Lift Service Weston (GTA) Mark Bruno modernforklift@rogers.com Provincial Lift Truck Inc. Kitchener Chris Glaubitz cglaubitz@provincial-lift.ca RBH Lifttruck Services Inc. Monkland (Cornwall) Rick Hebert sales@rbhlifttruck.com

SASKATCHEWAN Butterfield Forklift Ltd. Regina Parker Butterfield parker@butterfieldforklift.com Deval Handling Equipment Saskatoon Guy Musinka gmusinka@tcmdeval.com

ALBERTA LiftBoss Material Handling Group Calgary, Edmonton André Gagnon andre@liftboss.ca

BRITISH COLUMBIA Attica Equipment Ltd. Coquitlam (Vancouver) Scott Taylor atticaequip@yahoo.ca

ReadyQuip Sales and Service Ltd. Timmins Jason Denis info@readyquip.com Solarlift Material Handling Ltd. Waterloo Gerry Racine service@solarlift.com Sure-Lift Inc. Brantford Jason Spencer info@surelift.ca

Intercity Industrial Supply Thunder Bay Craig Urguhart craig.u@intercityindustrial.com

MANITOBA

Kawartha Industrial Forklift Peterborough Stan Coons kawarthaindustrialforklift@gmail.com

Deval Handling Equipment Winnipeg Guy Musinka gmusinka@tcmdeval.com

Keegan Forklift Hamilton Jeff Keegan jeff@keeganforklift.com Lewis Motors Inc. Barrie, Collingwood, North Bay Steve McKee smckee@lewismotorsinc.com

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Brought to you by Brought you by our surveytopartners:

 As the leading and largest association in Canada for professionals in supply chain management, the Supply Chain Management Association (SCMA) is the national voice for advancing and promoting the profession. SCMA strives to ensure that employers recognize the critical contribution that SCM professionals make to the success of their organizations. SCMA sets the standard of excellence for professional skills, knowledge and integrity. With nearly 8000 members working across the private and public sectors, SCMA is the principal source of supply chain training, education and professional development in the country. www.scmanational.ca

 For nearly 150 years we have been where the growth is, connecting customers to opportunities. Today, HSBC serves businesses in over 60 markets around the world. Whether it is working capital, trade finance or PCM solutions, we provide the tools and expertise that businesses need to thrive. hsbc.ca/business

05MMD-SalSur.indd 28

Making progress,

slowly alaries stagnate, gender gap S declines for supply chain workers

It’s time again to share the results of the annual Survey of the Canadian Supply Chain Professional. Read on to see where salaries have gone in 2014 and what your colleagues are making. Emily Atkins reports.

lthough the economic recovery is in full swing, it appears supply chain salaries are not bouncing back with vigor. In fact, the overall average salary reported in our 2014 survey has dropped back a little from 2013. But the good news is that both female supply chain workers and MM&D readers have experienced gains. This year the overall average salary is $86,967. That’s down about a grand (or about one percent) from last year’s average of $87,908. For MM&D readers the average is $88,571, or almost two percent higher than the average. Women’s average salaries climbed from last year by about a thousand dollars (a 1.2 percent hike) from $77,842

to $78,819. This still leaves a 17 percent gap between their wages and those of their male counterparts. However, that gap declined from 2013 to 2014 by four percent. So while overall sector average wages stagnated this year, women were the winners with higher salaries and improved pay packages relative to male colleagues. Still, pay equity in the sector remains a grim story. In the five-year cycle we are examining, the gap between women and men started at 31 percent. In 2011 that declined to 18 percent, but then jumped again to the 21 percent range for 2012 and 2013. So while the decline to 17 percent in 2014 is encouraging, it’s clear there is still a long way to go before women’s wages catch up.

THE GENDER GAP

2010 2011 2012 2013 2014

Overall average Male Female

$81,000 $82,800 $85,178 $87,908 $86,987 $93,600 $88,300 $91,181 $94,492 $92,276 $71,300 $74,600 $75,033 $77,842 $78,819

Actual difference $22,300 $13,700 $16,148 $16,650 $13,457 % More men make 31% 18% 21.5% 21% 17%

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Regional Breakdown From 2013 to 2014 there was little change in the way regional salaries stacked up. Once again, Alberta leads the way, albeit with a decline in average wage from $103,049 last year to this year’s $98,109, which is still well above average. BC and Ontario have swapped places this year, with Ontario’s average of $85,612 edging out BC’s $85,542. What’s interesting is that both fall slightly below the national average. Manitoba/Saskatchewan combined and Quebec also swapped places, with marginal changes for both. Quebec’s average of $80,580 just tops the Prairies’ $80,266. Last year the two western provinces’ wages were about $1,000 more than la belle province’s. For MM&D readers the sweet spot is Ontario. Wages there were $92,146 on average, four percent higher than the national number, and 7.6 percent higher than the overall Ontario average. In Quebec as well, MM&D readers claimed a premium, with average salaries of $91,907 versus the Quebec average of $80,580. That’s a whopping 14 percent differential. In BC MM&D readers also showed higher averages, although in Alberta you made less than average. In BC the difference was just two percent, while in Alberta there was an eight percent deficit.

5-YEAR SALARY OVERVIEW

British Columbia

$85,542

SALARY BY REGION

MM&D: $87,400 Alberta

$98,109

Atlantic Canada

MM&D: $90,736

$72,279 MM&D: $67,625

Manitoba/ Saskatchewan

$80,266 MM&D: $83,435

Ontario

Quebec

$85,612

$80,580

MM&D: $92,146

MM&D: $91,907

In Canada’s major urban centres MM&D readers hit the jackpot—everywhere but Alberta, that is. In Calgary the average is $107,428, while MM&D readers make $93,383, or 15 percent less. In Edmonton the gap is less than one percent. In Toronto the difference is seven percent in favour of MM&D readers, in Montreal it is 13 percent, in Vancouver it’s 6.6 percent, and in Winnipeg it’s a staggering 22 percent.

Men Average Women

$100,000

MM&D average for 2014: $92,276

92,000

84,000

MM&D average for 2014: $78,819

76,000

68,000

$60,000

2010

2011

2012

2013

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2014

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AVERAGE NUMBER OF HOURS WORKED

Highest paid city: Calgary ($107,428) For MM&D readers: Toronto ($97,586)

Male Female Mean MM&D Mean

$110,000

100,000

How much you work There’s no question that people generally put in longer hours, but does it pay off? It does if you put in the really long hours, but for those who work between 45 hours and 50 hours the payoff is just not there. The average salary for those who work more than 50 hours a week is $105,973. Among our readers it’s slightly less at $102,941. But if you work 46 to 50 hours reported salaries are much lower, averaging $84,340 (MM&D $85,791). That’s less than the overall average! It hardly seems worth it when those in the 41- to 45-hour range averaged $89,051 with MM&D readers at $94,638.

90,000

80,000

70,000

0 re

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-50 46

-45

$99,413 $101,059 $98,336

$96,913 $89,201 $87,385

Where you work Supply chain jobs in the natural resources industries continue to deliver top dollar. In our five-year overview they have consistently topped the list, and this year the average salary is $101,023. When you look at company size it’s the bigger the better for salaries. Respondents working in companies with 5,000 or more employees report the highest average salary at $101,059. But for MM&D readers it’s the next tier down that had the best result. Wages in companies with 1,000 to 4,999 staff were $99,038 for our readers.

$82,159 $79,925 $78,505

$87,719 $81,388 $78,760

$72,626 $74,912 $76,398

80,000

$81,722 $79,201 $83,996

100,000

$94,845 $92,020 $99,038

2013 2014 MM&D 2014 Mean

$110,000

90,000

Les

SALARY BY NUMBER OF EMPLOYEES

-39 35

$60,000

70,000

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+ 00 50

10 49 0099

50 99 09

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$60,000

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SALARY BY POSITION $139,747 $141,813 $134,121

60,000

$57,997 $56,479 $60,400

90,000

$68,859 $70,261 $71,854

$83,025 $85,690 $76,028

$98,656 $99,462 $90,198

120,000

$87,815 $83,434 $83,577

What you do $106,601 $102,461 $92,434

$150,000

2013 2014 MM&D 2014

30,000

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lta nt En gin Pro eer fes ing sio / na l Op era t Ta ions/ cti cal Ad mi Cle nis rica tra tio l/ n

Itâ&#x20AC;&#x2122;s no surprise that people with executive titles make the most, but MM&D readers who are executives make even more than the executive average. The overall average for that job classification is $128,497, while for MMD readers itâ&#x20AC;&#x2122;s $134,121. Another fact of note is that the gap between male and female executives is far less than the overall average, at only 2.5 percent. The top five job categories ranked by highest average salary are: Executive ($128,497), consultant ($102,461), managerial ($99,462), strategic ($95,869) and supervisor ($85,690). For MM&D readers the order is a little different. Execs claimed $134,121, followed by consultants at $92,434, managers with $90,198, engineering/professionals at $83,577, and strategic with $82,376. Clerical positions are at the bottom of all lists, and here again, the gap between males ($62,655) and females ($60,826) is smaller, at three percent.

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Top job title: Executive Overall average: $128,497 MM&D readers: $134,121

Optimum company size: 5,000 or more employees Overall average: $101,059 MM&D readers: $98,336

HOW DOES YOUR SALARY MEASURE UP? Visit the MM&D Online Salary Calculator! www.mmdonline.com Brought to you in partnership with

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SALARY BY AGE

Under 25 26-35 36-45

$100,000

46-55 Over 55 (Net) 56-65

How long you’ve done it Compensation is frequently based on how long you’ve been doing a job. It just makes sense that as your years of experience grow, your abilities and depth of understanding keep pace. This year’s survey results reflect that reality for the most part, with one interesting discrepancy. While, across the board, salaries are highest for those in the 30 to 35-years range, at $109,484, for MM&D readers it’s those who have between 20 and 25 years under their belts who make the most ($108,553). How old you are makes a difference too. Notable this year is the gains made by those in the under 25 age group. After a three-year slide, salaries for this group jumped to $64,517 this year. MM&D readers’ wages in this group did not keep pace, however, clocking in at only $53,326.

MM&D: $88,571

88,000

76,000

64,000

52,000

$40,000

SALARY BY COMPANY REVENUE

2010

2011

2012

2014

MM&D average for 2014

$100,000

92,000

84,000 MM&D average for 2014

76,000

68,000 More than $100 M Average Less than $100 M $60,000

2010

2011

2012

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05MMD-SalSur.indd 33

2013

2014

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SALARY BY ORGANIZATION TYPE

2013 2014 MM&D 2014 $117,000

Best Education: MBA Overall MBA average: $107,131 MM&D MBA average: $125,544

72,000

$89,072

$89,985 $79,693 $81,209

$77,113 $80,493 $71,550

84,000

$83,404 $83,991

$82,222 $80,810 $82,906

$84,777 $87,109

$87,731

96,000

Budget sweet spot: $75-500 million Overall salary for those managing this amount: $103,346 MM&D readers: $132,000

$80,255 $82,341

108,000

$103,697

$105,979 $101,023

$120,000

les

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ale

05MMD-SalSur.indd 34

$104,973

$89,600 $91,307 $92,272

$87,115 $85,304 $84,375

60,000

30,000

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In 2014 1,509 supply chain professionals completed the survey. Readers of MM&D, members of the Supply Chain Management Association, and sister publications Canadian Shipper and PurchasingB2B subscribers from across Canada were sent email invitations in the early summer this year. With this response rate the margin of error was plus or minus 2.6 percentage points, 19 times out of 20. Research services were provided by G. Bramm Research Inc.

$80,197 $79,805 $79,824

METHODOLOGY

$86,573 $84,152 $93,583

90,000

$81,818 $74,386 $83,278

120,000

$88,884 $79,600

$150,000

$111,596 $107,131 $125,544

ver

2013 2014 MM&D 2014

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$60,000

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STORAGE & RETRIEVAL

Lightweight containers help increase throughput Ergonomic and labour-saving new technologies By Jim McMahon

hether used for electrical parts, car accessories, mail order items, computer chips, food products, paperback books, apparel, C-parts or assembly line components, containers used for storage, picking, internal transport and shipping are critical to the function of any manufacturing facility or warehousing operation. Containers are essential to the establishment of order within the warehouse, to optimize manual, semiautomatic and fully automatic storage, and to protect the components and finished goods once stored. Throughout the supply chain in every industry, containers help companies move products faster, safer, smarter and more cost-effectively. The most efficient and durable containers to date have a weight of approximately six to seven pounds, depending on size. These can support weights of up to a limit of 100 to 110 pounds. The durability of the containers is modified by the design integrity and the quality of the blend of highdensity polyethylene or polypropylene used; where these are deficient the containers lack durability. Unfortunately, many containers, particularly those manufactured with poorly alloyed blends of recycled materials, are prone to these quality issues, and consequently have limited lifespans, requiring more frequent replacement. Additionally, as manufacturers and distributors have become more attentive to the ergonomic needs of their workers, weight limits on containers being manually handled by workers have been adopted, with a generally recommended weight ceiling of 33 pounds per container. This reduces physical stress from lateral movements by workers lifting too-heavy containers. 36

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Although a positive move for employee safety, reducing the payload weight allowed per container increases the number of containers required to achieve a specified throughput, and reduces the amount of product that can be pallet stacked and truck loaded. These conditions represent an industry-wide deficiency in container efficiency. SSI SCHAEFER has a potential solution in the Euro Light (ELB) line of containers. This line, designed for everyday use, is on average 46 per cent lighter than similar size traditional containers. It is also extremely sturdy, matching the strength of contemporary containers. Designed using a new polypropylene-blend material, the ELB container is a high-quality product, which can be used for virtually any purpose. “The ELB container line fills a gap in the industrial and warehousing need for plastic containers,” said Clinton McDade, senior designer at SSI SCHAEFER. “Each of the five container sizes in the line weighs significantly less than similar-size conventional containers. The weight difference varies from 20 per cent less on the smallest sizes, up to 47 per cent on the largest. For example, a 24-inch by 16-inch by 9-inch container is approximately 40 per cent lighter. These are very lightweight containers, yet because of the plastic blend we are using, and the integral design of the structure, we have been able to build the containers using less material while maintaining durability and strength comparable to any container on the market.” Less container weight means more weight can be applied to the payload. With a maximum weight of 33 pounds, the ELB containers will allow another almost 10 percent to be added to the payload. This can have significant cost efficiencies on labour and transportation by reducing the number of total containers needed for a given throughput. “ELB containers have been designed as single-unit geometric box structures,” continued McDade. “This design accentuates rigidity in the box, and helps eliminate the need for mid-box vertical structural MM&D | October/September 2014

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components that would impede the placement of labeling or hot stamping. Consequently, the ELB allows for labels or barcodes to be more easily placed around the outside of the container.” McDade added that because the containers use less material they are less expensive to manufacture and end up being 10 to 15 per cent cheaper to buy. The Euro Light containers are available in five sizes: 12- x 16- x 5-inch and 9-inch heights; and 16- x 24- in 5-inch, 9-inch and 13-inch heights.

Labour-saving ASRS The UltraBot ASRS (automated storage and retrieval system) order picking system from Integrated Systems Design (ISD) stores and delivers tens of thousands of SKUs and inventory to one or more workstations while saving up to 66 percent of the labour. The UltraBot systems can achieve 1,440 lines per hour (per operator) delivering loads up to 200 pounds and 3-foot cubed in size. Likewise, system performance such as throughput, labour and floor space savings, go-live dates and return on investment can be guaranteed before the system is implemented. The system’s capacity, throughput, load size, location and more can be changed at any time. The UltraBot robotic system moves up and down the front of two- or three-tiered horizontal carousels, retrieving and discharging totes, boxes or cases. It delivers inventory to a conveyor for routing to the dynamic batch workstations where orders can be buffered until the operator requires that pick. Completed orders are automatically taken from the workstation and routed to the next workstation or zone for further processing and then sent back to the UltraBot system for storage until the next pick is required. Integrated dynamic batch workstations optimize

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05MMD-AutoStorage.indd 37

All three different base designs on the ELB containers are conveyable and allow for loads from 60 to 110 pounds. The ribbed base has a reinforced, diagonally ribbed base with extra all-around ribs (tread) and optimized radii for strength. The Smooth Base is for quiet transport on conveyors or transferring items to modular shelving. The Reinforced Welded Base has a welded base plate with sloped base and shaping for optimal running properties and high loads. MM&D order pickers time by automatically inducting and discharging orders. Operators never have to waste time handling totes or scanning barcodes and license plates. One hundred percent of their time is spent picking orders. This “goods to person” technology dramatically improves labour utilization by two thirds or more by eliminating all wasted walking and searching time and using integrated pick-to-light technology, simple photo database software and hands-free dynamic batch picking workstations.

Vertical storage The Vidmar Tower vertical storage and retrieval system (AS/RS) is the ultimate high-density storage solution, designed to take advantage of every available inch of floor space and capable of being built up to 46 feet high with unlimited custom drawer configurations. The tower series ensures maximum operator efficiency with optional dual-delivery continuous pick feature and a choice of ergonomic picking bay designs and drawer access setup. Easy-use touchscreen operation and flexible management software improves efficiency and allows the management of up to 132,000 lbs. of material from one convenient console. Customers can choose from a variety of security options including automatic doors and password/barcode access.

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EQUIPMENT FOCUS

Forktrucks and Accessories 1 Hard or soft option

Crown Equipment Corporation, is offering hard and soft cabins for the Crown C-5 Series. The hard cabin is constructed from tubular steel and is available for the pneumatic tire model. Available as a factory-installed option, its textured, sound-absorbing surfaces reduce noise. Long, bar-style door handles provide strength and leverage for easy closing and two-way sliding, locking windows improve an operatorâ&#x20AC;&#x2122;s control of their environment. Filtered fresh air, heat and defrost controls are built into the door assembly so operators gain more floor space. This design also enables entry and exit on right side of the cabin. The soft cabin, while available as a factory-installed option, also can be purchased as an aftermarket kit. It has an acrylic top and soft rear window and doors that can be rolled up or down as weather conditions change. The soft cabin can be ordered as a full cab, a partial cab without doors, or in modular components that can be used to create a custom solution. The design of the Crown C-5 Series cabins considers optimum visibility in all directions, which is important in outdoor and extreme applications where pedestrians and other operators may not see or hear well. Through the large windows operators can easily view the fork tips, load and surrounding environment. With both the hard and soft cabins, forward visibility is maintained via the safety glass windshield with wiper and washer. Large acrylic roof panels provide overhead visibility, especially valuable when handling loads at height. 1

2 Hablo forklift?

Companies with Spanish-speaking employees now have an easier way to provide OSHA-compliant lift truck operator safety training. Yale Materials Handling Corporation has released a Spanish version of its award-winning operator training DVD program, Yale Handle with Care, which features Yale Class I-V lift truck products. Available in a two-DVD Spanish-only format or a four-DVD English and Spanish combination kit, Yale Handle with Care may be purchased through an authorized Yale lift truck dealer.

3 Natural rubber tires

Stellana US Inc has released Rmax natural rubber industrial tires for IC and Electric lift trucks. The unique rubber compound is highly resistant to chunking and tearing and has a high load carrying capability. Rmax tires are designed with an innovated TAP, Turning Assist Profile, to promote ease of turning and reducing driver fatigue. They are available in smooth and traction versions and a white non-marking tire is a standard option.

3 38

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MM&D | September/October 2014

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NO COMPROMISE GET THE BEST OF BOTH WORLDS

THE JUNGHEINRICH REACH TRUCK:

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EQUIPMENT FOCUS 4 Electric trucks from Hyundai

Hyundai Forklift introduced the 10/13/15BTR-9 series 24-volt electric counterbalance forklifts. This newly designed model is the first of Hyundai’s 9 series forklifts to be launched in the North American market, with the remainder of the product line following close behind. Operators can look forward to outstanding productivity, maneuverability, easy maintenance and comfort with these forklifts, which are suited for applications requiring a tight turning radius, such as distribution centres, loading docks and cold storage. All three 24-volt models use enclosed, low maintenance AC technology, drive and pump motors. The Zapi controller provides smooth operation and protection for high and low voltage, overheating and fault recording. All three units offer twoand three-stage masts to 236-inch lift heights, and load capacities of 2,200 lb, 2,750 lb, 3,300 lb, respectively. The combination of a three-wheel design and rear-wheel drive offers central pivot turning, which allows the driver to work in confined spaces such as the narrow aisles of a warehouse. This series also has a curve control feature, which limits travel speed based on the turning radius. Operators have the option of four different performance modes, High, Normal, Economic and Turtle Mode. All three units have advanced safety features including an optimized lift cylinder arrangement, which gives operators wider visibility on all sides, as well as a panoramic mirror that expands the driver’s view when backing up. A strong overhead guard, exceeding CEE and ANSI regulations offers operators protection from falling objects. When forks are being lowered on the 10/13/15BTR-9 series, a down-control valve maintains a controlled speed and similarly, the down-safety valve prevents forks from dropping down in case of sudden damage of the hydraulic line. Most drive movements, including Lift Lock, Tilt Lock and Drive Lock are impossible when an operator is not in the seat. Each model’s battery compartment is equipped with a side removal assembly making battery replacement quick and convenient. All three models also have an advanced LCD monitor allowing the operator to see speed and accelerator level, steer angle, travel direction, battery discharge indicator, hour meter, working mode and brake oil

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5 Batteries receive efficiency certification

Exide Technologies’s GNB Industrial Power Division’s product line of 24V, 36V, 48V, 72V and 80V three-phase industrial battery chargers for electric lift trucks and other material handling equipment has received energy efficiency certification from the California Energy Commission (CEC). Among the first industrial battery chargers to meet the CEC standards, the GNB Industrial Power EHF SERIES charger line is a multi-profile range for standard-flooded, low-maintenance-flooded and valve-regulated lead-acid (VRLA) motive power batteries. The new CEC standards require large battery chargers, sold in California with a manufactured date on or after January 1, 2014, to be more efficient; use less energy during the charging cycle and in standby and off modes; and meet performance criteria including charge return factor, charger efficiency and power factor. New CEC mandates for battery chargers expect to reduce energy consumed by battery chargers and are estimated to save California 2,200 gigawatt-hours each year–enough energy to power nearly 350,000 homes.

MM&D | September/October 2014

14-10-17 11:47 AM

Informa.indd 1

14-10-17 11:41 AM

LEGAL LINK

Defences to defamation It’s All True, I Swear It!

Marvin Huberman

n Part One of this article, we examined the essential elements of a defamation action. In this part, we look at the main defences to a defamation action. Once the plaintiff has proven the essential elements of defamation - the defendant intentionally or negligently published the statement; the statement referred to the plaintiff; the statement is capable of being defamatory; and the statement was defamatory of the plaintiff – the onus shifts to the defendant to prove a defence. The main defences include the following.

Truth or justification Truth is a defence. The defendant has the onus to displace the presumption that the defamatory words used are false by establishing the words are true in substance, that is, they convey an accurate impression even if there are slight inaccuracies in the details of the expression. If the words published are capable of having more than one defamatory meaning, the defendant is permitted to plead and try to justify an alternate, or lesser, defamatory meaning than that alleged by the plaintiff. The court will determine the natural and ordinary meaning to be given to the words at issue. If the truth defence fails, the court may increase the damages claimed by the plaintiff.

Fair comment This defence, as it has been recently analyzed and defined by the courts, illustrates that defamatory statements do not automatically override freedom of expression. The fair comment defence is available when the alleged defamatory words are comments (expressions of opinion) on matters of public interest. The comment must be based on true facts. The comment, though it can include inferences of fact, must be recognizable as comment. The comment must satisfy the following objective test: could any person honestly express that opinion on the proved facts? Even though the comment satisfies the objective test of honest belief, the defence can be defeated if the plaintiff proves the defendant was subjectively actuated by express malice, i.e. for an indirect or improper motive not connected with the purpose for which the defence exists. The judge decides whether the publication is on a matter of public interest, which means that the subject matter “must be shown to be one inviting public attention, or about which the public has some substantial concern because it affects the welfare of citi42

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zens, or one to which considerable public notoriety or controversy has attached.” To constitute fair comment, the statement must not be a statement of fact but rather a comment or opinion. The key is that the statement must be a reflection of a subjective opinion, not an assertion of an objective fact. Once the trial judge is satisfied that the statements are reasonably capable of being a comment, the jury then determines whether the challenged statement is one of fact or one of comment. This is viewed through the perspective of a “reasonable viewer or reader”. To constitute fair comment, there must also be some factual foundation to the comments made, which must be expressly stated or be so well known that the members of the public may make up their own minds on the nature of the comment expressed. The courts have held that the defence of fair comment applies provided the statement reflects a belief that could be expressed by an honest person, no matter how opinionated or prejudiced, on the basis of the relevant facts. The jury will decide whether or not the comments reflect an honest belief. The plaintiff can defeat a fair comment defence if he can prove that subjective malice was the dominant motive of the particular comment. If the trial judge finds that the evidence raises a probability of the existence of malice, the jury determines whether or not malice exists.

Privilege The defence of privilege is available where the “common convenience and welfare of society” requires it. It is not the content of the communication on which the existence of a privilege generally depends, but rather on the circumstances under which the communication is occurring. The common law recognizes an absolute immunity from liability for defamation–an “absolute” privilege. As well, the courts have recognized a “qualified” privilege in certain circumstances which do not warrant complete immunity. Absolute privilege extends to the publication of statements made in the course of judicial or quasi-judicial proceedings for statements made in the course of proceedings in Parliament and its committees, and for certain statements made by senior government officials to each other in the course of performing their duties. Absolute privilege, with certain exceptions, has been extended by many provincial defamation statutes to fair and accurate reports of court proceedings. The court will analyse the statement objectively and MM&D | September/October 2014

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LEGAL LINK consider “whether persons of ordinary intelligence and moral principle, or the great majority of right-minded persons, would have considered it a duty to communicate the information to those to whom it was published.” The common law recognizes certain categories of communication as being prima facie subject to qualified privilege, including fair and accurate reports or judicial proceedings, legislative proceedings and public documents. Qualified privilege has also been recognized for a report of theft made by a store owner to the police, for statements of an employee to his superiors regarding the conduct of another employee harmful to the company, and for a parent expressing concerns to educational authorities regarding the treatment her child received from a teacher. The onus rests on the defendant to prove that an occasion is covered by qualified privilege. The judge decides whether or not the occasion attracts a qualified privilege. If the plaintiff establishes that the defendant acted with malice, a qualified privilege is defeated. This malice is the same malice for the purpose of defeating the defence of fair comment. Therefore, if a statement was made maliciously, albeit on an occasions of qualified privilege, the normal immunity from liability associated with such an occasion is lost. If the trial judge finds that the evidence raises a probability of the existence of malice, the jury will determine whether or not malice existed. Another way the protection of qualified privilege can be defeated is by the defendant exceeding the privilege. Although malice defeats the entire privilege, where privilege is exceeded, it is only that part of the communication that is outside of the occasion that is subject to liability. The courts have held a qualified privilege to be exceeded when communication has been made to a “too broad an audience” – that is to recipients who have no legitimate interest in the subject matter. The qualified privilege will not apply to information that is not germane or is irrelevant to the duty or interest that gives rise to the privilege, notwithstanding that the recipient has the necessary interest to receive some information. A qualified privilege can also be lost if the language used in the communication is inappropriate or excessive having regard to the circumstances. The judge decides whether or not a qualified privilege has been exceeded. Unlike malice, which requires an examination of the motive of the defendant and his or her belief concerning the truth of its contents, the question as to whether or not privilege is exceeded depends on the scope of the publication in regard to the mutual duty and interest giving rise to the qualified privilege. www.mmdonline.com | September/October 2014

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Responsible communication Reporters, commentators and other public communicators traditionally were unable to rely on a defence of qualified privilege. Justification, or the truth defence, was the only defence available for statements of fact. However, for reporters and commentators, this defence is very often extremely difficult to prove in a court of law on the requisite standard of proof. As a result, this may have a “chilling effect” on what is published, which, in turn, may limit the variety of public debate. Thus the court established a new and independent defence, which is available to anyone who publishes material regardless of the medium. The new defence is called “Responsible Communication”. This defence has two elements: The publication must be on a matter of public interest; and, the defendant must show publication was responsible in that he or she was diligent in trying to verify the allegation(s), having regard to all the relevant circumstances. There is no separate inquiry into malice, once the Responsible Communication defence is made out. The judge decides whether or not the publication is on a matter of public interest. For the purposes of this new defence, the test for determining whether or not the publication is on a matter of “public interest” is the same as for the defence of “fair comment”. In determining whether a communication was responsible, the Supreme Court of Canada provided the following illustrative but non-exhaustive set of factors to consider: • The seriousness of the allegation; • The public importance of the matter; • The urgency of the matter; • The status and reliability of the source; • W hether the plaintiff’s side of the story was sought and accurately reported; • W hether the inclusion of the defamatory statement was justifiable; • W hether the defamatory statement’s public interest lay in the fact that it was made rather than its truth (“reportage”); and • Any other relevant circumstances. Ultimately, the analysis requires the court to weigh the potential public benefit of the publication against the risks and costs in terms of competing constitutional and other social values, including privacy. The jury determines whether or not the communication was “responsible”. MM&D Marvin J. Huberman, LL.B., LLM, is a Toronto trial and appellate lawyer, mediator and arbitrator. www.marvinhuberman.com. 43

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LEARNING CURVE

Rewarding performance Y Tracy Clayson

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ou may be surprised to learn that performancebased rewards—designed to encourage creative thinking, spur employee engagement and raise productivity—rarely succeed in properly motivating people. According to the Harvard Business Review and case studies by McKinsey & Company, these programs may increase compliance around stated corporate goals, but they do not have a sustainable, discernible impact on behavior. Instead, they can lead to internal competition and infighting, or cause people to work just hard enough to reach a reward and no harder. This stifles creativity and causes complacency in employees, doing more harm than good. In fact, where people are performing tasks that require creativity and better problemsolving skills, outcomes are typically even less positive when bonus systems are introduced. Similarly, when top-level executives are more handsomely rewarded, corporate profitability tends not to increase. But with the growing talent shortage, companies must be more innovative to attract and retain good employees. Those employees must better understand the importance of their employer’s brand, just as leaders must be role models in the behaviors that drive success in the company. Everyone must understand which specific processes and functions lead to corporate success. Sadly, while leadership often gets the memo, many workers are not shown how their performance impacts operational, financial and competitive outcomes. So, rather than dangle carrots, leaders need to chop a bunch up every day and nourish their people by spending more time engaging and teaching them. This type of good-faith development strategy is far more likely to foster general creativity or promote task-based innovation than inconsistent rewards that can make people do the right things for the wrong reasons. After all, every company has a culture, and those who see the value in developing employees by mentoring, guiding and growing talent will keep their good people. Most employees who are brought into a conversation about corporate direction instantly feel an upsurge in their sense of value. They want to understand what role they can play in their company’s success. So, to foster better performance development, it might be helpful to consider the following. Inspect what you expect: • Provide a clear picture on the overall goals of the unit, division or organization. • Prioritize according to critical deliverables, such as tasks, duties and responsibilities. Map out the key roles played in relation to the greater operation.

• Regularly review, renew and relay the expectations as needs change. Create a learning environment: • Recognize mistakes, misunderstandings and missed opportunities as part of the success of the work. • Collaborate and communicate the expectations and uncover any comprehension gaps. • Support the efforts and ideas of others and work as a team. • Consider that the best answers often come when better questions are asked in solving a problem. Collaborate, starting at the top: • Build a solid mutual/group understanding of desired performance goals. • Bring a mix of management levels to brainstorming sessions for a broader perspective on the problem. • A llow for new ideas and don’t allow a person’s title alone qualify them to be the solution provider. • Experts are not the only ones who can see opportunities, or how to tackle challenges. Reward creativity and encourage input: • Evaluate operational effectiveness, with a focus on the talent demands involved. • A llow for a balance of agility and established practices for process success. • Build a supportive environment and value honest appraisals of business operations. • Identify when competing interests are stalling success, such as when rewards are given for speed versus accuracy. Build a high-performance culture: • Grow high-potential performers by helping them develop strategies and improve their execution. • Invest in talent development. • Have deliberate high-performance succession plans by selecting the best people for the job. • Demonstrate the commitment of top-level executives on retention and skill building goals. Be honest about performance: • Ask if the job matches the skill of the person in the role as the needs change? • Don’t delay the need to discuss performance improvement–and do it regularly. • Get a commitment for change from those you honestly think are capable of doing the work. • Identify those who don’t perform at a high level and help them succeed elsewhere. MM&D Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel. tracy@in-transit.com MM&D | September/October 2014

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MATERIALS HANDLING

The missing link H Dave Luton

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istorically, supply chain visibility was limited to the end links—where shipments started and where they ended up. The transportation links between the two were often a black hole, out of which emerged the product when it was received. While this may have been acceptable four or five decades ago, it’s not in today’s world of global sourcing and international transportation networks. Today, longer in-transit times and distances necessitate information to provide a better idea of in-transit progress and projected arrival time. Inventory control practices, which traditionally emphasized only product when it was received, have also changed to reflect in-transit amounts. With local suppliers using a single mode of transportation, variability in transit times was relatively small The related need for in-transit information was less, as missing shipments could be managed on an exception basis. Larger occurrences of delayed receipts could often be identified in advance and managed because they affected both the user and the transportation supplier (bad weather, for example). For longer shipments on the North American continent, in-transit supply chain visibility is not new. The major railroads supplied automatic tracing capability over four decades ago, by old-fashioned telex. Car progress problems could often be identified in time to take corrective action. From a production planning perspective, knowing about a problem 48 hours in advance makes a world of difference to one identified only 20 minutes in advance. In contrast to North American transportation networks, international networks are multimodal and the handoff between modes (for example, between containership and land transportation) increases the risk of delays. The risk of procedural delays also increases with multiple countries, each with their own bureaucratic rules and multiple languages. In-transit shipments can be visible as never before. Some of the tools available to manage this include: a) The internet with worldwide access and capability. b) Mobile devices and real-time communications throughout the world. c) Track and trace capability coupled with GPS location and tracking information can provide real-time location and availability information. d) Large scale computer hardware and software resources that provide ability to integrate this information, both on a centralized and a distributed basis to industry participants. e) Real-time signature data at product handoff locations.

In logistics, the commonplace acronym “WMS” has long stood for “Warehouse Management System”. The major functionalities of a WMS system are well known and include abilities to: Identify and track items as they enter a distribution facility (“receiving”); identify and track items as they leave a distribution facility (“shipping”); locate and track items within the facility and provide information on their current physical status (including operations from putaway to storage to order selection and packing); and, integrate operations to manage, coordinate and control the operations needed to perform these functions. Now let’s take this warehouse management software, eliminate the walls and start expanding it like a balloon. In this case we are going to make it large enough to encompass the entire world. What is the computer hardware and software system we need to run this? Let’s call it “Worldscale Management Software”. I would argue that we have all the tools necessary to do the job today as long as the participants can be be integrated. Once integrated, think of the possibilities for all aspects of supply chain visibility. The key tools the transportation industry can provide us with are the ability to track and locate contents and the transportation vehicles they are on. Much of this infrastructure exists today, as illustrated by small package shipments. This is an important upgrade compared to full-load information of a decade ago since there are frequently several thousand shipments on a truck.Transfer points are known and there is information on the vehicles, which can be located via GPS and satellite tracking. Combined, you have a real-time in-transit picture. Add to this the capability for predictive in-transit time and the capability for automatic monitoring and, ultimately, management. For transportation companies the problems have not changed. The old freight claims summary of O, S and D (over, short and damaged). Damaged shipments will probably always require verification on receipt but short or late shipments can be managed. In a world that emphasizes increasing transparency, there are still important management decision to be made. In cases of problems, at what stage do you notify the customer? Too early and you drown them with too much information. Too late and you have an upset customer. MM&D Dave Luton is a consultant in the greater Toronto area. dluton@cogeco.ca MM&D | September/October 2014

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