A new approach to reality in distribution centres

Transcription

March/April 2014
$8.00
Pick
to
vision
A new approach to reality
in distribution centres
Publication mail agreement #40069240.
Inside
3
5
16
22
26
28
30
32
33
34
Taking Stock
Supply Chain Scan
Canadian Food Chain
MODEX report
Trade Data
Pick to Vision
Legal Link
Learning Curve
Materials Handling
Last Word: Guest Editorial
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14-04-16 3:10 PM
TAKING STOCK
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Positive developments
A
s if it’s not enough to have an editorial handover to
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March/April 2014  Volume 59  Number 02
16
22
26
28
Canadian
Food Chain
Under the
big top
Trading data
Equipment
focus
See how one
company keeps
containers clean
Modex 2014
reveals an
upbeat industry
Printed in Canada
Publications Mail Agreement #40069240, ISSN: 0025-5343 (Print)
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How advance info
helps Customs and
trade bodies
www.mmdonline.com | March/April 2014
02MMD-Editorial.indd 3
The future of
picking is in
your eyes
3
14-04-17 3:23 PM
SUPPLY CHAIN SCAN
CROWN
SMARTWAY SURVEY
INCOTERMS
Lift truck wins design
award, p10
GHG reductions in the Canadian transportation
industry p6
Why we need them, p12
Global pallet demand to exceed five billion
By MM&D Staff
G
lobal sales of pallets are projected to climb five
percent annually through 2017 to 5.1 billion
units, an acceleration from the relatively sluggish
pace of the 2007-2012 period.
“Pickup in manufacturing activity will spur acrossthe-board gains, especially in large, mature regional
markets such as North America and Western Europe,”
says Zoe Biller, an analyst with The Freedonia Group,
Inc, a Cleveland-based industry market research firm.
Demand will advance 6.8 percent per annum in
value terms to US$51.6 billion in 2017, stimulated
by increases in unit sales, as well as by a shift in the
product mix toward higher-priced plastic pallets.
The number of pallets in use will expand at a 4.6
percent annual rate through 2017 to 9.9 billion. Stock growth will be fueled by a larger
global economy, requiring more pallets
to accommodate greater shipping
requirements, as well as increased utilization of pallets in developing markets. These and other trends are
presented in The Freedonia Group’s
new study, World Pallets.
In industrializing countries, pallet
utilization is typically low relative to the size of their manufacturing, warehousing, and
construction
sectors.
Going forward, greater
numbers of potential
pallet users will strive to
become more competi-tive on a global scale by
improving operating
efficiencies and reduc-ing product damage in
shipments through the
use of pallets.
The Asia/Pacific
region, led by China,
will post the strongest
unit sales increases of
any regional market,
4
02MMD-News.indd 4
WORLD PALLET DEMAND (Million Units)
% Annual Growth
Item
North America
Western Europe
Asia/Pacific
Central & South America
Eastern Europe
Africa/Mideast
Total Pallet Demand
2007
1356
1100
724
134
248
128
3690
2012
1290
1000
1125
149
261
155
3980
2017
1540
1150
1660
192
326
202
5070
2007-2012 2012-2017
-1.0
3.6
-1.9
2.8
9.2
8.1
2.1
5.2
1.0
4.5
3.9
5.4
1.5
5.0
2014 by The Freedonia Group, Inc.
averaging 8.1 percent per year through 2017. This region will also overtake
North America to become the largest regional market by 2017, when it will
account for one-third of the global total. Sales advances across
the region will be spurred by climbing manufacturing
activity and increased adoption of pallets by new
users. China will experience the largest gains
of any national market in the world and
will account for over one-fifth of total
global unit demand in 2017.
The vast majority of pallets are concon
structed using wood or plastic.
Demand for plastic pallets will grow
the fastest of any product type in most
national markets through 2017.
Plastic pallets can be easily cleaned,
lending themselves to use with food,
beverages, and other products where
contamination must be minimized.
They also last for many years and
are resistant to damage during
normal use. Additionally, their
recyclability and ability to be
made from recycled materials
will be attractive to users seeking
to raise the perceived environ
environmental friendliness of their
operations. However, because
of their low cost, wood pallets
will continue to dominate
product sales in most areas,
representing more than 90
percent of 2017 global unit
demand.
MM&D | March/April 2014
14-04-16 3:30 PM
SUPPLY CHAIN SCAN
Fuel cell demo
for reefer trucks
Plug Power Inc has received $500,000 from the New York State
Energy Research and Development Authority (NYSERDA) to
demonstrate the viability of replacing diesel generators with hydrogen fuel cells for powering transport refrigeration units (TRUs) on
truck trailers that deliver perishable goods.
The Plug Power TRU fuel cell will power a Carrier Transicold
refrigeration unit for the Sysco Corp distribution centre in Long
Island, NY, for 12 months. Hydrogen will be supplied by Air Products.
Successful completion of this trial is expected to open the door to
hydrogen fuel cell expansion into the refrigerated transport market—employing clean energy to regulate cold temperatures for fresh
and frozen foods, such as produce, dairy products, meats, ice cream
and other items while enroute to grocery warehouses, distribution
centres and retail destinations.
Most of the 300,000 TRUs in operation across the US today are
powered by diesel, which is expensive and environmentally hazardous due to the emission of particulate matter and nitrogen oxides
(NOx). In the course of one day, a typical TRU can consume about
10 gallons of diesel and emit 101 kg of carbon dioxide (CO2). This
is in contrast to Plug Power hydrogen fuel cells, which have zero
CO2 emissions, and release only a small amount of heat and water.
“The NYSERDA opportunity is crucial to Plug Power, as we move
forward with development of fuel cell solutions for TRU deployments,” said Andy Marsh, CEO of Plug Power. “Along with a similar,
recently announced TRU project funded by the US Department of
Energy, this contract enables us to execute on our strategy to
implement hydrogen fuel cells in markets adjacent to the material
transport industry.”
BENCHMARKS
Pointe-Claire, Quebec-based Hewitt Equipment Ltd has received
one of the Mitsubishi Caterpillar Forklift America Inc (MCFA)
2014 Dealers of Excellence awards. These industry-leading dealers
were awarded this honour for delivering the highest levels of
customer satisfaction in their sales and support operations.
Material Handling
STORAGE &
RETRIEVAL
Solutions
Scan to view the
Pan Carousel video.
Maximize the efficiency of your plant or
warehouse space with the smallest cubed
footage possible. Intelligent vertical storage
maximizes productivity with optimized retrieval
times, increased security and improved
operator safety. Store smart, store vertical for
much less than you think.
Wheels Group Inc, a North American non-asset 3PL provider,
has been designated as one of Canada’s Best Managed
Companies, Platinum Status, for the 17th consecutive year.
Wheels first achieved Platinum Status in 2003. Platinum Status
recognizes companies that have achieved Best Managed for a
minimum of six consecutive years.
800.210.0141 • www.storevertical.com
CanPro Logistics opened March 24, 2014. Located near Highway
401, and close to Toronto’s Pearson International Airport, CanPro
will provide a range of full truckload and less-than-truckload
services including emergency, just-in-time, on demand and scheduled freight—for both regular and specialized equipment types
02MMD-News.indd 5
5
14-04-16 3:30 PM
SUPPLY CHAIN SCAN
SmartWay shipper survey reveals commitment to GHG reduction
By Emily Atkins
I
n March, Garland Chow, associate professor at University of British Columbia’s
Sauder School of Business made a cross-country tour presenting the results of the
Green Shippers Survey sponsored by the SmartWay program and supported by SCMA.
The SmartWay Transport Partnership is a partnership between public and private
stakeholders with the shared goal of saving fuel and reducing greenhouse gases and
air pollution from the freight transportation supply chain. Originally launched by
the United States Environmental Protection Agency in 2004, SmartWay has been
administered in Canada by Natural Resources Canada (NRCan) since 2012. The
program is also supported by NRCan’s FleetSmart initiative, which offers additional
information, resources and services designed to help companies save fuel.
The SmartWay program aims to provide a one-stop-shop tool to benchmark
fleets, allowing for year-over-year evaluation of progress, providing a mechanism
for companies to measure up against each other. It uses fuel, mileage and payload
data about carriers to calculate emissions rates for eight distinct emissions categories. Shippers can use SmartWay emissions information to compare carriers for
contracting purposes.
Transportation, and road transportation in particular, is a major contributor to GHG
(greenhouse gases). Between 1990 and 2010 the total number of freight tonne‐kilometres
increased by 54 percent in Canada’s freight sector, while GHG emissions from the
freight sector increased by 70 percent. Transportation
(freight and passenger combined) contributed over 28
percent of Canada’s GHG emissions in 2010
The Green Shipper Survey polled shippers about
strategies and opportunities for reducing GHGs. It
asked about opportunities in managing purchased
and private transportation; how important is CO2/
GHG reduction; what is the potential for carrier sourcing and supplier management to reduce GHGs; what
factors motivate and enable green transportation
initiatives; and, where is the industry heading?
The top three most implemented actions are:
Consolidation of shipments and load maximization,
with 64 percent having already done so and 13.08
planning to. Second was more direct shipments to
reduce miles with 50 percent already committed and
another 20 percent planning to. Third was route planning and trip scheduling to reduce miles travelled,
with 50 percent already doing so and another 17 percent
planning to. The full list can be seen in the chart below.
Continues on page 8
IMPLEMENTATION OF SUSTAINABILITY STRATEGIES IN TRANSPORTATION
Air Emissions Sustainability Action
Consolidation of shipments & load maximization
Route planning and trips scheduling to reduce miles
More direct shipments to reduce miles
Improved pickup and delivery scheduling to reduce miles
Increase utilization of fuel‐efficient modes (rail, sea, intermodal)
Back‐hauling to minimize empty miles
Transloading to minimize loads moved (use 53ft containers rather
than 20ft or 40ft to gain efficiencies during transportation)
Idle shutdowns/“no idling policies” for trucks that picks up/
deliver to reduce idling
Joint process improvement with suppliers to optimize
transportation movement
Joint process improvement with customers to optimize
transportation movement
Transportation management software to maximize load and
reduce vehicle miles
Driver comfort stations (climate controlled stations at dock
facilities for drivers so that they don’t need to idle trucks to stay
warm/cold while at shipping and receiving dock) to reduce idling
Include CO2 sustainability in sourcing carriers
Encourage carrier suppliers to be CO2 sustainable
Warehouse and plant location closer to suppliers to reduce
vehicle miles
Employees investigate CO2 reduction opportunities
Provide power source for auxiliary unit in‐cab heaters for
driver cabs to reduce idling
6
02MMD-News.indd 6
Source: Garland Chow
Degree of
Implementation
Implemented
Plan to
Implement
Don’t plan
to implement
Don’t know/
Not Applicable
64.49%
50.47%
50.47%
47.66%
43.24%
37.38%
35.51%
13.08%
16.82%
19.63%
21.50%
15.32%
16.82%
10.28%
9.35%
13.08%
15.89%
13.08%
24.32%
15.89%
14.02%
13.08%
19.63%
14.02%
17.76%
17.12%
29.91%
40.19%
35.14%
11.71%
30.63%
22.52%
35.14%
15.32%
29.73%
19.82%
24.32%
17.12%
32.43%
26.13%
24.27%
14.56%
34.95%
26.21%
21.62%
6.31%
33.33%
38.74%
21.57%
21.57%
19.61%
23.53%
26.47%
7.84%
32.35%
28.43%
39.22%
22.55%
23.53%
33.33%
16.50%
11.71%
26.21%
9.01%
33.01%
39.64%
24.27%
39.64%
14-04-16 3:30 PM
A CLAUSTROPHOBIC’S
WORST
NIGHTMARE
EXTRA SPACE IS A
THING OF THE PAST.
It’s time your products get up close and personal.
With Packsize® On Demand Packaging®, you get
the exact size box you need, for every product,
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14-04-16 3:11 PM
SUPPLY CHAIN SCAN
Continued from page 6
When asked if emissions reduction was part of their
corporate mission and vision, 46 percent agreed, with
29 percent disagreeing. Fully 46 percent said that senior
management were committed to CO2 sustainability,
while 30
percent said they were not. It’s clear that the bottom line is important—50 percent
said that CO2 sustainability initiatives must have a return on investment. Only 20
percent disagreed with that statement.
The survey was conducted online, ending February 7, 2014 with 169 valid responses
from firms or business units operating in Canada with primarily domestic transportation movements then. A full range of business types and sizes were included.
For more details on the survey and results visit the SCMA website at
http://tinyurl.com/kgxzafd.
DONE DEALS
Kuehne + Nagel has been selected as a global logistics partner by the Irish
Dairy Board as part of strategic plans to increase production and break into
new markets. The Irish Dairy Board (IDB), which already supplies butter and
cheeses to over 90 countries, is preparing for expansion from 2015. The
abolition of EU milk quotas that same year will see the IDB significantly increase
its production, and it plans to take its leading products to new markets around
the world. Under a new three-year agreement, Kuehne + Nagel will manage
global transportation operations, including distribution of IDB products to
over 90 countries by deep-sea freight.
C3 Solutions has formed a partnership with National Shunt Service Limited
(NSSL) to promote its dock scheduling application, C3 Reservations. C3
Reservations is a software-as-a-service dock scheduling application which streamlines the scheduling process. NSSL is a provider of short-haul services in Canada.
XPO Logistics, Inc and Pacer International, Inc have entered into a definitive
agreement for XPO Logistics to acquire Pacer, the third largest provider of
intermodal transportation services in North America. The combined company
will continue to trade on the New York Stock Exchange under the symbol XPO.
The transaction is expected to close in the second quarter of 2014. Pacer facilitates approximately 10 percent of all US domestic intermodal freight movements,
and is the largest provider of intermodal services between the US and Mexico.
Diversified Entities, LLC, a multi-temperature, bonded 3PL warehouse in
Melrose Park Illinois selected Datex FootPrint WMS software to assist in
streamlining warehouse operations. A public refrigerated warehouse and
distribution centre for over a decade, Diversified Entities, LLC specializes in
food product inventory.
Jamison RFID, a division of Jamison Door Company, a manufacturer and
integrator of rugged, purpose-built RFID portals and communications enclosures, has formed a partnership with Quest Solution of Eugene, Oregon.
Quest is a provider in the technology, software, and mobile data collection
systems market.
8
02MMD-News.indd 8
Air cargo makes strong start in 2014
The International Air Transport Association
(IATA) released January performance data showing a strong rise in airfreight growth compared
to a year ago. Global freight tonne kilometers
(FTKs) rose 4.5 percent compared to January
2013. This is a acceleration on the 2.2 percent
year-on-year growth rate recorded in December,
and is well above the 1.4 percent full-year growth
reported for 2013 as compared to 2012.
Growth was solid across all regions, with Middle
Eastern carriers growing the fastest (10.7 percent).
European airlines continued to benefit from
Europe’s recovery from recession, posting 6.0
percent growth. Carriers based in the Asia-Pacific
region, which account for nearly 40 percent of
the global airfreight market, reported 3.8 percent
growth. North American airlines reported the
weakest rise in volumes, just 0.7 percent, reflecting
subdued January business activity. However, the
underlying trend of manufacturing in the US is
positive, which should lead to an increase in
exports. Capacity fell 0.9 percent.
“The improvement in demand is good news.
It is a step-up in pace from the mild strengthening that we saw towards the second half of 2013.
But there is also ample reason to be cautious.
Protectionist measures are part of the reason
for a slower expansion of world trade than we
would expect from current levels of industrial
production. Companies continue to re-organize
supply chains in their efforts to move manufacturing on-shore,” said Tony Tyler, IATA’s
director general and CEO.
14-04-16 4:40 PM
Deval Handling Equipment
Distributor for TCM & Barrett
ttt products (by UniCarriers) for Canada
Become a TCM/Barrett dealer: Inquire about the dealerships available in your area
For the nearest Authorized UniCarriers (TCM/Barrett)
ttt) dealer, visit our website
www.tcmdeval.com, or contact us at 1-866-537-3750
7
7-3750
Deval.indd 1
14-04-16 3:35 PM
SUPPLY CHAIN SCAN
TIACA warns about air cargo advance data
By MM&D Staff
R
aising the spectre of slowed international trade,
the International Air Cargo Association (TIACA),
urged considerable further research before advance
data requirements for air cargo security screening.
In an address to the World Customs Organization’s
(WCO) Annual Technical Experts Group on Air Cargo
Security Conference in Brussels, TIACA Secretary
General Doug Brittin cautioned Customs regulators
against taking unilateral action to require submission
of certain Customs information for all air cargo shipments, in advance of aircraft departure. He told delegates “we recommend that all regulatory parties
coordinate this process through the WCO and that
they consult more closely with industry before they
move forward on establishing regulations”.
A similar process should be followed to establish
common procedures for member states’ security regulators to ensure common cargo screening methods are
in place after the analysis process is completed, he said.
While country-specific advance data programs have
been tested by Customs regulators—including ACAS in the US, PRECISE in
Europe and PACT in Canada—and some results shared through the WCO and
other venues, gaps in global standards remain.
Brittin said the air cargo industry fully supports the concept of advance data
risk analysis, stating that many positive lessons had been learned in relation to
the creation of data sets, data transmission, data analysis and the message ‘return’
process. However, he highlighted a series of challenges that must still be overcome.
These, he said, included the lack of compatibility between many carrier and
forwarder IT systems, inaccurate or incomplete information, wide variations in
the timing of data availability, and limited testing of forwarder capabilities,
especially outside of the US.
Brittin told the WCO conference that the air cargo industry still has a number
of concerns about advance data analysis, notably systems and standards are not
yet established, ‘operational’ testing is not yet sufficient in terms of getting messages to the freight dock in time, and airline and forwarder responsibilities and
roles are not fully defined.
As the next step, TIACA wants Customs and security regulators to work with
industry to ensure data elements, analysis and messaging procedures, screening
and response protocols are all standardized. The Association says the best way
to achieve this is by Customs regulators and industry working collaboratively
through the WCO while security regulators work to develop common ‘targeted’
cargo screening and compliance standards.
A crown for Crown’s design
Crown Equipment earned a GOOD DESIGN
Award for its Crown ES/ET 4000 Series of stacker
forklifts. The awards are presented by the Chicago
Athenaeum: Museum of Architecture and Design
and the European Centre for Architecture Art
Design and Urban Studies.
Internationally renowned design institutions
and associations have recognized Crown forklifts
with more than 80 awards since 1965. This recognition marks the 13th GOOD DESIGN Award
for Crown Equipment.
The GOOD DESIGN jury honored the Crown ES/
ET 4000 in the industrial category for high-quality
design that reflects Crown’s understanding of the
complex needs of forklift operators in daily work,
as well as the company’s ability to provide solutions
to improve the forklift-operator relationship.
“We’ve been using Crown ET 4000 stackers for
nearly a year, and our operators are very positive
about this truck, particularly its quality appearance,
robust construction and optional electronic steering,” said Thomas Berns, head of logistics at
Mellerud Chemie GmbH in Brüggen, Germany.
“The overall visibility is impressive, and the narrow
10
02MMD-News.indd 10
chassis is perfect for block-stacking in our narrow aisles. Overall, the Crown
ET 4000 is particularly suitable for our continuously changing tasks without
forcing us to make any compromises.
Jim Kraimer, director of industrial design, Europe, Crown Equipment,
added, “An integral part of our approach to design is understanding the forklift
and operator relationship. This latest design award marks our continued
investment in helping to ensure that our equipment makes forklift operators
as comfortable and safe as possible, which ultimately leads to improved
productivity and efficiency.”
Since 1950, the GOOD
DESIGN Awards have
been presented to the
world’s most prominent
designers and manufacturers for advancing
visionary and innovative
product concepts that
marry form with function. In this year’s competition, more than 700
new products and
graphic designs were
selected from more than
38 countries.
14-04-16 3:30 PM
PROTECTS WITH HARDWOOD FROM 100% CANADIAN FORESTS.
CAN YOUR PALLET PROVIDER DO THAT?
STRINGER
CHEP
CAN!
Protecting your products throughout the supply chain requires a strong platform and an
equally strong pallet provider. For 35 years CHEP Canada has helped manufacturers and
retailers safely ship to over 10,000 locations across the country. Combine that with three
proven pallet options, a dedicated service rep for your account, and the confidence that
comes with a trusted business partner, and your choice is clear.
To learn how CHEP can help you, visit www.chep.com
CHEP CANADA CAN
CHEP.indd 1
14-04-16 3:17 PM
SUPPLY CHAIN SCAN
GLOBAL FOCUS
Why do we
need Incoterms?
They constitute a
common language for
international traders
by Christian Siviere
Envirotainer has opened a new competence centre, R&D and production
facility in Rosersberg outside Stockholm. The new premises are more centrally
located and in easy reach of both Stockholm and Uppsala. They represent an
investment in the future, setting the foundation for a centre of expertise for
cold chain and industry development.
Envirotainer is a global provider of temperature-controlled air transportation
for pharmaceuticals. Through its network of partners, the company reaches
more than 200 airports in more than 100 countries. Envirotainer’s headquarters and manufacturing are located in Sweden, but the company also has
offices in Frankfurt, Dallas and Singapore.
“Since our expertise is an important part of our offer, we need premises
that help us meet our customers’ growing needs for advanced transport
solutions,” says Simon Angeldorff, CEO of Envirotainer. “In addition, two new
climate chambers are being built at Rosersberg, where our team of cold chain
experts can help customers plan thoroughly dependable transport for the
often life-saving medications we carry for them.”
Boeing and AirBridgeCargo Airlines (ABC), part of Volga-Dnepr Group and
Russia’s largest cargo airline, recently celebrated the delivery of the airline’s
fifth brand new 747-8 Freighter.
With its delivery, AirBridgeCargo continues to follow its long-term fleet
modernization strategy. The new aircraft will be used on ABC’s existing
route network linking Europe, Asia and the United States via the airline’s hub
in Moscow.
At present AirBridgeCargo’s fleet consists of 12 Boeing 747 (five Boeing 747400ERFs (Extended Range Freighters), three Boeing 747-400 Freighters and
five Boeing 747-8 Freighters).
12
02MMD-News.indd 12
I
n our global village, we could ask the question:
why do we need Incoterms? With the increase
in international commerce, more and more goods
are traded worldwide and you could think it’s all
getting simpler. But in reality there are different
ways of doing business, local languages and customs, legal systems, trade barriers, all bringing
challenges. Incoterms give us the advantage of
predictability and as they are recognized around
the world, they constitute a common language for
international traders.
Just what are Incoterms? They are
international rules defining the
respective responsibility of
seller and buyer concerning the supply of
goods. They specify
the division of risks
and costs between
exporter
and
importer and the
great thing is:
they have the
same meaning
worldwide!
And where do
they come from? They
were created by the
International Chamber of
Commerce in Paris in 1936 and
the latest version, the Incoterms 2010,
came into effect on January 1st, 2011. Since they
have been revised on a regular basis, they have kept
up with changes in international trade. When you
think about it, Incoterms were created 20 years before
containers even existed (the first ocean-going metal
container was invented in 1956), so they had to be
adapted to this mode of transport.
What do they look like? They are made up of the
three-letter Incoterm itself, followed by the named
14-04-16 3:31 PM
SUPPLY CHAIN SCAN
LogiMat® Vertical Lift Module
point (as precise as possible), for example:
“FCA One Yonge Street, Toronto, Ontario,
Incoterms 2010”.
What changed on January 1st 2011? The
Incoterms 2010 can be used for international and domestic sales (previous versions only covered international
transactions). We lost four terms (DES,
DEQ, DAF and DDU), gained two new
ones (DAT and DAP) and other changes
are too technical to detail in this article.
What are the challenges? It is important
to note that although Incoterms are recognized and used internationally, including in the United States, our neighbours
to the south sometimes still use their
‘’Revised American Foreign Trade
Definitions 1941’’ or the ‘’Uniform
Commercial Code’’. These American rules
have been superseded by the international
Incoterms but some companies still refer
to them and it can lead to costly misunderstandings. There are other challenges
too specific to describe here.
Where can you learn
about Incoterms and get
reference material?
To stay up-todate with recent
changes, several
organizations,
like CIFFA,
offer seminars
and webinars
on this subject
and reference
material can
be obtained from
the International
Chamber
of
Commerce in Paris
or the Canadian
Chamber
of
Commerce.
In conclusion, whether you are importing or exporting or both, in North
America or abroad, it is very important
to master the Incoterms and their interaction with the sales contract and the underlying contracts (shipping, insurance,
Customs), in order to build an efficient
and successful supply chain.
www.mmdonline.com
02MMD-News.indd 13
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14-04-16 3:31 PM
SUPPLY CHAIN SCAN
MOVERS + SHAKERS
Joyce Carter has been named president and CEO of Halifax
International Airport Authority (HIAA), effective March 11, 2014.
“Joyce has exceptional senior management experience and an
outstanding record of achievement. Since joining HIAA in 1999,
Joyce has been an integral part of our airport community and
HIAA’s growth and development,” said Peter McDonough, chair
of HIAA¹s Board of Directors.
Coty Inc has appointed Mario Reis as executive vice-president,
supply chain, effective May 1, 2014. Reis will join the executive
committee and report to Michele Scannavini, CEO. He will be
based in Geneva. Reis will replace Darryl McCall who will work
on the transition to ensure continuity in supply chain performance before his retirement on December 31, 2014.
Reis has more than 30 years of experience as a business leader
and supply chain expert. Previously he held several senior executive positions at Danone. Prior to that, Reis worked at Mars Inc
and Bain & Co in various business roles from 1986-1996.
SeaLand, the newly founded intra-Americas regional carrier of
the Maersk Group, has appointed its executive team. The new
team includes:
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Alfredo Di Palma will join as chief commercial officer (CCO).
Currently, Alfredo holds the role of commercial manager in charge
of Central America for Maersk Line.
Maria Batista has accepted the role of head of customer service.
Maria has over 20 years of experience with Maersk Line and
Safmarine, including postings in Miami, Costa Rica, Toronto,
Charleston and Charlotte.
Shane Sawyer has been appointed CFO. Shane, who currently
leads the regional business performance function for Maersk Line
in West and Central Asia, brings 12 years of experience with
Maersk Line, including roles in Dubai, Malaysia, Singapore,
Honduras, Panama and Costa Rica.
Thiago Covre will join the team as chief liner officer (CLO).
Thiago brings over 10 years of extensive knowledge in line management. His responsibility includes building a network based
on innovative products.
Timothy Child will be responsible for overall operations as COO.
Tim is a Maersk Line veteran, with a career spanning 25 years in
areas such as trade management, capacity management, and
external and inside sales.
All appointees will be on-board within the next two to three
months, joining Craig Mygatt as SeaLand CEO.
Come visit our
brand new website
for all the latest
supply chain news,
features, products
and more.
Same great URL—
www.mmdonline.com
—fantastic new look.
Optimized for mobile!
14-04-16 3:52 PM
PROFESSIONAL DEVELOPMENT DIRECTORY
Have You Signed Up?
The Purchasing Management Association of Canada
(PMAC) and the Supply Chain & Logistics Association
Canada (SCL) joined forces to create the robust, highly
focused Supply Chain Management Association (SCMA).
The Ontario Institute of PMAC is now known as Supply
Chain Management Association Ontario (SCMAO).
WE’VE
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Become part of a network of over 3,000 members
in Ontario and 7,000 across Canada. Imagine how
this professional network can help you reach your
career goals!
Whether you are working in the industry or considering
a career in supply chain management, with SCMAO
membership the sky’s the limit!
To apply for membership visit www.scmao.ca
SCMO_Membership Ad_7x4.875.indd 1
02MMD-News.indd 15
2014-03-27 3:44 PM
15
14-04-16 3:31 PM
Cleaning up
Keeping reusable containers
dirt- and germ-free is good business
by Kara Kuryllowicz
“C
leanliness is everything.” Three simple words drive every
action at GTA-based BoxSys, where owner Maninder Swaich
and her 26 employees clean approximately 36,000 reusable plastic
containers (RPCs) and pallets daily for customers across four specific
verticals: pharmaceutical, food, automotive and retail.
“This is our core business—it’s what we do 24/7,” says Swaich.
“Once customers’ RPCs arrive at our facility, we take control and
assume full responsibility for managing and cleaning a valuable
asset that can have a direct and dramatic impact on our customers’
bottom lines as well as their relationships with their clients/consumers and subsequently their corporate image and reputation.”
Over the past few decades, corporations have increasingly moved
from single-use containers, usually cardboard, to high-density
polyethylene and high-density polypropylene containers. While a
single-use, cardboard container might cost about $2.80 and an RPC
runs around $15, the RPC is typically used up to 600 times bringing
the cost down to just a few cents per use.
“RPCs make good business sense—they cost far less per use and
tend to better protect the product while taking less of a toll on the
environment,” says Roly Scagnetti, new business development
manager at BoxSys.
For some time corporations have recognized the value in focusing
on their core competencies while outsourcing specific tasks to thirdparty providers. Customers such as Apotex, Canadian Tire, Nestlé
Canada, Grocery Gateway, WalMart, Magna and Matrix Logistics
know that the structural integrity and cleanliness of the containers
that carry everything from food products to car parts is of paramount
importance. BoxSys has leveraged its expertise and experience to
develop a unique set of Standard Operating Procedures for each
industry sector, which it then modifies for each individual client.
“Owning your RPCs is one thing, but when you decide to manage
that asset in-house, you’re essentially getting into a different business and incurring the related costs such as real estate, equipment,
testing and payroll, whether or not the volume warrants it,” says
Swaich. “We partner with our customers and review and adjust
their SOPs together.”
Brian Petrie, now central procurement manager, Canadian Tire,
has been working with BoxSys since the company first started in
1997 as a washing and asset management expert, because it made
sense to rely on a single company rather than two separate firms
to source, wash and repair its RPCs. BoxSys owner Maninder Swaich
“At Canadian Tire, our focus is on ensuring the products on our
shelves meet our customers’ needs,” says Petrie. “We’re not interested in washing and managing the RPCs because that’s not our
core business.”
Every week, Canadian Tire relies on approximately 100,000 RPCs
to carry its goods from four warehouses to more than 491 Canadian
Tire retail locations and 90 PartSource stores across the country.
During peak seasons, such as the fall, this number can be as high
as approximately 135,000 RPCs per week.
“If we don’t have an ample supply of RPCs, it can cripple us,” says
Petrie. “I love the fact that I can absolutely rely on BoxSys to wash,
repair and pack up a full trailer load, 2,400 RPCs, in a day and a half.”
Six years ago, Jagdev Bahra, manager, logistics, processes and projects, at Canadian-owned pharmaceutical company Apotex Inc decided
to commit the 1,000-plus pallets required by Apotex Inc each week
to a single supplier, rather than washing a small percentage of its
pallets in-house and outsourcing the rest to several providers.
“Our expertise lies in the production of generic pharmaceuticals—
it’s more cost-effective and a better use of our resources to turn
pallet management over to an expert in that field,” says Bahra.
Every week, the 1,000 40- by 48-inch plastic pallets must be
washed to eliminate cross-contamination between Apotex’s four
A special supplement brought to you by
16
02MMD-FoodChain.indd 16
14-04-16 4:45 PM
Ontario sites that need the service. While there is little real dirt,
even the smallest amount of dust that would typically be created
by the finished pharmaceuticals themselves must be washed away.
“We needed a supplier that would work with us to understand
our industry’s specific requirements and fully grasp the regulations
around things like waste water,” says Bahra.
In the early days of the relationship, both Apotex and BoxSys faced
unanticipated challenges but as far as Bahra was concerned, BoxSys
handled it well.
“BoxSys is a smaller, owner-operated firm with a flat management
structure,” says Bahra. “Apotex, despite its size and scope, is very
entrepreneurial, and we want partners that think like us. At BoxSys,
there isn’t any bureaucracy—they’re not obliged to go through
various steps and approvals—they just do what they need to do to
solve your issue.”
Demand for BoxSys services are such that in May, the company is
moving from its 18,000sqf leased space to a 50,000sqf owned facility
nearby. While it is currently running a single, automated washing
line and one manual cleaning area for oversize and unusually shaped
containers, the new space will allow BoxSys to add a second, more
automated washing line to increase efficiencies, contain costs and
accommodate greater volume from new clients.
“After I hired an outside consultant to audit and assess our business,
I was informed that we were running below our potential because
we lacked the space we’d need to take on new clients,” says Swaich.
“That’s when I started looking further ahead to a bigger future.”
BoxSys can accommodate containers as small as about 12 square
inches to as large as four feet square. The containers range in colour
from basic black to cherry red and brilliant blue. Some containers
have hinged lids and others are open. Certain containers are essentially shallow, oversize trays with precisely molded compartments
that secure and protect parts from jostling, rubbing and potentially
damaging one another while in transit.
Today, BoxSys has nearly two decades in the business and a relatively new owner and CEO in Swaich, who bought the firm from the
original owner in 2008. Swaich was hired the year after the company
launched to input the production numbers. Initially, Swaich saw her
admin position as a temporary summer job. But over the years, as
she acquired new skills and responsibilities, the challenges kept her
at BoxSys. In her roles as quality auditor and ISO coordinator, she
became an integral part of the firm. In October 2008, Swaich, who
was then operations manager, got a bit of a surprise. BoxSys would
close forever that November and Swaich and the rest of the BoxSys
employees had just one month to find other employment.
“The owner was more than ready to retire, the economy was poor
and he’d been unable to find a buyer for BoxSys or its equipment,”
remembers Swaich, who wondered where she’d take her 10 years
of hard-won experience. “As I walked through the plant, I looked
at how many employees, including me, would lose jobs. I knew
what our equipment could do and the fact it was now destined for
the scrap metal heap was really sad.”
As the second-in-command at BoxSys, Swaich knew the industry
well and recognized BoxSys’s enviable position as the only RPC
management option in the GTA. As she puts it now, “I didn’t want
to see a business with 10 years of success just disappear!”
Learning that the lease had expired gave her pause, but she persevered. “I knew I could run the business because I’d already been
in charge of operations,” says Swaich.
Swaich was determined to recreate her job and keep everyone else
on the payroll. The new location needed some work but it got done
due in large part to her employees’ deep commitment to making it
happen. When asked why they were painting alongside the professionals hired by Swaich, one of the older employees replied, “They
way they’re painting our plant—it won’t be ready for us!”
“The fact I haven’t gone out for an RFP on our RPCs since 1997
indicates I’m very happy with my partnership with BoxSys,” says
BoxSys cleans up to
36,000 RPCs each day
Petrie. “When Maninder bought the business and took over as
president and CEO, it was comforting and it further built my confidence in the company. My first choice was to stay with BoxSys
over going back into the market.”
When Apotex’s Bahra learned that BoxSys had recently been
purchased by Swaich, a former employee, he wanted assurance that
he could continue to have a long-term relationship with BoxSys
under a new owner. He didn’t want to go out to an RFP because he
knew that 20 percent of respondents would be newer firms or
start-ups, who may not go the distance.
“I’d known Roly for years and he had complete faith in Maninder’s
abilities,” says Bahra. “The best supplier may not be the biggest or
have the most equity and assets, but they have the flexibility and
awareness to deliver the personalized, dedicated customer service
that really sets them apart.”
What does that really mean to Bahra? A few years ago, when faced
with an issue that needed immediate resolution, he called Swaich
at home.
“The fact I had her home number speaks volumes as does the fact
she solved the problem in just 20 minutes,” says Bahra. “Year after
year, BoxSys proves their commitment to me and to Apotex.”
The plant operates Monday to Saturday, 7am to 11pm and can
17
14-04-16 5:02 PM
add a shift if required. Experience has proved customers’ businesses are cyclical and that demand
ramps up with new product launches. In some
cases, BoxSys knows that an uptick is imminent and
can plan ahead, but Swaich and her employees are
always prepared to accommodate emergency and
rush orders.
“It’s what we do to help our customers run their businesses and it’s a part of our regular service—we don’t
charge a premium—we just get it done,” says Swaich.
As would be expected, because the food industry’s
standards are the most demanding, the new location
will have a separate, second line dedicated exclusively
to food containers. BoxSys complies with the ISO
9001-2000 standard, which is a hallmark of the consistency and reliability that ensure quality. As importantly, BoxSys meets the standards set by the Canadian
Food Inspection Agency and has developed a 20-plus
series of steps that address everything from employee
training to line speed, water temperature and pressure. The steps also detail the use of approved detergents, sanitizers and chemicals for washing the
containers, the plant floor and the trailer interiors.
The company is moving to
a larger facility in May.
KEEPING THE CATCH COOL.
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ACC195_MMMD_foodChain_halfpage.indd 1
2014-04-04 2:30 PM
14-04-16 4:45 PM
Clean RPCs and lids are randomly tested daily for TPC (total plate
count) and coliforms at BoxSys’ on-site laboratory and regularly
verified at an independent, external laboratory. BoxSys’ production
objective is less than 10 Colony Forming Units (CFUs) of bacteria,
yeast or mold or less in 98 percent of the samples tested, but the
industry standard is 50 CFUs.
“When we put consumers’ health and safety on the line, we’re
also putting our customers and our own reputation on the line so
our operators manually check critical control points such as the
water temperature and pressure as well as the chemical levels
every 30 minutes although the industry standard is every 60
minutes,” says Swaich. “Our quality-control inspector also has the
authority to stop the production line if we’re not meeting the
necessary standards.”
Each pallet of washed goods carries a Pallet Inspection Tracking System
(PITS) form so that BoxSys managers can identify the root cause of
issues, then develop and implement corrective actions as required.
“Our customers are welcome to walk through the plant any time,
but we also provide inventory status reports on a daily or weekly
basis as specified by the customer,” says Swaich.
BoxSys staff, who have years of industry experience, work closely
with customers and act as consultants when they see fit. For example,
BoxSys recommended a meat processing client switch from wood
to plastic pallets which have proved more durable as well as easier
to sanitize.
“Customers trust our experience,” says Swaich. “For example,
while they’d like to save time and money by skipping the four-sided
shrink wrap, they understand it keeps the RPCs and pallets pristine
while they’re in transit.”
As required, BoxSys, which provides cradle-to-grave service, will
order new RPCs and send RPCS that are past their prime to plastic
recycling facilities. BoxSys receives the payment from the recycler,
but applies a “material credit” to the RPC owner’s account.
Employees in quality, inspection and rotational production positions receive four months of apprenticeship training and are reviewed
every four months. Annual employee bonuses, which are paid at
Christmas, are tied to performance and targets.
Swaich is proud of the fact 16 BoxSys employees have been with
the firm for more than 10 years while 14 have over five years with
the firm.
“Our customers benefit because we have established a trust level
and our teams regularly deliver good results,” says Swaich.
“Customers also know that they can always reach me directly when
necessary—that accessibility and personal attention are differentiators and can ensure peace-of-mind. They know that I really do take
our ability to meet their expectations very personally.”
YOU PERFECT IT.
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©2014 Buckhorn / Myers Industries, Inc. #081413
US: 1.800.543.4454
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BULK BOXES | HAND-HELD CONTAINERS | IBCs | PALLETS | SPECIALTY BOXES
14-04-16 3:25 PM
News
Partnership has economic,
environmental advantages
Maersk Container Industry (MCI) and Primaira LLC have formed a partnership
that will benefit producers who transport fresh produce and fresh-cut flowers.
Denmark’s MCI offers the Star Cool Integrated reefer container, a container solution that weighs less, carries more and consumes less energy than other containers.
Primaira LLC, a Boston, Massachusetts-based technology company, provides the
Bluezone fresh preservation technology. The two companies are partnering to
develop an air-cleaning system in Star Cool Integrated refrigerated containers.
The companies say tests and trials of the Bluezone technology have shown that
it efficiently eliminates moulds, fungi and bacteria. Bluezone uses an ozone
concentration 300 times higher than what is already on the market, and can
effectively remove ethylene.
Both MCI and Primaira say that while they’re still working on the final design, so
far the partnership is showing economic and environmental advantages that don’t
currently exist in container transportation. The results show that together the
technologies can extend the shelf life of fresh produce and fresh-cut flowers.
Bluezone also complements MCI’s well-known CA and AV+ systems, increasing
the geographical reach of containerized transport and preserving the quality of
fruit and produce.
Cool solution
Prescott, Ontario-based Kriska Group has
signed a hardware and services agreement to
equip its entire fleet of refrigerated trailers with
the ibright refrigerated telematics system from
Reefer Sales & Service, the largest dealer of the
ibright product in Canada. International
Telematics, based in New York City, provides
the ibright solution.
Kriska says it selected ibright because its
customers were asking about cold chain security and concerned about temperature abuse
and tampering.
The ibright platform allows both Kriska’s
employees and customers to see in real-time
where their freight is; the current temperature
and temperature history of the load; when and
where the trailer was open; and, the health of
the reefer including fuel levels. They will also be
able to remotely change the reefer settings.
14-04-16 3:25 PM
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JOINING THE
Modex 2014 showcases a vibrant industry
By MM&D Staff
I
f the show floor at the 2014 edition of MODEX was
any indication, prospects for the materials handling
business are very good. Attendance was up and dealmaking was in the air as buyers and exhibitors from
around the world flocked to Atlanta, Georgia for the
semi-annual show and conference.
The expo is sponsored by MHI and is designed to
showcase equipment and systems solutions as well
as learning opportunities that span the entire supply
chain, from material handling to logistics across
manufacturing, assembly and distribution.
The expo attracted 23,000 key decision-makers in
virtually all manufacturing, logistics, distribution
and supply chain industries. The expo featured almost
800 exhibitors, over 225,000 square feet. Reflecting
the global nature of the expo, over 100 countries and
six continents were represented at this year’s MODEX.
“Attendees were manufacturing and supply chain
professionals with very specific objectives and buying
plans in hand. They know that investing in the latest
supply chain innovations is the key to building and
maintaining their competitive advantage,” said
George Prest, CEO of MHI.
“MODEX truly lived up to its motto, the greatest
supply chain show on Earth. Attendees were
impressed with the wide range of material handling,
logistics and supply chain equipment and systems
solutions and education offered, and exhibitors were
very impressed with the quantity and quality of
attendees,” he said.
MHI announced the winners of the 2014 MHI
Innovation Awards at the show. The award educates
and provides valuable insights on the latest manufacturing and supply chain innovative products and
services. Intralox won the Best New Innovation award
for their OMNI-DIRECTIONAL Sorter, and Product
Protector LLC won the prize for Best Innovation of
an Existing Product with their Product Protector.
22
02MMD-Modex.indd 22
Along with the healthy traffic on the show floor,
MODEX featured a supply chain conference that
included three keynotes, from Gil West, executive
vice-president and chief operating officer at Delta Air
Lines, William Strang, president, of the Americas –
Operations Group with TOTO USA, and former
Walmart CEO Lee Scott. During the March 19 keynote,
George Prest and Scott Sopher, principal with Deloitte
Consulting LLP’s Supply Chain practice released the
findings of The 2014 MHI Annual Industry Report Innovations That Drive Supply Chains. (See sidebar
story, next page)
The MODEX Supply Chain Conference also
included 150 educational seminars outlining leading
trends, best practices and state-of-the-art equipment
and technology solutions. In addition, MODEX 2014
partnered with several industry organizations that
co-located events with MODEX 2014 including the
Georgia Logistics Summit. Webinars of MODEX
2014 educational seminar sessions are available online
at www.MODEXShow.com/seminars.
MODEX Classroom Day introduced over 300 highschool and university students and educators to career
opportunities in material handling, supply chain and
logistics through hands-on learning and networking
with industry professionals. This year’s Classroom
Day combined an interactive educational session with
a dynamic guided tour of the MODEX expo.
MODEX Industry Night at the Georgia Aquarium
was an exciting and entertaining networking event with
over 1,500 attendees and exhibitors in attendance.
On the show floor
Intelligrated
Intelligrated and software subsidiary, Knighted,
showcased new fulfillment execution software, fulfillment technologies and automated material handling
equipment that delivers the speed and accuracy retailers require to satisfy e-commerce and omnichannel
fulfillment demands.
14-04-16 3:28 PM
The 2014
MHI annual
industry report
Innovations that drive supply chains
(The following is excerpted from the 2014 MHI Annual Industry Report)
Automated material handling technologies on display
include the latest Intelligrated conveyor and sortation
solutions, including the new motor driven roller (MDR)
transfer conveyor. The section facilitates a 90-degree
change in direction of cases, polybags and totes to
satisfy the product handling demands of e-commerce
and omnichannel fulfillment operations.
The Intelligrated MDR transfer conveyor
The MDR transfer has drive rollers with integral
24-volt DC motors for individually powered zones
and multiple transfer belts with adjustable band spacing to maximize product control and operational
flexibility needs. The innovative design maintains a
constant product height increasing power efficiency,
item control and throughput rates. Ideal for close operator interaction, the bi-directional
MDR transfer offers quiet operation and run-ondemand features that use up to 50 percent less energy
than traditional conveyors. Improved controls and
efficient designs allow quick startup, simple belt replacement and easy maintenance for maximum uptime.
Intelligrated’s visitors experienced live demonstrations of new picking technologies and Knighted fulfillment execution systems, a new software model
that delivers real-time optimization of labour, processes and automated equipment.
Intelligrated also showcased its resident maintenance
programs that place qualified technicians on site to
keep automated systems running efficiently, for operations looking to extend the life of equipment with guaranteed uptime and lower maintenance costs.
Continues on page 24
02MMD-Modex.indd 23
S
upply chain executives understand the need to capitalize on
powerful new technologies and business innovations that can
help address and manage the increasing complexity of today’s
global supply chains. In the past, companies tackled supply chain
challenges primarily by focusing on internal cost reduction and
improved operational efficiency. However, those traditional
approaches are losing their effectiveness as supply chains become
longer and more intricate, with more inter-connecting links, higher
stakeholder expectations, and more sources of risk. This increasing
complexity is forcing companies to rethink their approach to supply
chain improvement.
In late 2013, MHI and Deloitte conducted their first MHI Annual
Industry Report survey. The topic of this survey was “Innovations
that Drive Supply Chains” and the goal was to provide an up-todate perspective on emerging supply chain trends. The survey
included more than 450 respondents from large and small companies
across a wide range of sectors, including: Retail and Wholesale,
Consumer Packaged Goods, Automotive, Consulting, Life Sciences
and Healthcare, Transportation and Warehousing, Material Handling
and Supply Chain Equipment and Related Services. The vast majority of respondents were senior executives, with more than half being
C-level executives, Managing Directors, Senior Vice-Presidents,
Vice-Presidents, or Directors.
According to our survey, the top two strategic priorities for supply
chain executives are Supply Chain Analytics and Multichannel Fulfillment.
Supply chain analytics. Analytics tools and techniques harness
data from a wide range of internal and external sources to produce
breakthrough insights that can help supply chains reduce costs and
risk while improving operational agility and service quality. At many
companies, the supply chain function is a step or two behind the
commercial side of the business when it comes to capitalizing on
the power of analytics.
Multichannel fulfillment. Today’s consumers want to shop for what
they want, where they want, when they want—and then have all of
their purchases delivered quickly and consistently, whether their timeline
is next day or even same day. Although many retailers now do a decent
job on the front end handling orders through their various channels—
retail, wholesale, and online—many are still struggling to adapt their
back-end fulfillment processes. The survey also revealed two major
Continues on page 24
23
14-04-16 4:47 PM
SSI Schaefer:
At the SSI Schaefer booth visitors saw various technologies, including the Logimat automated storage
and retrieval system. Logimat has trays on both the
front and back of the unit, moving inside an enclosure
via an elevator that delivers them on demand to the
open picking window. Schaefer calls it “in principle
an automated tool drawer cabinet.”
The Pick@Work system also on display combines
ergonomic workstations with pick-by-light technology. The unit leads the employee step-by-step through
the work process via instructions displayed on screen.
It can guide assembly of tiny (batch size one) and
small series (batch sizes up to 300) and/or assembly
at a pick speed of up to 600 lines per hour.
The SSI Schaefer Autocruiser
A third technology shown was the Autocruiser,
which is a scalable transport solution to meet the gap
between forklift transport and conventional conveyor
technology. It can handle 10 to 500 moves per hour
for items up to 30 kg.
Engineered Lifting Systems:
ELS showed how its Destuff-IT unloader allows for
fast, ergonomic trailer unloading operations. The
end-of-conveyor solution speeds up manual unloading or loading processes, and prevents worker injuries
by making bending, twisting and repositioning of
conveyors unnecessary. Improved productivity means
fewer employees, lower costs and potentially even
fewer dock doors needed in a facility.
MM&D
24
02MMD-Modex.indd 24
Continued from page 23
barriers to development and adoption of supply chain innovations.
Talent shortage. To capitalize on the latest innovations, companies
need supply chain talent with the right skills, experience and mindset:
people with deep business and supply chain knowledge who are also
willing and able to apply new tools and methods. Unfortunately,
finding qualified workers is already at a crisis point with baby boomers starting to retire and a scarcity of younger workers to replace
them. And with the supply chain field expected to add 1.4 million
new jobs by 2018, the issue will likely only increase in intensity.
Continued focus on cost reduction. Over 70 percent of respondents say that “controlling costs” is a top priority, making it the
number one focus area for supply chain executives. However, this
singular focus might now be working against them, choking off
investment in essential innovations that are the key to longterm growth, performance and efficiency. Although most respondents
expect to increase their supply chain investments over the next three
years, in many cases it will be just enough to get by and not nearly
enough to drive disruptive innovation and competitive advantage.
Three emerging innovation areas are not yet top of mind for
executives…but may be soon.
Sustainability. Four out of five respondents say supply chain
sustainability is at least “moderately important.” However, over 60
percent of respondents admit to significant capability gaps that
may be preventing them from implementing and fully benefitting
from sustainability initiatives. Leading companies are adopting a
holistic approach as they start to recognize sustainability is as much
about increasing the value of their overall brand as it is about the
ROI of individual projects.
Mobile and machine-to-machine (M2M) technologies. Companies
of all sizes are beginning to apply these technologies to their supply
chains—but at this early stage the large majority (70 percent) report
significant capability gaps. Looking ahead though, 73 percent of
companies plan to continue investing in this area, and nearly half
expect their investments to increase over the next three years.
3D Printing. Additive Manufacturing—known as “3D Printing”—is
getting a lot of attention as a technology that could transform supply chains by localizing production and enabling just-in-time manufacturing. However, there is a big gap between future vision and
current reality. According to our survey, only 17 percent of respondents view 3D Printing as a strategic priority, while 70 percent say
they are not sure about its future impact. That said, the technology
has clear potential and companies should follow it closely and be
prepared to invest quickly as it matures and additional applications
become available.
This report takes a closer look at these strategic priorities, major
barriers and emerging innovation areas, and offers data-driven
insights on how they are shaping supply chains of the future.
For more information or to download the entire report visit:
www.mhi.org/publications/report
14-04-16 3:28 PM
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14-04-16 3:54 PM
E-manifest
explained
Information flow key to product movement
By Lynn Wark
A
nyone associated with today’s shipping industry
will tell you it’s a highly complex and competitive market, making for an extremely dynamic
journey for those of us who have made international
trade our mission. Having worked in this industry
for 30 years, I can tell you about the importance
technology plays in maintaining a competitive edge,
along with its increasing contribution to facilitating
global trade now and in the future. That is why
Canada’s international logistics industry has a lot
to reflect upon on the 10th anniversary of the Canada
Border Services Agency’s (CBSA) Advance
Commercial Information (ACI) initiative.
Launched in the spring of 2004 with the reporting
of inbound ocean freight shipment detail, ACI allows
the CBSA opportunities to screen shipments for
health, safety and security risks prior to their arrival.
ACI accomplishes this, in part, by requiring carriers
to electronically transmit marine cargo data to the
CBSA at least 24 hours prior to loading cargo on
vessels at the foreign port. Two years later, the CBSA
expanded ACI’s scope by requiring air carriers and
freight forwarders to electronically transmit conveyance, cargo and other cargo data to the agency before
shipments arrive at Canada’s borders. The final
modes of transport pending implementation of ACI reporting requirements are
highway and rail.
Enter eManifest
Implementation of eManifest, the third
phase of ACI, will provide the CBSA
with additional shipment data detail for
risk assessment purposes, establish advance
electronic requirements for all modes of transportation, and enhance current processes for ocean
and air. eManifest will require carriers, freight for26
02MMD-TradeReport.indd 26
warders and importers to electronically transmit
advance cargo information to the CBSA within
mandated time frames. In support of eManifest,
Customs sufferance warehouses will be required to
transmit electronic cargo arrival notices to the CBSA
when goods arrive at their facilities. Once fully
deployed, eManifest will provide the CBSA not only
the visibility of additional shipment data but also
the tools to effectively support an electronic commercial environment for processing shipments.
The Canadian government has specified that
eManifest will feature:
• An enhanced automated risk assessment, supported by business intelligence technology and
data warehouse;
• An eManifest portal reporting option;
• An integrated passage system for the incorporation of transponder technology, and advance
electronic information from highway and rail
carriers, freight forwarders and importers.
Once eManifest is fully deployed, each eManifest
stakeholder will be required to provide the CBSA
with detailed shipment data, which will be compared
to the entries of all involved parties to verify the information is consistent.
eManifest Rollout
The CBSA will implement eManifest
in three phases with a scheduled
completion in 2016. The first two
phases will establish requirements for
electronic pre-arrival information in the highway and rail
modes, make enhancements to existing
ACI requirements
in the ocean and air
14-04-16 4:48 PM
modes, and give the CBSA the power to develop
administrative monetary penalties (AMP) for noncompliance with eManifest requirements.
The final phase of eManifest, expected to be introduced sometime between 2015 and 2016, will require
Canadian importers to electronically submit importer
advance trade data (ATD) to the CBSA within the
prescribed mode-specific time frames.
According to the CBSA, ATD requirements will
build upon existing electronic data interchange
(EDI) sets, which align with the World Customs
Organization and US Customs and Border Protection.
Providing ATD information to the CBSA is a new
step that importers will need to incorporate into their
import processes for shipments into Canada.
Some considerations include:
• Transportation and logistics practices with vendors,
carriers and freight forwarders to meet
• eManifest reporting timelines;
• Identification and authorization of a third-party
service provider as needed;
• Purchase orders, contracts and service agreements
should be reevaluated to confirm all parties to the
shipment are meeting the obligations set out by the
CBSA.
Regulatory requirements for ATD include the following data elements:
• Buyer (purchaser) name and address
• Cargo Control Number
• Consignee name and address
• Country of origin/state
• Country of export/state
• Commodity HS code
• Exporter name and address (if different than seller)
• Importer number, name and address
• Manufacturer name and address (Last entity that
manufactured, assembled, produced or grew the
commodity or the name and address of the supplier
in the last country from which the finished goods
left when the country of export is a country other
than the US Mexico, Puerto Rico or Canada.)
• Seller (vendor) name and address
It is important to note that importer ATD filing
does not replace the obligation to obtain a Customs
release. Shipment information will still be required
to be transmitted within the time frames under the
release of commercial goods requirement.
Also included in the final phase of eManifest implementation are changes to the following five regulations made under the Customs Act:
• Reporting of Imported Goods Regulations
• Customs Sufferance Warehouse Regulations
• Designated Provisions (Customs) Regulations
• Transportation of Goods Regulations
• Presentation of Persons (2003) Regulations (consequential amendments)
02MMD-TradeReport.indd 27
Benefits on the Horizon
As with any type of investment of this magnitude,
immediate benefits to trade may not be realized for
some time. Costs associated with transition from a
paper-dominated environment to an electronic process will centre primarily on computer platform
development and enhancements as well as training
and communication.
The possible benefits of eManifest to industry
include:
• Shipments clearing Customs in a timely manner as
a result of assessing risk prior to shipment arrival at
the border and eliminating possible bottlenecks;
• Added operational efficiency due to close alignment
with the US electronic manifest process;
• Elimination of paper preparation and storage;
• Reduction in the use of paper and ink.
• Possible benefits to the CBSA include:
• Information from all appropriate parties for risk
assessments purposes prior to shipment arrival;
• Standardized application format across all modes
of transportation;
• More effective tracking of in-bond freight
movement;
• Greater transparency of import transactions;
• Enhanced ability to identify unmanifested and
high-risk cargo;
• Centralization of targeting activities;
• Decreased processing time at the border.
The CBSA reported in the Canada Gazette Notice of
February 15th, 2014, Regulations Amending Certain
Regulations Made Under the Customs Act, that the full
implementation of the proposed eManifest initiative is
expected to result in a net benefit of $470 million ($377
million to the businesses and $93 million to the federal
government), realized over a 12-year period beginning
PRE-ARRIVAL REPORTING TIME FRAMES ESTABLISHED BY THE CBSA
Ocean
Air
Rail
24 hours prior to the loading of goods on board
Four hours prior to arrival, or at time of departure
At least two hours before the train is expected to cross the border
Highway At least one hour prior to arrival
in 2014. CBSA attributed the expected savings to reduced
delays at the border and efficiencies gained from replacing paper with electronic transmission.
Ultimately, border security is the CBSA’s primary
focus, and eManifest is a process to help Canadians
achieve a more secure border. Canada can benefit from
technology-driven security and risk-based screening,
promoting legitimate trade and focusing resources on
higher-risk cargo. It gives me great satisfaction to participate in this growth and foster global trade. MM&D
Lynn Wark is Vice President and Regional Officer
of FedEx Trade Networks Transport and Brokerage
(Canada), Inc.
27
14-04-16 4:48 PM
Pick to
By Justin Doan
W
Justin Doan
e live in a time where the ability to bridge our
physical reality and the virtual world is making
us more efficient decision makers. From the Google
Glass Project to Oculus Rift’s virtual reality gaming
headset, we are constantly surrounded with new ways
to access information faster and smarter in order to
make the right decision.
While many of these technologies are being built
with consumers in mind, some may prove to be more
valuable when applied to specific industries. Let’s
take the Google Glass—camera-enabled, head-up
display (HUD) headgear for everyday life—and put
it in a food distribution centre. This new technology
could help improve productivity by offering a true
hands-free technology with a natural way to gain
crucial data.
The evolution of picking technology
First, let’s go back in time to when picking methods
were purely list-based. During that period, an operator had his “shopping list” and fulfilled it as his shift
progressed. This method is low risk, low cost and
gave the worker some foresight on his pallet build.
Unfortunately, this approach yields a lower pick rate
since it requires one hand to hold the list—resulting
in a longer cycle time and low pick accuracy, not to
mention the fact that a list can’t give feedback to your
warehouse management system (WMS). This method
is best suited for distribution centres with low volumes
that cannot afford to implement new technology. As
time went on, pick lists evolved into labels, which
slightly improved accuracy.
With the rise of information technology, a new type
of picking method emerged in 1987: the radio frequency
(“RF”) pick by Shirk and Bredenbeck, which served
as an automated documentation system. This new
approach gave the employee a portable scanning device,
initially in the form of a scan gun, to quickly scan
information on the product and/or case she was picking, and to display different data on her work order.
The RF pick significantly improved order accuracy.
This method, however, still resulted in a low pick rate
since the operator has to hold the gun in one hand or
28
02MMD-VoicePicking.indd 28
continuously walk back and forth to acquire the gun.
The advent of more compact arm-mounted units eventually helped increase the productivity of these particular tools, freeing both hands to pick.
In the early 1990s, the pick-to-light method was
introduced as a solution to the “cluttered hand” problem. With pick-to-light, the worker visually scans for
lit-up locations that show the number of cases to be
picked, picks the product, and confirms the pick by
pressing a lighted button. This “hands-free” method
naturally boosted pick rates and accuracy from list
picking, but still contains a number of drawbacks.
To implement such a system is quite expensive (about
$300 per pick location), requires a reliable information system to support it, and mandates that you can’t
have more than one order in each section. Given
these limitations, pick-to-light tends to be a viable
option mostly for unit-pick environments.
By the end of the 20th century, voice recognition technology or “pick to voice” became a functional option.
This particular solution works well in distribution centres with a large number of items spread out across the
warehouse because it gives employees time to confirm
their pick and listen for the next location. This hands
free method allows the operator to converse with the
WMS and obtain key information (eg, location number,
quantities, product descriptions) about his order.
Implemented in the right environment, this technology
provides an efficient process, with minimal errors.
The downside is that the system and hardware can
be expensive. Also, in a sound intensive environment
(ie, one with blowers, fans, etc), the picking process
could be disrupted by noise interference, forcing repeat
communications to fulfill one order. Voice processes
can also become a bottleneck when used in a high
pick-density situation. Further, the operator does not
have visibility into the remaining cases to be picked;
she is essentially picking blindly, which makes pallet
building more difficult, increases the amount of cases
requiring re-handling, encourages fatigue and reduces
the effective pick rate.
What’s next?
What does the future hold for picking technology,
and where should distribution centres strive to be?
14-04-16 4:49 PM
vision
A new approach to reality in distribution centres
After analyzing the industry’s technology track-record,
it’s clear that hands-free methods prove most successful in terms of pick rate and accuracy. In an ideal
world, distributors would benefit from a new method
that incorporates the accuracy of RF-picking with
the hands-free, organic feel of pick-to-voice. Adding
head-up display (HUD) to either technology could
be enough to fulfill this tall order.
At first glance, the idea of combining HUD picking
with older technologies might seem new or sexy. But
considering HUD’s accuracy and efficiency benefits,
it’s a simple way to realize the best of both worlds.
Consider an example of how moving from a wristmounted device to an HUD can improve operations:
arm units only offer a few square inches of display space,
often limiting the amount of information that can be
shown, and resulting in cluttered screens. To get access
to all of the information needed, the operator may need
to scroll through multiple screens, taking up even more
time. The operator also needs to move his arm to bring
the display in focus; most of the time this can be done
simultaneously with other actions, but in some cases
this can detract from overall productivity.
With the HUD display, an operator has continual
access to what is the equivalent of a 15-inch display
that follows your every move, providing as much or
as little information as needed. The information can
be tailored to suit the individual needs of the operators.
For example, an inexperienced employee may be shown
more information than a seasoned employee. Saving
a few seconds here and there might not seem that
significant to the bottom line, but once you start multiplying those seconds by thousands of picks on a daily
basis, and hundreds of employees, the monetary advantage of HUD integration becomes obvious.
HUD can equally elevate the power of voice-picking
operations. HUD technology can alleviate the two
main concerns about voice-picking: the time needed
for the system to communicate the information to
the user (it sounds like an automated phone menu)
and the “blind” picking issue. The operator would
have his assignment and shift performance displayed
in real-time. It would show him visual cues like GPS
direction for the best way to get to his next location
(eg, avoiding busy aisles), staging dock information,
02MMD-VoicePicking.indd 29
vehicle battery levels and other useful metrics.
Implementing an HUD in your operations gives
employees vital information to allow them to make
decisions faster, while keeping both hands free.
Beyond making the individual operator more productive, having headgear equipped with a miniature
camera improves communication between team members. These cameras could be used as barcode scanners
to confirm UPC or product locations, or even to report
damage. It would give supervisors access to hundreds
of pairs of eyes, creating a real-time feedback loop on
the state of the distribution facility.
A not too far-off future
The idea of such an avant-garde project is very tempting for any tech enthusiast, but each new technology
implementation has its challenges. Given the newness
of HUD technologies like Google Glass, we don’t yet
have all the answers or hardware required to introduce
it (without hiccups) into the distribution world—but
it is only a matter of time before we do. The current
displays will need to be stronger to withstand industrial environments (eg, extreme temperatures, high
humidity). And, as with most new gadgets, there will
be a significant training period required to ensure
all employees use the tools safely and correctly. Until
that time, we can prepare ourselves by creating the
right way to display the information and establishing
standard operating procedures (SOPs) for how to
integrate HUD with existing infrastructure.
There’s a plethora of questions we could debate on
HUD technology. Is this really the next big thing in
picking technology? When ready, will this technology
deliver on its promise to revolutionize distribution centres? Will the advantages outweigh the costs? Will we
be able to design a proper user interface that will be
efficient for the warehouse environment? Is it even safe?
It’s simply too premature to answer many of these
questions. For now, given the tremendous advantages
of HUD technology that we do know, we cannot
ignore the potential benefits it would bring to the
distribution environment.
MM&D
Justin Doan is a consultant and industrial engineer
in West Monroe Partners’ Montreal office.
29
14-04-16 4:49 PM
LEGAL LINK
Communicate clearly
“What we’ve got here is failure to communicate.”
— 1967 film, “Cool Hand Luke”
T
Marvin Huberman
he recent British Columbia Court of Appeal decision in Pageant Media Ltd v Piche is a cautionary
tale illustrating the need for clear communication
when entering into a contract, especially on behalf
of a corporation.
To avoid personal liability, employees, agents, officers
and directors who are acting as representatives of a
company MUST identify the company as the contracting party. Otherwise, third parties are entitled to
assume that these people are contracting on their own
behalf rather than as agents for the corporation.
In Pageant Media, the defendant, Chris Piche, the
president and chairman of CWC Gaming SA, a limited
liability company incorporated under the laws of Costa
Rica, was found personally liable under a contract with
the plaintiff company, Pageant Media Limited, to provide
advertising services in its magazine, “eGaming Review”.
The main issue before the Court was with whom the
plaintiff entered into that advertising services contract;
with CWC Gaming SA or with Piche personally.
The lower court decision
The defendant argued that he should not be personally liable since he contracted on behalf of CWC
Gaming SA, a limited liability corporation, when he
signed the contract, although the purchaser in the
contract was identified as “CWC Gaming” without
specifying that it was a limited liability company. He
further contended that, although he never told the
plaintiff that CWC SA was a limited liability company,
and that the correspondence between the parties did
not use the corporate designation “SA” or “Ltd” or
“Inc”, the plaintiff knew, or should have known, that
it was dealing with a limited liability company.
The defendant brought a summary judgment application for dismissal of the plaintiff’s claim, and the
plaintiff brought a counter-application for judgment
against the defendant for $28,880.30.
The motion judge heard both applications and found
the defendant personally liable under the advertising
services contract with the plaintiff. The judge held that
there was “a duty to advise the plaintiff that they were
dealing with a limited liability company” and that this
duty was not fulfilled because the contract, correspondence, invoices, and even the defendant’s business card
all referred to CWC Gaming or CWC, and not to CWC
Gaming SA, being the appropriate designation for a
limited liability company from Costa Rica.
30
02MMD-ll.indd 30
The court of appeal majority decision
The majority of the BC Court of Appeal concluded
that the burden of proof to show that Pageant Media
contracted with Piche’s company, CWC Gaming SA,
and not with himself personally rested with Piche.
Indeed, Pageant Media was not required “to lead
evidence that it did not know it was dealing with a
limited liability company except in response to Piche’s
evidence to the contrary.”
The majority justices further concluded that:
“The obligation to disclose that one is acting on
behalf of a corporate principal exists whenever one
seeks to rely on that limited liability; it is only the
content of the obligation that may vary with the circumstances. For instance, that obligation may be met
on the face of the agreement itself...”
The Court then held that the evidence presented by
Piche failed to satisfy the burden of demonstrating that
Pageant Media knew or ought to have known that he
was acting solely as an agent for a limited liability company. In consequence, he was found personally liable.
Points to communicate clearly
When a person signs a contract as an agent for a
limited liability company, he or she has the onus to
advise the third party of this fact, in default of which
that person when sued may not be allowed to hide
behind “the corporate veil” and is very much at risk
of being personally liable.
Make it clear on the face of the contract when signing on behalf of for example, “ABC Distributors Ltd”
that only the limited liability company will be liable
and that there is no personal liability.
Indicate on all relevant contractual documents,
correspondence, invoices, cheques, and business
cards, that the entity with whom the third party is
dealing is a limited liability corporation whom the
individual is representing as its agent, and not in his
or her personal capacity.
Pay close attention to pertinent statutory provisions
that govern the subject contract which may be analogous to, for example, Sections 10, 11 and 21of the
Ontario Business Corporations Act, R.S.O. 1990,
c.B.16 at www.canlii.org.
MM&D
Marvin J. Huberman, LLM,
(www.marvinhuberman.com) is a Toronto trial
and appellate lawyer, mediator and arbitrator.
14-04-16 3:29 PM
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14-04-16 3:56 PM
LEARNING CURVE
Grains and trains
C
Tracy Clayson
32
02MMD-lc.indd 32
anada, which boasts a $5-billion grain transportation business and is the world’s largest
canola and second largest wheat exporter, had a bumper crop in 2013 with a 76 million-tonne crop of
wheat, canola, barley and other grains. This was 40
to 50 percent higher than in 2012.
That’s the good news. The bad news is Canada is
currently suffering from an enormous transportation
challenge.
According to industry publication Grainews, grain
handlers have continued to be frustrated by the lack
of supply chain effectiveness to move their product
in a timely fashion. With empty ships waiting at ports,
demurrage charges applied to farmers have exceeded
$25 million.
The lack of sufficient rail service has had a negative
impact on Canada’s overall exports potential. A recent
decision by the US and Japan to source grains from
elsewhere due to Canada’s lack of supply shows the
situation is dire.
For farmers, the huge crop expansion, instead of
producing higher financial gains, has created a huge
financial and cash flow crisis due to the significant
transportation backlog and an inability to cash in
when grain prices are strong.
Attempts have been made to tackle the issue.
Government intervention, in the form of support from
the Canada Transportation Act, forced Canada’s railways
to respond to what members of the Western Grain
Elevators Association describe as a “transportation mess”.
Criticism by the grain industry of both rail lines
has focused mainly on the impact of cost cutting and
reduction of fleet, services and personnel, with complaints that the railways delivered 51,000 fewer than
ordered rail cars as of mid-February.
In March, Transport Minister Lisa Raitt announced
the government had issued an order in council to
force Canadian National (CN) Railway
and Canadian Pacific (CP) Railway to
move 500,000 tonnes of grain each
week, about double the current volume.
If they fail to meet the targets, they will
face daily penalties of up to $100,000.
But Mark Hallman, director of communications and public affairs at CN,
has defended his company’s service, citing an increase of 12 percent more grain
car shipments above the five-year average
and blaming abnormally cold weather
for much of the slowdown in shipments.
For safety reasons, the railways reduced
the number of cars their locomotives pull in winter to
70 percent of what they move during warmer months.
A recent Globe and Mail report did show CP was
idling 400 locomotives and 2,700 cars due to cost
cutting under the leadership of CEO Hunter Harrison.
Ed Greenberg, spokesperson for CP, complained
the railways are unfairly taking the blame for everyone
in the supply chain. And in a March 31, 2014 story
in the Calgary Herald, CP’s CEO Claude Mongeau
argued the speed and lack of consultation before the
government changed the rail transportation system
could result in “unintended consequences”.
Mongeau said CP continues to make “significant
progress” to reach its goal of transporting close to
5,550 gain cars per week, but can only meet its commitment “if other key players in the supply chain are
equally held to account for their performance.”
But Wade Sobkowich, executive director of the
Western Grain Elevator Association, said grain companies are already held accountable for their performance by tariffs, which allow the railways to penalize
them if they are unable to load or unload rail cars
within a specific time. Sobkowich suggested railways
be subjected to fines payable to grain companies and
passed on to farmers if they can’t deliver rail cars on
the days they promise.
CN Rail CEO Hunter Harrison, in an open letter
to the public on March 6, wrote “…we should all focus
on commercial solutions to maximize overall capacity
in the grain supply chain.
“This is especially important if these larger crops
become the new normal as has been suggested. If this
is true, a system grounded in commercial principles,
not regulation, is required to address the capacity constraints and the significant investments required,
including replacing Canada’s aging grain hopper fleet.”
There seems to be no simple solution. Agriculture
Minister Gerry Ritz has promised to keep closer tabs
on the rail lines, focusing on increased reporting,
from quarterly to monthly performance results, but
increased vigilance may not be enough.
Whether the answer is more or less industry regulation, finger-pointing is certainly not bringing the
players in the supply chain together. We need less
rock-lobbing and more discussion around this issue.
It’s time to work toward solutions. After all, better
movement of grain benefits everyone.
MM&D
Tracy Clayson is managing partner, business
development of Mississauga, Ontario-based
In Transit Personnel. [email protected]
14-04-16 3:29 PM
MATERIALS HANDLING
Is there a drone in your
warehouse?
W
hile warehouses are an important supply chain
link, they offer specific problems for the use
of drones. A properly designed and built warehouse
is vertically crowded; racking and other overhead
obstructions in functional areas leave limited room
to maneuver.
Drones also face problems because a number of the
vertical obstructions—such as fork trucks with
elevated masts—are mobile, not fixed. This means
you cannot create a three-dimensional map of the
fixed obstructions to avoid collisions. While the
technology for this has been around for a long time
in two dimensional space (think self guided vehicles
as an example) three dimensional spaces is a much
more complicated situation.
There is also the problem of traffic rules. Who gets
priority—the drone or the forktruck?
Power and lifting capacity also limit today’s
drones, as activities like case-handling would
require larger drones. Bigger drones magnify the
issue of maneuvering room.
In spite of these hurdles, a number of warehouse
applications are viable for drones today, although
they are in peripheral, not mainstream, warehouse
activities. As drone vehicle capacity increases and
control finesse expands these will increase, but today
we will concentrate on activities that can be handled
by existing technology.
Starting at the inception of a warehouse, even before
construction, a number of operations are practical.
Take the purchase and sale of land or existing buildings.
Use of a drone in real estate offers a number of possible
advantages. It provides a unique aerial view of a site
and surrounding real estate. For an existing building,
it can help provide an assessment of the exterior and
even interior, if it is unoccupied. Some of the information can be quite valuable in real estate negotiations.
Think of the value of preliminary roof or warehouse
floor inspection of an existing building, for example.
Once a property is purchased there are a number of
potential applications in the assessment and design
phases. These could start with surveying and preconstruction engineering activities. For an owner or his
engineering representatives it will also provide a means
to monitor and review construction progress.
Once the warehouse is constructed and operating,
a number of functions are reasonable candidates for
drone use. The most obvious one is perimeter security,
02MMD-mh.indd 33
particularly for larger facilities. Thieves are very good
at spotting fixed cameras, but a drone provides mobile
surveillance that can cover blind spots, like the roof,
at night.
It also provides a capability to monitor activies like
shift change for employees. This will help deter one of
the major concerns of inside theft, as goods illegally
removed from the inside often have to be transported
to an employee vehicle. Other illegal activity in employee
parking lots, like drug dealing, can be deterred.
Loading dock exteriors can be also monitored for
dock allocation and related activities, as well as dock
security and safety. For larger facilities, there are a
number of trailer yard activities that can be monitored
or controlled.
Maintenance of both facilities and grounds can be
simplified by a drone. Often activities like a roof
inspection after a wind storm or roof drain inspection
are neglected, because of the time and effort required.
Especially for larger facilities, a drone can greatly
speed up the process.
Inside the warehouse use of drones is more difficult,
but not impossible. Loading docks are less restricted
overhead than other parts of the building, so this is
a logical place to start. Most lift truck activity has
limited vertical elevation in this area, giving the
drones potentially more airspace.
Two other warehouse functions offer potential for
drone use. Inventory counting may be an interesting
area to start with if only case counting is needed. An
obvious area is large-volume, deep-lane block storage
which is both difficult and dangerous to count by
conventional means. A drone could easily fly in, and
using an RF scanner could have the count quickly.
Finally, drones maybe beneficial for accident prevention and emergencies. An example is a pallet
hangup at upper push-back rack levels, or in emergency cases like a fire and post-fire assessment. While
this column has only scratched the surface, it is obvious that the uses will expand in coming years with
increased drone capability.
Old timers like myself remember a warehouse management technique referred to as “managing by walking around”. Drones also offer the potential to reinvent
this management tool.
MM&D
Dave Luton
Dave Luton is a consultant in the greater Toronto
area. [email protected]
33
14-04-16 3:29 PM
GUEST EDITORIAL
The logistics tipping point
O
Aaron Lalvani
ver the past 20 years I have seen many changes
within the logistics landscape, from the impacts
of deregulation to the growth of 3PLs and transportation
brokerages, and the technological advancements made
by many trucking organizations. There is no doubt that
transportation providers, for the most part, have become
sophisticated, purpose-driven and solutions-oriented.
Industry experts have said outsourcing would not
succeed because the asset-based carriers had control
of the marketplace through their ownership of the
fleets. Does this idea still have any weight behind it?
What does the future hold for the industry? Who will
be the winners and losers? Can there be equilibrium
between price and capacity in a competitive environment for the trucking sector?
I want to approach this article with dialogue in
mind. My intention is to engage the industry in a
constructive dialogue to move the pendulum as close
to equilibrium as possible. I do, however, want to
challenge old notions and status quo mind-sets around
the shipper-carrier relationship.
Eric Gignac, VP at Guilbault, told me he believes
the trucking industry, to a great degree, allowed the
way for 3PLs and broker firms to be so prevalent. He
believes carriers just didn’t meet customer expectations with respect to systems and fulfillment.
Cambodian Market
“Collaboration” and “partnership” between shipper
and carrier are not always synonymous with mutual
benefit within the logistics environment. At conferences, in the trade media, and in online forums when
this topic has come up, it seems to divide opinions
and a lot of rhetoric occurs. Why do these discussions
cause such a reaction? Let me challenge this on two
fronts—the relationship is price-driven and carrier
agreements can be terminated quickly without repercussions for the shipper.
In 2009 I went to Phnom Penh, Cambodia, to teach
English. One afternoon, we went to a local market to
purchase souvenirs. It is under a tarp sheltering hundreds of stalls filling two city blocks. The foot traffic
resembles the 401 in Toronto’s rush hour. At one stall
I noticed a traditional Khmer shirt and pointed it out
to my friend. In seconds two young women hovered
around me. “You buy!” one young woman said. I told
her, “No, thanks.” The other woman started showing
me shirts, asking me to try them on. They didn’t stop
pushing product on me. “No” was not an acceptable
answer to these entrepreneurs. The conversation
moved immediately to price.
34
02MMD-ge.indd 34
At that point I noticed several stalls around me with
the same shirts. “Let the negotiations begin”, I said to
myself. I am sure these entrepreneurs did relatively well
in the end, but I leveraged everything I could to get the
best deal for myself. They, too, negotiated hard, but the
dialogue moved away from any product or service
differentiator simply to price. The best price for both
parties had to be negotiated if a deal was to close.
Price will drive buyers and sellers to either make a
deal or walk away. Whether in the Cambodian markets
or behind a boardroom table in North America, price
is a huge motivating factor, and that fact will never
change. So how do carriers deal with this reality?
Should they let market pricing determine their selling
price? Do they understand their cost structures and
turn unprofitable deals down? Do they curtail services
and upgrades to equipment and IT infrastructure?
Perhaps the answer is somewhere in the middle.
Conversely, do shippers have to adapt to a new model
of freight procurement and pricing to maintain the
viability of the rolling stock that moves their goods
to market?
Price and capacity equilibrium
In an industry where suppliers have multi-million dollar
assets (in tractors and trailers), and overheads, such as
fuel and maintenance, IT tools, sustainability initiatives
endorsed by shippers, and so on, where is the convergence of price with capacity going to end? In a regulated
market with new hours of operation rules, harsh winter
conditions pushing maintenance costs to record levels,
and drivers who are demanding more pay, trucking
firms curtailing fleets or rationalizing service regions,
how will the market respond? Will there be a general
rate increase higher than budgeted for? Will carriers
purposely de-market poor performing lanes? These
are questions shippers need to contemplate as they
build future logistics budgets and network plans.
I believe we are on the edge of a transformation in
the industry’s mindset from traditional procurement
strategies, to how transportation providers will service
shippers’ needs in the long run. I call on both sides
to challenge the status quo and build networks that
are profitable to all. In the end, our ultimate customers must benefit from this change—without them in
mind it is a futile exercise.
MM&D
Aaron Lalvani is president of the Lalvani Group,
offering lean manufacturing, supply chain
management and logistics consulting.
[email protected].
14-04-16 3:25 PM
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14-04-16 3:22 PM
Intelligrated.indd 1
14-04-16 3:23 PM

A new approach to reality in distribution centres

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