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DECEMBER 2019

C A N A DA’ S S U P P LY C H A I N M AG A Z I N E

FORMERLY

MATERIALS MANAGEMENT & DISTRIBUTION

FAST CARS, FAST DC

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Inside Porsche Cars Canada’s first parts distribution centre

Tracking tires AI for supply chains Sustainability sampler INSIDELOGISTICS.CA

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CONTENTS In every issue:

Taking Stock

Supply Chain Scan

Editor’s analysis

News and numbers from around the world

Supply Chain Smarts

Is it time for robotics?

Innovations

Learning Curve

New products for supply chain efficiency

Keeping it rolling Pival’s tire inventory excellence ON THE COVER

A FAST DC Porsche Cars Canada has opened a DC in Canada to gets parts to drivers faster. Story on page 14 Cover photo: Steak & Sizzle for Porsche Cars Canada

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SUPPLY CHAIN SCAN

AI in supply chain

Goodbye to ‘Driver Inc.’

37 Leading Edge

Intentional results

Safety First

Plan for pedestrians

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It’s all about the data – the best ways to integrate AI into your operations

Sustainability How green leaders are cutting their carbon emissions around the world

Cannabis, one year in

After a year of legal distribution a look at the highs and lows for weed 3

TA K I N G S T O C K

insidelogistics.ca EDITOR IN CHIEF: Emily Atkins (416) 614-5801 emily@newcom.ca WESTERN EDITOR: Derek Clouthier (403) 969-1506 derek@newcom.ca DIRECTOR OF BUSINESS DEVELOPMENT: Anthony Buttino (416) 459-0063 (514) 292-2297 anthonyb@newcom.ca CREATIVE DIRECTOR: Tim Norton (416) 510-5223 tim@newcom.ca PRODUCTION MANAGERS: Alicia Lerma & Jwad Khan (416) 510 6845 alicia@newcom.ca jwad@newcom.ca CIRCULATION MANAGER: Mary Garufi (416) 614 5831 mary@newcom.ca MANAGING DIRECTOR, TRUCKING & SUPPLY CHAIN GROUP: Lou Smyrlis lou@newcom.ca

NEWCOM MEDIA INC . CHAIRMAN & FOUNDER: Jim Glionna PRESIDENT: Joe Glionna Inside Logistics, established in 1956, is published six times a year by Newcom Media Inc. HEAD OFFICE 5353 Dundas St W. Suite 400, Toronto, ON, M9B 6H8 SUBSCRIBER SERVICES To subscribe, renew your subscription or to change your address or information contact mary@newcom.ca or 416 614 5831 or visit our website: www.insidelogistics.ca/subscribe SUBSCRIPTION PRICE PER YEAR Canada $84.95 per year, Outside Canada $159.95 US per year. Single copy price: Canada $15.00, Outside Canada CA$32.65 Inside Logistics is published six times per year except for occasional combined, expanded or premium issues, which count as two subscription issues. ©Contents of this publication are protected by copyright and must not be reprinted in whole or in part without permission of the publisher. DISCLAIMER This publication is for informational purposes only. You should not act on information contained in this publication without seeking specific advice from qualified professionals. Inside Logistics accepts no responsibility or liability for claims made for any product or service reported or advertised in this issue. Inside Logistics receives unsolicited materials, (including letters to the editor, press releases, promotional items and images) from time to time. Inside Logistics, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such unsolicited submissions in whole or in part in any form or medium whatsoever, without compensation of any sort. PRINTED IN CANADA

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The great indoors INDUSTRIAL REAL ESTATE IS PRECIOUS at the moment. With Canadian

vacancy rates at about 1.5 percent and not enough new space being built, rents are skyrocketing, and have reached an average of more than $7.60 per square foot in the greater Toronto area, with some parts of the GTA commanding more than $8, according to realtor Cushman Wakefield. The pressure is on the maximize the use of space in any building. For some, that means looking up, as developer Oxford is doing in Burnaby, British Columbia. Check out the story of its soon-to-be-built two-storey DC on page 7. Oxford claims this is the first multi-level DC in Canada, and since it’s not yet built, companies strapped for space must have been considering additional options. One of these is to look further afield into peripheral communities. 3PL Pival, featured on page 16 of this issue, has done just that, choosing a newbuild site in Guelph, Ontario, for its latest tire storage warehouse. To maximize the use of that space the company is seeking out customers with complementary seasonal inventory, ensuring the building is full all year long. For Porsche Cars Canada, whose new DC is featured in our cover profile on page 14, the strategy was to build to a far time horizon, securing a long-term lease and preparing for ten years of productivity. Porsche’s approach relies on a strong WMS that is leveraging the data being gathered from every order to optimize the warehouse for speed. For distribution centre and warehouse managers efficiency is motherhood. The cost of land and buildings is just one of the many factors adding pressure to the need to keep costs down as commerce speeds up. Cutting waste, reducing emissions and implementing AI to improve processes are just a few other adaptations being adopted by companies we look at in this issue. Take a look at our exploration of AI on page 20 and our sustainability feature on page 24 for more examples of how efficiencies are being introduced. How does your organization plan to manage the space challenge? Are you staying put and improving utilization by applying automation, or revising processes? Or are you contemplating a move to the ‘burbs? Please share your thoughts on these or any other issue with us. I can be reached at emily@newcom.ca. Until next time,

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CHECK OUT OUR UPDATE ON CANNABIS DISTRIBUTION ONE YEAR AFTER LEGALIZATION ON PAGE 28.

SU PPLY C H A I N S C A N

GOING UP Canada’s ﬁrst multi-level DC rises in B.C.

WALMART BLOCKCHAIN Freight partners must sign on DEVELOPER OXFORD PROPERTIES GROUP

Multi-storey industrial concepts have just started to emerge in other supply constrained markets such as San Francisco, Seattle and New York.

has unveiled its plans to develop Canada’s first large-bay multi-level industrial property. Comprising 707,000 square feet over two levels, the project will be built at the company’s Riverbend Business Park located in Burnaby, British Columbia, on the site of a former paperboard milling operation. The development will be on two levels. The ground floor comprises 437,000 square feet with 32-foot clear heights. The second storey, which is accessible to full size transport trailers via a heated ramp, consists of 270,000 square feet, 28-foot clear heights and a 130-foot truck court. Anticipated for completion in 2022, the building can provide a single customer 707,000 square feet of contiguous space, making it the largest available industrial property in the Greater Vancouver Area. Conversely, the two floors can be operated and occupied independently and further divided to accommodate multiple customers as small as 70,000 square feet. Located close to the intersection of Marine Way and Highway 91A in Burnaby, it is positioned to labour access and to serve the population base of Vancouver. “Vancouver is one of the tightest industrial markets in the world and space for businesses that service the region – be it through manufacturing, logistics or e-commerce – is in critically short supply,” commented Jeff Miller, head of industrial at Oxford Properties. “This shortage requires bold solutions and progressive approaches, and we have studied innovative industrial projects from across the globe to inform our plan to develop Canada’s first multi-level property. By doing so, we can add density to the already insidelogistics.ca

8 THE AI THREAT Are jobs at risk?

9 established Riverbend Business park, a former brownfield site, without the need to encroach on greenfield or agricultural land.” As the e-commerce revolution drives an increased need for supply chain and logistics innovations among traditional and online retailers, multi-storey industrial concepts have just started to emerge in other supply constrained markets such as San Francisco, Seattle and New York. Purchased by Oxford in 2011, the 65-acre Riverbend site was home to a former paperboard milling operation and a 14-acre landfill. Over 300,000 cubic metres of waste and debris were removed from the site and it was converted back into developable land. The developer has also worked to restore the shoreline of the adjacent Fraser River and help protect native species. Invasive and non-native plant species were removed, improvements made to fish habitats and shoreline erosion protection measures installed. The buildings at Riverbend Business Park are also LEED Certified and Oxford’s environmentally conscious approach to the redevelopment of the brownfield site earned it the 2019 City of Burnaby Environmental Award. Oxford is in the process obtaining the required planning and permitting and has begun initial site preparation work.

CANADA AND THE WORLD IN 2020 Trade, economics and more

11 MOVERS + SHAKERS Appointments and moves in the supply chain sector

13 7

SU PPLY C H A I N S C A N

Walmart Canada rolls out blockchain for freight WALMART CANADA HAS launched a

blockchain-based freight and payment network. The new system uses the distributed ledger technology to track deliveries, verify transactions, and automate pay-

ments and reconciliation between Walmart Canada and its carriers, which deliver inventory to over 400 retail stores across Canada. The company operates 8.75 million square feet of distribution centre and

moves more than 853 million cases of merchandise annually. (For an Inside Logistics feature on Walmart’s Harmony DC in Cornwall, Ontario, visit http:// tinyurl.com/IL-Walmart-Harmony) These goods are transported by a combination of 3rd party fleet as well as Walmart Canada’s own fleet of 180 tractors, 2,000 trailers and more than 350 drivers. Each third-party trailer tracks approximately 200 data points per shipment. Automating this data collection and management using blockchain results in significant cost savings. All Walmart Canada’s third-party carriers are scheduled to be live by February 1, 2020. The solution is accessible using a web portal and a mobile application. Walmart Canada partnered with DLT Labs to automate freight and payment data using DLT’s supply chain platform called DL Asset Track. The new network manages, integrates and synchronizes all the supply chain and logistics data in real time, aggregating the data between Walmart Canada and its fleet of thirdparty trucks on a shared ledger. The system automates the calculations that enable real-time invoicing, payments and settlement. It is designed to integrate with each company’s legacy systems. “Our carrier partners move over 500,000 loads of inventory nationally, which creates an extraordinary volume of transaction data,” said John Bayliss, senior vice-president, logistics and supply chain, Walmart Canada. “This new dynamic and interactive blockchain technology platform is creating complete transparency between Walmart Canada and all of our carrier partners.” Bison Transport was the carrier in the pilot of this new blockchain-based freight and payment network. “The blockchain initiative we worked on with Walmart and DLT Labs is a mutually beneficial solution that works well for Bison Transport and Walmart Canada,” said Rod Hendrickson, VP finance, Bison Transport. “This project is a new paradigm that will greatly improve workflows, reduce paperwork, and make the business we do with Walmart more efficient.” INSIDE Logistics DECEM B E R 2019

AI will not steal jobs ARE MACHINES GOING to steal our

jobs? That is the question that keeps popping up in light of the rapid progress of artificial intelligence (AI). Research shows, however, that such fears about the adverse impact of AI on employment are largely exaggerated, according to a study recently published by the MEI (Montreal Economic Institute). “There is no doubt that artificial intelligence will transform the labour market, and we should certainly not disregard the plight of affected workers. We must keep in mind, though, that more jobs will be created than destroyed,” says Gaël Campan, senior associate researcher at the MEI and co-author of the publication. Indeed, the World Economic Forum projects that structural changes in the labour market due to AI and related technologies will have created 58 million net jobs worldwide by 2022. Moreover, current forerunners in robotization, like South Korea, Japan, and Germany, also enjoy low unemployment rates. “AI allows less experienced or less skilled workers to be productive much faster, instead of having to learn costly skills and knowledge over years on the job,” explains the researcher. “This means improved job opportunities, which are better paid, less risky, and more gratifying.” Nonetheless, to smooth over this transition and minimize its negative impact, proactive measures should be taken to limit job losses, and to reduce the hardships of those most likely to be affected. “Industrialized countries must rethink their teaching and training strategies in order to better cope with a rapidly evolving environment,” says Campan. “To better prepare the workforce to the realities of automation, colleges should among other things develop closer relationships with the business community.” The bureaucratic and regulatory burden should also be reduced in order to facilitate business creation and development, as well as personnel recruitment. In sum, instead of worrying about insidelogistics.ca

the rapid development of artificial intelligence, we should welcome this opportunity. “Apocalyptic scenarios make for good science fiction films, but they are less useful when measuring economic im-

pact. As was the case with other transformative technologies, the judicious use of artificial intelligence will give a boost to innovation and contribute to the general improvement of living standards. AI is not a threat to humanity, but an ally,” concludes Luc Vallée, chief economist at the MEI and co-author of the study.

SU PPLY C H A I N S C A N

SMEs believe in trade but sell locally CANADIAN SMALL and medium businesses (SMEs) have made it clear that economic improvement and international trade are closely linked, with 83 percent agreeing that increasing trade between Canada and other countries will improve the economy overall. While SMEs in Canada feel that trade is critically important to the economy and growth of both their country and their business, many face obstacles when engaging in trade. Nearly a quarter of SMEs in Canada who import or export goods (24 percent) say that fees and tariffs have impacted the growth of their business a great deal, representing a real barrier to Canadian SMEs when importing or exporting goods to and from different countries. Looking more deeply at the impact

trade has on SMEs who currently import/export, 81 percent say fees and tariffs have had a great deal or some effect on the growth on their business. Also within this group, nearly half (48 percent) of those surveyed say that variations in fees and tariffs have been a major challenge to their business; and 44 per cent say that import and export fees have been a major challenge to their business. Canadian SMEs support NAFTA and CUSMA (Canada-United States-Mexico Agreement) have. Nine in ten of those surveyed (90 percent) in Canada support NAFTA, while 86 percent expressed their support of CUSMA. SMEs feel international trade will not only help the Canadian economy, but their business as well.

More than half of Canadian SMEs (57 percent) think increasing trade between their country and other countries will help their company. However, only 37 percent are currently selling goods online. This is in contrast with American counterparts, who are doing more business online (44 percent). While both Canadian and US SMEs share the view that trade is important to the economy, the poll confirms both are largely focused on local customers. These data are from the 2019 FedEx Trade Index, a poll conducted by Morning Consult on behalf of FedEx Express Canada, a subsidiary of FedEx Corp. The poll was conducted from September 17 to September 20, 2019 among 500 SME decision makers in the Canada.

DC OPENINGS Purolator opened its new Toronto terminal on Valleybrook Drive in Don Mills, to serve the GTA. The $8.5 million, 110,000-sq-ft terminal will add up to 135 delivery routes and sustain 200 jobs through a combination of new and existing positions. The opening is part of the companyâ€™s $1B Delivering the Future growth and innovation plan.

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Amazon has announced plans to open its first fulfillment centre in Quebec. The new site will be located in Lachine on the island of Montreal and will create more than 300 new, full-time jobs. This new site will launch in time for the 2020 holiday shopping season. Meanwhile the company is reported to have made real estate deals in the Greater Toronto Area for two additional sites. According to David Bergeron, a vice-president and sales representative at Colliers International Inc, who spoke on a panel at the DLS conference on November 6, the e-commerce giant has committed to 350,000 square feet of warehouse space in South Oshawa and 1.3 million feet in another GTA location. Amazon has not confirmed these deals. DHL is building a new $100 million facility at the John C. Munro Hamilton International Airport, in Ontario. The new facility, which will be four times the size of the current one at 200,000 square feet, will feature a fully-automated sort system with a capacity of processing 15,000 packages per hour. INSIDE Logistics DECEMB E R 2019

SU PPLY C H A I N S C A N

| By Christian Sivière

Canada and the world in 2020

photo: wildpixel, iStockimages.com

THE NEW YEAR will bring new trade opportunities and challenges for Canada as various trade agreements come into force or change and global economic conditions remain a question mark.

NAFTA II The most important development for Canada is what will happen to the renegotiated NAFTA, the USMCA (United States Mexico Canada Free Trade Agreement), which I call NAFTA II. Signed by the three heads of states in November 2018, the revamped Agreement is awaiting U.S. Congress approval and there are signs that this may happen by the end of 2019 or early 2020. When this happens, it will be great news for Canada and for Mexico, since for both countries, the U.S. represents about three-quarters of total exports. During the renegotiation process, the U.S. President threatened to cancel NAFTA if a new deal could not be found, so when NAFTA II is ratified and put into effect, it will be a great relief for Canadian businesses. The main changes will touch the origin certification, and rules of origin for the automotive industry. The certification will change to a mere statement on the commercial invoice, replacing the old NAFTA certificate of origin. For the auto industry the origina rules will be more demanding, with higher regional value contents, the obligation to source steel and aluminum in North America and wage requirements of US$16 an hour for workers. Designed to bring production back from Mexico to the U.S., these new rules will pose a compliance challenge. In the long run, they may be counter-productive, making the North American automobile industry less competitive on the global scale. The de minimis exemption for customs duties increasing from $20 to $150 will be detrimental to Canadian brick and mortar retailers and a boon for on-line platforms. Since the exemption will apply not just on NAFTA goods, but

on any origin, ironically, it will be beneficial to China.

Europe Relying on the U.S. market for 75 percent of our exports is dangerous. Successive Canadian governments have negotiated Free Trade Agreements (FTA) with a variety of countries, to diversify our markets. This led to the implementation of the CETA Agreement (Comprehensive Economic and Trade Agreement) with the European Union in September 2017 and the TPP Agreement (Trans-Pacific Partnership) in December 2018 with six Pacific countries. Canadian exports to the E.U. have grown much less than European exports to Canada, and our exports to Japan (the TPP’s biggest economy) have gone down, so Canadian exporters must prioritize these markets. Our government must also promote these FTAs. According to a Global Affairs survey released in June, only seven percent of Canadian exporters know CETA and the TPP well. Another FTA currently in discussion is with Mercosur countries (Argentina, Brazil, Paraguay and Uruguay). When finalized, it should help our exporters diversify.

Brexit Looking towards Europe beyond CETA, Canada has a keen interest in Brexit, the United Kingdom’s planned departure from the European Union, because the U.K. is our largest market in Europe. First scheduled for March 2019, delayed

to October, then to January 2020, the Brexit saga has been detrimental to the UK economy and it is not known what exit agreement will be made. Will a so-call ‘no deal’ govern trade relations between the U.K. and the E.U., leading to the imposition of customs duties, or will a ‘’smooth’’ deal be made, with a (so-called) frictionless border. If/when the U.K. leaves the E.U., will the CETA provisions be transferred over or will a new Canada-U.K. deal have to be negotiated? No matter the outcome, Brexit brings uncertainties and higher costs, and Canadian exports to the U.K. will suffer.

Oil The evolution of oil prices is vital for Canada, since we are an oil-producer, with high extraction costs. When oil prices go up, it’s good for Canada, not just for direct income, but also to attract foreign investment. Several factors influence oil prices: supply and demand, producing nations agreeing to limit production, conflicts in oil-producing zones, ecological issues and more. But a new element has emerged in recent years: the U.S. has become one of the biggest oil and gas producer and a major exporter, due to the environmentally questionable ‘’fracking’’ method. This has stabilized prices. Lastly, a unique Canadian problem remains unresolved: how do we get our oil to markets?

E-commerce Will e-commerce continue to gain market share, to the detriment of established, traditional businesses? What continued on page 12

insidelogistics.ca

IN CASE YOU MISSED IT what’s happening at

Canada and the world in 2020, continued from page 11 impact this has on economic activities, employment, industrial real estate, the environment and government revenues, are important questions. The famous ‘’GAFAs’’, Google, Apple, Facebook & Amazon, to whom we could add Uber, Airbnb, Netflix and more, have grown exponentially, generating huge profits (except Uber, which has never generated a profit) but generally don’t pay taxes, therefore not contributing to society. Will this be allowed to continue? Many governments tried introducing a ‘’digital tax’’, the last one being France, but they had to back down following U.S. threats to tax French products in return. The GAFAs being mainly U.S. companies, the tax was perceived by them as an ‘attack’ on U.S. interests. The OECD (Organization for Economic Cooperation and Development), an international regulatory body of market economies, is working on a digital tax solution but will it have teeth, consider-

ing that the U.S. is the largest contributor to the OECD’s budget? What impact this has on trade is hard to quantify but we cannot deny its disruptive effect.

Debt Another concern is the growing debt issue, as governments, corporations and individuals borrow more and save less, encouraged by low interest rates. When will the bubble burst, precipitating a crisis similar to 1929 or 2008? The current U.S. administration, easing banking regulations, keeping interest rates down, growing the U.S. budget deficit to new heights and cutting taxes for corporations and the rich, is not helping. One of the consequences is growing inequalities between the rich and the rest of the population. Could this be one of the causes of the increased social unrest seen across the globe in diverse countries like Chile, Lebanon or France?

insidelogistics.ca » » » » »

Loblaw adding automated in-store picking for e-comm http://tinyurl.com/ IL-Loblawautomates Montreal-area DC for outdoor equipment retailer http://tinyurl.com/IL-SAILDC CITT honours outstanding logisticians http://tinyurl.com/IL-CITTHonours Toy maker suffers supply chain woes on China tariffs http://tinyurl.com/IL-Spinmaster UPS CEO speaks outs about Amazon, plans http://tinyurl.com/IL-Abney

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SU PPLY C H A I N S C A N

MOVERS + SHAKERS

David Bosse of Cole International Inc. is the newly elected chair of the Board of Directors for the Canadian Society of Customs Brokers (CSCB). Based in Calgary, Bosse will lead a CSCB executive team composed of newly elected vice-chair Linda Dynes, (executive vice-president Canadian operations, Farrow); secretary-treasurer Candace Sider (vice-president, government and regulatory affairs North America, Livingston International Inc.); CSCB past chair Angela Collins (chief regulatory officer and vice-president client services, Willson International Limited) and CSCB president and CEO Carol West.

Frank Robertson is taking on a new role as vice-president, operations of Logistec Stevedoring (Ontario) Inc. Since joining the company in 2017 with more than 15 years of experience in the marine terminal operations and supply chain logistics field, most recently with Oshawa Stevedoring, Inc, he has been tasked with developing an in-depth overview of Logistec’s terminal network.

Toyota Material Handling (TMH) promoted Anne Ewing to director of dealer development. Ewing will manage both dealer development and dealer operations functions. Ewing previously served as TMH’s national manager of dealer development. Before joining TMH, Ewing served in a number of dealership roles, including CFO, vice-president of sales and operations, and part owner.

Pilot Freight Services has promoted Lygdel DeLeon to country manager for its Canadian operations. In his new role, DeLeon will be responsible for providing support and establishing systems to enhance sales and operations in Pilot’s three stations in Canada; Vancouver, Montreal and Toronto. DeLeon joined Pilot in 2014 to spearhead the launch of the Vancouver station.

Eric Allard is the new director of sales for Ontario with Delmar International. Most recently, he was global head of logistics for Husky Injection Molding Systems, managing major transportation and supply chain activities. He is a member of several industry related boards of directors and holds a Supply Chain Management Graduate Degree from HEC Montreal.

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| By Emily Atkins

A NEED FOR

SPEED 14

INSIDE Logistics DECEM B E R 2019

PORSCHE CARS CANADA’S FIRST DC DELIVERS PARTS FAST

hen your customers all drive fast cars, your parts DC needs to keep up. At the new Porsche Cars Canada parts distribution centre (PDC) in the Heartland area of Mississauga, Ontario, the staff are driven to ensure parts ordered by dealers across the country are delivered no later than the next day. But it’s about more than keeping the German car maker’s iconic 911 sportscars in perfect condition; Porsche is keenly aware that it is selling more SUVs these days, and they are people’s daily drivers. “When you go into the shop and you need a repair, if somebody tells you it’s going to take three or four days, that’s unacceptable,” says George Fremis, the company’s manager, parts operations and logistics. “That’s one of the biggest reasons why we built a PDC in Canada – to help reduce that time, so we can fix our customers’ cars faster.” The Canadian PDC, which started operation on October 1, 2019, replaces deliveries from the U.S., which means Canadian dealerships across the country can place an order by 5 p.m. their local time and receive the part the next day. Previously, Fremis says, it could have taken two to three days. “Being able to take that two to three days and cut it down to an

overnight process, gives the dealers a very big market advantage,” he adds.

Built for speed Not only is the DC designed to move parts fast, it was also built quickly. Work to set up the empty building began in the third week of April 2019, and load-in started on September 1. Between then and the October 1 opening date, 66 shipping containers of parts were moved in and organized. The DC has numerous different storage zones – bulk, large parts, medium parts, small parts and a special area for lithium-ion batteries for the company’s new Taycan electric car. The 22 dock doors are bookended by the battery storage area on one side and a section of racking for crossdocking at the other. “We originally thought our initial yearone footprint was going to be about 62,000 square feet, and over five years it would go up to 100,000 square feet,” Fremis says. “And this is 140,000. So we said, ‘Okay, well now that we have this space, how do we leverage it?’” After talking to racking vendors they realized that with economies of scale it was cheaper to start big than to build a small footprint and have to grow later. Now the building is fully racked and labeled, ready for use. What’s not needed

now is blocked off, and “as we need it, we open the spaces up and then we start putting parts there”, Fremis says. The design process was facilitated with input from the parent company, with the teams working from past experience to envision how much product would be needed and fast it would move. But they also had to take country-specific parameters into account. According to Fremis, Canada is known as “the rubber carpet capital of the world” at Porsche AG in Germany. “We sell more winter mats for our cars than anybody else in the entire world for Porsche,” he laughs. But it was actually winter wheels that prompted a preliminary design change. “I think we are the second or third largest market when it comes to winter wheel sets,” he recounts. “We sell anywhere continued on page 16

George Fremis is manager, parts operations and logistics for Porsche Cars Canada

Above: The inbound docks are quiet in the evenings as staff fill the final outbound orders for the day. Right: With room for grwoth the racks are not yet fully utilized.

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continued from page 15

between 1,200 and 1,400 winter wheel sets a year. And they take up a lot of space. So you have to accommodate the bulk when the first shipment comes in.” The first iteration of the racking design had failed to take that into account, Fremis notes, and when they actually crunched the numbers it was obvious that a lot of bulk storage space would be needed to accommodate the wheel sets, which arrive in large corrugated boxes. “I felt like I had got my crayons out, and a blank piece of paper and started drawing,” he says. Ultimately the team finally settled on about the 14th iteration of the plan. Commanding the centre of the DC, with frontage towards the docks is a two-storey mezzanine, 10,000 square feet on each level. Inside are shelves for small parts bins, along with a secure area for Porsche branded clothing and watches, but at the moment the second level is practically empty, ready for growth. According to Fremis, 70 percent of orders are fulfilled from this area, which is why it’s located close to the docks.

Manual processes Automation was considered when the DC was being planned – it’s used in Germany for both small and medium parts storage and retrieval – but it turned out to be too expensive. “When we looked at it, the cost was literally twice as much as doing this, and we just thought maybe this isn’t the right time,” Fremis recounts. What they do have, however, is a sophisticated warehouse management system, POLARIS (Porsche Logistics International Supply Automated Replenishment). It is linked to all the Porsche parts DCs, and the main PDC in Sachsenheim, Germany. As the Canadian PDC processes orders the WMS is learning in the background, observing what is consumed and how quickly. “As we’re consuming, it’s automatically reordering for us, so we don’t have to place the orders,” Fremis explains. “The system automatically looks at inventory and says, okay, what are you missing? How fast are you consuming this? Then it tries to figure out what’s the sweet spot to keep sending you containers.” Right now, the PDC is scheduled to have one to two sea containers, and four to five air shipments every week for replenishment. The airfreight fills in the parts that insidelogistics.ca

PORSCHE’S PDC SPECS Total footprint: 176,000 square feet; warehouse 140,000 square feet 12,000 SKUs (as of November 2019) Serves 19 Porsche dealerships Same day or overnight delivery 25 staff, working two shifts 7am to 11pm Inbound: One to two sea containers/week + four to ﬁve air shipments Outbound: Capacity 1,500 orders/ day; currently averaging 1,150 DC operated by Schenker

overnight by road. Cargojet and Wesbell cover the rest of the country. Porsche chose Cargojet partly because as a dedicated national cargo airline it flies overnight, and also because with car parts there are some items – like lithium-ion batteries – that cannot fly as belly cargo in a passenger plane. With its base at the Hamilton, Ontario airport, it’s only 55 minutes away by road. Another factor was the car parts business cycle, which slows down in Q4 and Q1 when other retail businesses get busy. “They liked the fact that when they get slow with those businesses in the summertime, our business picks up. It’s a nice fit,” Fremis says.

Outbound air by Cargojet Outbound road by Cardinal and Wesbell Logistics

are being consumed faster than the WMS expects.

Tuning the engine Every order is picked by one of the DC’s 25 full-time staff, using barcode readers to confirm locations, and picking carts for the smaller items. With 3PL Schenker managing the operation, it can move people around from other distribution centres and with a minimum of training have them up and running to fill in if there is a staff shortage. Because the DC is nowhere near capacity, at the moment the racking is set up so that all the picking can be done from the lowest locations, with replenishment items up high. But Fremis notes that they are trying to “tighten it up, so that we’re closer to the inbound and outbound.” Dealers cannot see the inventory in the system until it’s been put away, so the pressure is on to get the inbound product on the shelf as fast as possible. “The faster I put it to shelf, the faster he can see it in his system, the faster he can reorder it. Then, the closer it is to the outbound, the faster I can get it out,” Fremis says.

Planes, trucks and automobiles Porsche Canada is working with three outbound transportation suppliers, Cargojet for airfreight and Cardinal and Wesbell for ground deliveries. Cardinal does the Ontario and Quebec deliveries, reaching from London to Quebec City

Looking down the road Porsche has built this PDC to last until 2029, Fremis says. The larger-than-anticipated footprint allows room for expansion and was practical from a long-term lease perspective as well. “Especially in the GTA market, real estate is becoming a challenge,” Fremis says, “so people are looking for a longer vision. That’s one of the reasons why we chose this place. We said, “Okay, how do we stretch this, and make sure that we’re here for a longer period of time?” There’s room for expansion in the racking utilization, the mezzanine was built to readily accommodate a third level, and of the 22 dock doors, Fremis notes that in a normal week only three inbound and five or six outbound are being used on a regular basis. A training centre is also being built on the office side of the building helping Porsche utilize the full 176,000 square feet they’ve leased. It’s early days still and Fremis has his eyes open looking for improvements. Preparing orders for dealer pick-up are on the radar, for example. “That’s one of our future growth opportunities,” Fremis says, along with possibly twice-daily deliveries within the GTA. “If you can fix the customer’s car and get it back on the road, why wouldn’t you?” he asks. “But right now, because we’re so new we want to get our processes in place first before we start adding too many cooks into the kitchen…We want to keep it smooth, so we have everything locked down, from a process point of view, and then we’ll see what we can do in the future.”

AU T O M O T I V E L O G I S T I C S

| By Emily Atkins

FRESH Pival keeps stock rotating in its new tire DC

ou could walk into Pival’s automotive replacement tire distribution centre in Guelph, Ontario, with a blindfold on and instantly know what they store there. The air is redolent of fresh rubber, leaving no doubt about the contents. The smell is about the only thing that Pival doesn’t control in this specialist space. It’s dedicated almost exclusively to one tire manufacturer’s stock, which the 3PL stores and ships out to dealers. And while storing and shipping out sound simple, Pival adds value to the process by recording the unique bead identification on every single tire in the building. As they come off the truck the beads are scanned, the packaging is scanned, the tires are labeled, then put away. Tires have a shelf life, which means that these scans are very important to the manufacturer, enabling more accurate lifecycle tracking and ensuring that inventory moves in the correct order. “We have to manage the date of manufacture on every

single tire, the one that’s made the oldest has to get out first,” says Kevin Little, Pival’s vice-president of sales and marketing during a tour of the facility. “And so when you mix it with all the different SKUs that we have, it’s not rocket science, but it’s not easy either.”

Room for inflation The 260,000-square-foot facility opened in April 2019, and holds about 1,700 SKUs representing 300,000 tires. The tires are stored in collapsible racks that stack on one another, which means the DC can be reconfigured very easily. In fact, staff were reconfiguring the storage area on the day we visited, turning two storage locations into one to accommodate a large number of one particular SKU. According to Rob Strub, the warehouse manager, reorganizing allows a much denser cube, with rows 11 deep in places. The tire business is utterly seasonal, which means big retailers like Costco for example, might send back 10,000 winter tires and order 10,000 summer tires. “It’s INSIDE Logistics DECEM B E R 2019

to make every inch of the warehouse paid for,” Little notes.

Rolling along

“We can track every tire, no matter if we move it 50 times during the day. We can’t be selling old tires as new ones.”

Photo: Emily Atkins

– Rob Strub

a great game,” Strub says, but it’s very serious since the tires that have passed their best-before date (which ranges from 30 to 40 months from manufacture, depending on the manufacturer or customer) must be sold at a discount. With each tire’s barcode scanned into the WMS, the location of every unit can be pinpointed in the DC. “This is where our WMS is so great and so valuable to us,” Strub says. “We can track every tire, no matter if we move it 50 times during the day. We can’t be selling old tires as new ones.” To help maximize the building’s utilization Pival sought and won the business of another seasonal client, a lawn fertilizer producer. “We’re making room, because the winter tires are way down. And so we get a seasonal client that comes in, fills up space and then gets out in time for summer. We’re making space to do that,

For the most part the DC operates smoothly. But with 300,000 units moving through the facility twice a month, Strub admits that there can be friction in ensuring that carriers bring loads at the right times. They are scheduled, but when slots get missed, it can mess up the day. “It takes us two and a half hours to unload a trailer and we want the next one right on top of it,” he says. For outbound tires the WMS creates orders that the TMS organizes into loads, directing the pickers to stage them in the correct order – they are organized by order size and destination to optimize trailer cube and transportation miles. The two systems work in sync to manage up to 200 orders a day. “It’s mostly automated,” Little says. And then in the early afternoon, “we pull the trigger and electronically send dispatches to all the carriers to come in, what they’re going to have and what docks they’re going to be at.”

Slick service Taking advantage of the inventory data it collects on every tire, Pival is developing a mobile app that will allow customers complete visibility into their stock. “They’re going to be able to see where their inventory is and how much they have of each SKU,” Little says. “For now, they’ve got to send an email and wait for an answer. With the app they’ll be able to just look it up.” The app is expected to be ready within a year, he says. While as a 3PL Pival does a lot more than just manage tire inventories, the company knows its strength. “The fact is, we were born as a tire warehousing company,” Little says. “So for us to get away from it, it’s not logical, actually, because we’re able to generate a certain amount of sales because of that expertise. Why would we walk away from it?”

Pival’s Rob Strub (L) and Kevin Little with some of the 300,000 300,000 tires in the warehouse. Top: Part of the value Pival adds is sticking the adhesive labels on each tire as it arrives. insidelogistics.ca

ARTIFICIAL INTELLIGENCE

| By Jacob Stoller

HOW AI

is changing logistics Current use cases aren’t about eliminating jobs, as some believe, but about helping supply chain professionals cope with the challenges of a high-mix, low-volume environment.

lue jeans used to be simple. Fifty years ago, they were loose fitting denim pants made for physical work or relaxing on weekends, and people didn’t wear them to restaurants. Today, there are literally thousands of varieties for every possible style, fit, and venue, and many manufacturers sell multiple brands through a variety of storebased and online retail channels. “Nowadays, we’re seeing a lot of people who want to personalize what they get and stand out a little bit,” says Montrealbased innovation specialist and growth advisor Keith Blanchet. “And that turns the offer from companies into much smaller batches by high-mix, low-volume. So we’re having to evolve more technology to adapt to that environment.” One of the major challenges for logistics providers, explains Ben Humphries, head of global pre-sales at Montreal-based AI solution developer Element AI, is that the technology they depend on is based on earlier high-volume paradigms. “A year ago, we looked at the entire supply chain from raw materials all the way through to the consumer,” he says. “What we found is that all the solutions that exist today are geared for yesterday, when it was a producer-push model through the supply chain.”

Machine learning The bulk of the AI solutions being developed in logistics utilize machine learning, a subset of AI. Essentially, machine learning apps employ a variety of techniques, depending on the application and data involved, to improve their performance

against defined objectives as they learn from the data. The technology brings two key strengths to this new environment. First of all, it is able to execute tasks or deliver actionable information based on vast quantities of data from diverse inputs such as sensors, GIS devices, hand-written notes, audio files, video, emails, EDI data, or ERP systems. And unlike traditional apps that depend on fixed algorithms, machine learning apps are able to rapidly discover new approaches to highly complex problems, and also adapt in real time to changes in variables such as shipping costs, product volumes, or partner relationships. AI, however, is not a quick fix – solutions take time to develop, and many application areas are just emerging. Furthermore, contrary to what many pundits are saying, AI is not likely to replace large numbers of humans anytime soon. “I don’t see massive layoffs,” says Humphries. “I think the challenge is that there are not enough people for the jobs that are there right now. That’s going to become even more challenging over time.”

New productivity tools Much of the focus on AI solutions in logistics is aimed at helping supply chain professionals at all levels be more productive. Interestingly, people at IBM often refer to AI as “augmented intelligence”. “This is about finding ways to make the work better,” says Jennifer Van Cise, VP global sales, IBM Sterling Supply INSIDE Logistics DECEM B E R 2019

Chain. “Augmented intelligence, as we call it, is actually about making work easier, smarter, and better rather than just replacing workers. It’s about helping the professional manage through the increasingly complex supply chain world that confronts us today.” “I see AI helping take some of the more mundane repetitive tasks,” says Humphries, “and empowering and enabling the associate to take on more interesting roles. AI solutions become their assistants and their colleagues to some extent.”

Unlike traditional apps that depend on ﬁxed algorithms, machine learning apps are able to rapidly discover new approaches to highly complex problems, and also adapt in real time to changes in variables such as shipping costs, product volumes, or partner relationships.

AI also breathes new life into existing technologies that are decades old but haven’t worked well in complex environments. Optical character recognition (OCR), for example, which turns hard copy into digital documents, previously only worked reliably with printed text. Today’s AI-powered OCR apps can read the scribble of a harassed shipping clerk, adding a powerful tool to AI’s big data collection capabilities. AI has also supercharged the familiar search engine. Element AI Knowledge Scout, fo for example, is a similarity search engine la with natural language processing (NLP) capabilities which allows users to converse with the system rather than ttrying to guess which search criteria to use. se “It presents prese answers in a consumable way, way,” says Humphries. “If you ask it for monthl monthly figures, it will draw you a chart.” And of course, it keeps on learning.

What’s new is how well AI can perform some of the more familiar automation tasks. “Maybe it’s something as ordinary as document processing, such handling bills of lading more quickly in order to improve the movement of product around the warehouse,” Humphries adds. Many AI solutions learn by imitation. For example, if an associate is engaged in repetitive actions such as filling out routine forms, AI apps insidelogistics.ca

can learn from monitoring humans how to autofill those forms, reducing the time and tedium required to execute these tasks. Some of these capabilities are finding their way into out-of-box cloud offerings such h as the h Oracle O l NetSuite’s N S i ’ supply l chain h i software, which now includes a feature called Intelligent Automation. “The system starts to learn how each individual user interacts with specific screens and automatically adjusts the screen layout to become easier to use for that particular user,” says Mississauga-based Gavin Davidson, product marketing director at Oracle NetSuite. The system also gives the user tips on profitability, or the likelihood of an order shipping on time, and such advisory capabilities are evolving rapidly.

AI also promises to re renew efforts to automate some of the mo more repetitive physical tasks in warehouses warehouse and distribution centres, such as pick and place, by creating solutions that can adapt to the environment. “To get ROI from automation in the past,” says Blanchet, “you needed to have high volumes, and th then you would automate that task and th the perform that task exactly the same way time and time again as ffast as possible.” ibl ” What we’re likely to see soon, he explains, are smart robots equipped with vision and other sensors that can navigate unstructured environments within distribution centres or warehouses. “That’s where we’re going to start seeing the most return on investment,” he says.

Executive level tasks Many of the situations being presented to AI solution providers weren’t anticicontinued on page 23

Photos: 3alexd, Mladich, AlessandroPhoto, iStockimages.com

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ARTIFICIAL INTELLIGENCE

continued from page 21

pated a decade ago. A clothing manufacturer with multiple brands and channels, for example, was recently developing a process whereby a customer could return an item to a different store from where it was purchased, even if the second store sells the product under a different brand name. “This gets very complex from a logistical standpoint, especially when you get into the inter-company issues,” says Davidson. “For example, who bears the cost?” On the strategic side, AI allows organizations to transition from a fixed-rule information environment to one where the rules can change according to varying business conditions and goals. For example, an organization facing new pressures to improve customer satisfaction may need to adjust its policies for routing shipments in order to place greater emphasis on delivery performance.

can’t move forward without it. So the challenge is being able to balance a myriad of KPIs, even if they are at odds. That is, balance the cost of the supply chain, but at the same time ensure customer satisfaction through quality and timeliness of execution.” Sometimes executives just want answers to the age-old question, “where is the order?” Visibility into the supply chain has also been a priority of Oracle NetSuite’s supply chain customers, and in response, the company has released a module called Supply Chain Control Tower, which provides an end-to-end view of the supply chain. Using Oracle’s machine learning platform, the program assesses risks based on purchase order and vendor performance. New features continue to evolve.

that helps guide stocking information. So you need to ask if you’re collecting the right data related to that.” It’s also critical to eliminate extraneous data, in part because machine learning depends more heavily on data than traditional apps. “Even if we have the right data, it might get obscured by less useful information,” says Wong. “There are factors that are less meaningful, and they can overwhelm the contribution of the useful factors. Then you end up with bad forecasting and bad predictions.” Once the data is selected and validated, the next step is establishing an initial set of rules for the app to operate by. “You start out with a rules-based system where certain assumptions are made,” says Wong. “Then you use machine learning to relax those assumptions and learn what they should be.”

The technology is ultimately a tool to help supply chain professionals improve what they do.

“AT THE END OF THE DAY, WE’RE TALKING ABOUT OUR PEOPLE.” AI capabilities also make it possible for supply chain professionals to answer to a broad range of corporate objectives. In a recent example, Seattle-based outdoor clothing retailer Recreational Equipment Inc (REI) adopted IBM Sterling Fulfillment Optimizer with Watson to improve its supply chain performance against multiple KPIs. In a video interview with IBM, REI’s SVP supply chain Rick Bingle explained that supply chain professionals need to look beyond just managing costs. “I would really caution us around the word of optimization,” says Bingle “because in supply chain management, we often think of that as distribution costs, freight costs – really thinking about costs. We have to think about the margin impact, the customer experience, how we can drive revenue.” “People think of the supply chain as a cost centre,” says Van Cise. “But it’s really the heart and lungs of the business – you

insidelogistics.ca

Companies seeking to leverage the advantages of AI in their supply chains have many options that range from utilizing out-of-box tools in enterprise software like NetSuite, to building a custom solution with a team of data scientists. Canada boasts a strong community of young AI companies like Element AI, and AI developer platforms like Microsoft Azure are in wide use and have been adopted by a number of solution partners.

It’s all about the data All AI journeys, however, begin with data. “You need to find where your data strengths lie, and where the gaps are,” says Dr. Alexander Wong, University of Waterloo engineering professor, Canada Research Chair in the area of artificial intelligence, and a founding member of the Waterloo Artificial Intelligence Institute. “For example, there may be a lot of regional demographic information

The process requires that supply chain professionals determine what they want from their AI app, and then continue to work with it to ensure that it performs according to objectives. Essentially, people will first teach and guide the technology and then learn from it. “You’re building a framework,” says Humphries, “and you can ramp up as slowly or as fast as you want. Everybody should explore this.” For Van Cise, the technology is ultimately a tool to help supply chain professionals improve what they do. “At the end of the day, we’re talking about our people,” says Van Cise. “How can professionals excel in this changing world. I’m sure the same conversation was happening 60 years ago with increased automation in factories and warehouses alike. For me this is about the constant need for continuous improvement of your own areas of expertise.”

By Emily Atkins and Treena Hein

SUSTAINABILITY T

Inside the “world’s most sustainable DC” 3PL Rhenus shows off its green cred By John Tenpenny Calling yourself the “world’s most sustainable DC” might be considered hyperbole, that is unless you can back it up. Nicknamed “The Tube” because of its cylindrical design, the Netherlands head office and distribution centre for multinational logistics company Rhenus, located on the outskirts of Tilburg, may attract stares from commuters on the highway alongside it, but this warehouse boasts the green credentials to back its claim as one of the world’s greenest industrial buildings. With over 13,000 solar panels, the site produces not only enough energy to power its own production, but also feeds back into the country’s general supply lines – powering approximately 750 households on an annual basis, according to its senior vice-president Alphons van Erven. “We’re an energy producer,” he told a room of visiting journalists on a tour of the country’s logistics sector, hosted by the Netherlands INSIDE Logistics DECEM B E R 2019

Photo: Rhenus

here’s a tension building in supply chains as the growing demand for faster fulfillment competes against the strengthening public awareness of the need for sustainability. Faster usually means a higher carbon footprint, yet that’s exactly what a lot of people say they don’t want. Companies facing this dilemma have a few options to meet both types of consumer demand. They can reduce the impact of their operations by reducing greenhouse gas emissions (GHGs), by minimizing their creation of waste, and by creating offsets to improve their corporate standing while still meeting the need for speed. A recent McKinsey report shows that over 90 percent of the damage to the environment caused by consumer goods companies is generated by supply chain operations, and that includes 80 percent of greenhouse gas emissions. So the need for improvement is real. The good news is that efforts to improve sustanability also offer cost savings through reduced energy usage, less need for packaging and other inputs, and potentially lower labour costs through the introduction of automation. To demonstrate the scope of opportunities we’ve brought together several examples of different approaches to supply chain sustainability. We look at a European 3PL, Rhenus, that touts its new DC as the ‘greenest’ in the world, Canadian discount retailer Giant Tiger’s efforts inside the DC and on the road, and at Amazon’s side business of generating sustainable power.

Rhenus uses an AutoStore system for fast, energy-efficient storage and retrieval.

The Rhenus DC and HQ received the highest green building rating ever from BREEM.

Foreign Investment Agency (NFIA) and the Holland International Distribution Council (HIDC). “Using the entire roof for solar panels was a good business case for us and it’s a win-win situation for Rhenus and the Dutch government.” In May this year, it received the highest-ever rating (99.48 percent) for an industrial building from British sustainability assessors BREEAM, which has analyzed the green design and concept of more than 500,000 buildings in over 80 countries. The 650,400-square-foot building is completely airtight, meaning no hot air escapes in the winter. The roof also houses two large pumps that draw heat from the air outside and use it to keep the inside of the building warm. There are electric boilers for exceptionally cold days, which the company estimates are used only 10 days each year. Along the side, and at either end, are huge glass windows, allowing light to flood insidelogistics.ca

into the building. Not only is it thought to improve the wellbeing and productivity of workers, by making it a nicer environment, but it means they use 70 percent less electricity in lighting the premises. “The idea was to have a building that is comfortable to work in,” said van Erven. “It helps us attract people in what is a very tight labour market.” Sustainability measures even extend to the toilets, which use rainwater collected on the roof. Van Erven is “quite convinced” that companies that are not already taking such measures should be forced to by governments. “There is a discussion here in the Netherlands that companies with big carbon footprints will have to pay a penalty on the amount of C02 they are exposing to the air,” he said. “We have an advantage because we don’t

have any C02 pollution anymore, so in the future it will pay off.” During the tour, Rhenus also showed off its newly installed AutoStore system. The AutoStore system, provided by Swisslog, has a surface area of 1,000 square metres, and is equipped with 21,000 containers, 19 robots, two infeed and three order-picking ports. The automated order picking and storage installation is integrated with both the Warehouse Management System (WMS) and Transport Management System (TMS), both of which provide weighing and measuring scanners. According to van Erven, the robotic system will help Rhenus to serve more customers. “The AutoStore system assists in further improving the accuracy of its order picking and in fulfilling the customers’ growth needs through optimization of continuity and quality,” he said. And, according to AutoStore’s U.S. business development manager Andrew Benzinger, “labour and space savings are paramount for our customers, but they love to hear that the power consumption of ten AutoStore robots equals one vacuum.” The Rhenus Group, a logistics service provider with global business operations and an annual turnover of 5.1 billion Euros, has 660 locations worldwide and employs 31,000 people. Last spring the company acquired Canadian logistics specialist Rodair. “The acquisition is an important step for Rhenus in establishing a network in Canada,” said Jörn Schmersahl, CEO, Air & Ocean Americas for Rhenus Freight Logistics. “Rodair’s entrepreneurial and family oriented history and conviction to the same values will make an important contribution to the ongoing growth of the Rhenus Group.” Jeff Cullen, CEO of Rodair, added, “Being integrated into the Rhenus Group enables us to become part of an entrepreneurial global enterprise with depth expertise and passion which offers us the best prospects for long-term and sustainable development.” continued on page 26

S U S TA I N A B I L I T Y

continued from page 25

To date Amazon has launched 18 utility-scale renewable energy projects.

The duality of Amazon Offsetting same-day deliveries with renewable power No company outstrips Amazon’s attempt to balance its amped-up supply chain against environmentally friendly efforts. On the one hand it touts its ever-faster order fulfillment speeds, for example its recent announcement that more than 10 million items would be available for free, next-day delivery to its Prime members this holiday season, and the expansion of its same-day delivery options. On the other hand Amazon encourages customers to select one day per week to receive deliveries, an attempt to reduce greenhouse gas emissions that have increased thanks to the introduction of one-day delivery. At the same time, the company pledges to reach 80 percent renewable energy by 2024 and 100 percent by 2030, and become completely ‘carbon neutral’ by 2040. It’s doing this by building renewable energy projects around the world. Most recently the company announced three new projects, one in Scotland, and two in the United States. Together these wind and solar power sites will produce 265 MW of additional renewable capacity and approximately 670,000 MWh of energy annually, enough to power more than 62,000 homes. They are expected to begin producing energy in 2021, supplying energy to the company’s massive Amazon Web Services data centres. To date, the e-commerce giant has launched 18 utility-scale wind and solar

renewable energy projects that will generate over 1,600 MW of renewable capacity and deliver more than 4.6 million MWh of clean energy annually – enough to power 368,000 U.S. homes. Amazon has

also installed more than 50 solar rooftops on fulfillment and sortation centres around the globe that generate 98 MW of renewable capacity and deliver 130,000 MWh of energy annually. Amazon has ordered 100,000 electric vans. It will start to use them for deliveries in 2021, with full fleet use by 2030. Why does Amazon have such a large environmental guilt complex? While it argues that fulfilling orders closer to the customer from its many fulfillment centres helps reduce the carbon footprint of its operations, and that e-commerce is actually more environmentally friendly than having a shopper drive in a car to a mall, the company’s own need for speed is putting more GHGs into the atmosphere. Same-day and next-day shipping are putting more trucks on the road, creating more cardboard and dunnage waste as orders get smaller, and complicating the order consolidation process. It’s the additional carbon footprint these activities generate that Amazon is clearly hoping to balance out with its widespread introduction of renewable power.

AMAZON’S NOT ALONE IKEA plans to build dozens of wind turbines and has already installed roughly 750,000 solar panels on its buildings. European transport and logistics firm Gebrüder Weiss has leased the roofs of its trans-shipment and logistics warehouses near Vienna (pictured above) to a solar energy company. A panel surface area of 231,000 square feet, is generating about 2.4 million kWh of electricity per year, equivalent to the average annual consumption of 1,300 three-person Austrian households. Gebrüder Weiss has other solar projects at three of its other installations in Austria and two in Germany. INSIDE Logistics DECEM B E R 2019

Changing its stripes Giant Tiger’s green moves Canadian discount retailer Giant Tiger moves a lot of freight every year over the road and through its DCs. The company recognizes the value of saving energy and reducing waste. One initiative is using Long Combination Vehicles, says Alison Scarlett, director of brand communications. The impact of each one is equivalent to the annual electricity usage of 69 homes. All trailers now have aerodynamic skirts, which saves seven percent in fuel over trailers without them. In addition, Giant Tiger’s 14 newest Volvo trucks have maximized aerodynamics and an expanded battery pack, that allows drivers to have heat and air conditioning and cook food without needing to run their engines. In November, 2019, Giant Tiger’s new container chassis arrived, designed from the ground up with fuel economy and longevity in mind. “They have super single tires versus traditional dual wheels (six tires versus 12) which are mounted on lightweight, aluminum wheels,” Scarlett explains. “We also built in the ability to run an aerodynamics package on these chassis, which is something nobody else does. We have these prepped to run as LCVs to further our efﬁciency, and all components are galvanized to extend service life and reduce maintenance.” In addition, the company’s decision to transload from 40-foot ocean containers into 53-foot rail containers is trimming a third of rail movements from Vancouver to Montreal and a third of truck trips from Montreal to its new DC in Johnstown, Ontario, saving the CO2 equivalent of taking 877 cars off the road per year. And that DC was, of course, built with energy efﬁciency as a priority. (See http://tinyurl.com/IL-GTJohnstown for the full story.) “In fact, we won the 2019 Regional Technology Award from the Ottawa Valley Chapter of the American Society of Heating, Refrigeration

Giant Tiger’s automated robotic palletizers create a denser, more stable pallet that reduces C02 emissions by increasing the cube in trailers.

and Air Conditioning Engineers for efficiencies in HVAC, lighting and temperature control,” Scarlett says. “We recognize that even the smallest gestures can have a lasting impact and that is why we have invested in operational building efficiencies, for example, motion-activated LED lights, high-efficiency HVAC units with heat recovery, R-30 insulation in the roof and walls, and even the windows are oriented to receive maximum daylight exposure, limiting the need for additional lighting.” As an added touch, the parking lot is equipped with free electric car charging stations for employees. The DC also boasts automated robotic palletizers which help save cube on the trucks by creating taller, denser pallets than human pallet builders can. Algorithms direct the robots to place heavier items on the bottom and lighter ones on top, while also ensuring the goods are in the right order for unloading at stores. The retailer recycles all cardboard and plastic from all stores serviced by its trucks and is currently seeking a way to better recycle its shrink wrap. In addition, “the KwikZip graphics system we use is more sustainable than traditional vinyl adhesive

graphics,” Scarlett notes. “The graphics themselves are re-useable, can be removed and reinstalled at any time; when they reach the end of their service life, the material can be recycled, whereas adhesive vinyl must be sent to landﬁll.”

MEC BOXES CLEVER Right-sizing packaging is another huge opportunity that allows e-commerce orders to be fulfilled in a cardboard box that is exactly the right size for the goods being shipped. Canadian outdoor retailer Mountain Equipment Co-op (MEC) uses such a system from PackSize in its western distribution centre in Surrey, British Columbia. The machine takes the cube data from an order and creates a right-sized box from 22 pre-set choices. Using a right-sizing system can reduce box sizes by 40 percent, which cuts cardboard use by 20 percent. Smaller boxes mean lower shipping costs and a reduced CO2 footprint as more parcels can fit on the same truck. (For our in-depth feature on the MEC DC see https://www.insidelogistics.ca/ features/the-gear-game/).

Each of Giant Tiger’s LCVs save energy equivalent to the electricity consumption for 69 homes. insidelogistics.ca

CANNABIS DISTRIBUTION

| By Treena Hein

GROWING LIKE A WEED Managing the blossoming recreational marijuana supply chain

n the year since recreational cannabis was made legal in Canada there have been highs and lows as demand soared and rules changed while distributors sought to keep up. While the rollout has dragged in places, Ontario has perhaps had the harshest trip. The Doug Ford government came to power a few months before legalization and dampened the blaze. While the plan remained for crown agency ‘Ontario Cannabis Store’ (OCS) to run online sales, in the weeks after legalization OCS faced many challenges including labour action at Canada Post, licenced producer labelling issues – and staggering demand. In its first 24 hours of existence, the agency received nearly 100,000 orders, more than all other Canadian online cannabis retailers processed in their first month combined. At the same time last fall, the new government changed the plan on physical stores from public to exclusively private, with OCS as the sole wholesaler and distributor. These stores, however, were only opened in April 2019 – and they were few. Of the more than 560 licensed cannabis stores across the country, about 45 are located in Ontario and Quebec, where two-thirds of Canada’s population makes its home. Over half of total stores (a whopping 280-plus) are in Alberta. BC has about 92. This is a barrier for licensed producers to get products to market, notes Trisha Leblanc, national cannabis industry leader at consulting firm Grant Thorton. “This is especially true in Ontario, where there are only about 25 stores open and operating in the entire province,” she reports. “Toronto alone only has five stores for a population of 2.8 million, which is obviously much less than the 60 that Calgary has.”

Across the country

Challenges and solutions

Distribution models vary widely across the country. All Alberta stores are private, like Ontario, with online sales managed by Alberta’s gaming and liquor commission. Saskatchewan and Manitoba have both private online sales and retail stores; in Manitoba, only ﬁrms with physical stores can sell online. In Quebec, New Brunswick and P.E.I., provincial commissions manage both online sales and dedicated retail stores. It’s similar in Nova Scotia, but cannabis is sold alongside alcohol in provincial liquor stores. The Yukon government has gone with private stores and online government-run sales. In the Northwest Territories, the Liquor and Cannabis Commission handles distribution and online sales, with ﬁve privately owned stores authorized to sell. In British Columbia, cannabis is sold in stores that are mostly private, with a few run by the B.C. Liquor Distribution Branch (LDB), which also handles distribution and online sales.

When asked about how they’ve handled their particular supply chain challenges, crown agencies in Manitoba, B.C. and New Brunswick all point to working closely with retailers and suppliers to match available supply with demand. “By communicating proactively with provincial and federal regulatory agencies,” says Manitoba

Inconsistency This smattering of different models prevents a truly national and efﬁcient cannabis industry from emerging. “This regulatory fragmentation increases business complexity and cost, and prevents scale economies,” says Mitchell Osak, cannabis industry advisory leader with consulting ﬁrm MNP. And although there are many stores in some provinces, supply is still not meeting demand. “In Alberta for instance,” says Leblanc, “stores have had to close certain days of the week while they wait for more supply. There is also a lack of retail shelf space.” INSIDE Logistics DECEM B E R 2019

Liquor & Lotteries Corp spokesperson Lorne Kletke, “we haven’t experienced any signiﬁcant issues meeting reporting requirements and tracking product.” In B.C., “despite widespread supply shortages across the country early on,” says the LDB’s director of supply chain for cannabis operations, Jeff Ring, “the LDB was able to maintain consistent supply of wholesale product to service wholesale customers, including our public-run stores and online BC Cannabis Store.” A lot of the challenges for Cannabis New Brunswick since recreational legalization, notes senior communications specialist Marie-Andrée Bolduc, involved “quickly adapting our processes” to accommodate its partners, who were doing their best to navigate the situation. “When the supply challenges and lack of inventory became

apparent just before launch, we had to overhaul the way we ordered product in the short term and the way we distributed it to stores, and we had to look at inventory management differently. The volatility of shipments meant we had to put some quick manual work-arounds in place…while we were making system changes.” This quick and nimble problem-solving was also used by OCS last fall to clear its colossal online order backlog within about three weeks of recreational legalization. The agency states that now, almost 99 percent of customers receive their orders within three days.

Consultations In other developments in Ontario, over 50 additional private stores are being given the green light, and in October OCS conducted consultations with industry to “fully explore the viability of delivery models that could leverage greater involvement from licensed producers in the storage and transportation of product to authorized retail stores.” In January, OCS put out a tender for couriers to make same-day deliveries in the Toronto area, but cancelled that in April and will not explain why. Seeking private sector input is the most positive current factor in Canada’s entire cannabis supply chain, Osak says. “Ontario represents up to 50 percent of potential national cannabis sales,” he notes, “and moving to a more private-sector model like Alberta will open up Ontario to better supply chain service levels, improved efficiencies and greater industry participation.” Efficiencies will come from private players leveraging their larger economies of scale around logistics, space and more, he says. He believes these private firms will also be able to draw on lessons learned from distributing and storing other highly regulated products like alcohol and tobacco.

Rollout of edibles, beverages and more Canada’s cannabis supply chain will have to muster all of its experience from the past year in order to successfully handle insidelogistics.ca

a plethora of new ‘phase 2’ recreational products about to be legalized by year’s end: edibles, drinks, topicals and vapes. Osak expects volumes of edibles to slowly build in the first quarter post-legalization and then ramp up significantly, increasing supply chain complexity. “Additional volume is not necessarily a bad thing in the medium term when product choices, supply and inventories become better aligned with consumer demand and market access,” he explains. “However, there will be some product returns, higher inventory levels and possible trackability issues – and I believe the private sector is best positioned to handle these challenges.” Marijuana producer Aurora, in order to continue to ensure sufficient supply for domestic and international markets of existing products and to address production, packaging and distribution of new products, has established production hubs in Bradford, Ontario, Pointe Claire, Quebec, and Leduc, Alberta. Together, they total over 450,000 square feet. For its part, Cannabis New Brunswick, which many hold up as the best provincial cannabis supply chain in Canada, incorporated planning for the new ‘phase 2’ recreational products during planning last year for ‘phase 1’. “The team had… considered inventory management requirements both at the warehouse and at the stores,” says Bolduc, “and had planned our infrastructure and systems to be ready.” However, Grant Thorton’s Leblanc is of the view that the new product categories will strain a product supply chain already facing many challenges. There are many unanswered questions in her mind, about shelf space in existing stores, for example, stores that are very limited in number in some provinces. She also notes that new products like beverages “are much heavier than current cannabis products, and in provinces where there are not sufficient retail stores, will consumers be interested in purchasing these online?” And she asks, “where there are retail stores, is there sufficient space for refrigeration of beverages, which it is largely anticipated that consumers will want to purchase already cold?”

G U E S T PE R S PE C T I V E

| By Shane Snyder

North of the

BORDER Lessons learned from a Canadian expansion

n March 2019, Barcoding, Inc. – a supply chain automation and innovation company based in Baltimore, Maryland – jumped fully into international operations by expanding our offices into Canada. As president, it’s been rewarding to witness the successes we’ve had so far in establishing Barcoding-Canada, with offices in Montreal, Toronto and Vancouver. I believe we owe these successes to the lessons we’ve learned along the way. Our experience has led us to identify key best practices, new opportunities to pursue and challenges to avoid – all of which any business should consider for a seamless Canadian expansion. Barcoding’s primary reasons for expanding into Canada were twofold: first, to provide a better level of service for customers based throughout North America, and second, to expand our business opportunities by entering a larger market.

A big country We quickly learned that Canada’s 10 provinces each have thriving industries of their own, and any company setting up shop in the country should take note of the best location based on their business goals. Ontario, for instance, leads the country in manufacturing, with automobiles as the biggest category. The province is home to Ford, Chrysler and GM headquarters, as well as a Honda manufacturing plant and the only Toyota plant outside of Japan. In Alberta, the focus is oil and gas. New Brunswick is a hub for ﬁsheries and seafood production. Nova Scotia is home to 40 percent of the country’s military assets and houses some of the world’s leading defence and security operations, including Lockheed Martin and General Dynamics.

Quebec rounds out the country’s leading provinces for concentrated industries with a strong aerospace community. Bombardier, the largest aerospace company in Canada, Pratt & Whitney Canada and Bell Textron all base their Canadian operations in Quebec. When narrowing down the best location for operations, businesses should consider Canada’s immense geographic size. It’s 4,400 miles from St. Johns to Vancouver – that’s a thousand miles further than the distance between Seattle and Miami. Ontario is more than double the size of Texas. This translates to higher travel and shipping costs, so companies must budget accordingly. Beyond location, it’s important to consider Canada’s policies as they relate to health care and monetary regulations. Canada has a public health care system, but private supplements covered by employers are the norm and should be accounted for in your budget. In terms of monetary policy, businesses need to identify which suppliers should be paid in U.S. currency and which should receive Canadian currency, creating separate accounts accordingly with the appropriate local banks.

Legalities As with Canada’s policies, the country’s legal system also differs from the U.S. in notable ways that impact business. For this reason, U.S. businesses should ﬁrst establish a Canadian corporation, which demonstrates a commitment to the market and allows businesses to better leverage tax laws in the U.S. and Canada. Human resources and employment laws vary from province to province, so a company operating nationwide would need to tailor 10 employment agreements to each area’s speciﬁcations. Leveraging local legal counsel in the U.S. alongside

Canadian counsel allowed Barcoding to successfully navigate these regulations – particularly because we worked with a team experienced in expansion incentives and energy credits.

Culture Finally, respect for cultural differences goes a long way to establish trust as a company new to the country. One of the most apparent differences stems from language, as Quebec and Ontario are home to a significant population of French speakers. In these provinces, there are both legal requirements and an expectation of respectful awareness regarding language that businesses must embrace to successfully ingratiate themselves. Other cultural differences may be subtle, but they are no less important. For example, we have found that the best approach is to “listen and learn” before imposing or explaining our ways of doing business in the U.S. Most Canadians find imitations of their accent irritating, not endearing. And while Canadian society is diverse – particularly in Vancouver, Montreal and Toronto – hockey, traffic and the weather are almost always safe “ice breakers,” no matter who you meet. To date, Barcoding’s expansion has been an incredible learning experience. Canada is a dynamic market filled with opportunities. I, along with my colleagues, look forward to learning even more about the geographic, financial, legal and cultural nuances of doing business on an international scale. We look forward to continuing our work with colleagues and partners in Canada to take advantage of the many prospects this market presents for future growth. Shane Snyder is President of Barcoding, Inc. INSIDE Logistics DECEM B E R 2019

SU PPLY C H A I N S M A R T S

BRIDGING THE GAP Automation as labour augmentation IT’S HARD TO HAVE any kind of supply

These examples are just a few of the ways that materials handling tasks can be accomplished by humans and their robotic co-workers. Robots excel at repetitive, low-value tasks – just the sort of jobs that could lead to repetitive stress injuries. That leaves higher order activities for humans, complete with their potential for greater job satisfaction.

chain conversation these days without covering labour. Unemployment currently stands at 5.5 percent. But despite the economy operating at essentially full employment, the growth – and associated need for more labour – does not stop.

Need to have According to a September 2018 CBRE report, rapid e-commerce growth will create demand for an additional 452,000 warehouse and distribution workers from 2018 to 2019. Even for big names like Amazon, labour is difficult to find. During its much-publicized jobs day, the company received 20,000 job applications – not even half the number required to fill their 50,000 open positions. This gap between the limits of the labour force and the needs of the supply chain makes robotics not just something nice to have, but something we need to have. Think about robots as part of strategic workforce planning. They’re valuable tools that help raise overall productivity by working alongside human co-workers as a labour augmentation solution. What’s the extent of this positive impact on productivity? The same CBRE report pegs the productivity gain from robotics in the distribution industry to be as much as 46 percent.

Robots in the real world Historically, repetitive tasks that do not require the human capacity to think and adapt on the fly have been prime candidates for automation. Take order fulfillment, for example. In the average warehouse, order picking accounts for approximately 50 percent of total operating costs. A deeper look at this process reveals that employees assigned to pick orders can spend up to half of their time traveling between pick locations – not actually picking. The strengths of human insidelogistics.ca

Evolving jobs MICK MCCORMICK Robotics Business Leader, Yale Materials Handling Corporation

pickers and mobile robots best align with different tasks in the picking process and can work together to help boost overall efficiency. Mobile robots are adept at traveling long distances, continuously moving pallet loads and smaller quantities from point A to point B, without breaks or fatigue. They’re advanced enough to detect obstacles and adjust their paths accordingly, relying on their own ‘map’ of the facility to pursue alternate routes. Humans, on the other hand, lack the ability to continuously move between pick locations without tiring. However, we do have the most advanced perception, cognition and motion planning systems in the world. The capabilities that allow us to set the table and take out the trash are uniquely suited to find, grasp and move individual items to pick and pack orders.

Division of labour By dividing tasks according to the strength of each type of worker, both can be more productive. Pickers no longer sacrifice picking time traveling to pick locations, and storage aisles are in turn relieved of congestion, allowing mobile robots to bring items to pickers as efficiently as possible.

History has taught us that innovation creates new tools, jobs and even industries. Just 15 years ago, who would have dreamed of jobs like “iPhone app developer” or “search engine optimization specialist?” Or even further back, industries like “wireless technology” and “e-commerce?” Robotics is primed for a similar effect on the economy. A recent report by McKinsey & Company includes a top-end estimate of 800 million jobs displaced due to robotic automation. But in the same scenario, the company estimates significant job growth that more than offsets job losses: up to 890 million new jobs. In the warehouse and manufacturing facility, this effect shifts work to robotic solutions and creates new roles for humans, driving a greater need for skilled technical labour. Think robot maintenance, machine supervision and data specialists, all working together to keep systems running, analyze performance and optimize them for continuous improvement.

Robots becoming normal Robots are gaining ground in enterprises both large and small. Pressure from e-commerce will continue to mean key supply chain operations face growing pains, which makes robotic automation an attractive option. Deploying robots to augment labour is an increasingly attractive solution to drive the productivity gains needed to meet ever-growing demand and allow labour and automation to play to their respective strengths.

P R O D U C T I N N OVAT I O N S

NOW IN STOCK

The latest solutions on the market for warehousing, inventory control and distribution

Sorter upgrades MHS has made two additions to the companyâ€™s in-house sortation portfolio, the new HC-Loop cross-belt sorter and HC Smalls sliding shoe sorter. The HC-Loop is the companyâ€™s first cross-belt sorter, offering a flat carrying surface to handle the high volumes and package variety of e-commerce with maximum efficiency and accuracy. It includes an automatic centering feature that locates items in the centre of the conveying surface for consistent divert accuracy. This level of accuracy allows the system to use narrower divert chutes, boosting sortation capacity while maintaining an efficient footprint. The HC-Loop has a modular design for layout flexibility and space savings, and fewer components for improved reliability and simpler maintenance. The HC-Loop uses the new MHS linear induction motor that avoids contact and vertical attraction, for smooth, constant operation that contributes to long lifespans and precise speed control. The HC Smalls Sorter from VanRiet, an MHS company, is designed for the smallest, lightest parcels, capable of handling items as small as four by two by 0.02 inches and as light as 0.1 pounds.

The sliding shoe design works in tandem with rounded slats to prevent thin products from becoming trapped underneath shoes and causing jams. It offers a high density of exits to maximize capacity in a space-efficient framework, with low noise and a maintenance-friendly design to keep operations productive.

INSIDE Logistics DECEM B E R 2019

Power carts and trailers Hamilton Caster has introduced two new product lines to its e-Power cart and trailer offerings. A series of four industrial e-Power pushers is designed to push or pull in-plant trailers with load capacities between 3,000 and 100,000 lb. Also, Hamilton is introducing three new e-Power Vehicles with wagon-style steering to push or pull payloads up to 10,000 lb.

Dark, environmentally secure dock shelter

The new pushers are designed to be more manoeuvrable and versatile with a smaller footprint than a forklift or AGV. Compared to elaborate transfer cars that are designed for the proverbial “one-trick” material handling application, Hamilton’s Pushers can move a multitude of materials in varying sizes and shapes in and out of hard-to-reach areas.

Rite-Hite has improved its Eclipse shelter, providing a dark, environmentally secure dock.

To facilitate quick connects and disconnects, Hamilton engineers have designed seamless linkages between the powered and non-powered elements.

In a single piece of equipment, the Eclipse shelter provides a tight, consistent seal all the way up trailer sides, across the top, and at the corners.

The in-plant trailers that link to the e-Power Pushers and the decks of the e-Power vehicles can be designed with custom sizes and superstructures to address a wide range of material handling challenges. Optional side-steer or remote steering is also available.

On the sides of the trailer, durable hooks wrap around swing-open trailer doors, sealing the gaps created by the door hinge – gaps that amount to over two and a half square feet of open air if left unsealed. Side curtains are built with high-strength fabric, which has a unique, friction-resistant surface to resist wear.

Impact-damage monitoring device SpotSee has launched a new device that combines impactdamage monitoring with radiofrequency identification (RFID) technology. This new device, the ShockWatch RFID impact indicator, is designed to track damage through the supply chain and identify affected inventory in industries such as the automotive, medical devices/equipment and aerospace. The indicators are single-use devices that are tamperproof, field-armable and triggered when a damaging impact beyond a specific g-force threshold occurs. Once the threshold is exceeded, the device has both a visual indication, turning the indicator red, and an electronic indication, showing that damage has occurred when scanned with a reader. insidelogistics.ca

ShockWatch RFID delivers a damage-monitoring program while also providing an electronic record of information in the user’s enterprise resource planning (ERP) software, warehouse management system or directly into the SpotSee Cloud. By gathering data throughout the supply chain, ShockWatch RFID helps customers quickly identify where damage is occurring, allowing them to isolate damaged inventory for further inspection and determine where the root cause is in the supply chain.

Each ShockWatch RFID unit is fitted with a NXP UCODE G2iM+ passive RFID chip, which can be scanned with any standard ultra-high frequency (UHF) RFID reader. With these indicators in place, the need for visual inspections during the receiving process is greatly reduced to “exceptions only.” Once a ShockWatch RFID indicator passes by the RFID reader, within milliseconds the ShockWatch RFID indicators communicate that a damaging impact has occurred or if products can be moved into saleable inventory.

A weighted head curtain applies over 100 pounds of pressure across the full width of the trailer top. This gravitybased system keeps the curtain in constant contact with the trailer without requiring an additional rain diversion header. Innovative fabric corner pockets connect sides to top, providing a dark, complete seal when trailers back into place. Meanwhile, lip corner seals, filler pads and other components block gaps on the inside of the dock. Working together, the Eclipse shelter and PitMaster under-leveler sealing system provide an advanced, highly effective seal on all four sides of the dock door opening when trailers are in place.

P R O D U C T I N N OVAT I O N S

WMS adds put-to-light putaway 4,500 - 6,500 lb. capacity sit-down electric counterbalance lift trucks Mitsubishi Caterpillar Forklift America Inc. (MCFA), the provider of Cat lift trucks in the United States, Canada and Mexico, has introduced a new series of Cat 4,500- to 6,500-pound-capacity sitdown electric counterbalance lift trucks. The EC23N to EC30LN models have advanced AC motors and regenerative braking systems, and run longer on one battery charge. The two-stage hydraulic system determines the optimum motor speed, resulting in reduced energy consumption and longer run times. The two-stage hydraulic system allows these cushion tire lift trucks increased lift speeds and reduce energy consumption. The integrated, computer-based, Operator Presence Detection System (PDS) uses both audible and visual indicators to alert the operator of potentially hazardous situations. The full-suspension vinyl seat, including lumbar support, can be adjusted front and back to give the operator a comfortable operating position. Drivers can control the hydraulic mast and attachment functions, horn and travel direction with fingertip controls integrated with the optional seat-mounted arm rest.

Following the acquisition of Kodverkstan earlier this year, Weland Solutions now owns the Compact Store WMS system. In conjunction with the acquisition, Weland Solutionsâ€™ IT Department was expanded to give it the capacity to take the system to the next level. A series of planned improvements and brand new features are now being rolled out in parallel with the launch of Compact Store 8.0. The WMS system provides support for all operations included in normal inventory management, such as incoming deliveries, combination, prioritising and starting of order picking, transfer and replenishment. One of Compact Store 8.0â€™s new features is putaway and storage of incoming goods via Put-To-Light (PTL). This already exists for order picking, but is now also available for putaway. Several aspects of the feature for starting an order have been improved. The option to link operators to lifts, faster import of orders and enhanced support for tablets and mobile devices are other new features in the upgrade. Compact Store can be used as a completely independent system, but is usually connected to an ERP system (Enterprise Resource Planning). The ERP system manages finances and Compact Store can be seen as the storage module. About 400 have been installed at customer premises and Compact Store has been integrated with most commercially available ERP systems.

INDEX OF ADVERTISERS COMPANY

WEBSITE

PAGE

3D Storage Solutions ................................................... www.3Dstoragesolutions.com .................................................................. 39 CITT .............................................................................. www.citt.ca/ccpl2020................................................................................. 13 Dematic ........................................................................ www.dematic.com ...................................................................................... 2 Engineered Lifting Systems.......................................... www.destuffit.com ..................................................................................... 10 Johnston Equipment .................................................... www.johnstonequipment.com.................................................................... 8 Konstant ....................................................................... www.konstant.com ..................................................................................... 6 Old Dominion Freightliner ........................................... www.odfl.ca .............................................................................................. 40 Penske .......................................................................... www.gopenske.ca ....................................................................................... 4 SSI Shaefer.................................................................... www.ssi-shaefer.com ................................................................................. 12 Starke............................................................................ www.starkeforklift.com ............................................................................... 9

INSIDE Logistics DECEM B E R 2019

L E A R N I N G CU R V E

COMING IN FROM THE COLD How to leave the Driver Inc. model behind IN OCTOBER 2018, both the Canada

Revenue Agency (CRA) and Employment and Social Development (ESDC) made it clear they see drivers who incorporate themselves – but use someone else’s company-owned vehicles and then don’t pay payroll and other taxes – as tax manipulators. There’s been a fury over unfair practices like these in our industry – the Driver Inc. problem – for years now. What’s new is there are now clear signs the federal government could be ready to turn up the heat on the offenders. A November 5, 2019 article by Julius Melnitzer in the Financial Post says the CRA got a Federal Court order in July that forced Home Depot to release the identities of its commercial customers and their total spending between January 1, 2013 and December 2016, at all Canadian locations. Obviously, many contractors who deal only in cash have been positioned right in the crossﬁre. In the article, entitled “Contractors buying from Home Depot, other retailers beware – the CRA is coming after you,” David Rotfleisch, a tax lawyer from Toronto’s Rotfleisch & Samulovitch Professional Corporation, called the CRA’s move “clever out-of-the-box thinking” and said it is a “sensible approach that deals with a huge problem in the economy.” It is huge. A CRA report released near the end of 2018 shows that the Canadian underground economy (any economic activity that is partially or entirely hidden from governments in order to evade paying taxes or government reporting obligations) totalled $51.6 billion in 2016, or 2.5 percent of gross domestic product. So, it stands to reason that the trucking industry, and individuals and corporations using the Driver Inc. model, are hearing cautionary tales like the one about Home Depot’s commercial customers and thinking it is time to legitimize. Many trucking companies are realizing that to determine where the individual

insidelogistics.ca

TRACY CLAYSON, Director of Client Development, In Transit/CPC Logistics Canada

A CRA report showed the Canadian underground economy totalled $51.6 billion in 2016, or 2.5 percent of gross domestic product.

offenders are, the CRA will likely have to, at minimum, conﬁrm facts with them too. Trucking companies using Driver Inc. will need to answer a lot of unwelcome questions. For example: • Who owns the trucks? • Are payroll deductions coming off the driver’s pay at the source? • If not, who is paying the income tax? • Who’s paying CPP? • What about EI? • Why are you failing to report and remit

WSIB premiums (a form of payroll tax evasion)? Fleet managers who cannot answer these questions are going to be caught and will be subject to both severe financial punishments and public embarrassment. This is not an attractive option. They are seeing just how badly they need a safe and legal way forward. Similarly, those drivers who have been interpreting the independent contractor rules to their advantage are learning they need to chart a course toward compliance right away. But how? Well, there are companies following the rules. To spot them, look for those members of the Canadian Trucking Alliance who have come forward to lobby the provincial and federal agencies. Look for those making a public outcry at the highest level, like Alan Bedard, Chairman of TFI, an almost-$4 billion trucking firm, who described the pervasive practice of Driver Inc. as a “cancer” in the freight industry. His actions have been a wake-up call, and clear indication to the CRA that there are titans of industry who support a clean-up. Pay attention to the town hall participants, conference presenters, mainstream media. Heed the legal and accounting firms’ warnings saying trouble is on the horizon, in the form of a crackdown. Above all, get your search underway today for trucking companies, driver staffing service providers, shippers and customers who are not involved with the illegal Driver Inc. model – and do your business with them. You’ll recognize them as the law-abiding corporate citizens setting a good example, dealing with harsh financial challenges caused by competitors who are using Driver Inc. – yet still committed to following the rules. They are also the only ones with the truly sustainable pricing models, because they’re not about to be exposed for breaking the law. It’s time to come in from the cold.

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LEADING EDGE

UNDERSTANDING WHY There’s more than luck in being in the right place at the right time “THERE’S NOTHING LIKE being in the

right place at the right time… Even better if you understand why.” We’ve all heard this adage many times: “There’s nothing like being in the right place at the right time.” Only recently did I hear this important piece appended: “Even better if you understand why.” This adds a thoughtful new twist, which says we actually have a lot to do with our outcomes. It suggests that perhaps putting ourselves in the right place at the right time is the product of intentional focused effort rather than just the luck of the draw. Years ago, after a great scoring day, a fan told the famous golfer Gary Player: “Mr. Player, you were very lucky on the golf course today.” His response says it all: “Thanks very much. I practice my luck every day.” Yes, he did feel that his efforts played a large role in his success.

them focus on further growth in their careers.

ROSS REIMER has over 30 years of experience in transportation/supply chain. For the last 20 years he has been president of Reimer Associates, a recruitment ﬁrm within supply chain. rreimer@reimer.ca

A focused approach Taking a focused approach to “being in the right place at the right time” can really make a difference to a career plan. As a recruiter I’m involved in the world of employment opportunities every day. I’m constantly meeting potential candidates to introduce to my clients. Some people look at their careers and apply the adage that they were in the right place at the right time, and things happened to work out very well for them. From my experience with thousands of interviews I’ve formed a different view, however. Here it is: The people whose careers are the most rewarding are those who have understood why they are in the right place at the right time. These are the people who’ve been very intentional with their lifetime career plans. These intentional people do several things that can have a big impact on creating the right place at the right time. 1. They have a crystal-clear understanding of their strengths, abilities and weak-

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nesses. They’ve taken advantage of the various tools that can help them fully understand what they are good at, what they enjoy doing and how to find a career that will reward them for their efforts. They don’t just “fall into” a job and stick with it for a lifetime. Instead, they work on identifying life skills, developing them and continuously refining them. 2.They are lifelong learners. They fully understand that learning doesn’t stop at the completion of college, university or an industry-related course. They constantly keep up with the changes occurring in their industry, they continue to enroll in further education, and they read a large variety of material, including industry-related information. Many have established a relationship with a reliable mentor who can challenge them, encourage them and help

3.They have a focused work ethic to accompany a desire for work/life balance. In recent times it’s become somewhat unpopular to talk about a focused work ethic. It seems as though work/ life balance is perceived as a more worthy pursuit. No question: It’s a personal decision with respect to a career plan, but from my observations those people who end up in the right place at the right time are more interested in establishing a career than making sure they have enough time off. 4.They know when to take advantage of an opportunity, and when to pass. From a career perspective, high achievers will be actively recruited on a regular basis. It’s just a fact of work life. Being presented with new opportunities brings significant responsibility. Each opportunity needs to be viewed through the lens of honest self-awareness of their skill set, their long-term career plan and the health and longterm viability of the new opportunity being considered. Whether they make a career move or not is determined by their well-informed decision-making, not pinning their hopes on a random chance of success. The people with rewarding careers who are using their skills and abilities to the highest levels, and who truly enjoy the privilege of working, understand their achievements are not determined by luck. They know that intentional focused energy determines how a person arrives at the right place at the right time. Purposeful, insightful, determined effort goes a long way towards establishing great career outcomes. That’s a whole lot different from tossing the dice and hoping for the best.

SA F E T Y F I R S T

MANAGING TRAFFIC IN THE YARD 10 tips for better safety A MIX OF TRUCKS, mobile equipment,

pedestrians, bad weather, traffic jams and other potential hazards in your yard can spell disaster in the form of collisions between vehicles or vehicles and pedestrians. If traffic is left haphazard or unpredictable, you’ll often see problems. Reining in the chaos means putting an exterior traffic management plan in place. An effective plan will help improve traffic flow, maximize capacity, minimize delays, keep people safe, and more. Since a lot of factors come into play, there is no one-size-fits-all solution. But there are best practices that can help you design your own solution. Start with a hazard assessment. Sometimes companies will focus on hazard assessments inside the facility but overlook the outside. However, the legal duty to protect employees extends into the yard. Having a traffic management plan in place will also help your workplace avoid fines, penalties and other liabilities. Consider using “PEMEP” as a guiding principle to identify the unique hazards in your yard. In other words, “How could People, Equipment, Materials, Environment and Process contribute to hazards?” Here are 10 suggestions to help you produce a comprehensive exterior traffic management plan. 1. In your hazard assessment, consider these factors: trafﬁc flow – where, when and how vehicles access and exit site pedestrian routes and potential vehicle/pedestrian collision points yard design and layout impact of weather, such as icy or slushy conditions, or water accumulation quality of road surfaces and lighting signage and pavement markings pedestrian program, communication, training, monitoring and enforcement

NORM KRAMER Senior Health & Safety Consultant, Workplace Safety & Prevention Services (WSPS)

2. As part of the assessment, talk to any-

one with insights on what happens in the yard. These people can include the shunt driver, gatehouse staff, delivery drivers, workers and other pedestrians, and the joint health and safety committee. 3. Review and, if necessary, reconfigure the yard’s design and layout. Should traffic in the yard be two-way or can traffic be routed one way only to avoid congestion in restricted space? Observe what happens when congestion occurs. Is space permitted for overflow traffic or a truck waiting area, if necessary? Should cars be driving in the same area as trucks or can they be kept separate? 4. Check whether loading zones and parking and reversing areas meet traffic requirements. Is there enough space for parking and reversing, including painted lines to guide drivers to park squarely at the loading dock? Monitor scheduled and unscheduled pick-ups and drop-offs. If necessary, use signalers. However, ensure they are well trained and in a

safe position where they can be seen by drivers. 5. Develop a traffic system that mimics what’s used on outside roadways. Drivers are programmed to follow line markings governed by the Highway Traffic Act – stop signs, solid yellow lines, crossing areas, driving on the right, etc. If you install a similar system in your yard, drivers will automatically follow it. 6. Determine the safest places for people to move from point to point and create pedestrian paths so people move predictably, stay at a distance from trucks, and don’t walk in a driver’s blind spot. 7. Ensure potential danger areas where pedestrians and vehicles intersect are well marked. The primary goal is to separate vehicle traffic from pedestrian traffic. Use signs, lights, and a crosshatched border, similar to roadway crosswalks. 8. Boost visibility. Ensure all pedestrians wear high-visibility reflective vests. And with trucks often moving in early morning and after dark, keep the yard well lit. 9. Make sure everyone entering the workplace knows and understands the traffic management plan, including their personal obligations. To help workers and pedestrians understand what drivers can and can’t see, have them sit in the driver’s seat. Include temporary workers and contractors in the training. 10. If you’ve identified other hazards through your assessment, put systems in place to control or minimize the hazards (e.g. preventing contact with electrical lines, or arranging for snow removal or de-icing in winter). Once you’ve updated your exterior traffic management plan, review it regularly to ensure it remains effective and takes into account changes in the workplace. INSIDE Logistics DECEMB E R 2019

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