January/February 2017
REI FASHIONS A NEW DC
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A new disruptor O
n January 20th I watched along with pretty much the whole world (although I didn’t get counted in the much-disputed crowds on the Mall) as Donald Trump was made president of the United States. From the get-go I admit I was predisposed to be unsettled; the man says pretty dreadful things, apparently without much thought, and it was easy to fear the effect this might have on the US and its position in the world. It’s now a week in and there’s a lot to be concerned about as Canadians who are involved in business, and particularly those of us who rely on trade with the US. Trump has been signing executive orders at a rate that must be giving him a repetitive strain injury. He’s called the big-three auto makers on the carpet and made clear his Americafirst policies. He’s initiated the wall project on the border with Mexico, and in the process offended the Mexican president enough that the two countries are getting pretty testy with each other. Although Canada has not come directly into the line of fire, it’s only a matter of time until our trade with the US will come under scrutiny, especially as the NAFTA is re-opened at Trump’s behest. While we are not the main target, it will be difficult to avoid collateral damage if the trade pact is significantly neutered. I’ve been contemplating how this may affect our economic fortunes in the near and medium term. Disruption is a term that’s gained significant traction lately to describe the significant upheavals that are causing rapid and unpredictable change in various industries. Trump is a disruptor. Although he is doing what he said he would, his actions are nonetheless upsetting the status quo. They are causing the leaders of major enterprises, both multinational and domestic, and world leaders to pay close attention to his every pronouncement. It’s easy to become very tense in the face of the constant barrage. But as with the technological disruptors we see in industry, there remain certain constants that will—hopefully—allow normalcy to prevail. If Trump’s real objective is to ensure economic success for the country and its people, and his policies are not achieving this, then he ought to feel the heat from those same people and his fellow Republicans in Congress and Senate. Checks and balances, in the form of balance sheets and stock market indices will be the proof of his success. And Trump, as a business tycoon, oon, surely understands those imperatives.
January/February 2017 Volume 62 Number 01 1 12
20
23
28
Salary Survey
Sweet spot
ProMat preview
Fashioning a DC
How much logistics pros make and where they make it
Southeastern Ontario beats out US addresses for DC location
Lots of reasons why you should be in Chicago this April 3rd to 6th
Sports retailer REI builds an eco-friendly, omnichannel operation
Cover image: aleksei-veprev; iStockphoto.com
www.mmdonline.com | January/February 2017
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SUPPLY CHAIN SCAN
SMART
M+S
COOL KINNOWS
AI
Machines are learning all around us, p 6
Appointments and promotions, p 11
Cold chain study shows how to save rare fruit from wastage, p 9
Tech poised for explosion, p 11
Study identifies Canada’s worst traffic bottlenecks By MM&D Staff
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biggest contributor to road delay, far outpacing traffic accidents, inclement weather and construction. Grinding to a Halt, Evaluating Canada’s Worst Bottlenecks provides databased evidence for decision-makers at the federal, provincial and municipal level to use when making decisions on infrastructure investment and environment policy. It includes the cost to Canadians of these bottlenecks in terms of lost time, productivity and added greenhouse gas emissions. How Does Your City Rank?
Toronto had 10 bottlenecks in the top 20. Montreal had five, Vancouver placed four and Quebec City placed one. Other markets such as Calgary, Edmonton, Regina, Ottawa and Halifax also experience serious traffic delays. Highlights include: Canada’s worst highway bottleneck is the stretch of Highway 401 that cuts across the north part of the City of Toronto. This bottleneck alone costs commuters over three million hours of annual delays. In total, five of the top ten bottlenecks are found in the Toronto area. The stretch of Highway 40 into downtown Montreal is the third worst bottleneck in the
country, costing commuters nearly two million hours of annual delays. Compared with US bottlenecks using a similar methodology, Toronto and Montreal bottlenecks rank among the worst in North America. Although the City of Vancouver does not have non-signalized highways serving the downtown core, stretches of two main arteries (Granville St and West Georgia St) are congested enough to fall within the top ten bottlenecks—and produce the slowest driving speeds in the country. Methodology
This study collected and analyzed speed and volume data on highways in Canada’s urban areas, provided by mapping and location technology company HERE. These bottlenecks were identified as those stretches of highway that are routinely and consistently congested throughout the course of a weekday, as opposed to stretches that are congested only at limited times of day or days of a week. CAA retained CPCS, a transportation management consulting firm based in Ottawa, to conduct the study’s research and analysis. MM&D MM&D | January/February 2017
Photo: Arpad Benedek; iStockimages.com
ou were not imagining it—the 401 across the top of Toronto is the worst bottleneck in the country. It’s one of the top 20 most congested traffic bottlenecks that cover just 65 kilometres, and collectively cost drivers over 11.5 million hours and drain an extra 22 million litres of fuel per year. These are findings of Grinding to a Halt, Evaluating Canada’s Worst Bottlenecks, a first-of-its-kind study released by the Canadian Automobile Association (CAA). “Traffic congestion is a major source of stress for Canadians. Our study concludes that traffic bottlenecks affect Canadians in every major urban market, increasing commute times by as much as 50 percent,” said Jeff Walker, vice-president of public affairs for CAA National. “Reducing these bottlenecks will increase the quality of life for millions of Canadians, save millions in fuel costs and reduce greenhouse gases, helping contribute to Canada’s climate change commitments.” “Traffic congestion impacts both the quality of life for individuals and the overall economy. Motorists and passengers give up productive work hours, and precious personal and family time. When trucks are stuck in traffic, the goods they are moving become more costly to businesses and consumers,” the report notes. “The lost productivity from delayed passenger trips and freight deliveries harms regional and national economic competitiveness. Along with delays, congestion increases fuel consumption and greenhouse gas emissions. Vehicles idling in traffic consume far more fuel than they otherwise would. And by extension, vehicles emit more greenhouse gases in congested conditions.” Studies show that bottlenecks are the single
SUPPLY CHAIN SCAN DONE DEALS Nebraska Furniture Mart, a retailer of furniture, appliances, electronics and flooring, has improved forecast accuracy and customer service while optimizing the company’s freight operations and fostered increased collaboration with partners and vendors by using Logility Voyager Solutions. Nebraska Furniture Mart’s retail supply chain offers more than 650,000 available SKUs across multiple channels including in-store, online and over the phone. As the company’s product portfolio grew through the rise of online sales and expansion into new territories, and lead times increased for products sourced from around the world, it became critical for Nebraska Furniture Mart to improve its forecast accuracy and drive better end-to-end visibility. Northern Powergrid, a subsidiary of Berkshire Hathaway Energy, has selected DSI’s Digital Supply Chain Platform (DSCP) to increase inventory visibility and accuracy. Northern Powergrid manages the power network that delivers electricity to 3.9 million homes and businesses across North East England, Yorkshire and northern Lincolnshire. The electricity distributor awarded DSI the contract to provide a mobile-first supply chain solution that can track inventory in real time, both in the warehouse and out in the field. DSCP was selected as it can provide a single solution for mobile inventory management that
performs offline. The project is underway with the new mobile-first app expected to go live in spring 2017. Syngenta, an agriculture company, has collaborated with Accenture to design and implement a new digital logistics operating model across all modes of transportation, including sea and air freight globally, and road freight in North America and Europe. They designed a global operating model with a network of control towers coordinating regional and global transport orchestrated by external fourth-party logistics providers (4PL). These providers manage all transportation activities on Syngenta’s behalf, leveraging their detailed logistics expertise and regional market knowledge. The global implementation across Syngenta’s two business units follows a successful pilot in North America and Europe in October 2015. GlobalTranz Enterprises, Inc, a technology-driven freight management solution provider, has acquired Global Freight Source, Inc, a privately held freight brokerage and logistics company. Global Freight Source has operated successfully for over 25 years and brings years of freight management best practices that can be leveraged across the GlobalTranz network to improve operational excellence.
Experience, Connections, Opportunities
www.mmdonline.com | January/February 2017
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Machine learning tops Canada’s 2017 tech trends By MM&D Staff
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n 2017 the ways in which humans interact with technology will be significantly altered, as mobile devices will be able to perform machine learning tasks even without connectivity, according to Deloitte’s 2017 Canadian Technology, Media & Telecommunications (TMT) Predictions. Within the next 12 months, Deloitte predicts that in Canada over three million smartphones, or over a third of phones sold in the year will have machine learning capabilities within the device. Over time, these capabilities are also likely to be found in tens of millions (or more) of drones, tablets, cars, virtual or augmented reality devices, medical tools, Internet of Things (IoT) devices and unforeseen new technologies. “Machine learning will see everyday tasks
become even faster and more effortless—so simple, that Canadians may not even realize their mobile devices have in fact learned these new capabilities,� said Anders McKenzie, partner and national TMT leader for Deloitte in Canada. “Not only will machine learning revolutionize how we conduct simple tasks through our mobile devices, but it will also improve the safety of Canadians through other platforms, such as better autonomous vehicles, responding to disasters and more resilient to cyberattacks.� Looking five years ahead, Deloitte predicts that by 2022, fatalities from motor vehicle accidents in Canada will have dropped by more than 300 annually, a 16 percent decline from levels seen in 2017. The single greatest factor in this decline will be automatic emergency braking (AEB) technologies, where
onboard sensors scan the road ahead and can hit the brakes faster than a human driver can. Deloitte notes that AEB will be so widely adopted, affordable, preferred by consumers, and successful at saving lives that it may even slow down the movement towards full selfdriving cars. “This year will mark the beginning of a significant uptake in automatic braking technologies—a trend with an unparalleled potential effect—saving the lives of Canadians,� said Duncan Stewart, Director of TMT Research at Deloitte in Canada and co-author of the global report. “We could see the adoption of autonomous vehicles occur more slowly than expected, as automatic braking technologies provide an alternative option for Canadians who are attracted to the increased safety that they offer, but also still desire to control and operate their own vehicles.�
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SUPPLY CHAIN SCAN
Photo: a-image; iStockimages.com
Cyberattacks
In 2017, Distributed Denialof-Service (DDoS) attacks, a form of cyberattack, will become larger in scale, harder to mitigate, and more frequent. There will be on average a terabit/s (Tbit/s) scale attack per month, over 10 million attacks in total, and an average attack size of between 1.25 and 1.5 gigabits per second (Gbit/s). This escalation in the DDoS threat is largely due to the growing number of IoT devices, online availability of malware methodologies which allow relatively unskilled attackers to corral insecure IoT devices and use them to launch attacks, and access to ever higher bandwidth speeds. Biometric Security
The active base of fingerprint reader-equipped
devices will top one billion for the first time in early 2017 (10 million in Canada), with each active sensor used an average of 30 times a day, implying over 10 trillion aggregate presses globally over the year. With the rapid pace of access and adoption of this technology, the challenge is to determine which additional applications could use fingerprint readers and other biometric inputs to provide rapid and secure authentication. Indoor Digital Navigation
As of 2022, at least a quarter of all human and machine uses of precision digital navigation will include an indoor portion or be for an entirely indoor journey, compared to less than five percent of all uses in 2017. Being able to locate people and objects when indoors will be transformative, and is likely to benefit most vertical sectors, and have impacts on government, business, and consumers alike. 5G
Significant, tangible steps towards the deployment of 5G, the fifth generation of cellular networks, will take place in 2017. Planned upgrades to 4G networks, as well as the per-
formance of the first limited 5G deployments, should acquaint users and operators with several of the most important features of 5G networks, including significantly higher speeds, lower latency, and support for lowpower low-bitrate IoT devices and sensors. IT-as-a-Service
By the end of 2018, Deloitte predicts that spending on IT-as-a-Service for data centres, software, and services will surpass US$547 billion worldwide, up from US$361 billion in 2016. Although flexible consumption-based business models will not be ubiquitous by 2018, at over a third of all IT spending (35 percent), they will exceed half a trillion dollars and be growing rapidly. This shift will begin to evolve how the IT industry markets, sells and buys technology across businesses worldwide. Deloitte’s TMT Predictions are based on worldwide research supported by in-depth interviews with clients, industry analysts, global leaders and more than 8,000 Deloitte member firm TMT practitioners. Over the last five years, Deloitte was more than 80 percent accurate with its TMT predictions. MM&D
GLOBAL FOCUS KUKA robot challenge
Good year for Hactl
Over a period of seven months, more than 20 teams will be competing at the KUKA Student Award in France with the goal of creating a 3D printed bridge with a newly developed 3D printing KUKA robot. More than 20 teams, each comprising a professor and four students, will be competing against each other. The bridges will be 500 mm in length and designed in 3D modeling software. The bridges will be printed using a 3D KUKA printing head that can be mounted on a small size robot KR AGILUS or the collaborative lightweight robot LBR iiwa. The force-sensitive LBR iiwa will be used to apply forces and test the bridges’ structure. During the Grand Final, the jury composed of industrial partners will evaluate not only technical aspects of the project, but also the soft skills and team spirit during the presentation of the students. Special prizes will be awarded to honour the best team, the most original design and the strongest bridge. The winner will be granted a KUKA industrial robot.
Hactl, Hong Kong’s largest cargo handling independent, enjoyed a strong finish to 2016, beating 2015 tonnages by 1.7 percent and setting new terminal and ramp handling records. Total tonnage for 2016 was 1,653,938. Strongest performance was on transshipments, which were up a massive 29.6 percent on 2015. Mail, courier and other express traffic meanwhile grew 8.4 percent, and exports showed 2.1 percent growth. Only imports declined, down 8.3 percent, although the negative trend of January-September was reversed in the last quarter, with growth in every month. Hactl’s ramp handling business set three new all-time records for freighter handling in the final few weeks of 2016. On 23 November, Hactl handled 101 freighters in a single day; this broke its previous best of 98 freighters, set only 19 days earlier. In the week of 28 November to 4 December, Hactl handled 628 freighters, surpassing its previous week’s record of 609 aircraft.
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Study shows cold chain benefits Orange supply chain sees waste down, profits up, and emissions down By MM&D Staff
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nvestment in the cold chain—specifically pre-cooling and transport refrigeration equipment—can reduce food loss by 76 percent and carbon dioxide equivalent emissions (CO2E) by 16 percent. Those are the results of a pilot study on kinnow (a type of mandarin orange) conducted by the Indian School of Business under the direction of the National Center for Cold-Chain Development (NCCD) of India and Carrier Transicold India, and in collaboration with Balaji Kinnow. Balaji Kinow is one of the largest aggregators in the Punjab region and the first to use a pre-cooling system, which is designed for the rapid removal of heat from freshly harvested produce. The pilot study, funded by Carrier, examined the extent to which the cold chain can help increase the quality, reach and profitability of kinnow, a citrus fruit rich in micronutrients and common to the Punjab region of India and Pakistan, by enabling off-season sales and in distant markets. This is an area of critical importance to India, which is the world’s second largest producer of fruits and vegetables but accounts for just 1.5 percent of global produce exports due to losses of up to 20 to 50 percent of total production. The study shows that application of the chilling technology can increase profits all along the supply chain without the need for significant capital investment. The study also provides a general framework for aggregators and distributors to analyze profitability for any crop when using the cold chain. In comparing the carbon footprint of the kinnow supply chain with and without refrigeration, the study determined using cold chain technology can result in a net decrease in carbon footprint when compared with the carbon emissions of kinnow that is lost or wasted.
2,500 km by truck
The study measured the effects of cold storage and refrigerated transport from Abohar, in northern India to Bangalore, in southern India, a roughly 2,500 km (1,600 mi) overland journey that is a four to five days by truck. This allowed for analysis of the time- and distance-related aspects of cold chain investment. Kinnow is available only for three to four months a year, is highly perishable and grown primarily in a few districts of Punjab. To keep spoilage to a minimum, kinnow is best kept at four to five degrees Celsius and a relative humidity of 85 to 90 percent. Increasing yield and acreage has meant that production is too large for the local market, but there are challenges in distribution to markets that are further away. “The small percentage of kinnow that is exported to other domestic and international markets is often transported in open trucks, with cumulative losses as high as 32 percent,” said Pankaj Mehta, managing director, Carrier Transicold India. “Many markets in India and abroad have never enjoyed a flavorful, nutritious kinnow. The challenge is to convince all the stakeholders that the cold chain is a smart investment with a relatively short payback period.” Quick ROI
The study demonstrated that the payback for pre-cooling equipment is only about two
www.mmdonline.com | January/February 2017
years, while for refrigerated trucks it is just over four years. “This project reinforces government commitment to setting up a cold chain infrastructure for local growers,” said Jaspal Bhatti, government representative, Citrus State Abohar. “The cold chain is new technology for growers. After looking at the potential for this technology, the government has already announced subsidies related to the cold chain.” As a result of the study, Balaji has moved from renting to purchasing refrigerated truck units. “The refrigerated trucks help us to supply kinnows not only to Bangalore but also for export to Russia, Dubai and Bangladesh,” said Surinder Charaya, the owner of Balaji Kinnows, underscoring the increase in the geographical reach of the supply chain with cold chain investment. Mehta reports that distributors and retailers in Bangalore are also strong advocates of the cold chain for kinnow supply, and one distributor has already made considerable investment in refrigerated trucks and cold storage, while another was beginning to invest in the cold chain toward the end of this study. The study also assessed the carbon footprint of supply chain activities and found that in comparison with greenhouse gas emissions from kinnow spoilage, cold chain intervention reduced overall CO2E emissions by 16 percent in one scenario. MM&D 9
SUPPLY CHAIN SCAN BENCHMARKS Four Canadian business schools have been rated as outstanding for graduate employability and academics. Global higher education analysts QS Quacquarelli Symonds has released the QS Global 250 Business Schools Report 2017. The analysis, classifying business schools into four quadrants, recognizes the top institutions for both employability and academic standards across all major world regions. The four schools the Joseph L. Rotman School of Management at the University of Toronto, the Richard Ivey School of Business at the University of Western Ontario, Desautels Faculty of Management at McGill University, and the Sauder School of Business at the University of British Columbia. In addition, three Canadian institutions achieved a leading employability score, and a place in QS’s ‘Top-Tier Employability’ quadrant. They are HEC Montreal, Schulich School of
Business at York University, and the Queen’s School of Business. After 90 years in business in Ontario and Quebec Myers Transport Ltd is closing its LTL operations. The company cites economic conditions over the past ten years and “the resulting impact on the LTL market” as the reason for the closure, which took effect on January 20th. The Meyers Transport customer list has been transferred to Manitoulin Transport. The Meyers family will continue to be active in the transportation industry. Mortrans Inc. based in Belleville Ontario will continue to provide truckload and dedicated specialty service between Ontario, Quebec and the US; and will be owned and operated by Larry and Natalie Meyers. Mosaic Logistics, based in Peterborough Ontario, will continue providing third party
logistics services throughout North America and will be owned and operated by Jacquie Meyers. Canada Cartage supported Project Winter Survival again this year to help the homeless survive Canada’s frigid winter. Over the years, Project Winter Survival has assembled, with the help of volunteers, almost 30,000 winter survival kits containing life-saving supplies. The winter survival kits are packed and distributed to over 150 social service agencies in the Greater Toronto Area who then distribute them directly to the homeless. “We are happy to give back to the communities we serve”, says Paul Hanson, operations manager at Canada Cartage. “This year, we picked up, delivered, and unloaded 3,000 sleeping bags and had trailers on-site to help Project Winter Survival with some much needed storage space.”
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SUPPLY CHAIN SCAN MOVERS + SHAKERS In a surprise move Hunter Harrison stepped down as CEO of Canadian Pacific Railway Ltd five months early. In so doing he gave up benefits and stock options worth up to $118 million, including forfeiting his CP Rail pension. In exchange the railway agree to cancel his non-compete agreement, which would allow him to pursue opportunities involving other Class 1 railroads. Keith Creel Reports suggested Harrison was taking a run at the top job with CSX, but at press time this was not confirmed. Keith Creel became president and CEO of the company effective January 31, 2017. After 29 years as the office manager and executive assistant to OTA/ CTA CEO David Bradley, Jackie Dobrowolski—or Jack/JD as she is known to many—is leaving the association to pursue other interests. “Jackie has been a wonderful assistant and a major asset to OTA for almost three decades. She has been and always will be part of the family,” said Bradley, who will be retiring at the end of this year. For her part, Jackie says: “The decision to leave OTA was very difficult and bittersweet. I grew up here and it has been a large part of my life. Working with David, the staff and the members has been a wonderful and invaluable experience for which I am forever thankful.” Her last day at OTA will be February 28, 2017.
Wajax Corporation has appointed Darren Yaworsky as senior vicepresident, finance and CFO effective March 8, 2017. Yaworsky succeeds John Hamilton, who joined Wajax as senior VP, finance and CFO in 1999. Hamilton’s planned retirement from Wajax was announced in August 2016. Most recently, Yaworsky served as vice president, finance and treasurer at Canadian Pacific Railway and previously he filled several senior financial executive roles within the Enbridge Group of Companies. Yaworsky has an MBA from the University of Manitoba. APL Logistics appointed Bill Villalon as president, effective January 1, 2017. Previously Villalon served as the global leader for APL Logistics’s automotive vertical, and the regional leader for North America. Villalon has more than 30 years of experience in the global transportation and logistics industry and has been with APL Logistics since 1984. He had also served in various senior-level positions. In connection with Villalon’s appointment, Michael Pilver and Graeme Watson will be appointed to the roles of global head, automotive vertical and head, North American region respectively. Clarke Inc has appointed Kim Langille, formerly vice-president of taxation and interim CFO, as CFO. Langille has acted as vice-president of taxation for Clarke since 2012 and as interim CFO since March 2016. Before joining Clarke Langille was senior manager of taxation at Deloitte LLP.
Industry bullish on AI By MM&D Staff
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rtifical intelligence is coming. In a recent survey, 76 percent of large global organizations reported that AI is fundamental to their business strategy. The Infosys study “Amplifying Human Potential: Towards Purposeful Artificial Intelligence”, polled 1,600 senior business decision makers at large organizations around the world. The survey results revealed a clear link between an organization’s revenue growth and its AI maturity: Organizations that report faster growth in revenue over the past three years were also more likely to be further ahead when it comes to AI maturity. AI is perceived as a long-term strategic priority for innovation, with 76 percent of the respondents citing AI as fundamental to the success of their organization’s strategy, and 64 percent believing that their
organization’s future growth is dependent on large-scale AI adoption. While there are ethical and job related concerns—62 percent believe that stringent ethical standards are needed to ensure the success of AI—most respondents seem optimistic about redeploying displaced employees with higher value work. The majority, 85 percent, plan to train employees about the benefits and use of AI, and 80 percent of companies replacing roles with AI technologies will retrain or redeploy displaced employees. “Artificial Intelligence (AI) adoption is on the rise and we are excited to see the investments in AI that businesses are gradually making to derive meaningful and creative change,” said Sandeep Dadlani, president & head of Americas for Infosys. “As we are seeing AI mature and gain momentum, our research shows that the next four years will witness further spikes in interest, and general bullishness about the significant value and benefits that can
www.mmdonline.com | January/February 2017
be obtained through AI adoption.” The research found businesses expect noticeable AI adoption and growth by 2020. Organizations that have already deployed or have plans to deploy AI technologies expect to see a 39 percent average increase in revenue by 2020, alongside a 37 percent reduction in costs. However, only one in ten respondents that have deployed AI technologies believe that their organization is fully maximizing the current available benefits and capabilities of AI. The majority (90 percent) report their organization’s employees face challenges or concerns relating to the adoption of AI. There are also areas of AI adoption that need to be addressed with training, education and transparency in the workplace. Safety of data (43 percent), job security (40 percent) and pay rates (30 percent) are the foremost areas of workforce concern despite the broadly positive outlook for AI adoption. MM&D 11
A PERIOD STABILITY
of
2017 Survey of the Canadian Logistics Professional shows consistency
A
t the end of last year’s salary survey report (MM&D, October 2015) we noted the Canadian economy was facing a ‘technical recession” and wondered whether salaries in 2016 would reflect that fact. It appears that they have. Salaries in 2016 took a slight dip across the board from the 2015 results. Overall ,the mean salary for Canadian logistics professionals was $90,566, a decline of 1.75 percent from last year’s $92,182.
2016
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THE GENDER GAP
12
Men’s salaries dropped from $97,945 to $96,141, a decline of 1.84 percent, while women saw a drop of 7.75 percent from $83,381 to $76,919. Last year the actual dollar gap between the average male and female salary was $14,564, a 17.5-percent differential. This year it’s $19,222, representing a 20-percent gender discrepancy. Although that’s an increase from 2015, it’s consistent with numbers we’ve seen in the past five-year trend line, which has ranged from 17 to 21.5 percent. This disparity is reflected across job functions, management level, years of experience and amount of budget managed. For example, in the executive management group males earn $16,022 more than females. For those who manage more than $10 million in budget, the gap is $32,938. And, in terms of experience, women with 30-plus years are earning, on average, $32,769 less than men with the same longevity. CONTINUED ON PAGE 15
2012
Men make 5.97% more than the average Women make 16.3% less than the average
The gender gap persists
2013
2014
2015
2016
Overall average Male Female
$85,178 $91,181 $75,033
$87,908 $94,492 $77,842
$86,987 $92,276 $78,819
$92,182 $97,945 $83,381
$90,566 $96,141 $76,919
Male vs Female Actual difference % More men make
$16,148 21.5%
$16,650 21%
$13,457 17%
$14,564 17.5%
$19,222 20%
MM&D | January/February 2017
2017
SURVEY OF THE
CANADIAN LOGISTICS PROFESSIONAL
Yukon/ Northwest Territories/ Nunavut
British Columbia $90,835 K
SALARY BY REGION & URBAN SALARY AVERAGES
$61,000
Alberta $92,953 L
Manitoba/ Saskatchewan Edmonton
Atlantic Canada
$92,978 K
$78,284 L
$92,009
St. John’s
Vancouver
$95,764
$95,000
Saskatoon
$122,688
Quebec $78,904 L Calgary
Winnipeg
$94,215
Ontario
$76,923
$90,843 K
Regina
$137,438
Montreal
Halifax
$81,333
$104,225
Ottawa/Gatineau
$106,353
KL The arrows indicate if average regional salaries have increased or decreased from last year.
Cambridge/Guelph/ Kitchener-Waterloo
$81,843
Saint John
$56,833
Greater Toronto Area/ Brampton/Oakville
$95,635 Windsor/Sarnia
London
$97,000
$93,625
Hamilton/ Burlington/ Niagara
$68,273
5-YEAR SALARY OVERVIEW $100,000 $92,000 $84,000
2016 |
$96.141
2016 |
$90.566
Brought to you by our survey partner: Reimer Associates Inc. was established in 1997 by Ross Reimer. We concentrate exclusively on
ge
avera
2016 |
$76,000
$76.919
recruitment and M&A within supply chain and transportation. Ross built the company by carefully selecting exceptional people with impressive careers
$68,000
in transportation and supply chain companies. The team has learned firsthand what kind of skills,
$60,000 2011
2012
2013
2014
2015
2016
experience and personality it takes to fill critical positions and close transactions. We operate confidentially and effectively from inside the industry.
www.mmdonline.com | January/February 2017
13
Media Kit 2017 To receive a copy of the MM&D media kit, please contact: Nick Krukowski – Nick@Newcom.ca
TOTAL RESPONDENTS
90,566
96,141
76,919
125,648
105,835
82,942
2017
66,755
SURVEY OF THE
CANADIAN LOGISTICS PROFESSIONAL
$150,000 $130,000 $110,000 $90,000
SALARY BY SECTOR
$70,000 $50,000 TOTAL
MALE
FEMALE
EXEC MGMT
SENIOR MGMT
OP. MGRS/ SPRVSRS
Exec mgmt $
Senior mgmt $
SUPPORT & SALES STAFF
MANUFACTURING TRANSPORTATION THIRD-PARTY LOGISTICS RETAIL
SALARY BY COMPANY SIZE SALARY BY GROSS ANNUAL SALES Sales in Canadian $
Mean $
Male $
Female $
Op mgrs./ super $
Support / sales $
1 million or less
78,842
72,273
76,333
87,071
0
54,750
60,000
Over 1 million to 5 million
68,885
79,588
48,500
87,857
78,600
64,000
47,857
Over 5 million to 15 million
74,483
82,079
62,957
103,000
98,444
68,364
51,094
Over 15 million to 30 million
85,053
94,167
66,825
210,000
74,272
99,000
60,000
Over 30 million to 60 million
84,182
93,937
59,954
121,600
100,161
71,182
61,867
Over 60 million to 100 million
82,819
89,490
66,700
112,600
100,708
66,000
69,000
Over 100 million to 500 million
103,478
107,668
87,800
169,571
110,807
87,278
70,905
97,973
99,284
94,125
174,600
114,804
91,326
69,211
111,276
115,024
99,367
233,000
131,900 103,092
84,295
Female $
Exec mgmt $
Over 500 million to 2 billion Over 2 billion
SALARY BY NUMBER OF EMPLOYEES Total Employees
Mean $
Male $
Senior mgmt $
Op mgrs./ super $
Support / sales $
25 or fewer
79,909
83,391
67,995
85,182
92,071
61,000
56,687
26 to 100
79,386
86,480
61,421
111,429
87,800
72,857
54,923
101 to 500
87,694
98,268
60,268
165,889
102,690
80,185
59,333
501 to 1,000
89,782
98,396
76,000
181,667
102,329
76,321
73,966
1,001 to 5,000
98,138
100,567
91,652
156,857
120,462
83,082
72,229
5,001 to 25,000
97,399
100,248
92,069
169,000
106,310
96,688
76,377
101,633
102,173
103,182
150,000
126,500
101,727
66,400
More than 25,000
www.mmdonline.com | January/February 2017
The biggest firms offer the best pay. On the chart to the left showing company size by revenue, salaries are highest for the Over $2 Billion group. When measured against number of employees, companies in the Over 25,000 group also dominate the best-paid group. The highest averages are highlighted. CONTINUED ON PAGE 16
15
FROM THE SPONSOR
The pathway to successful hiring
As
a recruiter working in the supply chain vertical I’m deeply involved in the hiring process with a wide variety of clients, from small companies with just a few employees, to multinationals, and the processes that we see range just as greatly. Interestingly I’ve learned just as much from some of our smaller clients about a well-tuned hiring process as I have from companies with thousands of staff. There isn’t enough room in this column to cover every aspect, but I will highlight those that I believe make the biggest impact. Clear job description First and foremost, a clear and concise job description must be in place. If the job description is missing or vague, you’re already going down the wrong path. Because organizations are fluid, job descriptions must be current to stay relevant. At the same time, the job description must be realistic. Many times I’ve encountered four pages of standards that literally no human being can meet. This is just as futile as having no description at all. Realistic and attainable are the words to measure by. Sourcing decision Secondly, a decision on how to source outstanding candidates must be made with the understanding that sourcing is an investment decision. Whether the company chooses to advertise, use one of the many available tools such as LinkedIn, or employ a recruiter, the decision needs to be made with a long-term view in mind. Occasionally companies who are particularly well networked can find employees without stepping outside the organization. It’s great when it works but I’ve often seen a very short-term view taken at this point, causing the candidate pool to suffer greatly in both quality and quantity. Unfortunately, posting a position does not prevent multitudes of unqualified people from applying. Twenty years ago a newspaper advertisement would generate the same number of unqualified candidates. After all, there is simply no downside for people to not apply. Of course, the result is that someone in the organization has to spend considerable time sorting through résumés. It’s important to remember that a job posting does not tap into the passive network of outstanding people. That’s because typically the best people are already highly engaged in their careers and require a personal approach in order to be interested in a new opportunity. In the recruiting business we think of this as concierge-style service. For example, if you were in New York City and wanted to take your best client to an outstanding restaurant, years ago you could have grabbed the
16
Yellow Pages and discovered hundreds of restaurants. In today’s world, you could search the Web. But if you truly wanted to find a memorable experience, you would talk to the concierge at an excellent hotel. That’s the value of a well-established network. The right interview When it comes to interviewing there are a few key areas that will bring success to the hiring process. First, embrace the idea of panel interviews, because several viewpoints make for better hiring decisions. The panel style gives the interviewers a chance to reflect, take notes and formulate better questions as they participate in the interview. Secondly, a behavioural-style interview is the best way to validate the candidate’s previous achievements and whether or not their skill set lines up with the position description. As we all know, résumés can make big claims that need to be validated and clarified with open-ended questions. This is the most important part of the interview; the candidate’s ability to clearly back up what their résumé says is critical. Cultural fit Ensuring cultural fit with potential new hires is a critical piece in the process. Along with appropriate skills and experience, potential candidates must have values that align with the company’s culture. This is where an honest assessment of company culture is so important. If you know your culture is particularly demanding, with high pressure, long hours, and so on, you need to own that and be clear with potential candidates. Disaster is waiting if you don’t reveal the truth at this point. Art and science It’s important to remember that hiring isn’t an exact science, and there is no perfect recipe. That said, when we successfully match the science of a well-developed process with the art of interviewing and carefully select the right people, we can greatly influence the outcome in a positive way. When we do this, our actions match our words and we place the proper importance on ensuring people truly are the most important asset in the business.
MM&D | January/February 2017
JOB FUNCTION Job function
Mean
2017
Male
Female
10 or less
10 to 20
20 to 30
30 plus
Transportation
91,302
98,084
72,073
67,120
85,995
104,501
109,200
Customer Service
88,274
94,280
73,870
62,792
86,173
98,156
105,175
Purchasing
92,793
99,196
78,036
66,359
92,120
104,244
106,812
Project Management
94,687
100,685
79,479
67,165
92,486
109,194
104,146
Training and Development
91,836
97,496
79,356
67,433
89,064
104,142
105,788
Inventory control
87,824
94,360
69,750
68,105
82,664
100,886
108,027
Warehousing
94,051
100,524
76,570
68,473
87,507
110,885
112,585
Demand planning/ Forecasting
94,906
100,389
74,035
72,281
89,229
103,017
120,407
Customs
83,732
92,024
67,667
67,202
84,150
88,696
97,365
Order Fulfillment
88,630
96,921
70,783
65,608
83,390
106,385
109,612
Sales/Marketing
99,629
105,051
73,682
60,364
100,617
100,619
118,360
Information Technology
89,736
92,709
76,562
60,654
90,224
105,791
104,875
Other
95,447
104,704
73,967
69,386
86,591
109,682
144,200
Where you work
Salaries are relatively equal across industry sectors, with third-party logistics coming out on top at $95,943. 3PL employees also topped the chart for those who manage budgets over $10 million, and they bring home the most cash when they have more than 20 years of experience. For executives, the best-paying sector is transportation, with an average salary of $148,125. Likewise, senior mangers also do best in transportation, with $108,242 in salary. Operations managers and supervisors are best compensated in the manufacturing sector at $86,669, while support and sales staff do best in transportation with an average wage of $74,562. Drilling down to specific industries, the average salaries were closely grouped, with compensation standing out for executives working in Computers and Electronics, at $163,333.
SURVEY OF THE
CANADIAN LOGISTICS PROFESSIONAL
The best pay for execs & senior managers is in transportation. Ops managers do best in manufacturing.
EDUCATION $150,000 $130,000 110,000 90,000 70,000 50,000 HIGH SCHOOL GRADUATE
SOME HIGH SCHOOL
CEGEP SOME COMMUNITY SOME UNDER- SOME POST POST (QUEBEC) COMMUNITY COLLEGE UNIVERSITY GRADUATE GRADUATE GRADUATE COLLEGE GRADUATE BACHELORS EDUCATION DEGREE DEGREE
NS/REF
MEAN MALE FEMALE
MANAGERS MANAGES EMPLOYEES, EITHER DIRECTLY OR INDIRECTLY $150,000
Your attributes
It’s not just about the kind of company you work for. Hours worked reflect higher pay, with the 25 percent of respondents who work 51 to 55 hours weekly averaging $113,769. Education also pays off. The 11 percent of respondents with a post-grad degree bring home an average of $119,423. The largest cohort or respondents (29 percent) have undergraduate degrees, and make an average of $94,088. As for professional designations, CITT/CCLP holders (33 percent of respondents) make more CONTINUED ON PAGE 19
www.mmdonline.com | January/February 2017
$130,000 $110,000 $90,000 $70,000 $50,000 MEAN
MALE
FEMALE
EXEC MGMT
SENIOR MGMT
OP. MGRS/ SPRVSRS
SUPPORT & SALES STAFF
DIRECTLY MANAGES AT LEAST ONE INDIRECTLY MANAGES AT LEAST ONE DOES NOT MANAGE ANY EMPLOYEES
17
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than average, at $93,132, while P.Log holders (20 percent of respondents) net the most of those with professional designations, at $113,857. The extras
We asked respondents what they get besides wages in their compensation package. Fifty-four percent get a bonus (although only 44 percent reported receiving one last year). Thirty-seven percent get career development; 22 percent have profit sharing; 17 percent receive a company car or allowance; and 12 percent have stock options. Twenty percent report getting none of these perqs. More than half (56 percent) rate their benefits package as good or excellent, while 42 percent call theirs fair or poor. Methodology and demographics
In addition to changing publication months (from its previous slot in October’s issue) the survey this year had a slightly modified suite of questions. There were 701 respondents to the 2016 survey, which was in the field in the third quarter of 2016. Of those, 72 percent were male, and 27 percent female, with two percent not answering the question. If we were to create an average logistics professional based on our respondents, he would be 49 years old, with 22 years of experience in the supply chain, spanning four different companies and in six different job positions. He has been in his current position almost seven and a half years. Respondents came from across the country, with a significant bias towards Ontario, which represented 48 percent. Eight percent were from Quebec, 15 percent from Alberta, 12 percent from BC, and 10 per-
HOURS WORKED
2017
cent from Manitoba and Saskatchewan combined. Similarly, the Greater Toronto Area, including Burlington and Oakville, accounted for 32 percent of respondents. Montreal and Vancouver each accounted for seven percent, while Calgary residents made up eight percent. Invitations to participate in the online survey were e-mailed to subscribers of MM&D magazine and our sister publication, Canadian Shipper. With 701 qualified respondents the margin of error was plus or minus 3.8 percentage points, 19 times out of 20. Data collection and compilation was managed by G. Bramm Research Inc. MM&D
SURVEY OF THE
CANADIAN LOGISTICS PROFESSIONAL
HIRING RECRUITING IN THE FUTURE WILL…
ABLE TO FILL VACANCY
not sure
not sure
4%
3% 12%
13%
no problem
get harder
24%
get easier
34%
could not find staff
60%
stay the same
49%
somewhat problematic
RATE YOUR BENEFITS
3% $49,800 Good 46%
<35 >55 13% $106,176
35– 39 6% $69,813
51– 55 25% $113,769
46– 50 3% $90,297
Fair 29%
40
Exceptional 11%
28% $74,760
41– 45 21% $86,615
www.mmdonline.com | January/February 2017
Poor 13%
19
sweet spot ONTARIO’S DC
Study reveals Eastern Ontario offers competitive DC costs to North Eastern US locations
By Emily Atkins
A
Cost breakdown
Eastern Ontario bested its tier of five competitive US regions (Syracuse/Upstate New York; Camp Hill/Central Pennsylvania; Lehigh Valley, PA; Pittsburgh/Western PA; 20
and York/Southeastern PA), with the lowest hourly wages, and fringe benefits, and the lowest construction and amortization costs (which included buying 35 acres, and used the same rate for equipment for all facilities). The total project investment in Ontario was US$21.59 million, while the least expensive US alternative was US$60.18 million, thanks to the cost of land being US$45,500 per acre in Ontario versus US rates that ranged from US$79,500 in the Syracuse area to US$154,500 per acre in the Lehigh Valley. Ontario had the second cheapest electricity rates, but the highest property taxes and the second most expensive transportation rates. Ontario also had the highest sales tax rate, although the study did not take into account that Canadian businesses may claim back their sales tax inputs. Transportation costs were calculated based on two shipments a week, in 30,000-pound truckload lots, charged at US$2.40 per mile (which included fuel, labour, maintenance and insurance), to each of the following destinations: Boston; Portland, Maine; Manchester, New Hampshire; Burlington, Vermont; Providence, Rhode Island; Bridgeport, Connecticut; New York city; Buffalo, New York; Newark, New Jersey; Philadelphia; Wilmington, Delaware; Toronto; and Montreal. The Ontario DC’s transport costs came in at $1,212,614, while the least expensive were for the Syracuse location, at US$882,057, and the most costly were for Pittsburgh at US$1,466,809.
The Canadian advantage
DC location and network design have become increasingly important issues for senior management, and never more than in the current environment of uncertainty over trade relations and agreements. For many companies, improving the bottom line on the cost side of the ledger is far easier than on the revenue side. Hot-button warehouse costs include the rise of temporary labour staffing, expected to increase at a strong 3.9 percent pace in 2017 in the US and 3.4 percent in Canada. Industrial rents for warehousing space are also expected to see healthy increases on both sides of the border in the range of 6.2 to 8.5 percent nationally and well over 10 percent in hot Northeast and Eastern Canadian warehousing markets like Toronto, the Boston area and New York and New Jersey. The Boyd analysis shows that the least costly distribution location overall is Eastern Ontario—those communities served by the 401 highway between Toronto and Montreal and having easy cross-border access to the rich Northeast US market via Interstate 81. Napanee, Ontario—where Goodyear has a large facility, “is one of the sweetest of sweet spots for distribution,” said John Boyd, prinMM&D | January/February 2017
Photo: porcorex, iStockphoto.com
recent comparative analysis has shown that a hypothetical distribution centre located in Eastern Ontario would have the cheapest operating costs when compared to a series of Northeastern US locations. In the analysis, prepared by location consultants The Boyd Company Inc, major operating costs for a representative 500,000 square-foot, 250-worker distribution warehouse are presented for a series of 20 regional locations in the US and Canada. The hypothetical DCs are shipping to the US “megalopolis” area, roughly bounded by Boston in the north and Washington, DC in the south. Annual operating cost totals range from a high of US$21.3 million in the Meadowlands/ Northern New Jersey region to a low of US$13.4 million in Eastern Ontario (an exchange rate of .75 was used to convert Canadian costs). The 2016 analysis includes all major geographically variable factors critical to warehousing site selection such as labour, real estate, construction, taxes, utilities and transportation. Those costs that dont vary significantly with geography, including relocation and start-up expenses, were not considered.
TOTAL ANNUAL GEOGRAPHICALLY VARIABLE OPERATING COST RANKING Distribution Warehouse Location
Total Annual Operating Costs
Meadowlands/Northern NJ Region
$21,322,480
Cranbury/Central NJ Region
$20,663,653
Stoughton/Southeast MA Region
$20,154,292
Bridgeport/Southern NJ Region
$19,787,526
Worcester/Southeast MA Region
$19,737,262
Danbury/Southern CT Region
$19,165,711
Newburgh/Hudson Valley NY Region
$18,699,489
Windsor/Northern CT Region
$18,561,154
Lehigh Valley Region PA Region
$18,484,896
Camp Hill/Central PA Region
$18,473,104
Syracuse/Upstate New York
$18,462,136
Schenectady/Upstate NY Region
$18,400,406
Pittsburgh/Western PA Region
$18,131,187
York/Southeast PA Region
$18,024,334
Concord/Southern NH Region
$17,933,749
Hagerstown/Western MD Region
$17,318,301
Dover/Central DE Region
$16,963,894
Eastern Ontario Region
$13,412,191 Source: The Boyd Group
cipal of the Boyd Company in an interview. “Belleville and Cobourg also have access to New York through the interstate, which makes overnight shipments to Boston, New York, Philadelphia, even Baltimore, possible. And that market is the megalopolis market— the richest, most highly concentrated mass marketplace in the United States.” Eastern Ontario’s cost effectiveness is driven by a number of factors, including a favorable exchange rate, low land costs, absence of development fees and lower corporate fringe-benefit costs, owing to the healthcare system. “Land is cheap and you don’t have development fees,” he said. “Municipalities are not piling on with additional fees to help pay for congestion—in terms of taxing the utility system, schools and so on.” Boyd says their supply chain clients in the US typically pay about 40 percent of their payroll for benefits, while in Canada that figure is closer to 20 percent. Additionally, KPMG ranks Canada first among the G7 nations in terms of tax policies because of its low corporate taxation rates.
These advantages more than compensate for administration issues at the US border, Boyd said. Cornwall, Ontario another municipality along the 401 corridor, has “seen a significant growth of supply chain activities…as a result of a combination of factors that include available and affordable real estate, transportation linkages and a skilled workforce. Cornwall companies also benefit from low electrical rates,” said Bob Peters, division manager, economic development for Cornwall Economic Development.
Trade uncertainty But whether those border crossings become more problematic in the near future is matter of great speculation with the inauguration of Donald Trump as US president. “Trade is extremely important to our industries and our companies, especially given that we are a border community. We certainly support trade, and trade with the US is very important,” Peters said. Boyd believes “Trump’s protectionism may be beneficial for Canada as companies seeking
www.mmdonline.com | January/February 2017
to continue trading globally may find an advantage in relocating here.” “The Pacific trade agreement has already been pushed aside,” he noted, while Canada has signed the European free trade agreement (CETA). “This is going to present an opportunity for Canada to distinguish itself in North America as a location that does take a globalist, freetrade posture, and clearly in the logistics field this is very relevant. The upshot of this is there are going to be potential advantages for Canada, not just eastern Ontario, but Canada as a whole—for those companies that want to operate in an environment where global free trade is not at all compromised.” Boyd sees the Canadian auto parts industry as one of the reasons Eastern Ontario has become a sweet spot for distribution investment, and he also believes that the ‘special relationship’ between Canada and the US will protect the auto industry. “If NAFTA gets renegotiated I have no doubt that the auto industry will be insulated from any onerous changes in that agreement,” he asserted. MM&D 21
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Andrew Winton; Markus Lorenz; George Prest; Scott Sopher; Earvin “Magic” Johnson
ProMat all set to
innovation LEARNING ABOUT
By Kara Kuryllowicz
B
etween April 3rd and 6th manufacturing and supply chain professionals will have the opportunity to learn through keynote presentations and the 100-plus educational sessions that complement the thousands of distribution and supply chain equipment and systems solutions offered by ProMat’s 850 exhibitors at Chicago’s McCormick Centre. “The topics of ProMat’s keynote and show floor sessions reflect the fact that firms of all sizes are adopting data analytics, automation and IT solutions to create digital supply chains that are more transparent and sustainable. They also offer greater agility and visibility than the more traditional models,” says Carol Miller, vice president, marketing and com-
2017
munications at MHI, the material handling association. The first of the four keynotes kicks off Monday, April 3 with Andrew Winton, sustainability expert and author of Green to Gold, leading a panel of manufacturing and supply chain sustainability experts in a discussion on building supply chain sustainability for a competitive advantage. On April 4 Markus Lorenz, partner and managing director of The Boston Consulting Group, focuses on Industry 4.0 and how intelligent machines are transforming supply chains. A preview of the MHI 2017 Annual Report is presented on April 5 by George Prest, MHI’s CEO, and Scott Sopher, principal, Deloitte Consulting LLP. Later that afternoon, legendary basketball
www.mmdonline.com | January/February 2017
educate & inform
Hall of Famer and Olympic gold medalist Earvin “Magic” Johnson, whose firm is now worth $1 billion, dives into how products and solutions must be relevant to where customers are today and where they are going to be tomorrow. Attendees seeking more specific, targeted sessions can search the “On-Floor” seminars by day, time, sponsor, learning level (beginner, intermediate, advanced), by track (transportation, distribution and warehousing; manufacturing, planning and sourcing; data capture, analytics and information management; automation and robotics; sustainability and risk management; workforce and labour), industry focus (retail and omnichannel, automotive and industrial, food and beverage, consumer products goods) and product category. continued on page 25 23
ProMat 2017 Recognizing innovation
Looking to the future, ProMat’s Innovation Award program, now in its fifth year with three categories, Best New Innovation, Best Innovation of an Existing Product and Best IT Innovation, reflects the ever-expanding role that data analytics, automation and IT solutions continue to play in this industry. MHI and ProMat initially launched the Innovation Awards to put the focus on new products, which MHI surveys indicate are the numberone reason attendees come to ProMat. This year’s 12 finalists will be selected from over 130 submissions—up from the recordsetting 98 submissions in 2016—by a six-judge panel selected from end-user attendees who check the products/systems against a weighted point list. At ProMat, the second three- to five-judge panel visits each of the finalists’ booths for 10-minute presentations that include demos and Q&As. “Our judges are actively involved in the industry, because they’re tasked with identifying the most practicable, applicable and affordable products and systems that could revolutionize how they do things in their facilities tomorrow,” says Greg Baer, MHI’s director of sales, who also manages the Innovation Award program. “The winning innovations don’t have to be complex or high-tech—they just have to meet the challenge more effectively than any other product ever has.” For example, the 2014 winner in Best Innovation of an Existing Product category, a pallet protector mounted on a forklift, was innovative precisely because no other firm had ever created this simple, basic solution for which there was a genuine, industry-wide need. “The Innovation Award program really helps companies be aware of the newest technology and products in a constantly changing market. By looking into the future, these firms are all distinguishing themselves and creating a market niche,” says Kimberley Absil, a business process manager, supply chain atrategy, analytics & integration with Walgreens, who was an Innovation Award Judge in 2015. “In today’s world, where accuracy and speed are key, the move to automated from manual processes makes better use of human resources and the real-time data that is now available at our fingertips has improved accuracy, productivity and also provides a fast ROI.” MM&D asked the companies behind some
of the Pro-Mat Innovation Award’s submissions about their innovations and what inspired them. Evidently, creative companies and their teams must really listen to their customers and understand their industry’s challenges while being aware of the latest trends to develop an effective innovation. Rack Safety
“The IntelliSort HDS can handle polybags as rapidly and accurately as the once common cardboard boxes with their rigid, defined shape and edges,” says Tim Kraus, product management manager, Intelligrated. “We came up with a new way to use industry-proven technologies, components and methods to ensure our customers and our entire industry met consumers’ delivery expectations while minimizing costs and the equipment’s footprint.” Verified labels
For example, A-Safe, Inc’s RackEye, a 24/7 monitoring and safety system, tracks vibrations in the racking and sends alerts to users’ smartphones via the RackEye app when preset thresholds are exceeded. That information can be used to take preventive action before a racking failure that could put operators, equipment and product at risk. RackEye tells users exactly where and when the damage was incurred, which can help determine whether operator training, traffic flow or other adjustments are required. Over time, the data may also reveal patterns that allow companies to make further modifications, for example, reducing rack inspection frequency based on the number of alerts or increasing them seasonally. “Our UK engineering team recognized that, like the rest of the world, warehouse and distribution centre managers want to be able to manage everything from their pockets,” says Claire Porter, president, A-Safe, Inc.
Meanwhile, FOX IV Technologies’s V5440 labeling system integrates verification technology directly into the Fox IV label and print apply system to verify barcodes while the label is printing. Because every label is verified before it is applied to the product, everyone in the supply chain will be able to read the bar code on the label, which reduces possible charge-backs for unreadable codes or untraceable products.
“Innovation comes when you look hard at what you know best,” says Richard Fox Jr president of FOX IV, who notes the V5440 runs at the standard eight inches per second. “Consider your customers and their major concerns, then use your firm’s technical and industry specific experience and skill sets to identify and develop a viable solution.”
Odd-shapes sorter
Intelligrated’s IntelliSort HDS sorter was designed to give e-commerce retailers a competitive advantage by using a sliding shoe sorter to quickly and precisely push a wide range of irregular packages to the correct shipping container, whether they’re in polybags, jiffy packs or regular boxes. The more traditional sorting systems, which may rely on friction to divert the packages, have a higher risk of being less accurate with the increasingly common polybags.
www.mmdonline.com | January/February 2017
Celebrating innovation
Year to year, ProMat’s Innovation Award program has helped put exhibitors’ best new and improved products in front of attendees while celebrating and recognizing the impact that innovation can have on distribution and supply chain businesses. “Thanks to the Innovation Award program, many ProMat attendees now walk the show specifically to see the Innovation Award submissions and finalists,” says Baer. MM&D 25
Cargo
insurance By Christian Sivière
Limits of liability
hanks to globalization, most companies today are part of a global supply chain. We no longer ship goods just across the province or the country, but often across the globe— importing, exporting or both. Risks are greater, managing them is crucial and cargo insurance is a very effective, affordable tool that helps manage those risks. We want cargo insurance in order to be compensated in the event of loss or damage to our goods in transit from our suppliers or to our customers. But an essential consideration is that carriers have limits of liability and we will look at the maximum liability of carriers by mode, how cargo insurance works and how to get adequate coverage. Some shippers mistakenly believe that if something happens to their goods, it will be the carrier’s problem and they will compensate the shipper for full value. But this only happens if the shipper declares the value of the goods on the bill of lading and pays valuation charges. These valuation charges cost around two percent of the value, which is five or six times the cost of cargo insurance, for a lesser coverage. Most shippers do not show a declared value for carriage on the bill of lading, only a value for Customs and opt instead for cargo insurance.
What are the carriers’ limits of liability, the maximum they will reimburse us in the event of damage or loss? For road transport in Canada, the maximum liability is uniform across the country, fixed at $2/lb (or $4.41/ kilo). In the US, a law called the Carmack amendment, makes truckers liable for the full cargo value, except when they use the “released value”, which can considerably reduce their exposure as low as $0.50/lb. When comparing the prices of a US trucker versus a Canadian trucker, a prudent Canadian trader should look at their respective limits of liability. A US trucker could be cheaper, but if his liability is substantially lower than the Canadian trucker, it may not be such a good deal. On the other hand, Canadian truckers may sometimes want to avoid the full liability of the Carmack amendment when they deal with US customers. For rail, there is no uniform rule and the carrier’s limits of liability are established in the individual customer contract. For air, the liability of airlines is defined by international convention. It should be easy to manage, as the Warsaw Convention from 1929 was replaced by the Montréal Convention in 2003. Alas, only 110 countries signed the Montréal Convention while 152 countries had signed the Warsaw Convention, so 40 countries still apply the latter.
T
26
This is why most air waybills refer to both Conventions in their fine print. Which one will apply depends on the airline’s nationality and the country where the loss occurs. So the airlines limits of liability are: 17 SDRs (around $30/kilo) under the Warsaw Convention and 19 SDR’s ($34/kilo) under the Montréal Convention. SDR stands for Special Drawing Rights, an currency created by the International Monetary Fund for international agreements, based on the US$, Euro, Renminbi, Yen and Pound Sterling. It follows the fluctuations of these currencies. Ocean freight is more complex, as five conventions can apply, depending on the nationality of the shipping line and the country involved. They are: the Hague Rules, the Hague-Visby Rules, the Hamburg Rules and the Rotterdam Rules, governing outbound ocean freight. The US has a rule called the Carriage of Goods by Sea Act (COGSA), inspired by the Hague-Visby Rules. COGSA’s uniqueness is that it applies to both outbound and inbound freight. The Hague-Visby rules are applicable in Canada. What does it all mean? In the event of a claim and depending on the applicable convention, the ocean carriers will reimburse a maximum of 100 GBP, US$500 or SDR667 (around CA$1,200) per “customary shipping unit” and when we ship FCLs (Full Container Loads), a “customary shipping unit” is a conMM&D | January/February 2017
Photo: AlexLMX, iStockphoto.com
WHY WE NEED IT
Who’s buying?
Insured value is determined by adding the costs of packaging, freight and the insurance premium to the transactional value of the goods, then add 10 percent to cover administrative costs. tainer. So if you ship 200 boxes of electronics in a container and it falls overboard during the voyage, the ocean carrier may compensate you on the following formula: 1 x US$500 and not 200 (boxes) x US$500. Integrators and courier companies like DHL, Fedex or UPS also have limits of liability. They can be pretty low—nowhere near the value of your goods—but are not uniform and vary from one company to another. So when comparing prices between several integrators, it is wise to also compare their respective limits of liability.
Now we see that contracting cargo insurance is essential to compensate for the shortfall from carriers, so let’s look at who, between the shipper and the consignee, should take insurance. Firstly, the insured party must have an insurable interest in the cargo, i.e., someone who will suffer a loss if it is damaged or destroyed or who will benefit from the safe arrival of the cargo. For example, a Canadian shipper selling under the ExWorks Incoterm makes the merchandise available at his loading dock and has no responsibility beyond. He therefore cannot contract cargo insurance, only the buyer can. This leads us to address the relationship between Incoterms and cargo insurance. The seller is responsible for cargo insurance under the CIF and CIP Incoterms (but the insurance must be in the buyer’s name, as the goods travel at his risk). So in these two instances, the seller pays both freight and insurance premium. With the other Incoterms (EXW, FCA, FAS, FOB, CFR, CPT, DAT, DAP and DDP) insurance is left open and neither the seller, nor the buyer, has insurance obligations. A prudent trader should take insurance based on when the risks are on his shoulders, according to the Incoterm. Another consideration is terms of payment: if a seller gets paid in advance, he may not worry about cargo loss but he may worry if he gets paid after delivery, even if goods travel at the buyer’s risk. These decisions require careful analysis, based on commodity, transport mode and country of destination. From the buyer’s point of view, the same factors come into play, in reverse. Types of insurance
So cargo insurance covers the seller/ or the buyer in the event of loss or damage to their goods during the voyage. We will look at the types of cargo insurance available and their main features. Until 2009, the standard clause choices were “All Risks”, “With Average” and “Free of Particular Average”—together called the “American Cargo Clauses”. They have since been replaced by the “Institute Cargo Clauses” (ICC) A, B and C, drafted in London. ICC A is the most com-
www.mmdonline.com | January/February 2017
prehensive, most expensive coverage, B provides less coverage while C, covering against total loss only, is the cheapest. Whether you use ICC A, B or C, the coverage is warehouse to warehouse, except for some cargoes and some destinations, where the insurance underwriter may limit the coverage up to the port or the airport. This depends on the nature of the cargo and the local conditions at destination but some countries also have restrictive laws, making it compulsory for importers to contract insurance locally. Algeria and Iran have such restrictions and there are a few dozen countries with similar restrictions, mainly in the developing world. Aside from these country limitations, cargo insurance generally provides coverage from commencement of transit at the point of origin until it is delivered to the warehouse or “door” at destination. Some additional risks we want covered and not part of the ICC A, B or C are customarily added by endorsement: War Risks and Strikes, Riots and Civil Commotion clauses. Some of the factors that influence pricing are the customer’s prior claim experience, the nature of the cargo and packaging, values, modes of transport and origins/destinations. Having an open cargo insurance policy is a good way to enjoy favourable rates and the peace of mind of continuous coverage, as the inadvertent failure to report a shipment does not usually void coverage, such shipments being held covered, subject to the policy conditions. Like auto or home insurance, cargo insurance works with deductibles: the higher the deductible, the lower the rate. Limits apply as well on the maximum insurable value per conveyance. What cannot be covered with cargo insurance is consequential damages, loss of profit caused by shipment delays, inherent vice or improper packaging. Insured value is determined by adding the costs of packaging, freight and the insurance premium to the transactional value of the goods, then add 10 percent to cover administrative costs. This is expressed as 110 percent of the CIF/CIP value. We can insure more than 110 percent with the consent of underwriter. MM&D 27
fashioned
FOR STAKEHOLDERS REI breaks new ground
By Emily Atkins & Kevin Reader
W
hen the largest retail co-op in North America announced plans to build their third major distribution centre in Goodyear, Arizona, just outside of Phoenix, a number of supply chain experts in the fashion, apparel, footwear and accessories industry took notice. The third REI distribution centre (the others are in Sumner, Washington, and Bedford, Pennsylvania) was to include an unwavering commitment to efficiency, sustainability and delivering exceptional service for their owners, members, and the community. It was also going to be a state-of-the-art facility to support e-commerce and delivery direct to stores. In other words, a purpose built, omnichannel facility that would leverage the latest technology and approaches to design, construction, operation and performance. REI has achieved their goals. The DC was just awarded LEED Platinum status. Less than a year later, it produces more energy 28
than it consumes; in fact it has net negative energy usage and actually returns power to the grid. It is the first DC in the US to achieve both LEED Platinum certification and Net Zero Energy. It’s also the first DC to earn Platinum certification in 2016 and, at 400,000 square feet, is the second largest Platinum-certified distribution or warehouse facility in the US. It is also a model for omni-channel distribution centre design, meeting these requirements with ease while supporting 40 percent of the co-op’s sales—reaching approximately 36 percent of customers and 41 percent of the total retail volume. History of commitment
Started in 1938, REI (Recreational Equipment, Inc), was founded by 23 mountain-
climbing buddies. Since its inception, the company has been committed to its exceptional guarantee of 100 percent customer satisfaction. As a co-op, REI also delivers an annual rebate to owner/members. In recent years that’s been 10 percent of their purchases. It’s a history of commitment to customers, members and the community at large. But beyond that, REI’s management team is committed to deliver a new standard for supply chain and distribution centre design and operation at this flagship DC. “A new standard that was in line with REI values and commitment to sustainable operations”, says to Rick Bingle, REI’s VP supply chain. REI designed this facility to conserve water and protect the delicate environment of the surrounding Arizona desert. REI chose a nonevaporative cooling system, which keeps temperatures consistent from floor to ceiling while saving millions of gallons of water annually. The co-op also invested in an innovative restoration project at the Verde River, high in the Phoenix watershed. In partnership MM&D | January/February 2017
with Bonneville Environmental Foundation (BEF) and The Nature Conservancy of Arizona, the project will help modernize irrigation infrastructure to conserve water and enhance flows for recreation and wildlife, protect farmland and limit development and water extraction in sensitive areas, remove invasive plants to restore river habitat, and enhance recreation access at key sites along the river. USGBC awarded REI with two LEED points for the pilot project and now recognizes Water Restoration Certificates, which will ultimately restore more natural water systems, wetlands and damaged watersheds. And finally, employees are encouraged to give back to the community, and the company leads by example. Office space inside the REI facility is made available for community functions and the company was has been successful in maintaining a low carbon footprint and using as few resources as possible in the operation of the new facility. Goals
Four goals were established and maintained throughout the design process for the DC: • Be true to the REI brand; • Adhere to the REI culture and values; • Maintain REI’s commitment to stewardship; • Achieve the highest level of sustainability possible. Facility Design
The overarching challenge was to develop a facility design that was non-traditional. Innovative approaches had to be taken in order to meet both sustainability goals and build an efficient facility that would meet the emerging needs of the omni-channel business model. Using a design charrette process (a threeday intensive planning session where stakeholders collaborated on a vision for development) to develop the optimum distribution centre design, REI selected a crossfunctional team. It consisted of the Buther Design Group; Rocky Mountain Institute; Merit Partners; The Renaissance Companies;
CBRE; EBF Climate Corps; system integrator, DMW&H; and automation technology supplier, KNAPP. During the design process, REI and their team placed significant emphasis on renewable energy, water conservation, energy efficiency, eco-friendly building features, and recycling. Simultaneously the group was developing a state-of-the-art solution for omni-channel distribution—supporting store stocking, replenishment wholesale distribution and e-commerce requirements— all from within the same facility and the same inventory. Among the primary goals, the warehouse automation was to achieve “one touch distribution”; to ensure that an order picker could fulfill an order from a single location, and at the same time, without having to pick individual orders for store, e-commerce and wholesale distribution channels. After considerable research and design consultation, the team came to the same conclusion. The first step was to implement a disciplined receiving process that ensured all SKUs were placed in the proper location— to ensure picking accuracy could be maintained. Automated technology supplied by the KNAPP shuttle could then deliver SKUs for any order type to a universal workstation that would efficiently process orders for each channel. Knapp’s pocket sorter technology was also selected as part of an overall solution—and is the first North American system of its kind. It’s a sortation approach that allows picking, staging and sequencing of orders via a unique method. The pocket sorter has unique characteris-
www.mmdonline.com | January/February 2017
REI and their team placed significant emphasis on renewable energy, water conservation, energy efficiency, eco-friendly building features, and recycling. Simultaneously the group was developing a stateof-the-art solution for omni-channel distribution. tics. First, it provides a major reduction in space because of its pocket style design where the item is staged in a hanging pocket after picking and does not take up the space of typical horizontal conveyor accumulation. Second, its basic design provides for efficient use of building space, allowing multiple levels of order/item accumulation in a small footprint. And third, the sorter can sequence order items to packing or shipping in any sequence due to its unique sortation algorithms and logic. True to its mission, the team also developed a unique merger of these technologies and worked with Knapp to develop a new orderpicking station. The concept, the Pick-it-Easy Multi workstation, is now patented with contributors from the design group, including Rick Bingle. It allows all order types to be picked from a single workstation—a true “one touch distribution”. REI is very pleased with their new distribution centre. And true to their commitment to core values, community and sustainability, is open to sharing their experience and learnings. The co-op welcomes anyone within the industry or the general public to tour the DC in Goodyear, Arizona to see the facility firsthand; interested parties can contact the co-op by emailing sshaeff@rei.com. MM&D Kevin Reader is director business development and marketing at Knapp Logistics Automation. 29
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Datacapture
What’s new in mobile supply chain apps
M
obile apps are the latest ‘necessity’ in warehouse management and supply chain technology. Inventory control and data capture software is increasingly deployed on mobile devices, and code writers who do not supply mobile connectivity in their offerings run the risk of obsolescence. Here’s a selection of on-trend apps for different ops areas. REAL-TIME LOAD TRACKING Omnitracs has added a mobile application to their Virtual Load View (VLV) product, a solution that replaces manual tracking of shipments by providing access to real-time data, including the ability to improve tracking and identify when loads are falling behind schedule. The app helps brokers, shippers and carriers track loads through their own back office systems. “Traditionally, brokers have not had direct access to their carriers’ telematics, which forced them to rely on costly call centres to plan loads, track the position of trucks, contact drivers and act on problem loads,” said Jeff Champa, vice-president of product management at Omnitracs. Brokers and shippers who want to track their loads via Virtual Load View have the data sent to their back office system. Position data about the load is either shared from the Omnitracs Intelligent Vehicle Gateway (IVG) or Mobile Computing Platform (MCP) unit, or if no Omnitracs unit is available, now through this new smartphone application (Virtual Load View Mobile), which the driver can download from the iOS and Android app stores.
ORDER FULFILMENT HighJump has a new mobile app that allows consumer and commercial smartphones to execute inventory and order fulfilment transactions. HighJump Supply Chain Advantage inMotion is built to run on iOS, Android and Windows 10 mobile devices. That compatibility offers more handheld device flexibility and allows companies to invest in widely available consumer products in addition to traditional, rugged commercial devices. Employees’ familiarity with these smartphones and tablets makes for easy training and increased productivity. These devices can access the Internet, place a phone call and embed additional capabilities (i.e., additional mobile applications such as inspections with digital image captures). That makes it more robust than popular warehouse mobile devices like RF scanners. HighJump Supply Chain Advantage inMotion comes with HighJump warehouse management systems (WMS) or HighJump in-store fulfillment solutions.
VOICE PICKING inconso and SemVox have developed voice picking system that uses robust mobile devices (Enterprise devices) with Android KitKat (4.4.x). The application has an HTMLT5 front end with an Apache Cordova plugin. The rollouts are planned for the device types Zebra TC70 and WT42 with cableconnected headsets and is available in multiple languages. The inconsoVMS system uses existing components of the company’s WMS and controls the paperless picking using voice prompts based on the transmitted picking data. The employee is equipped with a voice terminal and is guided from place to place while picking and receives picking instructions via voice output. The employee confirms the picking process using voice input, whereby the data is processed in real time in the warehouse management system.
LOGISTICS APP AXIT has launched an app, “AX4 mobile”, that is designed for single-click configuration. The app, available on smartphones and tablets, enables the execution of operationlevel logistics. “Each customer can determine what functions or processes they want mobile access to”, says Uwe Schumacher, head of product line management with AXIT GmbH. As an example, the manager of a shipping department can be informed about additional costs for special deliveries. She receives the necessary information through the app and can either confirm or reject the additional cost. Thanks to the app decision makers are accessible everywhere, regardless of location. The app can also be updated with a single click for all users. The app also improves collaboration and flexibility in operations management: with a simple QR code scan it is also possible to integrate new participants within the supply chain management process and with the AX4 platform. MM&D
www.mmdonline.com | January/February 2017
31
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By Chris Anton
What’s holding your warehouse back? Mastering the on-demand, online shopping boom
T
he on-demand economy is attracting more than 22.4 million consumers annually and $57.6 billion in spending—with online marketplaces comprising the largest category. This growth is both exciting and terrifying if you’re in e-commerce retail. Meeting the rising demand for on-demand essentially raises the stakes on your operational efficiency and how you run your warehouse and distribution centres. From managing same-day delivery and global fulfillment, to keeping up with constant diversification and changing product mixes, the consumer desire for convenience is forcing transformation in every facet of the supply chain’s last mile. Order fulfillment, in particular, plays a significant role in cultivating your brand’s reputation and can be a differentiator or a detriment. For instance, if a customer’s order isn’t packed accurately, the warehouse has essentially diminished that customer’s experience. Ultimately, delivering on the promise of on-demand means keeping closer tabs on everything including staffing, inventory, shipping and tracking to ensure order requests are met properly. And that, in turn, requires processes and support tools that deliver visibility, agility and scalability to drive higher performance. Haphazard warehouse operations
Many e-commerce materials management and distribution teams try to patch up inefficiencies within their existing processes and legacy systems to keep up with demand. However, this causes more issues. They create subroutines, or Excel spreadsheets to respond to different areas where information is not getting captured. They then use this piecemeal information to try to monitor and maintain warehouse operations. This disorganized model—lacking realtime information and integrated systems— could result in costly errors for your business as well as tarnishing customer service.
Obviously, speed of response would take a hit, but you also can’t effectively manage things like on-demand global fulfillment using spreadsheets and fragmented data. You would never be able to accurately maintain various packaging regulations and all the other complexities that come along with serving consumers internationally. It would also challenge your capacity to meet changing consumer demand for additional product lines. Keeping up with changing product mix, item sizes and types would be a nightmare if dealt with manually. WMS technology can turn it around
As adaptability and responsiveness increase in importance to consumers, materials management and distribution teams are beginning to prioritize investments in better operational technology. Warehouse management software (WMS) solutions are topping their list of must-haves. In fact, according to research conducted by ARC Advisory Group, WMS was the technology most frequently noted as “likely” or “very likely” to be purchased or deployed over the next three years. Using the right warehouse management technology—the right ways—can improve your ability to satisfy customer expectations and enhance productivity. For instance, a third-party e-commerce logistics company we work with recently adopted advanced WMS to better maintain its client’s warehouses. Ultimately, the insight this technology provided led to the logistics company improving order-picking time by 200 percent for its clients. The trick is wading through the sea of WMS platforms and finding one that meets your operation’s exact needs. During this evaluation, you should be ruthless. The changing landscape of e-commerce retail and consumer purchase behavior demands it.
be invested in other areas of the business can give your organization a competitive edge. Look for tools that make data capture, maintenance and reporting easy. The technology you use should give you clear insight into everything from inventory and efficiency of material handlers to effectiveness of workflows and processes. With better data, you and your team can drive process improvement and start to optimize specific areas of warehouse operations like put-away, order picking and shipping. Additionally, whichever WMS solution you choose should also be flexible enough to accommodate things like multi-order picking for enhanced efficiency, as well as sometimes extreme fluctuations in volumes at different times of the year. Your WMS technology should also be intuitive enough that your team can get up to speed in minutes or hours rather than days or weeks. This is incredibly critical during peak online shopping periods. Even Amazon made significant changes to its warehouse management technology in advance of the holiday shopping season, which reduced training time and saved money. Better customer experience
Taking the time to course correct now will set your brand up for future success. In the long run, technology and process changes made to better accommodate on-demand e-commerce consumers will translate into overall cost savings for your business and a better experience for your customers. If you fulfill your customer’s order accurately and on-time, your business will avoid getting inundated with calls to correct misshipments and eating the costs of sending out replacement product. Furthermore, your brand will earn a positive reputation for its quality and reliability. MM&D
Tips for choosing the right WMS
Finding technology that meets or exceeds your functional specs and frees up capital to
www.mmdonline.com | January/February 2017
Chris Anton is executive vice-president of business development at Snapfulfil.
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SURFACE TRANSPORTATION SUMMIT
R U O Y K R A M R A D N E CAL oining j n o n a l Please p ountry’s top the c AND N O I T A T OR TRANSP EXECUTIVES G of SHIPPIN for a day N AND O I T A C U ED KING NETWOR
R E B O OCT
#sts17
2017
11
LEARNING CURVE
Celebrating 150 years of Canada’s transportation history
Photo: duncan1890, iStockphoto
A
s a country, we’ve come a long way from the primitive, early days when settlers homesteaded, developed their farms and, whether they knew it or not, laid some of the groundwork needed to create a nation. This year, Canada turns 150. I think it is appropriate to thank our first prime minister, John A. Macdonald, for the crucial role he played in steering us, and for helping to prevent our annexation to the United States of America in 1812. And how we’ve grown since then. When Canada came together in 1867, the population was estimated to be 3.5 million. According to Statistics Canada, our population stood at over 36 million in 2016 and has been growing by an average of about 250,000 every year for the last quarter century. In 1867, commercial enterprises ranged from the Hudson’s Bay Company, est. 1670, the Molson Brewery, est. 1786 and the Bank of Montreal, est.1817. Clearly there was a pressing need for transportation by the time the Canadian Pacific Railway was incorporated in 1881. You don’t have to be a historian, meteorologist or geographer to know the Canadian terrain and weather made it incredibly difficult to explore this land. The fish and fur trades date back to the 1500s and the time of French explorer Jacques Cartier, when large trading posts could be found in places like Quebec City. Trade between First Nations and New France along the Great Lakes was also taking place, in an effort to satisfy European demands for the pelts that would produce new fashions for those across the ocean. Much of the fur trade declined with a decrease in demand and the rising strength of the silk trade in the East. While the railway development of the 19th century contributed to the successful expansion and economic growth of Canada, the industrial revolution brought increased demands for more raw materials, and forest and agricultural products. These had to be transported, for manufacturing, processing and exporting—sometimes at a great cost—over land and sea. We still have the world’s longest coastline and vast fresh-water waterways, of course. According to the Transportation Safety Board of Canada, transportation in Canada today has grown into a $200-billion industry, with 450 million tonnes of freight moving on the www.mmdonline.com | January/February 2017
Atlantic, Pacific and Arctic Oceans and Great Lakes. Over 54 percent of Canada’s ocean freight arrives at the Port of Vancouver, 29 percent in Montreal, nine percent in Halifax and seven percent in Prince Rupert. Buildings, logistics engineering and designs for bridges, roads, pipelines, and rail lines have always been a major transportation expense, especially considering our small population and giant land mass. Sir Sandford Fleming, famous in part for surveying land for Canadian rail, first travelled by horse, oxcart and boat around 1850, and it took over three months to cross Canada. When the railway was built, transportation from coast to coast could be done in a week. Today, the flight time from Newfoundland to British Columbia is now just eight hours! The distribution and size of Canada’s trade makes us the world’s 11th largest exporter, with 78 percent of goods exported to our North American Free Trade Agreement partners, the US and Mexico, says Global Affairs Canada. The future for Canada’s trade with the US might be uncertain and a serious consideration with the start of the Trump US presidency in January, but there is hope that Canada could soon increase its trade outside of North America. What does the future look like for Canada’s transportation sector? Depending on the strength of our largest trading partners and their willingness to do business with us, we are well positioned to offer multimodal transportation options to meet the needs of a range of industries. Current data shows growth in exports of wood, aircraft and spacecraft and automotive parts, while declines in crude oil and minerals continue. Whether these products ship by sea, rail, road or air, in manned or unmanned vehicles, we have a long way to go to perfect the designs for, and planning of, extremely efficient movement of goods. But we have also come a long way—and that’s worth celebrating. MM&D
Tracy Clayson
Tracy Clayson is managing partner, business development of Mississauga, Ontario-based In Transit Personnel. tracy@in-transit.com 35
Print is Not Dead... In Fact
BORN: Germany, 1439 DIED: Circa 2000 ... or Did It?
It’s Growing
Consider The Following... • 2015 reversed a decade of decline, with a projected 0.2% YOY growth. (FIPP Trends Report)
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Print is not hanging on by its fingernails, IT’S GROWING. FIPP World Magazine Trends 2014-2015 Report
• Printed UK magazine advertising delivered the highest ROI of all media channels, 11% higher than TV and 22% higher than online. (PPA Magonomics)
• In the US alone, 234 new titles made their debut, up 21% from 2013. (Guide to New Magazines, USA) • FOLIO Magazine’s annual survey of US city and regional magazines said 2015 featured more new launches than any year since 2009.
Publications Serving Niche Markets (like B2B) Provide Unique Content Readers Cannot Get Anywhere Else.* * Skip Zimbalist, chairman and CEO of Active Interest Media (AIM), which publishes titles like Backpacker, Black Belt, Arts & Crafts Homes, Better Nutrition, Ski Magazine, Vegetarian Times, Power & Motor Yacht, and Yoga Journal, told FOLIO’s recent Growth Summit that AIM is investing in circulation marketing including direct mail. “We have not found declining yields in mail over the last 10-15 years,” he said.
In Case You Weren’t Convinced Before, You Can Confidently Say:
is Far From Dead. It’s Alive!
MATERIALS HANDLING
Refrigerated Warehousing PART 2
I
n comparing high density storage systems to conventional selective racking, an issue that often emerges is racking cost. Block or bulk pile storage which does not rely on racking, but is supported by product packaging, is the cheapest. Double-deep storage is the cheapest—in rack cost only— high-density racking on a cost-per-pallet position basis because it employs standard racking. Unlike other types of high-density systems it is limited to a maximum doubling of storage density over regular racking. It also requires specialized deep-reach forktruck equipment. Like the majority of high-density storage systems, double -deep racking is a last-in-first-out (LIFO) storage system. The next most expensive high-density storage system is drive-in or drive-through racking. On a cost per pallet position it is twice as expensive as double deep racking. The key is not to become fixated on the cost per pallet position. Unlike double-deep racking, drivein racking is capable of many pallets deep storage. Thus in terms of total cost; including the building, it can be competitive with double-deep storage. Drive-in racking is also capable of being used with standard lifttrucks. Functionally, it is very similar to bulk pile storage but does not have the same stacking height limitation. Like bulk pile and double-deep it is not generally suited for order picking applications because the pallet is buried in the storage lane once the first pallet is emptied. In the other two types of high density storage systems; pushback and flow racking pallets are automatically indexed to the pick face once a pallet is removed. This indexing also speeds up pallet putaway and removal particularly at upper rack levels. The lift truck can remain at the rack face and does not have to enter the lanes or tunnels of the drive-in system. Both drive-in and bulk pile racking are limited to one SKU per storage lane or tower. Both pushback and flowracking, on the other hand, can have a different SKU for each level. The greater number of SKUs to be stored in a drivein system means there are a greater number of empty slots in a drive-in system compared to a pushback system. These empty slots are commonly called honeycomb. It results in at least 10 to 20 percent lower occupancy than is achievable in a pushback or flow rack system. In certain rare situations this lower occuwww.mmdonline.com | January/February 2017
pancy is offset by the greater number of unit loads that can be stored vertically in a drive-in system. In a flowrack or pushback system a sloped elevation is needed to provide the indexing to convey the pallet to the rack face. This can decrease usable vertical heights, particularly in deeper systems of five pallets or greater. Another issue with drive-in systems is pallet quality, as the pallet supports the full weight of the unit load except on the edge. The travel in the tunnels also results in greater product damage and storage system damage compared to pushback or flowrack systems that index the pallet to the storage aisle.
Dave Luton
Pushback
The concept of pushback racking has been around for over three decades. Early designs were limited to two pallets deep. These employed the basic concept that holds true today, of providing deeper storage with the advantage of indexing the rear pallet forward to the load aisle. Compared to other high-density storage options it has the following considerations and trade-offs. Compared to drive-in or drive-through racking it is about twice as expensive per pallet position and is limited to six pallets deep. However, it is only about half as expensive as flow racking per pallet position. And pushback is capable of multiple system design options in the vertical plane. In a four-pallet high system, the bottom two pallets can be floor-stacked and the two upper levels can employ pushback racking. Pushback can be used effectively in an order-picking application because a large volume of product can be presented at the pick face, reducing the need for frequent replenishment. Compared to flow racking it is significantly less expensive even compared to the newer bearingless systems. Technically it does not provide FIFO (First In, First Out) stock rotation. But by always emptying the oldest lane first, in many applications sufficient product rotation can be maintained to avoid problems, except for products with a very short life cycle. While flow racking is the most expensive form of high density storage it is the only system that provides first in first out (FIF0) storage. Many users with product with a short shelf life use it to avoid loss, or in restricted space areas, like high volume manufacturing or line feed assembly. The live storage capability also permits its use in high turnover specialty applications such as staging racking. It is most susceptible to bad pallet quality and type. MM&D
Dave Luton is a consultant in the Greater Toronto Area. dluton@cogeco.ca. 37
LEADING EDGE
One man’s determined path to success P
Ross Reimer
Ross Reimer has over 30 years of experience in transportation/ supply chain. For the last 15 years he has been President of Reimer Associates, a recruitment firm within supply chain. rreimer@reimer.ca 38
icture a teenager arriving in Canada in the early 1970s on his own with very limited English, no job prospects and an immediate need to earn a living. Fast-forward 40 years and picture a successful husband, father, grandfather and business owner. That’s the story of my friend and client “J”. J landed in Canada with no job skills or experience and zero connections. What he did possess was absolute determination and a belief that he would succeed in his new home country. And so he immediately focused all of his energy on finding a job. Of course in those days there were no Internet job boards, and newspaper “help wanted” pages were a challenge for someone with a sparse command of English and no résumé. Knowing he would not rank very high on a list of potential employees, J realized he had to do something to stand out from the crowd. So J arose early each day, packed himself a lunch, and rode the bus to areas of the city with the highest concentration of industrial job opportunities. He then walked door to door seeking employment. The answer was invariably “no,” but J was not deterred. Each day he continued knocking on doors. Finally one morning while walking towards another potential factory job, J saw a Cadillac drive in and park in the owner’s parking spot. J walked right up and greeted the man with a firm handshake as he got out of his car. Surprised, the owner asked him if he worked in the factory. J’s response was, “Not yet, sir, but I would certainly like to and I am ready to start right away.” Obviously impressed with J’s positive attitude, and noting he had his lunch with him, the owner asked J to take a seat in the lobby while he checked with his foreman. Just a few minutes later J was put to work for the day, recalled the next day and ultimately spent several years progressing through a number of jobs with increased responsibility within the factory. You can be sure J put in more than an honest day’s work, and in his off hours improved his language skills. At the same time, J was always thinking about how he might become an owner himself one day. In a few years his opportunity did come and with the usual combination of fear and excitement around launching a new venture, J opened a small trucking business. One truck and big plans. That single vehicle grew into many, and over the years J built a successful
transportation business, providing outstanding service to customers and livelihoods for many employees. J’s story, like that of so many other entrepreneurs, is both impressive and inspirational and I believe some lessons can be learned from his experience. Determination
J was absolutely determined and willing to do what it takes to succeed. Not many of us can say we’ve gone door to door seeking a job. He did, while enduring countless “no’s” and continuing to persist until the answer was “yes.” Positive attitude
J had an attitude that anticipated success. Remember, each day when he left to pursue work he took his lunch with him. Each morning he anticipated that today would be the day he would win full-time employment and sit down to eat his lunch with his coworkers. Confidence
My friend used his outgoing and charismatic personality to his advantage. It was pretty unusual for a teenager to introduce himself to a business owner in the parking lot, open the door for him and announce he was ready for work that day. In that brief “moment of truth” J impressed the boss and created his own opportunity. Hard work
J worked to overcome many obstacles. Being a teenager with no immediate family, extremely limited resources, minimal understanding of the language and no clearcut skill set did not keep him from a positive intentional attitude plus a drive to keep moving forward, and ultimately great success. Patience
Finally, he was patient while learning what he needed to know in order to build a business. His lifelong dream was not to work in a factory, but he knew instinctively that the initial factory job was a gift and he would use it well. He learned all he could about the business, he observed his managers and no doubt saw their strengths and weaknesses, and all the while kept his eye fixed on his dream of building his own business. When the time came to step out and take the risk, J grabbed hold, and the rest, as they say, “is history.” MM&D MM&D | January/February 2017
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