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DECEMBER 2019
C A N A DA’ S S U P P LY C H A I N M AG A Z I N E FORMERLY
MATERIALS
MANAGEMENT &
DISTRIBUTION
FAST CARS,
FAST DC
Inside Porsche Cars Canada’s
first parts distribution centre
Publication mail agreement #40063170
Tracking tires
AI for supply
chains
Sustainability
sampler
INSIDELOGISTICS.CA
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MOVERS & SHAKERS
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SECT ION
page 1
C A N A DA’ S S U P P LY C H A I N M AG A Z I N E
D EC EM B E R Ó ä 1 U 6 " 1 È { U 1 ,ä 6
CONTENTS
In every issue:
5 Taking Stock
Editor’s analysis
7 Supply Chain Scan
News and numbers
from around the world
31Supply Chain
Smarts
Is it time for robotics?
32 Innovations
New products for supply
chain efficiency
35
18
Learning Curve
Goodbye to ‘Driver Inc.’
37 Leading Edge
Intentional results
Keeping it rolling 38 Safety First
Plan for pedestrians
Pival’s tire inventory excellence
ON THE COVER
SUPPLY CHAIN SCAN
7 >>`>½ÃwÀÃÌÕÌÃÌÀiÞ | VV >vÀ7>>ÀÌV>ÀÀiÀÃ|
Jobs and AI | >>`>>`Ì iÜÀ`ÓäÓäN «i}Ã
A FAST DC AI in supply Sustainability Cannabis,
Porsche Cars Canada has
opened a DC in Canada to
gets parts to drivers faster.
20 chain
It’s all about the
data – the best ways
24 How green leaders
are cutting their
carbon emissions
28 one year in
After a year of legal
distribution a look
Story on page 14
to integrate AI into around the world at the highs and
Cover photo: your operations lows for weed
Steak & Sizzle for Porsche Cars Canada
insidelogistics.ca 3
© 2019 Penske. All Rights Reserved.
TA K I N G S T O C K
insidelogistics.ca
EDITOR IN CHIEF: Emily Atkins
(416) 614-5801 emily@newcom.ca
WESTERN EDITOR: Derek Clouthier
(403) 969-1506 derek@newcom.ca
DIRECTOR OF BUSINESS DEVELOPMENT:
Anthony Buttino
(416) 459-0063 (514) 292-2297 anthonyb@newcom.ca
CREATIVE DIRECTOR: Tim Norton
(416) 510-5223 tim@newcom.ca
PRODUCTION MANAGERS:
Alicia Lerma & Jwad Khan
(416) 510 6845 alicia@newcom.ca jwad@newcom.ca
CIRCULATION MANAGER: Mary Garufi
(416) 614 5831 mary@newcom.ca
The great indoors
MANAGING DIRECTOR,
INDUSTRIAL REAL ESTATE IS PRECIOUS at the moment. With Canadian
TRUCKING & SUPPLY CHAIN GROUP: Lou Smyrlis vacancy rates at about 1.5 percent and not enough new space being built,
lou@newcom.ca rents are skyrocketing, and have reached an average of more than $7.60
per square foot in the greater Toronto area, with some parts of the GTA
NEWCOM MEDIA INC .
commanding more than $8, according to realtor Cushman Wakefield.
CHAIRMAN & FOUNDER: Jim Glionna
PRESIDENT: Joe Glionna The pressure is on the maximize the use of space in any building. For
some, that means looking up, as developer Oxford is doing in Burnaby,
Inside Logistics, established in 1956, is published
six times a year by Newcom Media Inc.
British Columbia. Check out the story of its soon-to-be-built two-storey
DC on page 7.
HEAD OFFICE
5353 Dundas St W. Suite 400, Toronto, ON, M9B 6H8 Oxford claims this is the first multi-level DC in Canada, and since it’s
not yet built, companies strapped for space must have been considering
SUBSCRIBER SERVICES
To subscribe, renew your subscription or to additional options. One of these is to look further afield into peripheral
change your address or information contact communities. 3PL Pival, featured on page 16 of this issue, has done just
mary@newcom.ca or 416 614 5831 or visit our
website: www.insidelogistics.ca/subscribe that, choosing a newbuild site in Guelph, Ontario, for its latest tire storage
SUBSCRIPTION PRICE PER YEAR warehouse. To maximize the use of that space the company is seeking
Canada $84.95 per year, Outside Canada $159.95 US per year. out customers with complementary seasonal inventory, ensuring the
Single copy price: Canada $15.00, Outside Canada CA$32.65
Inside Logistics is published six times per year except for building is full all year long.
occasional combined, expanded or premium issues, For Porsche Cars Canada, whose new DC is featured in our cover
which count as two subscription issues.
profile on page 14, the strategy was to build to a far time horizon, securing
©Contents of this publication are protected by
copyright and must not be reprinted in whole or a long-term lease and preparing for ten years of productivity. Porsche’s
in part without permission of the publisher. approach relies on a strong WMS that is leveraging the data being gath-
DISCLAIMER ered from every order to optimize the warehouse for speed.
This publication is for informational purposes only. You
should not act on information contained in this publication For distribution centre and warehouse managers efficiency is moth-
without seeking specific advice from qualified professionals. erhood. The cost of land and buildings is just one of the many factors
Inside Logistics accepts no responsibility or liability for claims
made for any product or service reported or advertised in adding pressure to the need to keep costs down as commerce speeds
this issue. Inside Logistics receives unsolicited materials, up. Cutting waste, reducing emissions and implementing AI to improve
(including letters to the editor, press releases, promotional
items and images) from time to time. Inside Logistics, processes are just a few other adaptations being adopted by companies
its affiliates and assignees may use, reproduce, publish, we look at in this issue. Take a look at our exploration of AI on page 20
re-publish, distribute, store and archive such unsolicited
submissions in whole or in part in any form or medium and our sustainability feature on page 24 for more examples of how
whatsoever, without compensation of any sort. efficiencies are being introduced.
PRINTED IN CANADA How does your organization plan to manage the space challenge? Are
Publications Mail Agreement #43008019, you staying put and improving utilization by applying automation, or
ISSN: 0025-5343 (Print) ISSN: 1929-6460 (Digital).
revising processes? Or are you contemplating a move to the ‘burbs?
Inside Logistics is indexed in the Canadian Magazine Index by
Micromedia Limited. Back copies are available in microform
Please share your thoughts on these or any other issue with us. I can
from Macromedia Ltd., 158 Pearl St., Toronto, ON M5H 1L3 be reached at emily@newcom.ca.
Until next time,
MEDIA INC.
FUNDED BY THE CHECK OUT OUR
GOVERNMENT
OF CANADA UPDATE ON CANNABIS
DISTRIBUTION ONE YEAR
AFTER LEGALIZATION
ON PAGE 28.
insidelogistics.ca 5
SU PPLY C H A I N S C A N
GOING UP
Canada’s first multi-level DC rises in B.C.
WALMART
BLOCKCHAIN
Freight partners
must sign on
DEVELOPER OXFORD PROPERTIES GROUP
has unveiled its plans to develop Canada’s first
Multi-storey industrial
concepts have just started to
emerge in other supply constrained
8
large-bay multi-level industrial property.
Comprising 707,000 square feet over two markets such as San Francisco,
levels, the project will be built at the compa- Seattle and New York. THE AI THREAT
ny’s Riverbend Business Park located in Are jobs at risk?
Burnaby, British Columbia, on the site of a
former paperboard milling operation.
The development will be on two levels. The
ground floor comprises 437,000 square feet
9
with 32-foot clear heights. The second storey, which established Riverbend Business park, a former brown-
is accessible to full size transport trailers via a heated field site, without the need to encroach on greenfield
ramp, consists of 270,000 square feet, 28-foot clear or agricultural land.” CANADA AND
heights and a 130-foot truck court.
Anticipated for completion in 2022, the building
As the e-commerce revolution drives an increased
need for supply chain and logistics innovations
THE WORLD
can provide a single customer 707,000 square feet among traditional and online retailers, multi-storey IN 2020
of contiguous space, making it the largest available industrial concepts have just started to emerge in Trade, economics
industrial property in the Greater Vancouver Area. other supply constrained markets such as San and more
Conversely, the two floors can be operated and
occupied independently and further divided to
accommodate multiple customers as small as 70,000
square feet.
Francisco, Seattle and New York.
Purchased by Oxford in 2011, the 65-acre Riverbend
site was home to a former paperboard milling oper-
ation and a 14-acre landfill. Over 300,000 cubic
11
Located close to the intersection of Marine Way metres of waste and debris were removed from the
and Highway 91A in Burnaby, it is positioned to
labour access and to serve the population base of
site and it was converted back into developable land.
The developer has also worked to restore the shore- MOVERS +
Vancouver. line of the adjacent Fraser River and help protect SHAKERS
“Vancouver is one of the tightest industrial markets native species. Invasive and non-native plant species Appointments and
in the world and space for businesses that service were removed, improvements made to fish habitats moves in the supply
the region – be it through manufacturing, logistics and shoreline erosion protection measures installed. chain sector
or e-commerce – is in critically short supply,” com-
mented Jeff Miller, head of industrial at Oxford
Properties.
“This shortage requires bold solutions and pro-
The buildings at Riverbend Business Park are also
LEED Certified and Oxford’s environmentally con-
scious approach to the redevelopment of the brown-
field site earned it the 2019 City of Burnaby
13
gressive approaches, and we have studied innovative Environmental Award.
industrial projects from across the globe to inform Oxford is in the process obtaining the required
our plan to develop Canada’s first multi-level prop- planning and permitting and has begun initial site
erty. By doing so, we can add density to the already preparation work.
insidelogistics.ca 7
SU PPLY C H A I N S C A N
Walmart Canada rolls out blockchain for freight
WALMART CANADA HAS launched a ments and reconciliation between moves more than 853 million cases of
blockchain-based freight and payment Walmart Canada and its carriers, which merchandise annually. (For an Inside
network. deliver inventory to over 400 retail stores Logistics feature on Walmart’s Harmony
The new system uses the distributed across Canada. DC in Cornwall, Ontario, visit http://
ledger technology to track deliveries, The company operates 8.75 million tinyurl.com/IL-Walmart-Harmony)
verify transactions, and automate pay- square feet of distribution centre and These goods are transported by a com-
bination of 3rd party fleet as well as
Walmart Canada’s own fleet of 180 trac-
tors, 2,000 trailers and more than 350
drivers. Each third-party trailer tracks
approximately 200 data points per ship-
ment. Automating this data collection
and management using blockchain
results in significant cost savings.
All Walmart Canada’s third-party car-
riers are scheduled to be live by February
1, 2020. The solution is accessible using
a web portal and a mobile application.
Walmart Canada partnered with DLT
Labs to automate freight and payment
data using DLT’s supply chain platform
called DL Asset Track. The new network
manages, integrates and synchronizes all
the supply chain and logistics data in real
time, aggregating the data between
Walmart Canada and its fleet of third-
party trucks on a shared ledger.
The system automates the calculations
that enable real-time invoicing, payments
and settlement. It is designed to integrate
with each company’s legacy systems.
“Our carrier partners move over
500,000 loads of inventory nationally,
which creates an extraordinary volume
of transaction data,” said John Bayliss,
senior vice-president, logistics and supply
chain, Walmart Canada.
“This new dynamic and interactive block-
chain technology platform is creating
complete transparency between Walmart
Canada and all of our carrier partners.”
Bison Transport was the carrier in the
pilot of this new blockchain-based freight
and payment network. “The blockchain
initiative we worked on with Walmart and
DLT Labs is a mutually beneficial solution
that works well for Bison Transport and
Walmart Canada,” said Rod Hendrickson,
VP finance, Bison Transport.
“This project is a new paradigm that
will greatly improve workflows, reduce
paperwork, and make the business we do
with Walmart more efficient.”
8 INSIDE Logistics DECEM B E R 2019
AI will not steal jobs
the rapid development of artifi- pact. As was the case with other transfor-
cial intelligence, we should mative technologies, the judicious use of
ARE MACHINES GOING to steal our welcome this opportunity. artificial intelligence will give a boost to
jobs? That is the question that keeps “Apocalyptic scenarios innovation and contribute to the gener-
popping up in light of the rapid progress make for good science al improvement of living standards. AI
of artificial intelligence (AI). Research fiction films, but they is not a threat to humanity, but an ally,”
shows, however, that such fears about the are less useful when concludes Luc Vallée, chief economist at
adverse impact of AI on employment are measuring economic im- the MEI and co-author of the study.
largely exaggerated, according to a study
recently published by the MEI (Montreal
Economic Institute).
“There is no doubt that artificial
intelligence will transform the labour
market, and we should certainly not
disregard the plight of affected work-
ers. We must keep in mind, though,
that more jobs will be created than
destroyed,” says Gaël Campan, senior
associate researcher at the MEI and
co-author of the publication.
Indeed, the World Economic Forum
projects that structural changes in the
labour market due to AI and related
technologies will have created 58 million
net jobs worldwide by 2022. Moreover,
current forerunners in robotization,
like South Korea, Japan, and Germany,
also enjoy low unemployment rates.
“AI allows less experienced or less
skilled workers to be productive much
faster, instead of having to learn costly
skills and knowledge over years on the
job,” explains the researcher. “This
means improved job opportunities,
which are better paid, less risky, and
more gratifying.”
Nonetheless, to smooth over this tran-
sition and minimize its negative impact,
proactive measures should be taken to
limit job losses, and to reduce the hard-
ships of those most likely to be affected.
“Industrialized countries must rethink
their teaching and training strategies in
order to better cope with a rapidly evolv-
ing environment,” says Campan.
“To better prepare the workforce
to the realities of automation, colleges
should among other things develop
closer relationships with the business
community.”
The bureaucratic and regulatory bur-
den should also be reduced in order to
facilitate business creation and develop-
ment, as well as personnel recruitment.
In sum, instead of worrying about
insidelogistics.ca 9
SU PPLY C H A I N S C A N
SMEs believe in trade but sell locally
CANADIAN SMALL and medium busi- trade has on SMEs who currently More than half of Canadian SMEs
nesses (SMEs) have made it clear that import/export, 81 percent say fees and (57 percent) think increasing trade
economic improvement and interna- tariffs have had a great deal or some between their country and other coun-
tional trade are closely linked, with 83 effect on the growth on their business. tries will help their company. However,
percent agreeing that increasing trade Also within this group, nearly half (48 only 37 percent are currently selling
between Canada and other countries percent) of those surveyed say that vari- goods online. This is in contrast with
will improve the economy overall. ations in fees and tariffs have been a American counterparts, who are doing
While SMEs in Canada feel that trade major challenge to their business; and more business online (44 percent).
is critically important to the economy 44 per cent say that import and export While both Canadian and US SMEs
and growth of both their country and fees have been a major challenge to share the view that trade is important
their business, many face obstacles their business. to the economy, the poll confirms both
when engaging in trade. Nearly a quar- Canadian SMEs support NAFTA and are largely focused on local customers.
ter of SMEs in Canada who import or CUSMA (Canada-United States-Mex- These data are from the 2019 FedEx
export goods (24 percent) say that fees ico Agreement) have. Nine in ten of Trade Index, a poll conducted by
and tariffs have impacted the growth of those surveyed (90 percent) in Can- Morning Consult on behalf of FedEx
their business a great deal, representing ada support NAFTA, while 86 percent Express Canada, a subsidiary of FedEx
a real barrier to Canadian SMEs when expressed their support of CUSMA. Corp. The poll was conducted from
importing or exporting goods to and SMEs feel international trade will not September 17 to September 20, 2019
from different countries. only help the Canadian economy, but among 500 SME decision makers in the
Looking more deeply at the impact their business as well. Canada.
DC OPENINGS
Purolator opened its new Toronto terminal on Valleybrook
Drive in Don Mills, to serve the GTA. The $8.5 million,
110,000-sq-ft terminal will add up to 135 delivery routes and
sustain 200 jobs through a combination of new and existing
positions. The opening is part of the company’s $1B Deliver-
ing the Future growth and innovation plan.
Amazon has announced plans to open its first fulfillment
centre in Quebec. The new site will be located in Lachine
on the island of Montreal and will create more than 300
A BETTER
new, full-time jobs. This new site will launch in time for the
2020 holiday shopping season. Meanwhile the company
WAY TO UNLOAD. is reported to have made real estate deals in the Greater
Toronto Area for two additional sites. According to David
Proven to reduce worker injury. Bergeron, a vice-president and sales representative at
Colliers International Inc, who spoke on a panel at the
Ergonomic, portable conveyor systems DLS conference on November 6, the e-commerce giant has
committed to 350,000 square feet of warehouse space in
ensure EASIER, FASTER and SAFER
South Oshawa and 1.3 million feet in another GTA location.
tire handling. Visit our website to Amazon has not confirmed these deals.
learn more!
DHL is building a new $100 million facility at the John C.
Munro Hamilton International Airport, in Ontario. The
destuffit.com new facility, which will be four times the size of the current
one at 200,000 square feet, will feature a fully-automated
(833) 669-5545
sort system with a capacity of processing 15,000 packages
per hour.
10 INSIDE Logistics DECEMB E R 2019SU PPLY C H A I N S C A N | By Christian Sivière
Canada and the world in 2020
THE NEW YEAR will bring new trade
opportunities and challenges for Canada
as various trade agreements come into
force or change and global economic
conditions remain a question mark.
photo: wildpixel, iStockimages.com
NAFTA II
The most important development for
Canada is what will happen to the rene-
gotiated NAFTA, the USMCA (United
States Mexico Canada Free Trade Agree-
ment), which I call NAFTA II. Signed by
the three heads of states in November
2018, the revamped Agreement is await- on any origin, ironically, it will be bene- to October, then to January 2020, the
ing U.S. Congress approval and there ficial to China. Brexit saga has been detrimental to the
are signs that this may happen by the UK economy and it is not known what exit
end of 2019 or early 2020. Europe agreement will be made. Will a so-call ‘no
When this happens, it will be great Relying on the U.S. market for 75 percent deal’ govern trade relations between the
news for Canada and for Mexico, since of our exports is dangerous. Successive U.K. and the E.U., leading to the imposi-
for both countries, the U.S. represents Canadian governments have negotiated tion of customs duties, or will a ‘’smooth’’
about three-quarters of total exports. Free Trade Agreements (FTA) with a deal be made, with a (so-called) friction-
During the renegotiation process, variety of countries, to diversify our mar- less border. If/when the U.K. leaves the
the U.S. President threatened to can- kets. This led to the implementation of E.U., will the CETA provisions be trans-
cel NAFTA if a new deal could not be the CETA Agreement (Comprehensive ferred over or will a new Canada-U.K.
found, so when NAFTA II is ratified and Economic and Trade Agreement) with deal have to be negotiated? No matter the
put into effect, it will be a great relief for the European Union in September 2017 outcome, Brexit brings uncertainties and
Canadian businesses. and the TPP Agreement (Trans-Pacific higher costs, and Canadian exports to the
The main changes will touch the ori- Partnership) in December 2018 with six U.K. will suffer.
gin certification, and rules of origin for Pacific countries.
the automotive industry. The certifica- Canadian exports to the E.U. have Oil
tion will change to a mere statement on grown much less than European exports The evolution of oil prices is vital for Can-
the commercial invoice, replacing the to Canada, and our exports to Japan ada, since we are an oil-producer, with
old NAFTA certificate of origin. For the (the TPP’s biggest economy) have gone high extraction costs. When oil prices go
auto industry the origina rules will be down, so Canadian exporters must pri- up, it’s good for Canada, not just for direct
more demanding, with higher regional oritize these markets. Our government income, but also to attract foreign invest-
value contents, the obligation to source must also promote these FTAs. Accord- ment. Several factors influence oil prices:
steel and aluminum in North America ing to a Global Affairs survey released supply and demand, producing nations
and wage requirements of US$16 an in June, only seven percent of Canadian agreeing to limit production, conflicts in
hour for workers. exporters know CETA and the TPP well. oil-producing zones, ecological issues and
Designed to bring production back Another FTA currently in discussion more. But a new element has emerged in
from Mexico to the U.S., these new rules is with Mercosur countries (Argentina, recent years: the U.S. has become one of
will pose a compliance challenge. In the Brazil, Paraguay and Uruguay). When the biggest oil and gas producer and a
long run, they may be counter-produc- finalized, it should help our exporters major exporter, due to the environmen-
tive, making the North American auto- diversify. tally questionable ‘’fracking’’ method.
mobile industry less competitive on the This has stabilized prices. Lastly, a unique
global scale. Brexit Canadian problem remains unresolved:
The de minimis exemption for cus- Looking towards Europe beyond CETA, how do we get our oil to markets?
toms duties increasing from $20 to $150 Canada has a keen interest in Brexit, the
will be detrimental to Canadian brick United Kingdom’s planned departure E-commerce
and mortar retailers and a boon for from the European Union, because the Will e-commerce continue to gain mar-
on-line platforms. Since the exemption U.K. is our largest market in Europe. ket share, to the detriment of estab-
will apply not just on NAFTA goods, but First scheduled for March 2019, delayed lished, traditional businesses? What
continued on page 12
insidelogistics.ca 11Canada and the world in 2020, continued from page 11 IN CASE YOU MISSED IT
impact this has on economic activities, ing that the U.S. is the largest contribu- what’s happening at
employment, industrial real estate, the tor to the OECD’s budget? What impact
environment and government revenues,
are important questions. The famous
this has on trade is hard to quantify but
we cannot deny its disruptive effect.
insidelogistics.ca
‘’GAFAs’’, Google, Apple, Facebook &
Amazon, to whom we could add Uber,
Airbnb, Netflix and more, have grown
Debt
Another concern is the growing debt
» Loblaw adding automated in-store
picking for e-comm
exponentially, generating huge profits issue, as governments, corporations and http://tinyurl.com/
(except Uber, which has never generated individuals borrow more and save less, IL-Loblawautomates
a profit) but generally don’t pay taxes, encouraged by low interest rates. When
therefore not contributing to society.
Will this be allowed to continue? Many
will the bubble burst, precipitating a cri-
sis similar to 1929 or 2008?
» Montreal-area DC for outdoor
equipment retailer
governments tried introducing a ‘’digi- The current U.S. administration, eas- http://tinyurl.com/IL-SAILDC
tal tax’’, the last one being France, but ing banking regulations, keeping inter-
they had to back down following U.S.
threats to tax French products in return.
est rates down, growing the U.S. budget
deficit to new heights and cutting taxes
» CITT honours outstanding logisticians
http://tinyurl.com/IL-CITTHonours
The GAFAs being mainly U.S. compa- for corporations and the rich, is not
nies, the tax was perceived by them as an
‘attack’ on U.S. interests.
helping. One of the consequences is
growing inequalities between the rich
» Toy maker suffers supply chain woes
on China tariffs
The OECD (Organization for Eco- and the rest of the population. Could http://tinyurl.com/IL-Spinmaster
nomic Cooperation and Development), this be one of the causes of the increased
an international regulatory body of mar-
ket economies, is working on a digital tax
social unrest seen across the globe in
diverse countries like Chile, Lebanon or
» UPS CEO speaks outs about Amazon,
plans
solution but will it have teeth, consider- France? http://tinyurl.com/IL-Abney
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12 INSIDE Logistics DECEM B E R 2019SU PPLY C H A I N S C A N
MOVERS + SHAKERS
David Bosse of Cole International Inc. Frank Robertson is taking on a new role Toyota Material Handling (TMH)
is the newly elected chair of the Board as vice-president, operations of Logistec promoted Anne Ewing to director of dealer
of Directors for the Canadian Society of Stevedoring (Ontario) Inc. Since joining the development. Ewing will manage both dealer
Customs Brokers (CSCB). Based in Calgary, company in 2017 with more than 15 years of development and dealer operations functions.
Bosse will lead a CSCB executive team experience in the marine terminal operations Ewing previously served as TMH’s national
composed of newly elected vice-chair Linda and supply chain logistics field, most recently manager of dealer development. Before
Dynes, (executive vice-president Canadian with Oshawa Stevedoring, Inc, he has been joining TMH, Ewing served in a number of
operations, Farrow); secretary-treasurer tasked with developing an in-depth overview dealership roles, including CFO, vice-president
Candace Sider (vice-president, government of Logistec’s terminal network. of sales and operations, and part owner.
and regulatory affairs North America,
Livingston International Inc.); CSCB past Pilot Freight Services has promoted Lygdel Eric Allard is the new director of sales for
chair Angela Collins (chief regulatory officer DeLeon to country manager for its Canadian Ontario with Delmar International. Most
and vice-president client services, Willson operations. In his new role, DeLeon will recently, he was global head of logistics for
International Limited) and CSCB president be responsible for providing support and Husky Injection Molding Systems, managing
and CEO Carol West. establishing systems to enhance sales and major transportation and supply chain
operations in Pilot’s three stations in Canada; activities. He is a member of several industry
Vancouver, Montreal and Toronto. DeLeon related boards of directors and holds a
joined Pilot in 2014 to spearhead the launch Supply Chain Management Graduate Degree
of the Vancouver station. from HEC Montreal.
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insidelogistics.ca 13AU T O M O T I V E L O G I S T I C S | By Emily Atkins
A NEED FOR
SPEED
14 INSIDE Logistics DECEM B E R 2019PORSCHE CARS CANADA’S FIRST DC DELIVERS PARTS FAST
W
hen your customers overnight process, gives the dealers a very now is blocked off, and “as we need it, we
all drive fast cars, your big market advantage,” he adds. open the spaces up and then we start put-
parts DC needs to ting parts there”, Fremis says.
keep up. At the new Built for speed The design process was facilitated with
Porsche Cars Canada Not only is the DC designed to move parts input from the parent company, with the
parts distribution centre (PDC) in the fast, it was also built quickly. Work to set teams working from past experience to
Heartland area of Mississauga, Ontario, up the empty building began in the third envision how much product would be
the staff are driven to ensure parts ordered week of April 2019, and load-in started needed and fast it would move. But they
by dealers across the country are delivered on September 1. Between then and the also had to take country-specific param-
no later than the next day. October 1 opening date, 66 shipping con- eters into account. According to Fremis,
But it’s about more than keeping the tainers of parts were moved in and Canada is known as “the rubber carpet
German car maker’s iconic 911 sportscars organized. capital of the world” at Porsche AG in
in perfect condition; Porsche is keenly The DC has numerous different storage Germany. “We sell more winter mats for
aware that it is selling more SUVs these zones – bulk, large parts, medium parts, our cars than anybody else in the entire
days, and they are people’s daily drivers. small parts and a special area for lithi- world for Porsche,” he laughs.
“When you go into the shop and you um-ion batteries for the company’s new But it was actually winter wheels that
need a repair, if somebody tells you it’s Taycan electric car. The 22 dock doors prompted a preliminary design change.
going to take three or four days, that’s are bookended by the battery storage area “I think we are the second or third largest
unacceptable,” says George Fremis, the on one side and a section of racking for market when it comes to winter wheel
company’s manager, parts operations and crossdocking at the other. sets,” he recounts. “We sell anywhere
logistics. “That’s one of the biggest rea- “We originally thought our initial year- continued on page 16
sons why we built a PDC in Canada – to one footprint was going to be about
help reduce that time, so we can fix our 62,000 square feet, and over five years it
customers’ cars faster.” would go up to 100,000 square feet,” George Fremis is
The Canadian PDC, which started oper- Fremis says. “And this is 140,000. So we manager, parts
ation on October 1, 2019, replaces deliv- said, ‘Okay, well now that we have this operations and
logistics for
eries from the U.S., which means space, how do we leverage it?’”
Porsche Cars
Canadian dealerships across the country After talking to racking vendors they
Canada
can place an order by 5 p.m. their local realized that with economies of scale it
time and receive the part the next day. was cheaper to start big than to build a
Previously, Fremis says, it could have taken small footprint and have to grow later.
two to three days. “Being able to take that Now the building is fully racked and
two to three days and cut it down to an labeled, ready for use. What’s not needed
Above: The inbound docks are quiet in the evenings as staff fill the final outbound orders for the day. Right: With room for grwoth the racks
are not yet fully utilized.
insidelogistics.ca 15Keep “Your
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between 1,200 and 1,400 winter wheel PORSCHE’S PDC SPECS overnight by road. Cargojet and Wesbell
sets a year. And they take up a lot of space. cover the rest of the country.
Total footprint: 176,000 square
So you have to accommodate the bulk feet; warehouse 140,000 square Porsche chose Cargojet partly because
when the first shipment comes in.” feet as a dedicated national cargo airline it
The first iteration of the racking design 12,000 SKUs (as of November 2019) flies overnight, and also because with car
had failed to take that into account, Fremis parts there are some items – like lithi-
Serves 19 Porsche dealerships
notes, and when they actually crunched um-ion batteries – that cannot fly as belly
Same day or overnight delivery
the numbers it was obvious that a lot of cargo in a passenger plane. With its base
bulk storage space would be needed to 25 staff, working two shifts at the Hamilton, Ontario airport, it’s only
7am to 11pm
accommodate the wheel sets, which arrive 55 minutes away by road. Another factor
in large corrugated boxes. “I felt like I had Inbound: One to two sea was the car parts business cycle, which
containers/week + four to five air
got my crayons out, and a blank piece of shipments
slows down in Q4 and Q1 when other
paper and started drawing,” he says. retail businesses get busy. “They liked the
Outbound: Capacity 1,500 orders/
Ultimately the team finally settled on day; currently averaging 1,150
fact that when they get slow with those
about the 14th iteration of the plan. businesses in the summertime, our busi-
DC operated by Schenker
Commanding the centre of the DC, with ness picks up. It’s a nice fit,” Fremis says.
frontage towards the docks is a two-storey Outbound air by Cargojet
mezzanine, 10,000 square feet on each Outbound road by Cardinal and Looking down the road
level. Inside are shelves for small parts Wesbell Logistics Porsche has built this PDC to last until
bins, along with a secure area for Porsche 2029, Fremis says. The larger-than-antic-
branded clothing and watches, but at the ipated footprint allows room for expan-
moment the second level is practically are being consumed faster than the WMS sion and was practical from a long-term
empty, ready for growth. According to expects. lease perspective as well. “Especially in
Fremis, 70 percent of orders are fulfilled the GTA market, real estate is becoming
from this area, which is why it’s located Tuning the engine a challenge,” Fremis says, “so people are
close to the docks. Every order is picked by one of the DC’s looking for a longer vision. That’s one of
25 full-time staff, using barcode readers the reasons why we chose this place. We
Manual processes to confirm locations, and picking carts said, “Okay, how do we stretch this, and
Automation was considered when the DC for the smaller items. With 3PL Schenker make sure that we’re here for a longer
was being planned – it’s used in Germany managing the operation, it can move period of time?”
for both small and medium parts storage people around from other distribution There’s room for expansion in the rack-
and retrieval – but it turned out to be too centres and with a minimum of training ing utilization, the mezzanine was built
expensive. “When we looked at it, the cost have them up and running to fill in if to readily accommodate a third level, and
was literally twice as much as doing this, there is a staff shortage. of the 22 dock doors, Fremis notes that
and we just thought maybe this isn’t the Because the DC is nowhere near capac- in a normal week only three inbound and
right time,” Fremis recounts. ity, at the moment the racking is set up five or six outbound are being used on a
What they do have, however, is a sophis- so that all the picking can be done from regular basis. A training centre is also
ticated warehouse management system, the lowest locations, with replenishment being built on the office side of the build-
POLARIS (Porsche Logistics International items up high. But Fremis notes that they ing helping Porsche utilize the full
Supply Automated Replenishment). It is are trying to “tighten it up, so that we’re 176,000 square feet they’ve leased.
linked to all the Porsche parts DCs, and closer to the inbound and outbound.” It’s early days still and Fremis has his
the main PDC in Sachsenheim, Germany. Dealers cannot see the inventory in the eyes open looking for improvements.
As the Canadian PDC processes orders system until it’s been put away, so the Preparing orders for dealer pick-up are
the WMS is learning in the background, pressure is on to get the inbound product on the radar, for example. “That’s one of
observing what is consumed and how on the shelf as fast as possible. “The faster our future growth opportunities,” Fremis
quickly. “As we’re consuming, it’s auto- I put it to shelf, the faster he can see it in says, along with possibly twice-daily deliv-
matically reordering for us, so we don’t his system, the faster he can reorder it. eries within the GTA.
have to place the orders,” Fremis explains. Then, the closer it is to the outbound, “If you can fix the customer’s car and
“The system automatically looks at inven- the faster I can get it out,” Fremis says. get it back on the road, why wouldn’t
tory and says, okay, what are you missing? you?” he asks. “But right now, because
How fast are you consuming this? Then Planes, trucks and automobiles we’re so new we want to get our processes
it tries to figure out what’s the sweet spot Porsche Canada is working with three in place first before we start adding too
to keep sending you containers.” outbound transportation suppliers, many cooks into the kitchen…We want
Right now, the PDC is scheduled to have Cargojet for airfreight and Cardinal and to keep it smooth, so we have everything
one to two sea containers, and four to five Wesbell for ground deliveries. Cardinal locked down, from a process point of view,
air shipments every week for replenish- does the Ontario and Quebec deliveries, and then we’ll see what we can do in the
ment. The airfreight fills in the parts that reaching from London to Quebec City future.”
insidelogistics.ca 17AU T O M O T I V E L O G I S T I C S | By Emily Atkins
FRESH
Pival keeps stock rotating in its new tire DC
Y
ou could walk into Pival’s auto- single tire, the one that’s made the oldest
motive replacement tire dis- has to get out first,” says Kevin Little,
tribution centre in Guelph, Pival’s vice-president of sales and market-
Ontario, with a blindfold on ing during a tour of the facility. “And so
and instantly know what they when you mix it with all the different SKUs
store there. The air is redolent of fresh that we have, it’s not rocket science, but
rubber, leaving no doubt about the it’s not easy either.”
contents.
The smell is about the only thing that Room for inflation
Pival doesn’t control in this specialist The 260,000-square-foot facility opened
space. It’s dedicated almost exclusively to in April 2019, and holds about 1,700 SKUs
one tire manufacturer’s stock, which the representing 300,000 tires. The tires are
3PL stores and ships out to dealers. stored in collapsible racks that stack on
And while storing and shipping out sound one another, which means the DC can be
simple, Pival adds value to the process by reconfigured very easily. In fact, staff were
recording the unique bead identification reconfiguring the storage area on the day
on every single tire in the building. As they we visited, turning two storage locations
come off the truck the beads are scanned, into one to accommodate a large number
the packaging is scanned, the tires are of one particular SKU. According to Rob
labeled, then put away. Strub, the warehouse manager, reorga-
Tires have a shelf life, which means that nizing allows a much denser cube, with
these scans are very important to the man- rows 11 deep in places.
ufacturer, enabling more accurate lifecy- The tire business is utterly seasonal,
cle tracking and ensuring that inventory which means big retailers like Costco for
moves in the correct order. “We have to example, might send back 10,000 winter
manage the date of manufacture on every tires and order 10,000 summer tires. “It’s
18 INSIDE Logistics DECEM B E R 2019to make every inch of the warehouse paid
for,” Little notes.
Rolling along
For the most part the DC operates
smoothly. But with 300,000 units moving
through the facility twice a month, Strub
admits that there can be friction in ensur-
ing that carriers bring loads at the right
times. They are scheduled, but when slots
get missed, it can mess up the day. “It
takes us two and a half hours to unload
a trailer and we want the next one right
on top of it,” he says.
For outbound tires the WMS creates
orders that the TMS organizes into loads,
“We can track directing the pickers to stage them in the
every tire, no matter correct order – they are organized by
if we move it 50 times order size and destination to optimize
trailer cube and transportation miles. The
during the day. We can’t two systems work in sync to manage up
be selling old tires to 200 orders a day.
as new ones.” “It’s mostly automated,” Little says. And
– Rob Strub then in the early afternoon, “we pull the
trigger and electronically send dispatches
to all the carriers to come in, what they’re
going to have and what docks they’re
going to be at.”
a great game,” Strub says, but it’s very
serious since the tires that have passed Slick service
their best-before date (which ranges from Taking advantage of the inventory data
30 to 40 months from manufacture, it collects on every tire, Pival is developing
depending on the manufacturer or cus- a mobile app that will allow customers
tomer) must be sold at a discount. complete visibility into their stock.
With each tire’s barcode scanned into “They’re going to be able to see where
the WMS, the location of every unit can their inventory is and how much they
be pinpointed in the DC. “This is where have of each SKU,” Little says. “For now,
our WMS is so great and so valuable to they’ve got to send an email and wait for
us,” Strub says. “We can track every tire, an answer. With the app they’ll be able
no matter if we move it 50 times during to just look it up.” The app is expected
the day. We can’t be selling old tires as to be ready within a year, he says.
new ones.” While as a 3PL Pival does a lot more
To help maximize the building’s utili- than just manage tire inventories, the
zation Pival sought and won the business company knows its strength. “The fact is,
of another seasonal client, a lawn fertilizer we were born as a tire warehousing com-
producer. “We’re making room, because pany,” Little says. “So for us to get away
Photo: Emily Atkins
the winter tires are way down. And so we from it, it’s not logical, actually, because
get a seasonal client that comes in, fills we’re able to generate a certain amount
up space and then gets out in time for of sales because of that expertise. Why
summer. We’re making space to do that, would we walk away from it?”
Pival’s Rob Strub (L) and Kevin Little with some of the 300,000
300,000 tires in the warehouse.
Top: Part of the value Pival adds is sticking the adhesive labels on each tire as it arrives.
insidelogistics.ca 19ARTIFICIAL INTELLIGENCE | By Jacob Stoller
HOW AI
is changing logistics
Current use cases aren’t about eliminating jobs,
as some believe, but about helping supply chain
professionals cope with the challenges of a high-mix,
low-volume environment.
B
lue jeans used to be simple. Fifty against defined objectives as they learn
years ago, they were loose fitting from the data.
denim pants made for physical work The technology brings two key strengths
or relaxing on weekends, and peo- to this new environment. First of all, it is
ple didn’t wear them to restaurants. able to execute tasks or deliver actionable
Today, there are literally thousands of information based on vast quantities of
varieties for every possible style, fit, and data from diverse inputs such as sensors,
venue, and many manufacturers sell mul- GIS devices, hand-written notes, audio
tiple brands through a variety of store- files, video, emails, EDI data, or ERP sys-
based and online retail channels. tems. And unlike traditional apps that
“Nowadays, we’re seeing a lot of people depend on fixed algorithms, machine
who want to personalize what they get learning apps are able to rapidly discover
and stand out a little bit,” says Montreal- new approaches to highly complex prob-
based innovation specialist and growth lems, and also adapt in real time to
advisor Keith Blanchet. “And that turns changes in variables such as shipping
the offer from companies into much costs, product volumes, or partner
smaller batches by high-mix, low-volume. relationships.
So we’re having to evolve more technol- AI, however, is not a quick fix – solutions
ogy to adapt to that environment.” take time to develop, and many applica-
One of the major challenges for logistics tion areas are just emerging. Furthermore,
providers, explains Ben Humphries, head contrary to what many pundits are saying,
of global pre-sales at Montreal-based AI AI is not likely to replace large numbers
solution developer Element AI, is that the of humans anytime soon. “I don’t see mas-
technology they depend on is based on sive layoffs,” says Humphries. “I think the
earlier high-volume paradigms. “A year challenge is that there are not enough
ago, we looked at the entire supply chain people for the jobs that are there right
from raw materials all the way through to now. That’s going to become even more
the consumer,” he says. “What we found challenging over time.”
is that all the solutions that exist today
are geared for yesterday, when it was a New productivity tools
producer-push model through the supply Much of the focus on AI solutions in
chain.” logistics is aimed at helping supply
chain professionals at all levels be
Machine learning more productive. Interestingly, peo-
The bulk of the AI solutions being devel- ple at IBM often refer to AI as “aug-
oped in logistics utilize machine learning, mented intelligence”.
a subset of AI. Essentially, machine learn- “This is about finding ways to
ing apps employ a variety of techniques, make the work better,” says
depending on the application and data Jennifer Van Cise, VP global
involved, to improve their performance sales, IBM Sterling Supply
20 INSIDE Logistics DECEM B E R 2019Unlike traditional
Chain. “Augmented intelligence, as we apps that depend AI also breathes new life into existing
call it, is actually about making work eas- on fixed algorithms, technologies that are decades old but
ier, smarter, and better rather than just machine learning apps are haven’t worked well in complex environ-
replacing workers. It’s about helping the able to rapidly discover ments. Optical character recognition
professional manage through the increas- new approaches to highly (OCR), for example, which turns hard
ingly complex supply chain world that
complex problems, and copy into digital documents, previously
also adapt in real time to
confronts us today.” only worked reliably with printed text.
changes in variables such
“I see AI helping take some of the more as shipping costs, product Today’s AI-powered OCR apps can read
mundane repetitive tasks,” says Humphries, volumes, or partner the scribble of a harassed shipping clerk,
“and empowering and enabling the asso- relationships. adding a powerful tool to AI’s big data
ciate to take on more interesting roles. AI collection capabilities.
solutions become their assistants and their AI has also supercharged the familiar
colleagues to some extent.” search engine. Element AI Knowledge
Scout, fo
for example, is a simi-
larity search engine
la
with natural lan-
guage processing
(NLP) capabilities
which allows users
to converse with the
system rather than
ttrying to guess which
search criteria to use.
se
“It presents
prese answers in a con-
sumable way,
way,” says Humphries. “If
you ask it for monthl
monthly figures, it will draw
you a chart.” And of course, it keeps on
learning.
Taking over the repetiti
repetition
AI also promises to re renew efforts to auto-
mate some of the mo more repetitive physical
tasks in warehouses
warehouse and distribution
centres, such as pick and place, by creat-
ing solutions that can adapt to the
can learn from monitoring environment.
humans how to autofill those forms, “To get ROI from automation in the
reducing the time and tedium required past,” says Blanchet, “you needed to have
to execute these tasks. high volumes, and th then you would auto-
Some of these capabilities are finding mate that task and th the perform that task Photos: 3alexd, Mladich, AlessandroPhoto, iStockimages.com
their way into out-of-box cloud offerings exactly the same way time and time again
such h as the
h OOracle
l N
NetSuite’s
S i ’ supplyl chain
h i as ffast as possible.”
ibl ”
What’s new is how well AI can per- software, which now includes a feature What we’re likely to see soon, he
form some of the more familiar auto- called Intelligent Automation. “The system explains, are smart robots equipped with
mation tasks. “Maybe it’s something as starts to learn how each individual user vision and other sensors that can navigate
ordinary as document processing, such interacts with specific screens and automat- unstructured environments within distri-
handling bills of lading more quickly ically adjusts the screen layout to become bution centres or warehouses. “That’s
in order to improve the movement of easier to use for that particular user,” says where we’re going to start seeing the most
product around the warehouse,” Mississauga-based Gavin Davidson, product return on investment,” he says.
Humphries adds. marketing director at Oracle NetSuite. The
Many AI solutions learn by imitation. system also gives the user tips on profitabil- Executive level tasks
For example, if an associate is ity, or the likelihood of an order shipping Many of the situations being presented
engaged in repetitive actions such on time, and such advisory capabilities are to AI solution providers weren’t antici-
as filling out routine forms, AI apps evolving rapidly. continued on page 23
insidelogistics.ca 21MODEX HELPED
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pated a decade ago. A clothing manufac- can’t move forward without it. So the chal- that helps guide stocking information. So
turer with multiple brands and channels, lenge is being able to balance a myriad you need to ask if you’re collecting the
for example, was recently developing a pro- of KPIs, even if they are at odds. That is, right data related to that.”
cess whereby a customer could return an balance the cost of the supply chain, but It’s also critical to eliminate extraneous
item to a different store from where it was at the same time ensure customer satis- data, in part because machine learning
purchased, even if the second store sells faction through quality and timeliness of depends more heavily on data than tra-
the product under a different brand name. execution.” ditional apps. “Even if we have the right
“This gets very complex from a logistical Sometimes executives just want answers data, it might get obscured by less useful
standpoint, especially when you get into to the age-old question, “where is the information,” says Wong. “There are fac-
the inter-company issues,” says Davidson. order?” tors that are less meaningful, and they
“For example, who bears the cost?” Visibility into the supply chain has also can overwhelm the contribution of the
On the strategic side, AI allows organi- been a priority of Oracle NetSuite’s sup- useful factors. Then you end up with bad
zations to transition from a fixed-rule ply chain customers, and in response, forecasting and bad predictions.”
information environment to one where the company has released a module Once the data is selected and validated,
the rules can change according to varying called Supply Chain Control Tower, the next step is establishing an initial set
business conditions and goals. For exam- which provides an end-to-end view of the of rules for the app to operate by. “You
ple, an organization facing new pressures supply chain. Using Oracle’s machine start out with a rules-based system where
to improve customer satisfaction may learning platform, the program assesses certain assumptions are made,” says
need to adjust its policies for routing ship- risks based on purchase order and ven- Wong. “Then you use machine learning
ments in order to place greater emphasis dor performance. New features continue to relax those assumptions and learn what
on delivery performance. to evolve. they should be.”
The technology is ultimately a tool to help supply chain professionals improve what they do.
“AT THE END OF THE DAY, WE’RE TALKING ABOUT OUR PEOPLE.”
AI capabilities also make it possible for Companies seeking to leverage the The process requires that supply chain
supply chain professionals to answer to a advantages of AI in their supply chains professionals determine what they want
broad range of corporate objectives. In a have many options that range from utiliz- from their AI app, and then continue to
recent example, Seattle-based outdoor ing out-of-box tools in enterprise software work with it to ensure that it performs
clothing retailer Recreational Equipment like NetSuite, to building a custom solu- according to objectives. Essentially, peo-
Inc (REI) adopted IBM Sterling Fulfillment tion with a team of data scientists. Canada ple will first teach and guide the technol-
Optimizer with Watson to improve its sup- boasts a strong community of young AI ogy and then learn from it.
ply chain performance against multiple companies like Element AI, and AI devel- “You’re building a framework,” says
KPIs. In a video interview with IBM, REI’s oper platforms like Microsoft Azure are Humphries, “and you can ramp up as
SVP supply chain Rick Bingle explained in wide use and have been adopted by a slowly or as fast as you want. Everybody
that supply chain professionals need to number of solution partners. should explore this.”
look beyond just managing costs. For Van Cise, the technology is ulti-
“I would really caution us around the It’s all about the data mately a tool to help supply chain profes-
word of optimization,” says Bingle All AI journeys, however, begin with data. sionals improve what they do. “At the end
“because in supply chain management, “You need to find where your data of the day, we’re talking about our peo-
we often think of that as distribution costs, strengths lie, and where the gaps are,” ple,” says Van Cise. “How can profession-
freight costs – really thinking about costs. says Dr. Alexander Wong, University of als excel in this changing world. I’m sure
We have to think about the margin Waterloo engineering professor, Canada the same conversation was happening 60
impact, the customer experience, how we Research Chair in the area of artificial years ago with increased automation in
can drive revenue.” intelligence, and a founding member of factories and warehouses alike. For me
“People think of the supply chain as a the Waterloo Artificial Intelligence this is about the constant need for con-
cost centre,” says Van Cise. “But it’s really Institute. “For example, there may be a tinuous improvement of your own areas
the heart and lungs of the business – you lot of regional demographic information of expertise.”
insidelogistics.ca 23You can also read
