Inside Logistics

Adapting to rapid change

Canadian execs look at DC trends


December 22, 2015
by Kara Kuryllowicz

We talked to Canadian supply chain execs to see how the rapid evolution of retail distribution will affect operations in the coming year.

“As convenience-based shopping experiences evolve, companies need to respond quickly and profitably to find new logistics channels to service this requirement,” says Jason Cunneyworth, vice president and general manager at Direct Distribution Centres in Brampton, Ontario.

“You have to maintain service levels while aggressively controlling the cost base to manage profitability, which runs the gamut from implementing technology to leveraging tools and processes like Lean and Six Sigma,” says Warren Sarafinchan, vice-president of sales and supply chain at Sun-Rype Products Ltd in Kelowna, BC.

“Firms will approach this differently based on their industry and business model, and whether they’re affected by factors such as commodity inflation or foreign exchange rates.”

To accurately, rapidly and cost-effectively deliver on service level commitments, firms are leveraging existing technology and creatively optimizing current operations. At Global Distribution and Warehousing in Mississauga, Ontario, Paul Kurrat, director of operations, notes that modifying applications in their existing WMS for a new client brought previously unexplored capabilities to light.

“Sweat your technology just like you would any other asset. You always want to get the most out of the investments you make in both physical and technological assets,” Sarafinchan says.

“The business case for the technology has to be rock solid. I never want to be way out in front or behind—I want to know the technology has been rigorously tested in market and that there is a base of people who can implement and understand it well enough to get the most out of it.”

Labour “availability is now just as important as cost. If you can’t find the staff you need, then it’s your labour issue that demands a rethink around automation,” says Bernard Betts, vice-president of worldwide operations for Montreal-based electronic components distributor Future Electronics.

Fully automated and robotic solutions, a significant investment, are particularly relevant in the face of labour-related cost, availability and regulatory challenges, such as limits on the weights employees can handle/lift daily. In these cases companies may consider ROIs in excess of 10 to 15 years.

Other concerns include consolidation of DCs to accommodate network design changes being made to adapt to the growth of e-commerce.

“Do the analysis well and you will find the right answer, but build as flexible a network as possible, because you know the world will change, you just can’t know how or when,” says Sarafinchan.

As firms zero in on that “last mile”, transportation and timelines are being scrutinized. The cost of getting products to market is one of the biggest variables, but transportation costs are as always volatile, and what works will vary business to business.

“We’re filtering the warehousing decisions through the lens of transportation cost and required speed to market; our customers fully embrace the local warehouse service if it delivers financial and service wins,” says Cunneyworth.

“Thanks to the data, we are able to take an empirical approach,” he adds.

“In the past, decisions were made largely on experience, whereas in today’s world, with the available data, you have increased visibility into the financial impact and can identify the gaps in your supply chain.”

Data can also challenge a range of assumptions, notes Ian Mackenzie, a senior logistics executive, formerly with Kit and Ace and Best Buy Canada, who has seen hard numbers confirm that an employee perceived as a “sloth” actually accomplished more than anyone else because he’d created his own unique productivity efficiencies.

The availability of “big data” can raise more questions than it answers. Is the data being looked at? Is it understood? Will appropriate action be taken? Will it deliver results?
Mackenzie adds, “When we’re talking cloud, sensors and data collection, it’s easy to be so overwhelmed that you don’t do anything.”

Sarafinchan points out the need for better tools: “I’ve seen some applications specific to logistics but it’s early days, and we’re all still looking for ways to better leverage reporting and data visualization tools.”

“The Internet of Things and the technology that can present the data gives us a whole new playing field, but I’m not sure the industry is fully grasping what a game changer it will be,” says Mackenzie.