Mountz, an engineer with a strong background in the low margin grocery fulfillment business, realized that the MHE intensive environment that was typical of the day was not sustainable for eCommerce applications. The industry needed less fixed equipment, a dynamic way of storing product and a flexibility that traditional material handling installations could not provide.

Enter Kiva Systems, with an innovative approach that uses tortoise sized robots to move product modules around the warehouse for restocking, order picking and forwarding to shipping.

Boasting a 2-3 times productivity improvement against traditional order picking, coupled with a dynamic re-assignment of product location based on demand, the robotics based system eliminates the need for product slotting cycles, and ensures that faster moving product is placed closer to the pick stations to reduce transit time.

In addition, Kiva Systems integrates with the client’s inventory management software to ease transition.

“The principals of Quidsi (Diapers.com) say the importance of logistics in Web commerce can’t be overstated. They saw their opening after realizing most e-tailers focus on driving people to the website, not on back-end operations. Quidsi and Kiva became so good at distribution that even Amazon, known for its logistical prowess, bought the company rather than compete with it.” reports Bloomberg Business Week.

For those that don’t want to invest the $1-4 million for a system, Kiva is reportedly exploring leasing options to provide access to the product to a wider range of clients.

With the eCommerce markets approaching US$200 Billion per year, innovations that revolutionize material handling and storage are more likely than incremental improvements on existing methods.

A demo video of the Kiva system can be viewed below:

As the enclosed table of results indicates, published recently by the Ministry, this was an aggressive exercise that resulted in excess of 3,000 orders issued for 977 sites visited. Of those orders, 118 were stop work orders, where the company was required to cease operations until the infraction could be corrected and re-inspected for compliance.

Over 10% of the sites visited received stop work orders. Of the 3,063 orders issued, the largest category (>16%) was “maintaining safety equipment and supplies in good order”.

The fact is many of these infractions could have been avoided by ensuring the safety standards are available and understood by managers, supervisors, workers and the H&S associations in the workplace. Information is available at the MOL website.

In addition, the Ministry produces a newsletter that can be received by email subscription, that details upcoming initiatives and safety updates.

The full report can be found at: http://www.labour.gov.on.ca/english/hs/sawo/blitzes/blitz_report36.php

One of the major outcomes of rapidly rising oil prices occurred when truckers were forced to park their rigs in protest because they could no longer afford to keep running when fuel prices took another leap. Following months of protest in 2000, the Fuel Surcharge (FSC), was developed to recognize that at any time the price of fuel rose above an agreed base, there would be an additional fee paid that would enable the transport provider to remain whole in terms of payment for the additional fuel cost per mile. In a perfect world, this would have solved the problem. However, the variables involved in determining a realistic starting point are complex.

Some FSC calculations were established with a base price for diesel fuel ranging from $1.00 to $1.25/gallon. Once the base price is agreed, there has to be a reasonable measure of fuel efficiency to determine the base cost per mile. For example, if a truck averaged 5.5 miles per US Gallon, then the base cost per mile was 22.73 cents, and was considered to be part of the rate already paid for transport. If the price rose to $1.35, then the revised cost per mile would be 24.55 cents, and by the FSC calculation, the transport provider would be entitled to an additional 1.82 cents per mile.

If all things were equal, this calculation would be applicable to all providers. Geography plays an important role in determining the cost of fuel purchased, and the resulting FSC. Some carriers have elected to follow a formula that determines FSC based on a percentage of the base freight shipping costs rather than a cost per mile. There are variables for Less-Than-Truckload, (LTL), as opposed to Full-Truckload, (FTL) and consider how complicated these calculations can be when factoring in cross-border shipping between Canada, the US and Mexico.

We all face tough decisions at the time we establish budgets for a new business year, and determining the cost impact of fuel can be a source of great concern. Whether it is about operating a own fleet or using a contract carrier, there are common elements:
Does your fleet/carrier operate trucks that are reasonable fuel efficient?
Does your fleet/carrier ensure proper maintenance of equipment in order to achieve fuel efficiency?
Are drivers trained to operate utilizing progressive shifting, reduce unnecessary idling time, and follow safe driving guidelines in order to control fuel costs?

Even simple practices, such changing filters regularly, can increase fuel efficiency by 5% or more. On a unit that averages 100,000 miles per year, the additional fuel cost can be more than $3,800.

A major factor is whether your commodities have been rated correctly for the FSC. Not all freight is treated equally, and an error can prove very costly. Make sure that your ratings are current and appropriate for the cargo being carried, and the payoff can be significant.

If your transportation strategy is not an encompassing, integrated approach that is regularly reviewed to reflect emerging trends, avoidable costs will creep into your operating costs, and drive down profits. When was the last time your firm did a comprehensive review of these issues?

For more information, contact Don Dougan at ddougan@supplychainsystems.com

It’s essential that companies set benchmarks − both internal and external − for their supply chains to determine performance, progress and expected results. Although most companies do have internal benchmarks in place, few have reliable external benchmarks for comparing performance with similar companies – quite often competitors.

Benchmarking – a three-step process

Here’s a case in point. We’ve been working with a national food manufacturer that had no idea as to how it was performing in relation to major competitors. Our job was to work with the company to identify strengths and find more efficient ways to manage the supply chain. This involved a three-step program spread over eight weeks.

The chart that follows offers an overview of the program. The first step defined the scope of the benchmarking project, such as identifying other companies for comparison, establishing confidentiality guidelines and setting out timelines. The second step involved conducting a study which included preparing and distributing a benchmarking package, as well as scrutinizing data and creating reports. The third step was an assessment to review results, determine gaps and have strategies in place to improve performance along the supply chain.

Benefits of benchmarking for companies

For this food manufacturer, the process gave the company better insight into the performance of its supply chain management, compared to competitors. The benchmarking report offered a full analysis, including performance gaps and strategies to fix problems.

As a result, this client had a much clearer view of its strengths and weaknesses along its supply chain, gained insights on the competition and had a benchmark for the future.

A reliable and useful benchmarking study allows companies to:

• Understand how their performance compares to similar companies, including direct competitors;

• Identify areas of strength and opportunities to improve areas in the supply chain;

• Establish a baseline to gauge improvement over time;

• Broaden or adjust their internal performance metrics;

• Conduct post-reviews to improve performance and eliminate problems;

• Establish a basis for developing future strategies.

We’d like to know about your experiences with benchmarking in the supply chain, whether internal or external, and welcome your comments and questions.

If you have questions or comments on this blog, please contact Bill Simpson at bsimpson@supplychainsystems.com.

Bill began his career at Sears Canada in 1975 and worked in various supply chain positions including buying, inventory planning and logistics over 20 years. Since 1995, he and SCS have provided consulting services to many consumer goods companies.

Bill is a member of SCL Canada and the Brampton Board of Trade. He Chairs the Occupational Standards Committee of the Canadian Supply Chain Sector Council and volunteers for the Mentoring Partnership and Microskills agencies.

Rick began his career in 1973 with American Hospital Supply Inc, and subsequently with Safety Supply Canada, the largest distributor of safety equipment in the world. Rick began his consulting career in 1989 and has worked with a wide variety of large consumer goods companies in diverse sectors.

Rick is a graduate (B.Sc.) of Concordia University in Montreal, a member of the Mississauga Board of Trade, a member of the Association of Independent Consultants, and a volunteer with The Mentoring Partnership and Microskills agencies.

Faced with the prospect of a whole new array of decisions and tasks that accompany a relocation, companies often make some bad decisions that will have negative impacts down the road.
There are some fundamental building blocks that can go a long way to ensure a smooth transition to new premises, regardless if you are moving an office, a DC, a manufacturing facility, or all three.

1. Get Organized
Determine the scope of the move, and select stakeholders and contributors to form a work group (not a committee) to tackle the relocation elements. BE WARY of assigning  people who are on “special projects”. People who have a direct interest in the outcome are the best candidates.

2. Get Help
Often companies talk themselves into handling the relocation themselves. There a few key questions that need to be answered before this course of action is taken:
a. If key people are already busy, can they handle the extra workload?
b. Do they have the necessary experience in managing the unique requirements involved in a relocation?
c. As a company, do we have a track record of bringing in projects on time and within budget?
If the answer to any of these questions is not a resounding “YES”, consider sourcing some expert assistance outside of the organization.

3. Get Started
Almost all companies underestimate the amount of time and effort it will take to successfully transition to a new site. The sooner the planning starts, the sooner issues emerge that need to be dealt with. The most common lament from companies that have been through a relocation is “I wish we’d had more time to plan this out”.

The best approach to mediate the impact of a relocation is to begin the planning process early, and make sure the right resources are recruited.

For more information, contact Rick Green at rgreen@supplychainsystems.com

Some companies learn their lessons the hard way, and the expensive way, when implementing new software. Take the example of a leading consumer packaged goods company that decided to purchase software for sales forecasting and distribution requirements planning. The process seemed straightforward, especially for this large a corporation. But that was not the case.

Yes, the company went through an exhaustive review of business requirements, checked out options available in advanced planning software and evaluated potential return on investment. Following formal demonstrations of the chosen software’s capabilities, the company made its selection and purchased the product.

But despite all the time and money spent up to this point, this company still tried to cut corners, trying to achieve results “on the cheap” and did not follow the right path for implementing the system. As well, its expectations on performance and ROI were simply not realistic.

Implementation goes far beyond “plug and play”.

This client needed a sufficient budget for software implementation costs. Initial costs – including support from IT, external consultants, vendors and hardware – can often be double or even quadruple that of the software costs.

They also neglected the people factor. This company should have dedicated the right staff – both internal and external support people – while also managing the timelines on the implementation phase.

Senior management’s expectations for this software must be realistic. The client soon realized this was a long-term proposition and the newly-installed software would not lead to an immediate return on investment.

As a consequence of not properly budgeting and resourcing the implementation phase of the project, this client ultimately faced a good three years to fully install the software. This also resulted in a considerable delay in achieving their ROI targets.

The primary lesson when selecting and implementing advanced planning software is that it’s not simply a matter of plug and play and hoping that the solution brings immediate returns. After spending considerable time and money on software, companies should not cut corners. Instead, they need to apply the right mix of resources, qualified people, budget and realistic expectations.

If you have questions or comments on this blog, please contact Bill Simpson at bsimpson@supplychainsystems.com.