BUSINESSLOGISTICSMANAGEMENT

SIPMMDIPLOMACOURSE

WRITTENASSIGNMENT

Submittedby:
AzmiSahab

Submissiondate:
28thJanuary2015

Wordcount:
2065words

TABLEOFCONTENTS

Subject

PageNo.

1. Introduction

2. CurrentIssuesFacedinCanadianTire

2.IWarehousingissuesfacedbyCanadianTire

2.IITransportationissuesfacedbyCanadianTire

3. SolutionstoIssuesFacedinCanadianTire

3.ISolutionstoWarehouseissuesfacedbyCanadianTire

3.IISolutionstoTransportissuesfacedbyCanadianTire

3.IIISolutionstoManpowerissuesfacedbyCanadianTire

4. Conclusion

11

5. ReferenceList

12

1.

INTRODUCTION

Canadian Tire is one of the largest companies in Canada. We operate four large distribution
centres, serviceing over 470 tire retail outlets.

We have recently installed a YMS (Yard Management System) that we have integrated with
our existing WMS (Warehouse Management System) and TMS (Transport Management
System). Following this recent installation, we would like to present this report which seeks to
discuss an evaluation system to measure Canadian Tires operational productivity
improvement.

This evaluation system will measure if the above system upgrades have removed or improved
Canadian Tires problems in product management and transportation issues in distributing our
products to all the tire retail outlets. We expect to have an improved performance in over the
road transportation equipment utilisation, driver productivity and warehouse dock/door
utilisation.

2.

CURRENT ISSUES FACED IN CANADIAN TIRE

Prior to the installation of the YMS, Canadian Tire faced significant issues in equipment
utilisation and employee productivity. These were largely due to the lack of integration and
synergy between the two existing supply chain information technology support systems
Warehouse Management System or WMS, and Transport Management System or TMS we
had already installed and were in use at Canadian Tire, resulting to inefficiencies in the
utilisation and productivity levels in the company.

While both the Warehouse Management System and Transport Management System are key
parts of our distribution process at Canadian Tire, each system manages separate entities of the
distribution process. The WMS controls the movement and storage of materials within a
warehouse and process the associated transactions, including shipping, receiving, putaway and
picking (Wikipedia, 2015). The TMS, takes on the baton from WMS and helps companies
move freight from origin to destination efficiently and encompasses solutions for moving
freight in all modes, including intermodal movements (Wikipedia, 2015).

The two main areas of issues faced by Canadian Tire have been identified as
I.

Warehousing issues

II.

Transportation issues

I.

Warehousing issues faced by Canadian Tire

a. Space utilization
b. Disorganized picking systems and processes for orders
c. Manpower issues

Because of the sheer volume of inventory at Canadian Tire and subsequent amount of orders
from the retail outlets we distribute to, it was identified that we are not utilising our warehouse
space due to an inefficient warehouse layout. Inventory and picking areas, forming, checking
and loading areas are not set up in sequence. It has been feedbacked that this creates much
chaos in the warehouse, with cases of damaged goods and equipment and also the occasional
accidents and injured staff. This situation is worsened when floor areas are chock-full with
checked orders waiting for hours to be loaded into trucks that are not yet available to be loaded.
This also creates a backlog of orders waiting to be packed and formed, not because of lack of
available inventory but rather lack of holding areas.

This chaos also results to redundant work done by the warehouse staff. We have seen same
orders being formed more than once and same checks done repeatedly. On the other hand,
orders from our retail outlets have also been ignored as staff assume they have been formed by
their colleagues. Repeated orders also add on to the volume faced at the holding areas, not
helped as our trucks are not fully utilised with each shipping trip to the retail outlets.

Staffing issues plays a big role in our warehouse. Surveys among our staff show a desperate
need for on-the-job training, worsened by the fact that many of the more experienced staff have
left the organisation with their expertise, leaving lesser competent resources to train newer
staff. Staff that are not trained well have shown more probability of repeated mistakes,
especially when picking orders and a higher tendency to cause damage to our products and
warehouse equipment.

Our WMS unfortunately also does not allow the warehouse managers to assess each individual
warehouse staff in below areas:

Number of orders performed in a day

Average number of lines received, picked

Date and time of each order delivery

Reception, Put away, Picking and Delivery discrepancies

Hourly intervals between deliveries

II.

Transportation issues faced by Canadian Tire

a. Extensive reach with distribution of tires to over 470 retail outlets

b. Low loads of distribution trucks
c. Manpower issues

Our country-wide distribution reach of over 470 retail outlets means Canadian Tire faces a
large transportation cost in distributing our products to the outlets. The unit cost increases as
our utilization levels decreases.

In order to maximize utilization, each truck that leaves our warehouses and headed to the retail
outlets needs to be full. It has been identified that this is not practiced by many of our warehouse
managers. Trucks are leaving the warehouse not full, and the delivery route provided to each
driver shows that orders are delivered by chronology of order instead of by areas. This means
that a truck may make one delivery to Retail Outlet 1 and 3, for example, because these orders
were formed before Retail Outlet 2. Although Retail Outlet 2 is located nearer to Outlet 1, their
order would have been delivered in a separate trip as their order was formed later. This is
clearly an inefficient use of our trucks and not maximizing the productivity of our trucks and
drivers, and also not efficiently distributing our tires to the retail outlets in a more timely
manner.

As mentioned in the warehouse issues faced by Canadian Tire, manpower issues is the also a
main concern faced by Canadian Tire. We face a severe shortage of trained drivers. Many of
our more-experienced drivers have resigned due to subpar pay levels and lack of job
satisfaction.

By having installed the YMS, a software system designed to oversee the movement of trucks
and trailers of a manufacturing facility, warehouse, or distribution centre (Techtarget, 2015),
it is expected that the integration between our WMS and TMS will improve the above problems
in Canadian Tires transportation and warehouse problems.

3.

SOLUTIONS TO ISSUES FACED IN CANADIAN TIRE

With the recent installation of the YMS and its integration with our WMS and TMS,
management expects an improved performance in the issues mentioned above.

In order for Canadian Tire to efficiently operate our four distribution centres and service the
retail outlets, we must successfully integrate our management systems in order to have a strong
Supply Chain Information System Functionality (Bowersox, Closs, Cooper and Bowersox,
2013) as shown in Figure 1.

Strategic
Planning

DecisionAnalysis

ManagementControl

TransactionSystem
Figure 1: Supply Chain Information System Functionality

Once a strong foundation in the transaction system is in place, ie. the integration of the YMS,
WMS and TMS, Canadian Tire will be able to evaluate the issues or discrepancies in our supply
chain management processes, and put into place the appropriate measures and solutions to
improve our work procedures.

I.

Solutions to Warehouse issues faced by Canadian Tire

In order to measure any positive impact of installing and integrating the YMS to the existing
WMS and TMS at Canadian Tire, we have decided to evaluate our warehouse performance
against three general metrics: Operational Efficiency, Fulfilment Efficiency and Stocking
Efficiency (Cohen & Roussel, 2005), as shown in Figure 2.

Operational
Efficiency

Measuring
Warehousing
Efficiencies

Stocking
Efficiency

Fulfilment
Efficiency

Figure 2: Measuring Warehousing Efficiencies (Cohen & Roussel, 2005)

a. Operational Efficiency measures

In measuring operational productivity at the Canadian Tire warehouse, we seek to evaluate the
quantity of activities performed by the warehouse staff, supported by the existing WMS. The
main focus will be to measure the efficiency of the material handling operations within the
warehouse, whether they are handled through labor, automation or a combination of the two.
We will do so by recording the number of orders received, formed and shipped on a daily basis,
as well as size of orders handled by the warehouse. This will help us to compare the productivity

levels, and if there are any improvements prior and after the installing of the Yard Management
System.

b. Fulfilment Efficiency measures

In measuring fulfilment efficiency at the Canadian Tire warehouse, we seek to measure the
warehouses ability to fulfil orders on time and in full, basically how many perfect orders can
we complete. We will do so by measuring the response time from the time order is received
from our retail outlet, as well as ship accuracy, which is forming the right product in the right
quantity for the right retail outlet. This will help us to evaluate the warehouses ability to fulfil
demand, in terms of inventory management as well as pointing out needs or discrepancies in the
warehouse staffs ability to perform their job effectively.

c. Stocking Efficiency measures

In measuring stocking productivity at the Canadian Tire warehouse, we seek to evaluate the
efficiency of the warehouse space usage. As Canadian Tire is one of the countrys largest
distributor, it is important for us to ensure the warehouse space is fully utilised, both horizontally
and vertically. We will focus our research on measuring the overall distance traveling in the
warehouse when fulfilling an order, congestion levels of current orders in the holding areas, and
optimally stocking the products to enable the warehouse to practice FIFO (first in first out)
method.

II. Solutions to Transportation issues faced by Canadian Tire

In order to measure any positive impact on Canadian Tires transport issues, we have decided
to evaluate our performance against two general metrics: Load Efficiency and Miles
Optimization (Anklesaria, 2008), as shown in Figure 3.

Transportation
Management

Load
Efficiency

Miles
Optimization

Figure 3: Measuring Transportation Efficiency (Anklesaria, 2008)

a. Load Efficiency
In measuring load efficiency of the Canadian Tire trucks, we seek to measure the average
capacity utilization of each truck by recording the number and size of deliveries on a per
delivery and daily basis. This will help us to compare the utilization levels, and if there are any
improvements prior and after the installing of the Yard Management System.

b. Miles Optimization
In measuring miles optimization of the Canadian Tire trucks, we seek to measure the average
number of miles for a unit of tire in our distribution system. This will help us to evaluate our
route plans to ensure the trucks are better utilized perhaps to cover certain areas in close
proximity instead of delivering orders based on their chronological order, regardless of their
locations.

III. Solutions to Manpower issues faced by Canadian Tire

In our initial research, we have found that skills discrepancies were apparent in both our
warehouse and transport staff. In order to reduce this issue, we have decided to increase our
training budget to provide new staff with the necessary skills to perform their jobs. SOPs will
also be in put into place to discourage discrepancies in job processes. Refresher sessions will be
conducted by warehouse managers and transport supervisors every 6 months. We are also

looking into providing on-the-job training, including a Buddy System for new staff. We are also
currently conducting market pay reviews to evaluate the pay grade systems of the truck drivers.

4.

CONCLUSION

Following the implementation of the YMS and its integration with the WMS and TMS, we
expect to see drastic short-term (3 to 9 months period) improvements in our warehouse and
transport utilizations, and increased efficiency in meeting demand from the retail outlets
Canadian Tire serves.

The long-term improvements will be especially seen in warehouse staff and truck drivers
productivity from a more dynamic nature of business. We will be able to see a leaner working
process, with faster turnaround time in our transportation process.

5.

REFERENCE LIST

Anklesaria, J. (2008). Supply Chain Cost Management: The AIM & Drive Process for
Achieving Extraordinary Results. New York: American Management Association.
Bowersox, D.J., Closs, D.J., Cooper, M.B. & Bowersox, J.C. (2013). Supply Chain Logistics
Management. New York: McGraw-Hill Education.
Cohen, S. & Roussel, J. (2005). Strategic Supply Chain Management: The Five Disciplines for
Top Performance. New York: McGraw-Hill Education.
Jacoby, D. (2009). Guide to Supply Chain Management. United Kingdom: The Economist.
Prater, E. & Whitehead, K. (2013). An Introduction to Supply Chain Management: A Global
Supply Chain Support Perspective. New York: McGraw-Hill Education.
Saxena, R.S. (2009). Inventory Management: Controlling in a Fluctuating Demand
Environment. New Delhi: Global India Publications Pvt Ltd.
Wikipedia.

(2015).

Warehouse

Management

System.

Management

System.

http://en.wikipedia.org/wiki/Warehouse_management_system
Wikipedia.

(2015).

Transport

http://en.wikipedia.org/wiki/Transportation_management_system