George J. Soleas, M.Sc., Ph.D Executive Vice-President warehousing - - PowerPoint PPT Presentation

logistics

George J. Soleas, M.Sc., Ph.D

Executive Vice-President

Improve Productivity and Efficiency and Optimize the Supply Chain

improvem emen ents t s to date

warehousing transportation health & safety

$1.23 $1.24 $1.26 $1.26 $1.27 $1.15 $1.20 $1.25 $1.30 $1.35 $1.40 $1.45 $1.50 $1.55 $1.60 78 80 82 84 86 88 90 92 94 2009/10 2010/11 2011/12 2012/13 2013/14 RF 2014/15 2015/16 2016/17 Cost Per Case Cases Handled (Millions)

Warehouse Case Volume Handled

Case Vol Cost Per Case

(11% Total Volume Growth over last 5 years) (Cost/Case: 3.3% Total increase in 5 years) Total Increase for Salaries/Benefits Last 5 YRS = 18.5%

innovation

$1.23 $1.24 $1.26 $1.26 $1.27 $1.25 $1.26 $1.26 $1.15 $1.20 $1.25 $1.30 $1.35 $1.40 $1.45 $1.50 $1.55 $1.60 75 80 85 90 95 100 2009/10 2010/11 2011/12 2012/13 2013/14 RF 2014/15 2015/16 2016/17 Cost Per Case Cases Handled (Millions)

Warehouse Case Volume Handled

Case Vol Cost Per Case

(5% Case Volume Growth for the next 3 Yrs) (Cost/Case: 0% increase in 3 years) Average YR/YR Increase for Salaries/Benefits Next 3 YRS = 1.7%

Warehousing

Durham

Business Continuity Auto-palletization AS/RS Crane Retrofit

London

Shipping Area Expansion Engineered Labour Standards

Ottawa

Two Store Order Picking Improve the Staging Area

Health & safety

Continue our Culture of Safety

innovative strategies

Balanced Freight Strategy

Reduce Costs Improve Customer Service Reduce Carbon Footprint

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Durham RSC Business Continuity Planning: Core Systems

30 Amazing years!

• Innovation
• Automation
• Self-sufficient
• Cost-competitive.

What will the next 20 years look like?

• Continuous Improvement
• Self-sufficiency
• Cost competitive
• Cost viable

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Where are we now? What does this mean? Where do we want to be? How do we get there?

Guiding Principle

• Mitigate Risk to avoid

system failures impacting production uptime and customer service

Durham RSC Business Continuity Planning: Core Systems

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• Identify the Risk & Vulnerability of DRSC “life blood” core systems and infrastructure
• 1. Feasibility Study of DRSC Core Systems
• Diagnostic assessment “system health check”
• 1-yr intensive study with recommendations
• 2. Sub-system Code Standardization
• Proper Code management & version control
• Code standardization alignment with C1

OBJECTIVES TO MITIGATE RISK TECHNOLOGY & SYSTEMS AT DURHAM RSC

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Feasibility Study Approach

Phases Fy14/15 Define

• Define what

is the business problem and level of RISK

• What do we

want to achieve?

Investigate

• Map out the

current state

• End-2-End

infrastructure risk study

• What does this

mean?

Analyze

• Identify and

quantify the problem and risks

• Vision
• Where do we

want to be?

Recommend

• x3 options:

Good, Better & Best

• Affordability &

Risk mitigation

• How do we get

there?

Decision Gate

Durham RSC

Outbound Sortation: Auto-Palletization – Prototype

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• Reducing labour costs
• Improving safety
• Maximizing Efficiencies
• Reducing breakage
• Improving service
• Enhancing product traceability

Durham RSC

Outbound Sortation: Auto-Palletization – Benefits

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Durham RSC

AS/RS Bay System: Crane Retrofit

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Upgrade all motion control drive motors and motor control systems to a current level of digital technology and programming capabilities.

Durham RSC

AS/RS Bay System: Crane Retrofit - Benefits

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• Reduce crane maintenance set up and configuration

required due to current analogue controls

• Increase crane availability and uptime
• Increase overall Highbay throughput by reducing crane cycle

times

• Increase staging area by approx.

40,000 sq. ft.

• Addition of up to 21 exterior

shipping doors

• Expansion of the existing yard -

increase trailer capacity by 42 trailers/containers

London RSC 2014/16

Expansion of Shipping Area/Bay Doors

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From 70,000 to 90,000 cases/day

London RSC 2014/15

Engineered Labour Standards

logistics Time Effort Work Task

Accurate, fair and consistent measure of productivity

Improved employee productivity Reduction in

• perating

cost

London RSC 2014/15

Engineered Labour Standards - Benefits

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• Reduction in lost or wasted time
• Improved employee productivity
• Higher levels of job satisfaction
• A motivated and engaged workforce
• Reduction in operational cost
• Greater throughput – KPI for Logistics – cases per hour worked

Ottawa RSC 2014/15

Two-Store Order Picking

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Redesign picking operation to increase productivity and reduce cycle time by multi-

• rder picking.

Ottawa RSC 2014/15

Two-Store Order Picking - Benefits

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• One trip to a pick location for every 2 orders:
• Less travel time for picking
• Less downtime for pallet change over
• 25% Productivity/efficiency gains

Ottawa RSC 2014/15

Improvements to the Outbound Staging Area:

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Maximize warehousing space and increase loading efficiency by initiating pallet flow racks on our shipping dock.

Ottawa RSC 2014/15

Improvements to the Outbound Staging Area - Benefits

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• Gain Storage Capacity
• Flow Rack on shipping dock will increase warehouse

capacity by 30,000 cases (7%)

• Loading Efficiency
• Reduce shipping area congestion, travel time for loading

and introduce efficiencies to picking and shipping functions

Balanced Freight Strategy Efficiency Sustainability Cost Effective

Balanced Freight Strategy Initiatives:

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Balanced Freight Strategy Initiatives:

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Less-than-truckload (LTL)

Balanced Freight Strategy Initiatives:

logistics Consolidated LCBO – SAQ Load

health & safety

98 81 75 37 36 15 14 13 12

20 40 60 80 100 120 2008 2009 2010 2011 2012 2013 2014 2015 2016

Lost Time Accidents Calendar Year

Lost Time Accidents

Target: 10% reduction every year 82% Reduction

Health & Safety

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Health and Safety:

Continue our Culture of Safety



Ergonomic initiatives



Incident trends



Continuous improvement through

• ngoing training, audits, education,

and awareness.

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FULLY AUTOMATIC PALLET STRETCH WRAPPING MACHINE

Tipping Point

health & safety health & safety

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LOGISTICS & QA DIVISION DRINKS ONTARIO April 23, 2014

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Specialty Services

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Overview

• 1. The year in Review
• 2013/14
• 2. The year ahead
• 2014/15

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TY LY % Increase TY vs. LY Private Orders 163,808 166,468

• 1.6 %

Consignment Programs 573,049 539,497 6.2 % Total Case Sales 736,857 705,965 4.4 %

Case Sales 2013-14

Fiscal year ending March 31st, 2014

Specialty Services

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TY LY % Increase TY vs. LY Private Orders $ 22,078,467 $ 22,680,051

• 2.7 %

Consignment Programs $ 85,151,044 $ 78,876,059 8.0 % Total Sales $ 107,229,511 $ 101,556,110 5.6 %

Sales ($) 2013-14

Fiscal year ending March 31st, 2014

Specialty Services

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TY (2013-14) LY (2012-13) % Increase TY vs. LY Average, Actual On-hand 41,272 40,317 2.4 % Percentage, On-hand to Threshold 85.1 % 89.3 %

• 4.2 %

Threshold Utilization

(Consignment program only)

Specialty Services

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TY LY % Variance TY vs. LY Inventory Turns Consignment Program 6.5 6.2 5 % Weeks of Inventory On-hand 8.1 8.4

• 4 %

Inventory Turns

(Consignment cases only, Fiscal 2013-14)

Specialty Services

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TY LY % Variance TY vs. LY Inventory Turns HVC Program 3 2.9 3 % Weeks of Inventory On-hand HVC Program 18.1 18.3

• 1 %

Inventory Turns

(HVC cases only, Fiscal 2013-14)

Specialty Services

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Specialty Services

Consignment Program Agent Participation

Tier # of Agents Tier 1 ( >2500 cases annually) 23 Tier 2 (2000-2499 cases annually) 8 Tier 3 (1500-1999 cases annually) 15 Tier 4 (1000-1499 cases annually) 20 Tier 5 (500-999 cases annually) 61 Total Consignment Agents 127

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Specialty Services

Period End Review Process

• Random sample of customer invoices audited

each period

• Looking for the following:
• Is the LCBO price displayed on the invoice?
• Is the Bottle Deposit displayed properly

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Specialty Services Partnership Results

• Consignment “entry “sales requirement to 500 cases annually
• 10% buffer on hand inventory limit to accommodate volume

fluctuations in stock flow.

• Threshold allocation adjustment option (On Hand/In Transit split)
• Fully implementing the afternoon shift to improve service
• Bringing HVC products in Toronto
• Use of shipping doors at 43 Freeland
• Improved turnaround for HVC orders
• IT system solution
• Investment in the future
• Service improvement – 24/7 access for order placement and payment
• Agent involvement

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Sales Performance

Year Specialty Services Year Over Year Growth Corporate Sales Year Over Year Growth 2013-14 5.6% 2.2% 2012-13 7.7% 3.9% 2011-12 10.2% 4.9% 2010-11 12.5% 4.3% 2009-10

• 9.0%

0.9%

Specialty Services

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SKU Count

Source 2013-14 % to Total Specialty Services ~14300 57 % Other ~11000 43 % Total ~25300 100 %

Specialty Services

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Specialty Services “Elite” Computer System

• Target implementation timing is early fall 2014
• “Go Live” will involve both systems so as to

not be a major impact during the busy fall season

Specialty Services

New System

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Specialty Services

The degree to which we are able to meet our objectives will depend on the level of:

• Agent buy-in
• Acknowledgement that success will be achieved

through ongoing LCBO Specialty Services-Agent community partnership

• Mutual understanding that we will continue to

face limitations such as program space, building capacity and externalities outside of our control.

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Questions/Comments from Drinks Ontario Members

Prod roduct F Flow

• w – Durha

rham t to

• Ou

Outlyin ing W Ware rehou

• uses

There is ongoing uncertainty in the industry regarding the LCBO’s process for transferring Vintages product from Durham to stores serviced by the London and Ottawa warehouses. It would be helpful if the LCBO could provide a flowchart explaining the process along with timelines at the various stages of execution. As you can appreciate, Members are under pressure to meet the new eight-week sell-through metrics and want assurance that the process is fast and efficient.

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Qua uality Assur Assurance T Test esting Currently, LCBO Products and Vintages Essentials orders are not held up in the laboratory for testing and analysis if there is a change in the vintage

• f the product. However, for Consignment products with a problem-free

sales history (e.g. HVC products), agents must approach the Specialty Services Supervisor with a request that the product be pre-released. The Supervisor then needs to wait for Quality Assurance approval, which leads to delays in order fulfillment.

• Will the LCBO consider extending to Consignment products (which have

had previous vintages successfully lab tested) the same testing privileges as LCBO Products and Vintages Essentials products? This will save time for both the LCBO and agents and help to drive product sales.

Questions/Comments from Drinks Ontario Members

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LC LCBO BO He Head Of Offic ice Re Reloc

• catio

ion

• With the talk of the government selling its Head Office location, has there

been any discussion regarding where the new Private Stock warehouse will be relocated?

• What is the timeframe involved here?
• Could there be more than one location for the Private Stock Warehouse

(e.g. Ottawa, London)? Governm nment nt Cou

• unc

ncil il Re Revie iew The recent Ministry of Finance announcement regarding a council search for

• perational

efficiencies and cost savings could result in a recommendation for third-party involvement in the operation of Specialty Services (third-party warehousing, etc.).

• Do you see this as an issue for the LCBO?

Questions/Comments from Drinks Ontario Members

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Pr Product ct Re Return rns Sales of product through Specialty Services are by the case. This can present problems for agents when customers want to return product for various reasons (e.g. broken cases, spoiled product, etc.).

• Is there anything that can be done to make it easier for Specialty Services

customers to return product for legitimate reasons, ensuring equal treatment across all sales channels? Pr Priva vate Ord Orders

• Why are Private Orders not factored into the calculation of agents’ ability

to move wine? This would enable them to expand their on-hand and in- transit thresholds.

Questions/Comments from Drinks Ontario Members

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Thank You

LCBO Quality Assurance Updates

Stephen Cater, Ph.D. Director, Quality Assurance LCBO

Drinks Ontario Meeting April 23, 2014

New LIMS (Laboratory Information Management System)

Benefits to Suppliers/Agents:

• Holds analysis data on more than

250,000 samples

• Current system is not compatible

with emerging technologies

• Process flow is fixed and is not

readily adaptable to changing business

requirements

New LIMS (Laboratory Information Management System)

Benefits to Suppliers/Agents:

Benefits to Suppliers/Agents:

• CoA’s and Invoices can be e-mailed

to different addresses

• Separate CoA and Invoicing modules
• Potential to allow web access to

suppliers and agents to track samples or view results or reprint CoA’s and Invoices

• WWTG agreement on single field of

vision now in force in Canada

• All mandatory information must be

in single field of vision- anywhere

• n label but bottom

Single Field of Vision

Steve’s Vineyard 2013 Merlot 13.5% alc./vol. 750 mL Product of Canada/Produit du Canada contains sulphites/contient des sulfites

Produced and bottled by Steve’s Winery, Toronto, ON

Wine/vin

• Health Canada will not endorse gluten

free claims on beverage alcohol products processed to have less than 20 ppm gluten protein without advanced lab results

• Can use a “crafted to remove gluten”

statement

Gluten Free Claims

“Crafted to Remove Gluten*”

*Product fermented from grains containing

gluten and crafted to remove gluten. The gluten content of this product cannot be verified and this product may contain gluten.

Gluten Free Claims

• LCBO to set targets for 1L and 1.5L glass

bottles

Lightweight Glass Bottles

• Updated PPS in 2013 allows for either using

burst strength or ECT

• If ECT stamped on carton must be compliant

with PPS requirements

Shipping Containers

• CALJ has unanimously approved the use of

Code 128 symbology for SCC-14 bar codes

• LCBO now accepts the UCC/EAN 128,

Interleaved 2 of 5 (ITF) or Code 128

SCC-14 Bar Codes

• Label & Shipping

Container reviews will be performed directly in NISS

• Automatic email

notification of results to agent

NISS Enhancements

• Results are easily

viewed from the Product Lifecycle page

• New comprehensive

reports may also be accessed and saved as Adobe PDF files

NISS Enhancements

NISS Enhancements

Product Quality Complaints

Enhancements to the Integrated Store Environment (ISE) - Point of Sale System

Product Quality Complaints

QA Debit Notes

• LCBO IT is developing a new integrated

web application for issuing QA debit notes

• All manual QA debit note processes are

being migrated to the new application

• The application will provide better delivery
• f debit notes to clients and will interface

with Oracle Finance and iSupplier

Protected names

• The final phase of the Canada/EU trade

agreement to eliminate use of protected geographical indications as “generic wine names” came into force on January 1, 2014

Protected Names

• Champagne, Sherry, Port,

Porto and Chablis may no longer be used on wines that

• riginate from outside these

geographical areas

THANK YOU