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

Improve Productivity and Efficiency and Optimize the Supply Chain logistics George J. Soleas, M.Sc., Ph.D Executive Vice-President

warehousing transportation health & safety improvem emen ents t s to date

Warehouse Case Volume Handled 94 $1.60 (11% Total Volume Growth over last 5 years) $1.55 92 $1.50 90 Cases Handled $1.45 (Millions) 88 Cost Per Case $1.40 86 $1.35 (Cost/Case: 3.3% Total increase in 5 years) 84 $1.30 $1.27 $1.26 $1.26 82 $1.24 $1.23 $1.25 80 $1.20 Total Increase for Salaries/Benefits Last 5 YRS = 18.5% 78 $1.15 2009/10 2010/11 2011/12 2012/13 2013/14 RF 2014/15 2015/16 2016/17 Case Vol Cost Per Case

innovation

Warehouse Case Volume Handled 100 $1.60 (5% Case Volume Growth for the next 3 Yrs) $1.55 95 $1.50 $1.45 Cases Handled 90 (Millions) Cost Per Case $1.40 (Cost/Case: 0% increase in 3 years) $1.35 85 $1.30 $1.27 $1.26 $1.26 $1.26 $1.26 $1.25 $1.24 $1.23 $1.25 80 $1.20 Average YR/YR Increase for Salaries/Benefits Next 3 YRS = 1.7% 75 $1.15 2009/10 2010/11 2011/12 2012/13 2013/14 RF 2014/15 2015/16 2016/17 Case Vol Cost Per Case

innovative strategies Warehousing Balanced Freight Health Strategy & safety Durham Business Continuity Reduce Costs Continue our Auto-palletization AS/RS Crane Retrofit Improve Customer Service Culture of Safety Reduce Carbon Footprint London Shipping Area Expansion Engineered Labour Standards Ottawa Two Store Order Picking Improve the Staging Area

Durham RSC Business Continuity Planning: Core Systems logistics 30 Amazing years! What will the next 20 years • Innovation look like? • Automation • Continuous Improvement • Self-sufficient • Self-sufficiency • Cost-competitive. • Cost competitive • Cost viable

Durham RSC Business Continuity Planning: Core Systems logistics Where are we now? Guiding Principle What • Mitigate Risk to avoid does this system failures impacting mean? production uptime and Where do customer service we want to be? How do we get there?

OBJECTIVES TO MITIGATE RISK TECHNOLOGY & SYSTEMS AT DURHAM RSC 1. Feasibility Study of DRSC Core Systems logistics  Identify the Risk & Vulnerability of DRSC “life blood” core systems and infrastructure  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

Feasibility Study Approach logistics Phases Fy14/15 Define Investigate Analyze Recommend • Define what • Map out the • Identify and • x3 options: is the business current state quantify the Good, Better & Decision problem and problem and Best • End-2-End Gate level of RISK risks infrastructure • Affordability & • What do we risk study • Vision Risk mitigation want to • What does this • Where do we • How do we get achieve? mean? want to be ? there?

Durham RSC Outbound Sortation: Auto-Palletization – Prototype logistics

Durham RSC logistics Outbound Sortation: Auto-Palletization – Benefits • Reducing labour costs • Improving safety • Maximizing Efficiencies • Reducing breakage • Improving service • Enhancing product traceability

Durham RSC AS/RS Bay System: Crane Retrofit logistics Upgrade all motion control drive motors and motor control systems to a current level of digital technology and programming capabilities.

Durham RSC logistics AS/RS Bay System: Crane Retrofit - Benefits • 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

London RSC 2014/16 logistics Expansion of Shipping Area/Bay Doors • 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

From 70,000 to 90,000 cases/day logistics

London RSC 2014/15 Engineered Labour Standards logistics Time Effort Work Task Accurate, fair Improved Reduction in and consistent employee operating measure of productivity cost productivity

London RSC 2014/15 logistics Engineered Labour Standards - Benefits • 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 logistics Redesign picking operation to increase productivity and reduce cycle time by multi- order picking.

Ottawa RSC 2014/15 logistics Two-Store Order Picking - Benefits • One trip to a pick location for every 2 orders: o Less travel time for picking o Less downtime for pallet change over o 25% Productivity/efficiency gains

Ottawa RSC 2014/15 Improvements to the Outbound Staging Area: logistics Maximize warehousing space and increase loading efficiency by initiating pallet flow racks on our shipping dock.

Ottawa RSC 2014/15 logistics Improvements to the Outbound Staging Area - Benefits • Gain Storage Capacity o Flow Rack on shipping dock will increase warehouse capacity by 30,000 cases (7%) • Loading Efficiency o Reduce shipping area congestion, travel time for loading and introduce efficiencies to picking and shipping functions

Balanced Freight Strategy Sustainability Efficiency Cost Effective

Balanced Freight Strategy Initiatives: logistics

Balanced Freight Strategy Initiatives: Less-than-truckload (LTL) logistics

Balanced Freight Strategy Initiatives: Consolidated LCBO – SAQ Load logistics

Health & Safety Lost Time Accidents health & safety 120 98 100 81 Lost Time Accidents 75 80 60 37 36 Target: 10% reduction every year 40 15 14 13 12 20 82% Reduction 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Calendar Year

Health and Safety: logistics Continue our Culture of Safety Ergonomic initiatives  Incident trends  Continuous improvement through  ongoing training, audits, education, and awareness.

FULLY AUTOMATIC PALLET STRETCH WRAPPING MACHINE logistics

Tipping Point health & safety health & safety

LC LOGISTICS & QA DIVISION DRINKS ONTARIO April 23, 2014 1

Specialty Services LC 2

Overview LC 1. The year in Review 2013/14 • 2. The year ahead • 2014/15 3

Specialty Services LC Case Sales 2013-14 Fiscal year ending March 31 st , 2014 % Increase TY LY 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 % 4

Specialty Services LC Sales ($) 2013-14 Fiscal year ending March 31st, 2014 % Increase TY LY 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 % 5

Specialty Services LC Threshold Utilization (Consignment program only) TY LY % Increase (2013-14) (2012-13) TY vs. LY Average, 41,272 40,317 2.4 % Actual On-hand Percentage, 85.1 % 89.3 % -4.2 % On-hand to Threshold 6

Specialty Services LC Inventory Turns (Consignment cases only, Fiscal 2013-14) % Variance TY LY TY vs. LY Inventory Turns 6.5 6.2 5 % Consignment Program Weeks of Inventory On-hand 8.1 8.4 - 4 % 7

Specialty Services LC Inventory Turns (HVC cases only, Fiscal 2013-14) % Variance TY LY TY vs. LY Inventory Turns HVC 3 2.9 3 % Program Weeks of Inventory On-hand 18.1 18.3 - 1 % HVC Program 8

Specialty Services LC 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 9

Specialty Services LC 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 10

Specialty Services LC 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 • 11

Specialty Services LC Sales Performance Specialty Services Corporate Sales Year Year Over Year Year Over Year Growth 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% 12