Putting Global Supply Chain Links Together
Toronto, Canada
June 16, 2004

Schenker North America is not just the freight forwarder your grandmother knew. Of course they are still one of the major air and ocean global forwarders, albeit with modern computer-based operations. But, they do it much more efficiently now.

In addition to these traditional services, they have become a premier value-added warehousing company. They also design and manage transportation networks. Besides that, they have major trucking operations in Europe and are now owned by Deutsche Bahn, the German railway system.
Revenues are $6.4 billion euros. Leading customers are Hewlett-Packard, Ford, BMW, Volkswagen and DuPont. Automotive logistics is over $1 billion per year for Schenker. North American revenues are only slightly less.

But, Schenker is not a well-known company in the U.S. While its Canadian operation runs like an engine hitting on all cylinders, it still has major steps to take in the states.

Leading the effort is 38 year old CEO Heiner Murmann. Murmann was raised in Germany and educated in Canada. He returned and joined Schenker in Canada ten years ago. As the new North American CEO, he is moving and modernizing Schenker substantially. That includes the acquisition of CCW, a small warehousing company with extensive value-added repair, assembly and onsite operations. The CCW acquisition is an example of Murmann’s plan to redesign Schenker as a true supply chain manager covering all of North America.

Toronto Operations
The crown jewel of Schenker’s value-added warehousing operations in Canada is a 290,000 square foot distribution center (DC) it operates for Unilever. This DC is ranked by Unilever as its best 3PL facility and has nearly perfect audit scores.

About 20 million cartons of Lipton and other Unilever brands flow through this DC each year. That’s done with 50 employees. 60% of the outbound is case picked; 40% is full pallet.

There are a series of key design features which significantly increase the effectiveness of the Unilever DC. High density shuttle racks with 13 or 26 pallet positions are used for A-C products. These shuttle racks reduce the space required within the warehouse significantly and increase the quick movement of product. The shuttles moving racks are controlled by the radio frequency (RF) system within the warehouse.

Case picking is done at two tower pick lines operating on two levels. Picking is done by employees in pairs. One picks, the other applies a label to each carton. Labeled cartons are fed into an automated conveyor system which sorts and delivers to pallet creating positions at the bays next to outbound shipment doors.

The ten outbound shipment doors are bracketed by inbound receiving. Inbound pallet license plate labels are read into the RF system which issues putaway instructions.

The warehouse management is SoliNet. SoliNet operates a FIFO system setting up “wave” picks of multiple orders. The labels it generates allow for batch picking of A and B products. That is, all of the cartons for a single product for multiple orders are picked at one time greatly increasing employee efficiency.

A large monitor scoreboard over the loading doors keeps everyone in the warehouse current on production and accuracy.

The Schenker/Unilever DC is in Brampton, Ontario. It officially opened in July, 2002 and was named best DC in the Toronto area earlier this year. Not surprisingly, the partnership arrangement between Unilever and Schenker is covered by a ten year agreement.

Customs Brokerage
The customs brokerage operation in Toronto is exactly what you would expect. It reflects the years of experience and precision necessary to get the job done right.

The guy in charge is not an austere German, however, but an amiable French-Indian named Chris Balquiere. Blaquiere’s staff of 65 primarily clears imports and handles five U.S./Canadian border locations. Personnel are assigned by value of goods and verticals. Senior brokerage employees serve as auditors. This brokerage operation handles Schenker shipments and does customs clearance work for other clients. Within the operation is a key accounts team insuring premium service to major customers.

Schenker maintains a customs consulting group to advise customers on classification and other issues.

Air and Ocean Freight
Dave Rowswell, VP Airfreight, has been with Schenker in Canada for 33 years. His operations manager, Barry Edwards, has been there 30 years. It’s a tightly run operation that is in the IATA top 10 for Canada. About 35,000 shipments per year are handled.

Rowswell is proud of Schenker’s ability to out perform the major integrators for key customers. An example he cites is a consolidation run for emergency spare parts for BMW. Parts are consolidated daily at the BMW production plant near Munich and airfreighted to Toronto for distribution throughout Canada. The standard service from Munich to dealers is two days.

Running alongside the Toronto airfreight operation are the domestic transportation management section and ocean freight forwarder. The core ocean freight operations are in Vancouver.

The Future
Schenker has 750 employees in Canada concentrating on 160 accounts. Globally there are about 80 key accounts, most of which present U.S. expansion opportunities. A good example of where Schenker is going in the U.S. is a new parts distribution center opened by Richard Falk, CEO of Schenker-CCW in Indianapolis. This facility serves Heidelberg Printing Press and distributes throughout North America.

Murmann’s team can be expected to cross-sell heavily between its functional specializations. The emphasis is on finding more partners for whom Schenker can be a global supply chain manager.


Sources: A&A Primary Research, http://www.dbschenker.com/

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