High Volume, High Value, High Touch
UTi’s Success in Eastern Canada
November 30, 2011
By
Richard Armstrong
Participants:
Greg Stamkos, Sr. Vice President and Chief Operating Officer
Carlo Lepore, Vice President – Client Solutions
Rob Chanona, Vice President – Operations
Chris Penley, Regional Vice President – Freight Forwarding
John O’Connor, District Manager – Freight Forwarding
Aneet Sihota, General Manager – Supply Chain Operations
Tharma Kumar, Vice President and Director – Manufacturing Operations
Shawn Ragoobar, Vice President – Operations
UTi Contact Logistics and Distribution has successfully employed a strategy of satisfying high volume, high value, and high touch clients in its six showcase Toronto warehousing operations. In Toronto, telecommunication clients provide 60% of the business while health, beauty and pharmaceutical clients account for 20% and fashion and retail clients account for 10%. In Markham, a majority of its clients are major automotive suppliers.
To put its Canada contract logistics operations together, UTi made two key acquisitions. In 2004, it acquired Unigistix, a value-added logistics provider that focused on telecommunication, pharmaceutical, health, and beauty and fashion retail accounts, and in 2006, it acquired SPAN International, a contract manufacturer with vendor managed inventory and hubbing operations that focused on hi-tech and automotive accounts.
UTi provides a large number of value-added services for its clients.
UTi’s value-added services:
- High Volume Pick & Pack
- Kitting & Co-Packing
- Garment On Hanger (GOH)
- Heat Sealing/Clamshelling
- Point of Purchase (POP) & Collateral Distribution
- Lot & Date Control
- Good Manufacturing Practices (GMP) Certified Facilities
- In-House Regulatory & Health Canada Quality Control (QC) Manager
- Temperature & Humidity Monitoring
- Reverse Logistics
- Recall Services
- Triage
- Vendor Managed Inventory (VMI) & Hubbing
- Electronic Component Manufacturing
UTi Contract Logistics’ six modern warehouses are made up of a campus location in Brampton with four distribution centers totaling approximately 800,000 square feet complemented by additional distribution centers in Mississauga and Markham.
Overview – 250 First Gulf Boulevard
The warehouse at 250 First Gulf Boulevard in Brampton is a good example of a UTi facility. It has over 300,000 square feet of space and a staff of 150 associates that provide extensive standard and value-added services. This multi-client facility is ISO 9001:2008 certified with 42 dock doors, a 32 foot clearance, a radio frequency (RF) paperless environment and has onsite IT support. A series of vertical specific warehouse management systems are used in order to provide the best functionality required for each vertical.
The facility has more than two dozen clients. For many of the clients, UTi provides in-house co-packing and heat sealing services where thousands of cell phone kits are prepared and shipped every day. The location also receives inbound shipments to support three manufacturing sites of a global cosmetics client in Toronto. Additionally, returns management is handled for almost all of UTi’s clients in the facility.
Extensive security measures have been taken at this facility and are typical of the other Toronto warehouses.
Security at 250 First Gulf Boulevard:
- State of the art security systems and processes
- Closed-circuit television (CCTV) cameras covering interior, exterior and high security product with video capture to approximately four years
- Cameras viewed daily for function
- Limited building keypad access/intrusion alarm system
- Receive and review weekly monitoring station reports of all keypad activity
- All system hardware centrally located within a secure computer room with limited access
- Intrusion alarm system monitored 24/7 offsite with priority call list
- Guards always on site whenever employees are present in the building
- Guards perform random rounds of inspection
- Security system operates utilizing various methods including beams, motion, audio and door contacts
Overview – Airport Road
The UTi Airport Road facility has physical features and security like those at Gulf Boulevard. It varies by being 230,000 square feet, having 328 warehouse personnel and a fully integrated returns/repair center for its telecommunications/hi-tech clients.
At Airport Road, there are six major clients across its key verticals. Several thousand orders a day are processed for one of UTi’s largest telecommunications clients. Associates are shifted temporarily as needed to cover surges for individual accounts. There are 30 processing lines each for business-to-business (B2B) and business-to-customer (B2C) clients. Outbound shipments for package carriers are grouped by seven zones for Canada. Twenty-two dock doors are used for inbound and outbound shipments.
UTi’s Reverse Logistics Center operates 75 workstations to process returns. It is used to handle one client’s cell phone testing/repair services supporting all the original equipment manufacturers (OEMs) across its handset lineup; services include testing with level R1+R2 repairs. UTi’s integrated, end-to-end testing and repair solution in support of its reverse logistics center has eliminated multiple touch points and freight costs and improved turnaround time on the devices significantly.
Device Repair Services
In addition to all the telecommunication activity at this location, UTi services a fashion retail client warehousing and shipping this client’s entire Canadian inventory of premium work wear. Four containers per day are normally received and 80,000 orders per year are shipped.
Airport Road Facility
Overview – 350 Parkhurst
350 Parkhurst is a 173,000 square foot facility with eight clients. There were 116 employees when we visited. As in other UTi locations, a variable flexible team member model is utilized, whereby UTi’s human resources team supports all recruiting, training and ongoing team member management to support the operations where full-time employment for the team members is the goal. RF is used for most activity but some paper picking is done.
UTi also supports a large apparel client with both GOH and flat pack. Up to 25,000 garments can be hung at one time. Steamer, pressing, labeling and retagging are among 25 value-added services performed. 100% inspection is done before shipping. About 200,000 pieces are shipped each month.
Parkhurst Facility
Garment Pressing
Additional Facilities Overview
The remaining three facilities consist of a location at 30 Driver Road in Brampton, a location in Markham and another location in Mississauga. At the 30 Driver Road location, UTi operates a smaller 70,000 square foot warehouse with more pallet in/pallet out activity. Services include pick & pack, cross-docking, labeling, specialty packing and kitting. UTi Managed Transportation Services has an office at this location.
In Markham, UTi has based its Electronics Manufacturing Services (EMS). EMS does sub-assembly, material sequencing, inspections and testing, component screening and sorting, Kanban fulfillment and dunnage management. It has the manufacturing capacity to do five million circuit boards and modular assemblies a year. It supports Tier 1 companies like Delphi, Laird Tech, Ferranti-Packard, RDM and Visteon. On the automotive side, EMS has taken care of products such as Sirius radio antennas and heated seat controllers for major Tier 1 and auto OEMs. In many cases, it has facilities near manufacturing locations for just-in-time (JIT), VMI and Kanban fulfillment.
Lastly, the primary UTi Freight Forwarding operation is located in Mississauga. Air, ocean and cross-border distribution are handled from this location. Freight forwarding operations for UTi in Canada involve 85 team members. UTi maintains a sufferance warehouse for inbound movements. Other freight forwarding locations are Leamington, Montreal, Calgary, Vancouver and Niagara Falls.
UTi Freight Forwarding and UTi Contract Logistics are preparing to move into the same head office to expand their collaborating opportunities. As a result, we expect an increase in integrated solutions and global supply chain management.
Sources: A&A Primary Research, https://www.us.dsv.com