Don't let the name fool you. While Canadian Tire is one of Canada's leading sellers of tires and car care products, this mass retailer offers much more.

Think of a combination of Pep Boys, Home Depot and Wal-Mart and you have a fairly good idea of the kind of merchandise found in a Canadian Tire store. Products range from garden tractors to dinnerware, and just about everything in between. Clothing is really the only segment Canadian Tire shies away from except for camping and sports-related apparel.

'We have a unique position in the marketplace,' says Bruce Johnson, vice president of distribution. 'If you go to our hardware area you will find we have 32 different hammers. Some other stores carry only one. We pride ourselves on our depth.'

Carrying such a wide range of automotive and general merchandise requires distribution capabilities that can efficiently process a large number of stock keeping units (SKUs). Its newest  DC in Calgary, Alberta serves 137 stores in western Canada. In a departure from its two older DCs, both located near Toronto, the new facility was designed to eventually crossdock or flow through half of the total volume it receives. This allows significant operating improvements.

'The new DC represents a major departure from how we distribute to our stores,' says Johnson.

'Our service levels have improved, we've seen an increase in stock turns of 35% and our accuracy is up. Our productivity is also well on its way to goal and is ahead of schedule. With the improvements we have made here and elsewhere, we have reduced inventory by $50-million (Canadian).'

Responding quickly to customer demands is a hallmark of Canadian Tire. This mass retailer traces its beginnings to a small auto repair shop and tire store founded by two Toronto brothers in 1922. The brothers began selling auto parts and then branched into camping and outdoor gear upon the request of their customers. Such sensitivity to buyer needs is something the 460-store chain continues to emphasize to this day.

Unlike most major retailers, each Canadian Tire store is franchised. In a sense, it is the Associate Dealers who are the customers of corporate distribution. They operate the stores and buy the stock from Canadian Tire. To be successful, the company must deliver product quickly to meet the individual demands of the stores, which can vary greatly. Outdoor equipment sells better, for instance, in Western Canada than in urban Toronto. This requires all DCs to stock a broad assortment of inventory. Calgary alone carries 51,000 SKUs, including its automotive parts.

The addition of the Calgary facility also relieved the capacity restraints felt by the other DCs in supporting a growth plan of 10-20 new stores each year. And it eliminated much of the difficulties reaching distant stores, especially during unpredictable Canadian winters.

Calgary also is de-signed as a testing ground for crossdocking and other new processes that Canadian Tire hopes to roll out in its other two DCs next year.

In addition to a design that accommodates crossdocking, Canadian Tire also changed the way it operates with the Calgary DC. While it owns the building and inventory, it hired Genco Distribution System to manage it as a third-party logistics (3PL) provider.

'Genco has a strong management team and they give us instant benchmarking of our practices,' says Johnson. 'They also have experience with crossdocking, flow through and multi-channel processing.'

Moving to a 3PL has helped to control costs in Calgary's tight labor market and has given additional support in handling returns, a function which Genco already has provided to Canadian Tire for more than five years.

Another unique feature of the Calgary DC is that it was built alongside a Canadian Pacific rail line. More than 60% of the product processed by the new DC arrives from overseas and is placed on rail in Vancouver. Canadian Tire's property in Calgary has its own intermodal access for offloading container shipments and for sending product to Toronto.

Additionally, the Calgary DC will soon be implementing a put-to-light system for picking broken-case product for its stores. It is all part of the $200-million (Canadian) investment that Canadian Tire is making to improve store replenishment, order fulfillment and distribution capabilities.

Canadian Tire's headquarters in Toronto allocates as much of incoming receipts as possible before product hits the building. This aids in scheduling workflow and staffing. Suppliers are given these allocations before product leaves the vendors' facilities, which permits each vendor to produce compliant individual store shipping labels. This allows immediate crossdocking when the product arrives in Calgary.

Other items are allocated at 'the eleventh hour' with assignments delayed until the product enters the yard gate. These items, which are also crossdocked, are known as 'flow through' receipts.

'Flow through allows us additional time, sometimes gaining even weeks for allocation,' explains Johnson. 'It really helps us with our seasonal items.'

Delaying the allocation is another way Canadian Tire creates flexibility in its distribution network and allows a faster response to its franchises. These items must be received and labeled before they can be crossdocked.

There are three types of unit loads entering the building - a full trailer of one SKU, full pallets and individual cases.

Products arriving from overseas by rail are dropped at the adjacent intermodal terminal. Due to the distance of a trans-Pacific journey, many of these items require a large amount of lead time.

'The imports tend to come in earlier than needed,' explains Jacques Menard, general manager of the Calgary facility. 'We will not put them into the building until that product is demanded.'

Most are stored in the 560 trailers parked in the yard until that time. They are then brought to a dock door and picked as waves require that product. The trailers provide a very convenient and cost-effective storage system.

Receipts arriving as full pallets head to several possible destinations. Those demanded immediately for the current wave are taken by lift truck or pallet jack to the appropriate dock. Some products for later waves are transported to a holding area and staged until that wave runs. Other items are taken to replenish the pick modules, while the remainder head to the 15,000 locations in the reserve storage pallet racks. A small quantity of high-cube fast-moving items is also stored in a floor-level area. Winter snow tires and seasonal lawn and garden products find a temporary home in this bulk storage.

Full case receipts have similar destinations. Those needed for the current wave are unloaded by automatic extenders and conveyed to the shipping sorter for routing to the appropriate dock.

About 90% of arriving product does not rest on a pallet. Those cases not conveyed to the sorter must be palletized before taken by lift truck to reserve storage or to replenish the pick modules. The put-to-light area currently being installed will soon be another destination for receipts.

Tires and exhaust systems parts, such as pipes and mufflers, are received at docks close to their storage areas. Tires are stored on 5 by 5 foot pallets in conventional racking, while the exhaust products are deposited into specially-designed racks. Both auto lines are housed in a separate room designed with higher-rated sprinklers, due to the fire ratings associated with tires.

Bar code scanning is performed on all receipts upon arrival, then as product is gathered by a lift truck for putaway, and again when deposited into its assigned storage location. This allows the warehouse management system (WMS) to track products throughout the inbound processes.

Auto parts orders ship daily to each store as part of the company's commitment to customer service and due to the high volume demands of the auto products.

'The stores carry an exceptionally large amount of automotive parts, but only a limited quantity of each SKU. Therefore, the automotive orders are picked daily,' says Menard.

The general merchandise demand is driven by store replenishment, with orders filled once a week. Items for about 40 stores are processed each day in six or seven waves.

Receipts for the current order wave are immediately crossdocked to the appropriate outbound trailer. Items designated for crossdocking or flow through in later waves are pulled from their temporary storage and sent to shipping during the appropriate waves.

The facility features nine picking modules, which are constantly replenished with stock from reserve storage using lift trucks equipped with on-board radio frequency (RF) units.

Two of the pick modules serve auto parts needs with products stored on shelving. Cartoned items able to ride the conveyor are picked by label and placed onto a belt within the module. Smaller items are picked from lists and placed into returnable plastic totes.

The conveyed totes and cartons then enter an eight-to-one merge feeding the sliding shoe sorter. The sorter features 19 diverts, 14 of which are accumulation spurs for the outbound docks. Other diverts send many of the totes that are not completely full to a consolidation area. Here product is removed and combined into other totes heading to the same destination. This maximizes the cube for shipping.

Auto parts are picked every day of the week. On weekends when only a portion of the building is operating, a simple but effective workaround of the conveyor and sorting systems trims operating costs. Those days, products are picked from their locations into the totes as usual. But instead of being placed on the conveyor, the totes are sent down gravity-fed spiral chutes. They are then gathered at the bottom by lift truck or pallet jack and taken to the dock or consolidation area.

Cartons and totes are next manually palletized and wrapped using an automated wrapping system. Addition-ally, mixed SKUs of tires and exhaust products are RF-picked onto pallets from their racks and wrapped before readied for store shipment.

Currently the parts are delivered to 156 destinations, including stores that sell only auto products. Calgary also services regional parts warehouses known as 'attack depots.' These centers offer a faster response for critical parts needs.

Auto parts pallets are loaded onto contracted trailers that are taken to the carrier's hub and eventually loaded onto panel trucks for store deliveries.

The remaining seven pick modules serve general merchandise needs. Five contain pallet flow racks for full case picking. Picked according to labels, cases are pulled from the flow racks, labeled, and placed onto a takeaway belt.

The sixth module contains case flow racks and shelving and is designed primarily for split-case picking. Items are pulled from storage locations according to pick lists and placed into outbound totes that are then pushed off onto a takeaway conveyor. The system is designed with enough flexibility that split-case picking into totes can also be performed from the pallet flow racks as needed.

The remaining general merchandise module is currently being constructed for the put-to-light system. Once online, totes will be placed in racking with each tote representing a store. Items will be picked into the totes as directed by lights.

Items from the modules are conveyed through the merge and into the shipping sorter where they are diverted to outbound trailers. Powered extenders aid in fluid loading. Most of these items will be trucked to the stores, while some, such as merchandise for Vancouver stores and product needed in Toronto, are loaded into rail containers that will be ferried across the yard to the intermodal terminal.

Calgary plans to significantly increase crossdock and flow-through volume next year, but even in ramp up, it is already seeing solid results.

'If you spend time on why you do things the way you do, you will get the savings you desire,' says Johnson.

Efficiencies are expected to increase as more crossdocking is performed and capacities grow. The building is also due for expansion in a few years to 850,000 square feet.

'The Calgary DC is a marvelous addition to our distribution network,' notes Johnson. 'It has increased service levels to our customers and increased the capacity needed to support our growth.'

The relationship with Genco has additionally been rewarding.

'I view Jacques Menard (a Genco employee) as just one of my managers,' says Johnson.

'It has been a very successful start-up,' adds Menard. 'Our expectations were well planned and very disciplined. Everything was talked through and measured. We understand Canadian Tire's expectations and saw how we can add value.'

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