CN: Mobile cranes help train keep a rollin’
For deliveries that positively, absolutely have to get there, rail may not be the first mode of transportation that comes to mind. Most of us think of freight trains lumbering across the prairie to deliver grain, coal or other commodities that get there when they get there. Yet, talk to Gordon Graham, senior manager of intermodal development for CN, and you learn that rail is now an integral link in today’s time-sensitive supply chains. “We’re not like your father’s train,” Graham explains. “Customers ship with us because of the quality of the level of service we provide.”
Service has become a critical enabler of CN’s success in recent years. “We are trying to grow opportunities by providing a reliable service that gets a container delivered when it’s committed to get it there,” Graham says. In fact, rail is increasingly an important link between trucks and ports in retail supply chains, just-in-time manufacturing and parcel delivery.
To make that transition, reliability is a key selling point. A customer trusts that his containers will arrive at an intermodal terminal in time to be transferred from a rail car to a truck, or vice versa, to get to the next point in their journey on time. For that reason, the mobile cranes, also known as reach stackers, that handle containers at CN’s network of intermodal terminals have to be available when they’re needed. To minimize downtime and ensure that critical parts are available, CN has developed a program with one of its mobile crane providers (Hyster, http://www.hyster.com) and their distributor (Wajax, http://www.wajax.com) to manage critical parts, especially expensive parts with long lead times.
Under the program, CN’s suppliers warehouse an inventory of mission-critical parts in quantities sufficient to keep CN in operation and in locations that allow for delivery in agreed-upon time frames, which could be relatively short to as long as 48 hours. The list of parts under the agreement ranges from components that can be easily swapped out and replaced during a repair up to and including a replacement mobile crane that’s available on short notice in the event of a serious equipment failure.
In addition, the distributor has assigned a key account manager and a master technician to work directly with CN, while factory engineers have trained CN mechanics to better service the equipment. CN looks to their suppliers’ expertise for recommended solutions to address CN’s demanding application needs.
The program is an example of two important trends. The first is the increasing importance of maintenance, repair and overhaul (MRO) to the materials handling industry, as systems become more time sensitive and complex, including automation in the distribution center and, in this case, yard equipment used in a port or terminal such as the mobile cranes employed by CN.
The second is that companies like CN are viewing their businesses from a broader supply chain perspective. As they look at ways to optimize an end-to-end process, they realize that inefficiencies at any given node have an impact in other areas of the business. For that reason, they are looking beyond just the price of a piece of equipment or service to what the provider can bring to the table as a partner in the business.
That type of thinking has long been prevalent in equipment intensive industries, such as commercial aviation, mining, power plants and oil and gas refineries. In those industries, any downtime has an immediate impact on customer service. Now, the real-time nature of just-in-time manufacturing, daily specials and next day/same day service is forcing transportation and logistics providers as well as e-commerce retailers to rethink their MRO strategies.
“If what we do at CN is inefficient because of an equipment failure, our end customer is disadvantaged,” says Graham. “That reflects poorly on us, and it reflects poorly on our suppliers. For that reason, we have to be comfortable with the level of support we receive from the component and service providers in our network.”
Reliability across the network
As Canada’s largest railway, and one of the largest rail operators in North America, CN operates 12 intermodal terminals in Canada and provides intermodal service to 11 additional terminals in the United States.
At a high level, intermodal terminals serve a simple function: They accept, warehouse and ship containers loaded with freight. Freight arrives at a port in containers before moving by rail to an inland intermodal terminal where the containers are held pending placement on trucks. Similarly, containers for export are trucked to an intermodal terminal where they are placed on a rail car. “You need an intermodal terminal to make those transfers from rail to truck or truck to rail,” says Graham.
Mobile cranes, as they’re referred to by CN, handle the heavy lifting required to make those transfers. CN operates more than 75 mobile cranes across its network in Canada, with additional units in the United States. The equipment is put through its paces. A container can weigh more than 70,000 pounds, which puts a lot of stress on the boom of the mobile crane. What’s more, the facilities operate 24/7, in all kinds of weather—including the bitter cold of a Canadian winter—and sometimes travel long distances over undulated and graveled surfaces. At some terminals, the mobile cranes operate more than 7,000 hours a year.
Despite a scheduled maintenance program, equipment still breaks down. “There are always going to be some unplanned maintenance events with any piece of equipment,” Graham says. The repairs themselves were not always the issue; rather, it was the availability of parts, especially for expensive parts such as the spreader attachment, drive axles and transmissions. “We maintain a stock of parts at our locations,” says Graham. “But it’s tough to keep a major structural part like a spreader at every location. At the same time, some of those parts are manufactured in Europe. They are expensive, they have a long manufacturing lead time and there’s a long transit time to get them shipped.”
For those parts, CN faced a Hobson’s choice: either tie up significant amounts of money in just-in-case inventory that isn’t used very often or face very long lead times when a breakdown occurs. While those expensive parts don’t fail very often, when one did, it was not unusual for a mobile crane to be out of service for several months until a replacement part arrived. Instead, CN took a third approach and turned to its suppliers. “At the end of the day, we wanted to minimize the impact of one of those events without having a lot of just-in-case equipment,” Graham explains. “What we were looking for was an equipment provider who understood the impact of downtime and would work with us to manage some of our parts inventory.”
A supply chain perspective
Partnering with a supplier also reflects CN’s supply chain focus in its operations. “Price is no longer the sole consideration,” says Graham. “We want suppliers who stand behind their equipment across their organization, including their dealers and technicians. Our OEMs need to understand that we not only want their equipment, we want access to their expertise and their ideas.”
The inventory management program supporting CN’s intermodal terminals is a reflection of that collaboration. The rail operator prefers to have the OEM and its distributor directly engaged in the supply and service of its equipment. It is looking for access to master technicians who can service the account and provide specialized training for its mechanics as well as experts who can suggest ways CN could optimize its operations. In this manner both parties can work contribute to improve the overall supply chain.
Under the agreement, the OEM and distributor hold key inventory in Canada at locations such as the distributors’ local branches close to CN rail facilities. Inventory is also maintained at the OEMs distribution center in Danville, Ill., and other strategic locations based on a service level agreement.
Once the agreement was in place, the next step was to develop the list of the parts that needed to be maintained, in what quantity and in what locations. That process got under way in the spring of 2014. The starting point for the analysis was internal. CN has a maintenance team at each intermodal terminal that manages its own inventory and workforce. At the corporate level, CN has a centralized fleet management group with a network-wide view of inventory, the ability to provide a higher level of technical support and to analyze where and why parts fail and how failures might be mitigated in the future.
Working together, the two organizations developed a list of the required parts based on prior history. That list was then shared with the manufacturer to develop an inventory plan based on the parts required, the location of the terminals that needed to be serviced and the locations managed by the OEM and distributor. “I understand that it’s not practical to keep a spreader attachment at every location,” says Graham. “At the same time, they don’t go down very often. So if we can get one in 24 or 48 hours, that’s sufficient.” In this agreement, for instance, only one spreader and one complete unit are maintained in inventory just in case.
“We haven’t had the need to pull the trigger on an emergency spreader or emergency crane as of yet,” Graham says. At the same time, the program and relationship illustrates the “stand behind our product and services” attitude that CN believes is crucial to its supply chain focus.
This program will serve as a model for similar programs CN is developing with other OEMs. “We’re no longer willing to buy a piece of equipment and take a chance on its reliability,” Graham says. “We want our OEMs to understand that if we’re not comfortable with the level of support they are willing to provide, it can cost them an order.”
Mobile container handling cranes: Hyster, hyster.com
Parts management: Hyster, hyster.com; Wajax, wajax.com