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HAVING GOTTEN THE start-upbugs out of its Guelph, Ont. warehouse,the TDL Group has turned its attentionto making the facility as lean as possible.

“Lean isn’t just for manufacturinganymore,” says Ken Hare, director of dis-tribution at the 155,755-square-footfacility that handles weekly deliveries tomore than 1,200 Tim Hortons locationsin Central Canada.

“We’ve been on a lean journey for thelast year or so, and it has really stabilizedour operations.”

Hare told visiting supply chain pro-fessionals recently that the warehousewhich opened early in 2006 has beentransformed by principles like kanban,kaizan, and 5S. And even bigger processimprovements are expected in 2010.

“I’m a big believer in this initiative,”he says. “The results are undeniable.”

Allan Young, national operationsmanager at the facility, says the first stepsin the company’s lean journey involvedrudimentary process changes, strategicrealignments, and the introduction ofnew systems to eliminate obvious wasteand improve the flow of the operation.

“That was up to 2008,” he says. “Butonce you’ve picked the low-hanging fruitand you’re climbing higher into the tree, ittakes more resources to get the sameimprovements. You really need someone tohelp capture more efficiencies,” said Young.

Enter Mike Rogers, the company’snewly hired lean expert. He has a back-ground in manufacturing, where manylean initiatives and just-in-time effortswere first modeled.

His goal for next year is to further

refine the company’s management sys-tems, concentrate on continuous im pro ve -ments, and optimize flow and pull.

“That’s where we really earn our pay,”he says.

In fact, the company is so focusedon continuous improvement that thereis evidence of it everywhere one looks –on the warehouse floor, in commonareas like the lunchroom, and in offices.On a whiteboard in the board room,yellow Post-it notes trace all the steps ina particular procedure that is under themicroscope. Question marks indicatewhere there’s waste.

A peer recognition system encour-ages the 420 workers at the facility(including about 150 drivers) to nomi-

nate colleagues who have made a contri-bution to warehouse efficiency. Theircommendation cards are displayed for allto see and are occasionally pulled at random for prizes.

There are also several idea boardswhere employees can offer opinions onhow processes can be improved. Evenrejected ideas are acknowledged by man-agement. They don’t simply disappearinto the ether.

The company even asks the visitingsupply chain managers to keep their eyesopen for new efficiencies and reportthem at the end of the tour.

No opportunity to make the facilityeven leaner is ignored.

The TDL Group has five warehouses

CASE STUDY: Tim Horton’s

Lean doughnutsTDL Group says keeping Tim Hortons franchises properlystocked takes a commitment to continuous improvements.BY ALLAN JANSSEN

TDL national operations manager Allan Young (left) and lean expert MikeRogers discuss warehouse strategy at one of the Guelph, Ont. facility’s ubiquitous white boards.

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in Canada (the others are in Kingston,Ont.; Langley, B.C.; Calgary, Alta.; andDebert, N.S.). The Guelph facility, whichsits on 42 acres just north of Highway401, is the largest. It features two 100-footstorage towers – one kept at ambienttemperatures, the other refrigerated forfrozen goods – serviced by a state-of-the-art automatic storage and retrieval system (ASRS).

Pallets ride the ASRS conveyors onslave boards – to avoid the inconvenienceof having a pallet collapse 100 feet in theair. The practice has proven useful, butadmittedly leads to some extra handlingbecause boards must ultimately bereturned to the receiving area.

Even this, though, gives TDL anopportunity to utilize a kanban system ofvisual replenishment cues. The slaveboards are collected in designated spots

and when their height extends above thegreen and orange markers on the side ofthe bin, and into the red, they’re ready tobe moved.

Visual indicators are everywhere,including where supplies and tools arekept. Open spaces indicate that somethingis missing, and employees are trained tonotice it, and find out what’s missing,where it is, and why it’s not in its place.

“At a glance we should always be ableto see what’s going on with the opera-tion,” says Rogers.

To that end, there are plenty ofboards which serve as focal points forworkers. Pre-shift meetings are held atthe whiteboards, where work assign-ments are reviewed, and scorecard data isdiscussed. In the same area, post-shiftmeetings are held to review the day’sactivity, with an eye for finding new

solutions and efficiencies.They know what they’re looking for.

Most of the material handlers who workin the warehouse have now taken leancourses.

“We’ve had a good buy-in from thefront-line employees,” says Rogers.“There’s still a tendency for them to tellmanagement what needs to be done andexpect it to be implemented from above.They forget that the new culture is forthem to do it themselves. They’re empow-ered to take steps to improve the process.”

They try to do a 5S audit (theacronym stands for “sort, set, shine, stan-dardize, and sustain”) in at least one areaof the warehouse every day. All audits areconducted with a warehouse worker anda supervisor, and the results are postedfor all to see.

Less than 90% success indicates thatthere’s a fundamental problem and theteam establishes an action item to fix it.

All processes in the facility are docu-mented, some with photographs andscreen captures, and they’re all auditedon a regular basis. Sometimes it is deter-mined that the prescribed steps are notbeing followed – which might mean abetter way has been found to do the samejob. If so, it is properly documented andbecomes the default process.

Well-defined processes are critical,says Young, when you’re carrying 2,500SKUs, in quantities that vary from 12-days worth to two-hours worth.

The fastest-moving products likecups and lids, are kept in trailers in theyard and are never really put away.They’re brought into the staging area asneeded, and treated in a cross-dock fash-ion. Most of everything else, however,rides the ASRS into the towers, wherepallets are stored two deep. They’re meas-ured for size and weight before being putaway, however, and any discrepanciesbetween the expected measurements andthe actual are manually checked.

Once the product is put away, theware house management system monitors

CASE STUDY: Tim Horton’s

From left, Darrin Noseworthy, Murray Vanduyvenvoorde, andBart Warzecha gather around a personnel board.

From left, Shawn Johnson, Buzz Houle, and Matt Columbro discuss warehouse assignments.

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inventory levels. When there’s less than apallet left, it triggers the ASRS system toreplenish.

Automation comes in particularlyhandy in the freezer area, where pickingin -5°F can be unpleasant. To make up forthe discomfort, warehouse workers get a

dollar an hour premium to work in thefreezer area.

Receiving from the company’s 100vendors is largely completed during the12-hour day shift. The picking of about55,000 pieces a day (sometimes as manyas 72,000 pieces) takes up the correspon-ding night shift.

Future lean measures will improvepick times by arranging for product toarrive at the designated bay at the sametime to minimize staging time.

“Next year we’d like to run the

picking process in more of an assemblyline fashion to achieve greater flow,” saysRogers. Early testing suggests this willcreate greater flow and pull efficiencies inthe warehouse.

The point of the company’s obsessionwith lean, says Young, is to create capacity.

Already inventory improvements haveallowed TDL to bring some third-partystorage in house to generate revenue.

“We believe we have huge efficiencyimprovements coming next year with thenext lean processes,” he says. “We’re hopingfor a 10-per-cent improvement or better.”

“The trick is to implement new ideasquickly and prevent backslide with man-agerial support,” says Rogers. “If youdon’t have that back-up, your improve-ments could stall.”

Change management has been fairly

straightforward, given that employeeshave been part of the process from thebeginning.

“They’ve been part of all thechanges,” he says. “It’s not like manage-ment’s driving it down. The participantswere people from the floor. They figuredout how to achieve the goals that we setout for them. You have the acceptancebecause they’re part of the discussions.They drafted the standard work, theycame up with the best methods, theywere part of the experimentation and thetesting.”

Hare says employees welcomed theopportunity to get involved in problemsolving. “They were helping to eliminatesome of the frustrations they were experiencing and the problems they were having.”

Perhaps the bigger adjustment had tobe made by warehouse managers, saysYoung.

“I think the biggest change has beenin our leadership team. We thought thatwas our job: to solve all the problems thatare out there. And it’s not. Our job is towork with our people to solve the problems.” !

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Warehouse workers like (from left) Clint Fisher, George Kane, and Ryan Grodde are helping identify areas of improvement.

Automation comes in particularly handy in thefreezer area, where picking in -5°F can beunpleasant. To make up for the discomfort,warehouse workers get a dollar an hourpremium to work in the freezer area.

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