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FMA Supply Chain Executive of the Year: Neil McKenna

Neil McKenna’s leadership helped establish Canadian Tire’s supply chain in Canada and now his sights are set on an international footprint

In the eyes of Neil McKenna, failure is a rite of passage for every leader. People make mistakes. But only by being accountable for them and learning from them can leadership be formed, says the vice president of transportation projects at Canadian Tire Corporation (CTC) and the 2019 recipient of the Freight Management Association of Canada’s Supply Chain Executive of the Year award.

His leadership style is revealed in the latitude he gives those who report to him, to empower them in making hiring decisions.

“When one of my AVPs (associate vice presidents) would need to hire a manger, they would seek my opinion and then ask me to approve their choice,” he tells Canadian Shipper in an exclusive interview.

“If I have to approve of a hire then that’s like me doing the hiring,” explains McKenna. “I want them to be accountable for their decision.”

McKenna joined Canadian Tire in 1994 as finance manager in the transportation division. During his time at Canadian Tire, McKenna has been involved in just about every aspect of the company’s transportation supply chain, from director of international transportation, where he was responsible for bringing in product from around the globe, to ensuring those products made it on to the shelves of CTC’s nearly 500 Canadian Tire Retail (CTR) stores as director of domestic operations. In 2008 McKenna was promoted to vice president, transportation, a position he held for 11 years before moving into his current role, where he oversees the development of CTC’s e-commerce delivery capabilities across the enterprise, as well as working closely with the consumer brands division, providing supply chain support as CTC looks for new global markets for its products.

During his nearly 25 year’s at Canadian Tire Corporation, Neil McKenna, FMA’s Supply Chain Executive of the Year, has helped to create one of the best-in-class transportation supply chains in North America. (Photo by Peter Power)

To grasp the scope of Canadian Tire’s transportation supply chain, you must understand that the company is more than your local Canadian Tire outlet.

In addition to its 500 general merchandise retailers, CTC also owns the SportChek, National Sports, Pro Hockey Life, and Atmosphere banners, combing to create Canada’s largest national sporting goods retailer; Mark’s (380 stores), a clothing and footwear retailer; Canadian Tire Automotive, with 5,600 service bays; Canadian Tire Petroleum, one of the largest independent gasoline retailers, which pumps more than one billion litres of gasoline each year at over 260 outlets; Partsource (91 stores), an automotive parts specialty chain; and as of this year, Party City Canada (65 stores), a premier retailer of costumes, accessories and decorations.

In 2018, CTC acquired Helly Hansen, a global brand in sportswear and workwear, with wholesale and retail distribution capabilities across more than 40 countries. The addition of Helly Hansen has accelerated CTC’s ability to distribute its consumer brands internationally, which is where McKenna plays an important role in expanding the company’s supply chain capabilities.

McKenna’s latest role is evidence of the evolving retail landscape. Over the past few years, the company has transformed to become a leading e-commerce organization, offering customers flexibility in how and when they want to shop. This has altered the function of supply chains, that now, in addition to shipping large volumes of products to stores, must also deliver individual items ordered directly by customers to their home or closest store for pick-up.

Transportation is the artery that provides an uninterrupted flow of goods from manufacturers all over the world to CTC’s store shelves.

The company’s transportation operations are Canada’s biggest importer of freight (22nd in North America), shipping more than 160 million cubic feet of product to its retail network, utilizing Canada’s largest fleet at over 14,000 pieces of equipment. Handling all that merchandise is done at four transload facilities—three in Vancouver and one in Halifax—and six distribution centres, three in the Greater Toronto Area, two in Calgary, and one in Montreal.

Managing transportation operations in such a complex supply chain requires constant innovation, something McKenna excels at, according to his successor as vice president of transportation, Gary Fast.

“Under Neil’s tenure CTC’s transportation capabilities have become a model of innovation and represent supply chain best practices. He has been a trailblazer in our industry.”

Fast highlights several important projects headed by McKenna during his term, including Canadian Tire becoming the first carrier in Ontario to run longer combination vehicles (LCVs) with containers, developing the world’s first 60-foot container and 40-60-foot sliding chassis, as well as spearheading the integration of all CTC’s transportation functions and banners.

From McKenna’s perspective, getting the province of Ontario to approve the use of containers as part of its LCV program is one of his most satisfying accomplishments.

“When Ontario was on the verge of allowing LCVs on its highways, which were already allowed in Quebec and Alberta, they were only going to allow LCV trailers. We had 5,000 intermodal containers that would have been excluded, which would have put us at a considerable competitive disadvantage.”

Instead of the usual lobbying of government officials, McKenna came up with an ingenious plan that involved the use of an empty 200-acre parking lot.

“At that time construction of our Montreal DC had been completed but had yet to begin operations. We engaged a retired Ontario Ministry of Transportation engineer to construct an exact replica of two Ontario intersections in the DC’s parking lot.”

Working with their partners at Robert Transport, McKenna’s team assembled every possible longer combination configuration of containers— two 53-foot, two 40-foot, and a 53-/40-foot.

“We invited all the Transportation Ministers from Ontario, Quebec, Nova Scotia and New Brunswick for a demonstration and spent a day educating them on why containers should be included in any LCV program. They took turns riding the LCVs, executing on- and off-ramp turns, which demonstrated that the turning radius of a 53-foot container was identical to that of a trailer.”

According to McKenna, within 72 hours of the parking lot demonstration, Ontario allowed containers to be part of the approved LCV program, soon followed by Nova Scotia and New Brunswick.

Managing expectations

Key to McKenna’s success during his nearly 25 years at Canadian Tire has been his mastery of what he calls the “theory of competing margins.”

“Transportation is essential to the success of any retailer and it is a necessary cost. So, it is incredibly important that it be managed efficiently and optimally, but it’s not as simple as just moving the product,” he says.

“When you are responsible for every step in the supply chain, from the manufacturer’s loading dock to a Canadian Tire retail store’s shelf, there can be as many as 20 different touch points along the way.

“Once a purchase order is sent to a factory, we then engage our offshore logistics provider, who trucks the product from the factory to either a consolidation location and then to the port or to the port directly in the case of full loads.”

From there, it is a dizzying array of moves, as first an ocean carrier delivers a container to a Canadian port, where it is trucked to a transload facility to be transferred into a domestic container, before being driven and loaded onto a train. Next up is another truck trip to a distribution centre, where the goods are unloaded again and stored before the final-mile delivery—by truck—to a retail store.

It is during this complex journey that McKenna’s theory comes alive.

“Normally you’d think that our margin would be the difference between what we paid the manufacturer for the unit and what we sold it to our customers for,” he says. “But in reality, every trucking company, third-party consolidator, ocean carrier, terminal operator and railway did their part at a cost, for which they would also like a margin, which eats into the only real margin. So the real difference between what we pay and what the customer pays is less all the costs in getting the product from there to here.

“The more effectively you can manage margin expectations across the supply chain, the more competitive you will be, and CTC is known throughout North America for this kind of best-in-class management.”

For McKenna, managing people is different than leading them.

“Managers manage people and/or processes. Leading inspires people to be better. If you have never been asked by someone who reports to you about leadership characteristics, you don’t have them, and you are not leading,” he emphasizes.

“Leadership is operating and performing in such a way that gives people confidence. A role or title doesn’t entitle you to be a leader. Only your actions will define if you are an effective leader or not.”

Fast is among those who count McKenna in the former category.

“Above all, Neil’s mentoring has produced many senior leaders within Canadian Tire’s supply chain and his collaborative approach and passion for developing talent is infectious and drives those around him to be their best.”

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