Greening the grounds finding economic and sustainable returns - murphy - nov 29- 2012 prof pesch guest - st cloud state university

Murphy Warehouse Company Case
Owner’s Perspectives
Greening The Grounds:
Finding Economic and Sustainable Returns In Supply Chain Logistics

November 29, 2012

Richard Murphy Jr. ASLA
President & CEO, Murphy Companies
Past President, American Society of Landscape Architects – MN Chapter (ASLA-MN)
Past Chair, Center for Transportation Studies (CTS), U of MN
Past Chair, Council of Supply Chain Management Professionals (CSCMP)
E-mail: richard@murphywarehouse.com

Resource Allocation Decisions
Green Sustainability Returns vs. Economic Returns
Is a Balance Possible?
What Can Drive this Balance Analysis

1

Perspective

Presentation Flow
• Where Do I Come From
 Intro to Murphy
 Intro to Logistics World
• Site Level - Green / Sustainable
Practices with ROIs
 Native Prairie Planting – why plant & maintain,
economic ROI (return-on-investment) results.
 Trees + Prairies Carbon Sequestration
 Stormwater Management – how to be green and
economic at the same time.
 Urban Heat Island – mitigation strategies
 Solar Power Generation – using state of art
technology, designed and manufactured in Bloomington, MN.
 LED Lighting Technology – ROI Analysis
 Carbon Neutrality – Murphy’s practices getting very
close at 12.83%

• Why We Went LEED & Energy Star
Certification
 5 Strategies

Perspective

Sustainability Certification
LEED Gold & Silver and Energy Star

GOLD Top 1%
2 LEED GOLD & 1 LEED Silver Certified
“Existing” Facilities (GOLD: July 2010 - built in 1994 and
1996; SILVER: Nov 2012 – built 1999)
 Minneapolis Campus Spring 2013
 Eagan Campus Spring 2013; Target level
Gold/Platinum

Energy Star Certification
 Scored 99 & 98 on 100 point scale (Aug 2010).
 Central Ave scored 87 (Jan 2012).
 Minneapolis & Eagan review Winter 2012/3.

2

Perspective

Sustainability Certification
ISO 14001 and SLI Certification

ISO 14001 Certification
 Environmental Performance &
Management Certification; Nov. 2012.

Sustainable Logistics Initiative
 International Warehouse Logistics
Association sustainability certification for
the 3PL Logistics Industry.

Where Do I Come From
Supply Chain Logistics / Transportation

Why Care About:
Touches Everything We Do

8.3% of Economy!

3

Why Care About:
Touches Everything We Do
% of Economy

8.3% Logistics
$3.78 per person in U.S.

vs.

17.3% Healthcare
$7.89 per person in U.S.

Perspective

Why Care About:
Strategic Advantage - Supply Chain Execution
Apple iPod Global Supply Chain – leading edge tech
would be wasted if time to market was too long!!!
 Steve Jobs said the supply chain was the
key to Apple’s success…!!!

Apple has been the #1 Supply Chain
in the world for 6 straight years..!!

4

Perspective

Why Care About:
Strategic Advantage - Supply Chain Execution
P&G’s success relies on this and so do many others
 Yes, the great ads, packaging, shelf designs,
marketing, sales, etc. help….
 But if the product isn’t on the shelf when
you want to buy - it doesn’t matter anymore

Perspective

Why Care About:
UPS’s new branding campaign has pulled
back the curtain and introduced the consuming
public to the importance of supply chain logistics
in their lives and the economy

5

Perspective

Warehousing in Logistics
5 Billion Sq. Ft of warehousing in U.S. (ProLogis)

Perspective

5 Billion Sq. Ft of warehousing in U.S.
Floor area equals a 4 foot walkway from
here to the Moon…!!!
The 5B only includes what’s under roof. Add another
40-50% to add outdoor dock & staging areas.
Industry has a massive impact
on the Nation’s landscape

6

Perspective

5 Billion Sq. Ft of warehousing in U.S.
Equates to a 4 foot by 4 foot square of space
in a warehouse for every man, women and
child in the U.S….all 330,000,000 of us…!!!
4 Feet
….a big footprint on the landscape!

4 Feet

In the Beginning…1904
4th Generation Family Business
“Feeding the horse-power was key”

7

Perspective

Who is Murphy
Logistics Services Company / 3PL
We are a Service Company
 Warehousing, distribution, transportation, value-
added, fulfillment, international, etc.
We handle products throughout their life-cycle
 From raw materials to in-process goods
to finished products to returns for
numerous industry segments.

Square Feet Operated: 2,800,000 ; Employees: 185
Companies Served:
 ISO 9001 & 14000 / OSHA SHARP / Organic Food Certified Fortune 100 to Small Entrepreneurs
 LEED “Gold” Certified / Energy Star Certified Facilities Domestic and Global
 US Customs – CES, CFS, GO; FTZ (Foreign Trade Zone)
Industries Served:
SKU’s Controlled: 29,000+ ; Orders / Month: 30,000+ Retail / Catalogue / Consumer
Truck Loads Handled / Year: 120,450 Medical / Health Care
Rail Cars Handled / Year: 9,000 (equivalent to 31,500 TL’s) Grocery / Food Processing
Beverage
Plastics
Recreational / Camping
Industrial
Forest Products (Paper/Packaging)
International

3PL – “3rd Party Logistics Services Provider”

Perspective

How do firms use Murphy
13 Examples
1. Big Box / Mass Merchant / Retail
Global Sourcing – Domestic Distribution
100%
2. 80%

3. Domestic Sourcing – Domestic Distribution 60%

4. Vendor Consolidation Park 40%

5. Seasonal Space Offsets Seasonal Spec
20%

Sugar
6. Domestic Manufacturing Support / JIT Plant 0%
Jan
Feb
March
April

Aug
Sept
Oct

Jan
May
June
July

Dec
Nov

Support
7. Distribution / Transportation Services
• Regional Distribution
• U. S. Distribution
• Consolidation / Cross Docking
• Rail Transload / Truck-Rail-Ocean Integration
8. Contract Logistics
9. Medical Support Logistics
10. Value Added Services
• Parts Assembly
• Pick and Pack operations
• Packaging
11. Customer Returns Processing
12. Core Competency Strategies Solutions
13. Build to Suit Operations and Warehouses

8

Perspective

Medical Support Logistics
JIT Replenishment
Surgical Kits
Custom kits for various surgery operations
 Customized for teams of Doctors at every hospital.
 Kit contains all the items needed for a surgery.
 JIT delivery to hospital.
Hospital Supplies
 IV Solutions, Needles, Dressings, etc.

Mass Merchant Retail Support
Store Backroom Logistics
Supply of 1500+ Stores with items to run stores
 Supplies, training manuals, uniforms. Sales/promo
materials, bags, etc.
 Full “pick-pack” operation..

Perspective

Customer Returns Management
“Reverse Logistics”
What happens to your clothes once they
reach the final end of retail
Clothing – garments shipped overseas for fibers to be
separated and reused.
 A local fashion designer has a clothing line made from re-
cycled threads.
Shoes – rubber soles recycled; fabric used as compost.
Leather Goods – reprocessed into other leather items.

Regional Distribution
Contract Logistics - 5 State Distribution
Beer: Domestic + imports + end-of-isle displays.
 Operate at 40-55º; keg room at 36º
 Strict lot control & rotation: “Born-on Date”
 Facility handles 18 rail cars indoors at one time
Reduces Distributors’ Cash Flow Requirements
Typical Beer activity: 52 turns per year
 DC Designed for “Flow-through”

9

Inbound Flow - Raw Materials

Global Sourcing –
Domestic Production
Multiple Concepts in Operation
Food Products – Raw, In-Process & Finished
• Import From Middle East & elsewhere
Vendor Park (Global Consolidation Point) Outbound Flow – Finished Goods
• North America Distribution

U.S. Distribution
Recreation Industry
Canadian Companies Covering
Entire U.S. from One Central DC
Operations Include:
 Item Pick / “Pick-Pack”
 Case Pick
 Pallet pick
 Small-to-Large Order
 Custom Labeling
 Carrier Selection and Management

Product Assembly &
Packaging
Value Added Services
“Postponement”
Important Concept in Marketing
• Allows manufacturers to “postpone” final
format of products
• Reduces total number of SKUs and
inventory size
Tray Pack
• Allows customization to customer specs
at last minute
• Typical services include:
 Brand labeling / Packaging (private label)
 Order entry and customer service
 Kit assembly / Make-to-order
 Multi-pak creation
 Shelf / end-of-isle display ready Halloween Candy
 Reverse logistics for store returns Mix packs
 Product repair
 Inventory control

Multi-paks

End-of-Isle
Displays

10

Value Added Services
Postponement Concept
Retail Supply Chain – Big User
Increasing Important for Retail Sectors:
 Club Stores
 Mass Merchandisers
 Box Retail / Department Stores
 Auto Stores & Repair Channels
 Grocery Wholesalers & Retail Chains
 Super-sized Stores

Murphy Project Example
 Multi-vendor 4th of July promotion
 End-of-Aisle Displays
 Multi Vendor Sales Promotions
 Master invoicing & coordination

Murphy Rigging & Erecting, Inc.
A Rigging / Millwright Contractor
Clients:
Manufacturers to Printers
Medical to High Tech.
Artists to Classified Military.

From Very Precarious Handling….to Very Heavy Lifts
….to Fragile Works of Art….to Delicate and Expensive
Medical Devices

11

Perspective

Richard Murphy, Jr. ASLA
Where Else Do I Come From…???
Landscape Architect
MLA Harvard Grad School of Design
MBA University of Minnesota
BLA University of Minnesota

Adjunct Professor
College of Design, U of MN
25 years so far…

Sustainability / Green Practices
A Fresh Perspective
Traditional Focus is Inward Looking
 Lighting, HVAC, forklift & truck fuel, packaging,
recycling, green purchasing, etc.

Added Focus is Outward Looking - Site Level
Green / Sustainable Practices
In many cases these represent “low-hanging fruit” with short ROIs.

 Native Prairie Planting – why plant & maintain,
economic ROI (return-on-investment) results.
 Trees + Prairies Carbon Sequestration
 Facility Design: Stormwater Management –
how to be green and economic at the same time.
 Urban Heat Island – mitigation strategies
 Solar Power Generation – using state of art
technology, designed and manufactured in Bloomington, MN.
 Impact of Solar on Mortgage Finance
 LED Lighting & ROI Analysis / Decision –
350,000 sq. ft. case study in Eagan by Murphy
 Carbon Neutrality – Murphy’s practices getting very close
at 12.83%

–
–

–
–
12

Case 1 - Native Prairie vs. Lawn

A Question I Ask
Industry Audiences:
Have you ever given much
thought to your facilities?
 Landscape?
 Stormwater?


A Question I Ask
Industry Audiences:
Have you ever given much
thought to your facilities?
 Landscape?
 Stormwater?

….You Should…!!!

13


Native Prairie vs. Lawn
Three Questions
1. Is there a cost difference?
2. Is there an environmental difference?
3. Do they look OK?


Fridley Logistics Campus
4700 & 4850 Main St NE, Fridley, MN 55421
Location of cost figures & 500,000 sq. ft. of warehouse.

Brown areas are native prairie
Photo taken in early spring.

14

Site: 4700 & 4850 Main St NE, Fridley, MN 55421
Actual data from Murphy expense records
Facility Design
Is there a cost difference – YES Total Cost Differences
Annual Maintenance Costs
$25,000
 Why have manicured lawn entirely surround
large DC & manufacturing facilities? $21,650
 Manicured lawn costs 7.3x move to $20,000
maintain than native prairie plants!
 Much more environmentally friendly and

Total Costs
sustainable! $15,000

$10,000

$5,000 $4,240

$-
6 acres 4.2 acres
Praire Areas Lawn Areas

Is there a cost difference – YES Native Prairie vs. Lawn
Total Cost Differences
Annual Maintenance Costs
If all 10.2 acres is cut lawn $60,000 $6,000

$52,652
$5,167
$50,000 $5,000

$40,000 $4,000
Cost per Acre
Total Costs

$30,000 $3,000

$21,650
$20,000 $2,000

$10,000 $1,000
$4,240
$707

$- $-
Praire Areas Lawn Areas If All Cut
6 acres 4.2 acres Lawn
10.2 acres

15

Is there a cost difference – YES
Annual Maintenance Costs Native Prairie vs. Lawn
Component Costs
Component Cost Differences

$12,500 $12,015
If all
Existing Set-up Cut Lawn
$10,000
Prairie Lawn Lawn $8,630
Areas Areas Areas
Annual Costs 6 acres 4.19 acres 10.19 acres $7,500
Maintenance $ 4,240 $ - $ -
Mowing - 12,015.00 29,220.25
$5,000 $ 4,240
Watering - 8,630.00 20,988.00
Fertilization - 1,005.00 2,444.14
$2,500
Total Cost: $ 4,240 $ 21,650 $ 52,652 $1,005

Cost / Acre.: $ 707 $ 5,167 $ 5,167 $-

Praire Areas 6 acres
Lawn Areas 4.2 acres

Prairie Maintenance
Key to success…!!!
Provided since day one by

Prairie Restorations of Princeton, MN
web-site: www.prairieresto.com
 Services include site visits 4-6 times per
growing season and burning every 2-3 years.

Brown areas are
Native Prairies

16


Is cost difference significant - YES
Economic Impact
“Over the last 16 years we have saved over
$947,428 while being green by planting
native prairies on 2 logistics Campuses!!”


Lawn Irrigation Sustainability
Eagan Site
Smart Management Tool at Eagan
Plant Need + Soil Moisture Level + Rain
Forecasting & Adjustment
 Soil moisture sensors
 Weather adjusted irrigation
 24/7 automatic site monitoring
 Internet mgmt.
 Est’ed ROI: 3 years

17

Is there a cost difference – YES
ROI of Prairie vs. Lawn Installation
Install Cost Install Cost
6 Acres vs. Prairie
Prairie $ 34,320 -

Seeded Lawn* $ 48,000 1.4x

Sod* $ 111,000 3.3x
* Does not include $30,000+ cost of sprinkler system.

Maint. Cost
6 Acres
Lawn: $ 31,002
Prairie Install Cost $ 34,320 1.28 Years
Prairie: $ 4,240 Savings per Year $ 26,762
of Prairie vs. Lawn
Cost Difference: $ 26,762


Is there an environmental difference - YES
 Native plant materials selection.
 No watering required, or significantly less in dryer climates.
 No fertilization required.
 Roots are deep and assist stormwater infiltration.

Lawn Grass:
1-3 inches

Prairie Grass:
3-15 feet

18


Results of Native Plantings – “Wildlife”
Fox, Deer, Eagles, Hawks, Numerous Bird
Species, Ducks, Fish
 Eagles dive into water and pull out fish!
 Pictured right is a 12 point buck at the 7033 Fridley
Facility, Fall 2009.

Former EPA Superfund site cleaned and
developed by Murphy in 1999.
7033 Central Ave NE, Fridley, MN 55432

7 acre native prairie surrounding retention and
ground water pond. Site where Eagles dive for fish.


Native Prairies & Trees
Environmental Metrics
Carbon Sequestration Annual Benefits
14 Acres of Native Prairie
 24.93 MtCO2e/Year
732 Trees
 275 Oaks, 274 Maples, 183 Spruce/Pines
 117.1 MtCO2e/Year

Carbon Sequestered by Murphy’s
Trees and Prairies over 14 years:
 5,009,961 pounds

19


Do they look OK?
Neighbors love it…!!!
 We run thousands of trucks through
the neighborhood yet the #1 thing I
hear is…...“oh, you’re the guys
with all the pretty flowers on
Main St.”

Start-up Issue….
 Prairie plants often do not meet city
lawn height ordinances!
 Needed a variance in 1994 with 1 st one.
 Former Landscape Architecture student
of mine was Fridley’s Assistant City
Planner and understood what we
wanted to achieve and allowed us to
proceed - the rest is history!

Photos show native prairies at Murphy’s Campuses -
14 acres total at four facilities.
Prairies installed in 1994, 1996, 1999 and 2008.


Edge

Much like a picture frame gives order
to a busy painting, a cut lawn edge
does the same for a prairie.

20

Edge
Key element in working with
Prairies in urban areas.
Without an edge prairies
are very, very rough looking.

Note flowing line (“edge”)
between prairie and lawn

Note straight line (“edge”)

Typical look with no edge.
Note roughness visual quality. Note flowing line / edge
Gets worse as plant height increases
between prairie & lawn


Do they look OK?
Not only do neighbors love them
We have been robbed twice!
One 4th of July a van was seen pulling away
from the property with plants in back. Police
arrested the individual.
 Contacted Ron Bowen of Prairie Restorations
for a value per police request he responded:
“they’re priceless!”
 These were 7 year old plants with deep roots.

Summer 2009 an elderly couple were seen
digging up plants. Unfortunately not caught.

21

Case 2 - Stormwater

Facility Design
Stormwater Regulation Impacts
Changing facility design & management
 Traditional Focus:
get stormwater off-site fast
 Today’s Focus:
handle stormwater onsite and reuse
Few outside profession realize
growing impact…!!!

EPA mandated cities to control their
stormwater – quantity & quality
 Regulations required cities to comply with no
additional Federal Funds, thus local fees.
Stormwater fees growing
 2000+ cities to date nationwide.
 Minneapolis - $3,400 per acre (i.e. $0.12 per sq. ft.
of warehouse). Most DC/warehouses use 20+
acres; cost is $68,000+/yr.

Case 2 - Stormwater

Minneapolis Logistics Campus
Stormwater Project
701 24th Ave SE, 55419

• 22 Acres, highly urban site
• Buildings dating from 1904 – 1980’s
• 24/7 busy logistics operation.
• 95% impervious before project
 58% building, 37% pavement, 5% green
 New suburban regulations often require 25-
40% green coverage
 Nearly 100% of Stormwater running off site.

Kasota / Rollins Ave.

24th Ave SE
still combined storm
/ sanitary line.

Goal #1 – reduce / eliminate annual stormwater
fee of $68,000.
Goal #2 – here for long haul, therefore, be a good
corporate citizen and do the right thing.
Goal #3 – leverage environmental leadership in
our business strategy.

22

Case 2 - Stormwater

Stormwater Project
Two Solutions Explored
1. Underground Storage
 Very expensive system – extra $300,000 for our
project & added 5 more years to ROI.

2. Permeable Pavements - Concrete, Asphalt
& Pavers
 Great idea – per respective industry associations:
not capable today of withstanding the constant
grinding & shear stress from truck’s turning while
pulling back into docks.

Case 2 - Stormwater

Stormwater Project

Basic Water Flow Design
Key:

Main Retention Pond

Bio Retention Basins

Surface and underground
pipe flow

Underground only flow

Overflow release to area
storm system

Prairie grass infiltration area

23

Case 2 - Stormwater

Stormwater Project
Net Result
100% stormwater fee credit
$68,000 annual savings
50% federal depreciation deduction*
* NOTE: not known till after completion.
NOTE: Original design generated 78%
stormwater fee credit.
“As-built” drawings = 102% net credit.

Site: 22 acres
% impervious: 95%

Project Cost
(Design + Const.) $ 580,000

Annual Storm water Fee $ 68,000

Payback in Years: 8.53

+ Federal Stimulus Package
Immediate 50% Depreciation: $ 290,000

7.0 yrs after Fed Credit & Tax Impact
8.5 yrs simple pre-tax basis

Case 2 - Stormwater

Stormwater Project

24

Case 2 - Stormwater

Major Retention Basin
NW Corner of Site
Photos show 1st summer plant growth

Case 2 - Stormwater

Major Retention Basin
NW Corner of Site
Photos Show 2nd Year Growth
Important to recognize that native prairie
plantings will take 3 years to show
maturity. One must be a bit patient.

25

Site Level Green

Facility Design
Gray + Green Infrastructure
Cities starting to treat & regulate street trees
like sewers and roads.
 To handle urban heat, stormwater, and improve real
estate values thus higher property tax values.
Only a matter of time before they look to private
property to help in this cause.

Gray Infrastructure Green Infrastructure

Site Level Green

Green Urban Infrastructure
Why Trees Will Be In Your Future
Trees and Stormwater Management
 Mature trees hold nearly an acre-foot
of stormwater…!!!
 Mature tree’s leaves & branches hold
80% of 1” rain in 24 hrs. In Minneapolis
this represents 90% of all storms!

 Reducing stormwater prolongs life of
sewers and pipes. Cities today can’t
afford to replace current old and
wearing out systems!

26

Site Level Green

“Urban Bonsai”
That’s what we grow for city trees today

Typ. 15+ year old city trees Natural 10 year old tree

vs.

Site Level Green

To Receive Benefits More Soil
Needed For Root Growth
It’s a very simple concept

27

Site Level Green

Urban “Heat Island”
Impacts From Trees
Urban Infrastructure
New planting technologies allow more soil:
 Tree root growth - thus bigger trees
 Stormwater - holding & recycling
 Gray Infrastructure - reducing stormwater
prolongs life of sewers and pipes. Cities today
can’t afford to replace current old and wearing
out systems
 Shade - more due to bigger tree growth reducing
urban heat island impact
 Increased property values

Silva Cell example in Minneapolis (http://www.deeproot.com)
 Technique readily useable on Logistics / DC Campuses

Stormwater

Impacts From Trees
University Ave LRT Corridor
Trees & Stormwater Control

28

Case 3 - Urban Heat Island
& Mitigation

Logistics / Distribution Campuses
Built of large and tall buildings with flat roofs
 Typ. Size: 3-500,000 sq. ft. ( 7-12 acres under
roof )
 Typ. Hgt.: 24-38 feet
 Typ. Truck Yard space: 30-40% of building size.
 Typ. Impervious Cover: 60-70%

& Mitigation

Typ. Solution Today: White Roof
Reflects more solar radiation, thus reducing heat

Regular roof 147°F

White roof

122°F

Air Temperature: 102°F
Location: Phoenix, Arizona

29

& Mitigation

Potential Solution – Green Roofs
Chicago City Hall
In 2000 the City of Chicago roofed its half of a
building in a green roof with striking results as noted.

Situation in Photo: 90-degree day

90ºF – Roof Temp.
City of Chicago side
(green roof)

170ºF – Roof Temp.
Cook County side
(normal built-up roof)

& Mitigation

Potential Solution – Green Roofs
Minneapolis Library
Green roof temperature statistics
Situation: 90-degree day

 Green Roof: 92° F
 White Roof: 125° F
 Dark Ballast: 145° F
 Black Roof: 170° F

30

& Mitigation

Green Roof
Can Become Stormwater
Retention Basins
Multiple Benefits:
 Delayed runoff onto site
 Delayed storm surge into system
 Reduced size and cost of site
infrastructure
 Reduction of stormwater fees

& Mitigation

Green Roof
Challenge today – Expensive
Often 2-3x cost of normal roof
Therefore rarely seen on private projects

Today government buildings where they are seen
 Normal white roof: $5.00 per sq. ft.
 Green roof: $10+ per sq. ft. w non-watered plants
 Green roof: $15-25+ per sq. ft. w watered plants

Roof membrane life longer since it’s protected
from solar rays
 Normal roof: 20-25 years.
 Green roof: 40-50 years est’ed.

31

& Mitigation

Green Roof
Target Center, Minneapolis
Cost: $26.00 per sq. ft.
 Green roof: $12.00 per sq. ft.
 Irrigation: $2.00 per sq. ft.
 Electronic leak Detection:
$1.50 per sq. ft.
 Waterproofing Membrane:
$10.50 per sq. ft.

Data Source: ASLA.org/stormwater

& Mitigation

Green Roof
Cooling aspects around roof air vents
Proven application:
 Research shows even a 50 foot ring around air
intake vents proving beneficial.
 Temp difference often 30+ degrees – between
green & std roofing.
 Therefore, 30 degrees less energy needed for
cooling fresh intake air in summer.
 Benefits accrued without green roof spanning
entire roof area

50 foot radius green roof
around fresh air intakes

32

Case 4 – Solar Power

Energy Creation - Solar Power
Roofs - Large available flat areas “just sit there”
LEED Credit Points….
Commercial solutions include:
 “Solar Energy Service Provider” - 100% responsibility to design,
build, own and operate the asset - including all upfront purchase
and installation costs….challenge in Midwest – utility rates too
low for economic models!!!
 ….to solutions where building owner owns the solar assets and
provider merely design-builds the system.

Staples Store, CA

2 Solar
Providers:


Energy Creation
Solar Power
Myth: Solar PV better in hotter climates.
Fact: Solar PVs are more efficient the colder they get.
Minnesota’s climate is perfect!

33


Energy Creation By Murphy
4th Largest Solar Energy Producer in MN
Ikea is #1 & other in top 10 are government entities

Murphy installed 8 systems 2010 - 2012
320KW total power
 5 buildings
 Fridley Logistics Campus: produces 50%
of energy use on 2% of roof…!!! 2 LEED Gold site

5 Major Innovations (state of art in world today):
 Run at low voltage – increases efficiency and
solves fire department issues with live systems; system
can be turned off when fire dept. shows up for fire!
 Solved “shadow problem” – shading a portion
of panel now doesn’t shut system down!
 Can Utilize 3M Solar Reflector Tech – only
solar manufacturer who can utilize this boasting power.
 Smart Panel Technology – panels only produce
power when asked by control device.
 No Roof Penetrations – held in place by weight
array (vs. attaching to roof with potential roof leaks!)


Energy Creation
ROI of Solar Power
1st Three Systems in 2010
Project Cost for 120KW power: $1,000,000
• Normal, non grant supported solar ROI
period is 20-25 years.
• Murphy’s project ROI period is 4 years…!!!
 4 Grants at work here:
1. Xcel Energy Grant (Utility Company)
2. Federal Stimulus
3. State Stimulus
4. State special grant for using MN
solar tech.
 Murphy paid $90,000 (of $1M system cost)

3M Solar Reflector Film
tenKsolar Panel

System designer, installer & grant consultant
Jon Kramer, NABCEP certified PV installer
240-463-3688; jk2surf@aol.com

34


Energy Creation 40 KW Solar PV
2012 Case Study in Eagan
350,000 sq. ft. Building
 Built 1978-80
 Empty for 8 years
 2012 Murphy purchase
 $3.8M in upgrades
• Lighting
• Fire System
• HVAC
• Dock equip.
• New access road
• Re-establish rail
• 90 trees
• 1.5 ac. Native prairie
 LEED Platinum / Gold target
 40 KW array - Nov. 2012 install


Energy Creation Jon Kramer
NABCEP certified PV installer
2012 Case Study in Eagan Sundial Solar
office phone: 612-926-8506
40 KW Solar PV Array cell phone: 240-463-3688
Dakota Electric vs. Xcel ROI website: www.sundialsolarenergy.com

Dakota Electric Xcel

35


Energy Creation
Eagan ROI of Solar Power
Why Install with 11 Year ROI?
SBA Mortgage Loan Impact
• Original finance goal was to secure an 80-20
loan structure (80% loan with 20% Murphy cash
investment).
 Market is closer to 70:30 to 75:25 structures

• Explored 5 different banks, 1 REIT, and the
insurance market.
• Two of the banks suggested we explore SBA
track as part of total mortgage package.
• Because Murphy, plus others in our
industry, have large buildings with few
employees per sq. ft. we never meet SBA
criteria. This time it was no different.
• HOWEVER…..when the SBA saw on our
application that we are installing solar power
(i.e. renewable energy) we automatically
became eligible!
• Result: 95:5 structure….unheard of today!!!
 95% is mortgage with only 5% Murphy cash
Murphy Minneapolis Logistics Campus
1 of 4 solar arrays onsite

Energy Creation
Eagan ROI of Solar Power
SBA Loan PR Benefits From
Murphy’s Education Effort
National + Local Coverage

36

Case 5 – LED Lighting

Lighting
Since 1980’s Have Been
Changing Fixtures w New Tech
ROI of 1.8 Years Typical
 Minneapolis Site: 3x so far since 80’s
 Fridley Central: new bldg. in 1999
and changed fixtures after 5 years
 All facilities now T-8

Existing
LED Lighting
Leading Edge in Mid-West For
Facilities 100,000 sq. ft. +
We Couldn’t Find Anywhere to View
in Upper Midwest!
Murphy Eagan
 350,000 sq. ft. in size
 Built in late1970’s
 Old high pressure sodium
 Upgrade options: T-5 or LED Proposed

Vs.

37

Lighting

LED Lighting
Narrowed to 2 Options
Lithonia vs. Lusio
 Motion sensor on each fixture
 Lenses on each fixture to reduce
glare and protect food if damaged

Lighting

LED Lighting
Lithonia Fixture Selected
Brochure Comparison Data

38

Case 5 – LED Lighting

LED Lighting
Why?
Multiple Benefits:
 Long-term energy use reduction
 Long-term maintenance cost reduction
 Fluorescent lighting needs the bulbs
replaced every 2.5 - 3 years.
 LED fixtures will not be touched for 40-
50,000 hrs. or 20+ years!
 LEED / Energy Star impacts
 PR Leverage value in corporate strategy
ROI
Install Energy Cost Savings Period
Fixture KW Cost * per Year per Year Years

HP Sodium 223.16 $ - $ 64,937 $ - n.a.
Existing

T-5 118.56 $ 210,000 $ 23,576 $ 41,360 4.1

LED 89.38 $ 445,000 $ 17,773 $ 47,164 7.8 **

Breaking News: a revised rebate calc.
reduced the LED ROI to 5 yrs.!!! * Includes sensors on each fixture.
** Savings from no T-5 bulb replacement & disposal every
3 years not included. Dakota est'ed utility credit included.

Dock Insulation

Dock Plate Heat Loss
Steel Plates Act as Ice Cubes
in Winter to Cool Bldg.
Murphy Designed In-house Solution
Very Low Cost With Huge Returns!
 Increased temperature around
docks 10+ degrees
 Reduced bldg. heat expense 15%
• Note: we hold at 55° in winter
 First installed in 2000.
• A few years ago dock equip.
suppliers started to offer this
product.

39

Transportation

Transportation
Trailer Wind & Mileage
Smart Truck “Under Tray” System
 Enhanced cross wind stability
per Murphy drivers experience
 Tougher / stronger solution than
curtains
• Expect less winter snow & ice
damage
 7% mileage improvement with
system Murphy installed
• Smart Truck has additional
items that reach 12%. http://smarttrucksystems.com/

Transportation

Transportation
Trailer Wind & Mileage
Smart Truck “Under Tray” System
Murphy’s ROI Analysis Calculations Murphy ROI Analysis
 Installed May 2011 on 2 test trailers
Assumptions:
 7% mileage improvement expected
with system Murphy installed Diesel Pice (per ga.) $ 4.00
7% Fuel Savings (per ga.): $ 0.28
Miles Driven by Trailer (per day) 500
Device Installed Cost $ 2,500.00

ROI Calculation (per unit):
Miles / Day 500
div by Avg. Fleet MPG: 5.2

Gallons Used 96.15
x 7% Fuel Savings Expected $ 0.28

Savings per Load $ 26.92

Device Installed Cost $ 2,500.00
div by Savings per Load $ 26.92

ROI in Days 92.86

40

Why LEED

Why We Went LEED
Especially at the Height of a Recession
Put Another Way:
Why Does Murphy Voluntarily Do Green
Projects/Practices?

5 Part Strategy
1. Leader’s and Family’s Perspective on
Leadership
2. Doing most of the actions anyway so why not
get 3rd party recognition
3. Strategic Business Reasons
4. Green practices are showing positive
economic ROI results
5. Marketing and Branding

Why LEED

Why We Went LEED
Leadership Strategy
(Item 1)

• Leader a Landscape Architect
 “what can we say…..”
• 4th generation family business
 “in for the long haul”

• Family believes it is important to be a
leader - being sustainable is important
and will grow

41

Why LEED

Why We Went LEED
Business Strategies
(Item 2)

• Doing most of the actions anyway so
why not get 3rd party recognition
 Client’s sustainability departments
don’t understand what we have been
up to for years.
 They do not readily understand where
the rubber literally hits the pavement.

Why LEED

Why We Went LEED
Business Strategies
(Item 3)
• Listening and responding to our
client’s “future” needs
 Major corporations will have “Green”
initiatives and requirements – esp.
once the recession in finally over!
 They need assistance from their
Carriers, 3PL’s, Suppliers, etc. to
contribute to their “greenness”
measures.
 They cannot achieve their goals
without the suppliers involvement
and assistance.

42

Why LEED

Why We Went LEED
Economic and
Marketing / Branding Strategies
(Items 4 & 5)

• Green practices showing financial
paybacks & positive ROI
 In many cases must be willing to take
longer view than Wall Street ROI
period of 2 - 4 yrs.

• Leveraging “Green” brand via
marketing / PR
 Murphy gets far more “press” time
than a typical business its size –
esp. at the national level.
 Opens up a totally new avenue for
marketing and sales penetration.

Why LEED

Why We Went LEED
Branding Impact
Industry Recognition
Placed upon Top 50 “Green” Lists

Top 50 Green Supply
Chain Partners List
Murphy has been listed
since list inception 5
years ago

43

Why We Went LEED
Branding Impact
World Trade 100
2012 Article Highlighting Murphy

“You can’t buy this kind of exposure”

Why LEED

Why We Went LEED
Branding Impact
KARE 11 TV
Richard Interviewed on Simply Science Feature
Discussing Murphy’s Prairies and Stormwater

MN Pollution Control Agency
Small Business Enterprise Newsletter Feature

44

Why LEED

Why We Went LEED
Branding Impact
Business School Case Study on the
Economics of Green
Exploring Stormwater ROI Issue at Murphy

Why LEED

Why We Went LEED
Branding Impact
Sierra Club Article
2,000+ word article for
publication late 2012
Writer for the club contacted Richard Murphy Warehouse Company Has Long History with Green Initiatives
based upon web research & networking
and heard we were the company to By Cassandra Hall
contact!
With over a century under its belt, the Murphy Warehouse Company has been a fixture of the Twin
Cities business scene for quite a while—and reinforces its commitment to stick around by investing time
and money into the latest green initiatives for their fleet of warehouses.

The Murphy Warehouse Company started in 1904 as a simple horse and buggy affair, hauling materials
off of paddle boats and barges; at one point they carried materials for building the St. Paul capitol.
Warehouses have always been part of, and grown with, the company. Now on their fourth and fifth
generations of family shareholders, and proud owners of five buildings out of their fleet of twelve
warehouses, the Murphy family continues to serve the Twin Cities area in third-party contract
logistics—that is, distributing people’s products when, how, and to whom they need them shipped. A
number of industries use Murphy Warehouse’s service, including the food, medical supply, paper,
industrial product, recycling, retail, beverage, and building material industries.

It is difficult to think of a thriving business taking the time to consider how their actions are impacting
the environment, especially when environmentally-conscious moves might cost money. On the
contrary, according to President and CEO Richard T. Murphy Jr., not only is Murphy Warehouse
dedicated to doing right by the community and the environment, doing so is not financially impractical
at all and actually makes a lot of business sense. To begin with, being environmentally-conscious is a big
part of listening and responding to clients’ needs for the future.

45

GHG Emissions Measurement
Typ. Modern DC
vs. Murphy Northtown DC
Metric Tons of CO2e per Year

Toward Carbon Neutrality 4000 3873

Murphy Northtown Fridley Facilities 3500

3000
500,000 sq. ft.
2500

12.83% carbon emission 2000

vs. standard warehouse ** 1500

1000 724
500
Murphy Warehouse - Moving Toward Carbon Nuetrality 0
Typ. Warehouse / Murphy
DC Warehouse Bldg.
Metric Tons of Only
GHG Emissions for Warehouses CO2e per Year
100% Typical GHG Emissions (460,000 sq.ft warehouse) 3873 GHG Emissions Measurement
Murphy Northtown Campus
Actual GHG Emissions (Murphy's actual same size bldg.) 724 Metric Tons of CO2e per Year
Emissions savings due to energy efficiency measures 3149 750 724

Additional Emissions Reduction Measures 650
On-site Carbon Sequestration in trees and prairie 142
550

Altnerative energy generation (Solar PV power) 85 497
Total Additional GHG Emission Reduction 227 450

Toward Carbon Nuetrality 350
Actual Murphy Bldg. GHG Emissions 724
250
Total Murphy Additional GHG Emission Reduction 227
12.8% Net GHG Emissions (for a 406,000 sq. ft. warehouse) 497 150

50
** Source: US EPA / US DOE Energy Star Program; 3873 GHG reflects an
average warehouse with score of 50. Murphy bldg’s scored 99 & 98 -85
-50
respectively out-of-possible 100 points, thus placing them in top 1% category. -142
-150 Murphy Tress & Solar Power Net Murphy
Warehouse Prairies GHG GHG Campus GHG
Bldg Only Sequestration Reduction

Murphy Warehouse Company Case
Owner’s Perspectives
Greening The Grounds:
Finding Economic and Sustainable Returns In Supply Chain Logistics

November 29, 2012

Richard Murphy Jr. ASLA
President & CEO, Murphy Companies
Past President, American Society of Landscape Architects – MN Chapter (ASLA-MN)
Past Chair, Center for Transportation Studies (CTS), U of MN
Past Chair, Council of Supply Chain Management Professionals (CSCMP)
E-mail: richard@murphywarehouse.com

46

Greening the grounds finding economic and sustainable returns - murphy - nov 29- 2012 prof pesch guest - st cloud state university

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