3. Current Events Economic downturn continues & capital still constrained Adjusting to global pressures Fuel, energy, and green demand unresolved Companies competing via their supply chains This is the “New Normal” BUT: Volkswagen, Hemlock Semiconductor, West TN Solar Farm Carlisle Tire via Whirlpool How can companies (and communities) plan ahead?
4. Supply Chain – Why the Fuss? CSCMP’s Definition of Supply Chain Management Supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Interesting to note, this does not currentlyinclude Real Estate Assets Management Companies no longer compete – supply chains compete Core competencies have led to segmentation of services & providers: 3Pl, 4PL, component outsourcing, near-shoring
5. Supply Chain – Who Is Involved Then: Silos: Manufacturing problem OR Transportation problem OR Distribution problem OR Real estate asset problem Problem addressed by the individual silos Now: Boardroom & C-Level Attention Integrated perspective of the inter-relationships between Manufacturing & Logistics Real Estate? The Beer Game
6. Changing Influences in Supply Chain Impact Real Estate Decisions Supply Chain Real Estate
7. Fuel Costs Relative Increase in Fuel Costs (Indexed to 1996) ? SOURCES: Energy Information Administration, Bureau of Labor Statistics
8. Fuel Costs Relative to Real Estate Costs Exponential increases in fuel costs (especially for diesel) Forcing changes in (and flexibility needs for) transportation networks Inbound/Outbound freight costs can now exceed real estate costs by a factor of 8-9 Annual Operating Costs Per Square Foot
16. Modal OptimizationOverview Definition: Modal Optimization can best be defined as a shipping mode or mix of shipping modes that best fits a company’s shipping strategy.
17. Modal OptimizationTrucks Trucks are a flexible and reliable mode of transportation Trucks are best suited for smaller, more time-sensitive shipments that are traveling shorter distances, typically less than 500 miles. Trucks are often used in tandem with trains through Intermodal service The trucking industry has steadily become safer -- Total miles traveled by large trucks have increased42% over the past decade, yet tragic accidents are at a record low, having dropped 29%.
18. Modal OptimizationWater Ocean Carriers and Barges Ocean carriers and barges are the most fuel-efficient forms of surface transportation. They provide high-capacity transport capabilities, but are restricted to waterway routes. Barge products limited to commodities Significant growth in container traffic in last 10 years
19. Modal OptimizationAir Air provides the fastest mode of shipping Air is suited for the smaller, time-sensitive shipments , particularly critical and expensive products (biotech, high tech products, pharmaceuticals) Shipping via air is most costly / ton mile
20. Rail Rail Benefits and Obstacles Rail provides lowest-cost means of land-based transportation Highly fuel-efficient Requires long-distance, single point to single point to offset assemblage costs Time and congestion concerns Requires significant capital outlays to establish (or restore) service levels Resurgence in interest w/ high fuel costs
21. Modal OptimizationIntermodal Service Seamlessly integrates road, rail and water transportation for truckload quantities Works best in markets with large concentrated volumes - inefficient in lower-volume markets Service is equivalent to or better than single-driver truck, averaging 400-700+ miles per day
25. Costs and service levelsAll of the above working in an inflexible real estate environment
26. Network AnalysisDeveloping a Flexible Strategy - Logistics Network Design Start Point Methodology Project Scope Project Start up (Kickoff) SOW - Network Group Data Gathering Data Analysis, Qualification Data Manipulation Assumption Generation Baseline Modeling Scenario (Optimal) Analysis Real Estate Plan Package Deliverable Project Management Several check points for data analysis and assumption generation Customer Buy-in to Assumptions Customer Validation of Baseline and Scenario run plan Review and Buy-in to scenario results Customer Involvement / Buy-in to Transition Plan Time (Typical Study 60 - 120 calendar days)
32. Our Experience Vs. Best Practice Current Best Practice Siloed Stakeholders Role in Decision Making Dynamic Nature of Decision Making Variables Real Estate Holdings Management COO, CFO should own the process All relevant stakeholders impacts considered Integrated decision making Strategies that anticipate broad range of change Flexibility in real estate structures Strategic use of outsourcing Total Landed Cost
33. Network AnalysisAnalysis & Recommendations Develop alternative scenarios from proposed ideas, strategies, changes, & options Encode and run the model Analyze the results Determine fiscal feasibility Develop Supply Chain Strategy recommendations Review cycle for holdings and fit with Supply Chain Strategy continues
34. Open Discussion Ben Fuqua Phone: (615) 742-4301 Email: jbfuqua@transystems.com Chris Steele Phone: (617) 314-6527 Email: chris.steele@cwsgrp.com Troy West Phone: (615) 742-4302 Email: tjwest@transystems.com Thank You Very Much
Hinweis der Redaktion
Volkswagen moving against market forcesHemlock and West TN representing the fuel and green pressuresCarlisle, Whirlpool shrinking and moving nearshore; Carlisle
Why are companies talking about SC?Who has been in the conversation?Direct link between SC planning
Why are companies talking about SC?Who has been in the conversation?Direct link between SC planningHasbro case study
Showing parallel between SC and RE
Significant changes to SC structureBlown through budgets ½ yearIncrease in global demand will increase; industrialization of 3rd world; prices will increaseForecast on oil prices in future?Impact of electric and fuel cells? Who buys the Saturn plant? VWSome level of local mfg/distribution to offset trans cost; near-shoring for sensitive productsExamples Whirlpool and Sierra Nevada Brewing
Trans costs driver vs RE
More facilities at expense of real estate and labor costs.
Up down arrowContinental gdp growth projections – rank as trade partnersSAFTA?
PC opens up gulf coast ports to asian mfgGulf coast growing due to Brazil, Russia, india, and China volumes.How do end users respond to this?
Single rail providerCSX capital limitations NS By-Passing Middle TN on Crescent CorridorResist pricing pressures, due high capital cost component and lead time
I’ll throw in Carlisle, Whirlpool, & SNB analyses.
Way of putting the real estate and SC assessment efforts together.Confirm and test strategies that work.D&C and FC keep in mind going through process.Best in class approach does link the SC network analysis and integrated asset strategy solution approaches to come up with the best corporate solution. – reality is that this has not happened in most cases.
SC decisions tend to be very flexible: transportation mode, inventory levels, prioritizationFacility decision tend to be fixed:Lease v. buy, lease term, cost of labor, talent availability, tax regulations, incentives & timing, expansion optionsOpen ended question to audience for other thoughtsSimilarity to buying a house: value, ease of exit, stability of market and job. Office market in downtown hit 30% by end of year.Real estate sets strategy into concreteReal Estate Holdings: how are they measured and portfolios managed
Supply Chain Strategy is same as Real Estate Asset ManagementAnalyze ResultsRun optimization scenarios designed to identify ideal network configurationsVary number of plants, warehouses, transportation optionsFix components of the supply chainDetermine fiscal feasibilityEvaluate one-time costs to implement new solution(s): opening or closing facilitiesEstimate multi-year costs for transportation, operations, facilities, incentives, and other relevant costs and offsetsCompare to baseline network
