On Business: Leveraging the Total Cost of Distribution
By: Ron Derven, contributing editor, Development
When a prospect comes to you for new distribution space, be prepared to help the company with a raft of other issues related to the space. That was the message of a recent NAIOP Webinar titled, “Logistical Leverage: Trends Affecting Supply Chain, What it Means for Industrial Real Estate.” Webinar leaders were Peter W. Quinn IV, SIOR, executive managing director, and John Morris, senior managing director, Cushman & Wakefield global supply chain solutions group.
“Earlier in my career when I went to meet with clients,” said Quinn, “I would ask a lot of real estate questions. It is not unusual today for me to walk into a client’s office and have no real estate questions. Now, clients need to understand the total cost of any distribution decision that they make. Real estate is a component of that decision, but it is just one component. One of my first questions now is: when is the last time you had a network modeling process completed? It is amazing how often that network modeling has not been done, even by the most sophisticated client. It is also amazing how often I hear people say, ‘I think I need 300,000 square feet in Columbus, Ohio, but I’m not completely sure and I’m not sure if it should be in Columbus.’”
Quinn and Morris said that their group offers a series of programs including logistics network modeling, inventory optimization, location strategy and workforce profiling to help clients better understand their needs. “This brings a lot of value not just to the clients but also the owners of the real estate,” emphasized Quinn. “If the owners can understand what is driving decisions today, then they will have more success.”
Morris offered a sampling of the questions that his group gets when the conversation turns to distribution space today:
- Should I produce more in the United States? Mexico?
- Should I move some inbound container materials to a Port of Call (POC) on the East Coast?
- Do I need more distribution center space, closer to customers, to reduce transportation costs?
- Where will my customers live in the future? Will I have any?
- Do I need better transportation options?
- Is the state(s) I am currently in going to change tax and business policies to address state deficits?
- Should I be somewhere else?
- Will I have access to good, cheap labor?
- Should I increase my levels of automation to increase my throughput in my DC space, and/or to reduce labor risk?
- Can I upgrade to better space? Should I do it now? What if I wait? Will the window close?
- If I make these changes, does it have a return? When?
For More Information
Cushman & Wakefield
NAIOP Webinar Series