Real Estate Analysis

Everyone knows that it is important to get a regular checkup from the doctor. Just get a quick and easy assessment of where they stand as far as the basics are concerned. In the best case, the doctor will give them some tips on how to do better. Worst case the doctor tells them there is something wrong and tells them what they have to do in order to get healthy again. It's common sense to keep tabs on where you stand.

The same should be true of your real estate portfolio. Real estate is a constantly shifting arena: prices fluctuate daily, buildings are built and knocked down, the demographics of a region change. Whether you have one location or a hundred it is a good idea to make sure that you are in good positions that are not hurting your business. Just like for your own health, it's important to get checked out by someone who is an expert in the field.

When the topic of a real estate analysis comes up most people in business think they can do it themselves. However, where would you start in order to figure out if you are doing the best you can be? A surface look would point at cost per square foot as the key factor of whether you are doing well or not. If you know the market rate for your area and are at or below that then you are doing well, right? Not necessarily.

If that isn't the decision point, what is? To really understand how your portfolio stacks up you need to look at a diverse set of metrics that includes: square feet per seat, cost per person, average churn cost per year, and common/shared space allocation. Then you need to benchmark this against your industry competition. Why does all this come into play with your portfolio? Isn't this an HR issue? It's important because the real estate cost is the effect of HR and Real Estate not being in alignment which is often the case.

If you have a high square footage per person, regardless of if your lease rate is at or below market you are overpaying for your space. You have too much of it. If your churn rate (or cost to alter the space with changing business conditions) is above your competitors then you may not be in the right type of space. If your shared space doesn't meet the needs of your employees then you may not have an effective workplace strategy in place (which ties directly into real estate).

Is it possible to do this evaluation internally? Absolutely, but there is a reason that most companies do not perform this level of analysis on themselves: it requires a specific type of expertise and knowledge that is outside the core competency of the business and is not performed on a regular basis. If this sounds like something that may help you then look into it. An inefficient office is a terrible drain on the bottom line and it may not even be noticeable if you don't know where to look.

RF Strategies

The most popular post on this blog is Warehouse RF Network. If you do a Google search for Warehouse RF it is the number 2 result. How we got to that spot I'm not sure, but there we are. A lot of the organic traffic that we get comes in through that post. Looking at the search terms that drive people there it seems that RF networks in warehouses are one of the biggest questions that people have when they go about setting up a new facility.

RF is one of the fundamental blocks of an efficient warehouse. It is the driver of so many "Best-in-Class" style processes that it is simply foolish to not implement it. The cost has come down over the many years since it was introduced that it should be part of any operation. However as is the case with most technology, a lot of operators are confused by it and what needs to happen to implement it.

When it comes down to it, an RF Warehouse system is not all that different from your at home wireless network. Most of the general equipment is the same in concept, simply bulked up to industrial grade. The real difficulty to RF is getting the right software and processes around it. Picking a WMS is the hardest part really. There are now so many options for Warehouse Management Systems that going through them to find the best for your situation can be a truly daunting task.

The trick to RF is making sure that the planning around it is complete. Follow these steps and you’ll be well on your way to putting in a very strong solution:

1. Implement a reliable WMS system
2. Setup a warehouse map and picking rules
3. Develop new putaway and picking processes to leverage the RF and WMS systems
4. Train all warehouse employees in detail on how to use the system
5. Perform a complete inventory count
6. Activate the system

The difference between RF and a paper system is, at the simplest level, the interface. Everyone you would employ in your warehouse is familiar with paper and how to work with it. There is a mindset about RF that it is more complicated because it involves a lot of technology. The truth is that the technology is now developed to the point where it is highly user friendly.

Lately when the topic of RF comes up, the natural follow-up becomes “What about RFID?” RFID is the next generation of Radio Frequency. There has been a lot of investment by organizations trying to push RFID as an efficiency driver. A lot of people know by now that Wal-Mart dictates their suppliers use it and the US Military has adopted it for inventory control as well.

What you probably haven’t heard is that even Wal-Mart is having a hard time driving their suppliers to RFID. They just recently began imposing a $2 per pallet fine for every pallet that comes in without RFID tags. The implication of course is that there are quite a few pallets coming in without it. Why aren’t companies moving towards it? Why is it always on the horizon as the next big thing without actually hitting? The simple answer is that the cost to implement continues to refuse to drop. Technologies usually drop in price as they become more widely used, RFID isn’t.

If you have any questions about these systems feel free to give us a call or send us an email. We are here to help you understand how to make these systems work for you and your company.

Strategy for Building Owners

One of the more difficult tasks for building owners is knowing and keeping up with everything that is happening with their building(s). If you own multiple locations it can be nearly impossible to keep track of all the changes being made, keep track of leases, make sure operations and maintenance is consistent, and stay on top of new ways to lower costs. Sure, you could try and keep up with it yourself or you could hire a crack team of consultants to constantly come in and look at everything and propose changes they find on any given day of the week, but those just aren't quite the best solutions.

A new solution is being offered at Integrated Strategies. We have the capabilities to track every lease (and their details), help implement a low-cost procurement plan, keep you informed about the latest technologies and work with you to continually lower operating costs. Our solution is that we have gone out, formed all the relationships and invested in the best technologies already to help you. We have relationships with carpet manufacturers to deliver carpet at sometimes 40% less than traditional dealers. We have relationships with lighting vendors to audit your current lights and deliver a high ROI solution to lower your utilities and improve operations. Our consulting services are second to none when it comes to helping with strategic decisions.

It can be frustrating to deal with different vendors for every different aspect of a facility. Tenants keep introducing their own wrinkles into the process as well. If you haven't put anything more than a day-to-day operations plan in place then you are leaving money on the table that you could be using to improve your margins. At the end of the day if you can reduce your operating costs by $1 a square foot then you are only helping yourself.

Being a building owner is an investment of your capital. Your goal is to get the best return possible for what you have put in. If there is a better, easier way to improve your business isn't it at least worth a look? We would love to come in and show you where we can add value to your operation either as part of a one-time project or as part of a long-term relationship. It can't hurt to see what's possible.


Technorati Tags: real estate, building, consulting, services

Warehouse RF Network

It is becoming more and more common for warehouses to have an RF or wireless picking system. The advantages of the system outweigh the initial costs. Increases in productivity, inventory accuracy and order visibility reduce overall costs every single year as the warehouse becomes more adept at using the system. However the installation of the system has become a point of question to many looking at RF. Who should design the system? How do I know what I need? What am I missing?

Having built and fit-out several warehouses with this technology it is not going to be as bad as you think from a design and installation point of view. The key to a successful system install is to team with a quality and knowledgeable IT and Data Wiring vendor. Whichever vendor you ultimately select should have the ability to layout and procure the IDF cabinets, Access Points, wire pathways and all other equipment. They should know the proper specs and ranges for all of the equipment they recommend and should give you an electronic drawing of everything in your warehouse.

There are several aspects to an RF system that you will need to decide. The first is what kind of bar code technology will be used on products and locations. Wikipedia has a page describing the many types of bar codes that exist and their many uses. Most handheld scanners have the ability to read multiple bar code types, but it is still important to coordinate and make sure that everything is compatible from the bar codes to the printers to the scanners to the WMS. If you receive product from other vendors they may already have their own standard that you can use. Check with them if you are thinking of matching their technology.

In the typical warehouse there are many ways that bar codes will be scanned and many obstructions that could interfere with the wireless signal. Rack in particular is the biggest issue with warehouse RF. It is important to take into account several rack related RF issues during your strategy:

1) Lift Equipment Scanners - Vehicle mounted RF or Handheld units. Forklifts present several issues of their own. Vehicle mounted RF is typically more robust, more difficult to steal and more difficult to drop and break. However there is the additional cost to mount it to the forklift and you don't have the flexibility to use the scanner for floor picks.

2) Lift Equipment - Man-up forklifts or Man-down forklifts. The type of forklifts used in the warehouse come into play with where location tags can be placed on the rack. For man-up forklifts the tags will go directly underneath the product on the beams. In man-down environments the tags will have to all be placed on the first or second level to allow scanning. If there is a mixed environment there could be room for quite a bit of confusion.

3) Rack Density - The more packed together the rack in your warehouse is the harder it will be to get a clear signal to every point a scanner could be used. For a density of one pallet every 4 square feet you will need to have the wireless access points much closer together than for a density of one pallet every 7 square feet.

4) Rack Flexibility - If there is the ability to add and remove pick levels or locations there will be a need for a more flexible labeling scheme throughout the warehouse. The most flexible scheme I've come across follows the AA-12-34-56-78 format. AA stands for the rack type or forklift used to pick and putaway in the area. 12 is the aisle, 34 is the bay number in that aisle (odds and evens should be on opposite sides), 56 is the beam level within the bay and then 78 is the location on the beam. (ex. SS-23-34-02-02 would mean the location is in the Single Selective rack on aisle 23 in bay 34 (with evens being on the left) 2nd level up and in the right hand position.)

Once all of these issues are decided it is time to work with the IT vendor to actually develop the design. Don't stretch any of the equipment you get to its maximum range. Your IDF cabinets will likely be about 250 ft apart. Your access points will be staggered throughout the building on about 100 ft to 150 ft centers depending on rack density. With a 500,000 sf building your probably looking at a 400 ft depth which gives you two rows of IDF cabinets running along your building and 3 rows of access points. There are a lot of items that need to be coordinated so much sure you develop a robust plan for what you want and need this system to handle.


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UPDATE:

There has been a lot of interest in this post. If you have any additional questions feel free to email me at dmusic [at] integratedstrategiesinc [dot] com .



Technorati Tags: rf, wireless, warehouse, design, barcode

Distribution Design Mistakes to Avoid

Distribution Centers (DCs) are some of the most important aspects of any supply chain. An effective distribution center can be the difference between losing money and making money. As we've discussed previously, Supply Chain health can often be overlooked. Without putting the correct processes in place the supply chain won't function correctly even if every aspect was well designed and implemented. But in order to even have a chance to run an effective supply chain, the design at each step must fit the purpose. The first cog to the supply chain is the DC.

Many DCs fail to even minimally live up to the high business expectations set for them during the initial strategy and planning stages. The issues that they face are varied but the symptoms are usually the same: low throughput, processing errors that impact service levels, inadequate inventory controls, poor productivity due to inefficient design. Many reasons exist for the struggle to open successful DCs. Most struggles can be associated to either lack of consensus on the plan, project plans run over budget and cannot be fully implemented or the proposed ROI for the design is inadequate to justify the project.

Beyond those, there are 10 common mistakes that should be avoided:

1. Incomplete Supply Chain Strategy
2. Lack of Financial Objectives
3. Overstated Inventory Levels
4. Failure to Utilize Postponement Strategy
5. Planning Without Data
6. Failure to Apply Lean Principles
7. Irrational Demand Buffering
8. Ineffective Space Utilization
9. Poorly Designed Value-Added Services Operations
10. Misapplication or Lack of WMS Technology

Ultimately a Distribution Center is a large machine where each part must work together. If even one part is incorrectly designed or fails to perform correctly the entire operation will suffer. Information and products must flow between areas seamlessly or it will back up and cause havoc.

Look at receiving docks in DCs. It is a fairly straight forward area where product comes in and relatively few tasks must be performed. A truck backs up to the dock and product is unloaded either manually or with some sort of fork lift. There may be a quality and count verification once off the truck, but for the most part the product is now ready for putaway into the storage area. Too often the receiving dock gets clogged with processed inventory that has not been put away. Usually this also means that orders cannot be placed against that product. The backup is usually caused by pickers focused on filling orders in hand and forgetting the putaway process. Eventually no more product can be received if nothing else is putaway simply because there is no room to put anything else.

The best way to avoid design mistakes is to always design with a process flow in place for facility operations. Before you can design a receiving area you must know what tasks will be performed there, what the putaway strategy will be and how many people will be in the area. It is not possible to design an effective storage area without knowing the picking processes and technology that will be used.


Technorati Tags: design, warehousing, process

Green Marketing

When was the last time you evaluated your marketing budget and scope? If it was more than 5 years ago you are likely missing out on some of the latest methods for getting your companies name out in the market. The internet of course is the biggest driver of much of this, but there is another. Social consciousness is the latest way for bringing new customers into the fold. Showing that you are helping the environment through your business practices can do as much or more than showing a 5% lower cost than a competitor.

LEED has been the biggest driver of this trend. Whenever the latest company decides to make their buildings and space LEED Certified it makes quite a few major magazines and news reports. Writing off this additional cost to the marketing budget is the best way to justify these decisions. GE is the latest driver of the Green Marketing trend with their announcement of expanding investment of the ecomagination lines. Right now those lines don't have as good of a return as others, but the press they are getting for it is through the roof which bolsters sales of their other lines as well.

Any good marketing director will know how to push your initiatives into the public eye (or at least in front of your customers). Adding a marketing page to all of your brochures and presentations is the simplest way to let people know how you're helping. Marketing to the community is the next best way. Communities love to hold up the companies that are working to stay involved and be socially conscious. It could be a way to become a community sponsor and open up new lines of business.

Why can't changing out light bulbs, adding motion activated switches or using environmentally friendly products be marketing? Thinking in new ways is how companies become leading edge. With the cost of marketing being offset from cheaper ways of mass communication and replication, it is a simple matter to allocate some money to non-traditional marketing. Make sure you are still doing right by your business and investing in things that will still have a return on your investment, after all you are in charge of making good decisions. Doesn't a quantifiable return on your marketing expenses sound good to you?

Start looking down the road five to ten years from now and try and see where your market will be. Will they care about being environmentally friendly? More than likely they will and they will want to do business with like minded companies. You can either be a leader by making the small steps now and taking advantage while the time is still good or you can play catch-up when the change happens. It happens all the time with technology like this. First it was computers replacing typewriters. Then it was email replacing fax and letters. Next followed the internet replacing dictionaries and research books. The future will be clean technologies replacing wasteful technology.

Technology equipment will begin using less electricity, buildings will feature sustainable and intelligent systems and every product on the grocery store shelves will have some green aspect to it. Green beans in cans from recycled materials, cereal in recycled bags instead of boxes and cleaning products in higher concentrations (which has already started).

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Welcome to those visiting from the Carnival of the Capitalists. If you liked this post we have some other posts on Green design and thinking:

Green Design and LEED
Environmental Marketing Gone Crazy
Greening the Warehouse

Feel free to subscribe to the blog! Thanks for visiting!

Technorati Tags: green, marketing, technology

Strategic Facilities and Operations Assessment

Aging infrastructure and stale business practices can weigh down a company's operating flexibility. More than just a tactile look at what is going on, a company needs to look at the way they are doing business and validate that the core assumptions they are operating under still apply. A building built in 1920 could be fine for some companies but completely inappropriate for another, even a competitor. It comes down to the principles that are grounding your business.

Any assessment should start in the boardroom with the executives. Brush off the mission statement and business plan and see if they are still applicable to the way things are truly running in the day to day operations. Compare it to the competitors and see if it could relate to any of the competitors business plans. If there is any misalignment, sit down and figure out why things are no longer the same. Rewrite the business plan and mission statement if necessary. Make sure that these get distributed through the layers of your company; your people need to know how things should be done and that their executives are staying ahead of the curve.

Next, evaluate the organizational structure to make sure that is supports the business. Often times groups will spring up out of momentary business requirements and never disappear when those requirements change or go away. A good organizational structure will have a clear role for every group. It will also be apparent how the groups will interact and support each other. Organizational structures and the related Org Charts should not be considered fixed entities. As business changes and evolves these need to change and evolve with it. The organization as a whole is simply the chosen method for executing all requirements for performing business functions.

With the business plan and org chart in place, take a look at the facilities and infrastructure. The environment where work is performed is as important as the actual plans. If you have created places where no one wants to work or your employees can't be productive evaluate ways to resolve the situation.

We were working with a client on assessing their facilities two months ago and they were trying to figure out why their work force was older than their competitors and why they couldn't retain young employees. Their problem was entirely related to their space. They had 1970s style workspaces and cubicles, their buildings were former military grade construction (almost no light or design elements), and their technology was completely out of date. Some employees were still using 15 year old beige analog telephones! Older employees didn't mind the setup because it was the environment they had come up in, but young employees essentially refused to work there. Fortunately their lease was nearly up and moving to a new space with new furniture was an option.

The last step of the assessment, after all the changes have been made and communicated, is to put in procedures to create continual improvement. This is not related to six sigma, this is reevaluation. Over the course of a year after all these changes have been made, you will probably notice reduced operating costs through reduced turnover, higher margins and increased productivity. Without continual improvement these costs will begin to increase again until it is necessary to perform a full assessment again. The cost of making all the changes necessary for realignment is not insignificant but they typically pay for themselves in a relatively short time frame.


Technorati Tags: facilities, assessment, org chart, consulting, operations