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

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  • 1. Murphy Warehouse Company CaseOwner’s PerspectivesGreening The Grounds:Finding Economic and Sustainable Returns In Supply Chain LogisticsNovember 29, 2012Richard Murphy Jr. ASLAPresident & CEO, Murphy CompaniesPast President, American Society of Landscape Architects – MN Chapter (ASLA-MN)Past Chair, Center for Transportation Studies (CTS), U of MNPast Chair, Council of Supply Chain Management Professionals (CSCMP)E-mail: richard@murphywarehouse.comResource Allocation DecisionsGreen Sustainability Returns vs. Economic ReturnsIs a Balance Possible?What Can Drive this Balance Analysis 1
  • 2. 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 PerspectiveSustainability CertificationLEED 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/PlatinumEnergy Star Certification  Scored 99 & 98 on 100 point scale (Aug 2010).  Central Ave scored 87 (Jan 2012).  Minneapolis & Eagan review Winter 2012/3. 2
  • 3. PerspectiveSustainability CertificationISO 14001 and SLI CertificationISO 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 FromSupply Chain Logistics / TransportationWhy Care About:Touches Everything We Do8.3% of Economy! 3
  • 4. Where Do I Come FromSupply Chain Logistics / TransportationWhy Care About:Touches Everything We Do% of Economy8.3% Logistics$3.78 per person in U.S.vs.17.3% Healthcare$7.89 per person in U.S. PerspectiveWhy Care About:Supply Chain Logistics / TransportationStrategic Advantage - Supply Chain ExecutionApple iPod Global Supply Chain – leading edge techwould 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 Chainin the world for 6 straight years..!! 4
  • 5. PerspectiveWhy Care About:Supply Chain Logistics / TransportationStrategic Advantage - Supply Chain ExecutionP&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 PerspectiveWhy Care About:Supply Chain Logistics / TransportationUPS’s new branding campaign has pulledback the curtain and introduced the consumingpublic to the importance of supply chain logisticsin their lives and the economy 5
  • 6. PerspectiveWhere Do I Come FromWarehousing in Logistics5 Billion Sq. Ft of warehousing in U.S. (ProLogis) PerspectiveWarehousing in Logistics5 Billion Sq. Ft of warehousing in U.S.Floor area equals a 4 foot walkway fromhere to the Moon…!!!The 5B only includes what’s under roof. Add another40-50% to add outdoor dock & staging areas.Industry has a massive impacton the Nation’s landscape 6
  • 7. Perspective Warehousing in Logistics 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 FeetWhere Do I Come FromIn the Beginning…19044th Generation Family Business“Feeding the horse-power was key” 7
  • 8. PerspectiveWho is MurphyLogistics Services Company / 3PLWe 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 / ConsumerTruck Loads Handled / Year: 120,450 Medical / Health CareRail Cars Handled / Year: 9,000 (equivalent to 31,500 TL’s) Grocery / Food Processing Beverage Plastics Recreational / Camping Industrial Forest Products (Paper/Packaging) International3PL – “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
  • 9. PerspectiveMedical Support LogisticsJIT ReplenishmentSurgical KitsCustom 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 SupportStore Backroom LogisticsSupply of 1500+ Stores with items to run stores  Supplies, training manuals, uniforms. Sales/promo materials, bags, etc.  Full “pick-pack” operation.. PerspectiveCustomer Returns Management“Reverse Logistics”What happens to your clothes once theyreach 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 DistributionContract Logistics - 5 State DistributionBeer: 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 timeReduces Distributors’ Cash Flow RequirementsTypical Beer activity: 52 turns per year  DC Designed for “Flow-through” 9
  • 10. Inbound Flow - Raw MaterialsGlobal Sourcing –Domestic ProductionMultiple Concepts in OperationFood Products – Raw, In-Process & Finished • Import From Middle East & elsewhereVendor Park (Global Consolidation Point) Outbound Flow – Finished Goods • North America DistributionU.S. DistributionRecreation IndustryCanadian Companies CoveringEntire U.S. from One Central DCOperations Include:  Item Pick / “Pick-Pack”  Case Pick  Pallet pick  Small-to-Large Order  Custom Labeling  Carrier Selection and Management Product Assembly & PackagingValue 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
  • 11. 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 & coordinationMurphy Rigging & Erecting, Inc.A Rigging / Millwright ContractorClients: 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 ExpensiveMedical Devices 11
  • 12. PerspectiveRichard Murphy, Jr. ASLAWhere Else Do I Come From…???Landscape ArchitectMLA Harvard Grad School of DesignMBA University of MinnesotaBLA University of MinnesotaAdjunct ProfessorCollege of Design, U of MN25 years so far…Sustainability / Green PracticesA Fresh PerspectiveTraditional Focus is Inward Looking  Lighting, HVAC, forklift & truck fuel, packaging, recycling, green purchasing, etc.Added Focus is Outward Looking - Site LevelGreen / Sustainable PracticesIn 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
  • 13. Case 1 - Native Prairie vs. LawnA Question I AskIndustry Audiences:Have you ever given muchthought to your facilities?  Landscape?  Stormwater? Case 1 - Native Prairie vs. LawnA Question I AskIndustry Audiences:Have you ever given muchthought to your facilities?  Landscape?  Stormwater? ….You Should…!!! 13
  • 14. Case 1 - Native Prairie vs. LawnNative Prairie vs. LawnThree Questions 1. Is there a cost difference? 2. Is there an environmental difference? 3. Do they look OK? Case 1 - Native Prairie vs. LawnFridley Logistics Campus4700 & 4850 Main St NE, Fridley, MN 55421Location of cost figures & 500,000 sq. ft. of warehouse. Brown areas are native prairie Photo taken in early spring. 14
  • 15. Case 1 - Native Prairie vs. Lawn Site: 4700 & 4850 Main St NE, Fridley, MN 55421 Actual data from Murphy expense recordsFacility DesignNative Prairie vs. Lawn Native Prairie vs. LawnIs there a cost difference – YES Total Cost DifferencesAnnual 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 Case 1 - Native Prairie vs. Lawn Site: 4700 & 4850 Main St NE, Fridley, MN 55421 Actual data from Murphy expense recordsNative Prairie vs. LawnIs there a cost difference – YES Native Prairie vs. Lawn Total Cost DifferencesAnnual Maintenance CostsIf 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
  • 16. Case 1 - Native Prairie vs. Lawn Site: 4700 & 4850 Main St NE, Fridley, MN 55421 Actual data from Murphy expense recordsNative Prairie vs. LawnIs there a cost difference – YESAnnual Maintenance Costs Native Prairie vs. LawnComponent Costs Component Cost Differences $12,500 $12,015 If all Existing Set-up Cut Lawn $10,000 Prairie Lawn Lawn $8,630 Areas Areas AreasAnnual Costs 6 acres 4.19 acres 10.19 acres $7,500Maintenance $ 4,240 $ - $ -Mowing - 12,015.00 29,220.25 $5,000 $ 4,240Watering - 8,630.00 20,988.00Fertilization - 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 acresPrairie MaintenanceKey to success…!!!Provided since day one byPrairie Restorations of Princeton, MNweb-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
  • 17. Case 1 - Native Prairie vs. LawnNative Prairie vs. LawnIs cost difference significant - YESEconomic Impact“Over the last 16 years we have saved over$947,428 while being green by plantingnative prairies on 2 logistics Campuses!!” Case 1 - Native Prairie vs. LawnLawn Irrigation SustainabilityEagan SiteSmart Management Tool at EaganPlant Need + Soil Moisture Level + RainForecasting & Adjustment  Soil moisture sensors  Weather adjusted irrigation  24/7 automatic site monitoring  Internet mgmt.  Est’ed ROI: 3 years 17
  • 18. Case 1 - Native Prairie vs. Lawn Site: 4700 & 4850 Main St NE, Fridley, MN 55421 Actual data from Murphy expense records Native Prairie vs. Lawn 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. LawnCost Difference: $ 26,762 Case 1 - Native Prairie vs. Lawn Native Prairie vs. Lawn 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
  • 19. Case 1 - Native Prairie vs. LawnNative Prairie vs. LawnResults of Native Plantings – “Wildlife”Fox, Deer, Eagles, Hawks, Numerous BirdSpecies, 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 anddeveloped by Murphy in 1999.7033 Central Ave NE, Fridley, MN 554327 acre native prairie surrounding retention andground water pond. Site where Eagles dive for fish. Case 1 - Native Prairie vs. LawnNative Prairies & TreesEnvironmental MetricsCarbon Sequestration Annual Benefits14 Acres of Native Prairie  24.93 MtCO2e/Year732 Trees  275 Oaks, 274 Maples, 183 Spruce/Pines  117.1 MtCO2e/YearCarbon Sequestered by Murphy’sTrees and Prairies over 14 years:  5,009,961 pounds 19
  • 20. Case 1 - Native Prairie vs. LawnNative Prairie vs. LawnDo 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. Case 1 - Native Prairie vs. Lawn Edge Much like a picture frame gives order to a busy painting, a cut lawn edge does the same for a prairie. 20
  • 21. EdgeKey element in working withPrairies in urban areas.Without an edge prairiesare 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 Case 1 - Native Prairie vs. LawnNative Prairie vs. LawnDo they look OK?Not only do neighbors love themWe have been robbed twice!One 4th of July a van was seen pulling awayfrom the property with plants in back. Policearrested 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 seendigging up plants. Unfortunately not caught. 21
  • 22. Case 2 - StormwaterFacility DesignStormwater Regulation ImpactsChanging facility design & management  Traditional Focus: get stormwater off-site fast  Today’s Focus: handle stormwater onsite and reuseFew outside profession realizegrowing impact…!!!EPA mandated cities to control theirstormwater – 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 - StormwaterMinneapolis Logistics CampusStormwater Project701 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
  • 23. Case 2 - Stormwater Minneapolis Logistics Campus 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 - StormwaterMinneapolis Logistics CampusStormwater ProjectBasic 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
  • 24. Case 2 - StormwaterMinneapolis Logistics CampusStormwater ProjectNet 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.) $ 580,000Annual Storm water Fee $ 68,000 Payback in Years: 8.53 + Federal Stimulus Package Immediate 50% Depreciation: $ 290,0007.0 yrs after Fed Credit & Tax Impact8.5 yrs simple pre-tax basis Case 2 - Stormwater Minneapolis Logistics Campus Stormwater Project 24
  • 25. Case 2 - StormwaterMajor Retention BasinNW Corner of SitePhotos show 1st summer plant growth Case 2 - StormwaterMajor Retention BasinNW Corner of SitePhotos Show 2nd Year GrowthImportant to recognize that native prairieplantings will take 3 years to showmaturity. One must be a bit patient. 25
  • 26. Site Level GreenFacility DesignGray + Green InfrastructureCities starting to treat & regulate street treeslike 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 privateproperty to help in this cause.Gray Infrastructure Green Infrastructure Site Level GreenGreen Urban InfrastructureWhy Trees Will Be In Your FutureTrees 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
  • 27. Site Level GreenGreen Urban InfrastructureWhy Trees Will Be In Your Future“Urban Bonsai”That’s what we grow for city trees todayTyp. 15+ year old city trees Natural 10 year old tree vs. Site Level GreenGreen Urban InfrastructureWhy Trees Will Be In Your FutureTo Receive Benefits More SoilNeeded For Root GrowthIt’s a very simple concept 27
  • 28. Site Level GreenUrban “Heat Island”Impacts From TreesUrban InfrastructureNew 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 StormwaterGreen Urban InfrastructureImpacts From TreesUniversity Ave LRT CorridorTrees & Stormwater Control 28
  • 29. Case 3 - Urban Heat Island & MitigationUrban “Heat Island”Logistics / Distribution CampusesBuilt 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% Case 3 - Urban Heat Island & MitigationUrban “Heat Island”Typ. Solution Today: White RoofReflects more solar radiation, thus reducing heat Regular roof 147°F White roof 122°F Air Temperature: 102°F Location: Phoenix, Arizona 29
  • 30. Case 3 - Urban Heat Island & MitigationUrban “Heat Island”Potential Solution – Green RoofsChicago City HallIn 2000 the City of Chicago roofed its half of abuilding 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) Case 3 - Urban Heat Island & MitigationUrban “Heat Island”Potential Solution – Green RoofsMinneapolis LibraryGreen roof temperature statisticsSituation: 90-degree day  Green Roof: 92° F  White Roof: 125° F  Dark Ballast: 145° F  Black Roof: 170° F 30
  • 31. Case 3 - Urban Heat Island & MitigationGreen RoofCan Become StormwaterRetention BasinsMultiple Benefits:  Delayed runoff onto site  Delayed storm surge into system  Reduced size and cost of site infrastructure  Reduction of stormwater fees Case 3 - Urban Heat Island & MitigationGreen RoofChallenge today – ExpensiveOften 2-3x cost of normal roofTherefore rarely seen on private projectsToday 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 plantsRoof membrane life longer since it’s protectedfrom solar rays  Normal roof: 20-25 years.  Green roof: 40-50 years est’ed. 31
  • 32. Case 3 - Urban Heat Island & MitigationGreen RoofTarget Center, MinneapolisCost: $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 Case 3 - Urban Heat Island & MitigationGreen RoofCooling aspects around roof air ventsProven 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
  • 33. Case 4 – Solar PowerEnergy Creation - Solar PowerRoofs - 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: Case 4 – Solar PowerEnergy CreationSolar PowerMyth: Solar PV better in hotter climates.Fact: Solar PVs are more efficient the colder they get. Minnesota’s climate is perfect! 33
  • 34. Case 4 – Solar PowerEnergy Creation By Murphy4th Largest Solar Energy Producer in MNIkea is #1 & other in top 10 are government entitiesMurphy installed 8 systems 2010 - 2012320KW total power  5 buildings  Fridley Logistics Campus: produces 50% of energy use on 2% of roof…!!! 2 LEED Gold site5 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!) Case 4 – Solar PowerEnergy CreationROI of Solar Power1st Three Systems in 2010Project 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 PanelSystem designer, installer & grant consultantJon Kramer, NABCEP certified PV installer240-463-3688; jk2surf@aol.com 34
  • 35. Case 4 – Solar Power 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 Case 4 – Solar Power 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.comDakota Electric Xcel 35
  • 36. Case 4 – Solar PowerEnergy CreationEagan ROI of Solar PowerWhy 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 onsiteEnergy CreationEagan ROI of Solar PowerSBA Loan PR Benefits FromMurphy’s Education EffortNational + Local Coverage 36
  • 37. Case 5 – LED LightingLightingSince 1980’s Have BeenChanging Fixtures w New TechROI 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 ExistingLED LightingLeading Edge in Mid-West ForFacilities 100,000 sq. ft. +We Couldn’t Find Anywhere to Viewin 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
  • 38. LightingLED LightingNarrowed to 2 OptionsLithonia vs. Lusio  Motion sensor on each fixture  Lenses on each fixture to reduce glare and protect food if damaged LightingLED LightingLithonia Fixture SelectedBrochure Comparison Data 38
  • 39. Case 5 – LED LightingLED LightingWhy?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 ested utility credit included. Dock InsulationDock Plate Heat LossSteel Plates Act as Ice Cubesin Winter to Cool Bldg.Murphy Designed In-house SolutionVery 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
  • 40. TransportationTransportationTrailer Wind & MileageSmart 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/ TransportationTransportationTrailer Wind & MileageSmart Truck “Under Tray” SystemMurphy’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
  • 41. Why LEEDWhy We Went LEEDEspecially at the Height of a RecessionPut Another Way:Why Does Murphy Voluntarily Do GreenProjects/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 LEEDWhy We Went LEEDLeadership 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
  • 42. Why LEEDWhy We Went LEEDBusiness 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 LEEDWhy We Went LEEDBusiness 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
  • 43. Why LEEDWhy We Went LEEDEconomic andMarketing / 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 LEEDWhy We Went LEEDBranding ImpactIndustry RecognitionPlaced upon Top 50 “Green” Lists Top 50 Green Supply Chain Partners List Murphy has been listed since list inception 5 years ago 43
  • 44. Why We Went LEEDBranding ImpactWorld Trade 1002012 Article Highlighting Murphy“You can’t buy this kind of exposure” Why LEEDWhy We Went LEEDBranding ImpactKARE 11 TVRichard Interviewed on Simply Science FeatureDiscussing Murphy’s Prairies and StormwaterMN Pollution Control AgencySmall Business Enterprise Newsletter Feature 44
  • 45. Why LEEDWhy We Went LEEDBranding ImpactBusiness School Case Study on theEconomics of GreenExploring Stormwater ROI Issue at Murphy Why LEEDWhy We Went LEEDBranding ImpactSierra Club Article2,000+ word article forpublication late 2012Writer for the club contacted Richard Murphy Warehouse Company Has Long History with Green Initiativesbased upon web research & networkingand heard we were the company to By Cassandra Hallcontact! 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
  • 46. 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 Metric Tons of CO2e per Year 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 (Murphys 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 Metric Tons of CO2e per Year 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 ReductionMurphy Warehouse Company CaseOwner’s PerspectivesGreening The Grounds:Finding Economic and Sustainable Returns In Supply Chain LogisticsNovember 29, 2012Richard Murphy Jr. ASLAPresident & CEO, Murphy CompaniesPast President, American Society of Landscape Architects – MN Chapter (ASLA-MN)Past Chair, Center for Transportation Studies (CTS), U of MNPast Chair, Council of Supply Chain Management Professionals (CSCMP)E-mail: richard@murphywarehouse.com 46

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