Your Client’s Global Supply
Chain
From their supplier’s supplier to their customer’s
customer




     Pete Quinn
Cushman ...
The Flow of Goods




   New Global Strategies - Triangulation
Investment triangulation patters driven by cost play, marke...
Rapid Growth in China/Asia Sourcing (Circa 1990)

                                         Regional DC


                 ...
Rapid Growth in China/Asia Outsourcing (Circa 2005-2010)




                  Regional DC                                ...
Interstate Highway System


  50 years of growth and expansion. Major metro areas are critically congested




Major Macro...
Power of the Can


   The World the Box Made




Collection of Component Parts in Boxes




                              ...
Multi Modal Delivery Throughout the World




 Norfolk Southern Intermodal to the US
 East Coast




      A local deliver...
Retail in US




E-Commerce in France




       The Technology Innovation




                                   8
RFID Technology

           Detection – Direction ? Label or Skin?




              Bar Code                             ...
RFID Technology

            Real Time Knowledge

                                                                        ...
The Process Innovation




Norfolk: Portsmouth Marine Terminal




   Source: Port of Virginia web site.




Virginia Inla...
Designing the Platform
                                      Point of View: The Supply Chain is about Location Issues.
   ...
The Flow of Services




 Workforce Shortage


     The EPF (Employment Policy Foundation) projects a shortage of several ...
Minneapolis Thematic Map –
Professionals




Minneapolis Thematic Map –
Steady Strivers




Minneapolis Thematic Map –
Aug...
Minneapolis Thematic Map –
 Stabilizers




 Minneapolis Thematic Map –
 Interluders




“The Active Way to Recruit” and B...
Some interesting Supply Chain data points to
           consider

         While the market is currently unstable, the fun...
The Flow of Goods and Services
In our world is Changing Yours




                                 17
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Microsoft PowerPoint - Your Client's Global Supply Chain (SIOR)

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Microsoft PowerPoint - Your Client's Global Supply Chain (SIOR)

  1. 1. Your Client’s Global Supply Chain From their supplier’s supplier to their customer’s customer Pete Quinn Cushman & Wakefield It’s All About the Flow of Goods & Services EU-25 and China-India Pac Rivals US Economy GDP Purchasing Power Parity Germany (5) $14.5 tr UK (7) $9,8 tr $4,7 tr $4,2 tr $14,1 tr Autres France (6) US (1) China (2) India (3) Japan (4) EU-25 1
  2. 2. The Flow of Goods New Global Strategies - Triangulation Investment triangulation patters driven by cost play, market opportunity & global hedge. CEE CIS? EU US China Mexico Central & Eastern Europe Platform Low-Cost Platform Supply Chain Optimization – Labor arbitrage – World class infrastructure – Leading engineering skills – Direct access to Europe Market Opportunity Global Hedge – Western Europe – Hedge against Asia – 10 New EU Entrants – Protection of IPR – Beachhead for CIS market Panama SeaBridges China and the EU 2
  3. 3. Rapid Growth in China/Asia Sourcing (Circa 1990) Regional DC Regional DC Import Facility Regional DC Import Facility Regional DC Import Facility Stage 1 – Importers (Retailers/Suppliers) locate import distribution centers in proximity to ports – These DC’s replenish DC’s in the domestic network – Potential for cross docking domestic sourced product Cushman & Wakefield Industrial Conference Rapid Growth in China/Asia Sourcing (Circa 1999-2003) Regional DC Regional DC Regional DC Import Facility 3PL Consolidation Center Regional DC Import Facility Import Facility Stage 2 – Importers (Retailers/Suppliers) arrange for China 3PLs to consolidate some shipments direct to specific DC’s in the domestic network, thereby bypassing their import DC’s Cushman & Wakefield Industrial Conference Rapid Growth in China/Asia Consumption (Circa 2002-2006) Regional DC Regional DC Regional DC Regional DC Import Facility Regional DC Regional DC Import Facility Regional DC Import Facility 3PL Consolidation Center and Import Facility Stage 3 – Importers (Retailers/Suppliers) gear up to supply the China domestic market – Build DC’s for the domestic market with capability of consolidation for export to the US/Europe 3
  4. 4. Rapid Growth in China/Asia Outsourcing (Circa 2005-2010) Regional DC Regional DC Regional DC Regional DC Regional DC Import Facility Regional DC Import Facility Regional DC Import Facility 3PL Consolidation Center and Import Facility 3PL Deconsolidation Center Stage 4 – Importers /Suppliers gear up to supply the China domestic market by outsourcing manufacturing to Africa – Build DC’s for the domestic market with capability of consolidation for export to the US/Europe Cushman & Wakefield Industrial Conference A Recent Survey Of Fortune 500 Executives Asked Each “What Are Your Company’s Biggest Supply Chain Issues?” WHAT ARE THE BIGGEST SUPPLY CHAIN ISSUES? Source: Eyefortransport.com Congestion Tripled in 20 Years The nation’s road system has been experiencing steady growth in congestion levels in recent decades, particularly in urban areas. Plans for the expansion of existing road networks often attract accelerated residential and commercial land development in the areas to be serviced by the roads. As a result, the capacity of the new roads are heavily taxed as soon as they come on line. In a distribution environment marked by increasingly tight delivery schedules and a relatively tight market for truckers, road congestion is highly disruptive and costly 4
  5. 5. Interstate Highway System 50 years of growth and expansion. Major metro areas are critically congested Major Macroeconomic Trends Impacting The Transportation/ Trucking Industry Increased demand for shipping capacity. Continued strong growth in global and domestic market economies has continued to put pressure on the transportation industry Higher fuel costs. Fuel costs represent as much as 25% of total operating costs; a one cent increase in fuel costs has a significant impact on slim profit margins Emphasis on quality of life. Drivers are opting for a better quality of life. Drivers’ lifestyle issues have made this profession seem less appealing. The average age of a driver is now approaching 55 years, and fewer new drivers are entering the workforce. Globalization. The rising levels of global sourcing and increased import customer demand are putting significant new strains on the trucking business Environmental and Regulatory Changes. – Environmental: Over the last 10-15 years, the level of investment in the U.S. transportation infrastructure, in our roads and bridges, has not kept pace with commercial growth. In addition, more recently, the weather has wreaked havoc – Regulatory: Hours of Service regulations. Driver productivity has been affected by a minimum of 2 to 4%. Class 8 truck production has risen in advance of 2007 emissions requirements. Impact On The Trucking Industry Higher Rates Back Haul Issues Deteriorating Service Not Enough Drivers Capacity Shortfall Overall 5
  6. 6. Power of the Can The World the Box Made Collection of Component Parts in Boxes 6
  7. 7. Multi Modal Delivery Throughout the World Norfolk Southern Intermodal to the US East Coast A local delivery truck mounts a free standing full body 7
  8. 8. Retail in US E-Commerce in France The Technology Innovation 8
  9. 9. RFID Technology Detection – Direction ? Label or Skin? Bar Code RFID Cushman & Wakefield Industrial Conference RFID RFID Technology Real Time Knowledge Bar Code Signal Received No Signal Cushman & Wakefield Industrial Conference RFID RFID Technology Real Time Knowledge Bar Code ? ? ? Signal Received No Signal Cushman & Wakefield Industrial Conference 9
  10. 10. RFID Technology Real Time Knowledge RFID Bar Code ? ? ? No Signal Store of the Future - Signal Received Cushman & Wakefield Industrial Conference This shows a completely different way to deliver goods than you are doing now. Being creative in distribution will enable a more profitable and efficient process! DISTRIBUTION CENTER Regional Drop Lots Consumers 10
  11. 11. The Process Innovation Norfolk: Portsmouth Marine Terminal Source: Port of Virginia web site. Virginia Inland Port Source: Port of Virginia web site. 11
  12. 12. Designing the Platform Point of View: The Supply Chain is about Location Issues. Supply Chain (SC) and Real Estate (RE) therefore have a symbiotic relationship. Plan Source Make Deliver Return Supply Network Inventory Management Rationalization Optimization Sourcing and Port Strategies Location strategy Real Estate Platform Suppliers and site selection Pr od Exit Strategies Facility Design u ct Workplace and HR Mgmt. Supply Chain io n Creative Operations Planning n FinancingCapital & Training io ut Markets Customer r ib ist Performance Sales, Alliances / D Management/KPIs Branding and Outsourcing / Merchandising 3PL Plan Find Acquire Manage Dispose a well-thought-out decision will consider both disciplines in an “end-to-end” integrated solution. Implications for SC and RE* PAST PRESENT - FUTURE Functional team silos: corporate real estate Cross-functional teams (real estate, operations, and/or finance driven… Ops and HR work within finance, marketing, HR) the constraints of the outcome. Global teams Geographic team silos: regional team Business cost and performance driven, where and perspective real estate is just one part of the whole Real estate cost-driven: primary Detailed business understanding, broad geographic decision criteria screening, cost analysis, risk management approaches Planning tools: basic real estate portfolio and and decision analysis occupancy cost analysis Network level planning, short term flexible leases Facility-level planning, mid to long term leases Optimize the position of the company / shareholders Ultimate goal: Optimize “my” business (broader, strategic view across business units) unit, based on how management is Focus: Strategic and tactical combined in a landed incentivized (P&L, EVA, etc.) solution Focus: tactical So where and what do you build next Lots of height Lots of drop lots Lots of doors In markets with Lots of people With Lots of flexibility in terms 12
  13. 13. The Flow of Services Workforce Shortage The EPF (Employment Policy Foundation) projects a shortage of several million workers by the end of this decade 10 Million by 2015 35 Million by 2030 Its all about the Location - Target Profile Thematic Mapping Where are the targeted employees? Target Profile Thematic Mapping identifies neighborhoods in which and the concentration of the target profile classes – Expansion Cities Example • Minneapolis 13
  14. 14. Minneapolis Thematic Map – Professionals Minneapolis Thematic Map – Steady Strivers Minneapolis Thematic Map – Augmenters 14
  15. 15. Minneapolis Thematic Map – Stabilizers Minneapolis Thematic Map – Interluders “The Active Way to Recruit” and Be in the “Right Place” Develop a list of specific households based on target profile – Based on PRIZM codes and a variety of other data sources are obtained. Recommends a media campaign to target those potential employees. Coordinates and Implements: – “Creative” collateral development based on target – The mailing of the material – Ad placement in media, on internet and other forms 15
  16. 16. Some interesting Supply Chain data points to consider While the market is currently unstable, the fundamentals in the trucking industry have not changed. Trucking capacity has recently been considered tighter than anytime in the last 20 years - a currently estimated 20,000 truck driver shortage in the U.S. is expected to grow to 111,000 by 2014 The average price of a gallon of diesel fuel is almost two and a half times that of 24 months earlier Air freight is growing at an average rate of 6% a year – customer service premiums Container volume is expected to grow at a 3X rate in the next 10 years 56% of CPG companies recently surveyed have diverted freight away from the ports in Southern California Logistics costs in the U.S. typically represent 6 to 8% of COGS, while in China they can be as high as 40% of COGS – China is an answer, sometimes 85% of fortune 500 companies have internal subscriptions to network modeling software applications – but how many use these, effectively? Key supply chain trends are affecting how real estate strategies are defined and implemented Supply Chain Issue/Trend Impact on Industrial Real Estate Competitive pressures, consumer demands and Network design, real estate strategy and site acquisitions – along with the recent attention selection are more critical points of emphasis: the from Wall Street to the value of a company’s real new emphasis is network by design, not by estate portfolio - forcing companies to look accident, aligned to maximize return on investment harder at their supply chain networks and operating asset effectiveness An increased demand for supply chain capacity, Limited premium DC capacity available in more in congested supply chain “choke points” where congested, populated areas inbound supply and outbound customer demand converge For others, a need to define new ports and Demand for networking strategy help, plus a routes, to manage service levels and costs demand for supply chain infrastructure in Tier 2 and Tier 3 markets CPG/Retail companies are making greater efforts Demand for larger buildings, or regional distribution at inbound and outbound freight consolidation as centers, “RDCs”, higher overall, with some local, well as efforts to control the management of smaller, forward facilities becoming less desirable freight Customization and Postponement: Customer Demand for larger buildings with greater potential requirements for more customized products for interior design flexibility. Also, State, County & combined with companies striving to reduce total Local jurisdictions’ policies and taxes affecting post- finished goods inventories leading to more manufacturing logistics postponement and final product build out closer to end demand Key supply chain trends are affecting how real estate strategies are define and implemented (continued) Supply Chain Issue/Trend Impact on Industrial Real Estate Truck driver time no longer “free”, and some Freight now needing to be made more desirable: drivers and carriers displaying shipping being picked up at facilities with easy site access, commodity selectivity good highway proximity and some potential driver Intensifying attention and resources dedicated amenities Existing buildings being retrofit, new facilities being to supply chain security built with modern, more expensive security systems incorporated Shippers looking to increase trucking capacity 24/7 zoning ordinances to permit distribution and and increase productivity by performing more delivery activities at all hours is higher value-add activities in overnite hours Shippers are seeking more freight mode Companies are seeking facilities with multiple mode flexibility as a way to manage service levels and capability – TL, Rail, Boxcar costs Shippers and Carriers having a harder time Potential for a DC site to be considered differently attaining and maintain trucking driving labor for its labor supply implications – for availability of DC and driving labor More shippers looking to move container Potential development opportunities in locations volume out of LA/LB, due to delays in those such as Sea Tac, Savannah, Charleston, Norfolk & locations, along with the loss of capacity in New Houston Orleans Overlapping retail channels (e.g. web, store, Facilities with multi-channel flexibility, features and catalog, club, etc.) competing for resources, available square feet are in higher demand inventory and distribution assets Generally, Supply Chain strategy and Real Estate more frequently reporting, solid or infrastructure getting more air time in the C dotted line, into Supply Chain Suite 16
  17. 17. The Flow of Goods and Services In our world is Changing Yours 17

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