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Brac presentation 9 10 13 final

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Brac presentation 9 10 13 final

  1. 1. © Foremost Quality Logistics Confidential 1 How the Site Selection Game is Played? September 10, 2013 PREPARED BY: Tim Feemster Managing Principal Foremost Quality Logistics O: 469-554-9873 C: 214-693-7689 tim@feemsters.com @tsfeemster - twitter
  2. 2. © Foremost Quality Logistics Confidential What about Site Selection & Using a Professional • Site selection is both an art and a science, best handled by professionals • Almost all companies are risk averse • Most company employees have never moved a site in their existing company or even their entire career • I have done over 100 start-ups in my career, most site selectors have not done that many • Many site selection companies have specialties- incentives, taxes, data centers, etc. but don’t team with others • You may know more about a subject than the site selection company. Use this to your advantage? • Incentives rarely make a bad location a good one, be careful • We are site eliminators, not selectors 2
  3. 3. © Foremost Quality Logistics Confidential Teamwork- Team projects like those that come down from the State. Who is LEADING, who is not committed, are you on the same page? 3
  4. 4. © Foremost Quality Logistics Confidential Seven Trends Affecting Industrial Site Selection 1. Growing demand in emerging global markets 2. Rising transportation costs 3. Emerging logistics hubs and the expansion of the Panama Canal 4. Downward pressure on rents, now ending and a “flight-to-quality” in real estate 5. Opting for more flexibility with 3PLs 6. Navigating more stringent financial hurdles 7. ecommerce, mcommerce, scommerce Source: Napolitano, Maida (2009), “Site Selection: 5 Trends for the New Economy,” Logistics Management, Vol. 48, No. 9, pp. 42-47. and Foremost Quality Logistics Logistics 4
  5. 5. © Foremost Quality Logistics Confidential 10% 20% 30% 40% 50% 60% RentLaborTransportation 0% 50.3% 21.8% 9.5% 7.8% 4.3% Customer Service Admin Supplies Other 2.7% 2.2% 1.2% Inventory Logistics Cost Breakdown- 2006 5 17.3% Source: Establish, Inc/HWD & Foremost Quality Logistics
  6. 6. © Foremost Quality Logistics Confidential Logistics Cost Breakdown- 2012 6 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Transportation Inventory Warehouse Labor est Warehouse Fixed est Administration Other 62.8% 22.9% 5.9% 3.9% 3.8% 0.8% PercentofLogisticsCost Cost Category 14.4% Source: CSCMP & Foremost Quality Logistics
  7. 7. © Foremost Quality Logistics Confidential 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% High Tech Regional Retailer Consumer Fulfillment Light Manufacturing CPG Manufacturer National Retailer Food & Beverage 41% 42% 24% 12% 62% 34% 19% 21% 72% 50% 65% 23% 54%5% 4% 5% 5% 5% 2% 6% 29% 19% 9% 8% 3% 9% 2% 5% 14% 14% 12% 16% 4% 4% Inbound Trans Outbound Trans DC Fixed Inventory DC Variable Freight, Freight, and Freight, then Labor and Love Source: CHAINalytics 7 %ofSupplyChainCosts 60% 63% 72% 74% 77% 85% 88%
  8. 8. © Foremost Quality Logistics Confidential Data Center Project 88
  9. 9. © Foremost Quality Logistics Confidential Start With Supply Chain Strategy to Get Leverage 9 Source: Gartner / AMR Research
  10. 10. © Foremost Quality Logistics Confidential Location Screening for Industrial/Manufacturing Let the data lead us. Identify locations by looking at everything at the start instead of artificially starting with a set of predefined “preferred” or “best-in-class” areas. First Pass: Fatal Flaws Screen out locations with fatal flaws e.g. Locations with insufficient connectivity or high logistics cost. Second Pass: Major Flaws Rule out Locations with major flaws e.g. Locations with key attributes but inadequate infrastructure like no intermodal, international airport or seaport access. Third Pass: Manageable Flaws Consider Locations that meet all critical criteria but have manageable issues – flaws that can be remedied or mitigated through negotiations with government officials Preferred and back-up Locations (1-2) Quantitative Analysis And Desktop Research Identify All Site Selection Criteria Site Due Diligence, Qualitative Data Gathering, and Cost Modeling Short List of Preferred Locations and Sites 10 Source: Foremost Quality Logistics
  11. 11. © Foremost Quality Logistics Confidential Business Location Services & Site Selection Process Phase 1 Strategic Context/ Criteria Development Phase 2 Initial Screening Phase 3 Location Assessment Phase 4 Field Visits/ Alternative Development Phase 5 Negotiation/Selection Derive location strategy from business strategy. Articulate location threshold requirements based on critical attributes for target metro areas. Develop preliminary cost profile to determine relative emphasis on critical criteria, including: •Labor •Operational Requirements •Operating Costs •Quality of Life/Business •Operating Environment •Other (One day) Finalize initial decision criteria threshold requirements. Assess initial list of communities based on threshold requirements: •Labor attributes •Cost structure •Operating environment •Other attributes Narrow location listing Primary and secondary research to prioritize communities Geo- variable cost comparison Trade-off analysis of qualitative factors vs. geo-variable operating costs Re-evaluate market priorities – assess market factors and opportunities in relation to objectives Confirm occupancy requirements and operational issues Create a short-list of communities. Conduct field visits designed to assess the following: •Potential site/building options •Incentive possibilities •Labor market •Logistics infrastructure and costs Identify alternatives & distribute RFP’s Analyze proposals •Present location analysis & recommendations Finalize location preferences: •Revalidate location/site criteria and site options •Site visits for final 2-3 locations Evaluate/negotiate incentives Establish site preferences Negotiate lease Finalize incentives Maintain flexibility Manage contingencies Outcome Outcome Outcome Outcome Outcome Location strategy and criteria developed Initial screening yields ranking of potential locations Final communities selected for site visits Multi-market competition/ Mgt. prepared to decide Using multi-market leverage, location/site chosen Final communities selected for site visits 11 Source: Tim Feemster Foremost Quality Logistics
  12. 12. © Foremost Quality Logistics Confidential RFP Critical Elements • Regionalization will get you more hits • Correct and up to date data • Answer all the questions • Use an appendix to add additional details or elements not asked for in the RFP • Site certification can be a real plus or can be a Fatal Flaw- remember what I said about RISK • Consistency of message between partners- state, regional, and local- deviate and it will cost you • Site tours can make or break the process • Remember site selection is GLOBAL, not just the US or your neighboring State/City 12 Source: Tim Feemster Foremost Quality Logistics
  13. 13. © Foremost Quality Logistics Confidential UK, Japan/Taiwan, Germany, & Canada are Top US Investors 13 Source: Congressional Research Service 2012 & Schneider Consulting
  14. 14. © Foremost Quality Logistics Confidential Manufacturing is the Largest US FDI Sector ($83B in 2012) 14 Source: Schneider Consulting
  15. 15. © Foremost Quality Logistics Confidential Relative to US firms in the same Industry, Foreign Company Trends 15 Source: US Dept of Commerce 2012 & Schneider Consulting
  16. 16. © Foremost Quality Logistics Confidential Top 10 Site Selection Criteria- Warehouse/Distribution 1. Transportation costs – both inbound and outbound 2. Logistics infrastructure – highways, intermodal, rail, FTZ 3. Labor costs & availability 4. Supply Chain interruption risk 5. Business climate- is there love 6. Rent /lease terms/ownership 7. Taxes & incentives 8. Utility rates 9. CAM charges 10. Access to public transportation- BRAC commute distance up to 40 mi (80+% of workers in study) Source: Tim Feemster Foremost Quality Logistics 16
  17. 17. © Foremost Quality Logistics Confidential Top 10 Site Selection Criteria- Manufacturing 1. Labor costs & availability 2. Transportation costs – both inbound and outbound 3. Supply Chain interruption risk 4. Logistics infrastructure – highways, intermodal, rail, FTZ 5. Utility rates 6. Business climate- is there love 7. Taxes & incentives 8. Rent /lease terms/ownership 9. CAM charges 10. Access to public transportation- BRAC commute distance up to 40 mi (80+% of workers in study) 17 Source: Tim Feemster Foremost Quality Logistics
  18. 18. © Foremost Quality Logistics Confidential What does the Future Hold? • Mobile social, and e commerce will explode • Transportation & port infrastructures will be more gridlocked • Fuel prices will remain volatile & but on average increasing • Customers will expect faster and more predictable lead times • Global trade activity will grow, but so will its costs, risks, and complexities • There will be more sources of financial and operational risk • Sustainability initiatives will have greater influence on supply chain networks, facility construction, and transportation choices • Ageing populations will create labor constraints in Logistics • The rules for lease accounting may change the Rent vs. Buy vs. 3PL decision in some companies 18 Source: Tim Feemster Foremost Quality Logistics
  19. 19. © Foremost Quality Logistics Confidential Soon, I am going to be up to my neck in ALLIGATORS - Questions? 19

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