Aligning Your Supply Chain

Knowledge of the goods movement industry is a key element in the success of an industrial commercial real estate professional. To make the best recommendations for our clients’ business, we must first thoroughly understand their business.

As an industrial real estate specialist for the past 25 years, I know that the basis of a successful business in this industry is strong client relationships, detailed evaluation skills and the ability to expedite contract negotiations. But the mark of success in any industry isn’t only what one has done, but what more they can do.

With that sentiment in mind, I recently set out to gain a deeper understanding of my own clients’ industries. To garner this knowledge, I enrolled in a Global Logistics Specialist professional designation program at California State University, Long Beach. As the only program of its kind on the West Coast, the curriculum is designed as a comprehensive educational training for people in the supply chain and logistics industry.

For a commercial real estate professional, there is a clear benefit to the pursuit of continuing education in the goods movement industry: the opportunity to better understand the challenges and opportunities our clients face. It’s imperative that we are able to identify sites that suit the needs of our clients and their customers in an efficient and cost-effective way. 

With an in-depth understanding of the supply chain, an industrial real estate specialist’s strategic counsel will be even more targeted, allowing us to be better advisers to our clients. 

In many instances, for example, we work with manufacturers or distributors who may be considering a move to a less expensive facility. The initial solution may seem simple: Take a look at the cheaper building. After gaining a deeper understanding of these clients’ customer service metrics, however, an industrial real estate professional will be able to further acknowledge the difference between renting on a per-square-foot basis versus the cost of moving goods.

Manufacturers and distributors must analyze their property needs based not only on space, loading docks and ceiling height, but also on deeper metrics that ultimately affect their end-customers. Analysis of time in transit as well as ongoing receipt of finished goods and raw materials all should be considered when advising these clients. 

Ultimately, we must measure the inbound reduction in cost against outbound service metrics and cost efficiencies to make the right strategic decision. We also must be able to recognize potential threats, including end-of-life or time-in-transit issues, and advise our clients about having a backup plan to mitigate supply chain risk. 

Beyond this, it’s important to understand scalability and the leaning of supply chain movements. By learning how to lean-out the supply chain, we can recognize the benefits this can have on our clients’ finished goods inventory capacity.

If we’re doing our jobs well, we actually want to reduce our clients’ footprint. This may appear counterintuitive to what people in our industry usually strive to do, which is to sell more square footage. That said, by developing a deeper understanding of push-versus-pull demand forecasting, we can recommend innovative ways to minimize on-hand inventory, which reduces their need for fixed real estate assets.

In addition to advising clients, commercial real estate professionals who are well educated on supply chain issues will be better able to identify the benefits and detriments of each location, specifically as they relate to moving inbound goods into the supply chain for the end-customer. 

Depending on the product being manufactured or distributed, there are various modalities to transport goods, and by deepening our knowledge of ocean, air, and intermodal transport, we are better able to establish the right solutions, depending on the service metrics customers are trying to achieve.

This leads to better alignment with all involved in real estate deal-making, including the executive management team, the operations team on the transportation and distribution side, and the manufacturing team. The result is improved alignment with clients’ end-customers as well, which is the ultimate goal.  

Kevin Turner is a senior vice president in Voit Real Estate Services’ Irvine, Calif., office. He completed the Global Logistics Specialist professional designation at California State University, Long Beach in 2012, and was so inspired by the program that he created a scholarship to help other professionals gain this experience and better understand the supply chain. Contact him at kturner@voitco.com.

 

 

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