It s in the Details: A Deeper Dive to Maximize Network Analysis Value

Transcription

1 It s in the Details: A Deeper Dive to Maximize Network Analysis Value Presented by: Bruce Baring, Director, Supply Chain Solutions Peach State John Warden, EVP, Site Selection Services, Colliers International 2018 MHI Copyright claimed for audiovisual works and sound recordings of seminar sessions. All rights reserved.

2 Project Background Company is manufacturer of plumbing products serving wholesale and retail channels Transitioned from regional distribution to plant direct in economic downturn 6 Manufacturing plants east of Mississippi River Service to west coast customers was not competitive Typical Project Approach Review Current State Analyze Data Build Baseline Model Build Modified Baseline Analyze Scenarios Recommend Network Plan 2

3 2017 Customer Demand LEGEND >500,000 lbs >100,000 lbs >10,000 lbs <10,000 lbs 3

4 Candidate Locations RENO, NV SALT LAKE CITY, UT ST GEORGE, UT LAS VEGAS, NV KINGMAN, AZ PHOENIX, AZ 4

5 Facility Cost Projections (2022) 110 workers 20 Lift Truck Operators 90 Pick, Pack, Ship 30% Fringe 2000 HRS per YR WAREHOUSE FIXED COST Annual Lease Rate Facility Size WH Fixed City State (nnn) Req (sqft) Cost Las Vegas NV $ ,000 $ 1,700,000 Phoenix AZ $ ,000 $ 1,440,000 Salt Lake City UT $ ,000 $ 1,570,000 Reno NV $ ,000 $ 1,115,000 St. George UT $ ,000 $ 1,200,000 Kingman AZ $ ,000 $ 1,008,000 WAREHOUSE VARIABLE COST Annual Blended WH Variable City State Wage Rate Hrs Req (yr) Cost Las Vegas NV $ ,000 $ 4,902,000 Phoenix AZ $ ,000 $ 4,516,000 Salt Lake City UT $ ,000 $ 4,442,000 Reno NV $ ,000 $ 4,819,000 St. George UT $ ,000 $ 4,216,000 Kingman AZ $ ,000 $ 4,301,000 5

6 Plant to DC Replenishment Costs (2022) Plant Location Candidate DC Location VA 1 VA 2 IN GA IN 2 TN Las Vegas $ 428,000 $ 295,000 $ 338,000 $ 238,000 $ 142,000 $ 97,000 Phoenix $ 398,000 $ 280,000 $ 335,000 $ 223,000 $ 137,000 $ 95,000 Salt Lake City $ 428,000 $ 275,000 $ 297,000 $ 239,000 $ 129,000 $ 89,000 Reno $ 544,000 $ 336,000 $ 379,000 $ 294,000 $ 151,000 $ 103,000 St. George $ 655,000 $ 391,000 $ 453,000 $ 343,000 $ 162,000 $ 108,000 Kingman $ 445,000 $ 296,000 $ 337,000 $ 246,000 $ 137,000 $ 95,000 Annual Loads Average Weight/Load 29,912 34,540 22,913 21,298 11,991 6,560 All replenishment loads were rated as FTL except IN 2 and TN 6

7 Outbound Transportation Costs (2022) City ST Zip Outbound Freight Las Vegas NV $ 2,161,000 Phoenix AZ $ 2,168,000 Reno NV $ 2,150,000 Salt Lake City UT $ 2,121,000 St George UT $ 2,361,000 Kingman AZ $ 2,434,000 All customer shipments with the same ship date were consolidated in future state (~24% reduction in shipments) 7

8 Total Cost Comparison Candidate DC Location OB to Customer Trans Cost IB Replen to DC Trans Costs Total Trans Costs Warehouse Costs Total Costs Diff from Min Cost Rank Las Vegas $ 2,161,000 $ 1,538,000 $ 3,699,000 $ 6,602,000 $ 10,301,000 $ 1,002,000 6 Phoenix $ 2,168,000 $ 1,468,000 $ 3,636,000 $ 5,956,000 $ 9,592,000 $ 293,000 3 Salt Lake City $ 2,121,000 $ 1,457,000 $ 3,578,000 $ 6,012,000 $ 9,590,000 $ 291,000 2 Reno $ 2,150,000 $ 1,807,000 $ 3,957,000 $ 5,934,000 $ 9,891,000 $ 592,000 5 St. George $ 2,361,000 $ 2,112,000 $ 4,473,000 $ 5,416,000 $ 9,889,000 $ 590,000 4 Kingman $ 2,434,000 $ 1,556,000 $ 3,990,000 $ 5,309,000 $ 9,299,000 $ - 1 8

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11 350,000 Cumulative Mid-Wage Workers By Drive Time (Minutes) From Residence To Site 300, , , , , ,000 50,000 0 St. George 167, ,332 58,619 13,873 Kingman 6,

12 Arizona Nevada Utah Mid-Wage Residents, Workers and Net Labor (Import)/Export of Workers St. George -2,228 13,873 16,101 Salt Lake City -34, , ,539 Reno -4,931 58,619 63,550 Las Vegas -28, , ,119 Phoenix Kingman 29,679 6,662 5,330 1, ,332 79, ,000-50, , , , , , , , ,000 Mid-Wage Shed Residents Mid-Wage Shed Workers Net (Import) / Export 12

13 Arizona Nevada Utah Mid-Wage Workers Share of Shed Working Population St. George 40.5% Salt Lake City 37.4% Reno 45.1% Las Vegas 44.5% Phoenix 45.2% Kingman 46.3% 30% 32% 34% 36% 38% 40% 42% 44% 46% 48% 50% 13

14 Mid-Wage Workers Per 10,000 Residents by Drive Time to Site 100,000 10,000 1, Reno Las Vegas Kingman Phoenix St. George Salt Lake City 14

15 Arizona Nevada Utah Underemployment St. George 51.9% Salt Lake City 41.4% Reno 53.8% Las Vegas 62.8% Phoenix 47.8% Kingman 55.1% 0% 10% 20% 30% 40% 50% 60% 70% 15

16 Population and Employment Change % 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 13.9% 12.0% 13.8% 9.7% 10.2% 11.2% 9.9% 5.6% 6.4% 3.2% 4.6% 4.7% Kingman Phoenix Las Vegas Reno Salt Lake City St. George Arizona Nevada Utah Population 15 Years And Older % Change Total Employment % Change

17 October November December January February March April May June July August September October November December January February March April May June July August September October 8% Unemployment Rate 7% 6% 5% 4% 3% 2% Kingman Las Vegas Phoenix 5.1% Reno St. George 3.9% 3.7% Salt Lake City 3.0% 2.8% Salt Lake City St. George Phoenix Reno Las Vegas Kingman 17

18 1,400 1,200 1, Mid-Wage Residents Who Live Within 10 Minutes Of Site With Commute > 25 Miles , Kingman Phoenix Las Vegas Reno Salt Lake City St. George Arizona Nevada Utah Commute One-Way 25 to 50 Miles Commute One-Way Greater Than 50 Miles 18

19 Teamsters Certification Elections Since Kingman Phoenix Las Vegas Reno Salt Lake City St. George Arizona Nevada Utah All Elections (Per 100k Workers) Transportation and Warehousing (Per 10k Workers) 19

20 Factor Rankings: Lowest Cost Options (Lower Score = Better Market) Kingman Salt Lake City Phoenix Transportation Cost Mid-Wage Share of Shed Residents Share of Mid-Wage Employed in Mfrg Number of Mid-Wage Residents Underemployment Commuting Patterns Live Within 10 minutes/commute 25+ Miles IBT Activity-All Industries IBT Activity-Trans/Whse Pop Growth Indexed to Job Growth Unemployment Rate Low Penetration of Mid-Wage Labor Resources Total-All Factors Total-Most Critical Factors

21 Conclusions Based on pure logistics (network model) costs, Kingman, AZ was the optimal answer Salt Lake City and Phoenix were within 3% ($300k per year) of the optimal answer Labor analysis shows that Phoenix is far superior Deeper labor resources Favorable commuting patterns Low labor union threat 21

22 Q & A 22

23 For More Information: Or visit MODEX Booth B