Location: Several Facilities
Before
The client’s supply chain team identified a significant cost savings opportunity by consolidating their E-commerce shipments into one consolidated fulfillment center versus shipping from four existing store-based distribution centers. Our systems team assisted the client in sizing the facility and evaluating automation alternatives that provided the highest return on investment. It was determined that the requirement was for 740,000 SF with possible expansion up to 1,000,000 SF. Based on outgoing parcel data the targeted states were IL, IN, OH & KY.
Results
- 743,600 SF build to suit with pre-negotiated potential expansion up to 968,240 SF
- Consolidation of facilities reduced the current amount of SF needed to support E-commerce
- Maximum use of ceiling height for vertical cube reduced the overall required SF
- Significant cost reduction in outgoing parcel costs which justified the project
- 40% labor productivity gain via automation and layout
- Payroll expense savings due to automation
- Secured over $5 Million in tax abatements, grants, tax credits, and utility savings
How We Did It
Johnson Stephens Consulting (MHE design), ESRP (Commercial Real Estate Solutions), and Rubin Advisors (Incentive negotiations) partnered together to evaluate multi-state options. An initial list of thirty-two options was reduced to four viable options. Each alternative was analyzed based on real estate costs, transportation costs, labor costs, utility costs, taxes, and incentives. The sites were then evaluated based on qualitative factors such as availability of labor, quality of labor, opportunity to retain existing associates, union activity, and crime.
Challenges Faced
- Lack of existing buildings in the desired size range
- Timing to have the facility ready for the holiday surge
- Flexibility to phase into the space
- Finding labor to accommodate the seasonal business
- Procuring incentives in a timely manner
- Ability to expand
