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Going Hand in Hand: Supply Chain and Real Estate · Speaking of Supply Chain

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You're listening to Speaking of Supply Chain, a Mebach podcast. This is a
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show for logistics professionals looking to learn more about the latest innovations in supply chain.
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Each episode will feature a conversation on topics such as mitigating supply chain disruption
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and reducing risk, current automation trends, sustainability initiatives, and more. Let's
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dive right in. Hello and welcome to Speaking of Supply Chain, where we
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explore trends, current events, and innovations impacting the logistics and supply chain industries.
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I'm your host, Ellen Wood. Today we're excited to be joined by
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Kate from jail L, who's going to be talking about how to unlock the
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value between supply chain and real estate. Welcome Kate, Hello, how are
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you doing? I'm great? How are you? Yeah? I'm not too
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bad for aya in the wonderful sun the UK, so only so tell us
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a little bit about yourself, lovely. So, my name is Kate Jones.
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I have been with jail L for nearly eighteen months now, but actually
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prior to join in jail L, I spent all of my career working in
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supply chain logistics at DHL Supply chain and when Canton and the moving to jail
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L has very much been about trying to better connect the dots across real estate
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and supply chain because what we'll talk about today and what we often see is
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those two things are looked at in isolation and there's a fantastic opportunity for occupiers
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to actually look at those things together. So it's great for me that I'm
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now set in a real estate organization. I get the opportunity to work with
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me Back, which we'll talk about shortly, and really bring together the specialism
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of supply chain and then the specialism of real estate under one roof Fantastic,
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fantastic, And we've also got with us, We've got Sophie from me Back
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and she's going to give us her perspective again from the supply chain side.
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Sophie, welcome. I tell us a little bit about yourself. How long
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have you been in the supply chain industry. So I've been in consultancy over
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six years now, so I've worked in two different consultancies and also done ust
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in improcurement as well. So I've been one of the engineering leads in me
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Back K, which is really useful doing concept planning, detailed planning and working
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with the other officers across the globe. So we're sharing knowledge in twenty four
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different countries now, I think, which is a really privileged position to be
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in. So on with our topic for today, which is how to unmark
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the value between supply chain and real estate and obviously the two of you have
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some great insights into this and you've worked together on projects, is that right
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on client projects? Yes, we have. We've worked from a number of
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projects, but both of us working very closely together, probably for the last
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eighteen months or so now, so really really enjoyable and yeah, We've got
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lots to share with you. I'd love to hear it. So what's a
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race project that you've worked on? So, something we've worked on in collaboration
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recently has been a conceptual planning project. So typically within me back, we
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have three phases to our conceptual planning and this is where we do a deep
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dive into the data and then we look at alternative technologies for functional areas within
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the site. So we're a non bias consultancy. We're not attached to any
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specific suppliers or manufacturers, but we pick the best technology for the client and
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keep our eyes on what's out there. One of the things that's quite beneficial
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and opens the eyes of our clients is when we work with JLLL is actually
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how can we harness the value from the real estate side. So in a
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lot of cases we have we do a conceptual plan and we come up with
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a budget and an idea of what that will cost in the space that's required,
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and then there's a pause and where the client will go away and present
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that to the board and work out if there's a strong enough business case,
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etc. But actually we can start having those discussions earlier with JLLL in partnership
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because then we can say it's not just about going to a third party for
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example, it's actually about what are the options for you to find that piece
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of land? Do you buy that yourself? Do you go through? What
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are the other routes for that? Which can also then help to that point
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that the business case where the client takes it back to their board, there's
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more than just the cost of the equipment and the labor that's required for the
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new concept. You probably have some bits to add their cake to. Yeah,
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no, I do, because I think what often happens is in a
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very traditional sense, is that an occupier or a client will do the network
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study either in house or with me back and then traditionally it sort of gets
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part and then it gets picks up again, you know, a few months
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maybe twelve months later, and they try and deliver that project in the market.
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And one of the challenges that we see is actually property availability isn't always
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there, and so you then have to go back to step one and start
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over again. Where Sophie and I've had some real success in some of the
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projects that we've worked on is from day one, when Sophie's been designing the
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concept and looking at the building type and the size, I've worked hand in
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hand with her to actually feedback how viable that is in terms of the market.
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And Sophie's just mentioned there around the business case, actually putting real life
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numbers into her business case rather than notional ones, and it just really opens
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the eyes of what the client can see from very early on in the Osso
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it's actually really exciting to work in that way, and because the client's excited
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by what we're pointing in front of them, well, and I think the
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value of that network study just increases at that point, because, like you
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said, when they when they do it separately, they do the network study
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and it's a it's a concept design or or they do you know, a
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new facility concept design, and then it's it's all hypothetical and they take they
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might take that back for the business case to the to the group and yeah,
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they might get funding for it, but then they go out and try
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and do it and it's it's different in reality. How often does that happen
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where they say, oh, this is the best thing, and we've got
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funding for it. Now we've got approval, But then they go out it
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doesn't exist in where they're trying to do it or how they're trying to do
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it, and so then like you said, they're they're back to square one,
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um, And that's that's lost money, that's lost time, that's lost
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productivity for the client. So having these two services go in parallel really not
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only speeds up the process, but increases the possibility of getting something actually accomplished
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rather than just spinning your wheels coming up with ideas. Yeah, exactly.
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And it also plays into the alternatives evaluation as well. So when we're looking
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at what different technologies it might be that because we know in a certain area
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thanks to our alliance, it may be that when we're looking at alternatives,
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we are trying to evaluate what the building heights should be. So by introducing
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JLLL and having that relationship together, we can say, you know, in
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this part of the UK, for example, is it likely that we would
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find a piece of land of this size or is it likely that we would
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get planning permission for a building at X amount of meters? And obviously from
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a client perspective, you want to have that sooner rather than NATA because if
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you can't go up, you have to go out and that's quite and then
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that that comes with all the rest of the cost as well. But this
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isn't just the UK as well. This is you know, this is wider
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than the UK. The regulations are different in different countries, which is why
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it works. We have this alliance across the world, so we have local
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insight as well as as well as across the world. So have you found
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that that this happens more often than not? I mean, how how big
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is the need for this when when clients are looking for either you know,
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a new facility or they're looking for you know, consolidating their network. How
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how big is this? How important is it to people in supply toing?
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It's really important, And what often happens is clients will only explore what they
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already know today, so that will maybe be through their existence the party logistics
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provided they may go to and say can you help me solve this problem?
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And the three pl will obviously look within their networks do that by going to
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a sort of market position with JLL and meback, we can provide complete transparency
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over what the options are. So there's a massive need And actually what I
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found on Sophie will probably agree with this as well because we've been working together
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for the last few months is it almost feels like we've reached a point where,
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you know, specifically for FMCG or fast moving consumer goods, because of
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the real trend in terms of automation and sustainability and all of those wider supply
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chain drivers. There's a lot of companies out there now looking at complete supply
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chain transformation projects. So they're not just looking at one site in isolation,
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but they're actually looking at how do they transform their end to end supply chain,
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And so it's really important that we facts are enough time into those objects
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so that we can explore all of the different options. And I think that's
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probably one of the key things that we would always say to a client if
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time is so important, especially when a client maybe has a lease event that
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they're working towards, because the closer you get to that, it makes it
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very difficult to change and we can help with all of that. So definitely
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a need. There's a lot of opportunity out there, and it's a really
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exciting time to be working with me back from a jailil perspective, So do
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you find that it's it's difficult to get clients out of that habit of doing
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things the old way and now trying to do things in this way in parallel,
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or do you find that since decisions have to be made so fast and
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everybody is moving just at the speed of light trying to keep up with their
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competition, are they on board faster, are they really interested in this or
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are they still mired in their all ways of working and establishing what they need
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to do. I think when we get the chance to explain how this benefits
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the client, it makes complete sense. And I don't think there is a
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real offering elsewhere on the market for this proposition for this joint alliance. So
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it's saving time and effort and money by making having more transparency earlier on in
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the process. And I think when you say it like that, it's almost
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a no brainer, And a lot of people would say, well, why
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wouldn't we Why wouldn't we do that? And I think it's just that it's
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not been and maybe available yet, or we've not kind of shouted about it
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loud enough. So this is hopefully anyone listening to this will then say,
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oh, yeah, this makes a lot of sense. Let's talk about it
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a little bit more. But it is I mean, if you think,
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as we mentioned earlier, when you're deciding on the technologies that go into this
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likely six seven figure maybe eight figure building, you want to make sure that
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that's something that you can implement. And we're looking at this not only from
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just a concept in isolation or a network design and isolation. This is something
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that we'd offer all the way through to implementation and go life. So this
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is something that we truly believe is not only optimal, but also is doable
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and achievable in the right timeframe as well. And time is precious right.
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This is everybody wants to save time and money where they can, and this
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is something that can do that well. And not only the real estate which
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is which is what we've been talking about, but so some of that intelligence
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that JLL provides in parallel with what we're doing for the client. What are
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some of those metrics, What are some of the information that we're able to
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provide to them? Is it just real estate availability, is it land cost?
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Is it you know, regulations for this particular area versus that one?
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What all is involved in this information that they're able to receive. So if
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I just talk through, I won't say who the client is, but a
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project that Sofe and I are working on together at the moment, the MABECA
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under taken a concept study and we're looking at multiple dCas. There is then
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a step in the process where the client has the option to either outsource it
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to a three pl which is option one. They have option two, which
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is to lease it directly from a developer, or they have option three to
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do a buy sale and lease back. And what we actually do is mock
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up the commercials for each of those three scenarios so we can demonstrate what the
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benefit of each is what the expected least term around each is and actually how
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that fits in with the client's long term business strategy as well. And it's
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really interesting because that one of the clients that we were working with, we
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talk to them about the strength of their covenant, which in a real estate
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landscape drives what the rent charged, is, what the incentives from the landlord
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are, etc. And it actually turned out in this particular scenario that the
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client had a much stronger covenant than the three pl that they were leased in
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the building through from an operational perspective, and so just by changing that one
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thing, there was a significant cost saving in the rental value of the building
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and the client hadn't really appreciated that that was actually an option. So we
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put all of those different factors on the table and then we can work with
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the client to help take it to the next level. Really and that is
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a big part of what we do because traditionally, from a supply chain perspective,
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and everyone's very focused about what happens inside the building because that is what
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supply chain is all about, which is, you know, our bread and
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butter, but actually the assets are either buildings within supply chain can really unlock
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a lot of value that is often missed. So that's what we spend a
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lot of time looking at as well. So aside from again time, time
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is money. What other benefits are there to working with supply chain and real
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estate in tandem, Like, what else could they get other than time and
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money? Well, I think the big piece really apart from time and money,
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which affect two very very important thing our deliverability deliverability because you know,
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you can save time, you can spend loads of time, you can spend
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a lot of money a little bit about you know, a little bit of
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money. But the reality is that businesses have to move forwards, they have
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to develop, they have to be available for their own clients. If they
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heart deliver a project that's going to impack that that actually impacts their wider business,
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so it has a huge impact. And so deliverability is actually key.
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And you know, within the UK market and the European market at the moment,
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there's a shortage of buildings because of what we've seen over the last two
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years with covid an uptake around e commerce. So having real estate and supply
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chain together is really important and essentially allows the clients to actually deliver what they
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need for their business. Interesting, So it's not even you can't even take
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the money and the time of themselves. You have to look at the whole
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package that you're getting and the fact that yes, you're saving money or ideally
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in the ideal situation, you're saving money because you're able to find the best
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deal. In the ideal situation, you're saving time because you're able to do
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everything at once. But just being able to actually finalize the project rather than
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having everything be up in that stratosphere of hypothetical situations of this is what we
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could do if all the math works out in real life, that's what it
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looks like on paper. But having the ability to actually implement it and deliver
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it and then move forward as a business with that new solution is going to
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help them in the market, in their own market against their own competitors,
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to to be able to deliver their service or their product to their client that
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much faster because they're not dithering around wondering in a boardroom if they're going to
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make a decision. Yeah, exactly, And that's it. It's the transparency
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of it. It's not looking at as Kate said, it's not just looking
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at the inside of the building, and then from a real estate it's not
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just looking at the outside of the building or the land. It's actually then
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the transparency to add as many factors into that initial business cases you possibly can,
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so that a decision can be made quicker and therefore your savings can be
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realized quicker. So when we say about time and money, yes, there's
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effort into working out the solution, but the time, it's the dwell time
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between. We know that this is the way that we want to go in
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the future. We know that these are the savings we can make, whether
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that's from transport, whether that's from operational expense, whether that's from consolidation of
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sites. But we want to get there because everybody will always say, you
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know, that's the savings that we're targeted for five years time, but we
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want them in three. So it's that's where you have as anybody would,
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right. But that's where it comes into play, is because we're able to
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get that decision at support with the transparency of getting that decision made quicker and
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therefore realized. All right, so how does that look. I know you
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talked a little bit about in some of your local areas where you've been looking
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for real estate for a client, Um, what does that look like in
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terms of some of the local planning things. I know, in the US
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it's it's different. We have a lot more space to work with, but
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in in Europe it's it's a lot more constrained and there's a lot of just
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different constraints when it comes to the European markets and the European real estate areas.
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You have a lot more of you know, older historical areas in your
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cities that need to be worked around that. There are different limitations as to
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what can happen. Um. But even outside of you know, inner city
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things, what kind of you know, insight can you bring to clients who
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are wanting to, you know, look for a larger facility or even land
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to build a greenfield facility. So this is actually really interesting one because again
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within the Jailer and meet back a line, we have a specialist team that
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focus on grants and incentives and they're constantly tracking what is actually being made available
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by the government and therefore what are the government's priorities in terms of driving the
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economy forward. So when we're actually working with clients, we will present them,
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what pieces of land in which locations there are incentives available that may actually
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help fund some of those projects. And again that's one of the wider factors
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to consider, and we also help with the client in terms of building a
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business case. So if they're going into an area where they're going to create
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jobs essentially by setting up a massive distribution center, that again is very attractive
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to the local authority if they've got issues with unemployment. So it goes much
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much further than just where does that buildings in the UK and or in a
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different European country and you know how many miles is it between that DC and
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another one. There's a lot more to consider in terms of employment, giving
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back to the local community, bionet diversity in terms of making sure that we
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protect landscape. What you see now is a lot of warehouses are being developed
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and built. They very much fit with the environment because the older facilities,
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as you've sort of mentioned, they're old, they're not very pretty to look
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at, and so there's a real drive moving forwards that warehouses are sustainable,
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that they fit with the local landscape, particularly because people are building closer to
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residential because there's not enough land available essentially, So all of that package together
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are those other factors that we work with clients to evaluate and hopefully and a
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lot more value by looking at what grants and incentives we can find for clients
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as well. Well. And I know that labor is a large issue in
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the US when it comes to supply chain and logistics and making sure that we
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have you know, the talent and the labor. Is that also an issue
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in your area? Have you had to deal with that on recent projects,
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and you know, really use the piece to help, you know, deliver
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a business case. What we're seeing now is when we're in a scenario where
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we're looking at what properties are available of a certain footprint in a specific geography,
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the next question on the list is, well, what's the labor availability
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in that area? And also who else is located in that area? Because
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am I going to go into a war with my next door neighbor over paying
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a little bit more to you know, to try and incentivize. So we
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really have to think very closely about how do we secure labor. And we're
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seeing some clients potentially go into secondary locations where it's not necessarily in the specific
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center of gravity, but they've got a much strong labor pool there, so
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that's also been quite interesting. Yeah, I guess it's the obvious buzzwords,
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isn't it, really of Brexit and coronavirus, which have had a significant impact
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on labor in the UK specifically, I mean, without wanting to get into
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too much detail around that, labor is one of the things that is a
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big driver for automation, right and actually sometimes it's not only about the investmentment
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of the automation. It's about the fact that that can work twenty four hours
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and we're going to have less sickness from automation. So it's not only about
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the rates of labor. It's about the kind of business continuity element which people
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obviously want. You know, slas and requirements from customers are getting stricter and
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stricter when we're competing with e commerce specifically and next day deliveries or even same
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day sometimes, so the labor can play a big piece in even deciding what
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that automation piece is going. Yeah, absolutely, and especially in the UK.
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I mean we are quite a small country but compared to the States specifically,
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but the variation of labor costs across north to south is also quite large,
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So it plays into account when you're looking at real estate and actually if
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you're looking at a single site or a multi site model, actually your labor
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costs may vary, you know, I don't want to put a percentage on
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it, but they will vary significantly from the north to the south of England.
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So that obviously plays a part in any calculations or any business cases that
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are created. And of course if there is an automated solution or a digitalized
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solution that will allow them to balance that labor need versus what they can get
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done through automation, they're going to want to try and find that and then
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having that labor information helps them get a realistic view of what that balance is
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going to require. Yeah. Absolutely, I mean we're always looking at,
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you know, comparing the different technologies with the increased labor required. For example,
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if you go manual and you have a high labor requirement, or if
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you get automated and you have a lower labor requirement. Kate and I did
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a webinar recently about actually how to map that and using some of the tools
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that we've got within GELLL and or me back. It's actually how can we
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visually layer that on top of each other when we're looking at where's the best
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place to situate a site as well. So it might be that we've done
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the network design and said you need to go in this area, this is
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where the center of gravity or the best supply chain strategy says you should be,
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and then we can help JELLEL can help and say, actually the labor
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for transport logistics in that area is really seldom and actually if you went ten
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twenty miles out east, then perhaps you'd find a better labor pool. So
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we can work we work together in that way as well. Yeah, that's
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very specific, just you know, twenty miles away that it would make that
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big a difference. It doesn't feel like that's significant enough. But clearly there's
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more out there in terms of information. All right, So before we wrap
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up for the day, is there anything else that you guys would like to
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share about what you guys are doing that is so hugely important for the clients
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in our industry. What do you see happening next? Do you think that
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a lot of people are going to, you know, start buying into this
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concept of doing everything all at once in parallel just to save the time.
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Do you feel like there's still going to be a little bit of resistance for
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a while as these new ways of trying to do these things, I think,
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I think what will happen is we're already starting to see clients become interested
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in this is a new model is in doing a supply chain in real estate
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study together and as some of these projects come to fruition and actually buildings go
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up and clients talk to each other, there's a lot of collaboration between clients.
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The message will almost spread and people will start to think, well,
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why haven't I thought about doing it that way? Or who do I need
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to go and speak to? And you know, we've been working on the
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alliance in the UK for the last sort of twelve to eighty months now and
27:26
really we're still at the very beginning of that journey. So doing things like
27:29
this podcast, doing things like our webinar and actually going talking to clients is
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a really big part of it and making that awareness and talking. So I
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think in the next sort of three to five years, this is going to
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be a really exciting space and I will just see hopefully more supply chain and
27:47
real estate projects happening, and by then some of the projects that Sophie and
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I are working on now will actually be projects that have been built and delivered
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and they'll have made a real impact to those client organizations. So I think
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the road ahead looks very interesting and there's a lot of opportunities to be had
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well, and that just to your client organizations, but to the communities that
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they're they're absolutely arriving in that'll be fantastic and it's changing the way supply chain
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is moving forward. I can't think of a situation where someone would say,
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no, I don't want that extra information while I'm trying to make this momentous
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decision, and in fact, just on I think that's a really important part
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is that you know, Sophie and I are more than happy to talk to
28:33
a client about what the options are, and if they're not in the right
28:36
place right now, that's absolutely fine, but it's better for them that they
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know what the opportunities are and then you know, in three to five,
28:45
ten years time, because you know, supply chain projects are big and they
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don't happen every day, they have the insight and information available to consider it
28:52
next time. So that's equally just as important as working on live projects now
29:00
well. Thank you so much Sophie and Katee for joining us today. We've
29:03
had a great conversation, but that brings us to the end of our episode.
29:11
This has been so so interesting to learn about how real estate and supply
29:17
chain really can go hand in hand and affect each other so so strongly that
29:25
it's almost silly not to consider them together. It's it's surprising that there aren't
29:30
more supply chain consultancies or more commercial real estate companies doing this. I'm kind
29:37
of excited that we're the first, so I hope our audience has enjoyed the
29:44
conversation today. If you have, please give us a five star rating and
29:48
make sure that you subscribe so you get our next episode. Thank you so
29:52
much for listening to Speaking of Supply Chain. You've been listening to Speaking of
30:02
Supply Chain a mebox podcast. Keep connected with us by subscribing to the show
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in your favorite podcast player. If you like what you've heard, please rate
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the show that helps us to keep delivering the latest in supply chain information.
30:14
Thanks for listening. Until next time,