what is our 2015 experience telling us about the future in industrial ed?

© Foremost Quality Logistics Confidential

Tim Feemster

Managing Principal

Foremost Quality Logistics

469-554-9873 O

214-693-7689 C

[email protected]

[email protected]

What is our 2015 experience telling us about the future in Industrial ED?

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August 19-21, 2015

mailto:[email protected]



What Will We Talk About Today

• Who is Tim Feemster and Foremost Quality Logistics

• Trends impacting the US related to Industrial/Manufacturing development & expansion

• Case Studies

• How do you tell the difference and how do you tell if you should:– Bid on the project with a "cut and paste" because you won't win

– Pass because you know you are not going to make the short list

– Put on a full court press to win the project because you can

• Q&A throughout

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If you use the right color, nobody will ever know

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TIM FEEMSTERMANAGING PRINCIPAL


6005 Calm Meadow Rd

Dallas, TX 75248

O 469-554-9873

C 214-693-7689

[email protected]

@tsfeemster on Twitter

Follow on LinkedIn

YEARS OF EXPERIENCE35+ Years

AREAS OF SPECIALIZATION Facility Master Planning

Lean Six Sigma Process Improvement

Project Management

Distribution Center Consolidations and Greenfield Design

Economic Development Business Planning

Keynote Speaker

Meeting Facilitation

Network Design and Planning

Operations Management

Real Estate Portfolio Strategy

Supply Chain and Distribution Strategy

Supply Chain Cost Reduction

PROFESSIONAL BACKGROUNDWith over 35 years of industry and consulting experience, Mr. Feemster specializes in supply chain and distribution network strategy,operations management in manufacturing and distribution environment, supply chain cost improvement, distribution center masterplanning, and economic development business planning.

Before establishing Foremost Quality Logistics, Mr. Feemster was a senior manager in three manufacturing companies, a consultant,an executive in two third-party logistics providers, and a practice group leader in two real estate companies.

Mr. Feemster has been exposed to the economic development, manufacturing, logistics and supply chain issues facing manyindustries and involving both refrigerated and dry channels. These experiences include specific assignments in over 40 project start-ups, operations management, Lean Six Sigma quality management, project management, strategic planning, marketing, siteselection, inventory planning and deployment, as well as transportation & private fleet management. He has been responsible forwarehouse facility layout and design, logistics systems development, purchasing strategy, business planning, carrier rationalization,warehouse network analysis, and third party qualification and selection. In addition, Mr. Feemster is quoted frequently in bothsupply chain and real estate industry press and makes over 25 presentations a year to professional organizations, university students,and economic development groups. He was honored as one of the 2010 Rainmakers by DC Velocity magazine.

Past clients include Alpo Pet Foods, Cisco Systems (US & Mexico), Coke, Disney, Federal Express, Frito Lay, Georgia Pacific, GM (USand Mexico), HP (US & Canada), Ingersoll Rand (US & Europe), NCR (US & UK), Nike Golf (US & Europe), Nissan, Philip Morris, Ricoh,Quaker Oats, CentrePort Canada, City of Dallas ED, Midwest Inland Port of Decatur, Regional Growth Partnership- Toledo, TeamTexas, Tulsa Chamber of Commerce, Duke Realty, AEP-SWEPCO, Colliers International, and Liberty Property Trust.

EDUCATIONMr. Feemster holds an M.B.A. with distinction, in Marketing and Operations Research from the Ross School of Business, University ofMichigan in Ann Arbor, MI. He received his Bachelor’s degree in Mathematics from DePauw University, Greencastle, IN.

PROFESSIONAL ASSOCIATIONSWarehouse Education Research Council (WERC) – Past President, frequent speakerCouncil of Supply Chain Management Professionals (CSCMP) – Registration Committee, frequent speakerInternational Economic Development Council (IEDC)- Frequent speakerIndustrial Asset Management Council (IAMC)- Frequent speakerIntermodal Association of North America (IANA)- Member, case judgeDePauw University- National Alumni Board of Directors; North Texas Regional Alumni Board of DirectorsUniversity of North Texas Center for Logistics Education & Research Advisory BoardUniversity of Houston Logistics & Technology Department Advisory Board

Tim Feemster Professional Profile & Qualifications

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from: Jeff Metersky

https://www.linkedin.com/profile/view?id=9243&authType=name&authToken=PKZq&trk=hp-richmedia-name


What Does Foremost Quality Logistics do?

• Site Selection for Users of Industrial and/or Manufacturing Space

• Economic Development Strategy Consulting

• Supply Chain Optimization- Freight, Network Design, & Facility Master Planning

• Project Management of Start-Ups

• Training/Speaking- How the Supply Chain Impacts the Real Estate Location Decision

• Meeting Facilitation

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Trends in Logistics

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Source: Tim Feemster, Foremost Quality Logistics

Impact / Response• Energy independence• Build lots of ecommerce facilities• Redefine networks for

transportation optimization• Reduce transportation costs- Mode

shift to less expensive water, rail intermodal, and/or truckload, driverless trucks

• Maximize supply chain efficiency and mitigate interruption risk

• Optimize warehouse operations• Green initiatives- LEED, Lighting,

Solar, CNG/LNG, & other green options

• Communicate & Collaborate

Supply Chain Challenges• Transport driver capacity• Rising transportation costs, #1• Supply chain disruption, risk• eCommerce, mCommerce, sCommerce• Winter shuts down massive

Geographies• Nearshoring/Reshoring• Infrastructure funding• Energy boom• Sustainability- buildings & SC



Newer Intermodal Hubs

• CSX- Cordele (150 miles S of Atlanta), 2011

• BNSF- Kansas City, 2013

• NS- Greer SC (212 miles to Port of Charleston), 2013

• CSX- N Baltimore OH (S of Toledo), 2013

• UP- Santa Terisa NM (16 miles NW of El Paso TX), 2014

• KCS- Wylie TX (NE of Dallas), July 2015

• NS- Fort Wayne IN, conversion of TripleCrown, 2016

• CSX- Chatsworth (100 miles NW of Atlanta), 2018

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Port of Tianjin Explosion on August 12, 2015

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Blast site 8/15/2015



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Buildings damaged over 2 miles away from the blast site


Loaded Container Traffic E vs W Coast

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Panama and Suez Canal Throughput

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Source: Transpacific Stabilization Agreement & JOC


New Lock Roller Gate for the Panama Canal

20Source: Rafael Ibarra / Reuters


Panama Canal Lock Design Using Roller Gates

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Panama Canal New Lock Design Saves Fresh Water

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Capacity Comparison for 19,224 TEU MSC Oscar

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130 miles nose to tail


Nearshoring/Reshoring

• Cost of manufacturing in Asia is rising• Supply chain interruption risk

– Port congestion/disaster– Weather- Tornados, Floods, Hurricanes, Typhoons, etc.– Natural disasters- Volcanos, Earthquakes, Tsunamis, etc.

• Speed to market– Reduce inventory– React to market changes faster– Existing buildings and/or certified sites– Auto companies are moving a lot of production to Mexico and some to

the US

• Energy costs moderate & less volatile– Lower energy costs makes US more competitive– Natural gas powered electricity generation

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B2C ecommerce Sales Worldwide- 2013- 2018 est.

trillions and % Change, eMarketer

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US Retail ecommerce sales- 2013-2018, $billions

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Source: http://www.statista.com

http://www.statista.com/


“Rapid and Surprising” Things in the Retail Space in June ‘15

The top 5 “Rapid and Surprising” events for Walmart, Amazon, and Alibaba:

WALMART:

• Neighborhood Market opened with fresh, deli, pizza, bakery, etc• Both Sam’s Club and Walmart debuted new grocery “click & collect”• ShippingPass mimics Amazon Prime• Increased salaries of store associates• Announced a new Chairman, the first since 1992

AMAZON:• Expanded Prime, 2 hour free delivery in Manhattan, NY• The debut of Canadian online clothing and shoe store• Closed Amazon Supply and integrates offering into Amazon Business• Announced FBA Small & Light for non-Prime free delivery• Announced plans for private label milk, cereal, baby food, coffee, etc

ALIBABA:• Announced a major expansion of Alibaba Pictures• Made aggressive move via Ilium with US cloud outreach• Explained cross-border commerce thrust is global entrepreneurship• Presented 5-8 year Cainiao delivery goals• Presented an additional partnership to pursue wholesale business

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Source: Jim Tompkins, Tompkins International


Now Let’s Discuss ecommerce Deliveries

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OmniChannel Distribution- Walmart/Macy’s Chasing Amazon

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Mega Import

DCs/Manufacturer

Retail

Stores

Customers

Product Flow Information Flow

Regional

DCs

Retailer

Website



UPS & FedEx Ground Delivery Maps- Toledo, 43604

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Source: UPS Ground Maps- http://www.ups.com/maps?loc=en_US http://www.fedex.com/grd/maps/ShowMapEntry.do

http://www.ups.com/maps?loc=en_US

http://www.fedex.com/grd/maps/ShowMapEntry.do


UPS & FedEx Ground Delivery Maps- Columbus, 43215

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UPS & FedEx Ground Delivery Maps- Indianapolis, 46204

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UPS & FedEx Ground Delivery Maps- Grand Rapids, 49503

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UPS & FedEx Ground Delivery Maps- Bolingbrook, 60490

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UPS & FedEx Ground Delivery Maps- Louisville, 40202

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UPS & FedEx Ground Delivery Maps- Memphis, 38103

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UPS Delivery Optimization- 10 DCs

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Source: UPS; Uses US Census data and UPS’s Ground Network, & 10 DCs

Site selection assumes 10 DCs:• Albany, NY 12202• Austin, TX 78701•Birmingham, AL 35203• Des Moines, IA 50316• Fresno, CA 93728• Grand Rapids, MI 49503

• Indianapolis, IN 46268• Orlando, FL 32824• Portland, OR 97217• Richmond, VA 23173

Average Transit Time- 1.16 days

Transit Days:1 Day 84.7%2 Day 14.5%3 Day 0.7%4 Day Plus 0.0%


Transportation Costs Continue to Rise

• Shortage of drivers

– New hours of service

– Driver safety records

– Demographics

• Equipment costs going up- EPA standards

• Port congestion driving up transit times & lowering the option for multiple trips

• Air Freight coming back

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Total Logistics Cost Breakdown- 2014

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Source: Tim Feemster, FQL Consulting & CSCMP.org

14.4%


Fuel Consumption by Freight Mode

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FREIGHT MODE

Source: Global Insights & Tompkins Associates

Less Than Truckload

Small Package


Transportation Cost Impact 2015

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US Spot Market Rates: 4 Week Trendlines- DAT

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$1.90 $1.88 $1.87 $1.89

$2.20 $2.19 $2.19 $2.18 11$2.23 $2.22 $2.21 $2.22


Estimated Average Daily Truck Traffic- 2020

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Source: U.S. Department of Transportation, Federal Highway Administration, Office of Freight Management and Operations, Freight Analysis Framework.


Highway Funding is in Trouble

• Federal highway trust fund model is not sustainable

– Structural revenue stream change

– Disallow funds transfer to other departments

• Issues to deal with

– Deteriorating bridges and interstates

– Population growth

– Increased traffic

– Funding methods

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American Business Act on Climate Pledge-White House announcement 7/27/2015

• $140 billion in new low-carbon investments

• More than 1,600 megawatts of new renewable energy

• 13 Leading Companies– Alcoa, Apple, Bank of America, Berkshire Hathaway Energy, Cargill, Coca-Cola,

General Motors, Goldman Sachs, Google, Microsoft, PepsiCo, UPS, and Walmart

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https://www.whitehouse.gov/the-press-office/2015/07/27/fact-sheet-white-house-launches-american-business-act-climate-pledgehttp://www.supplychain247.com/article/13_top_us_companies_pledge_140_billion_to_slash_carbon_emissions

https://www.whitehouse.gov/the-press-office/2015/07/27/fact-sheet-white-house-launches-american-business-act-climate-pledge

https://www.whitehouse.gov/the-press-office/2015/07/27/fact-sheet-white-house-launches-american-business-act-climate-pledge

http://www.supplychain247.com/article/13_top_us_companies_pledge_140_billion_to_slash_carbon_emissions


Greening the Supply Chain

• Facility- Industrial and manufacturing properties– Construction

– Energy

– Water

– Waste

• Material Handling Equipment- Forklifts and trucks– CNG/LNG trucks

– Walmart WAVE Truck

– Hydrogen fork lifts

• Operations- Changing the way things are done– Hybrid network

– Transportation mode shift

– Network optimization

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Environmental Impacts of Industrial/MFG Facilities

• Energy Consumption– Lighting– Heating/Cooling/Refrigeration– Power for Processing, Automation Equipment, Forklift Charging– Transportation for Inbound and Outbound shipments

• Water Consumption/Conservation– Irrigation– Process– Occupant Use

– Reclamation • Waste Generation

– Packaging, Pallet, and Process waste– Paperwork– New Construction Waste

• Operations– Chemical Use in Cleaning and Maintenance

– Transportation mode shift

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Green/$$ Transportation Mode Shift Examples

• Freight Optimization Software- 3PL Outsource

– Combine orders delivering on the same day using technology

• Small Package to LTL (Less than Truckload) if possible

• LTL to TL (Truckload), “Pool Points”

– Move TL on major volume lanes and then drop off for LTL delivery

• Truckload to Domestic Rail Intermodal Container, long haul

– Shipments over 400 miles with on/off ramps in close proximity

• Air Freight to Small Package or LTL, short haul

– Shipments less than 400 miles, maybe longer

• International Air Freight to Container via Ship

– Ship “generic” product and customize in the DC for orders

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Walmart & Daimler Focus on New Truck Concepts

• http://www.ttnews.com/articles/basetemplate.aspx?storyid=38980&utm_source=express&utm_medium=newsletter&utm_campaign=newsletter

• http://news.walmart.com/news-archive/2014/03/26/walmart-debuts-futuristic-truck

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http://news.walmart.com/news-archive/2014/03/26/walmart-debuts-futuristic-truck

http://news.walmart.com/news-archive/2014/03/26/walmart-debuts-futuristic-truck


Hydrogen Fork Lift Equipment

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Companies are Switching to CNG Trucks/Buses

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America’s Natural Gas Highway of CNG/LNG Fueling Stations

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Source: DOE Alternative Fuels Data Center

845 CNG + 73 LNG stations in the United States Excluding private stations

http://www.afdc.energy.gov/


Make Sure to Plan for the Unexpected

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Top 10 Site Selection Criteria Warehouse/Distribution

1. Transportation costs – both inbound and outbound

2. Logistics infrastructure – highways, intermodal, rail, FTZ

3. Available buildings/Certified sites

4. Labor costs & availability

5. Supply Chain interruption risk

6. Business climate- is there love7. Green buildings

8. Taxes & incentives

9. Utility rates

10. Access to public Transportation- Have you done a drive time study for your workforce?

Source: Tim Feemster Foremost Quality Logistics

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Top 10 Site Selection Criteria- Manufacturing

1. Labor costs & availability

2. Available buildings/Certified sites

3. Transportation costs – both inbound and outbound

4. Utility rates

5. Logistics infrastructure – highways, intermodal, rail, FTZ

6. Supply Chain interruption risk

7. Business climate- is there love8. Taxes & incentives

9. Green buildings

10. Access to public Transportation- Have you done a drive time study for your workforce?

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Source: Tim Feemster Foremost Quality Logistics


Do You Have a Better Answer to This Question?

• How do you respond to your next Industrial/MFG RFP?

– Bid on the project with a "cut and paste" because you won't win

– Pass because you know you are not going to make the short list

– Put on a full court press to win the project because you can

56


Are You Prepared for When Branding Goes Wrong?What questions do you have?????

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Tim Feemster

Managing Principal


469-554-9873 O

214-693-7689 C

[email protected]

[email protected]

