There’s money in property. And with stock markets languishing in the doldrums it’s probably truer today than ever. In these leaner times, perhaps it’s time to turn to the very ground that your products sit on to make strategic sense for the future.
There is particular poignancy here for the supply chain director or logistics manager. Warehouses can be valuable assets, often located due to historical reasons rather than objective, current strategic purposes. Many companies that have evolved through merger and acquisition activity have accumulated warehouses in rather an eclectic fashion. These buildings can be older properties, hardly suited to today’s materials handling technology and can be located on a valuable site more suited to other purposes, such as retail or residential use. And while these sites may look good on the books as assets and a sound investment for the future, perhaps you’re doing yourself more long-term harm than good.
Working with outdated and poorly equipped facilities may well be affecting your commercial performance by undermining the efficient operation and strategic aims of your supply chain. A poorly run supply chain is an unnecessary drain on profits and may lose you customers.
So, now may well be the time to consider centralising inventory in a single well-designed and properly equipped facility, located where it makes the most sense, and paid for through the release of out-dated assets. The consolidation of inventory with its potential to slim stockholdings would undoubtedly bring greater stock visibility and a reasonable contribution to the company coffers.
Of course, not everyone is so lucky as to be sitting on a potential gold mine. Leasing is a common approach. However, by looking closely at leasing arrangements and the more flexible financing options available today, more suitable supply chain strategies can be arrived at that can leverage higher levels of performance through the appropriate application of automated materials handling technology.
Although finance directors may well have the upper hand when it comes to the disposal of assets or entering into long term financial arrangements, every logistics professional and supply chain director should understand the parameters – financial and commercial – under which strategic change could be effected to the betterment of the supply chain and the overall performance of the company. Most certainly that includes a full understanding of the issues surrounding the property itself.
Those interested in being fully informed on these matters should attend a one day conference entitled ‘Winning with warehouses’, 8th April at the Millennium Hotel, Mayfair, London. E-mail: dbconference@distributionb. com, phone: +44 (0)20 8680 7474 or visit www.distributionb.com
Nick Allen, Editor