Tag Archives: supply chain management

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Main Event Entertainment Buys 6.4 Acres at Tempe's Emerald Center

 

Main Event Entertainment purchased a 6.4-acre retail site in Tempe for $2.05M and will build a new 57,000 SF indoor entertainment venue.

The property is located in Emerald Center near Interstate 10 and Warner Road in Tempe adjacent to IKEA and Dick’s Sporting Goods. Headquartered in Plano, Texas, this will be Main Event’s first building outside of Texas where it has 12 locations.

Construction is expected to start in 2Q 2013. The freestanding building will be located at the NEC of Emerald and Commerce drives and will have more than 400 parking spaces. It lies directly south of a future 74,000 SF retail showroom called Furniture Row that is being planned for 2014. Furniture Row purchased the site in 2011 and the two new buildings will share common parking and easements.

Main Event Entertainment will attract indoor corporate and family events and offers bowling, billiards, laser tag, glow golf, rock climbing, gravity ropes, arcade games along with food and beverage services.

Dan Gardiner and Greg Laing of Phoenix Commercial Advisors represented Main Event Entertainment in the site selection process. Rick Robertson and Chris McClurg of Lee and Associates Arizona represented the seller, First National Bank of Hutchinson, Kan., in the acquisition.

The new building was approved for a use permit by the City of Tempe in June 2012 and is being designed by Hunter Engineering.

Small Business Leadership Academy: Understanding Corporate Procurement Practices (Part II)

Small Business Leadership Academy: Understanding Corp Procurement Practices (Part II)

Small Business Leadership Academy: Understanding Corporate Procurement Practices (Part II)

One company’s purchasing is another company’s marketing.

If small and mid-sized businesses can keep that in mind, they will have discovered one of the secrets of success for a supplier, according to Joseph Carter, the Avnet Professor of Supply Chain Management at the W. P. Carey School of Business and instructor for the procurement classes in the 2011 Small Business Leadership Academy. Carter, a leading academic in the supply chain field, is also a Certified Purchasing Manager (C.P.M.) and Certified Professional in Supply Management (CPSM), designations granted by the National Association of Purchasing Management.

“The eye-opener for these business owners is self-awareness,” Carter said. “They are beginning to understand the role they play in their customers’ supply base.”

And that’s when procurement meets marketing.

“The owners of small businesses are so wrapped up in surviving that they don’t have the time – or the personnel – to specialize,” Carter said. “As a result many feel that their companies are under-appreciated by their customers.”

A company like SRP wants value from all of its customers, but a purchasing manager may be managing hundreds of suppliers. “A company, because it’s a large company, is not going to understand the supplier’s business and the supplier’s potential for adding value as well as the supplier does,” Carter said. Understanding the buying process and how the purchasing groups at large companies think enables suppliers to figure out what and when to communicate.

Suppliers must show how they add value to their customers’ enterprises. Sometimes that means understanding who the customer is. “The procurement officer is not your final customer,” Carter says. “Your customer is the user.” So small business owners cannot just try to compete on price. When dealing with procurement officers, they must elaborate on the total value that their company brings to the table, including “what’s in it for the procurement officer.” Elaborating on why working with their company will be worth the additional work of changing vendors, adding a new vendor, and the inherent risk of working with a new vendor, will enable that procurement officer to make that difficult choice with confidence.

The Small Business Leadership Academy (SBLA) is an intensive executive education program designed to strengthen the business acumen of small business leaders in Arizona. The program was jointly developed by the W. P. Carey School of Business and the Salt River Project (SRP), the program’s founding sponsor. Other seat sponsors this year include: Arizona Lottery, Blue Cross Blue Shield of Arizona, Hahnco and U. S. Bank. Each week we will bring you a few salient points from each class as well as comments from the professors themselves and the impact the information has had on the students.

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For more information about the Small Business Leadership Academy, please visit SBLA’s website.

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Tucson Office Market, Industrial and Retail Sectors

Positive Signs Bolster Tucson Office Market, Retail And Industrial Sectors

Positive signs bolster Tucson office market, as well as the area’s retail and industrial sectors

CBRE has released its third quarter 2011 market analysis of the Tucson area office, industrial and retail sectors. Report highlights include:

Office

•    The Tucson office market reported a stronger third quarter, with 71,209 square feet of positive absorption. This compares to 30,786 square feet of positive absorption in the second quarter and 22,028 square feet of negative absorption in the first quarter.

•    The Tucson office market vacancy rate declined in the third quarter, dropping 80 basis points to 17.1 percent. The area’s lowest vacancy was reported in the North Central and West Central submarkets, which both have rates of 13.6 percent. The highest vacancy rate, 27.4 percent, was found in the Southwest submarket.

•    The average asking lease rate for existing multi-tenant office space decreased for the first time this year, falling to $19.26 per square foot from $19.65 per square foot at the end of the second quarter and $19.43 at the end of the first quarter.

•    There will be no new speculative office construction in the Tucson market until demand picks up and the abundant supply of available space goes down.

Industrial

•    Vacany among industrial product declined for the first time in 2011, falling to 11 percent from 11.3 percent at mid-year. While only a 30 basis point drop from the previous quarter, this represents a 60 basis point decline in the past 18 months.

•    The industrial market recorded 121,971 square feet of positive absorption in the third quarter. Although a strong showing, this could not completely ease the occupied space lost in the first and second quarters, leaving the market with 26,996 square feet of negative absorption for the year.

•    The average asking industrial lease rate dropped significantly – 17 cents – to end the third quater at $6.25 per square foot. This compares to $6.62 per square foot at the end of the second quarter and $6.64 per square foot at the end of the first quarter.

•    With much of Tucson’s industrial product aging and functionally inefficient, any improvement in the economy will quickly lead to new construction, driving up lease rates and sales prices.

Retail

•    Tucson’s shopping center market recorded its second consecutive quarter of positive absorption with 34,629 square feet. This combined with the absorption through mid-year brings the market’s year-to-date total to positive 6,989 square feet.

•    The vacancy rate among shopping centers decreased in the third quarter, albeit modestly, to 12.2 percent from 12.3 percent at the end of the second quarter. Yet, vacany remains unchanged from mid-year 2010 when the rate was also 12.2 percent.

•    The average asking lease rate for shopping center space increased for the third time this year, rising to $18.30 per square foot from $17.71 per square foot in the second quarter and $17.64 per square foot at the end of the first quarter. This hike in the market’s average rental rate has been driven, in part, by an uptick in activity and demand in prime retail hubs.

•    Big box tenants and national retailers continue to vie for premium sites in high-traffic trade areas, while sites on the periphery wane in activity.

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Visit CBRE’s website at www.cbre.com for more information about the 3Q analysis of the Tucson office market, as well as the area’s industrial and retail sectors.

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Small Business Leadership Academy

Small Business Leadership Academy: Understanding Corp Procurement Practices (Part I)

Small Business Leadership Academy: Understanding Corporate Procurement Practices (Part I)

If you are the owner of a small or medium-size business interacting with a big corporation, you need to know how that company thinks about procurement. That’s what students in the 2011 Small Business Leadership Academy are learning from Joseph Carter, the Avnet Professor of Supply Chain Management at the W. P. Carey School of Business.

Typically, suppliers concentrate on the internal operations of their companies, Carter says, but if that’s their predominant focus, they will miss out on the advantages of optimizing their relationships with the companies that are their customers. Jeffrey Campbell of Western Truck Equipment Company, Inc. had the right idea when he asked, “What can I learn to better service the companies that we work with?”

“Today, the creation of value often requires careful coordination of activities across the boundaries between functions, business units and firms,” Carter explains. “In short, organizations that learn how to leverage procurement collaboration can obtain speed, innovation, dependability, flexibility, cost and/or quality benefits that go far beyond those potentially realized from solely optimizing a single firm’s internal operations.”

Carter is one of the top scholars worldwide in the field of supply management. He has published 60 articles about sourcing and supply management issues, and he has shared his expertise with firms all over the world.

Students are learning to understand strategic sourcing and their role as suppliers. To begin, they need to understand the importance of developing a collaborative relationship with a customer and how to manage it efficiently. Carter is taking the students “inside” their client companies by explaining the various roles and functions of a procurement department.

“Business owners need to understand the primary importance of sourcing when developing their strategy,” Carter says. “We’ll be talking about what they need to know in order to drive success for the buyer’s company as well as their own.”

Each week we will bring you a few salient points from each class as well as comments from the professors themselves and the impact the information has had on the students.

For more information about the Small Business Leadership Academy, please visit SBLA’s website.

[stextbox id=”grey”]The Small Business Leadership Academy (SBLA) is an intensive executive education program designed to strengthen the business acumen of small business leaders in Arizona. The program was jointly developed by the W. P. Carey School of Business and the Salt River Project (SRP), the program’s founding sponsor. Other seat sponsors this year include: Arizona Lottery, Blue Cross Blue Shield of Arizona, Hahnco and U. S. Bank. [/stextbox]

airlinefees

The Nickel And Dime Approach — Are Those New Airline Fees A Smart Strategy?

As higher fuel costs gobble up airline profits, the carriers are imposing new fees on passengers in an attempt to make up the difference. William A. Verdini, chairman of the supply chain management department of the W.P. Carey School of Business, wonders if this is a smart strategy. (17:23)

Misgana Kebede Company - Accent Transportation Services - AZ Business Magazine Nov/Dec 2010

A Dream Becomes A Reality for Ethiopian-Born Small Business Owner Misgana Kebede

Misgana Kebede
Company: Accent Transportation Services
Title: Owner | Est.: 2008
Web: www.transaccent.com

In May 2008, during the roughest stretch of the recession, a husband-and-wife team made a bold decision to start their own transportation business. Misgana Kebede and his wife, Bilen, started Accent Transportation Services, which specializes in executive car service around the Phoenix area.

Kebede moved to the U.S. from Ethiopia and was drawn to the tourism industry early on. In fact, he worked at various hotels and theme parks after high school and during college. Kebede eventually earned degrees in finance and logistics, transportation and supply chain management.

Prior to the creation of Accent Transportation Services, Kebede was working for Honeywell Aerospace in the supply chain department. Although he was learning a lot about the business, Kebede realized he wanted something more than to work in a cubicle.

“I had the dream of becoming a business owner, and a desire to serve others from the heart,” Kebede says.

When Kebede first started his business, the transportation industry was being hit hard by the economic downturn.
Companies were cutting down on travel costs, and car and limo services weren’t in demand. Despite the challenges, Accent Transportation managed to stand out to clients. Accent Transportation gains most of its business from repeat customers, and has grown from one vehicle to a seven-vehicle fleet within two years.

“Building a repeat customer base tells us we’re doing something right,” Kebede says. “Seventy to 75 percent of our business is repeat customers.”

Accent Transportation retains its customers because it continually focuses on improving the level of service it provides. It offers easy, online registration and account management. Customers can choose from Lincoln sedans, SUVs, stretch limos and a mini-coach. Kebede also emphasizes the importance of being on time.

Another major part of customer retention is that Kebede’s employees have excellent customer service skills. When looking to hire new employees, Kebede looks for people who already have spent time working in the hospitality business.

“If you know how to serve people, anything else can be learned,” Kebede says.

Kebede knows that building a business from the ground up is especially hard right now, but he is committed to his work.

“The first and foremost thing is to have a passion for what you do,” Kebede says. “Plan your days, weeks and months. Think about what will grow your business, not just what will help you get by.”

Arizona Business Magazine Nov/Dec 2010

Illustration of a box with a leaf coming out of it

Greening The Supply Chain: ASU’s Sustainability Consortium Is Working To Create More Sustainable Products

Almost every company is feeling pressure to report on its sustainability, i.e. the environmental and social impacts due to its operations. As stakeholders look at whether these obligations are being upheld, the emphasis has been on a company-level assessment of performance. Internally, companies audit their environmental management systems according to standards such as the International Organization for Standardization (ISO) 14000, a standard for environmental management systems that is applicable to any business worldwide. Externally, corporate watchdog and consumer advocacy groups focus on the behavior of the overall company. Even progressive programs such as the Carbon Disclosure Project emphasize measuring company performance.

While these efforts are a necessary starting point, we will fail to reach our global sustainability goals if we only measure sustainability of a company rather than the sustainability of the products it makes. The Sustainability Consortium, led by Arizona State University and the University of Arkansas, is developing the science and infrastructure needed to support more widespread and standardized reporting of product sustainability, so as to drive a new generation of products and supply chains.

There are several problems with only measuring sustainability of companies and not their products. First, consumers don’t buy companies; they buy products. Products will become greener if demand from retailers and consumers for green products increases, and communicating the sustainability of a product is the most direct way to shift consumer behavior.

Second, an emphasis on the product manufacturer alone tends to obscure the important role that the supply chain and the consumer play in the product’s overall footprint. By focusing on product sustainability, it is possible to take the product’s entire life cycle into consideration, which helps focus innovation efforts. Third, developing tools to measure a product’s sustainability while it is still being designed will help companies make more sustainable design choices up front, before the product is ever produced.

The Sustainability Consortium received initial seed funding from Walmart in July 2009, and has since added more than 40 other manufacturers, suppliers, government agencies and non-governmental agencies (NGOs). The initial emphasis of the Consortium is how product sustainability can be measured and reported to retailers such as Walmart and Best Buy. These same data and systems may be used by other groups outside of the Consortium to derive consumer-facing sustainability information, such as is communicated with many eco-labels today. Because sustainability science is relatively new, much research is needed to determine what data are critical to report regarding product sustainability, and how they might be efficiently reported from business-to-business and business-to-retailer.

The Sustainability Consortium’s current work consists of both sector working groups and Consortium-wide research initiatives. Within the sectors, teams representing multiple stakeholders are developing sustainable measurement and reporting standards for a select number of product categories in order to design a standardized way for such efforts to be scaled to all consumer goods products. Projects have begun in electronics, home and personal care, and food and beverage sectors. For example, in electronics the Consortium is working with Best Buy, Dell, the Environmental Protection Agency, Hewlett-Packard, Intel, Toshiba and Walmart to develop measurement standards for computer laptops, desktops and monitors. The team is examining existing standards such as EPEAT and ENERGY STAR, and also looking at recent research concerning a computer’s environmental footprint. The electronics sector team expects to have initial recommendations by this summer.

The Sustainability Consortium also is pursuing a variety of research projects that support work in all of the sectors, such as assessment and scoring, reporting and auditing, and consumer science. For example, researchers in the Consortium are developing a “social hot spot” database that will allow companies to be aware of certain regions of the world where suppliers have historically had a poor track record with things such as worker health and safety, and worker rights. Another research project is examining how industrial buyers use product sustainability information in purchasing decisions.

This work is benefiting the state of Arizona in several ways. First, the Sustainability Consortium has brought in several million dollars in revenue, which in turn has produced a number of new research jobs within the Consortium and has opened up research opportunities for graduate and undergraduate students. Second, our high public visibility has brought media attention to ASU and furthered the university’s leadership position in sustainability.  Third, both our students and university operations are benefiting. The Sustainability Consortium sponsored the local competition for the Walmart Better Living 2010 Business Plan Competition, and is happy to be sending a team to the semifinals that is looking at growing agave here in Arizona and processing it into ethanol. We also recently worked with ASU’s purchasing department to develop a “carbon calculator” for ASU’s purchases of goods and services. The calculator will help ASU prioritize for which product categories it should develop more stringent purchasing guidelines.

The Sustainability Consortium will continue to look for ways to “think globally and act locally,” working with a diverse set of stakeholders to provide value and synergy to global sustainability initiatives and developing opportunities for ASU faculty, students and staff to help make consumer products more sustainable.

Man looking up in front of a colorful painting

CEO Series: Brad Casper

Brad Casper
CEO, Henkel Consumer Goods (The Dial Corporation)

Consumers have been cutting back sharply on their purchases as a result of the recession. How has that affected Henkel Consumer Goods’ overall operations, such as vendor relationships, supply chain management, marketing, research and development, etc., and how has the company responded to those challenges?
The challenges have been significant in the past year. It hasn’t materially affected our relationships, but it has forced us to be much more nimble with both with our vendors who supply us, as well as our retail customers who we sell to. You cannot take things for granted in this environment, particularly with our retail customers. One day you think you have the merchandising support, you think they have their back behind you, only to find out that someone has come in and maybe taken your ad space or taken your display space. So that’s forced our organization to be very reactive, to be very sharp with our price points, because value during this recession has been really the operative word. Fortunately, we have a number of great brands that have done very well during this recession, like Purex laundry detergent, Dial bar soaps and body washes, even Right Guard and Renuzit have done excellent. We’re growing share in all of those businesses.

What signs is Henkel Consumer Goods seeing that the recession is abating?
We follow the consumer confidence data very, very closely, and we saw — just in February and March — just as we saw the Dow Jones start to pick up, we saw the consumer confidence (and) you can do a pretty strong correlation analysis between consumer confidence and (the purchase) of consumer goods. Now, they’re still looking for deals. The consumer is still looking for value and bargains, but we are seeing our market sizes that were more discretionary, like air fresheners, a year ago were declining, are (now) starting to grow slightly.

So those categories that I think consumers would classify as “I want, but I don’t need,” we’re starting to see purchases come back in those areas that are wants.

What are some sustainability initiatives Henkel Consumer Goods is undertaking both in its operations and its products?
Henkel has a rich heritage and history in sustainability initiatives. This isn’t something we do just because of the recession; it’s something we do every day. Even starting with the building that we are in, this is going to be a LEED-certified building. We’ve only been open eight or nine months, but we designed this with sustainability in mind. Within our organization we created a kind of self-promoting area we call Eco-mmitment. It was a campaign we kicked off internally because with thought that in order to be a sustainable company (we needed to have) sustainable employees. Eco-mmitment was an internal grassroots effort to create awareness of more sustainable practices that we have here in our offices, as well as in our homes. So we’ve rolled that out, so that all of our employees are a little bit more aware of that.

But when it comes to our innovations, we have a number of sustainability initiatives that are in fact being very successful in the market. More than two years ago we launched Purex Natural Elements — it’s a natural detergent — and it became a $100 million business within a year and we didn’t even have to advertise. It sold itself off the shelf with its natural surfactants. … Again, Henkel’s history in this goes back 40 years. Before most people in this country were talking about sustainability, Henkel was practicing it. And so we (Dial), kind of as the little sister who’s been part of Henkel for five years, we’re adopting these behaviors pretty rapidly.

You worked to make sure Henkel Consumer Goods remained in the Valley. Why was that so important?
It all begins with people. First and foremost, a company can be an accumulation of brands and buildings, but at the end of the day what makes it special are the people. And moving this from the Valley, whether it was just from the East Valley to the West Valley, there’s the risk that we would lose some of our valued employees. Add to that, if you were to take it out of Scottsdale-Phoenix altogether, the probability that we lose the majority of our intellectual property — that would have stood between us. Moreover, when I was offered this job, I was looking forward to moving to Scottsdale, and when I got here I didn’t want to move, I wanted to keep us here!

What skills do C-level executives need in order to succeed in a multinational, consumer products company such as Henkel Consumer Goods?
I think it begins with having a really strong strategic mind and framework. You really have to understand the markets in which you compete, where and how your competition is likely to try to defeat you, and then, kind of like a sports coach, you have to try to figure out how you navigate vis-à-vis them. So you have to understand your own strengths, weaknesses, opportunities and threats.

Business is about people … and therefore you have to learn how to tap those resources that you have. You surround yourself with the best people, but you have to motivate them … and that’s true both of a domestic company, as well as a multinational.

I think when you get into multinationals, we’re working across borders, we’re working across time zones. I’ve been on conference calls earlier this morning with our parent company in Germany as early as 7 a.m. You have to learn to work in a diverse environment, you have to be tolerant of differences, you have to try to leverage those differences to make you stronger. Sometimes that may mean being tolerant of what you thought might have sounded like rude or very straightforward behavior, and it just might be the cultural differences at play there.

Interpersonal effectiveness at the C-level is so critically important, and it’s not just because you’re a multinational; you’d fail, probably, if you weren’t effective in those areas.

    Vital Stats



  • Named president and CEO of The Dial Corporation (Henkel Consumer Goods) in April 2005.
  • Joined Henkel from Church & Dwight, where he served as president, personal care, since 2002.
  • Spent 16 years at Procter & Gamble.
  • Member of the Greater Phoenix Leadership Council and a board member of the Greater Phoenix Economic Council.
  • Holds a bachelor’s degree in science degree from Virginia Tech University.
  • www.henkelna.com
Medical supplies

Applying Supply Chain Management Techniques To The Health Care Industry

Businesses in the 21st century frequently attribute success to the ability to tame their supply chains.

The business of hospitals, in comparison, is quite different. Hospitals are service organizations with diverse customers, including physicians who have strong commitments to given manufacturers and products. Patients, of course, are customers, and their treatment often requires costly items. Because their customer base is so diverse, and because the associated costs can be high, it is increasingly important for hospitals to purchase materials at the best price possible.

One of the distinguishing characteristics of the health care industry is the prevalence of national group purchasing organizations that leverage the purchasing power of many hospitals. In Phoenix, Premier provides Banner Health and St. Joseph’s Hospital and Medical Center with strategic procurement services. Mayo Clinic is a member of Novation, giving it access to services that support standardization for expensive clinical items. Amerinet assists Scottsdale Healthcare in managing purchasing costs and improving processes.

Escalating costs
Increased costs associated with health care represent a challenge, however, it is not always clear why or where health care costs are escalating. The escalation of supply costs, frequently at greater than 10 percent annually, means that supply costs are the second-highest area for hospital expenditures after labor.

Paul Carmichael, director of materials management at Phoenix Children’s Hospital (PCH), fears that manufacturers will not continue to absorb supply-cost increases on their own. In addition, an aging population that demands a high quality of life will also drive up overall costs.

Hospitals require significant supplies. Mayo Clinic Arizona, for example, itemizes more than 100,000 products. Banner Health, which operates 22 hospitals in Arizona, reported $2.2 billion in net revenue, with supply expenses estimated at $390 million. Of this, $190 million were expended for medical/surgical supplies and $90 million for pharmaceuticals.

Doug Bowen, Banner’s materials manager, points to the challenges associated with pharmaceutical costs that now consume almost a quarter of supply expenses. Banner very strategically employs centralized control and standardized processes to optimize its supply operations. Bowen believes that Banner’s data warehouse system will disseminate best practices across the system.

Ryan Kirane is materials manager for Mayo Clinic Arizona and points with pride to the integration of the supply chain organization across the Mayo network and the subsequent supply chain excellence. In Arizona, Mayo’s net patient revenue of more than $500 million is balanced against a supply expense of approximately $125 million — signaling supply-intense procedures such as implant surgery. With pharmaceuticals making up about $45 million in expenses, Mayo echoes Banner’s concern with the cost of medications.

Each hospital faces different challenges in managing the supply environment. PCH, whose patients range from infants to adolescents, requires up to a third more products due to patient-size requirements. PCH utilizes advanced supply chain management technologies, such as “just-in-time” stock replenishment, to maintain low levels of inventory, yet excellent access to products. It has also worked with its national distributor, Owens & Minor, to utilize activity-based management principles,leading to improved product access and efficiencies. With almost $360 million in total patient revenue, PCH reports more than $62 million in supply expenses for the thousands of different items necessary to deliver care.

Solving the problem
In 2004, the Health Sector Supply Chain Research Consortium was founded at the School of Health Management and Policy at ASU’s W. P. Carey School of Business. The consortium brings together U.S. firms to solve problems unique to the health care supply chain.

Eugene Schneller, Ph.D., is professor and Dean’s Council of 100 Distinguished Scholar in the W. P. Carey School of Business, School of Health Management and Policy. He can be reached at gene.schneller@asu.edu.