THE SITUATION
A U.S.-based manufacturer of hybrid seed sought to expand their RDC (Regional Distribution Center) supply chain in the Midwest, with cold storage into the 2019 planting season. A quick turnaround expansion would require locating a Kansas City cold-storage warehouse with approximately 200,000 square feet or more of storage to prevent the seed from germinating before the planting season. The warehouse location would have to be within proximity of their production and manufacturing facilities so the seed could be shipped locally, and chemically treated and bagged at their manufacturing plant before it made its way to market. A 45-day window was allotted to locate a fully functional distribution center. The Ag-business is weather-driven, so the timing was everything.
In addition to locating a building, an experienced labor pool would need to be hired and trained immediately to be able to successfully manage the estimated fifty inbound trucks loaded with palletized seed ahead of start-up. Prior to receiving inbound pallets, a floor plan layout strategy would be required to fully utilize all available storage space for receiving products to be floor staged or separated by bins. The RDC would require marked lanes according to product number, license, or SKU. Markers would need to be visible either on the floor or from above to stage and scan pallets for audits and inbound/outbound shipments—Clearly a time-consuming task for a virgin building.
Picture 1Pictured left to right: Ed Harmon, Spartan Logistics Founder and NAI Harmon President, with Josh Ledford, Spartan Logistics Executive Vice President.
Picture 2 Middle: Cold units, air handlers, and dehumidifiers were installed to circulate the air and regulate the temperature to a cool 48-50° F and low to no humidity.
Picture 3 Right:
The SAP Warehouse Management System (WMS) provides flexible, automated support in processing all product movement while managing stock in the warehouse.
THE STRATEGY
Corporate and division representatives from the Ag-business turned to Spartan Logistics to locate a building in which Spartan Logistics would operate the distribution center in addition to approximately 600,000 square feet of their RDC’s already under contract with Spartan. Negotiations took place between corporate and plant-level representatives from the ag-business and Spartan Logistics management to discuss real estate options. A 226,000-square-foot industrial building within a 3-minute drive from the first established Kansas City RDC was discovered to be available on the real estate market. Spartan contacted an affiliate commercial realtor, NAI Harmon Group in Toledo, OH, to work together to see if the building was a suitable option. NAI Harmon Founder Ed Harmon and Spartan Vice President Josh Ledford took the lead to walk and inspect the building to confirm it could be retrofitted and purchased within the 45-day window.
Closing was the final step in executing the real estate transaction, and a three-year contract was signed off on by the ag-business with Spartan Logistics. Spartan managers were immediately in contact with vendors to begin insulating the building and purchasing chillers and air handlers to bring the temperature of the building to a constant 48-50° F temperature. When it comes to operating a cold storage warehouse, the challenge is to maintain an accurate cold storage temperature for the product inside while keeping personnel and equipment warm enough to perform well and function at optimal capacity. To successfully manage an RDC of this magnitude, Spartan would hire a Warehouse Manager, all five temporary forklift drivers, a CSR, an Auditor, and an Inventory Control Specialist. A pest control vendor was contracted ahead of start-up to perform a walk-through, and suggestions for implementing a comprehensive pest management plan.
THE END RESULT
In less than 45 days, NAI Harmon Group closed on the building. Spartan Logistics retrofitted the virgin building and now operates this location as a fully functional regional cold storage distribution center in Kansas City for its Ag customer to support its Midwest customer base. NAI Harmon was instrumental in leveraging the real estate transaction.
Case Study written by Kelly Swingle, Marketing Manager, Spartan Logistics
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