Charles Fallon, Principal at LIDD Supply Chain Intelligence, shares his rational behind the alignment of real estate and engineering, and how this unlikely pairing caters to so many unmet needs in the industrial marketplace.
Q&A Charles Fallon:
Q) Charles, I understand that you were highly experienced as a warehouse consultant prior to forming LIDD. Can you tell me a little more about your professional background?
CF: I began my career as an analyst at KOM International – a company founded by Sydney Kom who virtually invented the idea of putting engineering science into warehouse design. KOM was the consulting firm of record in grocery distribution and counted all the major retailers in North America and Europe as clients. I spent 10 years at KOM, the last 2 as a partner there.
When the Great Recession of 2008-2009 hit, the entire consulting industry contracted dramatically and KOM was no exception. I learned many hard lessons during that period and decided to invest those learning points into LIDD.
Q) When you created LIDD, you developed this concept of Supply Chain Infrastructure, or the combination of real estate, material handling and distribution technologies. Can you elaborate on this concept?
CF: It’s a simple idea that everyone understands implicitly. A supply chain consists of activities and processes that transform raw materials into usable products for consumers. All along that supply chain are assets that support this transformation and flow of products: buildings, equipment and technology. When they work together, they create competitive, compelling supply chains. When they work at cross-purposes, they create inefficient, low service supply chains.
So, these assets should be seen as a single, cohesive infrastructure and the investments they require should be coordinated and complimentary.
Q) To most people, real estate advisory and warehouse engineering are two very different fields. Why did you decide to align them and how did the LIDD Real Estate advisory practice come to be?
CF: Real estate advisory plays a critical role in providing an important piece of a supply chain’s infrastructure. If a company is going to move their warehouse, we need to figure out how big that structure should be based on their projected growth, and then locate the correct facility which meets their needs. A real estate advisor helps companies select and negotiate leases on buildings. Bad decisions can be financially and operationally painful. Like everything else in a supply chain’s infrastructure, it should be done to grow and improve the entire infrastructure.
We had good and bad experiences with traditional real estate advisors. We brought those capabilities in-house in order to mitigate risk and make sure the process is viewed as a single, cohesive operation. By doing this, we can make sure our clients avoid the bad experiences that can dilute the effectiveness of our infrastructure solutions.
Q) What benefit does this integrated platform serve our clients?
CF: A LIDD real estate advisor works with the LIDD design team to find buildings that work for the client. The design team has modeled every line item transaction in and out of an operation using algorithms that define the operations optimal needs in terms of throughput, storage and pick line.
So, a LIDD real estate advisor doesn’t just know that “taller is better” or why “40’ column spacings are ideal for single-deep racking,” they know why each client’s particular needs match a building or not. This shortens the search for buildings and improves the outcomes for clients.
Q) In your opinion, what are the biggest challenges industrial companies face today?
CF: Technology is both the greatest opportunity and challenge that companies face today. Consumers now control the market in a way they never have. They are informed, they judge supply chains as much as they judge products and they demand omni-channel service.
Most companies cannot innovate as quickly as the consumer-driven market demands. This creates space for new companies to disrupt markets and steal a share of the consumer market and the capital associated with it.
Q) Can you explain how you see LIDD might grow in the coming years?
CF: Fundamentally, LIDD’s focus is infrastructure: the set of assets that companies need to run their business. We will continue to design and implement infrastructure for our clients. We will add capabilities that serve this mission.
While Canada and the United States will remain our primary market, I’d like to see us operating in Mexico and Europe within the next 10 years. And in every market, we need to offer every service.