How to create strategic partnerships that lower expenses, increase ROI, and reduce environmental impacts.
By Reed Dulany, SeaPoint Industrial Terminal Complex
There is strength in numbers, as evidenced by the growing trend towards shared services in the manufacturing sector. Faced with continued rising costs, industrial manufacturers are increasingly turning to a co-location and shared services model, which allows companies in geographic proximity to one another to strategically pool synergistic resources that ultimately support each organization’s financial and environmental bottom lines.
The term “shared services” traditionally refers to different departments within the same company sharing or outsourcing services, like human resources or IT, resulting in overall cost savings. Within the manufacturing and logistics sectors, this model can be adapted to different industrial companies which physically co-locate on a single industrial site, enabling them to share office buildings, warehouse space, utilities, wastewater treatment, security and terminal access, thus reducing their physical footprint and infrastructure investment while increasing ROI.
According to Deloitte’s Global Shared Services Survey Report, which engaged 379 respondents across nine major industries, companies around the world are strategically shifting to a shared services model. 80% of respondents that implemented this model recovered their investment within the first three years. Savings were redirected to invest in the business as well as in talent development, facilities improvement, and technology.
As globalization, shifting government policies, and advances in technology accelerate competition and increase company performance expectations in the manufacturing sector, corporate leaders must continue to embrace creative ways to maintain high-performance and differentiation while controlling costs. By physically co-locating industrial plants and sharing services, companies can allocate saved resources to address other critical business needs, joining a growing network of industrial partners embracing this nimble solution.
The Power of Co-Location
Shared services in manufacturing and logistics are made possible through geographic proximity. The Brookings Report about Locating American Manufacturing affirms: “When firms locate near each other, they gain a number of advantages. The geographic clustering of companies in the same industry or related industries—along with the educational, R&D, business, and labor institutions that support them—promotes high wages and innovation.”
The advantages are exponentially compounded when these synergistic clusters are located together in one industrial complex. The proven idea of resource-saving shared services, as well as the natural benefit to being near complementary companies and related institutions, is the foundational concept behind SeaPoint Industrial Terminal Complex in Savannah, Ga.
SeaPoint Industrial Terminal Complex, a 600-acre industrial site featuring one mile of deepwater access on the main Savannah River channel, is being redeveloped as a multi-use, multi-tenant facility. The unique confluence of deepwater and land resources, robust connections to existing inland infrastructure, direct rail, and an on-site cleantech incubator, appeals to a wide range of potential partners in the manufacturing, shipping, logistics, and warehousing industries. Instead of seeing each company as discrete and operating in its own individual silo, SeaPoint embraces the shared service concept, offering industrial services from routine security to more complex utilities like reclaiming waste steam to generate electricity, which allows each company to focus on their core business and to operate as efficiently and effectively as possible.
Industrial co-location and shared services also provide a framework for commercial activity that benefits both business and the environment, creating an efficient ecosystem for participating companies and allowing each firm to reduce its contribution to the three leading contributors of greenhouse gas emissions (GHG) in the United States: transportation, electricity, and industry.
Long-haul trucking and drayage – critical and costly components of any supply chain – continue to face pressure as evolving environmental regulations intersect with labor challenges. Co-locating with a critical supplier or customer, when feasible, creates new opportunities to convey or otherwise transport raw or finished materials between firms, reducing emissions, increasing product reliability, and lowering production costs by streamlining transportation and logistics processes. Shared industrial services create similar opportunities for sustainable practices by consolidating multiple systems, like steam, compressed air, or even storeroom services.
As Henry Ford keenly observed: “Most people spend more time and energy going around problems than in trying to solve them.” Fortunately, the shared services and co-location model offers industrial manufacturers and logistics partners creative solutions while creating new opportunities, lowering expenses, increasing profitability and competitiveness, and reducing environmental impacts.
Reed Dulany is the chairman, president, and CEO of Dulany Industries, Inc. parent company of SeaPoint Industrial Terminal Complex, a 600-acre, multi-use, multi-tenant deepwater industrial site embracing a green, community-minded approach to industrial development. Reed also serves on the board of advisors for the Partnership for Inclusive Innovation, a public-private partnership created to lead coordinated, statewide efforts to position Georgia as the Technology Capital of the East Coast.