How does Lean Manufacturing save me money?
When CRE managers master the multi-layered data associated with their real estate portfolios, they can look beyond the transactional nature of real estate and make broader, data-informed strategic decisions.
A metric as elemental as real estate cost per full-time employee equivalent, or FTE, exemplifies this. The first steps toward this more strategic analysis are to harness your cost data and isolate its components.
You can then benchmark the components against those of peer companies — companies in your industry or whose portfolios have characteristics property types, geographical locations, etc. Once you see how each metric stacks up, the opportunities become clear.
Companies are shown in the same left-to-right order in each graph. The CRE team could consolidate locations as leases expire or consolidate employee teams so they occupy less space, assuming this is feasible geographically.
There might be other tactics as well. But when you break down those costs into their components, more strategic decision alternatives emerge.
Consider the two components of cost per FTE: Cost per Size i. Expanding the analysis to the other peers in the exhibits, you can see that the effects of these two components, Cost per Size and Size per FTE, differ widely in their impact on Cost per FTE.
The Cost per FTE report enables users to benchmark overall costs against those of peers. This takes the analysis further and starts to transform a tactical exercise into bona fide strategy. Benchmarking has taken us beyond tactical metrics and toward broader corporate performance management.
Cost analysis has morphed into transformational strategy. Savvy corporate real estate executives understand that a measure of space efficiency can yield opportunities and otherwise inform their long-term strategies and day-to-day tactical decisions.
Our benchmarking data as standardized across a broad range of companies and geographies reveals that most companies cluster in the 0. However, a key finding of best-in-class practices reveals that a few highly efficient companies are able to achieve ratios in excess of 1.
The average is 0. As the exhibit demonstrates, three different companies are highlighted on the high end of the scale with ratios ranging from 1. These remarkably high ratios are impressive in their own right, and even more so given that these are portfolio averages across an entire office base, including headquarters.
The three companies achieving the most favorable ratios represent the competitive Technology, Financial Services and Professional Services sectors. As a result, they are well positioned to impose aggressive seat sharing targets.
When we look more closely at the data, one of the peers has successfully implemented a restrictive ratio of seats and employees. All other employees are asked to share seats on either a first come basis or through an online reservation system.
They have established additional ratios between the number of individual work seats to the seats, size and configuration of the shared rooms.
On-site wifi enables staff to sit anywhere in the facility.
The company also keeps individual workstations small: The highest density sites are in the central districts of large urban centers, and not surprisingly, these offices are characterized by higher levels of staff in sales and client service functions. Many offices have ratios in the range, which then positively influences the overall average in a material way.
Although these peers are able to capitalize on certain structural characteristics of their workforce, their success in achieving high FTE-to-Seat ratios has lessons for every company pursuing reductions in space utilization.
Technology now enables individuals to be highly productive in a wide range of settings. The delivery of work is increasingly more ad hoc and cross-functional. Project teams can form, disband and re-form to meet ever changing demands.3D printing is any of various processes in which material is joined or solidified under computer control to create a three-dimensional object, with material being added together (such as liquid molecules or powder grains being fused together).
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Download PDF. CASE STUDY. FEBRUARY BENCHCORE DATA REVEAL VIRTUAL-FTE STRATEGIES’ BENEFITS AND OPPORTUNITIES.
A systematic and data-driven virtual-FTE strategy could lead to bigger opportunities to reduce overall space and cost. Jun 11, · Jackson said executives often claim that a buyback is the right long-term strategy for the company. “But if that’s the case, they should want to hold the stock over the long run, not cash it.
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