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IOT? WHAT IS IT???

IoT

IOT? WHAT IS IT???
The Internet of Things, or IoT, is a little-known concept becoming increasingly more important in everyone’s daily lives.  A technical definition is: cyber-physical systems incorporating internet connectivity with the ability to sense and react to the world in innovative and highly useful ways.  In practical terms, you can think of IoT as the fine tuning of efficiency in the supply chain using technology.  For example, IoT is the Amazon Echo you use to control the temperature in your home.  It’s the smart glasses your warehouse workers wear to guide them in filling customer orders.  That’s right.  There are glasses worn by humans, that have visual and verbal cues provided by a connected inventory and sales system overlaid on real world pick locations.  Think virtual reality glasses, with the actual warehouse racking in full view.  Glasses that guide them around the warehouse to pick and fill orders.
Businesses have been searching for ways to acquire more data and use it effectively to reduce costs and increase efficiency.  Until recently, the processors needs were too large, costly, and inefficient to scale up.  Three new developments changed this:

First, RFID tags – Radio Frequency Identification tags, which are low-power, inexpensive chips that can communicate wirelessly.  These allow manufacturers to track inventory location.  As well as monitor information such as manufacturing date, expiration date, and warranty periods.
Second, the increasing availability of broadband internet and cellular and wireless networking.  These systems provide digital infrastructure for IoT to be more broadly used in manufacturing.
Third, the adoption of IPv6, (internet protocol version 6), which, should provide enough IP addresses for every device the world is ever likely to need.

Now the stage is set to dramatically increase the effectiveness of IoT in at least three distinct areas:
(1) PRODUCTION AND FIELD OPERATIONS
IoT solutions can be used to monitor machine utilization such as run time, operating speed, product output, repair needs, and quality control.  The data is gathered in real time then aggregated in the cloud.  It is transmitted to shop floor workers’ user interface apps making immediate adjustments.  These systems can monitor inventory of raw material on the shop floor and automatically order parts to keep production running.
(2) SUPPLY CHAIN MANAGEMENT
IoT supply chain management solutions monitor the location, status, and condition of every object at any segment of the supply chain (be it an individual inventory item on a warehouse shelf or a truck delivering supplies). For instance, with the traditional supply chain management methods, manufacturers could only retrieve general data such as availability of a part.  With IoT in the manufacturing and distribution supply chain it changes everything.  Businesses can get information such as the location, condition, shelf life, quality, AND availability of each item.
(3) CONTROL OF OUTSOURCED OPERATIONS
When a business builds or buys a facility in a different city, state, or country, it still needs to maintain quality and production standards.  IoT-driven utilization monitoring solutions help industrial companies keep production and distribution on track.  They do so by monitoring real-time equipment efficiency metrics without direct access.  Smart products located in one city can access and assess real time data in another city.  This allows companies to make changes to and keep the distribution process moving effectively and efficiently.
IoT may be the new hot technology buzzword, but there are challenges.  Lack of qualified employees who can use it, cost implications, and data privacy concerns are causing businesses to carefully measure the costs and benefits of IoT adoption.  In most cases, businesses are taking a step-by-step approach.  This ensures they are implementing processes that match company culture and create efficiencies.  So, IoT is not yet self-aware, but beware, you will be hearing a lot more about it in the years to come.
Written By: John Young, CCIM

ADOPTION OF NEW TECHNOLOGY

Adoption of New Technology

ADOPTION OF NEW TECHNOLOGY
The top-rated business trend in 2020 is adoption of new technology.  This is not new.  Anyone who is running a business or making decisions about business growth has been clamoring to create efficiency through technology.  In fact, over $4 trillion was spent by businesses world-wide on acquiring new technology, most of it for value creation.
One metric used by companies is sales per employee.  By any measure, this metric is growing, undoubtedly due to new technology to create value.  From 2018 to 2019 sales per employee in the manufacturing sector increased by over $200,000, which is a 12% increase.  There are many new technologies that are driving this increase.  One important advance is a sales-ready website. These websites are lead generations machines that are responsive and can be viewed on any device.  They also enable direct contact with end customers who are becoming more involved in product design and delivery much earlier in the process.
In today’s marketplace, more detailed content and more online interaction between the customer and the manufacturer is the norm, and not the exception.  Experts agree that employees in both large and small firms who have access to the latest technology will continue to outpace their relatively less sophisticated colleagues.
Written By: John Young, CCIM | Vice President
Source: Bizminor

INVENTORY STORAGE? Proceed with caution.

INVENTORY STORAGE? Proceed with caution.
Since 2017, days of inventory have increased for manufacturing firms nationwide, which means inventory storage has also increased.  Days of Inventory in 2019 hit 59, up from 53 in 2018, and 51 in 2017.  Mathematically, a decrease in the cost of sales could be causing this.  COGS have actually increased slightly from 75.80% of revenue in 2017 to 75.98% in 2019.  This indicates that firms have an increasing amount of inventory.  Assuming this is not an over-production issue, firms are not selling as much as years prior.
This could be interpreted as a sign of economic slowdown, even before the Covid-19 storm made landfall.  The increase in inventory may lead some businesses to think that they need additional space, which they may have a legitimate need for, but if the underlying reason is because of a weaker economic environment, the right course of action for the business to take might not be committing to a new long-term lease.  Companies that absolutely need to move product offsite may want to explore third-party warehousing as an option.  It is not as cost-effective as leasing traditional warehouse space on a per square foot basis, but allows the end-user the flexibility to change on a month-to-month time horizon.
The global health crisis has further complicated the situation.  Some manufacturers now cannot keep enough stock to satisfy their customer’s needs.  This may temporarily reduce the need for additional storage, even though it would be financially feasible.  As with most circumstances, each should be evaluated on a case-by-case basis.
Source: Bizminer.com
Written by: Joseph Schultz, East Team Associate

WHAT IS YOUR RENT TO REVENUE RATIO?

What is your Rent to Revenue Ratio Image

WHAT IS YOUR RENT TO REVENUE RATIO?
One financial metric that many business owners are unfamiliar with is the industry rent-to-revenue ratio (I-RRR).  The math is simple; rent paid divided by total revenue from operations.  Naturally, some industries will pay a higher percentage of their revenue in rent; a retail shop will surely pay a different percentage of revenue to rent compared to a small law firm.
So what is your I-RRR?  With data collected across the entire nation, manufacturers, on average, paid 1.78% of their total revenue from operations toward rent.  In 2017, they paid 1.87%; 2018 they paid 1.77%; and in 2019, they paid 1.69%
The amount of rent a business must pay involves many factors.  Location, site access, building quality, and, most importantly, market conditions are all factors.  A business in New York City will certainly pay more in rent while a business in rural Minnesota may pay less.  The formula is simple, but the underlying factors can be quite complicated.  Many companies believe their I-RRR should be much lower during this economic slowdown.  However, the dramatic drop in rents that occurred in 2008-2009 has not happened…yet.  It is possible that large-scale business closures create urgency on behalf of landlords to make low cost deals, but it is not happening now.  Stay tuned for more market information as we near the end of 2021.
Source of Data: Bizminer.com