LATINtalk eJournal Feature

Forging Innovation in Transition

Retail Giants Tap New Distribution Channels in Mexico

by Erick Kuri, Mexico Business Leader and Operations Manager

Retail giants have a legacy in retail and create an industry of their own through building new stores.

And such volume is often not without innovation.

Mega-companies innovatively engineer their new retail centers. Often these retailers detail design, focusing building projects literally to the construction detail. Many are able to do this because they have data that provides the detail needed to further scrutinize and streamline new designs.

These retail giants are also a standout on purchasing.

Often, they do their own procurement, buying a significant percentage of the fixtures, furniture, and other materials for their own retail stores. Their large volume also guarantees preferential pricing from the market.

However, when such mega-companies set out to plan and design new distribution centers, for example in Mexico, they see that this new project type challenges their conventional approach to building.

Stakeholders often need to seek acumen into not only this project type, but also building these projects in Mexico. Here are insights that unfold in such a new forge.

Challenges

With the rise in online retail, mega-retailers are interested in building distribution centers. They engage experts who understand distribution centers, and the need to not only be cost-effective but also functional – to create distribution centers in an exceptional way that would parallel the quality and efficiency they have refined in their retail model.

Retail leaders seek to maintain internal procurement efforts, to keep prices as low as possible. In order to achieve this, they utilize the information built into BIM, which in turn enables them to use the bill of materials for the facility. This is one example of how the teams optimize the use of technology.

To forge the initiative, a project team can hold several workshops with representation from all the departments. They generate a plan with a project manager in charge of communication and documentation. This process becomes an ongoing effort by the team and stakeholders to define expectations for a new industrial facility – a substantial departure from their typical retail stores.

Solutions = Process + Technology

Defining the process is key to effective planning and coordination.

A project team offers stakeholders a collaborative process and an explanation of how it would work – from start to finish. Communication is another key element, with a special emphasis on meetings for coordination among the team. Interaction with stakeholders can be very successful and result in a working relationship built on trust between retail leaders and the project team. Through a series of open-ended discussions, stakeholders can express needs and desires, ask questions, rendering a high level of understanding and transparency.

One of the benefits of engaging with project team experts who have longstanding experience with distribution centers is the team’s ability to offer many alternatives for how to plan and build the new facilities. Project leaders present options, scrutinizing details and sharing contract methods – all new to many mega retailers.

Technology—in particular, BIM—is extremely useful in the work process. The project team shows stakeholders the 3D model and explains how it is used for coordination by taking leaders on virtual walks through a facility. When they are able to get a firsthand view of the finished product, leaders can see newfound value.

The use of BIM has a significant impact on stakeholders, who often know about the technology but have not extensively used it. Project stakeholders from multiple departments, including HR, Logistics, Real Estate, Operations, design and construction, can come together to provide input. Everyone wants to be involved in the development and revision of the design and they are excited to be able to walk into the virtual plant, making adjustments as they experience it for themselves.

In a robust model, leaders can make changes throughout the process, often resulting in many value-add developments. Scope changes or modifications happen with any project, no matter how much advance planning is executed. If the project team is flexible, and all the right parties are involved early on in the project, these design changes can be quickly rectified, avoiding the much costlier risk of changes taking place during construction.

The detailed planning and flexibility that make a project successful are only possible because of the effective coordination and communication among stakeholders and the project team. The ability to see the design – realistically represented via BIM technology – helps a multi-disciplinary team, including all stakeholders from a retailer’s side, to see other points of view and discuss many possibilities to make the most advantageous decisions.

Key Benefits = Cultural Competence

In addition to the excellent communication of the team, a team’s lengthy experience and deep understanding of the construction market in Mexico is one of the major differentiators that contribute to such a project’s success.

For example, there are many firms in Mexico that subcontract and use freelancers to complete engineering, while a single architect unites the project. With multiple disciplines working together as a single entity, working on the same model at the same time, the team can identify issues immediately and address them quickly.

A project management structure, including coordination and documentation, is uncommon in Mexico, however. Typically, when an owner hires a firm in Mexico, the owner deals directly with the architect. The architect incorporates the work of multiple disciplines, a task that normally would fall under the project management umbrella.

While most Mexican firms are architect-led firms, an engineering-led firm on such a project can provide more of a hands-on experience that resonates with mega retailers focused on detail. That way, instead of a typical architect lead’s focus on a single-discipline point of view—which risks losing sight of other engineering-led solutions—the design team can bring a project management structure that assures all solutions can be correctly managed across the multidisciplinary design team.

Consider an example. In Mexican distribution centers, the new system that retailers are exploring and pushing more is Automated Storage & Retrieval Systems (ASRS). For some retailers, this impacts drastically on labor resource and increases flexibility and control of their storage.

In general, when having an ASRS, the building is taller than one with a standard racking system. This allows the storage of goods to be higher and makes the rack area itself smaller—but because of the need for hallways around the rack area, these buildings’ dimensions are still similar to a traditional distribution center.

A project team that has utilized these systems before on other international projects has technical expertise that enables mega retailers to break new ground with their distribution center.

To innovate in this way requires exceptional cooperation among stakeholders and the project team. Responsiveness and awareness of both commitments and schedules are key to get the high level of cooperation required.

In Mexico especially, communication and schedules are often a challenge. Availability for conversations and making time to meet—even if that means traveling—builds trust. When stakeholders trust a project team’s commitment, they will trust the advice, comments, and ideas that come out of the collaboration.

Stakeholders are likely to provide more information as the professional relationship builds, resulting in a level of transparency that takes communication to the next level. Once trust is established, with responsiveness as a key differentiator, the communication is seamless.

Insights = Standardization

One of the keys to efficiency in this process is standardization, which optimizes design, construction, and operation, once it is implemented. Standardization is a natural byproduct of working in BIM. With a model, design teams can collectively walk into and improve the design collaboratively. Once it is complete, teams can standardize the design for future distribution centers.

One unique aspect of such projects is the focus on equipment procurement. Not every company buys equipment through internal channels, but since many mega retailers do, they want an easier way to do so.

For a project team, a simple click provides a comprehensive list of materials and equipment. This approach virtually eliminates human error, generating an equipment list directly from the model data than can be handed over to purchasing. This approach is easier and faster.

It is important for such projects to establish a standard of distribution in Mexico.

Especially in light of the current political climate, much attention is on international relations between Mexico and the United States, and a project of this nature helps bolster trade partnerships.

And, such a project offers many cutting-edge elements, including high-quality renderings and walk-throughs, all generated through collaborative participation. All of the internal support, coupled with the expertise of a project team, means that retailers can hit the distribution center market in Mexico ready to lead – forging innovation in transition.

Ing. Erick Kuri is the Mexico Business Leader at SSOE Group (www.ssoe.com), a global engineering, procurement, and construction management firm. With nearly a decade of in-country experience as a manager and engineer, Erick has extensive project knowledge with automotive / manufacturing facilities and distribution centers in dozens of cities throughout the Mexican industrial corridor. In addition to having local resources and knowledge of the Mexican construction market, Erick is able to execute projects more quickly and more cost effectively for SSOE’s clients. He can be reached at 52.477.391.0420 or by email at erick.kuri@ssoe.com.

distribution warehouse with trucks awaiting loading

With the rise in online retail, mega-retailers are interested in building distribution centers. When such mega-companies set out to plan and design new distribution centers, for example in Mexico, they see that this new project type challenges their conventional approach to building.

Technology—in particular, Virtual Reality—is extremely useful in the work process.

The project team shows stakeholders the 3D model and explains how it is used for coordination by taking leaders on virtual walks through a facility. When they are able to get a firsthand view of the finished product, leaders can see newfound value.

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