Microscopic Disrupters

We all know that there are currently some pretty serious disruptions in supply chains around the world. Without rehashing why this is happening lets look at how we got into a situation that might not have occurred 15 or 20 years ago.

One of the industry related groups that I have enjoyed over the last few years is focused on the warehouse and distribution markets. While it might seem that these types of buildings pop up at random there is actually quite a bit of research about the specific location where one of these facilities will be built.  The obvious purpose of these buildings was to build a buffer into the overall supply chain by providing space to hold goods and materials until they would be needed at the next step in the chain.  In the case of retail goods the next step in the chain was a store with adequate shelf space and backroom space to accommodate demand for several days, if not weeks.  When I was much younger one of my first “real jobs” was at a food distribution warehouse where we had racks and racks of goods simply waiting for the next grocery store order.  When the time came for me to hop on my fork truck and fill an order it generally involved pallet loads of products that would last a store for at least a couple of weeks.  The concept was the same for manufacturing related products and materials.  Factories would place orders for several weeks or months of anticipated demand that was stored at a warehouse some days away.  The factory had their warehouse space and the supplier had theirs.  Plenty of buffer time.


But as we also all know inventory is money that is not returning value until it is used.  So stores and manufacturers started to get smarter about inventory and utilizing “just in time” processes.  Those processes were, at first, pretty manual calculations.  Walmart was among the first companies to automate the process with sophisticated computer programs and, soon, other companies followed.  This thinking started “backing up” the supply chain.  If Walmart needed less inventory in their stores then the warehouse/distribution center could get by with less also if they employed the same thinking and automation.


As companies started stripping out costs through better inventory management and sharing some of those savings with their customers in order to build market share they had to also look for other cost reductions.  Pushing production offshore to take advantage of much lower labor rates provided that gain in profit margin but added another level of complexity to the supply chain…transportation time.  Once again sophisticated computer models were applied to the logistics and “just in time” transportation became real.  Original manufacturers of products followed the same thinking and only produced what was needed for the next computer programmed delivery cycle.

But…..all of this did one significant thing….it removed almost all the time buffers along the entire supply chain. Any glitch along the way would result in a shortage.  A ship gets stuck waiting to unload at Long Beach…a trucking strike keeps things stuck in Long Beach….a critical component has a defect…or just bad weather…could all create a serious problem because the computer programs that drive the supply chain are focused on creating the shortest possible time from source to site under normal circumstances.  Recovery from many of those events is usually relatively quick because the source factories are still up and running...and logistics companies can anticipate those events and have backup simulations ready to go.  Factory lights are still on, machines are still on and available, employees are doing maintenance work at the plant and are available to start up again in hours.


This time though those source plants are not still up and running.  Nobody is there.  Lights are off, machines and computers are turned off, employees are at home.  Restarting a factory is not as simple as flipping a switch and we are seeing the results of that today.  The entire supply chain needs to be “rebooted” and filled in again from the source end.  Four weeks to produce enough product to fill the open orders, one week from factory to port of exit, three weeks at sea, two weeks waiting in the queue to unload, another one or two weeks from port to local warehouse, and another week to the point of use…all after the source factory is cleared to reopen.


So file this one away under the category of unintended consequences.  We have created really smart computer programs to streamline the time from source to site but as a consequence we are vulnerable to even microscopic disrupters.

Hot Air Balloons and eCommerce

I live in an area that is almost ideal for hot air ballooning.  On almost any morning it is not uncommon to see at least 6 hot air balloons dotting the horizon.  Watching some the other day as they prepared for launch and then ascended it struck me that there is a basic lesson in the process that is useful to remember when designing HVAC solutions for eCommerce buildings and warehouses in general.

The obvious lesson is that hot air is buoyant and the hotter it is the more buoyant it becomes.  When prepping for launch the crews use their direct fired burners to blast hot air into the balloon causing it to fill and lift.  Once the balloon is vertical the crew fires the burners at full heat to get the balloon off the ground and on its way upward.  While in the air you can hear the burners firing whenever the balloon starts to drop below the altitude the pilot is looking for.  Short blasts produce little heat and balloon either stays stable or starts to slowly descend.  Long blasts produce more heat and the balloon rises.

So...what does this have to do with eCommerce and warehouses?  While the HVAC equipment cannot produce air that is hot enough to lift the building off the ground it can produce air that is hot enough to rise rapidly and stay near the top of the space. In an eCommerce fulfillment building with dozens of humans occupying the bottom 6 feet of the building that hot air can be a problem.

There are some HVAC companies that propose using very high temperature air to heat the entire space.  This becomes a real challenge as the hotter the air the more it wants to stay up near the ceiling.  There are a couple of ways to deal with this but both ways impact electrical operating costs.

One method is to install several large fans that are intended to pull air from the ceiling space and force it down to the floor level.  In addition to the electric power required to spin the fans this solution can also make it difficult to achieve the rack heights that are desired in the building.  There may also be structural cost implications depending upon the weight of the fan/motor assemblies.

The other method is to use the HVAC equipment fans themselves to force the hot air to the floor area.  This also requires electrical energy to overcome the buoyancy of the air. A secondary characteristic of this method is that the velocity of the air from the HVAC unit must be pretty high in order to force the air downward.  The result is a column of air moving at pretty high speed that reaches the floor in a relatively small area that can cause worker discomfort or stir up paperwork or products that are in the airstream.

Mestex has been producing a product concept for decades that overcomes these problems.  The concept is called "air turnover" and many companies have since copied the idea under different names.  The idea is simple....push warm (not hot) air into the space just above the worker level and pull it back across the floor where the workers benefit from the relatively slow moving warm air flow.  Not only does this method produce even temperatures where it is needed it also avoids wasting heat energy that collects near the ceiling with the hot air methods.

Deciding how to design an air turnover system can be challenging since the system sends air into the occupied space that also includes equipment, bottoms of racks, conveyor systems and such.  Another Mestex first is the use of Computational Fluid Dynamic ("CFD") modeling of the space to refine and optimize these designs.  CFD modeling originated in the defense industry to model aircraft performance and later was adopted by the process industry to evaluate things such as the impact of ocean currents on offshore oil rigs.  Since air is a fluid Mestex started using CFD modeling 20 years ago to assure owners that temperature critical products would be kept at the proper condition.  Mestex' use of CFD has expanded over the years to optimizing more mundane warehouse applications as well as more sophisticated applications such as data centers.  This expertise is available exclusively for Mestex customers.

So the next time you see a hot air balloon rising into the air you can appreciate the challenges of heating a warehouse or eCommerce building.

Going Vertical with Ecommerce

Vertical Ecommerce Mechanical Infrastructure Thoughts

I was emailed a copy of an article that was published in Building Design + Construction magazine that stimulated some thought.  The article spoke about the trend in Ecommerce buildings to go vertical in order to fit their large square foot requirements into a smaller footprint.  This allows the Ecommerce company to put distribution and order fulfillment closer to their customers and meet the expectations of same day and next day deliveries.

This approach is obviously appealing to developers and the Ecommerce companies themselves.  However I would suggest that it can create some difficult challenges for the mechanical and electrical infrastructure.  By reducing the footprint of the building the available square footage for mechanical and electrical equipment on the roof is also reduced significantly.  Given that most of these buildings would be built in urban locations and will require large parking areas there will also be very little room on the ground for the infrastructure.

Another characteristic of Ecommerce buildings is the clear height requirements for racking and conveyor systems.  Although the building might be as tall as a normal 8 story building it might only have 3 levels inside.  This complicates the approach to the heating and cooling of the space and creates large volume spaces that must be conditioned for worker comfort and efficiency.

A traditional approach to an Ecommerce space is to install multiple packaged HVAC units on the roof with simple overhead air distribution systems.  The challenge that I see with the vertical ecommerce buildings is the lack of roof space for the packaged HVAC solution.  Even if the square footage could be allocated for large packaged units they will need to be located closer to the center of the roof and require huge ducts to move the air toward the exterior walls (so as not to interfere with racking systems) and then down through each floor.  Branch ductwork from these large main ducts would then be needed to serve the area of each floor.  The construction costs for such systems could be quite high...if it were even possible to use the large packaged HVAC units on the roof.

Mestex has been manufacturing a solution called Air Turnover for over 20 years and it seems this might be a better fit for these vertical buildings.  The Air Turnover concept places the HVAC distribution systems on the floor close to where they are needed...a similar concept to why ecommerce is going vertical...in order to put the source closer to where it is needed.

Since Air Turnover equipment can be built with cooling coils and electric heat internally the only equipment needed on the roof would be a single air cooled chiller.  The piping system from floor to floor would consume much less space (and require much smaller floor penetrations) than the duct system and would actually perform more efficiently due to the thermal characteristics of water.  Air Turnover units would typically be mounted along an outside wall and could even take advantage of fresh air cooling by installing wall louvers adjacent to the units.  The floor space required for the Air Turnover units would not be much greater than that required for the large duct systems and Air Turnover would also not require the branch duct systems.

There are other major advantages to the Air Turnover system in the areas of performance, efficiency, ease of maintenance, ease of installation, etc...but this article is long enough now.  If you are interested in those details please contact us at www.mestex.com and we can explain the advantages in more detail.

A Simple Concept That Saves Big Dollars

Or, How a Bad Hair Day Can Save You Thousands Of Dollars...



Airflow Pattern From An Air Curtain

You have probably walked through a doorway some time in your life that totally messed up your hair…you had just experienced an “air curtain”.  So why would someone want to install one of these things if they can be so annoying?  The reason, as is most often the case, is to save money. 

“Air curtains” or “air doors” have been around for decades.  You find them on some commercial buildings up north in entry vestibules as a way to help isolate the cold outdoors from the heated indoors.  You also find thousands of them on industrial and warehouse buildings because of the large number of “dock doors” that are constantly being opened and closed.  Every time one of those doors opens, the building has the potential to lose heat to the cold outdoors…and that costs money.  Most facility managers realize this instinctively (or it was passed down from one generation to the next) but I am not sure how many have actually tried to calculate just how much energy and money is lost through a single dock door.

Here at Mestex we produce a number of “air curtain” products under brand names such as King, Applied Air, and LJ Wing.  All of our “air curtains” are intended for use on the large dock or ramp doors that you find in industrial or warehouse buildings.  The purpose of this little article, though, is to highlight the operating cost savings from using an “air curtain” rather than to tell you which one to use.  In order to do that we turned to one of our engineering analysis tools that we employ for more complicated application studies…Computational Fluid Dynamics, or “CFD”.

In some of our other blog articles we talked about CFD and how it works so I won’t go into that in detail but suffice to say that we can predict the temperature and airflow impact of HVAC equipment in a building…and do so with surprising accuracy.

For this study we created a model of a 20,000 square foot warehouse with a 20 foot height.  We then added a 14 foot wide by 16 foot tall dock door.  The model included R-13 wall construction and R-11 roof construction.  Our target inside design temperature in winter was set at 68 degrees F.  We threw in a few storage racks and a heating system on the opposite wall of the building from the dock door…about as far away as we could put it.  We then ran the CFD software with winter weather conditions from Syracuse, Chicago, and Atlanta.  (The little video above shows the airflow patterns in the warehouse and around the open door.)

Our CFD study showed a heating requirement of 3.5 million btuh in Syracuse without an “air curtain” and only 2.4 million btuh with an “air curtain”.  In Chicago it was 3.75 million versus 2.5 million, and in Atlanta it was 2.25 million versus 1.75 million.  You can see that the savings in btuh were significant in each case…even in Atlanta.

Converting this into dollars and cents translates into a savings of almost $21,000 per year in Syracuse, $19,000 dollars per year in Chicago, and $3,600 per year in Atlanta.  When you consider that a typical “air curtain” for a 14x16 dock door only costs about $18,000 completely installed and operational you can see why facility managers in cold climates can easily justify the investment…I mean, who doesn’t want a 1-year payback?  Even in “Hot-Lanta” the payback is 5 years just for heating…and the concept also helps with cooling.  We have also calculated the internal rate of return with various hours per day of door opening but that analysis is too lengthy for this already lengthy blog article.  If you want more information about the IRR or want information for your city just contact us at www.appliedair.com using the “contact us” selection under the “support” tab.

 

The Changing Face of Real Estate

One of my more enjoyable activities that I have is to act as chairman for a developers forum as part of the NAIOP organization.  This activity provides insights into the thinking, planning, and expectations of commercial and industrial property developers and owners across North America.  At our annual meeting a couple of months ago there were many presentations and discussions that focused on 2013 and beyond.  I thought I would share just a few of the points from that meeting.

The NAIOP Research directors provided some interesting factors to consider going forward that tended to revolve around the way technology is changing the office and industrial markets.  E-commerce is projected to have a negative impact on mom-and-pop retail and small start-up retailers until the housing market makes a big recovery, according to Cassidy Turley-Terranomics.  They went on to say that while middle market retailers will continue to struggle, the luxury and discount retailers will continue to expand and open new retail and distribution facilities. 

Speaking of distribution facilities, Jones Lang LasSalle indicated that they believe that distribution center users will continue to push for higher bays...up to at least 36 clear feet...in order to increase efficiencies in handling e-commerce transactions.  Another interesting impact of e-commerce that was highlighted by IMS Worldwide and by Liberty Property Trust is that changing real estate requirement for an e-commerce focused distribution center.  The number of transactions per day in an e-commerce site can be 10 times greater than for a traditional distribution center.  Each of those transactions must be touched by someone so the number of employees in an e-commerce center is much higher.  Parking for up to 1,000 cars in addition to trucks means the land required for these centers can be 40 or 50 acres greater than a comparable "traditional" distribution center.  Implied in this scenario is also the need for a temperature controlled work environment for those 1,000 workers instead of the old "just keep the pipes from freezing" distribution or cross-dock environment.

Another impact of technology and e-commerce is that a DC ("distribution center") for e-commerce has an element of "mission critical" to it in order to process all of the transactions.  Developers and users of these new types of distribution centers look for locations that have reliable fiber optic and cable network access, as well as dual primary power substations in order to minimize downtime in the event of a power disruption.  Other location related decision criteria include being in a right-to-work state and in a state that does not charge sales tax on e-commerce transactions.

Shifting back to the office market, CBRE-Canada, noted that employees are changing how they work and the traditional office with walls is going away.  They also noted that employees, especially the younger ones, communicate with each other by text message versus phone reducing the "noise level" in the office down to the clicking of small touchscreens...reducing the need for walls to control cross conversations.

PPR/CoStar commented that the average lease that they see in the office market has decreased from 5,000 square feet to 3,600 square feet.  This statistic is reinforced by the results of a CoreNet survey of 500 corporate real estate executives who have changed their office plan metric from 225 square feet per employee down to 175 square feet in 2012 with a projection of only 150 square feet by 2017.  This change means that development of new buildings will continue to be pressured as it will take longer to absorb space in overbuilt markets. 

The final point from the annual meeting is that while there is abundant capital available for the right deal all of these other factors are driving developers to spend that capital on remodeling and repurposing of existing space. 

Social Media and Building Construction

Today marks the IPO date for Facebook.  The press is all abuzz over the stock offering of a company that does not produce a single tangible item...yet, will be valued at over 100 billion dollars.  Would anyone have considered that even possible 10 or 15 years ago?  How could this be happening?

Whether or not you believe that Facebook is worth that kind of money it is a highly visible example of a trend that is accelerating so rapidly that building developers can barely keep up.  That trend is social media driven e-commerce.  The value placed on Facebook is derived from its ability to generate sales of goods and services through both its paid advertisements and through the massive database of user preferences.  When retailers know what you like and don't like they are armed with information that allows them to tailor their sales message directly to you in a way that makes it very difficult for you to resist.

Personalized advertising...not just to groups or subgroups of the population but down to YOU...is not quite there yet but it is coming fast. 

Another highly visible example is Amazon.  While Amazon lacks the social media aspect it has quickly become the largest "retailer" in the country.  Tracking and using personalized shopping patterns is already part of the Amazon business model and they use it very effectively to "suggest" other items that you might want to buy while you are on line making a purchase.  Combined with simple transactions this has made Amazon a success.

So, what does this have to do with developers and the construction industry?  Regardless of how a consumer makes that buying decision and places that order there eventually needs to be a physical transaction...even if it is only to hand over a tangible item to the purchaser.  The problem for developers and logistics companies is speed.  The speed of the e-commerce transaction is almost instantaneous.  That creates an expectation on the part of the consumer that the rest of the buying process will also go that quickly and be that personal.

So how do you quickly transport goods from their point of origin, to the port of entry, to the point of regional distribution, and then to the point of local distribution?  Many logistics experts will tell you that it is "the last mile" that can make or break the deal.  The "front end" of this distribution problem has been analyzed to death over the last few years.  Now that "last mile" needs to be addressed.  Does it mean repurposing US Postal Service facilities for commercial use?  Does it mean developing and constructing thousands of mini-hubs all around first and second tier cities? 

If it is the former then I would speculate that a significant amount of HVAC equipment will need to be replaced and upgraded for energy efficiency in order to help control costs.  The postal service has been running so lean over the last several years that the building infrastructure will probably need to be completely rebuilt with efficiency as the number one objective.

If it is the latter then what type of buildings and HVAC products will be required?  These will likely not be "big boxes" as we are used to.  High bays and cross docks will probably not be part of the mini-hub but something more like a large auto dealership service department.  This will call for smaller capacity HVAC systems to serve the smaller spaces but also have the sophistication to respond to carbon monoxide concentrations as delivery vehicles move in and out of the space.  And because all of this will be driven by computers what will be the data processing and data transmission demands?  These buildings will likely be "hybrid" facilities with a need for both simple and sophisticated HVAC solutions depending upon the part of the building that is in use.