Consolidating business operations
Also how will the new consolidated location impact logistical and supply chain operations.Increased costs in these areas could offset some of the real estate savings from consolidation.At first glance it would seem wise to choose the facility that has the lowest operating costs.But there are other factors to consider such as the cost of labor and recruiting potential in different geographic locations.Business consolidations occur internally or externally, depending if the company is reducing facilities or being sold to another business.
Many company executives see manufacturing and distribution costs as easy targets for cost reduction strategies.
Dominick Pagano, President and CEO of EDAC said, “The combination of expanded production capacity and greater cost effectiveness is essential to our plans to drive more growth” Corporate real estate needs change over time as a business changes and evolves.
Real estate facility consolidation is a proven and smart strategy to maximize cost savings and improve operations in a real estate portfolio.
A number of factors need to considered when planning to consolidate manufacturing and warehouse locations.
The first level of this analysis could be reviewing the rental rate or occupancy costs of the different locations.