MMD

Kansas City SmartPort promotes itself as DC location

CVS Pharmacy reveals insights into its decision to locate a $110M distribution centre near Kansas City International Airport


May 3, 2017
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Kansas City, Missouri — More than 500 regional and national business leaders joined KC SmartPort last week for its sixth annual industry briefing titled, “Big Freight: Behind The Deals in KC’s Freight-Based Development.” The forum focused on how distribution companies identify the need for new facilities and select locations – based on factors including costs, labour, incentives, real estate and more.

The keynote speaker was Jim Della Valle, senior director for supply chain transformation and outbound transportation for CVS Pharmacy. CVS will open a new $110 million, 762,0000 square foot distribution centre near Kansas City International Airport in 2018 that will service 370 CVS stores and bring 360 new jobs to the region.

In his speech, Della Valle revealed how large distribution supply chains like CVS select new locations:  “CVS is a purpose-driven company. This is key to CVS [which] uses its purpose and values to make decisions and drive our strategies. By identifying gaps between our capacity and our needs, we develop a business case for future growth opportunities.”

Della Valle said considerations for creating a Midwest distribution centre include store growth in the market, capacity constraints and transportation distances – and found that Kansas City offered affordable high quality labour, proximity to key road systems, low business costs and expandability options.

“Kansas City is called a ‘strategic supply chain location’ and has become a hot spot for new distribution centres and manufacturing operations,” said Chris Gutierrez, president, KC SmartPort, who moderated the event.  “In the last five years, there has been nearly 25 million square feet of speculative development in the industrial space, with close to three million square feet of build-to-suit space for distribution or manufacturing.”

Because labour supply is critical for distribution companies, the panel discussed workforce training and attraction programs.  “Workforce, workforce, workforce … that’s the question I’m asked nearly everywhere I go,” said Jim Roy, senior regional vice president for QPS Employment. “Companies must understand where they are positioned in the marketplace, invest in training and development and working on public transportation to get people from where they live to where the jobs are.”

Greg Kindle, president of Wyandotte Economic Development Council, is working with a team of local organizations on an innovative workforce development plan to maximize the impact of a new Amazon fulfillment operation opening in Wyandotte County next year.

“How do we use a project like [Amazon] to change the dynamic in the community and truly and deliberately connect people to the jobs being created? We have to find that talent. By reaching out to the working poor — those working multiple jobs but still finding themselves at the poverty level — and making them aware of the resources available to train up for other positions in the community, we can make a direct impact on the residents of Wyandotte County,” said Kindle.

The forum concluded with commentary on future trends. Kris Bjorsen, international director for JLL, touched on urban logistics, a trend that has become popular in large cities in India:  “Urban logistics hasn’t come to the U.S. yet, but we need to be preparing for it. We have a lot of congested cities here that are hard for freight distributors to reach. These places would benefit from better urban logistics planning.”

“Way before we get involved as economic developers there’s a life to the project that we don’t see. We heard today about transportation and inventory costs, real estate, incentives, and the critical important of workforce. Kansas City is doing a great job staying ahead of that to win deals — but we can’t stop,” said Chris Gutierrez, president of KC SmartPort.