Could It Be A Game-Changer Everywhere?
For the past seven years, Life Storage has been undertaking a quiet revolution in the self-storage industry. The real estate investment trust’s (REIT) supply chain logistics program has shown up as a mere blip on the company’s balance sheet, but it has the potential to represent a new direction for the industry.
Buffalo, N.Y.-based Life Storage operates almost 800 facilities in its network, yet the REIT is affiliated with more than 10,000 independent operators working cohesively to store and deliver the goods of corporate customers around the country.
The program, called Warehouse Anywhere, gives Life Storage a stronger foothold with an important business customer base, providing key logistics services for clients’ inventory around the country while helping to fill the empty units of affiliated partner facilities.
Life Storage calls its subsidiary a “forward deployed and final mile delivery solution,” placing clients’ products closer to their customers. Warehouse Anywhere, a third-party logistics (3PL) and warehousing service organization, reduces logistics costs, increases inventory tracking accuracy, and improves delivery time, according to Life Storage.
“We’re offering small regional warehouses inside self-storage units retrofitted with our technology, so we’re giving our customers the capability to add to their existing supply chain that one final location closer to their customer base,” says Steven Ciemcioch, president of Warehouse Anywhere.
Warehouse Anywhere combines a large network of self-storage locations across the country with advanced inventory management technologies to offer a variety of plans, from self-storage asset management to a complete 3PL service model. The nationwide storage facilities provide clients with a decentralized warehouse solution.
Instead of shipping their products from a centralized or regional distribution center, Warehouse Anywhere customers can “forward deploy” goods to self-storage facilities located closer to their end users. This gives retail and other clients the ability to be more responsive to customer orders and deliver products faster.
The concept helps clients answer the needs of Amazon-era consumers requiring overnight or same-day product delivery.
Marketing To National Accounts
Warehouse Anywhere was created in 2016 after Life Storage acquired a 60 percent ownership interest in Intelligent Logistic Solutions. Warehouse Anywhere combines the technology of the previous company with the REIT’s storage management division (formerly known as Corporate Alliance) to form a 3PL and warehousing solution.
“In 2012, Life Storage decided to make a commitment to market to enterprise or national account programs,” says Ciemcioch. “These organizations were using self-storage, but there was nobody at the time offering a seamless, consolidated solution to help these organizations. We started Corporate Alliance and launched a program to offer large organizations a national storage asset footprint with a software platform they were able to log into and view all their storage assets as well as request new space, change access privileges, as well as view consolidated invoicing for all their individual spaces.”
Warehouse Anywhere employs a cloud-connected warehousing solution, allowing for real-time inventory tracking, control, and reporting. Radio frequency identification (RFID) technology is installed in each storage unit to track inventory that enters and exits the space.
The proprietary Spyglass online inventory management portal gives clients the ability to view, manage, and report on inventory from desktop or mobile devices. Access is controlled via a mobile app and Bluetooth-enabled locks. On the go, field reps and technicians can view inventory at each warehouse facility, get directions to the closest facility containing that inventory, and even unlock a Bluetooth-enabled lock.
A Customer’s Perspective
Warehouse Anywhere has been deployed in several industries, including retail, service and repair, and healthcare. These companies require a forward deployed inventory model to supply pharmaceutical samples, medical devices, and retail inventory overflow closer to their customer bases.
Diebold Nixdorf, Inc., began a pilot program in California with Warehouse Anywhere two years ago. The program stores repair parts in 42 facilities.
North Canton, Ohio-based Diebold Nixdorf is a multinational financial and retail technology company specializing in the sale, manufacture, installation, and service of self-service transaction systems (ATMs and currency processing systems), point-of-sale terminals, physical security products, and software services for global companies with a presence in approximately 130 countries.
The company’s previous logistics firm didn’t provide the convenience Diebold Nixdorf required, so Warehouse Anywhere was contracted in California.
“The problem was they had limited hours of access, there was no real-time visibility of inventory, and we had to call the facility to see if the part was there,” says Fred Russo, regional service manager for California. “Once they verified the part was there, we had to coordinate the pick-up time. This was time consuming for us.”
That logistics company had large distribution hubs around the state, but they weren’t always central to Diebold Nixdorf’s customers. “We were driving across the county to go to a storage location and the amount of time we were spending was not worth it,” Russo says.
Because Diebold Nixdorf services many different kinds of machines and equipment, it’s not practical to carry all the parts needed for repairs in the technicians’ vehicles. “We keep them in our vehicles, but there is a lot of it we can’t carry,” Russo says. “Some of them are very large. We’d have to drive around in a semi and we probably still wouldn’t have all the parts we need. This gives us a lot of flexibility.”
Warehouse Anywhere’s technology supplements that of Diebold Nixdorf, providing real-time inventory tracking and the ability to locate parts quickly through a smartphone app.
“What we have now is the ability to pick any bin or location where our business is at or our technicians are at. That limits our drive time,” Russo says. “The primary problems we’ve solved with this solution is getting to our locations quicker and having real-time visibility to parts and an audit trail.”
With Bluetooth technology and video surveillance in each unit, Diebold Nixdorf can employ courier services to pick and ship products when company technicians are not available.
The courier gets a one-time code on a smartphone that allows access to the facility’s security gate and the ability to unlock the Bluetooth lock on the storage unit. A tracking video records the person entering the unit and the product picked.
“When they remove parts, we have an accounting for it,” Russo notes. “We see the lock is secured and have a complete audit trail. They can take that part and ship it somewhere for us overnight or they can drive it to a location of our choice.”
Diebold Nixdorf uses analytical data Warehouse Anywhere provides to create reports and control inventory. “They can take our data and give us a historical view of what parts are being pulled out of bins so we can determine our stocking level,” Russo says.
Using the Spyglass desktop app, Russo can use reporting data to check how often any single part is being pulled out of each unit and determine when to increase stocking levels for that product. In some cases, the data may indicate a particular part is approaching obsolescence and may need to be eliminated from inventory.
Diebold Nixdorf is looking to expand Warehouse Anywhere nationwide. “It’s working very well for us, so overall it’s been a success,” Russo says.
“Our customers rely on their equipment, so when their customers do not have access to equipment, it reflects negatively on their brand and it has a negative impact on the end user,” Russo says. “We’re able to get equipment faster through having local access to parts.”
Warehouse Anywhere generates a modest $10 million in annual revenue for Life Storage, but the potential is promising.
“This is a very small business for us today, but we like the growth trajectory a lot,” says David Dodman, vice president of investor relations and strategic planning. “The other exciting part of this story is $6 million of the $10 million is fee income and, as a real estate company, any way that you can generate revenue without using your balance sheet is exciting.”
In Life Storage’s 2018 Annual Report, Warehouse Anywhere was credited with contributing to the REIT’s growth in “other operating income,” which includes merchandise sales, tenant insurance revenue, truck rentals, management fees, and acquisition fees. This income category increased by $3.9 million for 2018 compared to 2017.
Another key aspect of the program is fostering long-term relationships with business customers. “This is a new way of doing business for companies that are focused on their supply chain,” Dodman says. “It is a long sales cycle. We believe that once a company adopts our platform, they essentially see the value of it; and we believe that makes them stickier for us and longer tenured customers.”
According to the Self-Storage Association, 19 percent of all storage space is leased by businesses, which have a reputation for paying on time, staying longer at a facility, and in many cases renting larger units.
In the length-of-stay category, 21.3 percent of consumers rent their units for one to two years, while slightly more business customers—22.5 percent—rent their units for the same period, according to the SSA. What’s eye-opening is that while one in four customers (25.2 percent) stays longer than two years, nearly half of all business tenants (48.4 percent) remain longer than two years. That equates to 70.9 percent of businesses that rent for more than one year.
“They don’t necessarily rent larger spaces; they’re renting standard size units,” Dodman notes. “These customers aren’t looking for additional distribution facilities; they’re looking for smaller units that allow them to place their inventory in more places.”
For example, a client in a large metropolitan area may require distribution to multiple destinations outside the city. “With the amount of locations we have, we don’t need to give them 1,000 or 2,000 square feet of space in one location,” Ciemcioch says. “We can decentralize and give them 200 square feet of space north, south, east, and west of the city and keep their inventory close to their demand signal and give them quick response times.”
For the 10,000 storage operating partners, this service gives them opportunities to fill odd size units or other hard-to-rent spaces such as on the upper floors of multistory facilities.
“Corporate and small business customers are an increasingly important segment for Life Storage. Leveraging Warehouse Anywhere to efficiently solve last mile delivery challenges is an exciting opportunity to develop deeper customer relationships,” says Life Storage COO Ed Killeen.
Warehouse Anywhere enlists the capacity of 11,000 self-storage centers to create a supply chain for their clients’ end users. This Partner Network extends Warehouse Anywhere’s reach beyond the Life Storage footprint to bring efficiency and timeliness to its logistics program.
“All the other players in this space were able to only offer that national account program at their wholly owned locations and we wanted to differentiate ourselves to be a one-stop shop for our customers,” Ciemcioch says. “We started a Partner Network in locations where we did not have a Life Storage property or footprint. When we grew our network, we strictly wanted to onboard independent self-storage operators to grow our ability to source anywhere in the country for our clients.”
Ciemcioch points out that one of the big obstacles national account customers had was controlling inventory in self-storage spaces, because once the goods left their distribution centers, tracking their inventory became a challenge. The Warehouse Anywhere technology organization offers a proprietary hardware and software platform that incorporates the REIT’s RFID technology to remotely track inventory live.
“We felt that would help us solve one of our pain points with our existing customer base, so now we offer a value-added service with inventory management tracking under the Warehouse Anywhere brand,” Ciemcioch says.
No Added Manager Duties
The Warehouse Anywhere activity does not necessarily add new duties to facility managers or staff, according to Ciemcioch. Instead, RFID and Bluetooth technology handle tracking, inventory, and accountability.
“We do not put additional job requirements on our property managers,” Ciemcioch says. “Our customers’ sales reps or technicians can be granted one-time access to spaces, pick inventory, and depart. The second option is on-demand delivery through courier drivers who can get one-time access to a unit to pick the items and deliver them. Our technology tracks access to individual spaces. We know who was in there, what they took, and when they left.”
Warehouse Anywhere offers delivery in 27 major markets through courier companies that have the proper documentation, licenses, and bonds in place.
Several options are offered for shipping: final mile with company carriers; same-day on-demand; next flight out (NFO); or two-day service. The company’s network of North American self-storage properties includes Hawaii and Alaska.
Warehouse Anywhere offers a service for small businesses requiring fewer than 25 storage spaces at a local, regional, or national level, as well as a plan for medium to large businesses that need 25 or more storage spaces in addition to a management program for day-to-day storage operations.
An Enterprise plan provides full self-storage and inventory management services plus RFID technology with real-time inventory visibility. Warehouse Anyway also offers a plan to retail and ecommerce companies that need 3PL in all major markets with same-day delivery.
The Warehouse Anywhere team can accept deliveries and manage shipments on behalf of clients, including pick, pack, and ship services.
In recent years, self-storage operators have added numerous convenience services to generate supplemental income. Many facilities accept deliveries on behalf of their tenants for a fee or allow couriers access to units to store merchandise. With “porch pirates” stealing delivered goods in many neighborhoods, these services can provide peace of mind for storage tenants as well as general consumers.
Some operators have set up on-site post offices to generate additional traffic to their stores. Some facilities have established dedicated spaces to serve as shipping centers where postal customers can purchase packing supplies for their mailed shipments.
Warehouse Anywhere takes the idea of customer service to the next level. While the concept of supply chain logistics would be costly and difficult for competing operators to duplicate, Warehouse Anywhere expands the role of self-storage everywhere in the business community and could provide impetus for the next revolution in the industry.
David Lucas is a freelance writer based in Phoenix, Arizona. He is a regular contributor to all of MiniCo’s publications.