{"id":1004576833,"date":"2022-04-19T05:20:58","date_gmt":"2022-04-19T13:20:58","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004576833"},"modified":"2022-12-08T13:05:20","modified_gmt":"2022-12-08T21:05:20","slug":"phoenix-investors-frank-crivello-on-the-safety-stock-boom","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\/","title":{"rendered":"Phoenix Investors’ Frank Crivello on the Safety Stock Boom"},"content":{"rendered":"

\"\"<\/a>At the height of the COVID-19 pandemic, retailers started to run out of inventory, and manufacturers ran out of raw materials to make more. As a result, stockouts among U.S. retailers jumped<\/a> from 14 percent in 2019 to 35 percent in May of 2020. Nearly two years later, many retailers continue struggling to keep goods on the shelves in the face of increased demand. Many manufacturers still can\u2019t get the essential components they need, such as semiconductors, steel, wood and much more. These ongoing inventory shortages have led businesses to reconsider their procurement and inventory management strategies.<\/p>\n

What is Safety Stock? And Why Didn\u2019t Companies Always Do It?<\/h1>\n

While some organizations may have held some inventory in reserve for emergencies as a best practice, the majority of business leaders around the world have spent decades trying to squeeze every last cent out of operations through Just-in-Time (JIT) production and logistics practices. Just-in-Time is just what it sounds like\u2014raw materials arrive within mere hours or days of when they are needed on the production line, and goods get produced and shipped out to distributors and retailers just in time to fulfill orders or stock shelves.<\/p>\n

By keeping goods on the move or in the sales cycle instead of stored in warehouses, retailers and manufacturers alike could significantly reduce costs associated with holding inventory. So, it\u2019s understandable how JIT got so popular, given that the practice has undoubtedly saved countless billions over the past few decades by helping companies reduce storage costs.<\/p>\n

However, the pandemic demonstrated the fragility of Just-in-Time strategies to supply chain leaders around the globe. It has now become clear that extreme Just-in-Time practices pose a critical threat to business continuity in most industries. As a result, companies are looking toward \u201cJust-in-Case\u201d strategies<\/a> to mitigate the risk of inventory shortages.<\/p>\n

With Just-in-Case, a company holds essential inventory in reserve to ensure operational continuity in the event of a supply chain disruption. For a manufacturer, that could be a few weeks of steel or microchips, whereas a retailer might store an extra month of top-selling products. Of course, the exact amount of buffer stock may vary widely based on forecasting data, storage availability, and numerous other factors. Generally speaking, however, releasing the extra inventory as needed to fill gaps in a disrupted supply chain can help avoid production stops and lost sales.<\/p>\n

The Safety Stock Domino Effect<\/h1>\n

The sudden transition to Just-in-Case inventory strategies has profoundly impacted industrial real estate. With industrial capacity already severely limited, both in the United States and globally, industrial real estate stakeholders must now also find a way to produce enough capacity to accommodate higher held inventory levels among manufacturers, retailers, and distributors.<\/p>\n

Efforts to build and store an average of 10 percent safety stock, combined with additional efforts to address existing inventory shortages, may create as much as 800 million square feet of future demand in the U.S., according to Prologis<\/a>. Meanwhile, vacancy in U.S. industrial real estate dropped below 4 percent<\/a> for the first time in Q4 2021. New industrial inventory gets grabbed up as fast as it becomes available, as evidenced by the 100 million square feet of industrial absorption in Q1 2022<\/a>.<\/p>\n

Safety stock now joins e-commerce, reshoring, and restructuring supply chain as an industrial real estate demand driver. Even with 375 million square feet<\/a> of new inventory in development this year\u2014and various other creative strategies<\/a> in play to produce usable space\u2014there\u2019s no doubt that industrial real estate demand will remain strong for the next several years at a minimum.<\/p>\n

\n

Founded by Frank Crivello<\/a> in 1994, Milwaukee-based Phoenix Investors<\/a> and its affiliates (collectively \u201cPhoenix\u201d) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The pandemic has forced many companies to consider \u201cJust-in-Case\u201d strategies to mitigate inventory shortages, says Frank Crivello.<\/p>\n","protected":false},"author":2817,"featured_media":1004576835,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21748],"tags":[37411],"class_list":["post-1004576833","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-industrial","tag-phoenix-investors"],"acf":[],"yoast_head":"\nPhoenix Investors' Frank Crivello on the Safety Stock Boom - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Phoenix Investors' Frank Crivello on the Safety Stock Boom\" \/>\n<meta property=\"og:description\" content=\"The pandemic has forced many companies to consider \u201cJust-in-Case\u201d strategies to mitigate inventory shortages, says Frank Crivello.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2022-04-19T13:20:58+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-08T21:05:20+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2022\/04\/CPE_SponsoredPost_PhoenixInvestor.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Frank Crivello\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/\"},\"author\":{\"name\":\"Frank Crivello\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/49a919c9c9ea31fc516b2bcaa5a8d237\"},\"headline\":\"Phoenix Investors’ Frank Crivello on the Safety Stock Boom\",\"datePublished\":\"2022-04-19T13:20:58+00:00\",\"dateModified\":\"2022-12-08T21:05:20+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/\"},\"wordCount\":628,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2022\\\/04\\\/CPE_SponsoredPost_PhoenixInvestor.jpg\",\"keywords\":[\"Phoenix Investors\"],\"articleSection\":[\"Industrial\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/phoenix-investors-frank-crivello-on-the-safety-stock-boom\\\/\",\"name\":\"Phoenix Investors' Frank Crivello on the Safety Stock Boom - 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