Headlines that scroll across the news ticker in Times Square and at the bottoms of business programs seldom herald a company’s success in its number of desks or the dimensions of its private offices. Robert Gracz, though, follows a different broadcast.
As vice president of corporate real estate and facilities management for Avnet, Inc., a Fortune 150 company, Gracz uses his expertise to improve the efficiency of the business’s infrastructure. A distributor of enterprise-computing and storage products, electronic components, and embedded subsystems, Avnet has a real estate footprint spread over 90 locations. The company’s offices and warehouses support its sales, marketing, and distribution of best-in-class technology to more than 100,000 customers worldwide. As Gracz explains, Avnet doesn’t just sell the hardware behind the technology, but “we’re also a partner to our customers, helping provide the right IT solutions to solve their pain points.”
The challenge that Gracz faces each day is to minimize space and maximize output. And looking at the numbers from his 27 years with Avnet, it’s pretty clear he has been successful. When he joined in 1986, the company’s portfolio spanned 4.5 million square feet with $2 billion in revenue to show for it. Today, operating in 2.5 million square feet, its revenue has increased to $26 billion. How did the company get there? In part, through standardization.
Avnet’s brand unification in the late 1990s was the catalyst for Gracz’s efficiency agenda, and profitability was the driver. Formerly, Avnet marketed its products and services under multiple company names that were not entirely distinct. Bringing the brands together under the Avnet name streamlined training and paved the way for similar action in the company’s real estate department. In any industry, cycles in the economy, particularly troughs, present the opportunity for real estate managers to drive efficiency. And, concurrently with Avnet’s brand unification, the distribution industry was maturing, and the company felt pressure on its profit margins in the supply chain. “We knew we’d have to manage our fixed costs to help drive profitability,” Gracz says.
Fixed costs, for Gracz, included overlapping businesses that competed with one another, scattered and isolated groups of employees from the same division, excess inventory, and inconsistent spaces that were often bigger than necessary. “Before consolidation,” he says, “each location conducted operations locally.” There were no standard processes for furnishing offices whose dimensions could range anywhere from 150 to 300 square feet without justification. And, expensive technological outfitting for inventory centers had been executed pragmatically, not strategically.
“My goal was to work with the business and drive the standard of ‘one size fits all,’” Gracz says. The first part of this plan was modular furniture. The second involved dropping office-module areas to a range of 28-44 square feet and providing two private office designs directly tied to an employee’s role.
Consolidation was the first of Gracz’s initiatives, and he had to work closely with Avnet’s leadership and its employees to get them to accept it. About five or six years ago, he saw the next opportunity for the company and felt the time, again, was right for a transition. Gracz first heard about remote work processes and flexible, shared workspaces through CoreNet Global, a real estate professional association, and he found that they would not only allow Avnet to continue operations 24–7 through normally debilitating conditions such as storms or power outages; they would also address the next great space-management challenge: oversaturation.
As Avnet started to downsize its physical space in the 1990s, Gracz says certain zones became so dense that buildings reached capacity, and he and other real estate managers are just now finding a solution in mobile technologies such as cell phones and laptops. On any given day, an Avnet office may function like a giant turnstile. The sales team may utilize the conference room on Monday morning and be in the field by noon. Traditional planning would provide each salesperson a desktop and workstation, but the hours a chair sits empty or a computer goes unused are fixed costs that Gracz takes into consideration as part of the company’s overall attention to expense management. “When you have a sales organization,” he says, “the presence of the workforce ebbs and flows. The evolution of consolidation now is to have a desk, but it supports two to three people at different times of the day.”
“The evolution of consolidation now is to have a desk support two to three people at different times of the day.”
VP of Corporate Real Estate and Facilities Management
Today, Avnet’s workforce is more than 90 percent capable of working remotely. Laptops are the employees’ physical tools, and Gracz says solid employee management is now critical to determining the success or failure of the strategy. Working with the HR department, he has helped develop employee-review and goal-setting processes for managers to use to ensure the productivity of their remote employees while using less space.
Real estate work is all about the efficient use of space. Executives managing millions of square feet, as Gracz does, don’t control the cost of production, nor do they determine payrolls; they do, however, control how close a given property comes to reaching its potential. No matter a company’s structure, Gracz stresses, you can add value through real estate management and ensure a solid foundation for an efficient business.