peer review

 peer review

1. What part(s) of the paper are the most effective?

2. What part(s) of the paper are the least effective?

3. What is the big idea?

4. List the major points of support that demonstrate the paper is evidence-based.

5.  Which sentences or paragraphs seem out of order, incompletely explained or otherwise in need of revision?

6.  Where are citations needed?

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DWELL Business Plan

Ryan T. Rasmussen

Department of Business, UMass Global

BUSU 640: Capstone

Professor Ginger Silverman

February 11, 2023

Section 8

Operations Plan

As the backbone to Dwells product offering, suppliers of steel shipping containers remain prevalent where major shipping hubs at the Port of Long Beach, Los Angeles, and San Diego create continuous demand. As these shipping containers become no longer useful for logistics purposes, Dwell will refurbish them into a sustainable and durable ADU for its clientele. Dwells shipping containers will be sourced from the following suppliers: Conexwest, The Ship, and Titan Containers. Dwell will source Grade A containers that are free from rust and corrosion and provide the structural integrity needed when customizing each ADU. Each 20’ and 40’ long high cube container will come standard with a 9’6” height and will be thoroughly inspected based on the International Convention for Safe Containers (CSC). With numerous shipping container suppliers throughout Southern California, supply is anticipated to keep up and exceed demand as Dwells customer base grows.

In an effort to stay competitive, much of Dwells success resides on supplier partnerships. What’s clear based on Dwells SWOT analysis is that consumers will pay more for businesses that stand by their word as it pertains to providing acceptable work and meeting schedules on budget. Order-to-delivery lead times are crucial to timeliness based on customer expectations which are set per the project feasibility study. With the understanding that each project is unique, Dwell engages each customer throughout the design, permitting, and construction phase to ensure customers are updated on timelines as the project progresses. It’s important to note that much of Dwells ability to meet schedules is enhanced by the prefabrication of each unit in a warehouse that is protected from inclement weather. Traditional contractors who perform “stick-built” construction are constantly dealing with these types of setbacks especially during the rainy season. Overall, there are five customer touch points as defined below:

Customer Touch Points

As shown, Dwell engages with each customer throughout the design and build process which can take up to eleven months to complete a project. Even though each dwelling can take approximately a year to complete, it’s important to note that only up to 3 months of work is performed at the project site. This is an important competitive advantage where traditional building techniques would impact the client throughout the entire process.

In order to meet these timelines, Dwell recognizes that supplier relationships are even more important at gauging product availability when it comes to risk exposure and profitability. As a sustainable builder that utilizes building materials that meet LEED certification, Dwell has taken steps essential to Supplier Relationship Management (SRM). With long-standing relationships with suppliers throughout California, Dwell is continuously in communication with their strategic partners. Dwell understands that its suppliers need information early and often as new contracts are put into place. This free-flow of information is necessary to ensure product availability. More importantly, as SRM develops, getting first-hand reviews of product development is common as it relates to innovative technologies. Lastly, SRM is important to ensure product availability by having a diversified amount of suppliers. During monthly reviews with its stakeholders, Dwell is able to vet out any risks with upcoming product availability by staying proactive where orders can be filled by a network of suppliers. Without SRM, Dwell understands that each ADU is at risk without the availability of building materials needed to meet each client’s construction timeline.

When looking at Dwells Supply Chain network, it’s important to understand that markets are continuously evolving based on new laws, regulations, and technological changes. As a sustainable contractor looking for ways to improve the triple bottom line, Dwell prides itself on addressing environmental issues such as recycling and utilizing regionally sourced materials to help prevent their carbon footprint. Swink et al. (2020) calls this approach where a firm “seeks to reduce the potentially negative impacts of a firm’s processes and products on the environment (planet) and society (people),” (p. 560). Dwell recognizes that by balancing its value proposition between being both sociable and environmentally sustainable, customers will be willing to pay a higher price for the betterment of the planet.

Dwells owners recognize that supply chains are crucial and therefore knowing how the operations flow are even more critical when taking raw materials and producing a complete, livable ADU. The supply chain flow chart below demonstrates the material manufacturing process by taking raw materials and then furnishing them into an ADU that can be utilized by its owner.

Supply Chain Process Flow Chart

ADUs are produced with an assortment of raw materials stemming from steel shipping containers, energy efficient windows and doors, solar roofing panels, and energy efficient insulation. These products can be manufactured from various recycled materials where it is tested for durability prior to use. Prior to shipping, these products are accepted by quality control personnel at which time they meet their specifications are then packaged and delivered to each client. Upon receipt, Dwell will unpack each item and place in inventory until it can be used in the ADU construction process. Upon construction completion, each home undergoes a comprehensive test where each mechanical component is tested prior and during each homeowner walk. Dwell recognizes that their work is not complete until all punch list items generated internally and externally are complete to their satisfaction and their clients. As the keys are turned over to the homeowner, Dwell issues a warranty and will honor major construction defects for a term of 10 years.

A key component to Dwells success revolves around logistics from procuring building materials, inventory management, and putting the pieces together in one final project. Upon the initial review of a customer’s property to project completion, it’s important that Dwell understands the specific characteristics of each property, potential jurisdiction constraints, onsite material storage, and crane access. These types of challenges are certain and will be encountered and communicated between the project team and client continuously through the building process. It’s also important to note that inventory management will be crucial for all items that come standard with each ADU. Customized items will be purchased and tracked for each specific project. Dwell understands that maintaining customized inventory that may not be used on other projects is costly and unwarranted. Effective logistics planning is important to Dwells success and will be developed prior to the start of each project and will be implemented throughout each project to ensure proper planning, material procurement, and manpower is coordinated through completion.

Since Dwell manufacturers each ADU offsite within their warehouse facility, transporting each ADU to its respective project site will be crucial initially as third party freight and craning operations will be required. With the financial costs of owning, operating, and maintaining both freight trucks and cranes, Dwell will work directly with a network of logistics and crane companies that will pick up, deliver, and install each prefabricated ADU with the oversight and management of Dwells field team. This core operation will be handled by Dwells president who will work directly with the site foreman and superintendent.

Packaging

is another important element as Dwell prepares each completed ADU for delivery. By using refurbished shipping containers each ADU can be easily picked up, transported, and delivered by a step-deck semi-truck. Since shipping container dimensions are made specifically for semi-truck trailers, each ADU can be properly loaded and delivered without the need for expensive packaging. This modular design feature provides additional transportation efficiencies while making its product more cost competitive. With the majority of finishes built within Dwells warehouse, each ADU shipping container uses containerization when it comes to packaging. This ease of handling is important where one large container can be created with many smaller containers (Swink et al., (2020), p. 386). More importantly, any finish that can be mechanically fastened such as siding, roofing, millwork, countertops, and flooring, can be shipped and delivered all together reducing labor costs that can be incurred when building onsite. By the time each ADU is lifted and delivered to each site, only the final finishes and utility connections are required for a fast and efficient construction schedule. To demonstrate Dwells workflow, a service flow chart has been prepared per the exhibit below:

Service Flow Chart

As lessons are learned, Dwells owners understand that as their business grows, continuous improvements will be necessary to stay competitive. By utilizing the Six Sigma improvement model, Dwell will utilize the 5-step process also known as DMAIC: define, measure, analyze, improve, and control. Most importantly, this process allows Dwell to incorporate lean processes which are necessary to meet schedule timelines while staying within or under budget. “Lean Six Sigma recognizes the role that stakeholders play in every project’s success, as well as the importance of gathering and analyzing data to help those stakeholders understand the effectiveness or ineffectiveness of the workflow” (Yasar, 2022, para. 2). By empowering our team members to identify opportunities for enhancements surrounding material procurement, equipment needs, safety protocols to customer service feedback, Dwell can begin to hone and modify existing procedures to help reduce operational challenges.

Dwell will lease and operate out of a facility in Santa Ana, CA that is zoned for industrial uses. The property will be approximately 5,000 square feet and will include office space, inventory storage, a design studio, a warehouse with drive-in bay, and parking. With a negotiable lease term, Dwell anticipates a per SF/YR rate to range between $15-$17.50 square foot. With lower lease rates along with larger lot sizes, Santa Ana provides a central location for both clients and staff. In an effort to stay lean, Dwells initial office space will be large enough to produce one to four units for the first three years. Dwells corporate office will be occupied by its President, Office Administrator, Design Coordinator, and Superintendent. The office layout below provides a sample exhibit of the overall office needs which includes a storage area for inventory, a breakroom for employees, and a design studio which will provide a secondary option for conference room space. A warehouse space will provide enough space to fabricate up to 8 ADUs at one time. With an anticipated increase in sales beginning in year four, Dwell may be in a position to move for additional warehouse and office space. Maintaining a negotiable lease term, Dwell understands that space is critical to the quantity of ADUs it can furnish to drive revenue and growth.

Office Layout Programming

In an industry that is continuously evolving, ethical considerations surrounding design and the use of sustainable materials is crucial in Dwells efforts to reduce its carbon footprint while also providing its clients with energy efficient materials that provide years of savings. According to Lynch (2021), “the construction industry is a massive consumer of raw materials and natural resources, and it generates an estimated 39% of the world’s carbon emissions” (para. 1). As Dwells owner consider profitability while designing sustainably, they have effectively coupled together to offer its clients the best materials that help address the complex challenges currently seen within the global economy. One such area where ethical considerations are being made revolves around appliances that reduce carbon waste. Dwell will offer each customer an option for all electric housing whereby it can offer electric cooktops and water heaters. In-lieu of gas cooktops and water heaters that produce carbon waste and effect indoor air quality, all electric appliances will be offered as a standard option. It’s important to note that Dwells solar panels and battery provide its customers with energy savings by providing electrical power during the evening hours and weekends when its customers need their utilities the most. Dwells goal as an organization is fabricate eco-friendly structures that are sustainable and profitable. Dwell also utilizes responsible waste management by working directly with companies such as Waste Management & CR&R. As Dwell produces construction waste, they are able to partner with these companies to divert more than 80% of its waste to landfills. These efforts are handled directly through their construction and demolition debris recycling program that tracks the debris type, tonnage, and diversion rate. This is instrumental in how Dwell responds to environmental wastes it generates, project to project. Sustainability is a key part to Dwells organizational culture whereby it sees innovation as one of its strongest competitive advantages.

Much of Dwells starting capital will come from the savings of both owners totaling $400,000 in cash. With 75% of ownership, additional capital of $100,000 will be raised by Ryan Rasmussen through a 401k loan along with a $250,000 home equity line of credit. The initial sources of capital will total around $750,000 based on available cash and loans generated by both owners. Dwell has located a 5,800 SF office space with warehouse with a 3-year term at $15 SF/Year. Office expenditures will include tenant improvements specific to Dwells design studio, reception area, break room, and restroom. These improvements provide aesthetics needed to support office staff while also providing a marketable space for clients during meeting touch points. Prepaid utilities along with legal and accounting fees which also include contractor license, business license, and LLC fee. In addition to Dwells tenant improvements, an extensive security system will also be installed to prevent theft of inventory and machinery. In an effort to minimize furniture (FF&E) costs, Dwells owners will source furniture and equipment from used office suppliers. Dwell will also pre-purchase various inventory items that have long-lead times and are standard features of their ADUs. Due to current supply chain shortages certain building materials such as windows, doors, stacking door sliders, solar panels and batteries will be purchased to prevent delays to overall construction schedules. As Dwells business expands, additional inventory will be secured to minimize risk to its supply chain. In order to provide further breakdown of Dwells initial sources of capital and anticipated startup costs, the analysis below will provide further clarification:

Dwell Sources of Capital & Startup Expenses

Sources of Capital

Owners’ Investment (name and percent ownership)

Ryan Rasmussen

$ 200,000

Frank Berry

200,000

Total Investment

$ 400,000

Bank Loans

JB Morgan Chase, N.A. (HELOC)

$ 250,000

Total Bank Loans

$ 250,000

Other Loans

Ryan Rasmussen (401k Loan)

$ 100,000

Total Other Loans

$ 100,000

Startup Expenses

Leasehold Improvements

Tenant Improvements

$ 10,000

Security

2,500

Total Leasehold Improvements

$ 12,500

Capital Equipment List

Furniture

$ 7,500

Equipment (Fork Lift)

9,000

Fixtures

3,000

Tools

15,000

Computers/Plotters/Printers

10,000

Total Capital Equipment

$ 44,500

Location and Admin Expenses

Rent & Related Costs

$ 27,318

Utility deposits

1,200

Legal and accounting fees

5,000

Prepaid insurance

818

Pre-opening salaries

22,270

Total Location and Admin Expenses

$ 56,606

Opening Inventory

Shipping Containers

$ 10,000

Solar Panels / Batteries

16,500

Windows/Doors

5,000

Hardware

2,500

Rough Electrical

3,000

Rough Plumbing

3,000

Stacking Sliders

20,000

Total Inventory

$ 60,000

Advertising and Promotional Expenses

Advertising

$ 10,000

Signage

2,500

Printing

1,500

Travel/entertainment/trade shows

2,000

Total Advertising/Promotional Expenses

$ 16,000

Other Expenses

Quick Books

$ 150

Other Software

400

Total Other Expenses

$ 550

Reserve for Contingencies

$ –

Working Capital

$ 275,000

Summary Statement

Sources of Capital

Owners’ and other investments

$ 400,000

Bank loans

250,000

Other loans

100,000

Total Source of Funds

$ 750,000

Startup Expenses

Buildings/real estate

$ –

Leasehold improvements

12,500

Capital equipment

44,500

Location/administration expenses

56,606

Opening inventory

60,000

Advertising/promotional expenses

16,000

Other expenses

550

Contingency fund

–

Working capital

275,000

Total Startup Expenses

$ 465,156

Security and Collateral for Loan Proposal

Collateral for Loans

Value

Description

Real estate

$ 1,250,000

Rasmussen Primary Residence

Owners

Ryan Rasmussen

Frank Berry

References

Lynch, C. (2021, August 25). The construction industry is getting greener: why, how, and what’s changing,
Forbes, retrieved from

https://www.forbes.com/sites/sap/2021/08/25/the-construction-industry-is-getting-greener-why-how-and-whats-changing/?sh=48c41a152bc7

Swink, M., Melnyk, S.A., Hartley, J.L. (2020). Managing Operations Across the Supply Chain (4th ed.) New York, NY: McGraw Hill Education

Yasar, K. (2022, May 9). Lean six sigma,
TechTarget, retrieved from

https://www.techtarget.com/searchcio/definition/lean-Six-Sigma

Raw Matierals

Component Manufacturer

Acceptance of Materials

Logistics

Unpackaging

Installation

Inspection

Client / End User

(Start) Comprehensive Site Review

Customer Feasibility Report

Contract & Design

Engineering & Permitting

Modular Production

Foundation & Sitework

Packaging

Transportation

Delivery & Install

Fit & Finish

Final Building Inspection / Certificate of Occupancy

Punch List

Reviews

Project Completion

1st Touch Point: Engage

1-2 weeks

2nd Touch Point: Design

2-3 weeks

3rd Touch Point: Engineering & Permitting

4-6 months

4th Touch Point:

Construction

ADU: 2-3 months

Sitework: 2-3 months

5th Touch Point:

Punch List
1-2 weeks

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