The Mheda Journal

In speaking with Audie Burgan, president of J.M. Equipment Company (Modesto, CA) earlier this week, I learned about an interesting method of parts distribution that his company is implementing. As part of their consolidation of two facilities into one, they have decided to take consignment inventory to the next level by setting up a series of “drop boxes” throughout their territory where customers can drop off and pick up parts.

I don’t know about you, but I’d never heard of this before and found it more than a little intriguing. Customers would be given a key to an 8×8x8 construction worksite-like box that would be stocked with certain parts. As needed, customers can leave and retrieve parts. Twice a day, a J.M. parts employee or driver will stop by the location and take care of whatever is waiting in the box.

J.M. has four branches in a territory that covers about 150 miles by 65 miles, so the alternate parts drop boxes would conceivably eliminate a good amount of back-and-forth drive times. As Burgan says, “This will help improve efficiency, lower costs and eliminate hassles for both customers and staff.”

Of course, not every parts and service claim is able to be taken care of in this way, but it does sound like an interesting plan. I don’t know all the details but you can read Audie’s article in the April 2010 issue of The MHEDA Journal to find out more.

As I’ve mentioned before in this space, the upcoming issue of The MHEDA Journal has the theme, “The Rules Have Changed.” The magazine will be full of articles from MHEDA distributor members. One such article is from Ted Springer, the president of Springer Equipment Company in Birmingham, AL.

In it, Springer says, “Diversity is something that people talk a lot about, but when it’s time to ‘put up or shut up,’ often it’s easier to stay the same.” He’s referring to product diversity, and what he means is that business onwers often espouse the values of diversification, but when all the numbers get crunched, you’ll find that it ends up being lip service.

Of course, his article goes on to talk about how his company has put those words into action (no spoiler alert needed…read all about it in April). But I thought this was a pretty provocative statement. It’s true in a lot of companies…initatives to change get started but, before long, people fall back to old habits. Or the person initiating the change gets moved to a new department and stops implementing the changes. Or maybe conflicting directives about how to implement the change come down and confuse people and stall things.

Whatever the case, there are many barriers to change. The companies that are best able to overcome those barriers are the ones that thrive, particularly in a down market where the old ways of doing business aren’t cutting it any more.

What do you think? How can these barriers be overcome?

Is “green” still a hot topic in material handling? A couple of years ago, it seemed that everywhere you turned, there was an article about new green technologies like fuel cells or LED lighting or something of that ilk. It doesn’t seem to come up as often anymore, so I’m wondering if it is a trend that has fallen by the wayside.

Green projects, for those who may not know, are those that are environmentally friendly, loosely synonymous with energy-efficient, alternative fueled, and/or able to be recycled. “To go green” was the oft-cited response to why customers should switch from IC to electric forklifts, or order a remanufactured part.

At the time, I’m estimating late 2007-2008, material handling wasn’t the only industry touting its green-ness. Automobiles, restaurants, manufacturers, and other businesses touted the benefits of reduced carbon footprints, natural ingredients and all that. I don’t hear about that as much anymore.

So here’s my question: Why? Have green projects been fewer and farther between now that everyone’s in a financial crunch (after all, green solutions often cost more)? Is green expected as a solution, so there’s no reason to market it that way anymore? Was that just a trendy marketing gimmick in the first place? Maybe I’m just not listening and the message is still there? Or another reason?

I’ll leave it to the experts.  What do you think?

Today marks the one-year anniversary of the passage of the American Reinvestment & Recovery Act (ARRA), commonly known as the Stimulus bill. Remember that?

One year later, has it stimulated anything? I’ve read many articles over the past 12 months about “shovel-ready” projects and highways and bridges and other infrastructure projects resulting from federal stimulus money. Did any of that bleed over to the material handling industry?

What has been the result of the federal stimulus for all of you out there? Particularly small businesses, how did the stimulus impact you?

Whether you know about it or not, the 2010 Winter Olympics get underway from Vancouver, British Columbia, Canada, this week. The Opening Ceremonies take place Friday, Feb. 12. It seems like the Olympics have been flying a bit under the radar this year, but I just wanted to point out that MHEDA has done its best to illuminate what’s going on with its latest issue of MHEDA Edge.

The February issue is full of stories about MHEDA’s gold medal performers, young up-and-comers in the industry who were nominated by colleagues to be recognized. The issue also features a story from an Olympic luge competitor about why “there’s no such thing as luck.” It’s a fun issue and I urge you to check it out.

So I’m little late getting to this, since the press release is dated January 12, but I still wanted to talk about this topic because I know MHEDA members find it increasingly important.

The state of California has approved the nation’s first mandatory statewide green building standards code, according to an article on logistics.about.com. Effective January 1, 2011, the code, known as CALGreen, requires all new buildings in the state to be more energy efficient and environmentally responsible, including mandates that every new building reduce water consumption by at least 20%. Other requirements say that 50% of construction waste be diverted from landfills and installation materials must emit “low amounts” of indoor pollutants. “The California Air Resources Board (CARB) estimates that the mandatory requirements will reduce greenhouse gas emissions by the equivalent of 3 million metric tons of carbon dioxide in 2020.”

As material handling distributors seek to do more and more for their customers, I know that many MHEDA members have pointed out building codes as one of the things they need to be constantly aware of. These regulations are constantly changing and can vary drastically from municipality to municipality. With California adopting this measure, other states can be sure to follow.

Read more about this new regulation here at http://logistics.about.com/b/2010/02/03/new-green-california-building-code.htm.

Well, it appears that I hit on a hot-button topic for many of you out there. My post “What the Internet Means for Distribution” from Monday has generated more commentary and feedback than anything I’ve ever written. Thank you to everyone who took the time to read and leave their thoughts. Whether you agreed with me or not, I appreciate it; I’m much more knowledgable on this topic than I was a few days ago, particularly as it relates to material handling, but also a few other industries as well!

Among the most interesting responses came from a distributor who asked not to be named, who said, “I’ve got customers who are buying used equipment out of my territory for a cheap price. Then they come back and say, ‘We really want to buy locally from someone we know, but we want the same price.’ However, the persons they’re buying from are hit-and-run type people. The trucks are not typically in the same standard or condition that we would sell a truck. The customer doesn’t like the idea of having to buy from somebody so far away and getting stuck if there’s a problem, but they are very price-conscious.”

As I said before, it’s a complex issue, for everyone involved — manufacturers, distributors and end-users. I’m not advocating that traditional territories should go away, nor do I necessarily think they will.  But I stand by the fact that it’s a discussion that’s worth having and a situation worth being proactive about. Today’s times are changing faster than ever.

Let me know of any other hot topics you want to explore in this space!

In a conversation with Louis Coleman, sales and marketing manager at Autoquip Corporation (Guthrie, OK), we got to talking about an interesting topic, which can basically be summed up as, “What does the increasing use of the Internet for sales mean for traditional distributor territories?” 

I wasn’t sure what to make of it at first, but the more I think about it, it’s an issue that should have distributors, manufacturers and end-users all reconsidering the traditional sales territory structure. As certain distributors become easier to find on the Internet, those distributors are more and more likely to be contacted by end-users who are not in the distributor’s defined territory. What is to stop that distributor (especially a distributor whose sales may be struggling in the current economy) from selling to or servicing that customer?

An ethical distributor who knows exactly where the end-user is located may have the fortitude to recommend that user to another distributor in the customer’s area. But customers who are anxious to buy don’t really want to hear “I can’t help you.” In today’s instant-gratification world, they want to buy now once they find what they’re looking for.

It’s not that difficult nowadays for a distributor with Internet savvy to set up shop with no inventory and just have the manufacturer drop ship to clients. It’s difficult to tell where those types of distributors are, and they may sell right over the top of other dealers.

The situation becomes complicated further when a lead comes to a manufacturer’s Web site. There are manufacturers out there who would love to have links between their own Web site and their dealers’ Web sites. Of course, distributors are concerned—and very appropriately so—that when they link to the manufacturer’s site, a customer can go from the dealer’s site to the manufacturer’s site and hit ‘Contact Us.’ The manufacturer doesn’t necessarily know where that person is located. If the customer is in that dealer’s territory, there’s no problem. But he may not be, and the manufacturer doesn’t know which distributor to give the lead to. I can see how this would be cumbersome and confusing for everyone involved.

Some distributors are becoming huge online and score wonderfully in the search engines. What keeps them from selling anywhere in the nation? Are we on our way toward master dealerships online? What can smaller dealers do to defend themselves? There are customers who value face time and personal contact, but are those dying out?

The answer to all these questions is, of course, “I don’t know.” It’s tough to know the right approach. Distributors often don’t want to talk about it amongst themselves because they most likely fall into one of two categories: big ones who have a strong presence already and are poised to grow their market share, or smaller ones that don’t have much of a Web presence and are upset that the other people are stealing their business. For their part, most manufacturers don’t seem have a good solution, either, so they really don’t want to address it with their dealer networks.

It’s a complex issue. Maybe all e-commerce platforms need to be ZIP code specific so it’s clear which projects belong to which distributor. On the other hand, if getting people to find you online is the goal, then it doesn’t seem fair to punish a large distributor who has the resources and skill to be featured prominently in search results.

As Coleman says, “I don’t know if all products can be sold online, but I do know that there was a time when I swore I would never use the Internet to book a flight. Now I can’t imagine using a travel agent. We may find out that the Internet selling model isn’t sustainable because the good customers really do want face time and that local service presence. I think some of that is true, but that’s what travel agents said, too.”

Time will tell. What do you think? Is the traditional geography-based model endangered? Will it go extinct?