The Mheda Journal

It’s Friday, so there may be a few of you headed out to Happy Hour for a cold one with the gang after work. Those of you in the Atlanta area can do so without straying too far from the material handling field, one of the few places I know of where it’s OK to have a beer on the job.

All right, that’s probably a bit of a stretch, but there is a restaurant in suburban Atlanta that has incorporated RFID technology into its offerings. According to an article I found in Wireless Week, “a restauranteur in suburban Atlanta has introduced connectivity to a Wall of Beer, incorporating connected flow meters on the beer taps and a pair of NFC card readers next to the taps.”

Unfortunately, the article does not name the bar, but here’s how the system works. Bar patrons who are members of the establishment’s “beer club” can go to the Wall of Beer, log into the system with a card and serve themselves. The system records which beer was tapped and how much, and charges the member’s account accordingly. Sensors in the taps detect the flow, pressure and temperature to monitor the product.

For the consumer, the benefit is convenience and a feel of exclusivity. For the restaurant, the benefit is much more accurate tracking of beer dispensing. (According to the article, a restaurant typically only gets paid for 75% percent of the beer it dispenses, due to spillage, bartenders who give away free drinks and other factors.) You may notice that each of those outcomes positively benefits the restaurant’s bottom line. Satisfied customers buy more beer, and the bar is not turning its inventory quite so quickly. Win-win.

The article notes that this isn’t legal in all states; there are 16 that do not have an alcohol self-service provision. But the sensors can still be used for tracking purposes. At the very least, it’s another innovative use of RFID capabilities. Who knows, the next time you’re tipping back a pint at the local pub, you may be in the middle of your next sales opportunity.

An op-ed piece in Thursday’s The New York Times provided an interesting perspective on green buildings and LEED certification, a topic we’ve covered in this space and in The MHEDA Journal before.

The Times article, titled “Don’t LEED Us Astray,” talks about how LEED certification (a U.S. Green Building Council certification given for incorporating eco-friendly design) has become a bit misguided. “While the standard is well-intentioned, it is also greatly misunderstood. Put simply, a building’s LEED rating is more like a snapshot taken at its opening, not a promise of performance.”

The article suggests that because once a building is built, it’s so difficult to predict what it’s actual green impact will be—after all, a bike rack doesn’t make people ride bikes—follow-up requirements should be implemented. “A number of local, state and federal agencies require LEED certification for their new buildings — so why not have them institute follow-up requirements as well? Buildings that efficiently generate on-site power should be able to claim tax credits. Tenants who reuse paper or install efficient lighting could claim rebates. At the same time, agencies should conduct regular energy-use checkups to ensure that landlords and tenants live up to the promise of their LEED certification—and those that don’t should lose their subsidy.”

I don’t really know enough about LEED to have an opinion, but I did find the argument compelling. I’ll throw it out to all of you: what do you think?

I was on vacation for a few days last week and spent some time cruising around Southern California. I had been there before but always had a destination and a reason in mind, and never really took any time to explore beyond my immediate destination.

This time, though, I had some free time to relax and soak it all in. Looking back on it, it’s amazing how much material handling I saw, really in every way. Traveling around Long Beach, i saw the port filled with huge barges loaded with hundreds of shipping containers. I saw cranes and hoists being used to unload those ships.

I saw forklifts in action, at every size business, from a tattoo parlor in Venice Beach using a truck to unload what looked to be large ink canisters, to the Hollywood Walk of Fame using one to haul some new granite for a new sidewalk star (I think it was Russell Crowe’s), to a shipyard in San Diego.

I saw industrial storage rack in the place where we picked up our rental car, and I saw conveyors both at the airport and at a cruise ship boarding station we rode our bikes past.

Most people don’t know it, but material handling is everywhere! Making that awareness more prevalent is the purpose of MHEDA’s Industry Advocacy committee, and the good news is, they have a lot of material to work with. Even on vacation, I can’t escape it!

Over the weekend, we passed the official first day of Spring (March 20). In addition to the long-awaited warmer weather and longer days, that also means it’s time for the Spring issue of The MHEDA Journal. It won’t be distributed until April 15, but we’re wrapping up production in the next few days and it’s fresh in my head.

This issue takes MHEDA’s Convention theme, “The Rules Have Changed” and runs with it. Eight distributors give in-depth descriptions of things they’re doing at their companies to illustrate how the Rules Have Changed and how they’re responding.

Bill Rowan of Sunbelt Industrial Trucks (Dallas, TX) talks about the tighter credit policies he’s implemented. Ken MacDonald of M&G Materials Handling (East Providence, RI) discusses the lean initiatives he’s installed at his company. Audie Burgan of J.M. Equipment (Manteca, CA) explains why they’ve decided to move into a larger facility in this economic environment. 

These are only a few of the headlines…keep reading the blog up through publication day to find out more ways that MHEDA Distributors are changing the standard rules of business.

In the next issue of The MHEDA Journal, we feature several articles from speakers at the upcoming MHEDA Convention (May 1-5 in Marco Island, FL). One such article is from MHEDA Member Barry Lauterwasser, president of Symbion Marketing, who has some interesting ideas about promoting of small distribution companies. Lauterwasser previously worked at a forklift distributor before venturing out on his own, and has some pretty interesting ideas about how to market a small business.

He says:

Often times, promotion has been viewed as an expense—some would say, “I spent $5,000 on a direct mail program and nothing happened.” That’s the equivalent of spending a day in the gym and assuming exercise is a waste of time because you didn’t lose weight. Products in our business are bought, not sold. You have to be there when a product or service is needed, or at least close to being needed. No one buys a lift truck simply because you have it on sale. There has to be a need for one, and if you’re continually pounding your messages home, you are much more likely to get that call, that opportunity, once the need arises (the payback).

To me, this was interesting. “Nobody buys a lift truck just because you have it on sale.” I’m guessing the same is true with any similar large capital investment, i.e. a conveyor system or large racking installation. That’s why marketing is more important than ever. You want to be on the tip of the buyer’s tongue as the go-to provider of a certain product.

Over the years, I’ve talked to many distributors who struggle with this issue. What is the right marketing mix? How much should they spend? What media is the best? What’s a good ROI? I certainly don’t know the answers to these questions, but you can find out at the MHEDA Convention.

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?

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?

As I prepare our Annual Industry Forecast article (which will be released in print and online on January 15), I’ve been talking to a host of material handling equipment distributors. Even though they aren’t predicting a robust recovery, they have outlined a few places where they see opportunity.

Scott Lee, president of engineered systems integrator Conveyor Solutions (Schaumburg, IL) and a director on the MHEDA Board, outlined some when I spoke to him a few days ago. In talking about some recent quoting and a general pick-up in activity, he said:

“It’s weird out there because it’s not these big, new projects where people are expanding. It is actually a lot of consolidation work that companies are doing to stay afloat and reduce resources. They’re reducing the number of facilities, so it creates opportunities for us to help them. Plus, I also think it’s a lot of end-of-the-year money too. People who may not have done as bad as they planned to are saying, ‘Let’s consolidate these two buildings and get this done for next year.’”

Scott didn’t make a solid prediction for next year, but was glad to report an uptick in business lately. As I hash through more information and distributor comments, I’ll keep posting updates of what I learn.

Any of you out there with any predictions for next year, feel free to leave a comment and let me know!

In our daily quest for material handling news headlines, myself and a number of my colleagues subscribe to a service called Google Alerts, which sends links to all kinds of news stories about a particular term. One that has been cropping up a lot lately is “distribution center.”

• United Natural Foods plans Texas distribution center
• Andes International Establishes East Coast Warehouse 
• Home Depot adds new distribution center in Topeka
• Fujifilm to expand Greenwood County distribution center

These are only a few that have come in over the last week or so. Is that an indication of new business out there?

It would seem so. Such news items have been coming in more frequently than in quite some time. Distributors, there is hope! Maybe things are turning around after all. I’ll know more about your outlooks as I continue to compile the 2010 Industry Forecast for The MHEDA Journal.

Let me know what you think!