The Mheda Journal

As 2010 comes to a close, we at The MHEDA Journal are already trying to get a head start on 2011. We’re brainstorming article ideas and calling members to find out the hot topics that are out in our industry that we should be writing articles about. (The list isn’t complete yet and we’re updating it all the time, so if you have any topics that you think MHEDA Members would gain value in reading about, let me know by leaving a comment below.)

One idea I did find intriguing came from a manufacturer of overhead cranes who I spoke with last week. (I’ll withhold the name for now since he doesn’t know I’m talking about him.) The topic was also broached my some distributors in our 2011 Industry Forecast (coming soon – look for it in January!), so I’m pretty sure it’s worth discussing in further detail.

The gist of the topic is this: How has the role of a distributor changed in the end-user’s eyes as a result of the downturn? As the manufacturer I spoke with said, “From an end-user’s perspective, they’ve hired distributors to do stuff, but my observation is what they hire them for is different now than it was five or six years ago. I think distributors are getting sharper and clearer about what exactly their customers are hiring them for.

He continues, “If I’m a distributor salesperson, I am a consultant. If I called myself a consultant, you’d pay me an hourly fee. But I don’t get paid an hourly fee, what I get is a commission basically if you buy my idea. I see end-users that don’t really recognize it for that. They put mileage on distributors for ideas and then they take those ideas and shop them all over the place. It’s gotten to the point where some distributors say, ‘I’m not going to go out to XYZ customer and specify all the equipment and then get my price hammered down because it’s not worth my time.’ But I think the issue there is what an end-customer is really hiring a distributor to do and I think it’s different than before. I think that end-users are hiring distributors to do way more things than just sell equipment these days.”

What do you think? Has a distributor’s role changed? If so, in what way? As I mentioned, we touch on this topic in our upcoming Industry Forecast, but if I get some feedback, then maybe we can turn it into a longer article. Any help you can give is appreciated!

While I was getting ready for work this morning, I happened upon The Early Show on CBS. Their correspondent was in a FedEx distribution center with boxes whipping by on conveyors in the background. It’s rare that I remember statistics from stories like this, particularly at 7:30 in the morning, but for some reason the particulars of this story stuck with me.

Today is Monday, December 13. It is the Monday before the last weekend before Christmas, which historically is the day of the year on which more packages are shipped than on any other day. This year, according to The Early Show reporter, 16 million packages are expected to be shipped today, a 12% increase above last year. (I tried to find a video clip to make sure my groggy mind remembered these numbers correctly, but I was unable to find it.)

This is good news for material handlers for two reasons. One, if you supply or integrate for logistics companies like FedEx, UPS, the postal service, or basically any retailer, it’s going to be a busy couple of weeks. You may want to make yourself available as downtime will come at a high cost to such companies. Quick response and availability will go a long way to solidifying your relationships with such customers.

Two, the increase over last year seems to indicate a return of consumer spending and consumer confidence. Those are good signs for general economic recovery, something that we all can support and are all looking forward to.  I already touched on this subject in an earlier blog entry, but it seems worth noting again, particularly in light of the economic doldrums that we’ve all suffered through for the last few years. Any chance to point out good news, I’m taking the bait. Happy holidays, everyone!

When I spoke with a MHEDA Supplier/Associate member a few weeks ago, he expressed some interesting ideas for ways for distributors to make inroads into profitable industries within their territory. IN down times, he reasons, it’s a waste of resources to beat willy-nilly on doors to get sales because most people aren’t spending money. The key word there, he mentioned, is “most.” As in most people aren’t spending money but some people are.

For this person’s business, and for now let’s just refer to him as a provider of pallet rack systems, sales were still good within certain niches—food, beverage and pharmaceuticals. “If I was a distributor,” he says, “I would definitely make a sales plan by niche market.” In other words, focus your sales resources on those areas where people are still spending money. It seems like a pretty simple, straightforward idea, but he lamented that many distributors he knows of don’t approach it that way and he couldn’t figure out why.

Take the food and beverage industry for example. One distributor he knows of built a separate website specific to the work they have done in the food and beverage market, complete with customer testimonials, product and list of end-users who have seen success with their products. Market that website to other similar customers, he says, and that could be a pretty simple way to drive some more business.

He also floated the idea of a distributor holding a “lunch and learn” event for all the beverage distributors within a given territory, or attending or exhibiting at a beverage-industry-specific trade show. “I’m just not sure a lot of distributors and integrators are aware of these avenues,” he said.

It’s an interesting strategy. What do you think? Would that work for a distributor? I’m sure lots of people already do this, and I’d like to hear about it. Anybody out there tried it? Leave a comment with your examples and I’ll use some of your best suggestions in an article.

A feature in the October 2010 issue of The MHEDA Journal will focus on MHEDA member companies who are celebrating a milestone anniversary this year. We define a milestone as every 5th year, i.e. companies celebrating 5, 10, 15,… years in business. I’m looking forward to next week learning more about Cross Bros. Co., a 165-year-old distributor in Rochester, NY, that is the subject of this issue’s member profile. In the meantime, I’m collecting photos of other companies celebrating anniversaries this year. How does your company look different now than it did at its inception? How are you commemorating the occasion this year? We want to give you some publicity about your achievement. E-mail me at editor@themhedajournal.org to submit your anniversary photos.

One distributor celebrating its 60th anniversary is Rick Power at Power Machinery Center in Oxnard, CA. Check out the magazine for photos of the company’s original building in 1950. The company was founded by Rick’s father Bob, who at the time of his death in 2007 at 91 years young, still kept an office at the company. What a story! To get a similar story told about your anniversary company, submit your photos by August 20.

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?