If innovation were easy we wouldn’t need awards to recognize companies who participate in it. Yet here we are devoting significant coverage to four companies that impressed MH&L’s editors and its editorial advisory board for taking innovative and bold improvement measures in a time when standing pat was the safest option.
In better economic times more companies are willing to invest in technology, but that’s buying innovation, not being innovative. Buying technology can result in islands of automation, and those are rarely sustainable as the tides of business shift around them.
MH&L’s Innovators of 2011 partnered with technology vendors but they also partnered with their own company’s technology stakeholders to anticipate their own future state. But what are material handling system vendors and service providers doing to be better partners?
The viable ones are evolving toward a more integrated approach to automation. They’re looking for technology partners too—to fill talent and service gaps in their own enterprises. Mergers and acquisitions among complementary partners are proceeding at a rapid pace. Another business that’s growing along with this trend is facilitating such arrangements.
John Sidell, former principal of TranSystems, a logistics consulting firm, started New Course, LLC (www.newcoursellc.com) to help private equity firms find the right combinations of material handling and logistics talent among small to medium sized companies. He sees the material handling industry as one filled with ripe pickings for these firms.
“One of our clients is a $2 billion-plus material handling vendor engaging us to help them build out what will be their technology group,” Sidell says. “It will be game changing stuff if they can get their head around it in the next 12 months. It’s part of a trend. Five years from now there won’t be automation islands any more; there will be much deeper integration.”
The partners companies choose can inspire innovation. Sometimes it takes a third party to help you see problems and opportunities in your business that are hiding in plain sight. Maybe that’s why most of the major third-party logistics providers (3PLs) did so well last year when other businesses were still struggling to exit the recession. According to a recent survey of 3PLs conducted by Robert Lieb, professor of supply chain management at Northeastern University (www.northeastern.edu), and underwritten by Penske Logistics (www.penskelogistics.com), 88% of those companies surveyed in North America met or exceeded their revenue projections, as compared with only 50% in 2009.
“This year’s survey indicates the logistics industry has largely adjusted to the new economic realities and are now investing in growth,” says Joe Gallick, senior vice president of sales for Penske Logistics. “Today, logistics companies are better positioned to help serve their customers as catalysts for supply chain transformation and innovation, which ultimately drives their own growth prospects.”
Even one of the innovators we profile in this issue—Mark Whittaker of PLCI—became a 3PL, first for his own company, PepsiCo, then for his industry. He recognized unmet needs and built a business model around them.
His efforts during trying times in his company’s development turned out to be time well spent. So will yours be after reading about him and his fellow innovators.