Comfortable Handling isn’t Always Healthy

July 22, 2013
Investing only in what you know can make ROI a stranger.

Sometimes it seems companies aren’t much smarter about spending their money than consumers—particularly when it comes to self improvement. Take the process of getting lean, for example. Many weight-conscious consumers know it’s in their best interest to slim down, but when tough times hit they’re drawn more to comfort foods than items that will better address their needs. As a result, the wrong choice cancels out their good intentions.

According to a study performed by Vanson Bourne and commissioned by Intermec, companies have similar conflicts regarding their technology investments. They know they need to be more efficient if they’re going to meet the rising demand for same-day or next-day service, but they’re more likely to spend money on comfort technologies—solutions they’re familiar with—than those that are more, shall we say, cutting-edge. Here’s an example of such a mismatch from the study:

  • Overall, transport and logistics managers felt that a process re-engineering effort could improve efficiency levels by over 13%.
  • Despite this belief, over a third (39%) have failed to complete a process re-engineering effort in the last year.  (And nearly three quarters (72%) of these have not evaluated their existing processes for at least two years.)

It could be that existing systems were performing just fine and these respondents didn’t see the need to do anything heroic. They also might have been trained in a regime where re-engineering a material handling process is more about product flows than data flows. In such a regime, capital is spent on solutions where results can only be witnessed by the naked eye.

But as service demand from customers gets more sophisticated (i.e., the need for same-day delivery), so do the enabling technologies. Before you know it, customer demand is outpacing performance capacity.

I talked to Jeff Sibio, director of industry marketing for transportation & logistics at Intermec, about some of the conflicts in the findings of the study they commissioned, and he told me they were borne out in site visits he and his colleagues have made.

“We often find that a customer’s physical bits and pieces are in place because they’ve understood the physical nature of things for a long time,” he said. “The thing that was missing was the availability and accessibility of information, to make fast decisions and process transactions quickly. 77% of the respondents said information availability was one of their key driving factors.”

This deficit in the ability to process information has a detrimental effect on material handling systems. As a result, their physical flow capacity is underutilized because the information isn’t moving quickly enough. The conveyors in an automated sortation system might be running at 27% of their physical capacity because of sludgy information flow.  The user can’t get the information to the decision point quickly enough.

“If you’re working in an environment where you know you’re the physical limitation, you do things to automate the physical nature of things,” Sibio explained. “But if you do that to an extreme where you’ve optimized one portion of the process to where it’s limited by other portions, you can see where the physical could have been optimized but then becomes limited by the information flow.”

Return on investment is the ultimate comfort food—as long as you stay in the habit of updating the recipe.