Adding Value Begins at Home

April 1, 2004
Testing and applying successful business principles to your own company can help you add value to your customers’ business, too.

Each year the editors of Material Handling Management solicit names of Material Handling Equipment Distributors Association (MHEDA) members who demonstrate exceptional skill in adding value to clients’ businesses. We review the list of candidates and select one company we feel best exemplifies the term value-added. This year’s winner is Advanced Handling Systems of Lakeland, Florida.

During the recent economic downturn, Jack Phelan and the team from Advanced Handling Systems opted not to participate in the slump. In fact, the company did just the opposite. It constructed a new building, added staff to be better positioned for growth in the next couple of years and, all the while, made sure it had fun along the way. In other words, it applied processes and policies to its own business that it uses to add value to its customers’ businesses.

Phelan recalls those turbulent days of a few years ago as storm clouds gathering on the horizon. With a grin, a shake of his head and a certain amount of relief in his voice, Phelan, president of the company he purchased 11 years ago, says, "We decided the way to get through the recession was to take our people and work like we were a significantly larger organization!"

When you enter AHS’ newly built design center in Lakeland, you quickly sense that ethereal thing called "team spirit" running throughout the company. The vaulted ceiling of the open office area floods workstations with natural light, making for a welcoming work atmosphere. Interestingly, the workstations are arranged in the same lines of flow the business follows: from sales to planning to project management.

A large part of the program to make the organization more efficient and effective involved sacrifice on everyone’s part. When asked to come in an hour or two early every day, and stay an hour or so after normal hours, everyone signed on.

Phelan’s philosophy for adding value is as simple as it is complicated. You first have to understand what issues the customer has before you can determine the solution. And you have to be mindful of your limitations. You don’t take on work you aren’t capable of completing.

Phelan calls it "identifying your zebra." If you go into the wild looking for zebras, you know specifically what you’re after. You can’t mistake any other animal for a zebra.

"Our process," explains Scott Tappan, chief operating officer, "involves crystallizing what the customer’s issues are. It allows the customer to work with us in identifying the importance of each issue and to find the right solution."

Rather than give the customer several cost options as a solution, AHS ranks the problems the customer wants to solve, inherently giving different budget constraints. "It’s not about right or wrong solutions, or finding the lowest-cost solution," says Tappan. "It’s about which problems the customer wants to solve. We define, early on in the process, what the most critical items are."

Using all the tools

The AHS process engages principals at all levels within the customer’s business and AHS. This can be a time- and money-saving way to do business. "Rather than deal with one person or department at the client’s business, who then has to translate the information to others," explains Phelan, "we insist on peer-to-peer meetings and working sessions to shorten the time frame of the project and make sure we are addressing all the issues. It is this proven process that guarantees success." Phelan adds, "Many innovative companies are recognizing the pitfalls of the traditional purchasing process and utilizing what is known as the design/build process for things such as construction and material handlingsolutions."

Tappan says most of the customers have a working knowledge of material handling procedures; however, the knowledge of what’s current is changing fast. They might know where they want to go, he says, they just don’t always know how to get there. And while customers’ questions seem to be about material handling, they are often about cultural and organizational changes, too.

Tappan then makes an interesting observation about material handling managers: "Many people we work with are now beginning to recognize that what we do for them can further their careers. They want to be successful and we want to make them successful."

Begin at the beginning

The questionnaire AHS begins any project with runs 50 to 60 pages. On top of that, Phelan says, they have the "legal pad" questions — queries specific to that business. "From responses to the questions," he says, "we’re able to leverage our knowledge of all industries and apply the appropriate equipment and controls solutions."

Tappan adds that the customer has to trust in AHS’ ability to make the right decision, not just prescribe the same solution that others within that particular industry use to do the job. "We strive to give our customers an economic advantage over the competition and you can’t accomplish that by using the same process that everyone else in their industry uses," he says. That is why each member of AHS’ design engineering team is active in many of the equipment manufacturers, as well as industry, training activities. This ensures that the solutions the team creates are state-of-the-art.

Phelan notes that the road to success, for the customer and AHS requires that both parties share knowledge of their respective industries. "Together," says Phelan, "we find the right solution, which is why the design/build process is so important."

The consequence of not sharing industry-specific information is that the customer just gets a myriad of equipment and probably not the proper application of that equipment.

Leta Cherry, director of marketing, says while the questionnaire approach might seem long and drawn out, in the end, the process does away with frequent changes once the project begins. "The project has to be thoroughly thought out and planned" she says. "It’s really about educating the customer and letting it make the educated decisions."

Adding value

Phelan says the way AHS adds value to the customer’s business is through a needs analysis that helps the customer understand what its problems are and how it can come up with the right solution across its entire organization.

"We have to be concerned about the customer after the project is finished," he adds, "so serving the customer after the system is installed is all part of the solution process."

AHS is an early adopter in the industry of using customer relationship management software, primarily as a communication tool, says Tappan. "If a customer voices an issue," he explains, "it is logged in and our customer service manager follows through until the issue is resolved."

Phelan sees the role of the material handling equipment distributor changing and evolving more toward the AHS model and beyond. "It’s not something that happens overnight and it’s not something you can do for everyone," he says. "It’s about awareness, having a focus, getting the momentum going and continuing on the path."

Obviously you can’t do this without a heavy investment of time and resources. Phelan says there are a growing number of companies that want the services AHS offers, and recognize that solution-based design requires input from all levels of an organization, not just operations.

Cherry says the company continues to get better as it learns how to leverage new technology for the customer’s benefit. "We’ve learned how to use the Web as an information tool," she says, "and how to create Internet portals for our customers to find their own answers to questions."

She adds that in the material handling equipment distribution business, there are few success stories of selling products over the Web. Solutions to major problems still require interaction between seller and client.

While presence on the Web attracts customers, it also serves as a way for AHS to show its suppliers/partners what they are capable of. "We want the people we work with, or those who might want to work with us, to know what kind of an organization we are," says Cherry. Phelan notes that the Web has become a good recruiting tool for finding quality people to join the company.

The future for distributors

Distributor? Integrator? Solution provider? Today’s Material Handling Equipment Distributors Association members go by many different names. Whatever they’re called, says Phelan, they won’t be successful without an investment in the form of time and information from the customer. "In our business," he says, "it’s important to differentiate yourself from the competition, for both AHS and the customers that we serve. Our way has been to follow a design/build philosophy that has proven itself in other industries. Our process is one that allows us to develop trust with the customer and with our equipment partners. As an industry, we need to educate our peers about what it is we do so that we can be involved in the [building] process as early on as possible." MHM

Adding Value Through Partnership

When it came time to expand its distribution services, this retailer turned to Advanced Handling Systems for help with the new technologies.

"The reality is," says Steve Knopik, president of Bealls, "that our store base was growing to a point that we were just out of space." He is referring to the expansion to more than 524 retail department stores across the Sunbelt from California to Florida.

Rapid growth forced the expansion of two distribution facilities and a revamping of the way Bealls managed the distribution of its merchandise to its Bealls stores and Bealls Outlet locations. Ultimately it chose to separate the distribution of Bealls stores and Bealls Outlet locations into two facilities totaling more than 900,000 square feet. The layouts were designed to handle both present and future needs for both chains of the department store business.

Bealls’ managers recognized that to expand and modify its distribution centers, they needed to review all aspects of the warehousing and distribution practices.

AHS adds value

Advanced Handling Systems (AHS) was brought in to ensure Bealls’ managers that they were looking at the newest picking and shipping technologies. The process began with a review of Bealls’ current processes with recommendations for equipment and technologies. Bealls measured its productivity rates and compared them against other industry leaders. The analysis allowed them to see where improvements were needed.

According to Knopik, "As we reviewed the new technologies, some of these things were just intuitive. Without using them, we would not be able to move our business to the next level."

One of the major material handling technologies Bealls selected is the use of voice-directed picking technology. Bealls already had RFDC technology in its production environments. It uses scanners on lift trucks to deliver information in real time.

Using voice-directed picking equipment was a complement to RFID. "We tested many different techniques," says Knopik. "We chose what made sense in our environment with our people and our kinds of products."

A key to the selection of voice-directed picking equipment was that wearing a headset and listening to commands guaranteed total focus by the workers on their tasks. Voice-directed picking requires little training, thus reducing the overall training time when bringing up a new system. Another benefit, says Knopik, is that language barriers are broken down. "The system allows the user to speak his or her own language as the basis for communication," he says. The user works through a tutorial and "teaches" the headset the necessary words. Then the system repeats the numbers and phrases back to the operator.

Since a key to success in material handling is information handling, one appeal of voice-directed picking is that it provides real-time information. Once the data is collected, stock levels and replenishment requirements are automatically updated to Bealls’ inventory management system.

Benefits of partnership

Bealls also looked at ways to ensure its building would be technologically advanced. Bill Simpson, vice president, distribution and transportation, assembled a team of support people who would guarantee the operations being designed would meet local and state codes. The implementation of 12 miles of conveying, sorting and picking equipment was a complicated task. Simpson’s team was charged with selecting a material handling systems integrator with the most experience in sophisticated systems.

"Ideally, you want to have one neck to choke," laughs Knopik. "You can hire many firms to implement these projects, but we have found that it is best to select a partner that has expertise at it all. If you use different players, you have the risk that one guy points fingers at another — and that can be very frustrating, costly and time consuming. We like to have a partner — not a vendor. A partner in these programs — one where they understand your objectives and are not afraid to suggest alternatives where it would enhance a particular activity."

He says a good give-and-take relationship is important to the overall success of any project. MHM

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