As the economy continues to improve many companies we interview are starting to give serious thought to upgrading their operations. They recognize that equipment and system control technologies have advanced allowing new systems to run more efficiently while yielding higher levels of performance and throughput.

Material handling systems install over a decade ago are not going to be as robust as a newly designed system. However, much of the new technology, such as Warehouse Control Systems (WCS), can be adapted to existing operations. This is especially true for picking and sorting operations. But, how does a company with an older DC operation know where to begin the upgrading process?

Often the most difficult part is deciding on how to get started. Should you hire an independent consulting firm to audit your operation, analyze data, and make recommendations? That would most likely require capital approval, which at this initial stage may not be available. Perhaps, you already have a vision of what your upgraded operation should look like. If that is the case, should you invite a variety of vendors in to explore options and alternatives? Maybe, but that will surely consume lots of time (both yours and your staff), and can quickly turn into a “blood-in-the-water” feeding frenzy.

A Rare Example of Something for Nothing - Being Worth Something

It can take months or even years to champion even a modest DC project through all of the twists and turns on the road from initial idea stage to an approved and funded project. Unfortunately, this can be discouraging and lead to a dead end.

To keep that from happening, it can be very beneficial to arrange an informal collaborative relationship with a single firm that is willing to share their considerable design and budget pricing expertise in an effort to move the project forward. Still, providing project justification in the form of an ROI may not be available from the vendor within this type of informal arrangement.

It’s a pretty good bet that only materials handling manufacturers and large system vendors can “afford” to invest in this kind of unfunded development effort. They are more likely to consider this to be an essential part of the overall sales process much like other forms of marketing and promotion. But, even they have to be careful not to chase after too many “rainbows”.

Why would they consider doing this? Because it is in their best interest to keep a viable project alive, while building a strong customer relationships and gaining insight into the real needs and internal dynamics of the prospect company. And (they certainly hope), get some preferential treatment for their efforts when the system vendor is finally chosen, or at least “win the ties.”

Consultants, who make money only from selling their time, obviously can’t afford to invest the kind of effort that a large equipment/system vendor can. They would say “you get what you pay for,” and they are generally right.

Still, especially in times like these, a vendor collaboration option may be worth considering, especially if funding for independent consulting help is not currently available.

There are limits to the time and effort, of course. And, the skill of the people you may engage with for this help varies widely.

As a potential buyer this “freebie” has both risks and rewards:

• The quality and validity of the vendor’s proposal will be based on questions they ask and answers you provide. You are responsible for your answers. They will probably not spend much time, if any, probing for more detailed information, especially during the “getting acquainted stage”. There is some risk that your assumptions of problems will be treated as fact.
• The vendor may offer more than one proposed solution at different price points. While this is good, they will all be based on the application of equipment and services available in the vendor’s tool box, which may or may not be your best choice.
• The vendor account manager (salesperson) has a vested interest in seeing this through to a successful conclusion and will therefore be doing whatever is appropriate to promote the project, including setting up site visits to see the proposed equipment and/or similar systems in operation. This effort will keep the project alive even when your focus may be diverted.
• Having going through this process you will gain insight and a broader understand of your specific operational issues and possible solutions. This, plus the concept drawings and budget proposal provided by the vendor, are very valuable building blocks regardless of whether you proceed with the project or not.

Hopefully, eventually your project will be approved. If at that point you have concerns relative to the solutions proposed by the vendor, and/or require independent justification, you always have the option of hiring a consultant or industry expert to evaluate and advise you. At lease up to that point, your project has advanced at little out of pocket cost to your company.

Final Thoughts

A DC project that never gets off the ground is a lost opportunity for the company, potential providers of the solution, and perhaps in the broader view, the supply chain in general.

Material Handling equipment and system vendors have a substantial interest in getting viable projects through the approval process. By freely assisting in that process, the vendor is in a sense willing to gambling that it will have gained favor when it comes time to close the deal, at the same time knowing that this can take months, even years to play out, eventually leading to a go/no-go decision. It’s a high stakes game as the project may never be approved, or in the end lost to a competitor. But right now, with volumes still down for most Material Handling vendors, more should be willing to take that chance.

Agree or disagree with Holste's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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