Cliff Holste, Materials Handling Editor

There is an interesting trend going on in the materials handling industry: major equipment OEMs, specifically in the conveyor industry, are increasingly taking on “systems integration” roles for major distribution automation projects and building strategies to make that an increasingly important part of their overall business mix.

This trend is most noticeable among major US-based conveyor manufacturers, such as Dematic, HK Systems, and Intelligrated. Hytrol, which sells exclusively through distribution channels rather than direct to end customers, at present cannot really pursue a direct systems integrator (SI) strategy

Accompanying this article is a link to the latest in our new series of analytic publications from SCDigest/Distribution Digest, which we call a Materials Handling Tech Notes, and which explores this subject in more detail. It can be downloaded here: Materials Handling Tech Note: The Materials Handling OEM as System Integrator: What you Need to Consider

In this article, we summarize key points from that Tech Note.

What is a Materials Handling Systems Integrator?

What is “systems integration” in the materials handling industry? We will define it as taking complete (or nearly complete) responsibility for system design, hardware selection, engineering, software support, and systems implementation.

That definition does not mean, of course, that users are not part of the system design and hardware/software system selection processes (budgets, if nothing else, have a huge impact on both these areas); it simply means that as opposed to most MHA system implementations, where there are many hands in the mix, one system provider has primary responsibility for design and total system success.

In our view, this specifically implies that the SI is not limited in equipment selection – the “universe” of available solutions, or close to it, should be open for inclusion in the final system design.

For that reason, the mantle of “systems integrator” role has traditionally been given in the industry not to manufacturers but to the layer of mostly non-manufacturing firms (examples: Fortna, Peach State Technologies, Tompkins Associates, WH Systems) that represent numerous manufacturers (though often these firms are not as independent in terms of equipment selection as customers may believe) and clearly position themselves as SIs.

The issue is further muddied by the fact that for what we might call material handling “sub-systems,” such as an Automated Storage and Retrieval Systems (AS/RS), many equipment manufacturers have for years taken nearly complete responsibility for systems integration.

Here, we are defining SIs in terms of taking responsibility for more complete DC systems that include more than just a single sub-system.

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OEMs are Increasingly Looking to be Complete SIs

The materials handling automation manufacturers best positioned to become SIs are the vendors most commonly associated with largeconveyor systems. Why? Because each of these companies (especially with the Intelligrated acquisition of FKI Logistex) brings a wide ranging set of materials handling technologies, and have the size and resources to pursue such a strategy.

In part, this is a desire to get closer to customers. It is also part of the general trend towards vendors of all sorts looking to "add more value" to a system sale.

It is also a reaction to the strategies of several European providers (e.g., SSI-Schaefer, Witron) with a growing US presence, have been using the SI approach in their home market for years, and are having some success pursuing the same strategies in North America.

Finally, the growth of Automated Case Picking (ACP) as a materials handling technology category is also a factor, as no one OEM will any time soon have the whole breadth of ACP technologies within their product portfolios. So, to be able to offer a full solution to custoemrs interested in ACP, they must be able to provide and integrate ACP solutions within a larger total DC project.

No one should expect, however, that a conveyor manufacturer acting as SI is going to use a competitor’s conveyor system or other basic equipment as part of the total system. Nevertheless, if an equipment OEM is going to position itself as a true SI, it absolutely must be willing to look at technologies and equipment that it does not currently manufacture as part of the total system design.

In a sense, there is a larger question of whether you should use an SI of any type to lead your project, but we will leave that subect for another day. In our full Tech Note, we provide a more detail set of recommendations to materials handling users about how to think about this trend and most effectively make the right decision for your company and project.

The real test will be if OEMs can truly take this independent approach with long-term customers with which they have a somewhat “captive” relationship. If you find an OEM that has demonstrated a true SI approach in that scenario, it increases the odds you will be served equally well.

The rise of automated case picking technologies over the next five years will make this question and decision an increasingly important one for MHA users.

We expect an increasing amount of true systems integration work to be performed by manufacturers over the next 2-3 years, but as is often the case – trust, but verify.

What is your take on the potential of equipment manufacturer as sysems integrator? What are the pros and cons? Let us know your thoughts at the Feedback button below.

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