Logistics News
By Cliff Holste
August 23, 2011
Logistics News: Conveyor Industry Sales Channels – Additional Content & Prospective from Industry Leaders
Additional Comments and Information Pertaining to Two Recently Published Articles
We received lots of positive feedback relative to the two articles recently published on “Conveyor Industry Sales Channels” and “Choosing Between OEMs and SIs”. For the most part, readers expressed their appreciation for the clear and concise explanation of the various sales channels and differentiation between them.
We receive two responses that provided both additional content and prospective. In order to further enhance the above referenced articles we have decided to publish those two responses here as follows:
From Eric Palotas, VP, Eastern Operations, Intelligrated (732) 302-2591
Please find below my comments on the above referenced article:
The major OEM’s (Intelligrated and Dematic) have regional operations in place, structured specifically to handle small to midsized projects (from $50K to $5M). These channels offer clients the opportunity to work directly with the OEM’s through operations that have been specifically architected to support this size/complexity of projects.
OEM regional operations are commonly configured typical to the Integrator model detailed in the article, yet offering all the deep pocket resources of the OEM. They are staffed to support clients’ needs from concepting through implementation, and in addition, commonly provide local customer service for installations within the APR.
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In short, the OEM regional operations offer all the products and services of the OEM (from Conveyor, Software, Sortation, Order Fulfillment Systems, etc.), in addition to the integration of third party system elements; providing for a solutions channel not identified in the article.
Thank you for the opportunity to offer input.
SCD’s comments:
OEMs who are competing with independent local distributors and SIs for conveyor projects starting at $50K is a relatively recent marketing and sales strategy that may offer additional procurement alternatives for some buyers with projects < $1 million. However, depending on how aggressively OEM regional operations pursue this level of direct business, it may have the opposite effect eventually reducing local completion. Still, OEMs do not have a lock on creative thinking, which when applied to system solutions, often trumps other presumed advantages.
For buyers looking for (3) competitive bids, they may wind-up with a bid from a distributor, an SI, and an OEM all proposing variations that utilize the same conveyor equipment. In a case like that - the OEM can’t lose.
From Gene Forte, CEO, Forte (513) 398-2800
I read with great interest the blog titled Logistics News: Understanding the Conveyor Industry’s Sales Channels Ecosystem and its Impact on Vendor Selection.
Many interesting points and observations were made about the evolution occurring within the distribution center segment of the supply chain industry and how original equipment manufacturers (OEMs), suppliers, integrators and consultants are all beginning to look alike. I would like to address a few of those observations.
Agnostic Approach – it seems logical to assume if an original equipment manufacturer (OEM) wants to become more of a systems integrator (SI), their advice will still be limited to the equipment type they produce, rather than what is the best solution for the customer. In much the same way as an architect recommends materials that best meet the design vision of the project, regardless of manufacturer, a truly unbiased consultant/SI also selects suppliers based on the best solution to a challenge, not simply the best solution offered by the manufacturer they represent. In some instances, certain OEM equipment solutions MAY NOT be appropriate for a specific operation, whether based upon equipment suitability, price, warranty, maintenance requirements, etc.
Simply put, a true consultant/SI represents the client, not any particular manufacturer or supplier.
Transparency – while most companies are driven by a genuine desire to do the right thing for their customers, another important consideration stems from the Sarbanes-Oxley Act of 2002. Sarbanes-Oxley regulations were developed in response to the high-profile cases involving corporations who violated the public’s trust. These scandals led to an outpouring for more transparency from companies and helped fuel the enactment of this bill.
This also led to the development of strict procurement procedures as an important function of the financial management and corporate governance of large companies. However, many sophisticated small and medium sized businesses have adopted this approach also. Essentially, the purpose of the procurement department is to know not only the total cost of a project, but exactly how their investment dollars will be deployed relative to all of the costs associated with the individual components that make up the total … and exactly who will be providing these products or services. They want (demand) competitive bidding and complete transparency.
Accountability – a true consultant/SI not only provides an unbiased recommendation supporting the best solution to a particular challenge, they also provide a single point of accountability for all of the pieces to the puzzle: conveyors, racks, shelving, installation, mezzanine, etc., along with making sure the various software packages work with each other. With many OEMs trying to become SIs, accountability is usually limited to the island of automation provided by a particular OEM, not all of the various systems
(disparate hardware-oriented solutions, supply chain execution software systems, etc.) that are required for any given facility-wide operation to be truly “integrated”.
Financing – while many providers of products and services operate with certain financial limitations and/or rely upon their allegiance to a particular manufacturer to assist with cash flow considerations, not all do. In fact, some are financially sound enough that they require no working line of credit or bank debt for working capital purposes.
Consultant/SI concept older than you think – in much the same way FORTE changed the industry 20 years ago by pioneering the design/build concept, 10 years ago FORTE saw the need for an agnostic approach that combined the best attributes of the design/build business model with the consultant model. The Consultant/SI practice that resulted from FORTE’s early vision and innovation is today regarded as the best approach by many of the fastest-growing, most successful companies in the world. In fact, this is evidenced by the adoption and growth of this business model throughout the industry as was so accurately reported by Supply Chain Digest.
Gene Forte, CEO
FORTE |
