The challenge in change…

Sometimes, when you’re wondering from stand to stand in the light of the halls in the NEC in Birmingham it is easy to forget that there is life beyond its four walls. Sometimes you pop on a stand and amid all the hoopla; branded workwear and impeccably shiny exhibits it is hard to place the actual equipment in a working warehouse.

Yet, I came away from IMHX – the once-every three years, now every two, intralogistics exhibition – taken aback by the evolution in the market. Intralogistics equipment isn’t actually being sold as equipment; it is a service. It is the kit; the software; the support and consultancy for your needs.

I hope this isn’t stating the obvious for some, but markets evolve at different rates.

During my career I’ve really on specialised in two sectors: B2B IT and UK road transport. These two markets are at very different ends of evolutionary stages.

Take printers in IT. You don’t just buy a printer and a cartridge anymore. You buy document management services. I was reporting on the sector as this model spread its way through desk-tops and lap-tops and servers and middleware and routers and security…. You name it. After the dotcom bubble burst in 2000 these businesses had to evolve to survive, and these services now dominate our lives as employees and consumers.

At the other end of the spectrum buying a commercial vehicle is a different proposition. Yes the market is evolving when it comes to the type of fuels used (electric and natural gas predominantly), but it wasn’t until last year that I saw any major world manufacturer of commercial vehicles talk about working with a customer on a consultative basis to find out about their operation and how an alternative fuel could benefit them. It is a market that still very much trades on the buy-a-bit-of-kit model.

So, with this background it was refreshing to see major players in the materials handling market talk about supplying a service to customers, that incorporates the ‘hardware’; software and consultancy. This should not be surprising, given the bespoke nature of many intralogistics projects. Each warehouse is different after all.

Yes, there are still spot purchases. The show was full of many different bits of kit that can be bolted on to an operation and they very much have a place. I was lucky enough to have dinner with a software company at the show, and we had a fascinating conversation about small and medium-sized businesses releasing funds to fundamentally change their supply chains. Sometimes all the arguments in the world about the long-term TCO of any [expensive] changes to warehouse management will not convince a finance director of the merits of spending a large amount of money at that very moment. They tinker around the edges and attempt to make savings where they can.

All of this means that selling on service is a challenge, as your dependant on a customer base willing to accept being sold a service. The world of logistics is so vast – from retail, to manufacturing, to automotive, to pharmaceuticals –suppliers are depending on customers evolving with them.

My conclusion? It is hard to point to the world of intralogistics as being on the stage of any business textbook evolutionary curve. Some suppliers are strategic partners, some just collect invoices for products delivered. Conventional thinking says that the supply chain is ‘ripe for disruption’ – but the market is so unique, with every customer on its own evolutionary path, that catch-all terms are rendered meaningless.