Is the systems supplier business changing?

By Staff -- Modern Materials Handling, 2/1/2007

The answer to that question is a qualified "yes" if recent moves by HK Systems ( www.hksystems.com) and FKI Logistex ( www.fkilogistex.com) are considered. As two of the largest suppliers of integrated materials handling systems, both discussed at ProMat 2007 new initiatives to expand their aftermarket service businesses.

HK's entry is called HK Production Logistics. Operating much like a third-party logistics provider, that enterprise will own and operate automated, high-volume logistics centers that manage inventory and kits for manufacturing companies.

John Splude, HK's CEO and chairman, says the first facility, which will be larger than 500,000 square feet, will open in early 2008. The contract, with an unnamed manufacturer, is for longer than 10 years.

"We're trying to grow our business in the aftermarket side to smooth out the revenue lumpiness of large installations," Splude adds. Already HK does upgrades and retrofits of existing systems as part of that business as well as long-term maintenance programs. The target, he says, is to have 50% of HK revenue in aftermarket service by 2008.

Meanwhile, FKI has a contract in Europe to supply parts to a company from an FKI owned and operated facility, says Steve Ackerman, president of FKI Logistex North America.

That facility is actually the pinnacle of a multi-stage program described by Ackerman as "total lifecycle support." At the program's base, "we are very anxious to move into full-service maintenance agreements that would make maintenance a fixed cost."

Another stage would be for FKI to have the contractual responsibility to operate automated materials handling equipment that it installed. Ackerman explains this removes the burden from end users to hire the right people to operate complex automated systems.

"The next step is for FKI to own the equipment, take over the operation and be paid on a per piece basis," Ackerman says. He then adds that this is "just experimental." "We're trying to be innovative in aftermarket service as we broaden our business," he says.