Are you ready to reset your supply chain?
I’m in Park City, Utah this week for Supply Chain Reset, the logistics conference that HK Systems – now, officially part of Dematic – has been putting on for 25 years.
During this morning’s opening ceremonies, Mike Kotecki, senior VP of North American sales, asked a simple question of the 400 or so folks in the room: Who here plans on doing business this year like did business last year? The question, and the title of the conference, really goes to the heart of what all of us in the materials handling and logistics businesses are facing as we negotiate a still challenging business environment.
Business is trying to figure out new ways to do business. If we’re smart, or paranoid to use a phrase used by Kotecki, we’re all trying to reset our supply chains and figure out smarter and more profitable ways to manage our distribution centers, manufacturing plants and transportation networks. While the name of the conference was probably chosen months before the wheels were put in motion for Dematic to purchase HK Systems – a deal that closed last Friday – these two companies are also resetting the way they do business.
I’ll deal with the HK/Dematic acquisition first and write some observations from the first day of the conference later.
I had a chance to listen to Mike Gonzalez, HK’s president and CEO, and Roar Isaksen, the president and CEO of Dematic’s worldwide operations, during the opening ceremonies, and to talk to John Baysore, president of Dematic’s North American operations. All three talked about how the two companies complement one another; HK, for instance, has depth in pallet handling technologies for manufacturing and cold storage clients while Dematic is a leader in conveyor and sortation with depth in case, tote and each storage, picking and handling technologies. But they also touched on some new areas.
Isaksen, for instance, said he intends to boost Dematic’s R&D budget for software development, an area where both companies already have a lot to offer their customers. He also said that Dematic is establishing innovation teams to plot future developments; those teams will include an equal number of HK and Dematic personnel. “We want the best of the best from our North American operations,” said Isaksen.
He also believe that Dematic’s has a global presence will “transfer the knowledge basis across borders.”
That’s a theme that Baysore expanded on during a follow up conversation we had after the opening ceremony. “Many of our opportunities today are global,” he said. “Emerging countries like China are beginning to automate, although at generally lower levels of automation than we see in the U.S. and Europe.” Dematic can now offer both distribution and manufacturing solutions to end users in those companies; meanwhile, the combined companies will expand HK’s global reach, which was one of the goals Mike Gonzalez set out for HK at last year’s conference.
But Baysore pointed out another reason that a global presence is so important today. Many major consumer packaged goods manufacturers – the kinds of companies that may be ripe for an HK or Dematic solution – are still experiencing growth and expanding their facilities, but not in North America. Instead, they’re building out overseas to get closer to these new markets. “Those companies are going to move personnel around the world,” said Baysore. “If their materials handling and automation solutions look different in every country, they have a challenge for employees that transfer.”
The reverse is also true: a company that can implement and support a materials handling and automation solution on a global basis should have an advantage. And with a portfolio of solutions that can support manufacturing, distribution and logistics processes, the sum of the two companies should be larger than the competitive value of their individual parts.
Baysore’s last point is that on paper, at least, the combined companies should be more cost competitive. HK manufactures cranes and AGVs in the U.S.; until now, Dematic had to partner on AGVs and bring over cranes from Europe. Meanwhile, he said, “we should be able to increase our conveyor production in Grand Rapids. With better utilization of our facilities there, our costs should come down.”
By the way, to Kotecki’s question, no one in the audience expected to continue with business as usual. Maybe the supply chain reset is underway.