Automation: It’s all about the software
SI Handling's acquisition of Innovative Automation highlights a trend
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Two years ago, I attended a meeting of Hytrol distributors in Little Rock. At heart, these were conveyor and equipment guys. Yet, two of the best presentations were about warehouse and equipment control systems. It highlighted how our industry has been changing in recent years from one focused on equipment to one focused on solutions. Increasingly, software is the glue that holds systems together.
That fact was certainly in evidence at ProMat last January. There, every major systems integrator was highlighting its software capabilities. It was also underscored by Intelligrated’s purchase of Knighted, a provider of warehouse management and control software systems.
Less noticed was the acquisition of Innovative Automation by SI Systems announced last month. But, the acquisition continues that same emphasis on software over hardware, according to Larry Strayhorn, who became SI Systems’ president and CEO last August. “Hardware has become commoditized,” Strayhorn said to me recently. “Software is the differentiator in the market.”
Software may also be the vehicle to reintroduce the market to SI Systems. Founded in the 1950’s, SI has primarily been known as an equipment company with a specialty in conveyor, tow line vehicles and wire-guided AGVs for automotive and other synchronous manufacturing industries. Big solutions for heavy industry. A decade or so ago, SI diversified into the distribution market. But, as with its manufacturing base, it was a product-based company specializing in A-frames. There were – and are – markets for all of those products, but they aren’t where the action is these days. “The software market is dominated by the big OEMs and the mid-tier consulting and integration companies,” Strayhorn said. That dominance, he added, has put smaller distributors and integrators without strong software offerings at a disadvantage. They either avoid jobs that require a lot of software integration, or play a minor role.
As Stayhorn looked at the market, he saw that disadvantage as an opportunity. “We have great manufacturing clients and there are still new opportunities that we will pursue,” he said. “But as I talked to the mid-tier distributors and integrators, they said that if they had a WMS/WCS product that allowed them to compete, they could go to market differently.”
That, in turn, led to Strayhorn’s acquisition of Innovative Automation, a San Diego software provider with WMS and WCS capabilities. “They have largely flown under the radar, but their first project was for a large consumer products company,” Strayhorn said. “It was very big, very complex and highly-automated. It was very successful.”
With the acquisition, Strayhorn added, SI plans to offer software capabilities to the mid market that has largely felt underserved. “The real strategy is to recreate SI Systems as a contemporary materials handling company with the products and the technology to meet today’s business model,” he said.
About the AuthorBob Trebilcock Bob Trebilcock, editorial director, has covered materials handling, technology, logistics and supply chain topics for nearly 30 years. In addition to Supply Chain Management Review, he is also Executive Editor of Modern Materials Handling. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.
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