2011 State of Warehousing/DC Equipment and Technology Survey

The number of supply chain organizations planning to spend on materials handling equipment and technology is increasing; but after being in “survival mode” for so long, budgets are small and decision makers are still wary.

Webcast: Join Group Editorial Director Michael Levans, Executive Editor Bob Trebilcock, and materials handling equipment consultant Don Derewecki as they go deeper into the data gleaned form the 2011 survey results while tracking changes in the material handling market over the past year.

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By Maida Napolitano · March 1, 2011

Last December, Washington lawmakers wrote a small provision into the new 2011 tax law allowing businesses to fully write off productive capital investments in one year, instead of amortizing them, giving companies lower taxable incomes and essentially freeing up more money to spend on labor or expansion.

If the government gets its wish, this year businesses will stop putting off the purchase of automated sortation systems and lift trucks and spend, spend, spend. Well, it seems that this wish could in fact come true. 

According to the 2011 State of Warehouse/DC Equipment and Technology Survey conducted for Logistics Management and sister publication Modern Materials Handling in January by Peerless Media Research Group, significantly more respondents—36 percent versus 16 percent last year—are planning to increase their spending on materials handling solutions in the coming year versus the previous year.

And while this finding most certainly sets an optimistic tone for the report, there is some data that may slightly temper the industry’s enthusiasm. While more companies may be spending, the median amount each firm plans to spend over the next 18 months for both materials handling equipment and information systems solutions is just $77,000, or 8 percent lower than our 2010 findings when that number rang in at $84,000. 

“That’s the equivalent of two nice new lift trucks or one specialized truck like a turret truck,” says Don Derewecki, senior business consultant for TranSystems, a supply chain consulting firm. “With that level of investment you’re just making marginal improvements.  Only 12 percent of the respondents are planning to spend a million dollars or more; so, to me that says that only 12 percent say they’re doing something significant.”

SAVE THIS IMPORTANT WEBCAST DATE | Thursday, March 31, 2011 | 1:00 p.m. EST

Join Group Editorial Director Michael Levans, Executive Editor Bob Trebilcock, and materials handling equipment consultant Don Derewecki as they go deeper into the data gleaned form the 2011 survey results while tracking changes in the material handling market over the past year.

“The costs of the distribution and warehousing side of many supply chains have been so depressed over the past couple of years that there’s really not a lot of movement you can make,” says Scott Pribula, president of TranSystems’ management and supply chain consulting group. “If buying two lift trucks is your budget, then that’s just attrition to me. You’re not really moving into the next level of efficiencies.”

In fact, a sense of caution remains with 78 percent of our 2011 respondents saying that they’re proceeding slowly until the economy becomes more stable. Most are keeping spending dollars to a minimum and only for those purchases critical to sustain ongoing business.

However, these findings are just the tip of the iceberg. Over the next few pages we’ll go deeper into the data gleaned from the 2011 survey results while tracking changes in the materials handling market over the past year. We’ll examine current utilization rates of manufacturing and warehousing facilities, zoom in on specific areas that warehouse and distribution managers are planning to invest, track which best practices are gaining importance, identify green initiatives currently in use, and explore how they’re currently making materials handling purchase decisions.

Questionnaires were e-mailed to readers yielding 463 total respondents, mostly from manufacturing companies with revenues ranging from large (35 percent have sales of $100 million or more) to small (16 percent are under $5 million). Only those responses from management and personnel directly involved in the purchase decision process of material handling solutions were considered.

With such a broad representation of respondents, this is a great opportunity to gauge how plans for your warehouse/DC equipment and technology investment match up with those of your peers across the country. Here’s what we found.

Page 1 of 2 pages 1 2 >

About the Author

Maida Napolitano
Maida Napolitano has worked as a Senior Engineer for various consulting companies specializing in supply chain, logistics, and physical distribution since 1990. She’s is the principal author for the following publications: Using Modeling to Solve Warehousing Problems (WERC); Making the Move to Cross Docking (WERC); The Time, Space & Cost Guide to Better Warehouse Design (Distribution Group); and Pick This! A Compendium of Piece-Pick Process Alternatives (WERC). She has worked for clients in the food, health care, retail, chemical, manufacturing and cosmetics industries, primarily in the field of facility layout and planning, simulation, ergonomics, and statistic analysis. She holds BS and MS degrees in Industrial Engineering from the University of the Philippines and the New Jersey Institute of Technology, respectively. She can be reached at [email protected]

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