Final thoughts from Supply Chain Advantage

By Bob Trebilcock, Executive Editor
September 12, 2012 - MMH Editorial

Let’s go out on a limb: I think the economy is improving. I say that despite the headwinds we all acknowledge, such as persistent unemployment, a continuing crisis in Europe, a potentially nuclear Iran, an election that’s too close to call and the impending fiscal cliff.

A reasonable person might ask: What the heck does this guy know? He was an English major. Fair enough. My wife and daughter would probably nod in agreement.

So why am I an optimist? For one, I’ve noticed that the dialogue among the analyst and professional investment community is changing. The other day on CNBC, one commentator pointed out that all of the headwinds I mentioned above have been plaguing the economy since 2008, and yet we continue to see incremental improvement. This morning, Ken Langone, a legendary investment banker, and Richard Grasso, the former head of the New York Stock Exchange, both opined that the economy has bottomed – they’re expecting a nice turn around beginning in the second half of 2013. That’s a time when many have been predicting the start of a double dip.

On Tuesday evening at Supply Chain Advantage in Park City, Steve Forbes, the editor of Forbes magazine and former Republican presidential candidate, acknowledged the tough times we have come through, but predicted good times ahead. The way Forbes sees it, our current situation is not the new normal. It’s an anomaly that will pass. He added that if five years from now he’s proven right, he’ll never let us forget and if he’s wrong, well, he’d blame it on the wine. Smart man.

What’s the view from the materials handling industry? I put that question to John Baysore, president and CEO of Dematic North America, at Dematic’s supply chain conference on Tuesday. For starts, Baysore says Dematic is planning for growth and not a recession. “We divide our business into three segments,” he said, outlining the degrees of automation a company may deploy, from simple pick-to-light or voice-pick solutions all the way up to complex integrated systems with multiple automation technologies. “We’re expecting growth in all three segments,” he said, “with the most significant growth in complex integrated systems.”

He pointed out that Dematic is increasing it’s R&D spending, especially in the development of software solutions and its portfolio of technologies.

More importantly, he noted that the materials handling industry, and not just Dematic’s business, is outpacing economic growth in all of the regions where Dematic does business. “In North America, GDP is growing at 1-1/2% a year and the industry is growing from 8-to12%,” Baysore said. “In Europe, our CEO believes the industry is growing at 4% a year. In South America, Brazil is an economy that has taken off. And in Asia, Australia is healthy and China is doing extremely well, as is Korea.”

Baysore attributes the industry’s growth to a number of dynamics, some of which are specific to certain geographies. In China, for instance, where wages are still relatively inexpensive, the need for accurate inventory and orders is driving automation. Here, manufacturing is automating to take labor out of the equation and get more competitive. In distribution, the e-commerce boom and the increase in each picking is driving the demand for labor saving innovation. “It’s just not practical to add hundreds of employees in a piece picking operation,” Baysore said. “More importantly, it’s difficult to find them. Labor availability is an issue.”

I agree with everything Baysore said. I am hearing similar insights from other executives in our industry. At the same time, as Steve Forbes suggested on Tuesday, I think good times are coming, slowly, inexorably and surely. And, hey, if I’m wrong, I can blame it on the wine. 


Get an unfair advantage
Monday marked the opening of Supply Chain Advantage, the annual logistics conference in Park City, Utah sponsored by Dematic.

 



About the Author

Bob Trebilcock
Executive Editor

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. More recently, Trebilcock became editorial director of Supply Chain Management Review. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. He can be reached at 603-357-0484.


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

FTR says both spot rates and contract rates are heading up in a full capacity environment and with the fall shipping season rapidly approaching, it explained conditions for shippers could further deteriorate.

Read how others are using Business Process Management to achieve ERP success with Microsoft Dynamics AX. Download the free white paper now.

Now that Congress has issued another highway funding Band-Aid – a $10.9 billion highway bill through next May that former Transportation Secretary Ray LaHood blasted as “totally inadequate” – what can we expect as the infamously do-nothing 113th Congress winds down in the next month before taking yet another recess to prep for the mid-term elections?

Seasonally-adjusted (SA) for-hire truck tonnage in July headed up 1.3 percent on the heels of a 0.8 percent increase in June. The ATA’s not seasonally-adjusted (NSA) index, which represents the change in tonnage actually hauled by fleets before any seasonal adjustment, was 133.3 in July, which outpaced June’s 132.3 by 0.8 percent, and was up 2.8 percent annually.

Volumes for the month of July at the Port of Long Beach (POLB) and the Port of Los Angeles (POLA) were mixed, according to data recently issued by the ports. Unlike May and June, which saw higher than usual seasonal volumes, due to the West Coast port labor situation, July was down as retailers had completed filling inventories for back-to-school shopping.

Article Topics

Blogs · Automation · All topics

About the Author

Bob Trebilcock, executive editor, has covered materials handling, technology and supply chain topics for Modern Materials Handling since 1984. A graduate of Bowling Green State University, Trebilcock lives in Keene, NH. Contact Bob Trebilcock.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA