February 16, 2017

Market "transformation" to comprehensive productivity solutions drove Toyota Advanced Logistics Systems' creation, leader says

New unit will be separate from Toyota's equipment business but will seek synergies.

By Toby Gooley

The latest indication that the material handling industry is being dramatically reshaped by the explosive growth of e-commerce and omnichannel fulfillment came Feb. 2, when Toyota Industries Corp. (TICO) announced the launch of Toyota Advanced Logistics Solutions (TALS). The new division, which is separate from Toyota's existing forklift business, will sell integrated automation and productivity solutions to material handling and logistics markets in North America. To provide the foundation for that business, TICO acquired Indianapolis, Ind.-based systems integrator Bastian Solutions LLC. TICO said it plans to make further acquisitions in the near future.

Michael B. Romano has been named president and CEO of TALS. He begins his new role on April 3, resigning from his position as president and CEO of Chicago-based Associated Integrated Supply Chain Solutions. Associated is a lift truck dealer for The Raymond Corp., which is based in Greene, N.Y. Associated also provides other types of warehouse equipment; facility and distribution-network design; equipment optimization; labor-management engineering; systems integration; and aftermarket services. Romano will sell his majority ownership in Associated to Raymond, which is a minority stakeholder.

Toyota's decision to create TALS was inspired in part by Associated's 2013 acquisition of systems integrator Peach State Integrated Technologies, Romano said in an interview. Because Raymond is owned by Toyota, Associated has a longstanding relationship with the Japanese industrial giant.

"Toyota became interested in the drivers for that acquisition—the current and expected growth of e-commerce—combined with labor shortfalls," Romano said. "The distribution model needs to change to accommodate e-commerce, which is labor-intensive because you're handling eaches. But the labor force is not available for that, so many companies are looking to automate."

After researching market trends, Toyota agreed that a strategy similar to Associated's should be "a very important component of their own strategy," according to Romano. The 2016 acquisition of equipment provider and systems integrator Dematic by German forklift company Kion—which is number two in global forklift sales behind perennial top dog Toyota—"confirmed that what we did at Associated really had market credibility," he said.

Romano said more acquisitions will follow Bastian's, and that TALS "will not necessarily" compete with Associated and Peach State. One of his responsibilities, he added, is to "assess, organize, and then to align all current competencies in this space within the Toyota enterprise. We will take people who are doing [the kind of services TALS will provide] today and try to assimilate those competencies under the TALS umbrella," he said.

Asked what he considers to be TALS' principal competitive advantage, Romano cited its ability to provide comprehensive solutions that encompass everything from "front-end" consulting services (such as for workforce management) to aftermarket support for the equipment and systems that it implements. "We will rely on the strength of the Toyota enterprise to provide after-sales support," he said. "That is something no one else has."

On a more macro level, the shift from selling and servicing equipment to being a provider of comprehensive solutions "is a transformation I believe is needed to stay relevant," Romano said. To stay relevant in a dynamic segment, companies need to be "getting out ahead of the market" and providing value that customers will need in the future, as well as responding to current needs, he said.

Given Toyota's objective of being the number one player in every space it competes in, Romano said, he anticipates TALS will have the resources to grow and over time become the global leader in comprehensive material handling solutions.

About the Author

Toby Gooley
Senior Editor
Before joining DC VELOCITY and its sister publication, CSCMP's Supply Chain Quarterly, where she serves as Editor, Toby Gooley spent 20 years at Logistics Management covering international trade and transportation as Senior Editor and Managing Editor. Prior to that she was an export traffic manager for 10 years. She holds a B.A. in Asian Studies from Cornell University.

More articles by Toby Gooley

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