Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.
By their own account, conveyor buyers are a pretty demanding bunch. When asked in a recent survey whether they were looking for speed, reliability, safety features or quiet operation, their answer was, in a word, yes. It's safe to assume that this isn't a population that's been agonizing over the tradeoffs between, say, speed and noise levels; the DC VELOCITY readers who answered the survey, which was conducted online last fall, have simply decided they want it all.
Not only do they want it all, but they also want it at a low price. When asked to rank various conveyor selection criteria, the survey respondents put purchase price and return on investment (ROI) near the top of the list, behind only reliability and functionality. (See chart.) Bill Hawthorne, vice president of conveyor manufacturer Hytrol, summarizes the situation this way: "Customers want equipment that will run faster and last longer—and not cost an arm and a leg."
Vendors tighten their belts
Those demands are putting the squeeze on conveyor manufacturers, which are already feeling the pinch of rising manufacturing costs and mounting research and development expenses. But in a market where competition remains fierce, buyers have little incentive to scale back their demands. "It is very definitely a buyers' market," says Leon Kirschner, president of TGW-ERMANCO, a material handling components and systems manufacturer. "There is substantial overcapacity in the conveyor world. It seems as though people who buy conveyors are able to demand more than they ever have in the past. There is a tremendous amount of price pressure."
At the same time, the demands on performance are escalating, Kirschner says. "We are scrambling to make equipment that is quieter and faster with greater throughput. Safety is a big issue. Another big issue is ergonomics." Customers, he says, want equipment that reduces lifting and other stresses that can lead to workers compensation claims. "Companies like ours have to be more innovative and have to outengineer the competition rather than trying to out-price the competition."
The continuing pressure to provide better, safer and more reliable equipment at a lower cost has led some manufacturers to take a closer look at their own manufacturing systems. Hytrol, a large conveyor maker based in Arkansas, is a good example. The company has rolled out a program for implementing lean principles in all of its operations.
"We've gone into a full-blown lean manufacturing mode to be more efficient, to get product out the door faster, but at the same time maintain quality," says Hawthorne.
Focus on total cost
Though price is never far from buyers' minds, manufacturers say some customers take a more enlightened view of it than others. Kirschner, for example, divides conveyor buyers into a couple of camps. "There are two types of customers," he says. "There's the sophisticated customer who thinks about the total cost of ownership and the less sophisticated customer who is not concerned about total cost, who says, 'Let's get an auction going.'"
But that may be starting to change. Several vendors report that they're encountering the auction mentality less often than they once did. Tim Kraus, a conveyor product manager at FKI Logistex, a large material handling equipment manufacturer, says he's seen more emphasis on total cost of ownership in recent years. "We see a shift away from purchase price toward total cost of ownership," he says. "Purchase price is important, but there is more emphasis on durability, mean time to repair, ease of maintenance, and reliability of the equipment. There is more emphasis on ongoing maintenance and how to minimize it."
Bill Hawthorne of Hytrol agrees. "Customers are becoming smarter about conveyors," he says. "They understand that speed has a lot to do with wear and tear and that you need the best components. They are looking for throughput. That's a big difference [from] the commodity buyer."
Kraus adds that he's also noticed a trend among buyers to approach suppliers with requests for a solution to a specific problem rather than requests for a particular piece of equipment. "They are not coming to us saying they need a belt-driven accumulator with photo eye sensors," he says. "They are coming to us with a problem and asking us to come up with a solution, keeping in mind the total cost of ownership."
Less is more
But that emphasis on total cost of ownership is also creating engineering challenges for manufacturers. Kraus, for example, says his company is constantly working to find ways to cut down on repair times and extend maintenance intervals. "The feedback from some large DCs," he says, "is they don't want preventive maintenance scheduled for any less than 60 days."
For a manufacturer, that translates to a demand to develop more rugged and reliable components with fewer moving parts. "We're trying to get away from chain and oil or anything that needs to have the tension continually rechecked," says Kraus. At the same time, he says, the company's engineers continue to work on ways to lock in photo eye alignment and maintain belt tracking.
Del Deur, manager of design engineering for TGW-ERMANCO, says his company is taking the same tack. "We are working toward simplicity," says Deur. "Fewer moving parts means a conveyor with higher reliability and one that is quieter. Our number one priority is to get the number of parts down. That is the vision. Simplicity is the way to go, but it is easier said than done." He explains that reliability is a particular concern for smaller DCs that have no maintenance staff.
TGW-ERMANCO Vice President Gordon Hellberg adds that reducing the number of moving parts also offers savings in installation and power usage and means lower repair costs.
At the same time, the need for flexibility in DC operations resulting from the development of agile supply chains has presented manufacturers with an additional challenge. Conveyor makers report that they're fielding more and more requests from buyers who want equipment that's easy to reconfigure as their operations change gears. "More of our customers are classifying themselves as having the potential for reconfiguration," Kraus says. "In that respect, we're trying to make things as modular as possible so that components can be unbolted and reconfigured."
They want it now!
If today's conveyor buyers have become more demanding, manufacturers say they've also become less patient. They expect fast turnaround on their orders, which creates additional headaches for equipment makers. "Our system delivery lead times are getting shorter and shorter every day," Kraus says. "Large systems used to have a turnaround measured in months. Now it's measured in weeks." That makes it tough for manufacturers to balance the work flow in their plants, he explains. "It becomes more difficult if we have several big jobs going on at the same time."
Hawthorne says that in response to the demands for fast cycle times, Hytrol now pledges to get its standard equipment out the door within four weeks of an order or it will pay the freight costs. The company is now looking to expand the program beyond its standard equipment, he adds. "We're pushing to even get our engineered products out the door faster."
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.