Lucky '13

CHICAGO – A few days at the ProMat Show and Conference suggest that, at least for the material handling world, 2013 could be a pretty good year.

I also got some insight into what's top of mind for businesses looking for new conveyors, sortation equipment, lift trucks, and related technologies.

First, on the economy, executives from almost every company I spoke with—conveyor specialists, integrators, manufacturers of both complex systems and simple solutions—all remarked that they are looking forward to healthy growth on top of what was a good 2012. That suggests their customers are also optimistic.

I asked several if what they were seeing was the result of pent-up demand—spending that had been held back as a result of the recession, a slow recovery, fears of a weakening economy, and the tragicomic fiscal cliff imbroglio in Washington. The answer generally was that, yes, there was some of that, but they were also seeing customers expanding capacity in anticipation of growth.

The nature of those investments is also instructive. Time and time again, the material handling executives said much the same thing about the factors driving capital investment.

First is pressure businesses face to be in multiple channels. The brick-and-mortar retailers are rushing into the direct-to-consumer business. They face fierce competition from the e-commerce specialists and are responding as quickly as they can. And that means they need systems to fulfill direct-to-consumer orders in a swift and cost-efficient manner. They have to make decisions about whether to do that from DCs dedicated to direct-to-consumer or in facilities that serve their stores. Can it be done with a single inventory, or must they isolate retail and direct businesses from one another? There's no one answer, of course. Each company has to make its own careful calculation.

Another trend: Companies want to see if they can get more density into existing facilities and more productivity out of them—perhaps by revamping processes or retrofitting existing equipment. Make no mistake: There's plenty of greenfield development, too. But distribution pros are looking hard at making the most of what they have.

Sustainability is also on the agenda. The word is out that investing in sustainability is good for the bottom line and good for the business as well as for the environment.

Finally, there's this. Several executives told me that better distribution operations—efficient and reliable processes—are proving good for a business's top line. Whether it's in the B2B or B2C arena, customers respond to good service. We've known that for a long time, but it's always nice to have it confirmed by those who see it every day.