Beyond forklifts: Toyota enters brave new world of integrated fulfillment solutions

The Feb. 2 announcement by global forklift sales leader Toyota Industries Corp. (TICO) that it has created a new division to sell integrated automation and productivity solutions to material handling and logistics markets in North America, and acquired systems integrator Bastian Solutions LLC to provide the foundation for that business, has offered a glimpse into the future of a material handling industry rapidly being reshaped by the explosive growth of e-commerce and omnichannel fulfillment.

TICO, based in Kariya, Aichi Prefecture, Japan, said the formation of the new division, Toyota Advanced Logistics Solutions (TALS), responds to changing dynamics in the North American material handling market that have created "a permanent demand for new forms of logistics solutions, beyond forklifts." TALS and the forklift business will operate separately but will coordinate when strategically appropriate, TICO said. TICO also owns Toyota Material Handling North America (TMHNA), which encompasses Toyota Material Handling U.S.A., The Raymond Corp., and Toyota Industrial Equipment Manufacturing Inc.

Industry veteran Mike Romano was named president and CEO of the new division. Romano takes over on April 3, resigning from his current role as president and CEO of Chicago-based Associated Integrated Supply Chain Solutions. Romano comes with bona fides: Associated, a longtime Raymond dealer, also offers facility and distribution network design, equipment optimization, labor management engineering, lift truck fleet management, systems integration, and storage systems. In 2013, Associated acquired systems integrator Peach State Integrated Technologies.

Indianapolis-based Bastian, which has 20 North American locations, specializes in material handling automation, static and mobile robotics, warehouse execution and management software, and industrial controls. It counts the rapidly growing areas of e-commerce and omnichannel order fulfillment among its major focus areas. The company will retain its name and will continue to be led by CEO Bill Bastian II and President Aaron Jones.

The Bastian acquisition will allow TMHNA to provide a broad range of integrated services in fast-growing areas of demand not currently part of its core business of industrial equipment, serving customers "at a level we have never been able to do before," said Brett Wood, president and CEO of TMHNA, in an interview. "Bastian fit our strategy perfectly," he said, adding that the company's flexibility and expertise in industrial robotics and the development of software to control and manage material handling systems will provide a competitive advantage.

Wood also said a good "cultural fit" and previous experience with Bastian as a supplier of automation to Toyota's Columbus, Ind., forklift-manufacturing plant helped seal the deal.

TICO's strategy is similar to that of rival lift truck vendor Kion Group AG of Heusenstamm, Germany, which eight months ago paid $2.1 billion to buy Atlanta-based systems integrator Dematic Corp. At the time, Kion said it planned to become a "one-stop supplier for intelligent supply chain and automation solutions." Kion also acquired Dematic to position itself for the rapid growth of e-commerce fulfillment and for "Industry 4.0"—a European term for the application of the Internet of Things (IoT) to the industrial and logistics sectors.

In December, Kion said it would create a Supply Chain Solutions business unit comprising Dematic; Belgium's Egemin Automation, a provider of automated guided vehicles and other automation technologies which it acquired in 2015; and Retrotech, a U.S.-based systems integrator that specializes in warehouse automation and retrofits, which Kion acquired in 2016.

Honeywell International Inc.'s 2016 acquisition of the material handling automation supplier and systems integrator Intelligrated, considered to be Dematic's primary competitor, had similar goals. Mason, Ohio-based Intelligrated's warehouse execution system (WES) software and order fulfillment technologies will complement Honeywell's product lines in mobile computers, scanning and auto identification, and voice automation technology, Morris Plains, N.J.-based Honeywell said at the time.

Wood said in the interview that the impetus for all these acquisitions and the companies' end goals are similar. However, TICO's strategy differs in that Toyota is "not trying to integrate what they (Bastian) do into our existing business. ... We have created a brand-new organization with the specific intention of minimizing changes at their company," he said.

TICO plans to make more acquisitions or cement existing partnerships as it builds out the TALS division. That could include acquiring or collaborating with other systems integrators as well as software companies, Wood said. Additionally, Toyota's and Raymond's existing automation businesses, which largely focus on automated guided vehicles (AGVs) for manufacturing and warehouse environments, will move over to TALS, Wood said.

A newly formed "synergy committee" will look for other ways that Toyota, Raymond, and Bastian can collaborate, potentially including such areas as procurement, IT, administration, engineering, and process management, including sharing the famed Toyota Production System, widely known as "Lean," Wood said. He anticipates there will be opportunities for both Raymond and Toyota lift truck dealers to participate in the aftermarket area for automated material handling installations.

Wood said he expects more consolidation in the material handling segment. In addition to domestic match-ups, the rapid growth in North American demand for e-commerce fulfillment and integrated material handling solutions could also attract big players from Europe, China, and Japan that may seek to get into the integrated solutions market through partnerships and acquisitions, he said. Because the biggest systems integrators have already been acquired, attention may turn to smaller and medium-size integrators that may be ripe for partnerships, or possibly acquisitions, he said.

Wood said material handling is in for a wild ride over the next few years. Citing goods-to-person order fulfillment, "connected" lift trucks, and a proliferation of data-communication methods as examples of advances that have dramatically changed the field in recent years, he forecasts more changes to come. "Telematics and [material handling] technology over the next 10 years will be very different and will advance much faster than in the last 10 years. I'm convinced of that," he said.

Senior Editor Ben Ames contributed to this report.