Monday, March 16, 2009
By Benoit Montreuil, President 2008-2009
College Industry Council on Material Handling Education
Every member of the Material Handling and Logistics (MH&L) industry is continually struggling with the challenge of convincing their potential clients of the value provided by investments in material handling and logistics technologies, solutions, and services. Many seek attention and recognition from C-level executives to consider material handling and logistic investments as strategic for their organization and worth the significant financial effort required for their implementation.
The industry is traditionally strong at dealing with two types of requests from the user community. One, can you help us reduce our material handling and logistics costs? Two, can you help us solve this material handling and logistic problem or nightmare? The knowledge, the sales and engineering resources, the tools, the products and the processes are in place to answer such requests and develop offers to clients that will deal with it. This is business as usual in the industry.
The real problem is that this is not enough anymore. It is built on three premises which are seriously shaken:
- Minimizing costs is a top strategic issue. Even in the hard economic turmoil we are currently in, cost reduction is often not a strong enough measure for survival and prosperity.
- Executives understand that investment in MH&L technology will help significantly in this strategic cost reduction quest. Even when cost reduction is strategic, it is far from true that material handling and logistics will be highlighted as a top candidate area for targeting strategic cost minimization efforts. For example, offshoring and outsourcing will be considered well before.
- Engineers and managers in the client companies are capable and willing to identify significant MH&L problems and to push their importance and fight for investments in solving them. Companies are facing a ton of problems, each crying for strategic attention and investment. The vast majority of them are kept at the tactical and engineering levels, many remain unsolved, or patchwork solutions are implemented. Only a few successfully justify C-level attention and big bucks. Even more fundamental is the fact that problem significance is relative and often dependent on strategic intent. Previous problems may fade away when business moves in a different direction.
The key for survival and prosperity of both MH&L industry players and their clients is the ability to adapt to the new rules of the game through combinations of product/service innovation, process innovation, and business model innovation. It involves how to help them become faster, leaner and more agile, resilient, collaborative, innovative and environment friendly, as best fit their situation and strategic intent. It requires thinking out of the box, often enlarging the scope of thinking to encompass their demand and supply chain. Most important it requires deeper understanding of the client’s business drivers, strategy and model, with the goal of offering and delivering outstanding business value propositions to clients.
Yet this is not a one-way street. Clients must learn the enabling power of MH&L innovation, moving beyond technicalities and functionalities and toward capabilities. Differentiating capabilities enables business leaders to explore and implement business models that sustainably position their company in sweet high value spots in their ecosystem.
This is a tough assignment for tough times and an exciting assignment for exciting times. Companies face such an assignment on an individual basis. The industry also faces such an assignment on a collective basis. The overall community, including academia, also has to tackle it.
The College Industry Council on Material Handling Education (CICMHE) is attempting to make its contribution. The main targets are business and engineering schools. For the former, the goal is to embed MH&L content in supply chain management and business strategy courses, educating MBAs on the enabling value of MH&L innovation.
For the latter, the goal is to broaden the engineering perspective of designers of material handling systems, facilities, logistic networks and supply chains, to emphasize the alignment with and enabling of business strategies and business model innovations.
This involves the development of in-depth revealing and engaging case studies, the catalyzing of research merging the engineering and business perspectives, the development of high-impact, high-value course material, and their promotion and dissemination through the academic community.
This is a tough yet exciting assignment. Your help is highly welcome, whether you are a user, a vendor, a consultant, an integrator, or an academic.
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