Materials handling clockspeed

Clockspeed. If you're not familiar with the term, it was coined by Charles Fine, an MIT professor, to define rapidly evolving industries – those with a fast clock speed that he likened to fruit flies that are born, mature and expire in a very short time. He argued that “in business today, all advantage is temporary. In order to survive-let alone thrive-companies must be able to anticipate and adapt to change, or face rapid, brutal extinction.“

Based on my week at Promat in Chicago, I'd argue that the clockspeed of our industry has been accelerating in an unprecedented fashion over the last three to five years. As one industry veteran put it the other day, there was a ten-year period where we more or less saw many of the same products and solutions at show after show. Achievements were often a measure of speeds and feeds – the rate at which the equipment could move materials through a DC. This Promat, I had more conversations about algorithms and software, like the one I had with Dematic, than about the mechanical functionality of the equipment. At the 30,000 foot level, I break the industry developments down into three bullets.

New alliances: The biggest news in the last year of the industry has been the mergers and acquisitions of Retrotech, Egemin and Dematic by Kion; Intelligrated by Honeywell; and Toyota's acquisition of Bastian and Vanderlande. But it doesn't stop there. Yesterday's Wall Street Journal reported that “Plug Power granted Amazon the right to buy up to 20 percent of its shares” based on meeting contract goals. While Kion, Intelligrated and Toyota are taking different approaches to the market, in conversations with their executives, they each predicted an increase in R&D spending that will benefit their individual companies but also the industry – and increase the clockspeed.

New business models: The traditional industry business model is that a company builds a DC and then buys, installs, operates and maintains solutions provided by equipment, technology and software suppliers. These are still emerging, but we're beginning to see solution providers turning that traditional model on its head. Witron, for instance, is installing and operating its systems for some customers; Packsize owns its machines in many facilities and charges by the amount of corrugated used; CHEP has evolved from just renting pallets to monetizing the information it collects about its customer's supply chains; Tompkins International announced Monarchfx, its e-comm fulfillment alliance, and for some time Dematic, has operated facilities for a heavy equipment manufacturer.

New solutions: Let's end with new solutions, which is where we have really seen a change in clockspeed. Despite spending more than 30 years in this industry, I am still wonderstruck when I walk the show floor and see how concepts like goods-to-person picking are still being interpreted for specific applications by companies like Kardex Remstar and Cimcorp; and at how shuttles and AutoStore came seemingly out of nowhere to take over a market that was once dominated by horizontal carousels and mini-load systems. Similarly, the cool factor at this year's event was the adaption of augmented and virtual reality technologies to everything from lift truck operator training at Raymond to piece picking at Bastian. They still have a bit of a science project/pilot feel about them, but watching the demonstrations, you can't help but feel that someone is going to figure out a way to increase productivity with these new technologies down the road. Perhaps the best example of the clockspeed phenomenon was robotics exhibitors like IAM Robotics, RightHand Robotics, Locus Robotics and OTTO Motors – I know I'm leaving some out, but those were the four I had a chance to visit. What's exciting about this space, as Jeff Hedges, the president of OPEX, put it, is that many of these companies are from outside the materials handling industry. As a result, they may bring a new perspective to age old problems, that will increase the clockspeed even more.

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