Looking back at MHEDA’s Business Trends from 2008-2018
By Steve Guglielmo
The MHEDA Board of Directors publishes its upcoming list of material handling business trends in the 4th Quarter Issue of The MHEDA Journal every year. The list is conceived at the July Executive Committee Meeting and then disseminated among the MHEDA membership as a guide for things that might be impacting our industry in the years to come. But while each year’s Trends, taken on their own, are an incredibly helpful guide, we decided to look back at the last ten years worth of trends to see if there are any patterns that emerge. What “trends” proved to actual be trends? Which were one or two year blips on the radar that didn’t actually pan out the way we thought they might? The following are the MHEDA Critical Impact Factors (and now Material Handling Business Trends) from 2008 through 2018.
2008 Critical Impact Factors
1. The association and its members need to change the view of training and professional development from an expense item (drag on time and money) to an investment and ultimate revenue generator.
2. The association needs to identify the new leaders and key managers and engage them in association programs and services.
3. Members need to demonstrate and convince both customers and suppliers of their value proposition in order to address and alleviate margin pressure and to remain a viable conduit to the marketplace.
4. Distributors are faced with the rising cost of doing business.
5. The association and its members need to be educated and understand the impact of globalization and potential opportunities and challenges.
6. The material handling industry needs to be better defined by the association and communicated to its members relative to its role and impact as the enabling technology within the supply chain.
7. The association and its members need to understand the impact, opportunities and challenges of green in our industry.
8. The association needs to stay abreast of and communicate relevant industry and general business news and trends to its members.
9. The association needs to more effectively communicate its increasing value proposition to all individuals within member companies.
2009 Critical Impact Factors
1. Customer perception of professionalism and consistency is more important now than ever
2. Market conditions and customer demands have created more opportunities for outsourcing, diversification of services and profit improvement.
3. The job description along with the skill sets necessary for point of service employees have significantly changed.
4. Volatility and commodity pricing fluctuations are more prevalent than ever before.
5. The Association and Members need to evaluate their own organizations and all business partners in the areas of training, process improvement, culture, leadership, product development and make appropriate changes.
6. Opportunities exist to improve communication and process alignment between distributors and suppliers.
7. The industry is faced with an aging workforce and companies must focus on employee evaluation, development and recruitment.
8. Economic conditions, including credit volatility, rising travel costs and inconveniences are issues to be considered.
9. Members need to demonstrate and convince both customers and suppliers of their value proposition in order to address and alleviate margin pressure and to remain a viable conduit to the marketplace.
10. The association needs to better define the role and the value of the material handling distributor to all stakeholders.
11. The association and its members need to continue to monitor the impact, opportunities and challenges of green in our industry.
2010 Critical Impact Factors
1. Economic recovery will be slow and fragile and the association and industry will lag behind with no predictability as to the pace of recovery.
2. There will be heavier scrutiny of all dollars spent emphasizing the importance of the value proposition and the requirement for a return on investment for both members and the association.
3. Economic conditions have created over capacity and excess inventory resulting in margin pressure, price wars, risk and safety issues and potential liability issues.
4. With customer profiles changing and new business opportunities emerging, members need to structure their organizations by adapting to these changes.
5. While credit availability is improving, there are new constraints and continued volatility in the market; be mindful of the credit worthiness of the customer.
6. Members must be prepared to deal with more governmental intervention in their organizations.
7. During the turnaround, members and the association need to streamline their processes, embrace metrics such as benchmarking tools and key performance indicators, use technology accelerators, evaluate their partners, target their marketing and continue to do more with less.
8. Because of emerging online technologies and social networking sites members and the association need to become educated and understand the implications and opportunities.
9. Employees must provide more value to an organization than ever before.
10. The association and its members need to continue to define the role and the value of the material handling distributor to all stakeholders.
11. The association and its members need to continue to monitor the impact, opportunities and challenges of green in our industry.
2011 Critical Impact Factors
1. Economic recovery continues to be slow. Members need to uncover new business opportunities, be more flexible, react quickly and efficiently, provide ongoing employee training, streamline their processes and embrace metrics such as benchmarking tools and key performance indicators.
2. There will be continued scrutiny of all dollars spent emphasizing the importance of the value proposition and the requirement for a return on investment for both members and the association.
3. With customer profiles changing members need to structure their organizations providing more services using core competencies and technology while minimizing internal cost.
4. The banking and lending climate is worsening with more banks failing, and more credit scrutiny. Be mindful of your cash flow position as well as the credit worthiness of the customer and the supplier.
5. Members must be prepared to deal with more governmental intervention in their organizations i.e., health care bill.
6. Because of emerging online technologies members and the association need to become educated and understand the implications and opportunities.
7. Members must provide support and training to their employees and likewise, employees must provide more value than ever before.
8. Distributors need to demonstrate and communicate their value to both customers and suppliers.
9. The association and its members need to continue to monitor the impact and opportunities of green technologies, energy efficiency and sustainability.
10. The supply chain process is changing with lengthened lead times, increased customer demands and limited resources including personnel.
11. Consolidation of customers, suppliers and distributors is creating realignment of distributor networks.
2012 Critical Impact Factors
1. Economic rebound is uneven based on region and industry; it’s important to identify viable market opportunities by targeting growth segments.
2. Energy and transportation costs continue to rise which will change the nature of distribution.
3. Commodity price fluctuations, extended lead times, shifts in global consumption and the supply chain, increase complexity for the distributor and supplier.
4. Sales strategies must change to be more solutions focused and cost effective for the distributor.
5. Continued margin pressure requires lean operations and a deeper understanding of your core competencies to identify and take advantage of emerging opportunities.
6. Dealer and supplier personnel must continue to enhance their job skills and improve their productivity.
7. Dealers and suppliers are operating with fewer resources and may have capital constraints. It’s imperative that they utilize outside opportunities (including MHEDA) for networking, best practices, professional development and cost saving options.
8. Customers are demanding more electronic interaction with their distributors.
9. Customers’ staffing remains lean and therefore they have become more reliant on distributors for solutions support. This is an opportunity for distributors.
10. The conservative banking environment dictates that members must have a well-structured banking strategy and strong relationship with their bank particularly if they want to take advantage of emerging markets. Cash positions are more important than ever.
11. Employee benefits including health care are getting more complex requiring the need for members to fully understand the impact to their business, costs, ramifications and potential solutions.
12. As the economy recovers, members must be selective with new hires and ensure that the proper skill sets are in place.
13. The association and its members need to continue to monitor the impact and opportunities of green technologies, energy efficiency and sustainability.
2013 Critical Impact Factors
1. Members must have performance metrics in place that support when and how to respond to economic and market fluctuations.
2. Economic uncertainty still exists with predictions of a flat economy or slow growth ahead. It’s important to identify viable market opportunities and target growth segments.
3. Debt structure and cash flow is of vital importance to participate in growth opportunities and be well positioned during a downturn.
4. Investments must be made to recruit, develop and retain top sales people who understand and embrace the concept that sales strategies need to be solutions focused and economically justifiable to the customer.
5. Continued margin pressure requires lean operations such as outsourcing and a deeper understanding of your core competencies to identify and take advantage of emerging opportunities including but not limited to energy efficiency, safety and green initiatives.
6. It is critical to identify and retain all high performing employees. There are more job opportunities today and therefore, a higher risk of losing key personnel.
7. It is critical for members to hire top candidates but increasingly difficult to identify prospective employees from the existing labor pool. This problem will worsen as employees retire.
8. Members must understand and be prepared for the implementation of health care reform.
9. Customers are reducing their supplier base working with distributors that provide value added services and a wide variety of product offerings. Members need to research and understand the customers’ needs.
10. Customers are demanding electronic interaction and distributors must make the investment in technology and software to meet these demands.
11. The Distributor’s brand identity is becoming more solutions focused. The manufacturer must build a cost effective product that solves the customer’s problem and rely on the distributor to deliver the solution.
12. The cost of labor is one factor that is leading to more automation and companies relocating to where labor costs are low.
13. Members need to understand and be educated on how to utilize, implement and measure the benefits of online marketing, web technologies and social media as a business development tool.
2014 Critical Impact Factors
1. While the overall economic outlook is predicted for slow growth, certain industry segments will be experiencing high growth opportunities. For example, the Engineered Systems industry is poised for growth with much of this due to the increase of e-commerce and goods-to-person automation.
2. There is a trend toward more local and regional distribution centers. Consumers are driving this because of demand for one day or same day delivery.
3. Customers are seeking more real time tracking information and supply chain visibility. Members must be aware of and supportive of this trend.
4. Manufacturers who can reduce lead time and deliver a quality product will have a competitive advantage and will emerge as the market leaders.
5. In spite of high unemployment, skilled and talented employees are still difficult to recruit. The aging workforce is going to compound this problem. Members must be committed to the internal development of their people and also be prepared to modify their organizational culture when transitioning to a younger generation of employees.
6. Retention of top performers is critical and steps must be in place to motivate and develop existing employees.
7. There is a continued trend toward consolidation and factory owned distributors in the industrial truck marketplace.
8. More consultants and third party management companies are working with end users on equipment acquisition, maintenance and fleet management.
9. Customer demands and requirements for safety compliance and government regulations (building permits, life safety, contractor licensing) are becoming more complex, costly and often need to be customized for each end user.
10. The distributor sales team must have the knowledge and skill set to educate and effectively communicate to the C level executive about emerging technologies and how specific solutions can improve ROI.
11. To build loyalty and trust, distributors must provide the customer with value-added services. This provides a way for distributors to serve as vendor partners and uncover additional opportunities.
12. Members need to develop a strategy to utilize, implement and measure the benefits of web technologies, mobile apps, online marketing and social media as business development tools.
13. As owners anticipate the transition of their businesses, they must be prepared with a succession plan.
2015 Critical Impact Factors
1. Members need to evaluate and potentially modify their business model to address the significant and ongoing growth in automation.
2. There is a long term trend toward more local and regional distribution centers. This is being driven in large part by evolving consumer demands and expectations for same day delivery. Customers are responding by focusing on Omni Channel Fulfillment. As a result, there are new and emerging opportunities to provide solutions to the customer.
3. Members must be committed to embracing a changing work culture, specifically understanding how the younger generation requires more flexibility and is motivated differently. The workplace culture may impact a younger employee’s willingness to stay in place long term.
4. The industry is facing a shortage of skilled labor and this trend will continue as existing employees retire. Additionally, skill sets for the technician in all industry segments are changing with increasing reliance on systems and software diagnostic tools.
5. Succession planning is critical not only for the dealer principal but also for key managers and senior executives. Companies adopted lean organizational structures during the recession and as a result, internal successors may not currently be in place.
6. More so than ever before, it is critical for an organization to retain their top performers. Processes need to be in place to develop and motivate existing employees.
7. There is a continued trend toward consolidation including factory-owned distributors as well as the acquisition of systems integrators within the industrial truck industry.
8. Consultants and third party management companies are continuing to target and market to end users for equipment acquisition, service, maintenance and fleet management. This is a competitive threat to the traditional distributor.
9. Safety compliance and government regulations are becoming more complex with stricter enforcement. This can be very costly and challenging for the member company but can also provide opportunities for distributors to educate and provide services to the end user.
10. Online sales of material handling equipment has led to commoditization of some distributor offerings. Therefore, distributors need an even deeper understanding of a customer’s business and need to establish a value-added, ROI, service-focused relationship.
11. Members need to be better educated on the benefits of digital marketing in particular, the correlation between social media and search engine ranking.
12. The industry may be facing an inflationary environment within the next 3-5 years and members need to understand and be prepared to operate their businesses during these conditions.
13. Fluctuating costs and regulatory complexities of health care insurance, especially those related to the ACA, continues to impact member companies and must be closely monitored.
2016 Critical Impact Factors
1. Members should evaluate their operations to embrace the significant changes in technology and automation as they relate to their customers as well as to their own businesses.
2. Same day deliveries are creating local distribution points. Omni channel fulfillment is the new norm and as a result, there are opportunities to provide solutions to customers.
3. Mobile technology is becoming a prominent means for doing business and interacting with customers. Members must embrace this trend.
4. Fleet management companies continue to market to end users for equipment acquisition and service. This can be a channel disrupter and members will either compete with them or cooperate with them.
5. Consolidation of dealerships and OEMs is accelerating. Member must have a strategy to deal with this in their market.
6. A sales, acquisition and/or succession plan is critical for organizational perpetuity and succession strategies of the principal, key managers and senior executives.
7. Members must create a culture that recognizes and blends generational differences. It is imperative to understand the millennial’s desire for corporate consciousness and how this will impact their willingness to stay in place long term.
8. The need for skilled technicians in all segments of the industry continues to escalate and necessitates creative recruitment practices, heightened training and more reliance on diagnostic tools and mobile technologies to augment the workforce.
9. Members must embrace data mining techniques and predictive analytics to increase revenues, cut costs, improve customer relationships, enhance the sales process and reduce risks.
10. The economy is healthy but members must maintain vigilance and develop a plan for the next downturn.
11. Government and safety regulations continue to become more stringent and complex. Members must have a clear understanding of these requirements and recognize both the risks and opportunities.
12. Members need to take necessary precautions to protect against cyber threats and the security of data.
2017 Critical Impact Factors
1. Companies continue to face significant challenges recruiting employees which is contributing to wage inflation and the need to develop more creative and unique ways to recruit and retain employees.
2. Members must be prepared to modify their internal structure and sales process to meet the demands of multi-generational buyers and new purchasing trends.
3. Industrial truck distributors must have a strategy for the growing customer demands to manage fleets and operators using telematics solutions.
4. Members must embrace data mining techniques and predictive analytics to increase revenues, cut costs, improve customer relationships, enhance the sales process and reduce risks.
5. Customers are increasingly pursuing automation and members must be positioned to provide solutions.
6. Members need to be vigilant about protecting against cyber threats and the security of data.
7. The Federal Reserve forecasts economic growth to remain in the 2% range over the long run. It’s imperative to improve business processes, leverage new technologies and effectively manage expenses.
8. Consolidation is accelerating at both the supplier and distributor level which is causing realignment of the channel and territorial conflicts. This consolidation is also putting pressure on smaller distributors to remain competitive.
9. Companies are still challenged by succession planning and members need to evaluate all exit and transition strategies.
10. Members must have a strategy to address the impact of 3rd party fleet management firms.
11. Current laws regarding minimum wage and other employee benefits threaten to create a negative effect on member companies.
12. There is continued escalation of health care costs and medical insurance premiums as well as uncertainty about future legislation. Companies should review their plan design and consider implementing proactive strategies such as wellness programs to mitigate these rising costs.
13. There are increasing requirements for permitting, contractor licensing and safety, burdening the distributor. Members must have a clear understanding of these requirements and recognize both the risks and opportunities.
14. Members must create a culture that recognizes and blends generational differences. It is imperative to understand the millennial’s desire for corporate consciousness and how this will impact their willingness to stay in place long term.
2018 Material Handling Business Trends
1. It is critical for member companies to engage in business strategy planning to address all facets of the organization including exit strategies, disaster planning, marketability of the company, and adaptability of technological advances.
2. End users continue to seek and implement automated solutions driven by skilled labor shortages, minimum wage increases and a desire to reduce fleet size. Members must evaluate and understand the risks and opportunities that exist to participate in automation solutions.
3. The current trend of strong economic expansion has surpassed the historical business growth cycle. Indicators continue to reflect strong economic growth however members must be prepared for a correction while capitalizing on the current robust business climate.
4. Changes to the new lease accounting standards under GAAP/FASB are being phased in beginning December 2018. Members need to consult with professional advisors to understand how this will affect their financial metrics and how it may impact the financing of customer equipment.
5. With the changing buying patterns including online research and purchasing, it is imperative that distributors understand, embrace and implement an electronic B2B strategy i.e. e-commerce, digital marketing, SEO, etc.
6. Recruitment and retention of employees continues to challenge companies and members must create a culture that attracts top talent. Having a multi-faceted recruitment strategy along with a structured on-boarding program and professional development path is critical.
7. Changes in technology have challenged the current capabilities within many companies. This includes changes in equipment/automated solutions as well as internal information systems. This trend will continue as equipment and systems get more complex. Members must source talent with the digital expertise necessary to grow the organization.
8. The continued demand for data collection from material handling equipment provides a revenue stream opportunity. This includes warehouse control, management systems and telematics.
9. Customer demands are resulting in challenges to the traditional distributor model and must be recognized. This includes the prevalence of third party fleet providers, factory direct channels, OEM automation strategies, and online suppliers. Distributors must be forward thinking as to how their organization will evolve and provide service/value to the end user.
10. Businesses need to adapt their communication strategies to cross all forms of technology in order to connect with their employees and multi-generational buyers.
11. There are increasing requirements for permitting, contractor licensing and safety. Members must have a clear understanding of these requirements and recognize both the risks and opportunities.
NOTE: There continues to be ongoing important business issues that members need to recognize and consider including employee benefits, cyber security, consolidation, proposed regulatory policies, etc.