Defining MHEDA’s 2019 Material Handling Business Trends

October 2, 2018

MHEDA’s Chairman of the Board and CEO discuss the changes to this year’s Material Handling Business Trends and how they will shape the industry for the foreseeable future
By Doug Carson, Liz Richards and Steve Guglielmo

Every year, the MHEDA Board of Directors releases their list of Material Handling Business Trends (formerly Critical Impact Factors) that will be shaping the material handling industry in the upcoming year. These lists deal with trends in the economy, customer behavior, technology and much more. These trends have been instrumental in not only company planning but also shape MHEDA’s educational events and editorial for The MHEDA Journal for the entire year. This year’s planning process included not only the MHEDA Executive Committee, but also two members of the MHEDA MBOA, the first time it has ever done so. We were able to sit down with 2018 MHEDA Chairman of the Board Doug Carson and MHEDA CEO Liz Richards to discuss the planning process and the final result. The full list of 2019 Material Handling Business Trends can be found on mheda.org as well as page 33.

The MHEDA Journal: Can you take readers behind the scenes for what the planning process of the Material Handling Business Trends looks like? Do you start with last year’s or start from scratch? How is the wording fine tuned? How do you arrive at the ideal number of trends?

Liz Richards: Prior to MHEDA’s Summer Executive Committee Meeting (held every July), we gather information from a variety of sources to better understand the issues, challenges and opportunities facing members and the industry in general. One of the most valuable documents we receive is from the members of MHEDA’s Manufacturers Board of Advisors/MBOA who provide insight on sales activity, projections for year-end and the year ahead and, their own view of the “Critical Impact Factors” they see facing their dealers and customers. MHEDA’s Board of Directors also provides us with their top three trends/challenges, both short and long term.

In addition to looking at the external environment, we also dissect the information provided from the members-at-large garnered from the annual membership and convention surveys. Data is also provided from other trade associations to compare how MHEDA is faring against other distribution organizations. Once we analyze all of this data, we identify the commonality and begin defining the trends that are most critical and most often mentioned. We don’t review the previous year trends until we have scrutinized the current data that was gathered. There is no “magic” number of trends but typically we end up with anywhere from 10-15 items. It’s interesting to see how some drop off, others may have escalated and new ones emerge. For example, the conversation about tariffs wasn’t on our radar in July 2017.

Doug Carson: We begin by asking for input from the MHEDA Board of Directors – we ask them to provide us their top three material handling trends for the coming year prior to meeting at the Executive Committee meeting. We then also review the 2018 Membership Survey results which provides pages and pages of free form responses which allow us to spot general trends in the form of repetitive themes. At the meeting we review input provided by the Manufacturer’s Board of Advisor’s Market Condition’s Summary Report and discuss these trends among the group. We then group the MHEDA Board of Director’s responses and the Membership Survey results into general themes and try to distill them down into trends that apply to all of our members.

We make every attempt to start from scratch and not reference the prior year’s trends. Eventually once we’ve distilled a number of the material handling trends for the coming year we will review our current list against the prior years’ list. In the three years I’ve been participating in the process we will usually find one or two trends from the prior year that we feel the group did a good job identifying and describing a business trend and we will repeat it or slightly modify it for current use. However, as a rule we make every effort to not influence our current year’s work with prior year’s output.

Liz Richards does a really nice job of making the first attempt at the wording for our trends from the discussions on-going during the meeting. Through an iterative process we will print out the trends and then micro-tune them through suggestions and debate among meeting participants to try and have them apply to as many members as possible.

We don’t have a pre-determined number in mind. The number we eventually come up with is a natural outcome of the distillation process previously described of boiling down MHEDA board members and membership survey responses.

TMJ: MHEDA has been producing these Material Handling Business Trends (formerly Critical Impact Factors) for more than a decade. How has the process changed?

LR: The process changed slightly last year when we forced ourselves to start with a blank sheet versus looking at previous years. This year we also solicited comments from former board members and past presidents to gather as much insight as possible.

TMJ: How can MHEDA members use these trends in their own strategic planning?

LR: Members who know we conduct this annual exercise will contact the MHEDA office in late July and ask for them. We definitely encourage them to do so since the trends are very industry-specific issues that should be addressed in every member organization. One of the trends we identified last year: “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” speaks very specifically to the fact that members should be engaging in their own annual Strategic Planning Process. In fact, MHEDA hosted a Business Planning Conference this year to help members understand how to effectively implement a planning process in their own organizations.

DC: At Fallsway Equipment Company we kick-off our strategic planning process for the year by reviewing and discussing the Material Handling Trends among the management staff. We decide which ones are relevant to our business and keep them in mind while constructing our business plan for the coming year.

TMJ: Many trends are reoccurring issues from year to year. How do you balance “current” trends from things that you feel might become trends a few years down the line, even if they’re not happening right now?

LR: We look at long term trends as well as more current “short term” trends and identify them both. Subjects like automation and the ubiquitous nature of that subject will continue far into the future. On the other hand, there are some trends that have become a regular part of everyday business but nevertheless need to be addressed such as cost of benefits, cyber security, permitting. Although those items were not identified as separate “trends,” they still need to be addressed in every organization and were footnoted accordingly.

DC: We do find reoccurring issues from year to year – a good example is lack of availability for technicians. There are a few of these reoccurring themes that we must include in the trends for the coming year simply because the vast majority of our members include them as a top issue they’re facing. I believe we’ve been very successful also identifying the issues that may not be immediate but are on the mid-term time horizon that give our members a year or two to put their plans in place to take advantage of the trend when it is accelerating in effect. A great example of this is the Amazon effect and the trend towards automation.

TMJ: Last year was the first year there was an MBOA presence at the EC meeting, which continued this year. How beneficial has that been in the planning process?

LR: It was extremely valuable to have the MBOA involved last year and this year we included two MBOA members, one from the storage & handling/systems segment and one from the lift truck market. The primary reason for involving manufacturers at the board level was to seek their advice and input since they talk to and understand the needs of their dealers. Having them now engaged in the strategy meeting is a huge benefit.

DC: I believe the addition of the MBOA presence has been invaluable to the EC meeting. Their perspective is unique from the distributors’ approach. In addition, simply having the additional people involved adds to the energy and flow of the meeting and development of the material handling trends and subsequent EC directives to our board committees for the coming year.

TMJ: How has the wide cross-section of industry segments represented among the EC helped enhance these trends?

LR: We would not do proper service if we didn’t make sure all industry segments were represented at the EC, board and MBOA level. We pay close attention to these demographics when we begin the nomination process and we have allowed ourselves the option to invite former board/MBOA members back to the EC meeting if the Executive Committee is not balanced in representation.

DC: There are many trends that focus on the same general theme but they impact the industry segments in completely different ways. For instance, automation means something different to every industry segment represented in MHEDA. We went around the table at the EC meeting and every participant had a different example of how their company was adding capabilities to capture our customers’ thirst for automation. Having all industry segments represented ensures we are considering all members’ perspectives.

TMJ: Any other important details readers should know?

LR: Let us know what you think of the 2019 trends. Do you agree? Have we missed anything? And please use these in your own planning process.