How Distributors Deliver on a System's Promise

The system is up and running. It's purring like a kitten. The company president's smile glimmers in the fresh paint. Your distributor has done all the reliability demonstration tests, packed his tool bag and faded into the sunset.

So why is there a queasy feeling in the pit of your stomach? Is it because you remember that during talks with various systems providers, no two installers used the same terms and procedures when you discussed testing?

The purpose of reliability demonstration tests, sometimes called acceptance tests, is to show the system's level of reliability. That's a bit circular in the wording, and also part of the challenge in getting clear answers. You want to know how reliable the machinery is, true. What you really mean is: How long will it run without a breakdown?

"Mean time to failure," says John Usher, professor of industrial engineering, University of Louisville, "is another term used in place of reliability. Because of the nature of testing and the lack of perfect information with which to assess the item's true reliability, both consumer and producer [of material handling systems] are subject to risk associated with a test."

The purchaser of the system runs the risk that the system will perform well in the test; however, the true reliability might not be acceptable to him. The producer of the equipment runs the risk that the item might fail the test, even though its true reliability is acceptable to the purchaser.

And the distributor is the person in the middle. Working with your distributor early in the planning stages of a new material handling system can help reduce problems. Only at the beginning do you have the chance to better define what all parties mean when speaking of machine reliability and system up-time.

Finding the missing link
The majority of material handling equipment is purchased through a dealer or distributor. The dance performed by original equipment manufacturers (OEMs) and distributors is often unseen, complicated and sometimes not decipherable to people on the outside — meaning the end user. Understanding the relationships your distributor has with its suppliers can help you make more informed purchases.

"A ‘given' part of any contract we establish with the customer," says Sam Grooms, president, Hy-Tek Material Handling, Columbus, Ohio, "is extensive system follow-up, along with critical parts and service support. We have to be sure the OEM we choose to represent will support us. Our success is its success."

And a key to that success, says Grooms, is communication among all parties. Programs such as dealers' councils and advisory boards are important to keep channels of communication open among OEMs and distributors.

Certainly one of the stigmas attached to material handling has been that the equipment is becoming nothing more than commodities. If that were true, and many argue it is not, end users could safely make purchases based on price alone.

With proper support and adequate education on the part of manufacturers, distributors are in the best position to pass knowledge on to you, the end user. This, then, has become a critical communication issue. Distributors say they need more than glossy marketing brochures from the OEM. In-plant education programs, particularly at the time of new product introduction, is essential. While the trade show used to be the forum for such introductions, OEMs now recognize the value of better indoctrination of the sales force. The end user is the true beneficiary of these programs.

As an example of this forwardthinking approach, Reg Eklund, president and CEO, NACCO Materials Handling Group, says, in reference to the company's 240-location dealer network, "Working with dealerships is a core competency of Hyster, and the global nature of its products makes it essential that we nurture that competency."

Eklund was speaking to the news media during the introduction of the company's new line of lift trucks. He says it was by working through its dealers to understand the customers' needs that the company was able to create a truck tailored to specific customer requirements.

Part of Hyster's approach in introducing its Fortis line of lift trucks will be to educate and certify salespeople and technicians within its distributor network before the distributors can begin making sales calls.

"We wanted to take a more dramatic approach to lift-truck design," says Eklund, "and that approach was to design a truck that was flexible to the customer's needs. We want the buyer to have a truck that fits his specific needs, rather than for us to build a truck around some given parameters we've determined."

OEMs support distributors
Dave Hoehn, vice president-sales at Hyster, says education of the dealer network is more important than ever because the customers' expectations of equipment are much higher.

"Customers used to focus on cost," says Hoehn. "Now the emphasis is on reliability and the total life-cycle cost issue."

Hyster's education program is a combination of on-line classes and follow-up as well as several hours of hands-on vehicle training. These education programs apply to operators as well as technician positions within the dealership.

Customers are also getting plenty of education via the Internet; however, they are not getting the handson experience only a distributor can provide.

"Working with your distributor early in the planning stages of a new material handling system can help reduce problems."

Gregg Goodner, president, Hytrol Conveyor, was on a panel of manufacturers and distributors at this year's Material Handling Equipment Distributors Association (MHEDA) conference. He was asked about Web purchasing and its impact on distributors. "Web purchasing depends on the product," says Goodner. "It won't be a long-term way to purchase products. The weak economy led people to this way of buying and it doesn't develop the vital relationships end users require. The more support a product needs, the less chance there is to have successful sales on the Web."

Will sales via the Internet change the way distributors do business? To some degree it already has; however, in the long run, things might not change all that much, according to the experts. The Web is still a way for consumers to gather information and buy the occasional commodity part. The distributor who uses the Web wisely can develop leads and find growth opportunities in Web-based sales. Most agree that selling lift trucks, conveyors and other major pieces of material handling equipment, along with the required parts and service, is still a people business.

The distributor's position
The dynamic changes in its customers' businesses is the thing driving change in the distributor's business. Ed Reel, senior vice president, Peach State Integrated Technologies, says, "These customers are experiencing broader challenges in their distribution business — challenges more strategic in nature — reaching far beyond a distributor's material handling equipment products and service offerings."

"The OEM and the distributor combine their strengths to create a system that will bring you success."

These business challenges — best described as evolution, says Reel — arrived through numerous channels, including mergers, acquisitions, consolidation, off-shore manufacturing — or simple organic growth and global expansion. Additionally, "burning platform" issues, such as shorter cycle times, better fill rates, higher service levels and improved inventory turns, generated further complexity across companies' logistics and distribution operations.

Finding a distributor who understands these challenges can lend incalculable support to your business and head off challenges you might not be aware of.

To meet these challenges, companies are investigating how to bring more strategic design into the equation and to their warehouse operations. These visionary companies realize that the design of their logistics and distribution network will yield significant value, including improved return on investment, competitive advantage and increased shareholder value.

Managers also realize that thinking more strategically, instead of tactically, can assist in developing and implementing solutions that have a greater and more long-term positive impact on overall logistics operations.

"Distributors say they need more than glossy marketing brochures from the OEM. In-plant education programs, particularly at the time of new product introduction, is essential."

Where does the material handling distributor fit into this changing environment? "Just as these business dynamics change the way clients think about enhancing operations," says Reel, "material handling equipment distributors must also assess their role in support of customers' changing business conditions. Distributors need to think more strategically to develop and implement solutions that directly address these challenges, and deliver higher value and return on investment to customers' operations."

Helping you save money
If you're considering the purchase of used equipment, your distributor might be the place to start. Robert Babel, vice president engineering, Forte Industries, says the success of an improvement project is often measured by its return on the equipment investment. "Project leaders are tempted to lower costs," says Babel, "while hoping to get the same level of benefit from the system modification. One tactic used to reduce the cost of a high-priced line item is to substitute used material handling equipment in place of new equipment."

An engineer within your company, or one who works for your distributor, with an equipment design background should evaluate any purchase before the signed. A challenge with used equipment is that it's hard to evaluate. Generally, you do not see it in operation and know between little and nothing of its pedigree.

According to Babel, here's the kind of support a distributor can provide.

• If you're planning a distribution improvement project, and are considering the inclusion of used equipment, have objective experts examine the equipment. A source separate from the buying and selling process can identify usable equipment from equipment that should be discarded. The right third party should be familiar with the variety of brands and models, and possess knowledge of spare parts availability, and the cost for the necessary refurbishment.
• If you purchase used equipment, having a supervisor or project manager onsite can ensure the jobs of dismantling and loading are done right.
• Dismantling equipment requires meticulous attention and knowledge to be done right. Intimate knowledge of the new configuration into which the used equipment will be installed is also required. Hastily ripping material handling equipment out may render it useless. Tagging components according to the new engineered drawings will facilitate the installation process, providing easy identification and organization.

Successful support
To have a successful system installation and the kind of support you need and expect from your distributor, you need to get off to a good start. Here's a compilation of annotated tips and suggestions gathered at the MHEDA

• Understand your distributor's business philosophy, and the philosophies of his suppliers. In turn, be sure he understands your approach to business and what matters most to you.
• Ask if the distributor's suppliers provide support staff and ongoing education programs when equipment is upgraded and when new employees need basic information.
• Determine if the distributor will discuss changes to the proposed system if changes in your marketplace occur before construction begins.
• Discuss the strengths and weaknesses of the distributor's suppliers to assess whether you should explore other avenues or approaches to your material handling project.
• Keep your eye on the big picture when selecting a distributor. Does he have the time and resources to fulfill his promise, or will he be subcontracting critical parts of the program?
• Make sure the distributor is supplying you with a product that will satisfy your current requirement — or delivering a solution to your longterm application.
• Help the OEM understand your needs. This only happens with sound communication among all three parties in the transaction. If your planned system is a big one, ask that a representative from the OEM's company be present during final negotiations.
• Recognize that the distributor sitting across the table cannot be all things to all people. Look for someone with experience in the project you imagine. You can't afford to work with a distributor that makes it up as it goes along.

The OEM and the distributor combine their strengths to create a system that will bring you success. Profitability is the eventual goal of all parties, yet all of the suggestions listed above hinge on a single word — communication. Often, from your perspective, the distributor is the face of the manufacturer. OEMs recognize this and are thus offering more support to their distributors, thus assuring customer loyalty.