Material Handling Equipment – bringing order out of chaos
Over the past 4 years, we have come across a large number of clients facing the same challenges. They know they could organize their MHE category much better, but have no idea who is spending what, on what and with whom. The extent of what is unknown is often very impressive. From the number of machines in such and such country, to the type of repair and maintenance contract, or characteristics of the lease agreements.
The reason for this ignorance is easy enough to identify: simply make the parallel with the car industry. From a functionality point of view, a Ford Focus and a Peugeot 308 are the same thing. From an emotional point of view however, users see a huge difference. MHE manufacturers will use exactly the same mass customization approach to offer a global solution. While some of that customization will generate genuine productivity improvements or functionality changes, it is also a very effective strategy to muddy the waters and make any direct comparison of equipment very difficult. “We have spent a lot of time removing the emotions from our acquisition process for new machines, now we buy what we need focusing on functionality” CFO, global logistics company
That being said, while knowing what you don’t know is a good start, it isn’t much help unless you have a way of figuring out what you should be doing from there…One of our clients has more than 2700 machines in Europe. They could identify 230 different groupings of machines, based on specifications. Even within each group, where the specs were supposed to be similar, we found price variations from 1 to 3. In addition, non-specification related data, such as numbers of hours logged, number and duration of maintenance events, etc, were largely unknown, and little more information was available regarding the services included in the suppliers’ Full Service (FS) contracts.
We will not address the obvious here, and take as a given that an in-depth market consultation should be organised, with a clear strategy and mandate, and that any supplier relationship must be established for a multi-year period to be effective. But beyond this basic sourcing and category management exercise lie a few key points that must be considered in most situations.
