North American shipments of Material Handling Control Systems (MHCS) software and services reached nearly $494 million in 2001. This market is expected to grow at a Compounded Annual Growth Rate (CAGR) of over 13% over the next five years, according to an ARC Advisory Group study, Material Handling Control Systems for North America Outlook.
Supply Chain Visibility Fuels Market Growth
A MHCS solution provides a uniform interface to a broad range of material handling equipment that reduces operator training time, maintenance costs, and transportation time of individual goods. MHCS solutions are found in material handling systems for manufacturing plants, distribution centers, warehouses, and parcel handling centers. Managing the equipment in these facilities requires relatively sophisticated software that is capable of communicating directly to conveyors, sortation equipment, AGV, ASRS, and robots.
"Optimization of the sourcing, manufacturing, and delivery of goods is viewed as the next opportunity for businesses to improve profitability," said Sal Spada (sspada@arcweb.com), ARC Director of Discrete Industries. "A greater emphasis is on synchronization of the supply chain with customers and suppliers by improving the supply chain visibility. To be effective, extending the supply chain visibility depends upon greater reach of information on inventory in transit, work in process, and inventory in warehouses and distribution centers. As a result of this increased supply chain focus, MHCS solutions have taken on greater importance."
MHCS solutions are capable of providing historical as well as real time data to make process improvements in the equipment and staffing of warehouses and manufacturing solutions. Many companies are in the midst of adopting six-sigma initiatives, which rely upon data analysis in order to justify and identify process improvements. Without accurate data on a service or manufacturing process to support decision making, organizations are unable to make informed decisions across departmental boundaries.
Automated Business Process Drive Technology Adoption
Automated business processes are used to eliminate delays that result from human interaction. This technology leads to direct digital messaging between manufacturing units, external suppliers, and the high-level business systems. Mid-sized companies need to implement these solutions also, but are not blessed with large budgets. Therefore, solutions need to be incremental in nature. MHCS solutions eliminate manual business processes that lead to errors in orders or simply poor allocation of resources. Overall, the importance of MHCS solutions is to provide a greater degree of collaboration in the extended business enterprise.
It is clear that North America is lagging the European and Asian market in terms of adoption of automation in material handling systems. As a result of this late adoption, there is anticipation for high growth in North America. The major European material handling suppliers are establishing footholds in the North American market through numerous acquisitions. Consequently, these suppliers are bringing a new level of automation to the market. In conjunction with this, they are arriving with the benefit of having had to provide sophisticated automation solutions in European markets.