Defining MHEDA’s 2018 Critical Impact Factors

October 1, 2017

MHEDA’s Chairman of the Board and CEO discuss the changes to this year’s Critical Impact Factors and how they will shape the industry going forward

Every year, the MHEDA Board of Directors release their list of 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 CIFs have been instrumental in not only company planning but also help shape MHEDA’s educational events as well as editorial for The MHEDA Journal. This year’s planning process deviated from previous years. We were able to sit down with 2017 MHEDA Chairman of the Board Buddy Smith and MHEDA CEO Liz Richards to discuss the planning process and the final result. The full list of 2018 Critical Impact Factors can be found on mheda.org as well as page 33.

The MHEDA Journal: How did the planning for this year’s Critical Impact Factors differ from previous years? Why did you decide to change the process and what did you hope to achieve with these new results?

Liz Richards: MHEDA’s annual strategic planning process has served the association extremely well and allows the Executive Committee and Board of Directors to take a forward thinking approach to what the members and the industry are facing given the changing demands and dynamics of the end user and the marketplace. The Critical Impact Factors, defined as Environmental conditions, characteristics and trends that could impact the association, the industry and/or its constituents, either positively or negatively, and therefore should be considered in identifying future opportunities and programs, are developed based on an environmental analysis of both external and internal trends facing the industry and MHEDA. Once defined, the CIFs are shared with the association members and MHEDA staff so that programs, services and resources can be designed and identified to help members meet those challenges. The only change to the process this year was to take a longer term view in addition to a one-year outlook. What was determined, however, is that most of the factors are both short and long term and will have a lasting impact on how a member’s organization might grow and evolve. It is imperative that members have a solid business strategy and planning process to address changing dynamics. One other modification that was made this year was to invite the chair of the MBOA (Manufacturers Board of Advisors) to attend the summer EC meeting. Having the perspective of a manufacturer during the analysis phase of the planning process was very helpful particularly given the symbiotic relationship between these channel partners.

Buddy Smith: Last year, we changed the process from looking at the previous year’s CIF’s as a baseline to a more ‘clean slate” approach. We do this by looking at industry reports, ITR economic reports, member surveys, board surveys, relevant articles, etc. The current year CIF’s are developed without reference to the previous years factors. With a year under our belt, this process continued to be refined and I believe resulted in quality CIF’s. As Liz mentioned, we tried to look out further this year in developing the CIF’s. It is a difficult exercise to predict the future. What we discovered was that there are current trends right now that will have a long term impact on our industry. As a dealer, my take away is that our company needs to begin addressing these potential opportunities and threats now.

TMJ: Several of the CIFs are recurring issues from previous lists, like exit strategies and consolidation. However there are many new CIFs identified this year. Are there any Factors that you feel will gain importance or relevance to members in the coming years?

LR: The Executive Committee purposely starts with a blank page when defining the CIFs to avoid repeating items from previous years and ensuring that we don’t include factors that are simply “the cost of doing business” such as the ever frustrating issue of health care insurance and benefits. Instead, we attempt to focus more on issues that will be impactful long term and should be considered as they relate to an organization’s ability to evolve and adapt to market changes and customer demands. For example, the impact of automation is here to stay and there are many side products of that. Does a company have the digital expertise necessary to handle changes to information systems? Does the organization have the ability to not only understand and deliver telematics solutions but provide consultative advice and best practices to the customer? Can/should a company provide a total automated solution or is there a need for an alliance with an integrator? With many OEMs adopting automated solutions, how might this impact the traditional distributor model?

BS: I agree, we tried to focus on strategic issues rather than tactical. Strategic issues by their very nature are long term. Many items that were previously on our critical impact factors have become more tactical in nature (i.e. finding talent, health care, etc.) One new critical impact factor that I believe is a “sleeper” is the changes in lease accounting (CIF # 4). I call it a “sleeper” because it is sneaking up on is without much fanfare. It will start soon and impact all leases including our customers who may now try harder than ever to shift risk to our members. This CIF will also impact those dealers who own their real estate in an LLC and receive lease payments from their operating company.

TMJ: This was the first year that there was an MBOA presence at the Executive Committee meeting when these were discussed. How beneficial was that to the planning process?

LR: As mentioned above, having the perspective of the manufacturer during this strategic discussion was particularly helpful given the importance of the distributor-manufacturer relationship and their mutual goal to best serve the customer.

BS: Agreed—The more we can involve the OEM’s in discussions and solutions, the better our decisions. As an additional benefit, I think our relationships with our OEM’s are enhanced because of this process. This leads to greater trust between manufacturer and distributor resulting in better solutions for the customer.

TMJ: Do you feel that having a wide cross-section of industry segments represented among the Executive Committee members helps enhance the CIFs?

LR: It’s absolutely vital to have all industry segments represented during this discussion and MHEDA has allowed for the opportunity to invite additional members to the EC [strategic planning process] meeting if we find that we are not well represented on either side, the forklift industry or systems integration.

TMJ: Any other important details that readers should know?

LR: The most important thing a member can do is to use the CIFs as part of their own internal planning process. Make sure key managers and stakeholders are gathered together in a formal and structured setting to understand and proactively address how their organization can evolve and grow given the changing dynamics of the industry. Adopting MHEDA’s strategic planning process as a model is always an option!

BS: We have a guiding principle in our company that we talk about quite a bit. It is called ‘Embracing Change.” There is no doubt that things are changing in our industry. I believe our perspective on change is critical to our long term success. Are we excited about the opportunities that these changes present? Or are we dreading having to deal with it and thus become paralyzed by inaction. I believe the difference in our perspective is the difference between growing and staying stuck.