How to profit from downtime

AHS looked at itself when business was slow, and is reaping the benefits

By Joe Nowlan, Associate Editor -- Industrial Distribution, 8/1/2006

Like many material handling companies—not to mention their customers— Advanced Handling Systems, Inc. went through a downturn in its business a few years ago.

Along with licking their wounds, though, AHS also made the most of their downtime by examining how they operated and then initiating improvements, says Chuck Frank, president and CEO. Based in Cincinnati, AHS is a provider of materials handling solutions, including planning, implementation and post-project evaluation.

“During the slow time, we looked at ourselves to see how to make ourselves better and become a great company,” he says. “So when things did turn and improve, we’d be in a position to handle increased volume and revenue.”

During this self-analysis period, AHS management went through a number of “what-if” sessions, analyzing what it did well and what it could do better.

One approach AHS decided to implement dealt with how they gauged potential clients. The interview process that AHS now uses with new clients is a key to its improved business the past few years, Frank says.

“We do a better job of interviewing our clients,” he says. “And we make sure we can add value while making sure our clients appreciate [that] value.”

So if AHS senses the situation is not a good fit, they’ll decline to work with that company.

“We’re passing on some [potential] opportunities,” Frank says.

Once a customer signs on, AHS will set up some key performance indicators, Frank explains, that will assist them in making sure that the deliverables both parties agreed to are being met.

This has enabled AHS to better realize what it wants from a customer, and what that customer should want and expect from them.

“We’ve become more focused on what we do, and realize we can’t be all things to all people,” he said. “It’s an education of our clients to make sure they understand…the process that we go through.”

AHS takes on the complete implementation of a customer’s material handling demands. The approach can represent a bit of a hard sell for some potential customers who are reluctant to give up much control, Frank explains.

Some clients are entrepreneurial-based, privately held businesses. Their strengths, Frank says, are more in marketing and purchasing, for example.

“But many have little idea how to distribute their products to the consumer,” he explains. “So we’ll go in as an extension of their organization and help them with where they are going, and how to best get them there.”

New AHS clients are told not to expect miracles starting on day one. Patience, a rarity anywhere these days, is needed.

“When you put in a big warehouse management system, it can take several months—sometimes a year or more—to transform that business or to change its culture. All companies will need a window of time to get the system up and running and eventually hit on all cylinders,” he says.

So with business steady and profitable these days, what are Frank and AHS concerned about? Getting good people and keeping them, he says.

“Finding the balance of having great people on staff, paying them what they are worth, keeping your overhead down so you can remain competitive,” Frank says, “and always selling the value of your organization to your core clients….”