AIDC’s Time to Shine in the Asian Supply Chain Market

by Richa Gupta | 12/11/2017

Honeywell and SATO Announce Supply Chain-focused Investments to Capitalize on AIDC Opportunity in China and Japan

The Asian logistics market has seen a flurry of activity this past week from an AIDC standpoint with market leaders Honeywell and SATO both making strategic announcements to address opportunities within it. This blog details the strategic investments and alliances forged by these conglomerates with an eye on the future.

Honeywell signed an agreement to acquire a 25% stake in FLUX Information Technology, a Chinese software provider focused on warehouse management and related supply chain applications. This deal is similar to its recent acquisitions of Movilizer and, to a certain extent, Intelligrated as it further expands the company’s automation solutions portfolio from the standpoint of material handling and logistics. In VDC’s opinion, this is also a continued pivot away from the more tradition data capture, label printing and mobile computing solutions; it carries the potential to create even more friction with partners serving those portfolios. The investment in FLUX is especially significant as China’s focus on e-commerce and, as a result, logistics has seen an exponential increase in the past 3-4 years, and drives much of its government’s investments from the standpoint of infrastructure development. Several MNCs are also active participants in the country to take advantage of this growing opportunity. The country has seen several new initiatives being introduced to promote warehouse management system development, strengthen domestic logistics infrastructure (including warehouses and connecting roads), improve traffic management policies for delivery vehicles, and solve challenges associated with last mile delivery. With this investment, Honeywell gains access to FLUX’s comprehensive client network, which includes leading domestic brands and logistics operators such as Chery Automobile, China Post, Kerry Logistics, Septwolves, and SF Express. Its broad suite of data capture and labeling solutions – spanning barcode scanners, printers, and mobile computing devices – and comprehensive material handling systems (courtesy its Intelligrated acquisition) have the potential to fit right into these operating environments, as the partnership gives Honeywell direct access to a broad range of end user organizations. The vendor also announced that it would form a new joint venture company with FLUX’s founder, with a 75% ownership interest, to serve international customers.

In related news, SATO announced its partnership with JDA Software Group as the latter looks to expand its presence in the Japanese market, with a keen focus on the warehousing opportunity. The two companies aim to combine JDA Warehouse Management and JDA Warehouse Labor Management with SATO’s Visual Warehouse Solution, its 3D mapping, indoor locationing, and voice navigation system for logistics centers in Japan. As with China, the Japanese market is fraught with labor shortages and increasing supply chain complexity even as end user organizations across revenue tiers look to extract value from generated data in order to enhance operational efficiencies. The vendors aim to provide their customers (including the 5 food & beverage companies that will deploy the solution by March 2019) with the tools required for labor scheduling/utilization, warehouse operations management, and streamlining picking route navigation and respond to shifts in real-time. It is interesting to note here that JDA Software’s CEO is long-time AIDC industry veteran, Girish Rishi, who has held Executive positions at Matrix, Symbol, Zebra Technologies, and Tyco Retail Solutions over the years (and also VDC Research where he served as the AIDC Practice Director in the ‘90s!). JDA’s partnership with SATO also speaks volumes of its leadership’s keen understanding of the importance of relationships with AIDC hardware vendors in order to provide end-to-end supply chain solutions to customers.

VDC believes these partnerships are in line with organizational demand for supply chain efficiencies—from the standpoint of labor productivity, inventory management & control, visibility, and traceability—while also positioning these AIDC vendors as visionary leaders in the Asian market for warehousing and distribution. As e-commerce growth accelerates, we expect such investments and alliances to become a priority for not only AIDC market leaders but also niche participants in this segment.

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