Winning With Wireless
Real time means wireless, and wireless means profits for VARs and integrators. See how integrator Lowry Computer Products, Inc. went from selling Intel chips to providing bar code solutions. Lowry plans to use wireless products to propel its 2000 sales revenue to $70 million.
In 1974, 19-year-old Bill Gates was contemplating quitting Harvard to start his own business. At the same time, in Brighton, MI, Richard Lowry was also planning on starting his own company. Lowry would accomplish his goal that year; Gates would have to wait until 1975.
The former created Lowry and Associates, a manufacturer's rep business for a relatively unknown company named Intel. Gates, of course, went on to create Microsoft which, along with Intel, helped revolutionize the PC market.
Lowry and his three associates sold Intel chips, processor boards, and components to distributors. In 1976, Lowry's son Michael joined the company and began distributing computer peripheral products, such as modems, storage devices, terminals, and printers. It was at this point that the company began acting as a systems integrator. "Since there were no microcomputers, customers still relied on companies like us to integrate computer peripherals to their microcomputer platforms," explained Michael Lowry, who became the company's president and CEO in 1980.
Focusing On Data Collection
Then, in 1978, the company accidentally stumbled upon its future. An existing customer asked Lowry to design software that would allow a Printronix printer to print bar codes for shelf labels. As they say: The rest is history. The company changed its name to Lowry Computer Products after Richard Lowry's death in 1980. By 1986, the company had revenue of $18 million: $10 million in computer peripherals and $8 million in bar code solutions. That same year, Lowry decided to focus exclusively on data collection. "Before SCSI (small computer system interface) and 5.25-inch disk drives, it would take two guys and a truck to deliver a 300 MB drive," Lowry said. "I could see the handwriting on the wall. With the PC, people weren't going to need a lot of additional services. We were involved in too many aspects of the [computer] business."
Although Bill Gates' DOS (disk operating system) software helped jump-start the PC industry, it was the spreadsheet that became the "killer app." The bar code industry mirrored this scenario. Bar codes were initially used for inventory control, but POS (point of sale) became the "killer app." The industry adopted standards, and suddenly bar codes were used everywhere. Then, in the late 1980s, the bar code market began to move to multiple applications and industry-specific guidelines. At the same time, margins were decreasing on hardware products. By 1990, the company was no longer involved in the computer peripheral business. It was still an $18 million company, but now its revenue was derived solely from the data collection business.
Adding Value With A Vertical Market Strategy
"The big change came when the auto, food and drug, and government industries adopted bar code technology," Lowry explained. "This was the emergence of what we now call supply chain logistics." With this change, Lowry noticed that customers were becoming more concerned with application knowledge, rather than how the technology worked. Consequently, he decided to realign his entire sales force into specific vertical markets automotive, consumer goods, food and drug, government/healthcare, and general manufacturing. Recently, Lowry expanded this concept by creating a specialized label technology team.
"This industry-specific structure was a new value-add for our customers," stated Lowry. With these specialized teams, Lowry's sales force could learn the logistics concerns of a specific vertical market. For example, Lowry could help a manufacturing client implement standardized bar code guidelines for all the client's suppliers. This would increase the speed of data collection, and ultimately, the speed of shipping the finished product. As a result of Lowry's new specialized teams, the company began providing single, packaged solutions for specific markets.
Recently, Lowry has seen an increase in the number of companies seeking effective data collection systems to integrate with ERP (enterprise resource plan) and WMS (warehouse management system). In addition, Lowry predicts that more growth will come from tier-two suppliers that require bar code standardization from their supply chain.
The Future Is Wireless
Lowry is currently a national integrator, with Fortune 500 companies like General Motors and Proctor & Gamble as its customers. Although bar codes have brought the company to its current level of success, its future is clearly with wireless technology. "These days, nearly 95% of the data collection products we sell are wireless," Lowry said. "E-commerce has forced companies to think in terms of real time; and therefore, everyone wants a wireless solution."
A recent lawsuit against Toys "R" Us demonstrates the impact of an inefficient supply chain or inventory control system. The toy retailer is being sued for not delivering products before Christmas that were ordered from its Web site. The site guaranteed Christmas delivery by standard shipping for toys ordered by Dec. 11, 1999. It also guaranteed in-time delivery via premium shipping for toys ordered by Dec. 14, 1999.
"This type of litigation forces companies to think less about the look of a Web site and more about the mechanism for fulfilling orders," said Lowry. "Wireless products help companies move to a real-time solution for inventory control because warehouse workers become mobile. The employee picks the product from the shelf and scans it with the wireless device. That data is then sent immediately to the WMS. This helps a company by replenishing items on-demand, versus stocking for just-in-case. It's all about how quickly you can get the product to the customer."
Although wireless technology has come a long way in the past five years, Lowry anticipates the biggest growth is yet to come. The food and drug, consumer goods, and auto industries are all beginning to fully embrace wireless solutions. Furthermore, many industry analysts predict the healthcare market will become a new hotbed for data collection devices. "Hospitals have been reluctant to adopt data collection solutions due to the high price of covering such large facilities. Wireless technology enables them to reduce the amount of data collection devices needed, and therefore the overall cost," Lowry explained.
High Expectations For Turnkey Solutions
Data collection technologies have become so advanced that most people just assume there is a solution to every problem. Of course, everyone wants real time, and everyone wants turnkey solutions that are faster and cheaper. "Nowadays, if you can't guarantee a system will be running within 90 days, you may lose the job," stated Lowry. He also warns that VARs should be wary of trying to be all things to all people. As an example, he cites the fact that his company does not pursue the POS market. "The hardest part of this business is learning to say no."
Lowry predicts that within the next five years all factory and warehouse data will be collected using automatic data collection devices. Consequently, he says that the wireless printer market will flourish. However, the only obstacle, he says, will be standardizing the software and operating systems for handheld wireless devices. "You don't want to have one type of software for communicating with your executives and another for your back office people," he explained. I'm sure Bill Gates would agree.
Questions about this article? E-mail the author at DanS@corrypub.com.