The AIDC Industry: A View From The Peak

Jim Wyner has a clear picture of the automatic identification and data collection (AIDC) market. As president of $275 million Peak Technologies (Columbia, MD), he's among the few at the top - and he likes what he sees.

Peak Technologies is a full-service VAR and systems integrator of AIDC peripheral equipment and systems. The company focuses on the AIDC market through bar-code data capture, information systems, printing, mini-printers and other equipment, supplies and consumables. Peak's primary applications include warehousing, manufacturing and distribution. Its customers are composed of a mix of industrial giants, including Fortune 500 companies, and medium- to small-sized manufacturing, service and distribution companies.

Peak was formed in the mid-80s as a holding company, and has acquired 26 companies since that time. The goal of the acquisitions was to build an international AIDC VAR focused on U.S. and European markets. Moore Corporation Limited, a $2.6 billion company and a leading supplier of document-formatted information, print outsourcing and data-based marketing, acquired Peak in 1997.

The Future Of 2-D
Wyner believes 2-D bar-code technology has a substantial future. The 2-D bar codes are designed to act as stand-alone databases, and come in two types of symbologies. Stacked symbologies build rows of bars and spaces on top of each other. Matrix symbologies dispense bars and spaces with encoded data in a checkerboard pattern of shapes. "We see 2-D being used in more specialized applications where the end user needs specific information stored in a small space," he says.

"For example, there is a big opportunity for 2-D in the retail market, where advanced shipping notice is so critical to the business process. End users require specific data or detailed information on an order before it ever leaves the manufacturer or distribution center. Two-dimensional technology allows more information to be stored in the same small place than a one-dimensional bar code." Only a small amount of information can be printed in the one-dimensional format. When the 1-D bar code is scanned, a number is retrieved. From there, a database must be accessed to obtain any details about the product.

Two-dimensional bar codes stand alone. For example, Peak installed Symbol Technologies' PDF417 2-D bar code to track bolts of lace at a textile manufacturing company. Information like the item number, quantity of lace, dye-lot number, web number telling which machine produced the material, and the width of the material were all contained on one 4- x 4-inch label. Employees can scan one of the 2-D bar codes and provide a label and packing list in real time.

In addition, electronic manufacturers and telecommunications companies are beginning to use 2-D bar codes, Wyner says, because they have the need for more data than can fit in the confines of a one-dimensional bar code. And, the 2-D information doesn't need to be processed.

AIDC Is Not Something To Ignore
Depending on who you talk to, says Wyner, radio frequency (RF) data collection products will be a billion-dollar market by the year 2000. "That's a 30% compound average growth rate for Peak according to research companies like Frost & Sullivan and Venture Development Corp. The real benefit is real-time data capture versus batch data capture. (With real-time data capture, information is provided as the bar code is scanned. With batch capture, a number of items are scanned and transferred some time later.) RF offers significant opportunity in productivity gains for inventory management in manufacturing."

"Another trend is enterprise resource planning (ERP) systems, which are somewhat driven by the Year 2000 (Y2K) problem. They have a huge growth potential over the next few years. They create tremendous opportunities for the AIDC industry through improving supply chain management and warehouse management systems." (ERP is an industry term for the broad set of activities supported by software that helps companies integrate important parts of their businesses like the financial, human resources and order-tracking aspects.)

Peak supports, but doesn't sell ERP solutions. "We are certified by SAP to work with its systems," Wyner explains. "We can work with our customers who have implemented SAP's solution to integrate data capture into their ERP backbone. We see that as a significant growth opportunity. However, I don't think we will expand to sell ERP. We want to concentrate on being a professional AIDC organization. ERP is a good lead-in, but it is not our business."

Wyner also sees creating bar codes through network printing as a major opportunity. The ability to integrate thermal printers and network line printers with a wide range of software platforms (NT, UNIX, AS/400) will offer significant growth. Since Moore has other businesses in areas like outsourcing, document management and printing solutions, Peak has the opportunity to pair with sister companies to offer total solutions. "There is a strong complementary relationship between Moore's different technologies," explains Wyner. "We have opportunities to interface with other Moore companies so we can be part of a total solution."

Vertical Niches Work For Small VARs
Wyner sees many smaller AIDC VARs specializing in vertical niches. "There is some consolidation going on," he says, "but the ‘roll-up' of VARs is not as prevalent as some people might think it is. These small VARs can compete in niches."

The increasing need for global information and current Y2K standards are driving changes in supply chain management, encouraging the need for integration. "Customers need to implement these complex business solutions," he says. "VARs need to support software integration along with the hardware and software. I see the demand for this kind of service increasing."

To really get ahead of the game, VARs need to understand their customers' business processes. "We use a metaphor at Peak to put ourselves in our customer's shoes," Wyner says. "Make a video of a day in the life of the customer. We want to understand what our customers do on a daily basis that impacts their business. Understanding what our customers do lets us propose solutions that enable them to be more competitive in their business. At the end of the day, their success is our success."

Peak's New Core Strategy
There is no doubt that Peak has a strong reputation in the AIDC industry. Wyner wants to make that reputation even stronger. He moved from Peak's parent company, Moore Corp. (Chicago and Toronto) in January 1998 to develop a core vision and strategy for the AIDC giant. "We don't see ourselves as a conglomerate. We see Peak as a highly focused company servicing AIDC."

This task has been nothing less than challenging. "When I was president of the labels and label systems division at Moore, Peak reported directly to me," he explains. "When I came on board as president, I wanted to understand what Peak's employees thought about the business - mainly what worked and what didn't work - so we sent a survey to every employee. One of the glaring responses was that most Peak companies still saw themselves as the entity they were before acquisition. I don't believe that managing over 20 separate companies is the optimum way to build and grow a market-leading business."