By Quinton de Villiers
The insatiable demand for warehousing space in South Africa is a trend that I continue to watch very closely as it mirrors the increasingly important role that logistics is playing in the day-to-day operations of local businesses.
It is likely that this development will continue to gain momentum as imported goods gradually replace those of the beleaguered local manufacturing sector, which decreased by a further 6,4% in the first quarter of this year, with six of the 10 sub-sectors experiencing negative growth.
While the importation of goods performed just as poorly during this period and will not go unaffected by the underperforming Rand, manufacturing has been in a state of crisis for many years. This is due mainly to low productivity, rampant labour unrest and, more recently, shortages in electricity, while “wet” manufacturers are sure to eventually also feel the pinch of substantial underinvestment into water infrastructure over many years.
Any turn-around in this important sector of the economy is, therefore, highly unlikely in the foreseeable future, despite the much-needed attention manufacturing is now receiving under president, Cyril Ramphosa’s, “New Dawn” to specifically grow small-medium and micro enterprises and help resolve unemployment in South Africa.
Meanwhile, the logistics warehouse also remains the critical “brain” of the supply-chains of those local companies which are shipping their products outside of the country in an increasingly globalised economy. Their competitive edge at this point in time remains a lower Rand, albeit that they are also operating in an increasingly unstable geopolitical market that has also been exacerbated by United States’ president, Donald Trump’s, “trade wars”.
Specialists in logistics distribution, such as Bridgewater Logistics, are at the forefront of assisting these embattled industries also transform warehousing from a cost centre into a strategic source of value for their customers.
This has been achieved by ongoing innovation that is specifically geared at providing them with the edge they need to remain competitive in challenging economic environment, where exported goods and services declined by more than 16% and imported items and services by well over six percent in the first quarter of 2018.
The rampant increase in the price of fuel, including diesel – the very lifeblood of an already-transport intensive economy, such as South Africa – will only exacerbate the situation.
Discerning distribution logistics operators have demonstrated their commitment to improving efficiencies in the supply chain by adopting what is considered to be best international practices in the design of these facilities.
These state-of-the-art operations have been planned in such a way to ensure minimal movements inside, in addition to sufficiently catering to high throughput velocities, including incoming goods, customer orders, inter-facility transfers, dispatches and returns.
This is in addition to taking a much longer-term view by prioritising free movement over storage capacity to provide an efficient and safe operation for many years to come, while also giving due consideration to the nature of orders and specific picking requirements.
One of the many outcomes of all of these efforts is the ability to ensure customers shorter lead times.
However, this strategic storage function is anticipated to become progressively more important as a dynamic, value-adding, competitive tool that has also, importantly, bridged the divide that previously existed at an operational level and business objectives.
The warehousing distribution logistics industry can, therefore, not rest on its laurels, and will have to continue to proactively respond to clients’ ever-changing demands, not least of which is the need for a more interactive supplier community.
A case in point is the immense strides that have already been made by the industry in deploying cutting-edge practices, in terms of inventory management, production scheduling, transportation and organisational communications, including the use of radio frequency identity (RFID).
The latter has only now taken hold in the developed world, promising to transform logistics and retail industries of the future as they continue on their quest for excellence in distribution.
RFID has demonstrated its ability to significantly fast-track the supply of products or cash flow to ensure high growth in revenue for all participants in the chain.
This is in addition to ensuring increased commitment and competence due to improved customer loyalty, while also greatly assisting in managing costs and maintaining excellent service!
Quinton de Villiers is the founder and managing director of Bridgewater Logistics with a long and impressive track-record in African logistics and security. Follow Quinton at #InTheFastLane for more insights and expert commentary on African transport and logistics.