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COMPANY PROFILE

2013

Industrial Logistics Systems “We have and we are changing the face of logistics in South Africa”

company report

“We have and we are changing the face of logistics in South Africa” Editorial – Joe Forshaw Production – John Cliff With a portfolio of successful projects completed all over the world, ILS is now the recognised industry leader in supply chain logistics consultancy. IndustrySA recently spoke with ILS MD, Gary Benatar and Chairman, Martin Bailey, to find out more about what makes the company so successful.

It is common knowledge that Africa contains some of the world’s fastest growing regions. According to the IMF, Angola was the world’s fastest growing economy last year and Mozambique was the fastest growing non-oil producing country. Six of the world’s ten fastest growing economies are in sub-Saharan Africa. There are certain factors that have to be in place for this growth to continue, one of them being effective supply chain management. Running supply chains in the correct way is critical to Africa’s success. As growth continues, these supply chains will be put under increasing pressure and as consumer demand continues to rise, customers will not stand for empty shelves and unfulfilled promises. So how can businesses ensure that their operations are slick and ready to cope with unexpected booms in demand? Industrial Logistics Systems (ILS) Chairman and Executive Director Martin Bailey believes you need to get

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the supply chain right and then effective operations will fall into place. “You can have two operations with exactly the same processes, the operations are identical but the technology and the methods used to execute strategies are different. When you get the execution of the supply chain right it makes everything easier.” So what exactly is supply chain management? Modern supply chain management deals not only with physical process flows, but also encompasses information flow and cash flows. The goal of Supply Chain Management has evolved into the enabling of a company’s business strategy. It can create a competitive advantage by driving overall volume and revenue growth, increasing profits and improving customer service levels and responsiveness. ILS is a leading supply chain and logistics consultancy and is continually working with major brands to help them improve the efficiency of their supply chains. Whether it is upgrading technology or building a brand

Industrial Logistics Systems

new warehouse, ILS has internationally recognised expertise in all areas of supply chain management. The company was started in 1987 by Gary Benatar and Martin Bailey and the pair had the idea of providing facilities planning services. “We were doing facilities planning, laying out operations and using our skills as industrial engineers to lay out a site or operation and make that efficient. We were also consulting in materials handling and systems design and selection,” says Gary, Managing Director.

PLAN, DESIGN, EXECUTE What makes ILS a standout company in the market of supply chain and logistics consultancy is the fact that they have vast experience of executing strategic plans. “We have different legs within the company. We have a strategic planning leg, which handles supply chain strategy. We have a design leg and we also have a division that executes supply chain management and that makes

us different to everyone else in the market. So after the planning phase, we actually design the infrastructure,” says Martin. Gary elaborates on this, telling us that the operational experience of staff at ILS is something which has resulted in the company having no firm competition. “In 1995, I looked at re-engineering ILS. Shoprite had just gone live with their first distribution centre (DC) which we designed. The week before the DC went live, the manager of the facility resigned and I decided to take two months away from ILS and run the facility until they could get someone else. “This was one of the best learning experiences for myself, suddenly I had got into operations. Although we didn’t get many things wrong, I realised there were many differences between the theoretical side and the practical side and after this our focus changed.” It was this operational experience with Shoprite that prompted Gary to structure the business in a way which

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sees a large emphasis placed on operations and execution “We have competition but there isn’t a company that competes with us head on. The likes of PWC, Accenture, Deloitte and McKinsey can all advise on strategy but the difference is, they cannot execute,” says Gary. Experience has been built up over the last quarter of a century and since its establishment in 1987, ILS has been advising major companies on expansion, growth, refitting and consolidation. “Here’s a perfect example; say Shoprite come to us and say ‘we don’t like how things are running, we want to change the way we are doing things, we are not getting goods on time to our stores’. We will then formulate a strategy to get goods into their stores, on time, in the right place and in the right way. “Once the strategy is developed, the client will say ‘how do we execute this?’ and with Shoprite the strategy was to run central warehouses so the execution was to build the warehouses so we built six warehouses. “Also, to execute the strategy, we’ve helped them to find the right software, the right infrastructure, the right equipment and the right people and we hold our hands to that process,” says Martin. The software designed to handle the Shoprite distribution was introduced by ILS and the company became involved with developing software to ensure that the strategic plans were upheld by a functional IT system. “We would write computer specifications with guidelines as to what the IT system would do. The customer would then get a big team in to write

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the system from scratch. In 89-90, I travelled a lot internationally and saw various off-the-shelf systems and eventually we installed our first WMS (Warehouse Management System) in South Africa which was very successful. “We then sat down with Shoprite and recommended a similar system after going around the world and investigating the best on offer and it was one of the most important single steps they took in moving themselves ahead of the game in South Africa,” says Gary. A vital part of ILS’s success is the ability to build close relationships with clients – good people are the key to good consultancy. “Our job involves building a strong relationship with clients” says Martin. “Our guys who are present at the start of a project are present all the way through to the end. “The service we offer is our intellectual property and that is what we sell. “Some of our people are fantastic communicators. We do need selling skills; we have to sell a design to a customer who may want to stay as he is.” Gary says that ILS can offer their clients an education in successful supply chain logistics and this involves effective communication between the company and the customer. “We engage in an education process with the client. One of our successes is that the customer takes the ownership of a project. We will act as an extension of our clients business and almost like a specialist logistics department.

Industrial Logistics Systems

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IndusrtySA Editor, Joe Forshaw and ILS Managing Director, Gary Benatar

“I like to use an analogy from Jack Welch who said ‘whatever is a core competency of a business should stay in-house, whatever isn’t a core competency; outsource that activity to someone for whom it is a core competency’, and our core competencies are designing supply chains and infrastructure. Our client’s competency must be in the running of their supply chain and that is where the education process becomes effective.” ILS has worked with some of the country’s leading brand names and right now, retail is the industry in which ILS has been busiest. “We have worked with Shoprite, Clicks, Spar, Dischem, Distell, Massmart and other big names in retail, manufacturing and pharmaceutical from around the world,” says Martin. Gary also says that as the world has changed and the digital age has taken over, the company has built its relationships in different ways, taking advantage of advancements in technology. “We work with clients from all over, for example we were working in Australia. Because of this we invested heavily in infrastructure, things like video conferencing and a strong IT backbone.

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“This means we are able to communicate and do things remotely however, the issue of time differences is always a problem. “When we started ILS drawings were done on a drawing board and emails didn’t exist. Faxes had only just started becoming popular but life was still easy as the expectation of instant gratification and result from the customer was not there.”

GROWTH In the years since its inception, ILS has grown dramatically. After becoming recognised as an industry leader in South Africa, the company has developed its opportunities with international clients as Martin explains. “We have done a lot of work in Saudi Arabia and Dubai as well as work in Belgium, Australia and Africa. “Our international work is similar to our work in South Africa but overall every job is different.” In South Africa, growth for ILS is not necessarily about physical expansion, Martin explains growth would be to move into new industry sectors. “We have offices in Cape Town and Johannesburg and for now that is our lot, we don’t intend on building

Industrial Logistics Systems more offices, we think we can travel. We are growing by about a compound each year. We are in a niche market and we don’t want to move away from that. “We offer such a comprehensive service and it is so broad and so different to anyone else in the world that it is perhaps too broad and we cannot grow it further. What is growth for us is new types of industry. Retail is maybe our biggest, manufacturing second and pharmaceutical third but over time we will find a new niche and grow there. It could be government or something similar.” ILS’s knowledge of technology has allowed them to stay on top of the market in a climate that is always changing. In terms of supply chain management, the continent is seeing the deployment of the latest technology, thereby achieving a holistic approach to cost management and the freeing up of value. ILS has adopted certain world-class best practice benchmarks as the standards to which a facility should be measured. “We travel overseas at least four or five times a year to make sure we are up to date with the best practices in the world,” says Martin, “If we wanted to offer a client something different, we would actually travel with them and show off examples of new technology and best systems.”

Gary explains that because of ILS, logistics in South Africa is often where benchmarks are set for world class practice and people who visit are wowed by what has been achieved. “I can tell you now, we have and we are changing the face of logistics in South Africa. We have changed the way FMCG (Fast Moving Consumer Goods) work and we have stimulated the move towards centralised distribution.

“We formulate a strategy to get goods into their stores, on time, in the right place and in the right way” “When I used to travel overseas 20 years ago and see logistics achievements, I would say ‘I would love to do something like that’. Today, people come to South Africa with us and say ‘wow, that’s amazing’ so we are proud to say we are world class at what we are doing. “We’ve done a lot of stuff that is very innovative, firsts in South Africa and sometimes firsts for the world.”

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â&#x20AC;&#x153;Our business is people. We have a very young crew who are very dynamic and highly skilledâ&#x20AC;?

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Industrial Logistics Systems “OUR BUSINESS IS PEOPLE” ILS is a consultancy business. The work of the company involves their knowledge and expertise but they are not physically building bricks and mortar for clients. They have minimal assets but control expenditure of over R4 billion directly and over R4 billion indirectly every year and this means getting the right people involved is key. “We have around 30 people working here right now. We are a consultancy firm; we don’t physically build things or employ bricklayers etc. “Our business is people. We have a very young crew who are very dynamic and highly skilled. We train them up and use them to the nth degree. We drive them really hard and they love it. The great thing is, they are doing something different every day. Monday it’s Shoprite, Tuesday it’s Anglo American, Wednesday it’s Vodacom, Thursday it’s pharmaceuticals and it’s very exciting. “My one ambition is that my staff will say that they’re excited to come to work in the morning and we get that 95% of the time,” says Martin. ILS is not scared to invest in its employees and provide them with the best possible facilities so that they can achieve the best possible results. Gary explains that loyalty is rewarded with bonus schemes, incentivised

systems and ownership projects which see the longest serving employees gaining directorship and shareholding. “They are on the path to the next level of succession. “One of our cultures is to run our business like a family and this culture has been successful. The younger directors think like me as they have been with me for a long period of time. “We have great offices. I’ve spent a fortune on our offices. Our offices in the Waterfront in Cape Town look over the sea and our offices in Jo’Burg are spectacular. You spend 80% of your working day in the office so it has to be nice. “We sit down every day and have healthy, home cooked food in the office at no cost to the employees. This has been the culture for 26 years and it helps nurture and retain people.” Working with a highly skilled workforce has its drawbacks. A lot of time is invested in training and development of staff and with ILS being one of the country’s leaders in supply chain logistics, the training and knowledge received is second to none and this results in ILS employees becoming targets for the rest of the market. continues on page 32 >

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STRAPLINE

Your storage problems, solved Formrack (PTY) LTD is a wholly South African Owned company specialising in light and heavy duty racking systems, shelving systems, mezzanine floors and the designing of warehouses and stores or any area in need of efficient storage space. Managing Director, Yvan Mahieu, tells IndustrySA that the Randburg based company has the knowledge and experience to assist clients, large and small, with any storage needs that may arise. Q: When was the company established? The company was founded in 1994 by myself. After having previously worked in the industry, I felt there was a need for greater attention to detail and personal contact with the client. We have six permanent employees in our sales and design facility and we outsource for various other tasks. We work all over South Africa and sub-Saharan Africa. Q: Who are your major customers? We deal directly with clients and work with some very big blue-chip customers. In Zambia, weâ&#x20AC;&#x2122;ve just completed very big projects for First Quantum Minerals and we also completed a new facility in Lusaka for Jaguar/Land Rover. We are at present in the process in the completion of a high rise racking installation for Metrofileâ&#x20AC;&#x2122;s new state of the art G3 facility, which when complete will accommodate 1,000,000 archive storage boxes with an estimated weight of 15,000,000kgs. Q: What services do you offer? We design the racking that goes into the warehouses, we will then have it manufactured and install it and commission it. We offer a comprehensive after sales service. There is always damage to racking be it forklift or just wear and tear. PAGE 10 JUNE 13

We recently finished a project for a distribution company in Isando, Johannesburg and that was 30,000+ pallet positions. With Metrofile, we have done some very high racking installations, over 18m high with six cat-walk levels which they use for archive box retrievals. There is no job too big or too small. If you start off on a small project with a company, that can eventually grow with the client. Q: Which products are most popular? Pallet racking is the core of our market and mezzanine flooring is also quite big. With the price of land going up the way that it is, it makes sense for the client to utilise volume and go up, gaining more efficiency out of the basic footprint of the warehouse. We also offer small parts storage, office shelving, mobile shelving, drive in racking and push back racking. Q: What separates you from the competition? There are few companies that do what we do; it is a very competitive market. Our attention to detail and personal service differentiates us from the rest. Our response times are very quick although we do look at projects in detail. We are a streamlined and specialised company ensuring that we have our finger on the pulse at all times.

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“Our biggest challenge is our staff,” says Martin. “All of our employees are graduate engineers and trying to attract and retain good engineers is difficult. Unfortunately the industry sees us as an ideal training ground for personnel and after we train people up, they will get poached. “The universities do not offer courses that are of any use to us. We hire graduate engineers with the basic skills and understanding and train them from scratch. We develop their knowledge of the supply chain from warehousing and distribution to infrastructure and anything else in the supply chain. “We can help engineers understand how to build infrastructure - physical infrastructure, IT infrastructure, equipment infrastructure and the skills that surround those areas. Strategy-wise they’ve all had a good education but executing that strategy is something else.” Gary elaborates, saying: “University is important as it gives the guys the ability to think and learn in the right way. The knowledge training will come from us. “We will start all of our young engineers in an operational capacity and this will help them greatly with design. They will then move to work on infrastructure where they will gain a lot of experience before eventually working on strategy. “There’s no one consulting in strategy without at least 12-20 years’ experience. You can’t be a consultant in strategy without unbelievable business acumen and business knowledge.”

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PLATINUM AWARD WINNERS ILS has major projects underway right now and the company is helping big brands to expand and become more productive. “We will be continually working with Spar, Shoprite and Dischem in the near future because they are growing. There are also a host of other big names that we are fighting for. “We are doing a big job for Atlas Copco which is exciting. We have worked with ABB to combine all their divisions under one roof in South Africa and our design there has become a model for the whole world. The new facility in Long Meadow was our baby, we conceived it and used very different technology to anywhere else in the world and they love it, it’s gone down really well. “We laid out each and every production lane and how they should all integrate. Obviously, by putting 12 divisions under one roof you don’t want to duplicate, you want to share sources,” says Martin. The company has received recognition from peers for successful projects on numerous occasions and they are proud to hold a platinum LAA (Logistics Achiever Awards) medal, something of which there are only a few around. “We have three logistics achiever awards from the LAA. This is a multi–faceted organisation. All the associations get together and judge the best logistics achievement of the year. We have achieved three awards; gold, silver and platinum and there are not

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many platinum awards around. “We are doing stuff here that we think is as good as anywhere in the world. Some large companies have operations in South Africa and in other locations and their operations in other parts of the world are disastrous compared to here,” says Martin. While recognition for great work is nice, Gary and Martin are not in business for awards and trophies. Martin suggests that repeat business and a strong portfolio mean most to the company. “We have built over 450 warehouses and we are seen as the benchmark in South Africa when it comes to building warehouses. That in itself is recognition enough. “We are working with Vodacom right now. We originally built a facility for them 12 years ago, now they have called us back to refresh it and this will last three months. “Our work with Shoprite has been on-going for 23 years. “Sometimes when a project is finished we will leave and never hear from the client again but other times we never stop hearing from them.”

CRITICAL FOR SUCCESS Attention to detail in the supply chain can spark positive results for a company and recognising where improvements can be made, where attention is needed, is one of ILS’s specialties. “Every company believes they are unique” says Martin, “in reality, with logistics, they all do the same things. They buy, they store, they distribute and yes, they all have slightly different styles but the process are not unique and if you can optimise those processes and take the guys out of their existing boundaries there is huge productivity to be gained. It’s a major component; supply chain management can make up 20% of the gross national product of a country.” ILS has the vision of being the leading provider of expertise in the field of supply chain logistics and right now in South Africa it is a challenge to find the sort of expertise and experience that ILS possess in any other company. Martin says that there is no such thing as a ‘typical’ project for ILS. Every job is different and that is what helps to separate the company from the chasing pack.

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company report “Our major competitor is an American company, they are bigger than us in terms of global footprint but locally they don’t do the work we do.” It is the ability of ILS to offer services from an operational base and from a solely independent viewpoint that Gary says are the most important to the company’s success. “The success of ILS relies on it being independent. It cannot be encumbered by a supplier. The company needs to be owned by the people that are passionate about the independent advice that they are giving.” Even the global recession could not stop the progress of ILS and although retail and manufacturing felt the pinch during the meltdown, ILS remained busy throughout. “We have not felt any effects from the slowdown at all, we have remained very healthy over the last few years,” says Martin. Being part of a ‘developing country’ means that there is going to be a lot of growth and expansion for organisations in South Africa and as the first world – third world gap closes, the commercial world is looking

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BROLL

Maximising your property’s potential If you are looking for specialised services in the property sector, Broll should be your first port of call. Last month, Johannesburg, Cape Town and Durban were pinpointed as Africa’s next frontier of real estate growth. The three cities were among 20 in Africa described as catalysts for commercial property growth by retailers, corporates and investors. While there are many reasons for the growth in the property sector, one thing has always remained the same - effective property consulting, transactional management and property management is vital and choosing a good property company can have large-scale positive effects on business. The Broll Property Group is Africa´s leading commercial property services group and since its establishment in 1974, the company has bought together an unrivalled mix of technical expertise and global market knowledge with the sole purpose of maximising the potential of your property. Broll has worked with ILS on major property projects across SA and William Wakefield, Director Industrial Broking Division, explains more about the services that they have provided. “We represent corporate industrial tenants. We handle the legal and financial issues of the property deal and also the issues surrounding the location from a costing perspective; all the macro and micro issues from security to road network access to traffic flows. “The predominance of industrial requirements in South Africa at the moment is in warehousing and distribution sectors, mostly with larger retailers and logistics companies. These companies are clients of ours and we offer them unique and individualised property advice and consult to them on all property aspects. “We will be involved right from the initial planning phase to negotiating and finalising the leases and sale agreements.” As both Broll and ILS are working with national and international retail and logistics clients, a broad knowledge base and vast experience is required. The two companies both have this and their skills complement each other, with ILS focussing on supply chain logistics and Broll consulting on property market issues. “ILS will advise on industrial design, warehouse layout, racking systems, process flows etc. We handle more of the external envelope and macro property issues,” says

Wakefield. “They are industrial logistics specialists. They are involved in the design of process flow and industrial engineering aspects. Our focus is on the property aspects for the same clients. “We can handle macro site issues. For example; if a client comes to us and wants to set up a new distribution centre anywhere in the country, we would go about sourcing the location for them first, we would then arrange pricing, availability and distance from strategic points. “When the site is chosen, a process that ILS is often involved with, we will work with ILS to put together a facility of optimum size and shape.” Whilst Broll has worked on property deals for a range of clients, Wakefield describes a current project for Distell as a great example of how the company has worked with ILS to achieve results. “We are working on a project for one of the major retailers right now and we are handling all of the property issues and ILS is dealing with the logistics and engineering aspects. “We have worked hand-in-glove on this project, providing big space savings by consolidating three facilities into one. We provided a new facility at the same cost of their old, inefficient facilities. “We have been working alongside ILS for around 15 years. We work predominantly in South Africa but we are now working throughout Africa. We have a number of branches which have been established over the last ten years in areas such as Namibia, Ghana, Nigeria, Mauritius and Kenya.” Broll’s assets under management have now exceeded R60 billion and the company employs around 1200 people and Wakefield puts the success down to a strong history, saying: “We have a long history with commercial, industrial and retail property in South Africa. We are probably one of the longest standing companies in this sector. We operate in sub-Saharan Africa and we are the partner of CB Richard Ellis, the world’s largest provider of real estate services to the commercial, industrial, retail and investment markets.”

“We have a long history with commercial, industrial and retail property in South Africa. We are probably one of the longest standing companies in this sector”

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