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Want bigger profits? M a y b e it ’ s tim e f o r a s u p p l y c h ai n r e t h i n k

The real competitive edge in business lies in having a better supply chain, says logistics consultant Martin Bailey.

By Ian Armitage

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M

artin Bailey is a supply chain whizz. It is his belief that if you can get it right you can leapfrog your opposition. “This is where the money is,” he says. I’m sure most execs out there would agree. Certainly, we are living in the era of the supply chain. Mr Bailey is the Chairman of Industrial Logistics Systems, a firm he and Gary Benatar founded 25 years ago. Today the Johannesburg and Cape Town-based firm is a major sector player and pre-eminent name in ‘Start-to-Finish’ logistic consultancies. “There are many benefits to operating a slick supply chain,” Bailey says. “A lot of products cost more to supply and deliver than to make so by optimising your supply chain you can make huge savings. There is


Industrial Logistics Systems focus SUPPLY CHAIN

no argument that companies realise this and have the right strategies in place, but the execution is sometimes lacking – that’s where we come in.” Supply chain innovation and excellence is more important today than ever , but Bailey feels South Africa still lacks the logistics and transportation infrastructure to compete on a global level, with poor infrastructure and high costs a stumbling block. “The big problem is that the centre of our economy – over 60 to 70 percent - is based around Johannesburg

and Pretoria, 600km away from the nearest port. This puts us at a huge disadvantage. “Another problem is our poor freight railway infrastructure. It pushes more traffic onto the roads, and with it costs and prices have been driven up. Huge investment is needed to fix this.” Skills are another challenge, he says. “Nationally we have a real problem. As a company we like to employ industrial engineers – they fit our culture. The problem again

There are many benefits to operating a slick supply chain

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Industrial Logistics Systems focus supply chain

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is that technical education in South Africa has totally collapsed. Five years ago I would employ three or four technical graduates and one university graduate. That’s not the case today. In fact, we have to train graduate engineers, and my opposition and much of South African industry has to do the same. The result is we are sucking the number of engineers dry and the costs are increasing. It’s not because we don’t have enough graduates or highly skilled people – we’ve got them in South Africa – what we haven’t got is the middle level skills.” Bailey says another challenge facing industry is labour costs. “Labour costs are going up, while labour productivity is going down. 4

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The real challenge is looking at energy price, putting our CO2 levels under control, and getting costs into line - whole new strategies

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While this is happening, the cost of automation is coming down and so industry is taking a serious look at it. It’s certainly a dilemma, but the computer stuff is getting cheaper and cheaper. I certainly believe, and I’m not sure this is good for the country, that industry can benefit from automation and we’ll see much more of it.” Bailey says there are benefits to automating many processes and replacing some (but not all) workers with machines. He has a point. According to the 11th UASA Employment Report released by economist Mike Schüssler in May, South Africa can’t afford to employ its own people. He found the employed unskilled workers here, in comparison with other countries surveyed, are being paid too much.


Industrial Logistics Systems focus SUPPLY CHAIN

On a broader front Bailey adds the biggest challenge to business and with it the supply chain and logistics sector worldwide is the future movement of fuel prices. “Everything is inflated at fuel price and energy prices are inflating far far faster than the rest. And as prices start shooting through the roof all strategies need to be looked at. “The real challenge is looking at energy price, putting our CO2 levels under control, and getting costs into line - whole new strategies. We really need to re- look at our supply chain from a wholly different point of view. “If we predict $200-a-barrel, which will come eventually, then we’ll need to radically change the way we look at and how we structure supply chains. Companies are starting to strategise and think about the impact and what their businesses will look like. That keeps us nice and busy and represents a great opportunity for us. We’re every excited.” How focused is South African business and industry on cutting-edge strategies? ”In retail hugely aware. Worldwide the retail industry has understood that the supply chain is core to their business. Elsewhere the picture is very mixed.” Bailey’s professional www.southafricamag.com

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Industrial Logistics Systems focus supply chain

CONGRATULATIONS INDUSTRIAL LOGISTICS SYSTEMS Toyota Forklift congratulates Industrial Logistics Systems (ILS) on their 25th birthday and is proud of the long and professional association between the two companies. Toyota Forklift is proud to have worked on projects that ILS has chosen us to collaborate with over the years. The relationship goes back over 15 years, and it has evolved to become mutually beneficial based on a joint sense of professionalism, work ethic, commitment and trust. We wish ILS everything of the best for the next 25 years and look forward to continuing our relationship with them.

credentials are impressive. Along with Professor Roy Marcus he established the Materials Handling Research Unit at Wits University in 1979. Three years later he was joined as research assistant by Gary Benatar and the two went on to establish Industrial Logistic Systems in 1987. “This is a small country so we engage in everything from mining to motor car parts to retail. The sector is highly, highly competitive. “The biggest difference with us is that we do the complete range – the strategic planning and the execution. “We’ve also got experience. In 25 years we’ve built over 500 warehouses. We can show the battle scars, and people like that.” END To learn more visit www.ils.co.za. 8

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Toyota Forklift has supplied handling equipment on a number of projects designed and managed by ILS, most notably Shoprite, where we have been the suppliers at all of their distribution centres. Further information is available from: Karen van Diggelen, GM: Marketing & Communications, Eqstra Industrial Equipment Tel: 011 571 0294. Cell: 082 880 0204 Email: karenv@sie.co.za


RAisiNg the stANDARDs

as market leaders since 1984 EQSTRA INDUSTRIAL AND AGRI is the Partner of Choice (employer, supplier, investor) in distribution, rental & value-added services in the Industrial, Material Handling and Agricultural Equipment market; offering a total solution, providing best-inclass brands and delivering optimal life-time value for our customers. Toyota Forklift is the global market leader in materials handling equipment with a reputation for safety & efficiency, innovative research & development and quality products‌ AND helping you reach new heights.

teL: +27 (0) 11 395 0600 1 395 0600 WEB : www.eiegroup.co.za WeB: www.eiegroup.co.za


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1st Floor, Building F Morningside Close Office Park 1 Michelle Morningside, Sandton 2196 Tel: +27 (0)11 656-1100 Fax: +27 (0)11 656-2642 Email: ils-jhb@ils.co.za

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ILS Business Brochure - South Africa Magazine Issue 30

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