No matter how you look at it, eighteen months in business puts you in the very young category, even if you’ve got strong roots. The first year of operation is often seen as a time for sorting out problems and not running at full capacity and efficiency. That didn’t happen at ID Logistics South Africa.
In June 2015, the company completed their nationwide network and launched their new Boksburg facility. Twelve months later they were ticking off achievements. All in a tough economic climate and a disruptive operating environment.
ID Logistics South Africa MD Etienne Juillard and new business development director Friedel Spies sat down with “Supply Chain Today” and took us through their achievements, plans for the future and the big industry issues.
From the exterior, the Boksburg ID Logistics facility looks much the same as it did a year ago but the changes inside are instantly recognisable. There are a few new faces, a bit more office space, and a lot more branding. Asked what the highlights have been of the year, Etienne doesn’t take long to respond, “There have been many but five stand out,” he tells us.
1) Eight new customers
Yes – eight. That’s pretty impressive when you consider local market conditions and stiff competition.
2) 75 cost saving initiatives
These initiatives can take six months to a year to complete depending on the size of the project and business. 75 have been completed in the twelve months resulting in cost savings for their customers.
3) A complete executive committee
Logistics professional Friedel Spies joined the team in March 2016 as new business development director, and a contract manager was appointed to oversee customer integration. “We now have a complete executive committee,” says Etienne.
In the current business environment increasing resources might seem a luxury, but when you take into consideration the additional eight customers and the completion of 75 cost-saving initiatives, this heavy agenda could only be completed with a few more bodies on board.
4) Increased branding and marketing exposure
Friedel says another achievement for ID Logistics has been more market exposure and branding presence.
5) Client recommendations
“In 2015 we weren’t known,” adds Etienne. Thanks to the hard work of the team and the good service they offer to their customers, ID Logistics is now a recommendation to new clients from existing customers.
As you would expect, there have been a few challenges along the way. One is the fragmented market in the perishable space. ID Logistics offers services in ambient and perishables. However, the industry does not have one standard model – some outsource, some don’t, some centralise supply chains, some don’t.
To outsource or not?
In the perishable space in South Africa, there is a tendency in medium-sized or regional businesses to favour insourcing over outsourcing. This is very noticeable in regions because when companies go outside of their region, they tend to outsource as they don’t have the expertise or knowledge of new areas.
Can outsourcing benefit a business, even if they are comfortable in their region with their operations? Friedel says there may be some cost benefit, but that shouldn’t be the only reason to outsource as an expert like ID Logistics can offer a lot more.
Quality and control are but two examples. Over 90% of their deliveries are made within 24 hours, and for perishable goods, truck temperature is monitored every 20 minutes.
The company is able to offer these kinds of services because of the investments they have made in new technology, and the access they have to the latest developments at the ID Logistics head office in France.
Add in the strong focus on great customer service, and you’ve got more than a few outsourcing selling points. “We focus on continuous improvement and are close to our customers and their problems,” says Etienne.
“This can mean assisting a customer even when their problem is not the core business of ID Logistics, but affects the service we offer. An example is not being able to meet a customer’s requirements, purely because the customer isn’t getting their order on time. Assisting the customer in sorting the problem means we’re all back on track.”
Friedel says regular feedback from customers is important and used to improve efficiency and give customers a competitive edge which isn’t always easy because many customers have older systems that don’t integrate with those of a 3PL provider.
“Better quality data will allow us to really understand how we can reduce costs and provide better service.”
While the market remains fragmented, integrated good information may be hard to come by. Centralisation could change that. “Centralisation will force companies in this industry to look at data in a different way because it will upset the way supply chains are run,” Etienne asserts.
State of flux
How different is our local market from international markets? “Outsourcing in the FMCG market is relatively aligned with what you will find in Europe,” says Friedel. “But there is a difference when it comes to customer segmentation and the mere size of the stand-alone contract logistics’ opportunities.
“For example, a European retailer offering value-for-money fashion items would probably have 80% of their supply chain outsourced in a country like France, whereas in South Africa the supply chain is managed internally by the company.”
Centralisation and hybrid models may be with us for some time, maybe as much as ten years. The environment is very disruptive and in a state of flux which both Etienne and Friedel believe may result in some consolidation in the industry in the next few years.
ID Logistics, Friedel Spies
Tel: (010) 003-6876