Warehousing and distribution in South Africa faces many challenges, from high maintenance costs through to the lack of a skilled workforce. Managing director David Leisegang discusses with Andrew Pelis how Rennies Distribution Services has continued to hold its own.
Rennies Distribution Services is a member of the Bidvest Group of Companies that was created out of a company restructure in 2004. Rennies is a national supply chain and logistics specialist in warehousing, transport and distribution. “We were created from a restructure of Bidfreight’s transport, distribution and in-land warehousing divisions. Our business is divided into two distinct areas covering multi-customer third party warehousing and transport and single customer warehousing, transport and distribution,” affirms managing director David Leisegang.
Leisegang says that the company has built its reputation on specialist services. As a result it enjoys long-standing relationships with several global blue chip companies. “A large portion of what we do in terms of transport and warehousing involves dangerous and hazardous products and we are capable of handling these products nationally. We only have two or three significant competitors in that area.
“Most of our work is contractual and, amongst others, we provide logistics services for large clothing and homeware retailers,” he continues. “We also provide services to the automotive, chemical and forest products industries; handle general cargo; and deal in transportation and distribution. Our strategy is to specialise in niche markets in these areas.”
As the global economic downturn started to bite, Leisegang says that the effects were somewhat delayed in South Africa and that by diversifying, Rennies did not feel the impact so much. “There were some areas that were affected and certainly the packaged chemical sector was adversely affected; however, our experience was that the retail sector was impacted to a lesser extent.”
Leisegang himself arrived at Rennies just before the credit crunch, some three and a half years ago. A nine-year veteran of the parent company Bidvest Group, his aim was to invigorate customer relations and oversee improvements in operational processes.
“There have been a lot of changes since I’ve been here,” he admits. “The objective was to establish a well rounded and competent senior management team, settle down a number of insecure contracts and to review operational processes. Part of the process has been a significant management restructure that has enabled us to refocus on our key areas of competency. We also implemented a number of operational systems that support the work we do, including a safety, health and environmental system based on ISO14001 and OHSAS 18001. More recently we have started to roll out a new warehouse management system—we found a simple and efficient system which is supplied by the Canadian company Accellos.”
The company has spent in the region of R5 million on the new system, initially installing it at two sites before rolling it out to another three sites. “We have another three to four sites to go yet and we’ve seen advantages already,” he continues. “Daily planning has become a lot easier and it gives us a better snapshot on the business so we can ascertain our scheduling requirements much quicker. Additionally we can measure efficiency now as the system looks at the allocation of tasks to employees on the floor. We have also improved our visibility with our customers’ stock as a result of this new system and the feedback we have received from clients has been very positive.”
An integral part of the success in improving operations has been training Rennies’ 530 staff. Indeed, Leisegang suggests that without training, the company would have trouble functioning at all. “There is a shortage of the necessary skills here in South Africa,” he comments. “We spend quite a lot of time on training and have an in-house training department as well as an operations support department that helps to write our procedures and to set up operational training. We have found it easier to bring people up through the ranks into management and we spend a lot of effort trying to up-skill guys from school into forklift operators and then management.”
With the Black Economic Empowerment (BEE) agenda in mind, the company’s expenditure on training is well placed. Leisegang indicates that Rennies’ objective is to raise its current BEE level 3 rating to level 2 in the next financial year. “Two important aspects of that will be to achieve our employment equity targets and maintain our preferential procurement spend—using companies with appropriate BEE ratings,” he explains. Vendors are an important part of the Rennies Distribution Services success story.
South Africa’s internal road system has certainly come in for its fair share of criticism over the years. For the occasional motorist, poor road surfaces may prove a temporary inconvenience; however, for the logistics companies that drive the country’s commerce from A to B, the issue is far more serious. However, a spin-off of hosting the 2010 Football World Cup has been significant infrastructural improvements in many of South Africa’s major centres, including improvements to roads.
The company operates a fleet of 50 trucks and approximately 95 trailers, customised to accommodate the specialist nature of their cargo. All very impressive; but then one factors in the demands of those South African roads and the reality of costly maintenance added to fuel costs, and the penny drops. “Much of our preventative maintenance is outsourced and we have established long-term relationships with those vendors. Most of the work they carry out is done remotely but they will work on-site when necessary, as it is vitally important that our vehicles are never off the road.”
The second element of fleet is expenditure on new vehicles. Leisegang says that, on average, the fleet is no more than three years old, with new replacement vehicles brought in each year. Further investment in the latest satellite navigation technology enables management to track the progress of each delivery and to chart the best route for the driver.
So it seems that Rennies Distribution Services is well positioned for the next phase of its growth; and Leisegang has very definite ideas on the direction that will take too. “One of the areas we are looking at for the future is the Durban to Johannesburg market. In particular we have seen that it is far more cost-effective to unpack containerised products at the port and to then load them onto bigger vehicles and transport them to Johannesburg.
“At the moment the transport and distribution business accounts for no more than 30 per cent of our revenues, with the majority covered by warehousing; we anticipate seeing more growth from transport and distribution and that is where our focus is going to be,” he concludes. www.rds-sa.co.za
