Formed just eight months ago, Imperial Logistics Refrigerated Services is preparing a paradigm shift in refrigerated logistics services in South Africa. Managing director Gavin Wilson explains to Gay Sutton his vision for the future.
It is a long held wisdom that any company that remains static is in fact in decline. And during times of global economic uncertainty, it’s even more important to be flexible, alive to opportunity—and above all, creative. “We believe that our marketplace is right for a step change,” explains Gavin Wilson, managing director of Imperial Logistics Refrigerated Services. “And not only a change in mindset: the global economic situation is forcing a lot of organisations to rethink their company focus and to reassess exactly what constitutes their core business.”
Imperial Logistics Refrigerated Services (ILRS), part of the Imperial Logistics division of one of South Africa’s largest companies the Imperial Group, was formed in July 2010 through the merger of four companies within the group. Fast ‘n Fresh—originally headed up by Wilson—and Liebentrans were leaders in their field in the transport of refrigerated produce, one transporting perishable food predominantly for the retailer Woolworths, the other transporting fresh meat between abattoir, wholesaler and retailer. The third company in the mix was a smaller family owned fruit transport business located in the north of the country, in which Imperial is now a majority shareholder. The three were obviously complementary to each other: “Our aim in coming together is to achieve economies of scale and to provide a better offering across the marketplace,” Wilson says.
The fourth element of the merger, however, heralds something of a change in strategy for the other three companies. “As companies, we have grown organically and by acquisition, and historically we have always acquired assets: trucks, trailers and bulk infrastructure,” Wilson explains. “The final element in the merger is a fourth party logistics provider, known as our 4PL division. It’s what we call asset-light, and consists of an office that simply matches companies looking for transport with those that have transport and are looking for commodities to move,” he continues. “This will help us to improve our return on investment ratios, particularly for the perishable foods business. It will help us ensure our vehicles are filled for their return journeys and also, by building relationships with reliable smaller operators, it will enable us to use their services without the necessity of investing in assets.”
It is, however, by developing a new strategy for growth that ILRS hopes to revolutionise South Africa’s refrigerated logistics marketplace. Wilson believes that with many global organisations operating in South Africa and benchmarking their performance against global best practice, the next big growth area in the logistics market will be complete outsourced logistics services. This model already operates extremely well in many parts of the world, and delivers significant efficiency and cost savings. And given the current economic conditions, companies are increasingly focusing on their core business, and outsourcing the rest.
“Each element of our company has a very good record of executing a transport service for customers, delivering from A to B. That’s where our strength lies,” Wilson says. “The plan is to build on that with end-to-end logistics services.”
The model that ILRS is developing will include providing an in-depth analysis of the existing customer’s logistics requirements, based on detailed information provided by the customer along with ILRS’s experience of their current operational processes. The company will also draw on the expertise of other divisions within the Imperial Group such as the Integration Services division, which has particular expertise in supply chain optimisation, and will amalgamate all the findings to devise a detailed total logistics offering.
“The challenge for us will be in changing old mindsets,” Wilson says. “Many organisations are happy in principle to outsource, but then tend to tell us how we should do it rather than to provide us, as the logistics experts, with the information and allow us to have the freedom to suggest and recommend how best we can provide those services.”
An example of how this could pan out in the future is a plan being developed for Fast ‘n Fresh customer Woolworths. Until now, Woolworths has been paying a huge number of different suppliers to produce and deliver chilled goods to its distribution centres. “We have put together a proposal suggesting that if they purchase from the factory gate, we can optimise our transport fleet which has been doing outbound deliveries for them, and collect direct from the factory as well, delivering significant cost savings.”
As one of the first such proposals, it has been a huge undertaking, and the company has drawn on the theory and practice developed by world leading organisations such as Walmart, as well as the skills and knowledge of the Imperial Group. Going forward, the plan is to begin with well established customers where a relationship of trust has developed over a long period of time, and then ultimately to take the concept out into the wider marketplace.
As a new company, ILRS not only has an ambitious vision for the future, but it has also spent the first six months aligning the four original companies into a single entity, managed from a new head office in Cape Town. “Much of this work has involved the softer issues of bringing together the different cultures and approaches.” A considerable number of roadshows have been undertaken for staff and customers. “Initially, there was individual tension and fear amongst the staff that this was purely a cost cutting exercise. But that was never the intention. Everybody who was with the four companies is still part of the new entity, and those fears have now subsided.”
Alongside this the company has tackled some of the basic structural integration issues by analysing the IT systems and operational requirements of the four original companies and drawing up a plan that will allow them to completely harmonise their processes and cultures while continuing to provide a top quality service.
Beginning in January this year identical ERP, accounting and payroll systems are being implemented across each company. “At Fast ‘n Fresh we developed our own in-house Transport Management System which proved very successful, and we’re also in the process of rolling that out across the new companies.” The main benefit of this system is that it provides real time visibility of processes, of all of the different disciplines, across the business.
Work on the IT infrastructure and systems is scheduled to be completed by the end of this financial year, not only creating a single organisation with one way of doing things, but also a great springboard from which to market the new service offering.
