T he trend to develop bigger centralised warehouse facilities in desirable urban precincts close to arterial routes has continued unabated despite the pressure on retail sales in South Africa. Martin Bailey, chairman of Industrial Logistics Systems (ILS), a local and international expert in distribution centre and operations design, said the global trend was expected to continue. “Warehouses are being built higher and they are more centralised, so if a company has six branches they now want it all in one place. They are closing down smaller warehouses and as a result there is no longer any demand for those smaller facilities.” Bailey said the global trend had seen firms like Walmart grow bigger due to the sheer scale of their operations which enabled them to obtain costeffective access to products, leading to the demise of smaller businesses in the retail sector. “For the last 30 years centralisation has been a trend, although it was thought that one day it may no longer be, especially when the price of fuel hit $100 a barrel – but then it hit $60,” he said. Bailey added that the benefit of centralisation was that it resulted in reduced inventories and improved quality control and management – although there were some exceptions to the rule including high volume goods such as non-alcoholic beverages that were better distributed via decentralised facilities close to the market. According to real estate specialist JLL's national director Bruce Fields, the standard height of modern warehouses is now between 13.5 m and 15m, compared to 9-10m ten years ago. Warehouses were also experiencing a shift in labour patterns, Bailey said, with firms seeking to be compliant with the stringent new labour regulations around temporary staff, employing permanent labour rather than temporary labour. “There is a trend to comply with the legislation and some companies outsource the whole operation through a third party and they control the labour,” Bailey said. Most centralised warehouse facilities were now implementing labour incentive programmes to improve productivity. “We have software that uses scanning or voice technology which measures every step a worker takes.” However, Bailey said that despite the hype around the fourth industrial revolution, there was currently little evidence of implementation in the warehousing sector in South Africa, apart from some operations servicing the pharmaceutical sector. “It is an industry that can adopt automation – and we talk a lot about the fourth industrial revolution. There is a bit happening using track and trace and cloud-based computing, and we talk big data and blockchain, but blockchain would just be a cost for the industry that won’t add much value,” Bailey said. “You could automate almost anything in a warehouse and have a ten-fold reduction in labour – and that’s an easy thing to do – but there are a number of difficulties. Firstly, you are paying for the technology in euros and it’s expensive, and the second thing is finding someone to maintain and fix it.” Bailey said the introduction of technology in warehousing would also require a change in management culture regarding the investment of resources in technology and engineers. “If technology is chosen for the right reason there is a huge financial benefit,” he said. Warehouses now benefited from the reduced cost of security technology such as cameras and backscatter X-ray scanners which can see through clothing to produce a 3D image. He said other crime-fighting measures employed included weighing of pallets and the use of additional human checks of goods. He added that most medium-sized warehouses were fitted with generators – and firms were also installing solar panels to ensure sustainable electricity supply and to contain costs. However, the country’s warehousing sector remained behind the global trend of green buildings and the use of energyintensive air conditioning units remained common. “In Germany they pump water from the ground, which gets to 18 C. We have not got to that yet but we have got to putting inverters in our air conditioners and that is a 10% reduction in energy use. But we probably use less energy than a warehouse in Germany,” he said.
INSERT: Most centralised warehouses are now implementing labour incentive programmes to improve productivity. – Martin Bailey
