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Review of operations –
Bid Industrial and Commercial Products continued |
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| Proudly Bidvest |
| Business units, notably Waltons, have embraced the Bidvest mymarket e-procurement initiative and derive substantial benefits. The leveraging of inter-group strength and buying power is a source of competitive advantage in some areas. Proudly Bidvest has become a key component in the editorial mix of company marketing material, the CN Business brochure being an example, and has elicited a positive response from customers. |
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| Differentiation |
The scale of our operations and our extensive national footprint enable us to offer pricing efficiencies and the promise of professionalism and reliability. Our companies are well resourced. Our stockholding can be substantial. Our track record for customer support is well established.
This value proposition is being accentuated by the pace of growth in some segments of the economy. As companies become concerned about reported bottlenecks or stock shortages, the business case for dealing with the well-resourced market leader is further strengthened. |
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| New structures |
| In May, Vulcan Catering Equipment joined our manufacturing operations following a restructuring at our sister-company Bidfood. In November, we acquired the distributorship for LS products, a strong electrical products and accessories brand that will support our penetration of the commercial and industrial sectors. |
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| New investment |
Significant investment was made in branch infrastructure across all business units. The nationwide process involved new branch openings, relocations, refurbishment and additional facilities.
Waltons, in particular, made good progress with the strategic upgrade of its retail identity while further strengthening its Gauteng footprint through new store openings in Park Meadows, Strubens Valley, The Wedge (Morningside) and Fourways. CN Business continued its ongoing programme of showroom renovation and strengthened its distribution infrastructure with the opening of a new Gauteng warehouse. |
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| Innovation |
To provide a total solution to customers, Voltex has launched a collaborative effort with the builders of electrical distribution boards. These specialists are allowed to work from our premises on the design and development of these products. This gives the board builder instant access to all the necessary resources while we strengthen the relationship with the industrial customer or the projects that require distribution panels.
Stronger central support for our internal customers – our branches – remains a point of focus. We recently formed a 2010 committee to identify opportunities linked to major infrastructure projects. The committee will coordinate the efforts of all divisional companies and branches, remove duplication and ensure efficient service.
Central support on this pattern was successfully pioneered a year ago when we created two initial committees to assist branches with national contracts.
A technical committee was given the task of evaluating the technical performance of our products to ensure they meet all relevant specifications. Strict quality control in support of the sales function has become vital as competitive pressures mount.
Simultaneously, a tender committee was set up to examine tender documents and develop quotes on behalf of our branches.
These central support functions take the pressure off branches, enabling them to concentrate on customer service and sales.
In addition, we have imported an exclusive range of quality Korean manufactured electrical products, the LS brand, and are marketing them directly through our branch network. This creates an opportunity for branch operations to drive the growth of a new range without relying solely on price differentiation for similar products. |
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| Black economic empowerment |
A further initiative involves the development of a new generation of leaders by identifying and fast-tracking staff with high potential. This “Top 100” programme is open to all, with strong representation by historically disadvantaged South Africans.
Candidates take two in-house exams; one to test general knowledge, the other to assess their ability to deal with issues that frequently face management in our industry. Those who succeed will have further exposure to new role-play and problem-solving exercises. No one “fails” as all participants are free to re-take the initial tests at a later stage, by which time they will be better prepared.
It is hoped the process will help to prepare a new wave of managers for responsible positions and help retain BEE talent – a major challenge.
BEE improvements are consistently achieved across the division. Waltons has achieved an “AA Level 3 Contributor” BEE rating and has established a national BEE committee to drive sustained improvement. All the other businesses are currently awaiting their new ratings.
BEE procurement reached R2,3 billion, representing 51,8% of our discretionary spend. |
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| Corporate social investment |
| R3,7 million was spent on corporate social investment. The process is driven at local level by our branches, ensuring strong focus on community upliftment. |
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| The future |
Bid Industrial and Commercial Products will pursue double digit growth in both revenue and trading profit in 2008. The economic environment is expected to remain generally positive in the core South African market, though the rising trend in interest rates will have to be watched closely. Credit and cash flow management will be key focus areas for the entire division.
Our pursuit of new business in the municipal and parastatal sectors will be assisted by the full-year effect of the newly promulgated codes of good empowerment practice. In the past, potential customers sometimes applied arbitrary weightings to various elements of the BEE scorecard. Promulgation of the revised codes will ensure greater consistency in BEE scoring and interpretation. This trend was noted toward the end of the reporting period and enabled many of our companies to make inroads at municipal, parastatal and governmental level.
Though continued growth in the domestic market is anticipated, export opportunities will not be neglected. Opportunities exist for the export of patented and strongly branded products. |
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