The Covid-19 pandemic has fast-tracked business and digital transformation in the material handling and industrial equipment sector. It’s a change that EIE Group CEO, Gary Neubert, says is the silver lining in an otherwise difficult period.
EIE Group distributes and rents industrial equipment such as Toyota Forklifts. In addition, the business adds value through service maintenance, the provision of parts and disposal of product at end of period.
Neubert discusses how the material handling and industrial equipment sector has responded to the pandemic. In addition, he provides a glimpse into the future of the industry and just what it takes to run an agile, forward-thinking business both during and post-pandemic.
The pandemic’s impact
We witnessed the closure of several original equipment manufacturers (OEMs), especially in Europe during early stages of the pandemic. While many OEMs in Japan continued to operate, although at reduced volumes, throughout the pandemic, several manufacturers in China also closed their operations down for a period of time, largely because their staff couldn’t get to work. These countries, however, got up to full production a lot quicker than anybody else because they dealt with the pandemic a lot earlier than anyone else.
European manufacturers adopted much stricter measures in managing the Covid-19 outbreak. In Sweden, for example, all administrative staff worked from home while production continued at about 40%.
Most manufactures are now getting back to normal production, however, there are countries such as the United Kingdom, where the economy there hasn’t opened up fully yet and production is only up to 40%. This is where the impact is going to be fairly significant. This is supported by market statistics that indicate numbers in Europe are down substantially.
Locally, Covid-19 has impacted the market significantly. Orders for April and May were down 50% plus compared to the same period last year.
From our business’ perspective, we have the four links in the chain: we distribute product; rent product; add value through service maintenance and parts; and dispose of product at end of the period.
Close to 40% of our rental fleet was operating in April, largely due to our role as an essential services provider, in support of the country’s retailers. This figure increased to about 85% in May and is back to 100% now, with all of our technical employees back at work.
Maintaining full customer support
Our business continued to support essential service providers such as retailers from the start of the lockdown. Our administrative, sales and finance employees were quickly equipped to support our customers while working from home. A core team of technical staff, made up of roughly 45% of our technical team, continued to work throughout the hard lockdown period. We had an additional technical team on standby to step in if necessary. The team was ramped up in May when the country transitioned to level 4 of the lockdown and demand for our services increased.
While we obtained the necessary permits to continue operating during lockdown, we only issued permits to essential staff members. That said, we were 100% available to deal with all our customers’ needs.
Up front, we established a business continuity plan that clearly outlined the various policies and procedures for lockdown. These were (and continue to be) strictly adhered to by our employees and customers. For example, our technicians are issued with spray bottles and before they were allowed to work on a forklift, they are required to spray down the entire machine.
We also invested in quality PPE to ensure the protection of our employees and we require safety compliance from our customers as well. If there is any risk to our employees, we engage with our clients to minimise those risks.
The next weeks and months are going to be a lot tougher as the pandemic reaches its peak and we are going to become even stricter in terms of PPE requirements. All employees who come back to work are expected to undergo a comprehensive induction programme and they are not permitted to move around the premises without the correct PPE.
Borders and supply chains
We continued to source parts and equipment from Japan and our OEMs as ports remained open for essential service providers. All of our equipment comes into Durban’s port and our freight forwarders were open all the way through the lockdown. We did, however, have to air freight more parts in than we normally do, but this seems to have normalised now. In general, we carry sufficient parts to carry us through a defined time period, which carried us during lockdown.
The new normal of sales
The greatest change for our sales team was working from home and dealing with customers online. They were continuously in touch with their customers during the hard lockdown to ensure their requirements were being met and to gain an understanding of what their requirements would be for the different levels of lockdown. There is no doubt that the face of sales has changed forever, and companies are going to need to adapt to this new normal.
Embracing the fourth industrial revolution
Our industry has to become a lot more effective and efficient in how we run our businesses from a digital perspective. The big opportunity for our business is the packaging of related products into our current stable and promoting our products and offerings online, as well as encouraging customers to do more of their research online to better understand the products.
The Covid-19 pandemic has had several positive spin-offs for us and changed the way we think about and conduct business. The silver lining is that the most agile and change-fit companies will survive through this and come out a lot stronger.
But it is not just sales and marketing that benefits. We have implemented a full digital transformation strategy in the business that is changing what was the norm, and taking a legacy industry from a paper-heavy production into the digital space. Every investment in technology has an end in mind – and our end is to streamline operations that ultimately improves the business and the customer’s experience.
The future of the material handling industry
There will always be a place for material handling in South Africa because forklifts will always be needed if you want to lift and move products. There may, however, be a move towards Automated Guided Vehicles (AGVs), especially in new warehouses. Obviously, this will need to be weighed up against our high unemployment rate – so we don’t see this happening on a major scale in the short term. We also expect the warehouse industry to grow in response to the spike in online buying.
We expect the rental market to grow significantly. Prior to Covid-19, the rental versus cash business was about 50/50 in South Africa. We expect that several companies will want to preserve their cash post-Covid-19 by rather opting for the rental route. This will align with the European market, which is a mature, and predominantly, rental market.
From an internal operations perspective – certainly at EIE – sales, administrative and finance employees will continue to work from home and the majority of meetings will still be conducted online. This means less travel and less office space. If people do come to work, they will need to book a work space for the day or a few hours using a bespoke online booking system.
Future-proofing a business
No textbook can teach business leaders on how to deal with a situation such as the Covid-19 pandemic. Agility is key and businesses need to be in a position where they can adjust quickly. When we were in the main lockdown phase, we had to take every day as it came.
My single biggest word of advice is to communicate, communicate, communicate. At EIE Group, we conducted EXCO meetings every morning to review what was happening from a pandemic perspective and make decisions from there about what to do in the business. This was then communicated to all of the managers and their teams. We kept our people constantly informed. Every week, I sent out a video message to the business to let all employees know what was going on and how the business was handling the situation.
This type of agility keeps a business on its toes and able to react when necessary. Be agile, and communicate.
Personally, I learned the importance of having a strong team around you that you can rely on. It is important that your various teams work hand in hand. Our daily communication sessions were fantastic from a team point of view.
Importantly, if a business is open minded and agile, I believe it will be well positioned to harness opportunities, no matter how difficult the situation.