WSP says light industrial property has room for innovation

18th May 2020

By: Marleny Arnoldi

Deputy Editor Online

     

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Professional services firm WSP says it is not all doom and gloom in the property sector, especially not in the light industrial property space.

The firm adds that it is often darkest before the light and some of the most difficult periods have led to great innovations, new approaches and renewed opportunities.

“Business leaders and investors will still look for opportunities, no matter the state of the economy – it is all about managing risk, and managing upfront capital investments, against long-term return on investment.

“And this is the investment approach we continue to see in the light industrial property space,” WSP notes.

Over the past several years. there has been steady interest and growth in activity in the light industrial property space, including warehousing, storage and distribution centres.

WSP says it has seen big retailers, who have been successful even in these trying economic times, developing large and centralised new warehouses and distribution centres.

Shoprite was one of the first to move in this direction, and since then other retailers have also considered adopting similar strategies.

The firm explains that the reason for this is that in a difficult market, where pricing is increasingly competitive, businesses are looking for an edge or advantage that will help them stay ahead of their competition.

One way to achieve this is through driving efficiencies in how they manage their distribution and supply chains. Through considered and strategic investments in establishing warehouses and distribution centres in good and centralised locations, these businesses are able to be more astute in their procurement and processes.

Driving efficiencies can also lead to knock-on cost savings, which better enables these businesses to deliver the best value for money to their end consumers as well.

In addition to the new, or greenfield, projects, in the past few years WSP has also seen a number of brownfield light industrial, warehousing and distribution centre projects.

“Despite the challenging economic times, businesses still recognise the value in strategic expansion and/or refurbishing projects. A lean market can be a perfect opportunity to implement these projects, as companies are often reluctant to take portions of their process offline during peak times.”

WSP further highlights that, prior to the Covid-19 global pandemic, there were pockets of growth in South Africa where disruptive technologies, such as automation, had been adopted.

However, owing to the investment cost to implement such technologies and the inherent social responsibility that business in South Africa have to preserve jobs, businesses have resisted widespread automation.

For the most part, companies still look to implement a warehouse management system (WMS) or an enterprise resource planning system with a strong WMS module, which aid in driving significant improved efficiencies.

“However, it is widely understood among operators that when implemented correctly disruptive technologies, including automation, can certainly bode massive workflow and operations efficiency benefits for the facility.

“And, in light of the impact the Covid-19 outbreak is having on how we work, across industries, research suggests that this is likely to raise issues of supply chain resilience and mitigation, as well as may accelerate the use of automation and robots in operations and reduce reliance on labour,” says WSP.

The firm adds that there is a direct link between the stability of an economy and ongoing development.

While the Covid-19 outbreak is having an impact on productivity and growth across all tiers of the economy in the short term, South Africa is not alone in this and there is room for optimism.

“Companies that can afford to adapt and make diligent investments to increase the capacity and efficiencies of their warehousing, storage and distribution facilities to where they need to be – to meet the changing market needs - will be resilient well into foreseeable future,” WSP concludes.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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