Interview Frank Courtney, Barloworld Logistics CEO EMEA
A collage of lush greenery, quaint villages and seemingly endless rolling vineyards flashed on the screen as the camera panned across the French countryside, coming to rest on a red-clad cyclist, his chest emblazoned with an emblem bearing the name: Barloworld.
As millions watched, more cyclists filled the screen, but the red-clad rider edged ahead of his competitors and shot across the Montpellier finish line. The Barloworld rider had stunned the more well-known teams with a clinical performance. His name was Robbie Hunter. He was riding in the 2007 Tour de France. He eventually ended up an unexpected second overall in the points classification for the race that year.
Afterwards, Hunter had a message for his homeland fans: “I hope it shows everybody back in South Africa that anything can be achieved if you try hard enough and give it your all.”
Fast-forward to the present, and South Africa-founded Barloworld is in the midst of another challenge on foreign soil. This time the youngest member company of the 110-year old group – Barloworld Logistics (BWL) – is aiming to rival the more recognisable supply chain industry names here in the Middle East.
And, in the legacy of Hunter, they are certainly ‘giving it their all’. Even though the UAE has yielded only three per cent of Barloworld’s US$517 million yearly logistics turnover thus far, the company has invested deeply in the country, and the CEO for the Europe Middle East and Asia Regions, Frank Courtney, is positively optimistic. “Comparatively, it’s a small percentage, but that doesn’t mean it’s not important. This is relatively a new investment with an exciting future. We hope to increase this to a more meaningful number. So strategically, this is a very important market for us,” he says.
Since its entry in the region in 2008, the company has acquired several logistics firms in the Middle East, the Far East and Europe, including the UAE’s Swift Freight International LLC, which has since been rebranded to Barloworld Logistics.
It has spent the past three years aligning the services of the acquired subsidiaries to match the Barloworld image; offered products not core to the firm were eliminated or sold. This included Swift Freight’s Africa trader business, which BWL gauged to be valueless to their particular target market. However, rather than shut it down and retrench 330 employees, it helped set up a separate company and sold it off as Swift Freight – a firm that now operates independently, off BWL - to former CEO EMEA Warren Erfmann.
Today, Barloworld Logistics stands as a “complete” end-to-end supply-chain solutions provider and has moved into the next stage of its challenge. Part of that next stage entails providing companies with a “smart supply chain”.
“BWL strategically has an asset-light business philosophy and avoids unnecessary assets. We believe in a blank page approach with our clients. This means we try to understand their needs and offer appropriate solutions, as opposed to dumping our resources on them,” says Courtney.
“So we don’t force our asset-based solutions onto a client if it is not required by him. What is most important to understand here is that when companies want to optimise their supply chain, they often end up looking to their suppliers for rate reductions. With the advent of the financial crises, suppliers’ margins are down to the bare minimum and suppliers are hardly in a position to bring meaningful savings.
“If you look at the logistics industry the number of acquisitions, mergers and closures in that market is a testimony to the real pressure under which companies are operating. The real savings are not in squeezing suppliers for a few percentages points of savings but by stepping back, taking a holistic view of the entire supply chain, thinking innovatively and looking for synergies. That is where optimisation comes from,” he explains.
“Many businesses believe that service level improvement can only be achieved at a higher cost. BWL philosophy is to reduce the cost and improve service levels simultaneously. This allows companies to use their supply chain to achieve their strategic goals.
“We are currently looking for companies with a burning need to change. This need to change or partner with us could be driven through financial or service level objectives or both.”
One such partner they have found is Pan Emirates; Barloworld signed a partnership to optimise the supply chain of the UAE furniture retailer in January this year. And, now the challenge for the company is to get other firms to think likewise and make use of the vast experience the group provides in an area that can potentially become unnecessarily time-consuming and costly.
“Our growth strategy in the UAE is obviously to create a niche and a competitive advantage for ourselves through our product offerings, that is, to offer smart supply chain and integrated solutions. Most businesses in the Middle East have grown rapidly and often; the organisational functions are not integrated thereby leading to inefficiencies in the business. This gives us an opportunity to offer our solutions across multiple verticals and clients,” says Courtney.
“Our focus is to align our clients’ supply chains to their business strategies. Often companies are not using their supply chain to their strategic advantage. Supply chain should be a strategic advantage and not a strategic disability. We enable companies to match their supply chains to their business strategies to achieve their goals.
“Our primary objective is to educate our potential clients about our capabilities and the transformation that we can bring about to their business. Organisations in the Middle East try to manage their supply chain by themselves. Many are yet to consider the idea of outsourcing. Pan Emirates is one of the few exceptions to have pioneered in this direction, which we believe will be the norm in the future, as companies would like to focus on their core competencies.
“As organisations begin to see value in outsourcing, acceptance across industrial verticals will become customary. We will then extend our product offerings to leading clients and in multiple geographies.
“Outsourcing is all about partnership, trust and relationship. We want our potential clients to trust us for our capabilities and value offerings.”
Having acquired 11 companies, grown their annual income from $29.4 million to $517 million and expanded from 17 locations in South Africa to 87 worldwide, all in the past 11 years, the UAE is another stage to conquer for BWL. However, as any cycling enthusiast will tell you, a race is made up of several stages on different terrains, and in terms of BWL’s overall race for success, this means always keeping the big picture in mind – like the further lucrative opportunities lying in wait around the Middle East.
“We intend to grow our UAE base and extend supply chain offerings to the neighbouring states,” reveals Courtney. “Other than UAE, we also have opportunities from Saudi Arabia and Qatar and we intend to explore them from a long-term perspective.
“We see a huge opportunity to invest in the Middle East market. Primarily, the long-term compounded average growth rate forecasted for the Middle Eastern economies is in double digit numbers, as these economies have organic growth. We have also observed that not many companies have been offering smart supply chain solutions to clients.
“During the past few years, we have noticed tremendous interest in our solution offerings and the response from our existing clients has been positive.”
With 110 years of experience behind them, the Barloworld Group may well ease through the throngs of supply chain companies in the region to add another conquest on foreign soil. At least its CEO thinks so: “There are not many companies which have been around for 110 years. This means that we have been doing the right things. We are a company that looks for sustainable opportunities. We do not take things lightly and when we make the decision to get involved, we look at it with a long term view,” says Courtney.
“Our entry into the Middle East market was given considerable strategic thought and we are here to build a business for centuries to come,” he adds.
“At Barloworld, apart from the history, you get a sense of belief and trust to work with. Our history proves that we will do the right things right!”