Material handling outlook

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There has been an increasing need for inventories to be stored, which has added pressure to current facilities and forced the expansion of existing warehouses and storage space.

A similar experience exists over at SPAN, where those who used to look for a fast operation are now exploring the possibility of implementing high density storage to ensure better quality customer service. “Those who used to prioritise cost over quality have realised that investing in premium machinery is effectively a better plan for long-term cost saving,” says El-Ghossaini. “So what we’re seeing is that in addition to the high demand for WMS and warehouse optimisation IT solutions that SPAN offers, many customers are acquiring our Demand Planning and Forecasting Solution to help them minimise their stock and improve service levels.”

For Famco, the downturn has meant that specific industries, such as FMCG and retail, have seen inventories rise rapidly as sales demand for products recedes. “These inventories have to be stored, which has stressed current facilities and necessitated the expansion of warehouses to cope,” states Dronfield. “This results in increased storage and handling requirements. Specific operations are also experiencing increased demands on their handling equipment fleets, resulting in greater frequency of servicing, and subsequent demands on our team of service technicians.”

An area that has been seeing significant recent interest is that of garment storage and handling, according to Famco. Systems that are standard in high-labour-cost countries – such as powered overheard rails and automatic transport to unique storage locations – are going to become more common in the Middle East as operational criteria and demands evolve. Furthermore, Dronfield also feels that distribution centres in this part of the world will become more focused on product movement, not just product storage.

“The dynamics of a distribution centre have to be considered, and the pressure will be on to fulfil the orders to ensure on time shipment and submission of the invoice,” says the Famco executive. “The design of the distribution operation should be focused on efficient and effective movement of the product to ensure quickest consolidation of the order. Materials handling will have to be at the best to cope and solutions will include systems designed to minimise fork truck movements across the distribution centre.”

Such systems include ‘satellite’ or ‘rack entry modules’, which replace the trucks needed to enter storage systems. This releases the time spent by the trucks and operators working within storage areas to focus on more productive operations, increasing the turnaround on order and maximising the return on capital invested.

Long term, however, there seems to be good news about the industry’s future in the Middle East. After all, multi-modal logistics has been a key part of the history of this region for centuries; one could argue that it is a far more natural fit than the financial or real estate markets. “From our point of view, the Middle East has a high potential growth in this sector,” says Ehrhardt. “Customer awareness is always rising and the quality, rather than the price, of goods will be even more important in the years to come.”

A factor that will aid success is the willingness of local governments to invest in the supply chain. “The support has been vital for promoting the business and helping international companies to set up in the region,” says SPAN’s El-Ghossaini. But one area where the government can assist further is the duty drawback option that expires on equipment over six months old. Some executives believe this should be lengthened to 12 months to allow companies to stock to more aggressive levels.

But the general consensus seems to indicate that the outlook remains bright. “In today’s economic situation, clients are looking for a solid vendor who has secured a sizeable customer base that can guarantee all existing customers will benefit from quality long-term support, excellent after-sales service and continuity for the coming years,” says El-Ghossaini.

Companies that can adapt to the needs of the consumer are clearly going to be in a better position when the upturn comes. Some industry observers are asking what firms are doing now that major financial indices are starting to stabilise. While it’s impossible to tell when the market will be back in force, it would be foolhardy not to make sure you are ready to reap the benefits when it does.

“The opportunities for the material handling industry are limited only by the current levels of understanding of the industry and willingness to invest,” concludes Famco’s Dronfield. “The diversified mix of industries and users will ensure the ongoing development of the industry, and provide a considerable number of opportunities for everyone concerned.”

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