Axiz, one of the largest distributors in the IT market, has invested more than R10 million in expanding its distribution and manufacturing facilities in Rivonia. This is in anticipation of changing markets and to allow it to become a global player.
Key measures of the expansion over last year have been a doubling in sales staff over the last year, from 20 to 40; a fivefold expansion of the warehouse, from 300 square metres to 1 500, and a similar fivefold increase in operational facilities; a trebling of production on the memory assembly line, with a further doubling planned for 1999; the opening of a Pretoria office; and the separation of marketing from sales.
"Our core business is distribution of computer components," says Axiz MD Anthony Fitzhenry. "Our objective is to get the right product to the customer in the quickest way, at the lowest cost. This is a high-volume, low-margin business, which puts the onus on us to implement best operational practices, reduce costs, optimise efficiencies and benchmark ourselves against the best distributors in the world."
The three distributors Axiz has chosen for benchmarking are Amazon.com, Dell and Coca-Cola. "These are global leaders who have understood that the greatest gains in cost reduction and competitiveness are to be had in the area of distribution," says Fitzhenry. "85% of the cost of a product goes into distribution, and only 15% into the actual manufacture. If you can shave 10% of the manufacturing cost, you have only shaved off 1,5% of the actual selling price; a 10% saving in distribution, on the other hand, translates to 8,5% reduction in selling price."
The other area that Axiz is focusing its attention for business improvement is in training its salespeople in customer intimacy. "Operational excellence and customer intimacy will be the differentiators of tomorrow`s winning distributors," notes Fitzhenry. "We have spent the last 12 months training all our salespeople to get ever closer to their customer and to create the relationships that allow us to retain and enhance the relationship."
Axiz has invested heavily in improving the efficiency of its warehouse, introducing flow-racking as the basis of electronic picking, which it aims to have implemented by 2003.
Axiz, already the largest Intel distributor, has boosted its share of the memory market to 43%. It has achieved this through running three shifts a day, seven days a week. It is doubling its capacity with a further R5 million investment in component assembly machinery, in the process trebling its memory output. This makes it a global player in the memory market.
"Our quality has remained exemplary," says Fitzhenry, "with returns down to one in 10 000."
"The goal of all this is to be the best distributor globally by 2003, for our suppliers and our customers, by any measure in our markets," stresses Fitzhenry. "With the speed of development today, and the level of disintermediation made possible by the Internet, our business model could change overnight. Virtual companies such as Amazon.com could be our biggest threat and we need to be ready for that by being even better than the best."
Share
Editorial contacts