Bigger and better

EMPA Middle East is building its own distribution centre in Jebel Ali and planning to launch door-to-door distribution within the UAE to give it a higher level of service in the competition IT distribution sector.

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By  Neil Denslow Published  May 2, 2005

|~||~||~|IT distribution company, EMPA Middle East is re-examining its logistics strategy in order to better support its growing business. The centrepiece for the overhaul will be a purpose-built distribution centre in the Jebel Ali free zone, which will enable the company to hold its currently divided stock in one location. The company, which handles products from the likes of Intel, MSI, Fujitsu, Acer and Toshiba, is also set to launch door-to-door distribution with Aramex within the UAE in order to help customers bypass the country’s bureaucratic customs processes. EMPA launched operations in Jebel Ali in 1998, primarily distributing Intel processors from a 500 m2 warehouse. Since then, the company has grown into a major player in the regional IT sector. It registered sales of US $80 million in 2004, and $24 million in Q1 2005, with the aim of hitting of $110 million for the year. By 2007, the company is forecasting sales of $150 million. Logistics has played a key role in the company’s growth, as the IT sector requires both fast fulfilment and low transportation costs. “Our customers need very short timeframes, maybe half an hour to an hour, before they get the shipment,” says Mosses Joyce, logistics manager, EMPA Middle East. “Otherwise, with all the competition that there is, they will find the product from another vendor.” Providing a low cost fast service begins with the company’s freight strategy. EMPA uses different forwarders, predominately, Danzas, Eagle Global Logistics (EGL) and Expeditors, for its shipments in order to get the quickest shipments and best rates from different parts of the world. “Our strategy is very simple: if they are strong in a particular region we use them,” says Joyce. “The main advantage for us is to get more favourable rates and daily services, as the transit time for shipments is very important… The price fluctuates a great deal in the market, so we need to concentrate on the freight part,” he adds. Last year, EMPA’s total import volumes hit 650 tons, up 60 tons on 2003, in line with the company’s wider growth. This figure is expected to rise further in the coming year, as the business grows and it launches more products and brands in the region. To support this growth, the company is set to start building a new 1335 m2 warehouse in Jafza South, which should open in Q1 2006. An extra 1225 m2 has also been earmarked for a possible phase 2 development. The move will enable EMPA to consolidate its stock, which is presently split between its own 500 m2 warehouse in Jafza and Modern Freight Company’s 3PL facility. “As the business increased and the volumes increased, we had to find more space…and because, of the space constraints in Jebel Ali, we started working with Modern Freight for the 3PL in 2002,” explains Joyce. EMPA opted to work with Modern Freight for a number of reasons, including its quick picking times and because the 3PL’s Jebel Ali warehouse is nearly next door to EMPA’s own facility. “The rate is okay and they are very close by,” says Joyce. “The support is also excellent, and the picking times for shipments are comparatively short.”||**|||~||~||~|At present, EMPA is storing it small high value items, such as processors, in its own warehouse, while holding larger bulk items, including monitors and motherboards, at Modern Freight’s facility. (Modern Freight also handles the freight forwarding for EMPA’s containerised shipments.) This division makes the best use of the available space, but it obviously adds complexity for customers collecting goods. “In the initial stages, people complained that they had to collect two cartons from here [at EMPA] and then 10 cartons from the other warehouse, although it was a single order,” comments Joyce. “We are giving them good support without any delays and it [MFC] is close by… However, this split is not ideal and it is the main reason we are going to open our own warehouse,” he adds. EMPA plans to run the new warehouse in-house rather than relying on a 3PL to manage the facility. This will mean increasing the existing logistics staff from 11 to manage the larger and more complex operation, but Joyce says it will enable the company to more effectively leverage on its installed knowledge base. “Our people know the products, they know how to store them and they know how much time they will lie in the warehouse for,” he says. “With this know-how, we can then better understand and, accordingly, operate the warehouse.” Alongside the move to the new warehouse, the company is also planning to change its distribution strategy within the UAE. At present, EMPA’s customers have to organise the collection of goods and handle all of the paperwork associated with moving items out of the free zone themselves. However, the IT distributor believes this is costing it business opportunities, particularly among smaller clients, as the bureaucracy takes the best part of a day to complete. “We have talked to several present customers, and they have all said the same thing,” says Joyce. “We do not have a person we can send to collect just one or two notebooks.” To get round this problem, EMPA is working with Aramex on a scheme to simplify the export process, with the most likely outcome being the formation of a sister company registered in Dubai. Future orders in the UAE would then be consolidated by the mother company and then exported to this new entity, with all of the customs clearances done in one go. “We will sell to our sister company… in one invoice, and then they [Aramex] can distribute from there,” explains Joyce. “We will start with laptops and LCD monitors, and then perhaps move onto desktops in the next stage. These kind of things will be feasible in the initial stages.”||**||

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