A discussion with WHS’s group MD

A discussion with WHS’s group MD

Plumbing Africa sat down with Gustav Mertz, the recently appointed group managing director of Wholesale Housing Supplies (WHS), in a Q&A session.

Mertz joins the group with 24 years of experience in the transport supply chain, coupled with a wealth of logistics experience. WHS’s Saffer division will continue its primary role as break-bulk distributor of plumbing supplies to merchants.

Q. What have been the challenges in this area of the business?

A. There is no denying that we are operating under depressed market conditions. We find that because the customer order value has decreased, as well as reducing their stock levels, we become the customer’s warehousing facility. We then have to ensure regular and consistent deliveries. Rising costs of distribution, including fuel, means we need to operate smarter. Customers believe that by going directly to the manufacturer, they will see major cost savings, but it is a short-lived option, as the cost-to-serve is unsustainable for the manufacturer. For our manufacturers and suppliers, on-time and in-full (OTIF) has had a major impact on our fill rate to our retailers/merchants.

Q. How are you adapting or changing to overcome the challenges?

A. We are applying different strategies that will have a positive impact on our customers as well as on our performance. Some of these strategies include rationalising the diverse range of product line items; introducing minimum order quantity and pack sizes; better managing minimum order values; educating customers around our offering and linked to this, staff skills training; sales staff assessments to improve and upskill individuals; and looking to add more diverse and complementary products to our offering that are correctly positioned within the market to grow our sales and, in turn, give our customers an opportunity to grow their sales and profits.

Q. To what would you attribute the market ‘downturn’? Is there a noticeable decrease and if so, in what areas of plumbing/building?

A. There has been a noticeable decrease and there are several reasons for this — some within the ambit of our control as an industry and others not. For example, bulk water supply has reduced in all areas; entry and medium-cost housing volumes have slowed down; service delivery (that is, power, water, and sanitation) has fallen behind badly; residential refurbishment has decreased as people hang on to their money; and, of course, the political instability is not helping. The use of unqualified plumbers is the elephant in the room, as this impacts negatively on both the compliant manufacturers as well as the qualified plumbers’ profitability. We will engage with merchants in supporting training, especially training of the younger plumbers, since they are the future of the industry.

Q. Which countries does WHS supply to?

A. We supply to the SADC countries, including Botswana, Lesotho, Swaziland, and Namibia. Dawn Africa then supplies to the rest of Africa, either through our own Dawn Africa branch in Zambia, or agents and merchants in other countries.

Q. WHS brings in their own products. Is this because the local market cannot supply it, or are the products better quality?

A. As a business, WHS does import plumbing goods, but these have traditionally been sourced through our Stability Wholesalers division. However, where we need complementary products, or when it is an own-branded product, the Saffer division can sell these as well. Having said that, Saffer has a preference to use, as far as possible, local brands that are manufactured in South Africa.

The use of unqualified plumbers is the elephant in the room, as this impacts negatively on both the compliant manufacturers as well as the qualified plumbers’ profitability.

Q. Saffer has always supported products that are SANS accredited. Is this still the case, and how do you believe industry can best deal with the supply of sanitaryware, particularly those that best suit the needs of the ‘two markets’: informal settlements and rural areas?

A. Saffer has always preferred supplying SANS-accredited products. We are constantly looking for products of good quality at the right price, to be able to supply to our customers. However, we cannot ignore the reality of an important and large demographic profile in our country. This market does benefit from accredited products, but by its nature, it does leave itself open to substandard products finding their way into the market, based purely on pricing. One must always ask oneself, “What has been removed to make the product cheaper?” It will normally be the best components that are the first to go as they are the most expensive.

Q. In this vein, you have another division, Stability Wholesalers. What is the focus of this division as opposed to Saffer, and why did you segment the business in this manner?

A. Stability Wholesalers offers an alternative in brand and quality, with some products holding the SANS mark, while others are designed by us as value for money, fit-for-purpose imported products. We believe this offers the rural areas products that do not fail in fit, form, or function. It must be borne in mind that the needs of the rural areas may not be the same as in the urban areas, as pressure, for example, is not the same and the source of water supply is different. When we source products from overseas, we gain better pricing, which is passed on to the customer. Saffer has always carried the top locally manufactured brands and distributed them to the market, whereas Stability Wholesalers offers these more cost-effective imported brands to a wider audience.

 

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