One of the challenges of successful business is meeting changing customer demands. When transition is so enormous that it transforms the face of an industry, being prepared and knowing the product becomes critical. Such is the current position of the lighting industry in South Africa, as companies get to grips with the irresistible force of energy saving appliances.
At the industry’s forefront is Reeflite (Pty) Ltd., a business with in-depth product knowledge, which has made it the first port of call for wholesaler enquiries.
The Krugersdorp-based company began trading in 1989 and is currently going through the second seminal moment in its history, as Matt van der Watt, Managing Director, explains:
“When we started off our main clients were the mining companies, for whom we developed haulage lighting. In 1993 the company changed direction and started with the development of industrial luminaires that was marketed via electrical wholesalers. At that time the locally produced fittings were manufactured from glass reinforced polyester that was manufactured in a very labour intensive hand layup system. The products were all fibre glass based and we developed a variety of hand-laid lights.
“A big turning point came around a decade ago when we developed a cold press system which has since more than doubled productivity.
The development has proved invaluable as van der Watt has sought ways to improve operational processes and reduce waste, in the face of challenging economic times:
“We manufacture a range of industrial lighting and we have tended to concentrate on the electrical wholesale market. We decided not to sell directly to the contractors and end users as this can exhaust a lot of extra effort and cost when the wholesalers are dealing with those customers in any case. I would say up to 99 per cent of our business is through this channel.
“We work with approximately 500 wholesalers and of course they have been affected by the economic downturn in recent years. We have therefore sought ways to become leaner in our operations and the cold press has proved an important ally in saving costs.
“The cold press changed our business drastically and we can now carry out 30 to 40 operations per day, which is much more efficient than our labour intensive hand laid method used to be. To attain the same level of production would have required an extra 3 or 4 people every day, so the introduction of this machinery has changed the number of people we need to use.”
Van der Watt says that crucially, the new press has also defined the need for radical changes when it comes to supply chain. The company still invariably uses the same tried and tested suppliers, but the new equipment requires different raw materials:
“It took us some time to develop the cold press as we needed to get the mixture of raw materials right and we worked very closely with our suppliers developing the resin and hardening chemicals to achieve the right combination and volumes. We were the first lighting company in South Africa to use a cold press and therefore we did not have a blueprint to work from. We have of course stayed with those suppliers, who have shown us great support – it is just that we order different materials from them nowadays,” he comments.
The privately-owned company manufactures from the Krugersdorp site, which comprises of two units combining a total of 1,200 square metres of operational space, including a 600 square metre area set aside for the storage of raw materials and finished products.
Sales and distribution offices are also located in Cape Town, Durban and more recently in Port Elizabeth, whilst a sales agent also operates on behalf of Reeflite in Bloemfontein.
According to van der Watt, the company manufactures 15 main lines of product, which generally have between 5 and 10 variations, depending on customer demand. The biggest range and perhaps the product that Reeflite is best known for is flood lighting, both for industrial use and for sports stadiums.
Products range from large 1,000 watt lights to the smaller 400 and 250 watts items, but the company also produces smaller high-intensity discharge (HID) products and increasingly is manufacturing for the energy saving market.
“Our overall market share is roughly 25 per cent in South Africa and we have annual turnover in the region of R45 million a year,” van der Watt states.
“In the past wholesalers would tend to maintain stock levels but over the last 2 to 3 years that situation has changed, along with the economic climate – and the end user is now more willing to wait for us to make to order.
“We generally maintain our stock levels at around 3 weeks of supply in order to stay competitive and our lead times are generally 2 to 3 days. We can turn around an order quicker than the rest of the industry which gives us a competitive advantage.”
About 3 years ago, around the time that van der Watt joined Reeflite, the company was in the process of implementing a new IT system. With added current day pressures on stock control, forecasting and auditing have become essential components of maintaining a profit-making business; with the Pastel Evolution system linking all the vital business areas.
Van der Watt says that the company generally closes down over December and work is quiet until the second quarter of the year and also busy towards the end of the year, as companies aim to finish projects.
In recent years, the industry has changed, perhaps instigating the second seminal moment for Reeflite, with the introduction of greener technology, as van der Watt describes:
“The arrival of the compact fluorescent light changed the landscape. We have introduced lots of fittings and this line has sold particularly well as an energy saving device.
“We felt that the fibre glass fittings that we produced did not necessarily synergise well with LEDs – there were heat issues, so we have sourced other products and act as a distributor.
“Energy saving has had a huge impact on industry and we are selling lots of fittings for flood lights and we are now looking to import LED products from China.”
Perhaps the best measurable indicator of the impact of energy saving products is the sales book – and van der Watt says that this area now accounts for almost 50 per cent of the company’s business, although the education of the end user meant that take up initially was slow and the build-up has been gradual.
The fact that Eskom is promoting energy saving through many projects is also impacting on customer thinking and Reeflite is well positioned to play an important part, providing design consultation services for end users.
At present the company is working towards ISO9001 certification, having worked in collaboration with SABS requirements for a number of years. Each year SABS tests the company’s light fittings and according to van der Watt, it is hoped that ISO certification will be achieved before the end of the year.
“We try to get everyone to be quality concerned and we operate 100 per cent inspection at the end of the production line. Certainly the cold press improved the consistency of the product,” he acknowledges.
“Our main challenge is then to make sure that we find the right balance between production and sales rate – so that we meet demand and supply levels without compromising quality. We operate in a small industry and reputation is important – it can only take one complaint to cause enormous pressure.
“We also try to ensure that we have the right people in the right places so that they can make the right calls and look at the bigger picture, even when demand is slower. We have focussed our efforts on bringing the right people in and focussing on their strengths: with the right people on the bus you can go anywhere.”
Including Africa. Van der Watt suggests that the African market now accounts for roughly 10 per cent of sales revenues, with Reeflite having developed excellent relationships in particular with wholesales in Namibia and Zambia, who supply lighting equipment to the local mining and fishing communities.
Domestically he is content with the number of offices serving South Africa and believes that the company is prepared for the next phase of its own evolution:
“We will undoubtedly look to sell more LEDs and I would say that the industry as a whole is in a transition period right now. Our relationship with the wholesalers is strong and I believe that they will take us with them as the energy saving market grows.
“We are well positioned but the next few years will take some effort.”