Management consulting, Procurement, Sourcing, Lean Manufacturing, Supply Chain Management, Services operation, OTC, Performance improvement, Business Process Re-engineering, Operational Due Dilligence, Change Management

1. State of the Supply Chain Management: Middle East Series 2010
B2G Consulting
Supporting Growing Markets

2. Foreword
© 2010 B2G Copyright - Middle East Series 2

3. Foreword
M iddle East benefits from an smoothen and ease business
exceptional position between transactions. However, the complex
Asia andchain from performing to the
Europe. This confers to its challenges in the region cannot be
region aoptimum source of business
large level the supply chain ignored, and should be addressed as an
opportunities, performing to its optimum
from which are still mostly opportunity to revolution the current
untapped. In this race, many GCC situation. Supply chain management is
countries have started to differentiate clearly lagging compared to more
themselves by launching large scale mature markets such as Europe, but we
initiatives. For example, the Kingdom of believe at “Art of International Trading
Saudi Arabia, one of the leading and Import (Artiti)” that the region
countries, has embarked on a massive should find innovative ways to
transformation through Saudi Arabian distinguish itself by providing world-
General Investment Authority (SAGIA). class services. We hope to see soon
Important investments have been done more GCC organizations globally
to support the development of logistics recognized for their high dedication to
infrastructure in the Kingdom (road and customers, outstanding quality and
rail networks, ports and airports facilities operational excellence, supported by a
etc…). In addition, laws and regulations dynamic and highly trained professional
are in the process of being adapted to workforce.
sm
Mohammed H. Al Qhahtani
ARTITI
level the supply chain from
performing to its optimum
© 2010 B2G Copyright - Middle East Series 3

4. Table of contents
Foreword 2
01 Introduction 6
02 Executive summary 8
03 Survey panel analysis 10
Where are your headquarters located?
What is your company’s annual revenue?
What is your number of employees?
What is your main sector of activity?
Industry insights: Conducting a cost reduction program
in the transport sector 12
04 Supply Chain maturity
How is the level of knowledge of your Supply Chain organization? 14
What are the Best practices currently used by your organization? 15
What are the activities outsourced? 16
What is your supply-demand model? 17
Which technology is being used to support your Supply Chain operations? 18
How is your Supply Chain considered by the top management? 19
What is the frequency of training for the Supply Chain staff? 20
Industry insights: Human Resources Management –
Recruiting Supply Chain Experts 22
© 2010 B2G Copyright - Middle East Series 4

5. Table
of contents
05 Supply Chain performance metrics
Perfect order fulfillment 24
Delivery performance 25
Total supply chain management cost 26
Cash-to-cash cycle time 27
Inventory days of supply 28
Days of payable outstanding 29
Days of sales outstanding 30
Industry insights: 3PL outsourcing in the Petrochemical
Industry 32
06 Supply Chain challenges
What are the top Supply Chain concerns your organization is facing? 36
How difficult is the recruitment of Supply Chain professionals? 37
What are the next initiatives you are planning to implement? 38
07 Conclusion 40
08 Appendix 41
© 2010 B2G Copyright - Middle East Series 5

6. Introduction
01
O ptimism is back in the Middle they will struggle to counter demand further solidified in recent years as
East, as the region shakes itself through scaling production, this coupled increasing volumes of finished goods
free from the effects of effects recession,
free from the global of global with unresponsive supply chains will and raw materials passed through its
and once again and once againto the
recession, looks forward looks lose valuable time to market. How will borders. The collective aspiration and
good forward to the good times.
times. Senior leadership of these companies face the upcoming commitment of the region, in becoming
multinational companies based within operational and supply chain a world class transit hub, is evidenced
GCC is justifiably optimistic about and
effects of global recession, the challenges, in an increasingly complex by unprecedented levels of investments
economic upswing, looks forward to the
once again however upon closer global market, characterized by local in logistics infrastructure that will be able
good times.
inspection, one finds that only a few specificities? As a region, the GCC has to cope with expected increase in freight
have taken the opportunity during this undergone an extraordinary over the coming years, driven by double
recessioptimum level the supply
crisis to strengthen their operational transformation in recent years and has digit growth in South and East Asia.
chain from performing to its
readiness. Companies that exclusively emerged as a global freight hub by However set against this present and
optimum
opted for short-termism through ruthless virtue of its strategic location between future context, the following report
cost cutting as a means of survival Asia, Africa and Europe. Spurred on by poses a serious question: Do current
during the crisis, will find themselves World economic growth (before 2008), players within the region, whether at
unable to respond to the upturn, since its position as a global transit hub company, country or regional level have
they will struggle to counter demand further solidified in recent years as the vision and oversight to make the
© 2010 B2G Copyright - Middle East Series
through scaling production, this coupled increasing volumes of finished goods necessary shift in paradigm, from a6
with unresponsive supply chains will and raw materials passed through its mindset which is purely focused on

7. Introduction
the vision and oversight to make the condition, and with due care and by reducing inventories, lowering
necessary shift in paradigm, from a attention to the environment, SCM deals operating costs, speeding product
mindset which is purely focused on with all business activities associated availability, and increasing service level.
logistics, to one which is holistic in its with satisfying a customer‟s demand. Structuring the supply chain requires an
treatment of the complete supply chain. SCM is the oversight of materials, understanding of the demand patterns,
Supply Chain Management (SCM) is the information, and finances as they move service level requirements, distance
corner stone of any successful strategy in a process from supplier to considerations, cost elements and other
and yet paradoxically it is also the least manufacturer to wholesaler to retailer to related factors. These factors are highly
understood of all disciplines, often under consumer. SCM involves coordinating variable in nature and this variability
resourced and devoid of investment. and integrating these flows (Information, needs to be considered to improve any
Misconceptions about the term “supply physical, financial flows) both within and supply chain.
chain” abound often leading to among business partners (suppliers, The ‘State of the Supply Chain
confusion between itself and logistics. service providers, customers). It is said Management Middle East’ aims to
While logistics involves getting the right that the ultimate goal of any effective draw a concise portrayal of the
goods, to the right place, at the right supply chain is to increase the customer current situation as seen by supply
time, at the right cost, in the right satisfaction in the most profitable way chain practitioners in the Gulf region.
condition, and with due care and by reducing inventories, lowering
There are six key elements to a supply
© 2010 B2G Copyright - Middle East Series operating costs, speeding product
attention to the environment, Supply 7
chain:
Chain Management (SCM) deals with all availability, and increasing service level.

8. Executive summary
02
his report is the culmination of chains as chiefly driven by customer leadership in the face of competition,
T over six months of dedicated
research optimum level the supply chain
by B2G Consulting, bringing
demand, loosely linked together by
collaborative end-to-end partners,
increasing complexity and innovation,
supply chains must continually invest in
together from performing to its optimum
under one publication the 23.7% stated that their supply chains their human resource. However
collective level the supply chain from
wisdom of over 225 were organized by function whilst only investment in training is particularly low
participating companies optimumwithin
performing to its based 18.4% were structured in processes. in the region and the majority of
the GCC region. Supply chain The quality of human resource is the respondents (68%) provide training less
management (SCM) is the cornerstone critical success factor of any than 5 times a year to their supply chain
of any successful organization and the organization and supply chains are no staff, this phenomenon becomes
discipline increasingly finds itself exception, collaborative chains are especially acute when considering that
included in top management‟s strategic stretched across longer distances, 60% of their employees possess only
agenda. This is further borne out by the across many borders, in their search for rudimentary knowledge of fundamental
fact that 28.9% of all respondents low cost resources and at the heart of concepts. Not surprisingly education
consider their supply chains as strategic these networks are people managing reform is a top priority amongst GCC
to their business goals. 39.5%, of all complexity, technology and cross counties and there is a real need to
respondents‟ perceived their supply cultural relationships. To maintain develop best talent across the region.
chains as chiefly driven by customer leadership in the face of competition, GCC firms face a unique challenge
© 2010 B2G Copyright - Middle East Series
demand, loosely linked together by increasing complexity and innovation, where they are compelled to source8
collaborative end-to-end partners, supply chains must continually, invest in from a small pool of qualified local

9. Executive
summary
GCC firms face a unique challenge challenge facing the industry is the lack all respondents had implemented Sales
where they are compelled to source of visibility, both internally between & Operations Planning Process, and
from a small pool of qualified local critical processes and between critical more companies (42.1%) intend to set
professionals, who are hard to recruit partners, leading to soaring inventory, up such initiatives within the next 12
and even harder to retain, 84% of long lead times, high operating costs months. Pressures on lead-times,
respondents found recruitment of and low customer satisfaction. The inventory levels and costs have led the
qualified supply chain professionals volatility in the economy has been large majority of respondents to define
difficult, especially at middle mirrored by fluctuating demand, which mid-term plans to reduce logistics costs
management level (59.5%). Although has made forecasting, fraught with (36.8%), reduce delivery lead-times
outsourcing presents an immediate errors and much more difficult to (34.2%), optimize inventory levels
opportunity as a promising alternative, it manage. 73.7% of respondents stated (31.6%) and improve suppliers‟
is still a nascent industry in the region. that improving their level of demand performance (21.1%). Lastly, the
76.3% of respondents outsource at least forecasting was on top of their agenda importance of information is often
one logistics function. However, for 2011, followed by 63.2% who wished overlooked as a critical competitive
regardless of whether the supply chain to pursue inventory optimization. To resource, but its role is crucial to
is in-sourced or outsourced, the biggest improve demand forecasting, 20.7% of achieve higher productivity.
challenge facing the industry is the lack all respondents had implemented Sales responsiveness, interconnectedness
© 2010 B2G Copyright - Middle East Series
of visibility, both internally between & Operations Planning Process) in a bid (internally and externally)
9
and lower
critical processes and between critical to achieve a level of best practice and costs.

10. Survey panel analysis
03Study background
The “State of Supply Chain Management – Middle East Series” represents B2G consulting‟s largest annual review of global
supply chain performance focused on the GCC region. With participants from Saudi Arabia, Bahrain, UAE, Oman, Kuwait and Qatar,
the survey provides deep insight into the most critical yet least understood lever, i.e the Supply Chain management, to improve
significantly any company‟s operational profitability and margin‟s growth.
Consisting of a comprehensive online questionnaire, participants were invited to respond to 21 key questions covering the
different aspects of the supply chain management in terms of challenges, maturity and performance level.
Headquarters location Number of employees
2.6%
6.0%
18.8% 18.4%
11.4% Saudi Arabia
Bahrain
<10
Dubai
2.9% 101
Abu Dhabi
48.6% 501
5.6% Oman
18.0% 100
Kuwait
18.8% 18.4% >50
Qatar 28.9%
Other
20.0%
Saudi Arabia <101
15.8%
2.9%
101-500
Bahrain
501-1000
Dubai
Abu Dhabi
18.0% 1001-5000
%
>5000
Oman
28.9%
Kuwait
Qatar
Other 15.8%
© 2010 B2G Copyright - Middle East Series 10

11. Survey panel
analysis
Survey participants
Nearly 230 companies participated in this 2010 survey, with data collection completed in November of 2010. The survey
population is composed of organizations from a diverse set of industries, including Retail, Oil&Gas, Consumer Goods, Mining and
metals, transport, industrial manufacturing, services, telecommunications, construction, health care and agriculture. The survey
reflects the response of the population which is composed of more than 60% senior executives in supply chain management, with
15% at the CXO-level. The region surveyed is only focused on the Middle East region particularly on the GCC countries: Saudi
Arabia, Bahrain, UAE, Oman, Kuwait and Qatar. And more than half of survey participants are companies with annual revenues
superior than $500 Million with a minimum of 500 employees.
Company annual revenue ($US) Main sector of activity
Industrial manufacturing 17,9%
Services 14,3%
13.2%
21.1% Consumer goods 10,7%
1M-25M Retail 8,9%
7.9%
26M-50M
Food and beverage 8,9%
51M-150M
151M-500M
Oil & Gas 7,1%
10.0% 10.5%
501M-1B Transport 7,1%
1B-10B
Mining and metals 5,4%
>10B
11.1% Construction 5,4%
26.3% Other 3,6%
1M-25M
Health care 3,6%
26M-50M
51M-150M Telecommunications 3,6%
151M-500M Agriculture 1,8%
5%
501M-1B
Real estate 1,8%
1B-10B
>10B 0% 5% 10% 15% 20%
© 2010 B2G Copyright - Middle East Series 11

12. Industry insights
Conducting a cost reduction program in
the transport sector
01 Company background and 02 Results
Challenges
Which results have been obtained after the
In few words, please describe your company implementation? How long did it take to reach the
activity. expected outcomes? What are the next steps?
“Mubarrad is a publicly listed Kuwait-based company, “It took six months after implementation to start seeing
specializing in land transport, logistics, heavy transport, truck improvements. The team built a 6-year strategic plan with
manufacturing and maintenance. Mubarrad is a GCC player clear objectives. At that time there was a significant drop in
with operations in Kuwait, Dubai, Oman and Egypt. With a sales, but we finally managed to increase the revenue by
market value of 21.6 Million KD, its assets are worth 37 33%. Several strategic initiatives were launched such as:
Million KD for a total of 200 employees (excluding drivers).”
 Upgrading transport asset quality and improving
utilization rate
Which pressures forced Mubarrad to embark on a
 Securing long term contracts
cost reduction program?
 Concentrating businesses in Oman and Dubai to
“After several acquisitions and major internal increase profitability
transformations, a new management team has been  Building up a new executive committee with a cross
appointed in mid 2010 to restructure completely the financial functional view to drive the change and bear
and operational departments in order to drastically reduce decisions as a team
costs. The situation when we arrived was a very high SG&A  Implementing a CRM system to optimize the
costs compared to the revenue, accentuated by a difficult decision making process with the market dynamics
economical context.”  Increasing project planning and execution to
increase the projects success rate
What did Mubarrad decide to do to overcome this  Close monitoring of losses
challenge?  Focusing on employees efficiency while
“The new management team decided to go for the best transforming the mindset from employees to
leaders
practices in the industry, and conducted several analyses
 Diversifying the logistics offering
(SWOT, balanced SCORE Card, zero based costing, Porter
 Expanding the regional coverage
analysis…) with the support of management consultants.”
© 2010 B2G Copyright - Middle East Series 12

13. Industry
Insights
Mohammad E. Al-Muaili
Vice Chairman - CEO
Mubarrad Transport Company
03 Key lessons learned 04 Which lessons to retain in conducting
such initiative?
Did Mubarrad face any difficulties during the
project phase?
“The major issue that we faced during the project “People are definitely the most important assets for a
phase was the change resistance from the existing staff, company, especially when the company decides to embark on
so we had to take tough decisions in order to a major transformation program that involves changing the way
institutionalize a full commitment from everyone and to it operates. We can witness it every day at Mubarrad, so we
bring the morale up within the company. As a new team, tried to really have the right personnel with the right mindset
we were constantly walking on eggs, as we wanted to who considers himself as an owner of the company rather than
improve the situation but without jeopardizing the day- just an employee. In the end, the success of the company lies
to-day operations. It was helpful to set up employees in a team effort and not on one-man show.
SCORECard, monitor the to monitor the
not only to not only individual individual
“People are definitely
performance of each employee but as well to assure
each employee but
The challenge in the GCC is mainly
about having the right people, and
the most important
that everyone wouldeveryone wouldmeasure its own
as well to assure that be able to
unfortunately, there is a workforce
contribution
be able to the global initiative.own
measure its
One of the very first things that we did was to bring all for a company”
assets
deficiency in this market, which is
contribution to the global initiative.
even stronger in the area of supply
One of the very first things that we
top was to bring all top managementin the same office
management (including myself)
did was to bring all top management (including myself) chain and logistics. At Mubarad, we .
did
close tosame office close the the operations, usedthe decided to tackle the skills issue through two educational
in the the operations, as to executive office as to
(including myself) in the same office
be remotely located. It wasbe remotely located. we,was through two educational segments:
segments: one with small workshops to improve the technical
executive office operations,important for us that It the
close to the used to as the
management, lead thatexample and demonstrate led our and soft skills of the employees and workshops to improve
one with small harmonize the levels
for us by the management, by by
important office used towe, remotely
executive be
own acts and high commitment that we were expecting between departments,the technical other soft skills of the
and the and one with extra
example Itthe demonstrated by our own acts the high
located. was important for us that
from our employees.”we were expecting from our professional activities organized by theharmonize to cement
employees and company the levels
commitmentmanagement, lead by
we, the that
the bonds and improvebetween departments, and one with
the interpersonal relationships within
employees.” demonstrate by our own
example and
the company.” extra professional activities organized
acts the high commitment that we
S
“ o far, the cost reduction
were expecting from our employees.” S
by the company to cement the bonds
program has brought in substantial cost savings and this has
o far, the results were the reduction of the loss to 71 K KD
and improve the interpersonal
reflected positively in the overall result. The road is long and we haven‟t finished yet our
from 2.2 Million KD at the same period in 2009. The road is
relationships within the company.”
mandate.”
long and we haven‟t finished yet our mandate.”
© 2010 B2G Copyright - Middle East Series 13

14. Supply Chain maturity
04#1: How is the level of knowledge of your Supply Chain organization?
Introduction
Most companies enter supply chain to Knowledge of Supply Chain organization
improve profitability, through process
improvement and technology for more
responsiveness to consumer demands. 8,0%
Mature – with knowledge
However maintaining a competitive about advanced models
advantage depends on the ability of such as SCOR and supply
32,0% chain best pratices (S&OP,
each unit in the chain to apply VMI, etc…)
knowledge innovatively. Knowledge is Average – with basic
the competitive advantage in a supply knowledge about supply
chain (operational
chain – it not only enhances the
fundamentals)
efficiency of the operations but also
enables to foresee and manage Low – with ad-hoc
complexity and change. The major knowledge on supply
chain
challenge for companies is to acquire, 60,0%
develop and retain skilled supply chain
professionals to sustain efficiently their
supply chain performance.
Results
Analysis nationals (Saudization, Emiratization
The respondents were asked to indicate
The supply chain is one of the most etc…). In the face of fierce global
the level of knowledge of their supply
rapidly evolving disciplines, and the competition to recruit the skilled
chain organization. The results show
variances in supply chain activities resources, GCC Companies should
that:
require new set of skills and start looking at ways to develop and
32% of respondents have
experiences for world class supply chain secure domestically the skilled
advanced knowledge of supply
professionals. The noticeable shortage manpower, required to support the
chain concepts
in the Middle East of supply chain expansion of their organizations. In
60% present basic knowledge
professionals with the required skill-sets fact, some of the respondents have
on supply chain
is not something exclusive to this region already jumped on the bandwagon by
6% admit to have less
but it is likely to be accentuated by establishing “learning centers” to
knowledge
some governmental initiatives that develop training and education
encourage the employment of their programs to enhance local work force.
nationals understanding of the true root causes
© 2010 B2G Copyright - Middle East Series preventing the supply. 14

15. Supply Chain
maturity
#2: What are the best practices currently used by your organization?
Introduction
Everybody talks about best
Best practices in place
practices. But what does it really
mean in the Middle East context? It
Sales and Operations Planning Process 20.7% does not mean always getting the
Customer segmentation 15.3%
End to end Supply chain visibility tool 11.1% latest technology or doing exactly
Performance management 10.2%
Integrated business planning
what best-in-class companies did
8.0%
Real time information 6.4% lastly. “Best-practices” are the
Joint service agreement (JSA) 5.7%
Supply chain costing (Activity Based Costing) 5.1% methods, processes or activities
Collaborative forecasting 3.2% that are the most effective at
Lean methodology 2.5%
Customer collaboration 2.2% delivering the highest outcome in a
Competitive Benchmarking 1.9%
Vendor Managed Inventory 1.6%
particular context. It is critical to
Supplier collaboration 1.3% understand that the way of using
Formalized supply chain risk management 1.0%
JIT - Just in time 1.6% best practices are business-specific.
Financial supply chain (cash flow management) 1.6%
Consequently success depends on
Other 0.6%
choosing them with a thorough
0% 5% 10% 15% 20% 25%
understanding of the operations
involved while considering the
specific business environment.
Results Analysis
The top 5 best practices used by the The lack of visibility: internally amongst critical customers. This would logically
respondents are: processes, and externally between business explain the top 3 best practices
partners; have incurred high inventory levels, used by the respondents. The most
#1 Sales & Operations Planning process
significant operating costs, longer lead times advanced companies have
#2 End-to-End supply chain visibility
and lower customer satisfaction. To forecast the elevated the conventional S&OP
#3 Performance measurement
demand more accurately and plan the supply process to integrate R&D, Product
#4 Customer segmentation
accordingly, the respondents have implemented management, marketing and
#5 Integrated business planning
one of the most powerful best-practices in financial issues into the process to
Due to the recent financial crisis, there is demand planning: the Sales & Operations merge the operational and financial
a noticeable growing trend for financial Planning Process (S&OP). The S&OP process plans into a seamless business
supply chain practices, which were not provides optimum results when complemented planning and tactical execution-
very popular in the Middle East in the with end-to-end visibility systems and efficient directing process: The Integrated
past years. performance measurement tools for segmented Business Planning (IBP).
customers. This would logically explain
© 2010 B2G Copyright - Middle East Series
the position of the top 3 best practices used by
15
the respondents. The most advanced

16. Supply Chain maturity
#3: What are the activities outsourced?
Introduction
Outsourcing in the Middle East is a fairly
Outsourced activities
new trend knowing that most companies
have been in-sourcing the majority of 10,5%
their activities so far. In order to 28,9%
optimize costs and deliver greater Logistics
efficiencies on all managed services, 23,7% Warehousing
Middle Eastern Corporate went through
Manufacturing
an intermediary phase of shared
R&D
services with a central department. As
IT
the supply chain sector has
15,8% None - Inhouse
professionalized along with the level of 10,5%
maturity of the organizations, an Other
increasing number of new ventures
have spun off, meanwhile developing 13,2% 18,4%
the outsourcing service offerings.
Results
23.7% of respondents do not outsource Analysis of manpower. One of the biggest
any of their activities. Amongst the Managing the supply chain has become challenges in outsourcing is to be able
respondents, who outsource some of increasingly complex, especially to understand and master the activity or
their functions, there are: coupled with the specific challenges in function that the company wants to
28.9% outsource Logistics the Middle East: narrow local supply outsource. Especially, before handing
function base, regulated markets, level of over its operations with potential related
18.4% work with contract maturity of business partners, shortage unresolved issues. Else this will only
manufacturers
of qualifies manpower etc…which has limit this initiative to outsource the
15.8% outsource Warehousing
services forced some companies to outsource current issues the company is facing.
some of their non-core activities such as Innovative companies amongst the
Considering the enabling functions, IT
logistics, warehousing or IT but as well respondents have embarked in a
and R&D represent altogether slightly
some of their very core activities journey, where they are accompanying
more than 23%.
including R&D, manufacturing, the service provider, as a partner, to
procurement and including the provision grow at the same pace, hand in hand.
of manpowerof . information and
© 2010 B2G Copyright - Middle East Series financial flows along the Customers by 16
optimizing the physical, information and

17. Supply Chain
maturity
#4: What is your supply-demand model?
Analysis
Supply-demand model
Inventory carrying costs count for a
large portion of total costs in many
13,2% 10,5% supply chains, so unsurprisingly
effective inventory management is one
Make/Deliver-to-stock of the most important issues that supply
chain managers are facing. Managers
18,4%
Make/Deliver-to-order have the difficult task to determine
which products should be made to
Mixed of Make to stock /
Make to Order order, and which should be made to
Make-to-Engineer stock in order to reduce the inventory
level while increasing (or maintaining)
the level of service. For made-to-stock
55,3% products, accurate demand forecasting
and proper inventory management
strategies must be determined to reduce
the level of inventory hold. For made-to-
Introduction Results order products, approaches for reducing
Competitive pressures on lead-times, The configuration of the supply chain customer lead time must be developed.
inventory level and costs have led many generally depends on the industry sector; The decision to use either a MTS or
organizations to review their production- however the respondents‟ responses MTO strategy depends strongly on the
inventory-delivery practices. In their give a good indication of the leading business specificities and has a
quest for “zero-inventory” goal, World- supply chain model present at the significant impact on the supply chain
class companies have started to regional level, which helps to understand performance. Indeed, with 55.3% of
determine the optimal conditions when the related supply chain challenges. The respondents using a combined
to hold a finished good inventory and large majority of respondents (55.3%) MTS/MTO strategy, it appears to be
when it is not. Based on that, the indicates that their supply chain model is much more effective than using either
resulting configuration selected, i.e. a mix of Make-to-Stock and Make-to- strategy exclusively. For this reason,
Make-To-Stock (MTS) / Make-To-Order Order. For the other supply chain most companies are employing a hybrid
(MTS) / Make-to- Engineer (MTE), is configurations: MTO–MTS approach, holding inventory
determinant of the performance of the 18.4% only have Make-to-Order in some cases, and producing to order
company‟s supply chain. 10.5% only have Make-to-Stock in other cases.
13.2% have Make-to-Engineer
© 2010 B2G Copyright - Middle East Series 17

18. Supply Chain maturity
#5: Which technology is supporting your Supply Chain operations?
Introduction
The importance of information is often Technology supporting the Supply Chain operations
overlooked as a critical competitive
resource. Indeed, its contribution to the Warehouse management system 34,2%
management of the supply chain is not Forecasting tool 26,3%
always very well understood. However, Performance measurement 23,7%
the role of the information technology in S&OP tool 21,1%
supply chain management is crucial to CRM application 18,4%
achieve higher productivity, Transportation management system 18,4%
responsiveness and lower costs. The SRM application 13,2%
everlasting changing customers‟ e-invoicing 13,2%
expectations have greatly increased Supplier management e-portal 13,2%
along with the internet trend, and have Capacity planning tool 10,5%
put on the spot the necessity of an Other 5,3%
efficient information system to support
0% 5% 10% 15% 20% 25% 30% 35% 40%
the end-to-end supply chain operations.
Results Analysis that imposes a greater discipline in
The top 3 information systems used by Traditionally, warehouse management anticipating and fulfilling the market
the respondents are: systems have been widely used to demand in a more cost-effective way. In
monitor the warehouse operations and this regard, to measure and control the
(34.2%) Warehouse management transactions. Indeed, WMS counts for effectiveness of their organization to
system (WMS) 34.2% of respondents‟ answer. On the supply the demand, companies have
(26.3%) Forecasting tool other hand, the lack of market visibility embarked on initiatives to improve both
(23.7%) Performance measurement in the Middle East coupled with a the visibility of their internal performance
tool versatile and hectic demand signal has and that of their business partners. The
forced companies to improve their volume of information processed
Further to the growing interest in the demand planning with more accurate requires the use of Business
S&OP process, there are 21.1% of forecasting tools. The market is Intelligence tools to segregate the most
respondents who are using related currently shifting from a supplier-push relevant information to support key
tools. model to a more customer- pull model business decisions.
that
© 2010 B2G Copyright - Middle East Series 18

19. Supply Chain
maturity
#6: How is your Supply Chain organization considered by top management?
Analysis
Supply Chain organization perception by top management With supply chains becoming more
dynamic and complex, organizations
Demand driven - Customer centric 39,5%
have begun to understand the
significance of having a high level
Strategic function (part of top management board) 28,9%
supply chain executive influence their
Function oriented
23,7%
(LOGISTICS/PRODUCTION/PURCHASING…) business strategy. Indeed, an efficient
Considered as a Cost center 23,7% supply chain management, which is
Collaborative with End-to-End partners (Suppliers /
21,1%
aligned with business strategy,
Customers)
Process oriented becomes critical to remain competitive
18,4%
(PLAN/SOURCE/MAKE/DELIVER/RETURN/ENABLE)
and profitable. Competition is no longer
Considered as a Profit center 10,5%
companies against companies but
Manufacturing driven - Internal focused 7,9% supply chains versus supply chains.
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
This mindset shift has supported
organizations to reshape their supply
chain management in a more customer-
centric supply chain. However major
Introduction Results organizational changes, from a
In today‟s business world, operations The respondents‟ perception of the functional model to a more process
and supply chain management are the supply chain is mainly demand driven- oriented model, are still slow to occur in
backbone of many companies. In this customer centric (39.5%), collaborative the Middle East. Besides this, there is
regard, more CEOs are including supply with end-to-end partners (21.1%) and an increasing trend to expand the
chain management in their strategic considered as a strategic department boundaries of the company‟s supply
agenda to differentiate themselves from
(28.9%), but remains organized by chain to integrate more external
their competitors. This shift has helped
functions (23.7%) rather than by partners. As a matter of fact, each
to see more supply chain executives at
processes (18.4%). Although for a member of the supply chain has an
the board table and has been
minority of companies (10.5%), the impact on the performance of the
accompanied by a transformation of the
supply chain is considered as a profit others, the overall supply chain and
way the supply chain management was
generator, the majority still sees it as a ultimately the end customer.
perceived within the organization.
cost center (23.7%).
© 2010 B2G Copyright - Middle East Series 19

20. Supply Chain maturity
Supply Chain
maturity
#7: What is the training frequency of the Supply Chain staff?
Introduction
Today, the global supply chain has
Training frequency of Supply Chain staff
become more complex with more
integrated perspectives, linking 4,0%
suppliers and customers. And one of the
most important drivers for success in 28,0%
deploying and running an efficient Never
supply chain is People. The challenge
Below 5 times a year
for supply chain executives, in the
Middle East, is to understand which
Between 5 to 10 times a
knowledge and skills are required, and year
to define the appropriate training and Above 10 times a year
education for their existing staff. As the
scarcity of skilled supply chain 68,0%
resources is exacerbated in the region,
training appears to be an adequate
solution more than anywhere else.
Results Analysis while in the UAE and Qatar private
The frequency of the staff training gives Education reform is on the top priority institutions are booming, in Saudi Arabia
a good indication of the importance of the focus is less on private universities,
list of the GCC governments, as the
education to the respondents‟ but rather on improving the quality of
need to develop best talents across the
management: public universities such as KAUST.
region becomes urgent to tackling the
68% of respondents provide Bahrain is making a point to differentiate
skills gaps, in a globalised economy. As
training to their supply chain staff itself from Dubai and Qatar by offering
a recent discipline, Supply chain
below 5 times a year training in services to cater for various
management is lacking of universities
4% of respondents provide training sectors, including banking and
between 5 to 10 times a year and private training centers to prepare a hospitals. However, Supply Chain
28% of respondents never provide highly skilled workforce for the future in management has not found its place yet
any training the Middle East. In this process, several in the academic programs and degrees
major initiatives in Education have been of GCC universities and private
launched to enter the era of Knowledge: institutions.
© 2010 B2G Copyright - Middle East Series 20

21. © 2010 B2G Copyright - Middle East Series 21

22. Industry insights
Human Resources Management:
Recruiting Supply Chain Experts
01 Company background makers are not able to improve the existing processes.
In few words, please describe your company Moreover, logistics companies are not using latest
activity technologies and thus, need more manpower to compensate
“We are a recruiting agency which represents IESF in this lack of technology.
Dubai. IESF (International Executive Search Federation) is
What attracts talents in the Middle East? How
the largest retained executive search group in the world
difficult is it to retain skilled resources?
identifying talent and leadership in 160 offices and 40
countries globally. We look for experts/specialists and talents “Some young talents look forward to getting more
using direct search approach. We have successfully made exposure than they would have in a mature market and to
searches in all support functions (HR, Finance, Supply endorsing real responsibilities. Besides this, the packages
“Good professionals lacking in some countries of the
Chain, Logistics, Procurement and Project ement offered can be higher and tax
Management) and in the following industries: What levels are the most free in the Middle East?
optimize cycle times. Consequently, decision makers are not can handle the
who “Senior Levels and MiddleMiddle East. On not strong
improve processes to increase quality, decrease costs and
IT/Telecom, Logistics, Engineering, the other
Management are
Manufacturing, Construction, Large Retailers hand, retaining talent is
full supply chain cycleefficiently implemented.”because of
enough to ensure that the strategies and tactics decided by
able to improve the existing processes.
and FMCG for UAE, Qatar and Saudi Arabia.” extremely difficult
the Board/Executives are
Manpower landscape in theare very hard to find”
high inflation rates which have
02 What attracts talents Middle
How do the nationalization be reflectedaffect salary
to programs in local
East? How difficult is it to retain
in the Middle East companies?
increases. In addition, recognition & development, career
training is very important to
skilled resources?
How is the Middle East manpower
“S
landscape?
ome young talents look forward to getting “I growth, promotions, incentives
employees so that management should be able to offer
t should be a two-way street; instead of focusing on these
on target reached…”
training & development, career growth, promotions,
“Good professionals who they would or part supply
programs, companies should make a real selection of
“Good professionals who can handle full
more exposure than can handle full orhave in a
mature market and to endorsing real
incentives on target reached…”
candidates and hire only motivated ones. Newly most
What levels are the hired
part supply chainvery hard very hard to two main reasons.
chain cycle are cycle are to find for find for employees should be provided with detailed Middle Middle
lacking in the job descriptions
Which levels are the most lacking in the East?
responsibilities. First, universities the the packages
Besides,
two main reasons. the region are not focusing enough on
in
First, universities in
“S
and expected targets. It can take some time so it is better to
offered can focusing enough on tax free in some
be higher and Logistics-
region are not Chain despite the huge needs of skilled
East?
enior Levels and Middle
Logistics-Supply start early during training and internships. New employees
countries of the the huge needs of skilled the other
Middle East. On
Supply Chain despite
manpower in this sector. Moreover, we can find a lot of
hand, retaining talent is we can find difficult
extremely “S Management are not strong
should gain more and Middle in themselves are not helped
enior Levels confidence Management and be strong
manpower in this sector. Moreover, cannot think out of the
good operational people but they enough to ensure that the
by a mentor.”
enough to ensure that the strategies and tactics decided by
because of high inflation rates which have to
a lot improve processes to increase but theyto decrease
box, of good operational people quality, strategies and tactics decided
the Board/Executives are efficiently implemented.”
be reflected of the box, improve processes addition,
in salary increases. In
cannot think out cycle times. Consequently, decision by the Board/Executives are
costs and optimize
recognition quality, decrease costs employees so
to increase
is very important to and “It should be a two-way street; instead of focusing on
efficiently implemented.”
that management should talents in offer
© 2010 B2G Copyright attracts Series
What be able to the
optimize cycle times.- Consequently, decision
Middle East these programs, companies should make a real selection of 22
training Middle East? How difficult is it to
& development, career growth,
makers are not able to improve the existing
How do the nationalization
candidates and hire only motivated ones. Newly hired
programs affect local

23. Industry
Insights
Zoran Marinkovic
Partner - HR Solutions
BM Management
Consultancies – I.E.S.F.
How do nationalization programs affect local How is the educational system in supply chain?
companies?
“Instead of focusing on proposing Business Administration
“It should be a two-way street; instead of focusing on these degrees, universities should offer Logistics and Supply chain
programs, companies should make a real selection of programs. Internships and trainings are not very developed
candidates and hire only motivated ones. Newly hired in the Middle East whereas they would give a professional
employees should be provided with detailed job descriptions exposure and experience to students. Students would be
and expected targets. It can take some time so it is better to able to work with specialists and experts in supply chain and
start early during training and internships. New employees logistics as well as discover the various functions of this
industry.” industry.”
“Instead of focusing foresee the future of supply chain
on
should gain more confidence in them- selves
selves and be helped by a mentor.” How do you
Business Administrationin the Middledo you foresee the
manpower landscape
How
East?
03 Recruiting Supply Chain degrees, universities regional competition andbebecause
“With the increase of future of supply chain
supply chain and logistics aremanpower landscape in
critical in order to able to
specialists
Are Supply chain professionals should propose Logistics and quality of products on time and
deliver the right quantity the Middle East?
at the right cost, we need professionals who can challenge
more demanded compared to other
areas? What is the trend?
areas? What is the trend?
and Supply existing chain and who are familiarand ofthe latest
the procedures
“With the increase
competition
with
regional
because
“The world credit crunch hashas made programs” to spend time to draw-up an outstanding Supply logisticscycle
world credit crunch made people realize that they
technologies. Companies should understand that they need
supply chain and
Chain
are
people focus that they should focus and
should realizeon their core business on expertise. This is critical in order to be able to
which can be implemented in a mid-term view.”
their core business and professionals were less demanded
the case in Dubai where expertise. This deliver the right quantity and
is the case Chain than in where professionals the banking
in Supply in Dubai wherethe real estate or in were less
the case in Dubai professionals quality of products on time
quality of products on time and at the right cost, we need
demanded demanded
were lessHowever, theintrend willChain a huge demand in
industry. in Supply Chain than in the real estate or in the
Supply see and at the right cost, we need
professionals who can challenge the existing procedures and
than in the real estate ports coming up will see a Zayed
Supply Chain with newor in the banking like renewed huge
banking industry. However, the trend who are familiar with the latest technologies. who
professionals can
Companies
demand However, in Abu will see a
industry.Khalifa PortChain with new ports coming nearlike
Port & in Supply the trend Dhabi, Kuwaiti port up the challenge the existing
should understand that they need to spend time to draw-up
huge demand Iraq, Saudi‟s Red Sea Abu Dhabi, Terminal
border with in Port & Khalifa with new Gateway Kuwaiti
renewed Zayed Supply Chain Port in an outstanding Supply procedures
Chain cycle which who are
and can be
portsnear the Port likeSalalah, Saudi‟s Red Sea Gateway
port coming up of renewed Zayed
extension,the border with Iraq,extensions of several ports in implemented in a mid-term view.”
familiar with the latest
Dubai…” extension,
Terminal
Port & Khalifa Portthe Port ofDhabi,
in Abu Salalah, extensions of technologies. Companies
several port in Dubai…”
Kuwaiti ports near the border with Iraq, should understand that they
Which positions in supply chain
Saudi‟s Red Sea Gateway Terminal need to spend time to draw-up
WhichPort Middle East Series sought?
© 2010 are positionsmost
the in supply chain 23
extension, B2G Copyright - of Salalah,
the an outstanding Supply Chain
are the most sought?
(Procurement, sourcing, planning,
extensions of several ports in Dubai…” cycle which can be

24. Supply Chain performance metrics
05#1: Perfect Order fulfillment
Introduction
The Perfect Order Fulfillment represents Perfect order fulfillment (%)
the percentage of orders that are on
time, in full, with complete and accurate 9,7% 3,2%
documentation and no shipping 12,9%
damage. This customer-facing metric is
crucial as it measures the performance 50-60%
of the organization, as perceived by the 60-80%
Customer. Needless to say that this 80-90%
90-95%
metric directly impacts the company‟s 35,5% 22,6%
95-100%
top line and affects the relationship with
Not measured
its Customer. Although the precise
quantification of its contribution to the
revenue growth is relatively challenging,
16,1%
the benefits are confirmedly substantial.
Results Analysis relationship that enhances collaboration
The respondents were asked to indicate Achieving high „perfect order fulfillment‟ and speeds up transaction between
the level of their perfect order fulfillment: levels demands more than just supply chain partners. Companies that
35.5% of respondents indicate that computing data from software. boast some of the highest Perfect Order
their perfect order fulfillment Companies must configure their supply rates carry less inventory, experience
reaches 95% and above. chain processes from end-to-end to shorter cash-to-cash cycle time, and
16.1% of respondents have a deliver the highest possible have significantly less stock-outs when
perfect fulfillment comprised performance. It involves much more compared to their competitors. AMR
between 90-95% than the logistics aspect of delivering a Research says the pay-off for
22.6% of respondents say that their customer. It includes putting in place companies with high rates of "perfect
perfect order fulfillment ranges accurate forecasting process and tools, orders" can be substantial. A 3 percent
between 80-90% building information systems that improvement in perfect order fulfillment
9.7% of respondents do not connect suppliers, customers and translates to a 1 percent increase in
measure this metric. internal departments, or developing profits, AMR says.
strong
© 2010 B2G Copyright - Middle East Series 24

25. Supply Chain
performance
#2: Delivery performance (line item delivery to first commit)
Analysis
Delivery performance (%) The first step in improving on-time
delivery is defining what it is. This is
generally a major challenge. Each
6,5%
customer may have his own definition of
9,7%
„on time‟. Companies will need to
32,3%
develop an operational definition for on-
50-60%
time delivery that is aligned with their
60-80%
business partners. Once done, it is
80-90%
important to understand that improving
90-95%
on-time delivery is mainly a matter of
29,0% 95-100%
issues concerning time and
expectations. Indeed, the expectations
must be well understood by both parties
22,6%
in order to avoid unnecessary
pressures. On the process side,
Forecasting, demand planning and the
Introduction Results supply chain configuration play a major
The „Delivery performance‟ or „On-time The survey results indicate that:
role in the performance of the on-time
delivery‟ is one of the key components
delivery. So to address the issue, supply
of the perfect order fulfillment. On-time 32.3% of respondents outperform
chain managers must examine carefully
delivery is measured as percent above 95% of On-time delivery
their demand processes to identify and
achievement within a window of time 22.6% of respondents deliver with a
measure those that are contributing in
that brackets the customer-requested performance between 90-95%
date/time and/or the business' 29% of respondents reach an the desired on-time outcome. From this
committed date/time. While price has average on-time delivery between analysis, managers will be able to tackle
always been a key element in the 80-90% counter performance related to process
purchasing decision, a constant and 16.2% of respondents are lagging lead times, capacity bottlenecks,
timely delivery is becoming increasingly with a delivery performance below process quality and etc… in the quest of
important due to the market‟s pressure 80% the 100% on-time delivery.
for speed and product instant availability
© 2010 B2G Copyright - Middle East Series 25