The right time to evaluate supply chain operations...
With change and challenge comes opportunity. It is no secret that the economic realities in the Middle East have transformed markedly over the past year thanks to sharp falls in the price of oil, the long-standing bedrock of the region.
But, with businesses seeking to make adjustments to their supply chains or expand further down the value chain to open up different revenue streams, opportunities for the economies of the GCC to diversify are opening up.
Enter DHL Supply Chain. As the contract logistics division of DHL, which has more than 40 years’ experience in the Middle East with DHL Express, the supply chain unit is looking to build on the bridgehead it has formed in Saudi Arabia since 2003. Proven provider of key supply chain services in the energy and health sectors, the company is in a position to help navigate clients from all industries through new challenges that lie ahead.
Nick Murray has been DHL Supply Chain’s General Manager in Saudi Arabia for three years. Having worked for the company in emerging markets across Europe and Asia for the past 16 years, he is now charged with implementing the sorts of transformative services provided by DHL Supply Chain in other parts of the world. And there is no better time to do so.
“Companies in the Middle East have been forced into re-evaluating the ways they do business, and this is where we can step in and help,” he says. “There is also a firm belief that the Gulf should play more of a leading role as a logistics hub for the Middle East and Africa region, even the world.”
The scope for businesses to transform their supply chain processes excites Murray, who describes some of the new services that can be offered to companies all over the Middle East.
“Examples of these include taking on inventory ownership for clients to release inventory off of their balance sheets,” he explains. “We will then provide the physical logistics services on top of the inventory ownership service. We have also taken over assets in companies’ supply chains, for example warehouse networks that may have been acquired off the back of a long term logistics deal. These are the types of big structural transformations that we see as being hugely relevant for businesses in the Middle East today.”
Leveraging the power of DHL’s global operations is another huge advantage that can be rolled out to clients in the region. Through divisions such as Express and Global Forwarding, DHL Supply Chain is able to collect products from vendors all over the world, transport into Saudi Arabia, clear customs and deliver to customers’ doorsteps. “This allows them to access a global network of potential suppliers and maintain control of their supply chains,” Murray adds. “We effectively cut the middle man out.”
The Middle East public sector is another area which DHL Supply Chain is likely to approach, drawing on successful examples from the UK. The company recently won a bid to procure, supply and distribute uniforms for London’s Metropolitan Police force. DHL Supply Chain also has a long-standing partnership with the country’s National Health Service, which involves the procurement of consumables and non-pharmaceutical products.
In the aviation arena, a partnership with a food production company has enabled British Airways to reduce flight turnaround times and cut down on waste in its supply chain. Murray explains: “We’ve designed specific vehicles with two decks to optimise the loading and unloading process, meaning we can get the catering and cleaning crews on at the same time, cutting down time spent preparing aircraft between flights. The waste food is recycled into dried pellets which heat up water to clean trays, which can then be reused.”
It is these sorts of innovations to the supply chain which Murray believes can greatly benefit transforming businesses in the Middle East during times where change is needed to tackle fluctuating economic circumstances.
Tried and tested
DHL Supply Chain’s track record for operational excellence in Saudi Arabia and the region makes it well-placed to expand and innovate its offerings.
Indeed, for a major energy client, DHL Supply Chain processes over 700,000 orders a year, collecting from a pool of 3,500 suppliers and delivering to 4,000 drop points. Alongside providing such enormous scale, the company is also delivering 99 percent of orders on time, a remarkable feat given the large and challenging geography of Saudi Arabia.
Healthcare is another firmly established market for DHL Supply Chain in the country. Murray expands: “We already distribute healthcare products within Saudi Arabia, anything from heart valves to dialysis equipment, which cannot go through the same network as spare parts for the automotive sector or materials for oil companies. This is certainly an area we are looking to expand our involvement in.”
Health and safety guardian
Beyond operational excellence, an uncompromising and determined stance towards health and safety has also helped to establish DHL Supply Chain as a trusted partner in the region.
Unbeknown to many is the fact that Saudi Arabia’s roads are something of a death trap. On average, 17 people die every day on the country’s road network, around five percent of all fatalities. This is three times the rate seen in the likes of Australia, the United States and much of Europe.
“One third of the hospital beds in the country are taken up by road traffic accident victims, meaning there is a massive drain on the economy and society because people are simply driving too dangerously,” Murray says. “As a result of this we have a leadership role to play in our industry and with our employees – it is all about how we change attitudes towards road safety, it is about engaging with employees every day.”
At the company’s main facility, a huge banner reminds departing employees about the importance of driving safely, with icons illustrating messages about mobile phones, seatbelts and controlling speed and stopping distances.
All DHL Supply Chain drivers undergo thorough defensive driving courses, while telematics devices are fitted in every vehicle, with new forward facing in-cab cameras also being tested. These will provide real time data on driver behaviour, alerting the company on metrics including speed and breaking harshness. This all helps generate league table reports on drivers which are then used in feedback sessions to help boost employee engagement.
“We are winning over hearts and minds in regards to health and safety, and as an employer we have a major duty to deliver on this,” Murray says. “A lot of progress has also been made with our major energy client. For instance, we have a world safety day initiative and competitions for staff and families to design posters, which all feeds into a culture we are trying to create.”
A key part of this company culture stems from the fact that 70 percent of DHL Supply Chain employees in Saudi Arabia are natives. Typical levels of Saudisation for international companies stand at anywhere between 15 and 30 percent.
“It is very unique for a foreign company to adopt anything like the level of Saudisation that we have, and this is not anything new either,” Murray says. “We have had this track record for years and have gone beyond simply hitting government quotas – we’re doing it because it benefits our business and customers.”
Around 850 of the company’s 1,000-strong workforce are blue collar workers such as drivers and warehouse operators. “We were told it would be difficult to find and retain many Saudis in these roles,” Murray says. “The opposite has been the case.
“Through our engagement processes we have ensured that people remain with us, for example our rounds of internal training feed into certifications on a DHL passport which they carry round with them. This is all part of building a global corporate culture where employees feel a true part of DHL Supply Chain.”
Staff awards have been another important component of employee engagement since 2011, while global annual surveys provide extensive feedback and requests on all manner of issues, from improved toilet facilities to explanations of wider DHL strategy to provide a more meaningful context to everyday work.
Thanks to a firm footing in countries like Saudi Arabia and a reputation for operational excellence, the company’s highly-skilled and motivated workforce is well-placed to help businesses in the Middle East negotiate times of change. And through replicating the sorts of transformative supply chain services already provided around the world, DHL Supply Chain is ready to assume the position as regional transformation leader.