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September 2016
The greenest hotels in the Middle East
SUSTAINING MASDAR Setting the sustainable standard
STEEL
Egyptian Steel is making a name for itself as an efficient, thought-leading manufacturer
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EDITORS COMMENT
W E L C O M E T O T H E S E P T E M B E R 2016 issue
of Business Review Middle East. This month’s issue has a special focus on sustainability, starting off with a look at Masdar. The Abu Dhabi-based clean energy company has had a pretty amazing year, hitting the headlines with the Solar Impulse 2 flight – we take a look at this, and some of Masdar’s other big green achievements. Sustainability in the hospitality industry is another of our features, with many hotels in the region leading the way when it comes to energy reduction and water-saving initiatives. We also look at the issue of energy management for businesses in the Middle East, with top tips on how to implement an energy management strategy. Other organisations featured in the magazine include Al Fakher Tobacco and Perkins + Will. We do hope we enjoy the issue; please share any feedback with @BusinessRevME on Twitter.
Lucy Dixon Group Editorial Director lucy.dixon@bizclikmedia.com
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CONTENTS
F E AT U R E S
PROFILE
10 Setting the sustainable standard TECHNOLOGY
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How hotels can build a sustainable legacy for the future
LIST
Taking control of energy use
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BRIDGING THE GAP IN SER VICE ORIENTATION
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CONTENTS
C O M PA N Y P R O F I L ES Egyptian Steel Construction
Perkins + Will Construction
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Al Fakher Tobacco Supply Chain
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PROFILE
Setting the
sustainable standard 10
September 2016
As Masdar celebrates its 10th birthday, Business Review Middle East has a look at some of its sustainability achievements Writ t en by: LUCY D I XO N
BACK IN 2006, Mubadala Development Company — which is owned by the Abu Dhabi government — set up Masdar, an organisation with the aim of developing clean energy and helping the emirate diversify its economy. Its mission is to use the government’s $15 billion commitment to incubate and establish a new energy industry in Abu Dhabi. Masdar is divided up into five key areas: Masdar Institute, Masdar City, Masdar Clean Energy, Masdar Capital and Masdar Special Projects. Perhaps the most famous project to come out of any of these five business units is its partnership with Solar Impulse, which saw a solarpowered, 48-hour flight land safely in Abu Dhabi in the summer of 2016. The first aircraft to circumnavigate the world using only solar power, Solar Impulse 2’s successful return was witnessed by Dr Sultan Ahmed Al Jaber, UAE Minister of State and Chairman of Masdar. “Solar Impulse has proven just how practical the application of solar energy can be. It will also provide valuable data that will lead to critical improvements in two key areas: energy storage and 11
PROFILE
efficiency. Masdar is truly excited about the endless possibilities of solar energy, and we will be part of taking such technologies to the next level,” he said. Another of Masdar’s achievements is Masdar City, a sustainable development built from scratch in the middle of the desert. When the car-free eco city was first planned 10 years ago, it had incredibly tough goals including zero carbon and zero
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waste, with 50,000 residents and another 40,000 commuters. Although it is many years behind schedule – the target completion date has been changed from 2016 to 2030 – there is still much that can be learned from the ambitious project when it comes to planning and achieving a sustainable built environment. Key achievements of the city include a 40 percent reduction in water demand and a naturally cooler
temperature by almost 10° Celsius than elsewhere in Abu Dhabi. The projects Masdar is working on are not restricted to Abu Dhabi, and one of its recent renewables investments provides energy to over 500,000 homes in the UK. The London Array is a joint venture between Masdar, E.ON, DONG Energy and La Caisse de dépôt et placement du Québec. It is the world’s largest offshore wind farm
and the same size as 10,000 football pitches. Impressively, its 175 wind turbines power almost one in 50 British homes. Talking about the project, Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, said: “The development of London Array has positioned Masdar as a leader in the offshore wind power sector and paved the way for the company to pursue further projects, such as the 402-megawatt Dudgeon
“Solar Impulse 2 was the first aircraft to circumnavigate the world using only solar power”
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Image credit: www.flickr.com/photos/solarimpulse Creative Commons by NC SA / 2.0
S E T T I N G T H E S U S TA I N A B L E S TA N D A R D
PROFILE
offshore wind farm now under construction in the North Sea.� Those wanting to learn about clean technology and renewable energy have been heading to Masdar Insititure. It is the world’s first university focused on sustainable technologies at a graduate level. Unsurprisingly, it is located in Masdar City, and has seen over 550 graduates since it was opened. Its achievements are 14
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The Solar Impulse 2 pilot, Bertrand Piccard.
S E T T I N G T H E S U S TA I N A B L E S TA N D A R D
numerous and a recent highlight is its research into using renewable energy for desalination. Researchers are looking into whether it is economically and technically feasibly for geothermal energy to be used to produce fresh water from sea water. Masdar Institute’s Dr. Hassan Arafat, Professor of Chemical and Environmental Engineering, said: “In the UAE, seawater desalination is one of the largest consumers of the country’s generated power. It is estimated that nearly 30 percent of the fuel consumed by the UAE’s cogeneration natural gasfired power plants is used to produce freshwater.” And according
to the 2015 UAE State of Energy Report, the UAE’s combined power generation and water desalination plants are the country’s most carbon-intensive activities, so making use of geothermal energy could produce a massive reduction in carbon emissions. These are just a handful of examples of what Masdar is doing to raise the sustainability bar in the Middle East and beyond. Speaking about Masdar’s 10th anniversary at a celebration earlier this year CEO Mohamed Jameel Al Ramahi commented: “The last ten years of Masdar have truly been a decade of innovation. We have grown from a bold initiative into a global enterprise driving the adoption of clean energy and sustainable development. We are a major investor in renewable energy, deploying new capacity around the world and increasingly here in the region. We are building the world’s most sustainable city, home to the world’s first graduate-level university focused on advanced energy and sustainable technologies. And we are the hub of the global sustainability debate, thanks to platforms such as Abu Dhabi Sustainability Week.” 15
TECHNOLOGY
How hotels can build a sustainable legacy for the future In the midst of a complicated picture for tourism in the Middle East, how can hotels work for a brighter, more sustainable future? Written by SIOBHAN O’NEILL , editor of Green H o t e l i e r. T h e l e a d i n g v o i c e on sustainability in the hotel industr y
TECHNOLOGY THERE’S NO DENYING that tourism in the Middle East is facing difficult times. Previously popular destinations like Egypt, Turkey and (North African) Tunisia have suffered dramatic drops in visitor numbers in the wake of political instability, terrorist attacks and Foreign Office advice for travellers. For hoteliers a corresponding surplus of empty rooms is bad news. But the region has a wealth of culture, history and hospitality to offer, and several destinations continue to boom or are steadily growing their tourism industry (think UAE, Oman, Jordan). For those countries which are experiencing a downshift, it’s a great time for businesses to consider investing for the future. To ensure that future has longevity, any investment should be focused on sustainability. Hotels are naturally big consumers of resources. In hot countries, consumption can be even higher when you consider power for hundreds of air conditioned rooms, higher than average water consumption and the importing of products that today’s guests tend to expect wherever they are in the world. But that consumption isn’t without a cost, both financial and environmental, and today’s hotels don’t just to be great places to stay, they also need to be good neighbours to the communities in which they’re located. While destinations like Dubai have a 18
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TECHNOLOGY reputation for extravagance, and that can be appealing to some vacationers, countries like Oman are keen to build a reputation for sustainability — recently sponsoring the Responsible Travel Awards to help highlight their own credentials. Building sustainability into the hospitality industry is essential, not least because they’re one of the sectors most likely to be affected by climate change. Consider the fact that water consumption in the UAE outstrips the natural supply. The region was highlighted alongside Brazil, China and India as most needing to act to mitigate water risk in a report published by ITP (the International Tourism Partnership). Turning a hotel into a responsible business that reduces its carbon footprint and water consumption and becomes a good neighbour to its local community takes just a few simple steps, and will quickly reap rewards both in terms of reduced operational costs and in consumer – and employee – loyalty. Measuring is the first step to understanding consumption and there are a host of free tools available to businesses keen to learn 20
September 2016
where their energy and water use is highest. It is possible to invest in technologically advanced building and energy management systems, but even the smallest lodging can make use of HCMI (the Hotel Carbon Measurement Initiative) the universally recognised tool and metric for measuring carbon footprints per room, stay or meeting. Simple actions like swapping all lighting to LEDs; adding motion sensors to corridors and back of house; using room keys which switch off the power to an empty guest room and using the most energy efficient equipment can make a big difference. Reviewing housekeeping practices and introducing a linen and towel policy as standard will also make big impacts on water consumption. Low flow taps, aerator showers, dual flush toilets and use of grey water systems for flushing toilets or landscaping purposes will dramatically reduce a hotel’s water footprint. A recent study using PwC’s TIMM (Total Impact Measurement and Management) with TUI and the Travel Foundation found that the biggest positive impact the industry could make on destinations was training
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TECHNOLOGY
Middle East hotel resource consumption in numbers. 31,903 kg of CO2 annually per room in U.A.E (compared with 5,954 kg in the UK) 680 litres of water daily per guest in U.A.E. (compared with 300 litres average for the local population) 3 million tonnes – estimated annual food waste in U.A.E., population 9.3m. (7m tonnes UK, population 64m)
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S U S TA I N A B L E H O T E L S
and employing local young people. That’s why many hotels – including those in the Middle East - use the Youth Career Initiative to help disadvantaged young people improve their opportunities. An award-winning programme, YCI has an 85 percent success rate of graduates who’ve been through the six months of classroom and skills training in up to 15 different hotel departments, going on to employment or returning to education. Hotels in Jordan like the Four Seasons and Grand Hyatt in Amman and the InterContinental Aqaba are having great success with the programme, and hotels in Egypt and Lebanon will soon be joining. The Green Hotelier Awards have highlighted some hotels that are leading the way when it comes to being responsible businesses with a clear environmental, social and sustainability programme in the Middle East, and they make great examples for others to learn from and replicate. The 2016 winner – Yassat Gloria Hotel & Apartments in Dubai – has in the past three years invested to reduce energy,
water and waste. It participates in the Soap for Hope programme, recycling partially used bathroom amenities, as well as a local can collection programme that plants trees, whilst offsetting carbon and doing neighbourhood clean-ups. The Ramada Hotel & Suites Ajman U.A.E. has also taken huge strides to reduce its environmental impact, including a zero waste to landfill project which sees 90 percent of its waste diverted to recycling and other solutions, and waste oil converted to biodiesel. When hotels are motivated as responsible businesses to help preserve our global destinations for future generations, there’s no end to the positive actions they can take. And if your hotel is blessed with 350 sunny days per year, why wouldn’t you cover it in solar panels like this IHG property which will be powered entirely by renewable energy? It’s a fine balancing act for hotels to provide a luxury stay for guests whilst also being environmentally responsible, but it is far from impossible.
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LIST
Taking control of energy use Four things your business needs to know about energy management W r i t t e n b y : S A L M A N Z A FA R , F O U N D E R , E C O M E N A W W W. E C O M E N A . O R G
LIST
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TA K I N G C O N T R O L O F E N E R G Y U S E
1
Effective energy management is essential for businesses in the Middle East. During the past decade or two, the Middle East has been witnessing a rapid increase in energy consumption due to a high degree of industrialisation, high standards of living and an exponential increase in population. In fact, the level of primary energy consumption in the Middle East is among the highest worldwide. Â These factors have made businesses in the Middle East realise that effective energy management is not only good for them, but is also an essential requirement. In recent years, many businesses have come up with dynamic strategies to achieve an immediate reduction in energy consumption. This trend towards effective energy management is expected to continue to grow in the region in the coming years.
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A successful energy management strategy needs the support of every employee. For an energy management plan to succeed, the entire organisation, including its employees and management team, should be committed to its implementation. The strategy should include: • Goal-setting: how much energy reduction do you want to achieve? • Number-crunching: how much energy do you actually consume? • Identifying energy-guzzlers: what are the major consumption units in your business, and what measures can be taken to reduce consumption. • Technology and automation: smart metering, schedule-based lighting, occupancy sensors, HVAC control and latest technological innovation can provide an active approach to energy management. • Continuous review and management: regular performance monitoring is essential to check the progress towards your energy-saving goals.
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TA K I N G C O N T R O L O F E N E R G Y U S E
3
Businesses in the Middle East face specific challenges when working to reduce their energy consumption A lack of incentives to reduce energy consumption is a major hurdle faced by businesses in the Middle East. In the GCC region, electricity is usually provided at heavily subsidised rates which fail to provide the motivation to the consumer to reduce energy consumption. Most of the commercial buildings in the Middle East consume huge amounts of energy in the form of HVAC, lighting, ventilation etc., and there is a real need to make such buildings ‘energy smart’ in the realest sense of the term.
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Technology is at the heart of energy management. Technology plays a vital role in reducing energy consumption as energy savings are not limited to power consumption by HVAC, lighting or ventilation, but also encompass optimisation of energy use, building infrastructure, supply chain networks, product design and transportation networks. Businesses in the Middle East may strive for energy-smart buildings, smart grid systems and renewable energy sources (like rooptop solar and biogas systems) to improve their long-term sustainability and realise more effective cost-management.
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SUSTAINING STEEL Written by Nye Longman Produced by Richard Deane
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EGYPTIAN STEEL
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September 2016
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LEVERAGING SIGNIFICANT INVESTMENT AND NATIONAL DEMAND, EGYPTIAN STEEL IS MAKING A NAME FOR ITSELF AS AN EFFICIENT, THOUGHT-LEADING MANUFACTURER AT HOME AND ABROAD
S
tepping into the steel industry in 2010, propelled by over $2 billion of investment, Egyptian Steel is growing to become a leading diversified manufacturer and stalwart of the recovering Egyptian economy. Backing up substantial capex with robust social, environmental and operational programmes, the company is looking forward to years of sustained growth and success. Since we spoke to CEO Ahmed Abou Hashima in the July 2015 issue, the company has undergone a number of structural changes and is now in the process of diversifying its offering to the domestic and international market. Abou Hashima is proud of how far his company has come – and is optimistic about its place in developing the country. He says: “Steel is crucial for
the economy. We have a shortage of 8 million housing units and infrastructure. The whole population lives on only 7 percent of the land. In order to develop Egypt, steel is vital for at least several decades. It’s a strategic industry that employs thousands of people.”
Operational development Operations are shared across a number of subsidiaries which consist of Egyptian Steel for Building Materials, National Port Said Steel (NPSS), and IIC for Steel Plants Management. Together, these divisions enable the company to provide a range of steel production capabilities to the market – supported by a number of technological innovations. “When all four plants of Egyptian Steel are at full capacity we will be able to acquire a 20-25 percent
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EGYPTIAN STEEL
market share in Egypt,” says Abou Hashima. “We’re also expanding into the cement industry with a production capacity of 2 million tons per year, and going into IPO is in our plan, although there’s no set time for it yet. “We have already taken our first step into the cement industry by establishing the sister company Egyptian Cement, and in the future, after mainly operating in steel and cement we might look into diversifying into other building materials such as wood, ceramic, and glass. Our vision is to make the group a onestop shop for all building materials.” By the end of 2017, all of Egyptian Steel’s plants will become operational and the company will have an estimated workforce of 6,000 people. “With the opening of the Beni Suief plant we’re also opening a vocational development centre for training steel plant workers in order to improve their skills and performance,” Abou Hashima adds. But the centre is not limited to just people working for Egyptian Steel: “It’s open for free to anyone who wants to learn,” he says, “It helps us raise
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the calibre of our workers, and at the same time is part of our role to give back to society, and enable people to have an opportunity to improve their skills to be able to compete in today’s workforce market.” While Egyptian Steel is backed up by significant investment, the company has had to face up to the industry-wide challenge of sourcing enough energy for production. “The government has made an enormous effort to improve the power grid,” Abou Hashima says. “There have been new power stations launched, as well as mega projects with companies like Siemens to generate power, and the outstanding natural gas field discovered by Eni, which will have a great impact in the future.” “The situation is definitely better, but we have started using new energy-saving technology which will enable us to avoid any problems in both the long and short run.”
Sustainable steel Embedded within Egyptian Steel’s business model is the imperative to operate as responsibly as possible, a
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AHMED ABOU HASHIMA CEO
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EMB BUSI OPER
BEDDED WITHIN EGYPTIAN STEEL’S INESS MODEL IS THE IMPERATIVE TO RATE AS RESPONSIBLY AS POSSIBLE
EGYPTIAN STEEL
philosophy that it applies holistically to its workers, the environment and the Egyptian people. At a technical level, the company has made massive strides in energy saving through use of more efficient technology. Combined, the eco-friendly technology the company is using saves almost 60 percent of the energy required and saves as much as 30 percent of emissions – innovations that have added an extra competitive edge. Egyptian Steel also recycles 100 percent of its steel scrap. This technology is the first of its kind in the Middle East and Africa, and only the third instance in the world. The other two steel plants that use this technology - one in Arizona and the other in Greece - produce 250,000 tons/year, while Egyptian Steel’s Beni Sueif and Al Ain Al Sokhna plants each have a production capacity of 830,000 tons/year, making Egyptian Steel the biggest manufacturer of green steel globally. Abou Hashima adds: “I created a concept that I like to call ‘socially responsible capitalism’ which emphasises that the civil society has rights that should be fulfilled - it’s our duty to improve people’s lives and to lessen their suffering as much as we can.” And the company is continuing to achieve this social mission. In 2014 Egyptian Steel scrapped its advertising agenda in order to refit 40 of the poorest villages in the country with basic amenities. Since then it has also sponsored a large number of Egyptian
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EGYPTIAN STEEL IS w w w . e g y pBASED t i a n - s t e e IN l . c oCAIRO m 43
EGYPTIAN STEEL
WHEN ALL FOUR PLANTS OF EGYPTIAN STEEL ARE AT FULL CAPACITY WE WILL BE ABLE TO ACQUIRE A 20-25 PERCENT MARKET SHARE IN EGYPT – CEO Ahmed Abou Hashima
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athletes, and the Paralympic team. What is clear from its conscious social work is a desire to share the success of the company in order to raise the standing of as many people in the county as possible. Abou Hashima adds: “It’s very flattering that our CSR efforts got recognition on a local and on an international level. But what actually keeps me motivated is the happiness I saw on the villagers faces when they moved into their revamped homes.” The company is also currently working to obtain ISO 9001 (Quality Management Systems), IS0 14001 (Environmental Management Systems) and OHSAS 18001 (Occupational Health Safety Assessment Standard). Having built on an already strong foundation of investment and national demand for its products and services, Egyptian Steel is set to play a major role in developing the country’s economy and skills base for many years to come
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Building
Written by N Produced by J
g trust
Nye Longman Jordan Platten
PERKINS + WILL
With over 40 years of operations in the Middle East, Perkins + Will has cemented its presence in this key market by building trust, developing talent and working innovatively
E
ven for architecture and design companies with the experience and track record of Perkins + Will, establishing a competitive presence in the Middle East can be challenging to say the least. It has not only been able to achieve this (doubling its business each year for the past five) but has also worked on such prestigious projects as the Sheikh Mohammed bin Rashid football stadium in Dubai, and the regional headquarters of global giants like LinkedIn and Google. Business Review Middle East speaks to Steven Charlton, Principle Managing Director at Perkins + Will and discovers how he has led the company to its enviable position.
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Operations With a list of services covering architectural and interior design, strategic and urban planning, landscaping, and branded environments, it is clear why the company has a strong demand in the Middle East. The company’s specialist expertise also covers healthcare, education, corporate, civic, technology, sports and travel verticals. But faced with a market that necessitates a strong physical presence in order to do business, it was not until five years ago – when its Dubai office was founded – that Perkins + Will was able to scale impressive growth. “We went from the initial start-up
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Consorts diverse range of certified products are suitable for a variety of building uses, such as hospitality, schools, healthcare and commercial spaces.
T +971 (0) 4 446 0900 F +971 (0) 4 446 0999 E info@consortme.com www.consort-hw.com 3903/04 Mazaya Business Avenue, Tower BB2 Jumeirah Lakes Towers PO Box 19186, Dubai, UAE
CONSTRUCTION
team and we are now touching 100 plus people in the Dubai office. It’s been quite an aggressive growth period – especially in the wake of the recession,” explains Charlton. “People thought we were crazy but it’s worked out very well.” “We are pretty much doubling every year since we started. We are getting to a comfortable point in the market, and because of this we moved to a new 10,500 square foot office last September and are now working on strategic efficiencies and working smarter and more efficiently.” The company is also refining its internal processes and capabilities in order to deliver on its increasingly strong reputation for effective delivery. He says: “We’ve gone from searching for the next job to a position where clients come to us knowing they get an exceptional standard of design and quality.
“There are of course inefficiencies that arise from doubling every year and we wanted to make sure we are improving everything. From improving the way clients are greeted in the office all the way to the design process and documentation. It’s about looking at every single thing and making them better – marginal gains.”
The value of people In a market crowded with many of the world’s largest architecture and design companies, the need to attract and develop a highly skilled workforce is pressing; Perkins + Will is pursuing this with an innovative approach. Charlton ensures that his workforce is able to develop creativity outside of typical projects and that team members can develop their careers holistically. “I always say that you’re selling people and their ideas when you sell design,” Charlton muses. “The
2,400
Number of employees at Perkins + Will
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PERKINS + WILL
CUNDALL’S ENGINEERING CONSULTANCY SERVICES COVER THE ENTIRE LIFE CYCLE OF ANY BUILDING Clients such as Perkins & Will, find our ‘total solutions’ approach saves them time, money and effort. Our core services include Building Services, Civil and Structural Engineering and Sustainable Design. www.cundall.com
stronger the team you have the wider it goes. We’re bringing in talented new employees in every month it’s a very dynamic environment. “If you have exceptional people you get exceptional results; everything becomes a well-oiled machine. We employ the best in the region - people want to join us from other firms,” Charlton explains. “We help our people
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find out what they want to be and then we help them get there. “We give people opportunities to do interesting projects; we want our people to try things and experiment. We also ensure that there are experienced people around them to keep them in the right direction and reign them back when needed.” With offices in every global region, and with over 2,400 staff globally, Perkins + Will is able to deploy the right expertise to take on a wide variety of projects – an aspect of its operations that not only enables it to fulfil the demands of the market, but one that enriches careers as well. For the employees at the company, Charlton explains, personal and professional development is worthy of serious time and investment. “Employees can dedicate a percentage of their time to projects that are not paid for. Any employee can submit a research proposal and we select them globally every quarter – employees can have time away from paid work to focus on these. “Initially it’s about just trying
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PERKINS + WILL
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ideas, new technologies, software and new ways of looking at things. But if successful it can be an incubator for genuine and systemic changes in our industry.” In addition we have staff from various offices working in the studio at any one time, currently LA and, Boston teams are in our offices and we have people in Chicago – we move people around a lot which opens their eyes to working in different regions and cultures.”
Global company – local presence
local presence – a facet that Perkins + Will has not overlooked. “When we first set up the office here, people always asked ‘how long have you been here? How big is your office and what projects have you done here?’ Even though we had experience elsewhere, it didn’t matter to them. They want to see the office and make sure we are real. We grew it organically. That took hard work and long hours - it has paid off now. We have the back catalogue and an office which aligns with our aspirations - those questions are now answered.” Backing up its exponential growth with a dedicated strategy to invest in people – both in and outside of the business – Perkins + Will is set to develop an already impressive presence in the Middle East. Having developed a profound understanding of its target region, the company’s reputation as a trusted partner can only grow.
Perkins + Will is headquartered in Chicago, IL, USA
“We tendered on a project recently and the client said – ‘why should we choose you?’ To which I said: ‘Just call one of our clients, choose any client’” says Charlton. And this is no small matter to consider when working in the region; many local companies prefer to partner with businesses that have a dedicated
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SUPPLYING THE WORLD’S FINEST MOLASSES Written by Tom Wadlow Produced by Heykel Ouni
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Al Fakher Tobacco is the global leader in the production and distribution of high quality molasses products, driven by a supply chain operation on a path to excellence
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ou might be forgiven for thinking that a global leader in the tobacco industry had been built on a foundation stretching back several generations. For Al Fakher Tobacco however, the rise to the world’s most renowned tobacco molasses company has been a rapid one. Formed in 1999 and owned by Jordanian parent Al Eqbal Investment Company, the UAEbased organisation is now present in 150 countries with a team of 550-plus staff of 20-plus different nationalities. Othman Tahboub is Al Fakher Tobacco’s Senior Director
of Supply Chain. With more than 15 years’ experience in the procurement industry, he joined the company in 2007 as a Commercial Manager before heading up the supply chain operation in June of 2015. His intricate knowledge of the wider business strategy is critical in the way supply chain operations are approached, allowing the company to differentiate itself from the competition in all of its markets. “Al Fakher differentiates itself in many markets through quality,” he says. It’s a very competitive market out there, that’s why we always need to provide our sales
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A L FA K H E R T O B A C C O
teams with the best quality and Supplier landscape best priced products possible Al Fakher Tobacco’s supply chain to become more competitive. landscape is made up of two world“We also need to be flexible class manufacturing facilities in the in order to meet sudden peaks UAE, one dedicated to the local in demand, while at the same market and the other, larger site time offering consistency in our producing for export. The company product quality. All of this helps also hosts a network of warehouses the company to become across the country containing more competitive in tailored storage systems our markets.” for particular products Al Fakher’s and materials product range used. And it is the consists of more suppliers of such than 100 flavours materials, and across standard, having visibility over Number of employees gold and special the entire network, at Al Fakher Tobacco edition ranges, that is the number one with accessories priority for Tahboub. such as high quality “The most important part glass shisha also sold worldwide. of our supply chain operations is “We have also entered the vapour choosing the right suppliers,” he market which is massively popular explains. “If you choose a good one in the UK and the USA, which your life will become much easier. makes it crucial that we are flexible Al Fakher is risk certified and we to meet ever-changing customer work with top risk management demands with new products and providers in the world to identify, variations,” Tahboub adds. assess, and mitigate risks. “We have to diversify our
550
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“If you can’t develop people, then how can you develop a business forward?”
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supply base, that’s why we work with multiple suppliers around the world to minimise supply risk. Our suppliers are the best in their fields, profitable and add value to what we do. “Supply chains are more complex than ever and we need visibility of the whole chain to make sure we comply with regulations across borders, for example with sustainability and CSR. We have regular meetings with suppliers and get to know them inside out.” Shipping providers handle the inbound logistics operations, with 85 distributors making sure the products reach wholesalers and retailers in the 150 different national markets. Al Fakher’s team of marketing and sales managers frequently touch ground in these different territories, acting as a vital point of direct communication and scouts for new business opportunities.
Continuous improvement Suppliers and partners aside, Al Fakher is also embarking on its own internal continuous improvement programme in order to achieve supply chain excellence. For example, it is investing in a new warehouse management system to enhance analysis of inventory data, a move which should result in quicker issuing and movement
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of goods and an improved cash conversion cycle. The most significant continuous improvement project, and what the whole of Al Fakher’s supply chain operation is aiming to reach, is platinum standards. “We are aiming is to achieve platinum standards within three years, which would recognise us as being on a par with the procurement departments in” in the biggest multinationals Tahboub says. “Such standards are very efficient and strategically aligned. There are more than 20 criteria to achieve this, five of which are leadership and organisation; strategy; people management; processes, procedures, systems and performance, measurement and management. Even within these there are many more subcategories. This is very focussed way for us to improve.”
success to date, is Al Fakher’s loyal employee base. Across all business departments employees benefit from a range of incentives and initiatives, resulting in a 99.5 percent retention rate. These policies are grouped into a triangle, at the top of which is a positive, safe and comfortable working environment.
We make a difference in the supply chain. We are a prominent regional supplier of oleo, functional, detergents, paint, cosmetics, tobacco, dairy farms and specialty chemicals. Selling in to 23 countries around ME and Africa. Representative of WILMAR (World # 1 in agribusiness)
Custodians Crucial to attaining excellence, and indeed crucial to the company’s
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www.al-behar.com / ammar.rafie@al-behar.com
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The second is competitive packages, from salaries to benefits like accommodation, transport and profit sharing. “The third part is development and training, and this is why we have a high retention rate,” Tahboub adds. “The company invests a lot in internal and external training, case studies, site visits, active learning, and experiential learning. We never look at this as a cost but an investment – if you can’t develop people then how can you develop a business forward?” As well as looking after its people, Al Fakher is also
increasingly becoming a custodian of the local environment in which it operates. “We are also working on a waste management programme to make sure we are known as a sustainable producer as well as a worldclass one,” says Tahboub. The waste management programme involves a new water treatment facility which cleans water before it reaches sewage works. Other initiatives include a tobacco dust capturing system and a rubbish compressing systems to cut down on waste output.
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Q&A
CEO Samer Fakhouri Samer Fakhouri is the CEO of Al Fakher Tobacco. He is also EICO’s chairman of the board. In addition to his position in Al Fakher and EICO, Fakhouri held the position of General Manager of the International Tobacco & Cigarette Co. (ITC) in Amman – Jordan since 1995 and until EICO was founded in 2008. Under his command, ITC was sold to Philip Morris International in 2011. Fakhouri’s experience in tobacco business extends beyond two decades. He is the driving force behind EICO’s acquisition and subsequent expansion of Al Fakher in 2006. Fakhouri holds a BBA from Oklahoma State University gained in 1993.
How has Al Fakher progressed since you arrived? Al Fakher has experienced tremendous growth since it was acquired in 2006. Distribution networks didn’t exceed 20 countries. Our distribution network now encompasses 85 countries and with presence in 150+ countries. Manufacturing capacity has increased tremendously. Usage of technology was minimal compared to a high usage of best technology now. Al Fakher have partnered with the world best technological providers to combine their technologies with our platform setup to create complete solutions tailored to fit our high-end requirements
What defines Al Fakher Tobacco? Leadership. Our Leaders are humble, they take their ego away, their ambition is for the larger cause, Visionary, adaptable to change, and can be change catalysts. Mentality. Our team have a winning mentality. We believe that Success is being the best in what we do and that Success is choice and discipline. The team. Our team is empowered, motivated, engaged, enhanced, and enabled. We are a team, not just a group of people. Environment of truth and transparency. We have a climate where truth and not compliments are heard. People can speak up freely and will be heard. Simplicity. We simplify work. We don’t complicate things or processes. We work smarter, not harder. Culture of discipline. People operate with freedom in a system of responsibilities. In a culture of discipline, people do not have "jobs", we have responsibilities.
Tell me about the wider business strategy. What are your aims and ambitions for the coming years? Al Fakher focuses in maintaining its market leadership, through sourcing top quality ingredients, to produce premium products, and sell through a competitive pricing strategy, supported by aggressive marketing. We will focus on strengthening its premium offerings, unlocking new markets and M&A opportunities going forward, while maintaining operational and supply chain excellence.
How important a role does supply chain play in formulating this strategy? I t’s all about Efficiency, and flexibility. Our supply chain is an essential element to our
operational excellence. Our efficient supply chain enables al Fakher to be more competitive in the market place and helps controlling costs which maximizes our profits. Our flexible supply chain always aims to speed up products flows. It is fast in detecting and responding to short term requirements and in adapting to new strategies to support change in overall company or changing market dynamics.
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Othman Tahboub Senior Director of Supply Chain Othman Tahboub is the Senior Director of Supply Chain, responsible for the procurement of all materials and services for the company, raw materials and finished goods warehouses, material management and in-bound logistics. He joined Al Fakher in 2007 as a Commercial Manager. Prior to joining Al Fakher Tobacco, Tahboub spent seven years at the International Tobacco & Cigarettes company in Amman, Jordan, where he held a variety of roles in production, data analysis, procurement, shipping, and logistics. Tahboub has an MBA from Hult International Business School in Boston and is a full member MCIPS in the Chartered Institute of Procurement & Supply in the UK.
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Bright future Al Fakher Tobacco’s strategy revolves around maintaining its position as a global industry leader through maximising its competitive advantage, namely quality of product in vast array of guises and flavours costed at competitive prices. “In our strategy framework, every department has a goal,” Tahboub says. “We know the molasses industry will continue to grow, as opposed to cigarettes industry which is a declining sector. Whether its quality management, operations, HR or supply chain management, the target is to achieve excellence and sustain our competitive advantages and core competencies by providing customers with the best products possible. Achieving competitive advantage is difficult, but sustaining it is even harder and we cannot stop at where we are now.”
Tahboub is also passionate about encouraging more talent to pursue a career in the supply chain at large, especially given how complex supply chain processes have become at global companies such as Al Fakher. He concludes: “For anyone looking to pursue a career in supply chain I would emphasise the importance of being an effective communicator, a change catalyst and a positive thinker. It is a stressful world but you really have to keep spirits high and motivate yourself and others because we deal with many stakeholders in this business. “I would also stress the need to aim high with certifications and executive education and to also get involved with other areas of the business, as this will help to understand the requirements of the supply chain even more. This is what is happening at Al Fakher Tobacco.”
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