Global Supply Chain March 2016 Issue

March 2016 Issue 24

ENHANCING THE BUSINESS OF LOGISTICS

Qatar In diversification mode

DP World Future strategy

Erhardt & Partners’ Truck Driver app

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Supply chain risk in the region SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: info@signaturemediame.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven jason@signaturemediame.com Director: Deepak Chandiramani Deepak@signaturemediame.com Managing Editor: Munawar Shariff munawar@signaturemediame.com Art Director: B Raveendran ravi@signaturemediame.com Production Manager: Roy Varghese roy@signaturemediame.com

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Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused.

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So while supply chain risk in the MENA region remains historically high, Iran’s now permanent play in the entire regional business environment is a new dimension for industry businesses to consider. Having said that, overall risk in the last quarter of 2015 was relatively stable and the lifting of Iran’s sanctions present a definite positive regional outlook.

“The overall outlook for 2016 indicates that supply chain risk in the region will remain high. This is mainly due to ongoing security risks, and an over supplied oil market, which continues to suppress the oil price.

In the short term, this will impact negatively on risk in the oil exporting countries in the region where government expenditure is a major driver of the economy,”says Sam Achampong, General Manager, CIPS Middle East and North Africa. The opening of the Iranian economy will assist regional and global supply chains in the medium term, he feels. Significant trade and investment opportunities exist, but risks remain high. The success and speed of the re-entry of Iran into the global trade arena will hinge on the effectiveness of dealing with a business culture, which has been cut off from the world for a long time.“Notwithstanding the difficulties in re-integrating Iran to global trade flows, the sheer scale of the anticipated trade that will be stimulated as a result of the lifting of sanctions USD 600 billion (AED 2,204 billion) between Iran and China alone over the next 10 years - the UAE is likely to be one of the trading hubs to benefit. (Page 26.)

More on supply chain finance is on Pg 40 talking about how companies look to supply chain finance (SCF) to improve their working capital and manage risks across complex markets.

See you next month!

Munawar Shariff Managing Editor Signature Media munawar@signaturemediame.com

MARCH 2016 3

March 2016 Issue 24

ENHANCING THE BUSINESS OF LOGISTICS

26

51 Future strategy DP World announces intention to back potential infrastructure development in India

06 News 32 Omnichannel and e-commerce SCM 16 Country report - Qatar 54 Giving F&B a boost Supply chain logistics need to keep

20 Country report - Bahrain Bahrain’s transport sector expands on all fronts All of Bahrain’s transport sectors are on a growth trajectory signalling good economic times

26 Cover Tackling the region’s supply chain risk Re-introduction of Iran to global supply chains is a mixed blessing for suppliers 4 MARCH 2016

up with the demands of the new age of customer demands

40 Five tips for

successful SCF

Supply chain finance has been affected by recent regulatory reforms

46 Qantas’ extra passenger!

Recently Qantas had to fly a new engine to one of its aircrafts that needed it in Johannesburg

48 The truck driver app Erhardt & Partners’ Truck Driver app links the warehouse to the road

Jafza reaffirms its commitment to the growth of the F&B industry

56 Another award in the bag

Almajdouie has been recognised as ‘2016 Logistics Service Provider of the Year, KSA’

58 Recognising the winners

Dubai Trade honours winners and runners-up of the 8th ESEA Awards

60 A humble yet

fearless leader

COVER: INTERIOR OF THE ALI QAPU PALACE IN IRAN

Falling oil prices spur diversification of industries and increased efficiency in Qatar A different set of priorities for energy-rich Qatar

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Opening of Concourse D boosts capacity to 90 million Dubai International has now increased its capacity from 75 million to 90 million with the opening of Concourse D, the result of a USD 1.2 billion (AED 4407540000) investment to enhance service and boost capacity for the more than 70 international airlines that will now call it home.

“We continue to invest in the development of top-flight infrastructure to augment service levels for our international

MCB and LDL operator about to start work

6 MARCH 2016

airlines and their customers while providing the capacity needed to meet growing demand,” said HH Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Airports; President of the Dubai Civil Aviation Authority; Chairman and CEO of Emirates Group, adding,“Shorter walking distances, more comfortable seating areas, more choice in lounges and a world-class retail and F&B offering are sure to impress and delight our

Safely offloading baggage containers from BA 105

passengers and our airline partners.”

Dnata has also begun its operations at the new concourse. It will handle all flights and baggage at Concourse D, as well as all passengers transiting through this new part of Terminal 1. Approximately 3,000 dnata staff have been assigned to the new facility, working in various capacities from check-in, special handling, airside operations and Marhaba.

Driving the first baggage units away from BA 105 arrival

Left to right: Waleed Al Sayed, CEO Ooredoo Qatar and Chris Dedicoat, EVP Worldwide Sales, Cisco at MWC

Ooredoo Expands Strategic Partnership with Cisco

Ooredoo is building its long-term strategic relationship with technology leader Cisco, having announced two new significant agreements at the Mobile World Congress in Barcelona. The two agreements will significantly expand the range of services available to Ooredoo customers, as companies look to deploy innovative solutions to reduce costs and increase productivity.

With the first agreement, enterprise customers will now be able to lease Cisco technology from Ooredoo, providing them with access to cutting-edge technology.

Through the second agreement, Ooredoo will be able to bring Cisco’s VirtualManaged-Services (VMS) suite to the Qatar market.

Through the new Cisco leasing agreement, companies will be able to lease essential business infrastructure without having to make a large investment.

Hardware available through the agreement includes networking solutions,

collaboration technology, telephony, video and instant messaging, and servers.

Ooredoo has also agreed to work with Cisco to deliver Virtual Managed Services (VMS) to the Qatar market.

Ooredoo is also promoting its success in further developing its Machine-toMachine (M2M) and Internet of Things (IoT) portfolio for customers across its footprint. Demand for IoT/M2M solutions, which enable business assets to communicate directly with each other or with a central command centre, is rising strongly, as more companies look to automate day-to-day activities.

Ooredoo has expanded its Managed Connectivity solution, IoT Connect, developed in partnership with Ericsson and based on its Device Connection Platform (DCP). Ooredoo’s cloud-based infrastructure enables companies to access their IoT/M2M SIM network seamlessly across all markets, reducing costs and providing greater central control.

MARCH 2016 7

More than 3,000 employees participate in Jafza Car-Free Day

8 MARCH 2016

Jebel Ali Free Zone (Jafza) organised a successful Jafza Car Free Day on February 24, 2016 to support sustainability and reduce carbon footprint.

Over 5,000 staff from the Jafza Community, including senior executives from Jafza, customers, government entities and stakeholders used environment-friendly public

transport including the metro, bus to reach workplace in the free zone.

Jafza launched an extensive promotional campaign through the Free Zone and among its customers and other entities creating awareness on the significance of preserving the environment and reducing carbon emission.

On the sidelines of the Car Free Day, Jafza also organised an environment exhibition participated by a number of companies operating in the Free Zone showcasing their innovative products that add value to the community.

DP World signs construction contracts for expansion of flagship Jebel Ali Port DP World has signed two major contracts for civil construction work at its new Container Terminal 4 on a reclaimed island in Jebel Ali Port. His Excellency Sultan Ahmed Bin Sulayem, DP World Group Chairman and Chief Executive Officer; Zeyad Baker, Executive Director, Dutco Balfour Beatty LLC and Patrick McKinney, Area Manager, Middle East and Gulf, BAM International Abu Dhabi LLC – Dubai Branch, signed on behalf of their respective companies.

Under Phase 1, Dutco Balfour Beatty

Same-Day Delivery Startup Deliv to Get Funding Boost From UPS

LLC is developing an operational yard area with a quay length of 1,200 metres.

BAM International Abu Dhabi LLC is building a 400 metre bridge and adjacent causeways, and the 2.2 km quay wall with an alongside depth of 18 metres, designed to accommodate the largest mega container vessels. CH2M HILL (Halcrow) will deliver the civil works on the reclaimed island north of Jebel Ali’s Terminal 2, connected to the mainland by a 3,000 metre causeway.

Under Phase 1, Terminal 4 will add 3.1 million TEU (twenty-foot equivalent units)

Same-day delivery startup Deliv Inc is getting a funding boost from an unlikely source: United Parcel Service Inc. The Palo Alto, California, company fetches goods from brick-and-mortar retailers to bring them to customers’ homes nearby, one of a crop of such firms hoping to win the day in so-called lastmile delivery, typically the priciest leg of an order’s journey.

Deliv works with mall operators to incorporate its software into tenants’ online checkout systems. The company, which relies on contract drivers to help keep costs like insurance and health

by 2018, taking Jebel Ali Port’s total capacity to 22.1 million TEU. The port will be equipped with at least 110 cranes with a total quay length of around 11,000 metres by that time. DP World will further expand Terminal 4’s capacity to a total of 7.8 million TEU in line with market demand under Phase 2, with an additional operational yard with a quay length of 1,000 metres that will be built by Dutco Balfour Beatty LLC.

care down, charges retailers a fee, which is based on distance travelled from their stores. The retailers typically pass that fee on to customers.

UPS and FedEx Corp, currently, offer same-day deliveries, but focus primarily on high-margin sectors like health care.

Instead, they offer evening pickups from retailers, allowing for next-day delivery.

As most online orders are placed in the evening after people get home from work, both UPS and FedEx have said there is more demand on their networks for next-day deliveries than same day.

Source: Nasdaq.com

MARCH 2016 9

Pictured shaking hands to the new agreement are James Rigney, Etihad Airways Chief Financial Officer (second left) with Rajesh Mehta, Citi’s Regional Head of Treasury and Trade Solutions Europe, Middle East and Africa, surrounded by executives from both companies

Etihad Airways signs Citi as International cash management bank partner Etihad Airways has announced an enhanced agreement with Citi as its international cash management bank partner.

The new mandate, covering Etihad Airways’ worldwide operations outside the GCC, will enable the airline to leverage Citi’s substantial investment in financial technology to further develop its cash management operations and help reduce costs.

Abu Dhabi International Airport awarded ISO 22301 Management System Certificate 10 MARCH 2016

Etihad Airways will now be able to utilise Citi’s Liquidity Management solution to achieve substantial cash optimisation and competitive market rates through automated treasury tools, resulting in significant transaction cost savings.

Citi’s cash management solution rationalises account opening processes and moves the Abu Dhabi-based carrier to a fully automated and

Abu Dhabi International Airport has been awarded the ISO 22301 Management System Certificate for Business Continuity Management. This makes the capital’s airport the first in the Middle East, and one of a few in the world, to become ISO 22301 certified The certification is the international benchmark of good practice in Business Continuity Management, and recognises the steps that Abu Dhabi Airports has taken to implement processes, which will

centralised account administration, and automated account payable and account receivable management tools to achieve better control and minimise transactional risks.

Picture Caption: Pictured shaking hands to the new agreement are James Rigney, Etihad Airways Chief Financial Officer (second left) with Rajesh Mehta, Citi’s Regional Head of Treasury and Trade Solutions Europe, Middle East and Africa, surrounded by executives from both companies.

provide continuity of its operations during disruptive events.

It was awarded to Abu Dhabi Airports’ Risk Management and Operations teams following an external audit of the management system. Abu Dhabi Airports was also the first airports company in the region to have received the ISO 9001 Quality Management System, 14001 Environment Management System, and OHSAS 18001 Occupational Health and Safety Management System across all its airports.

Empower’s net profit climbs by 27 per cent in 2015 Emirates Central Cooling Systems Corporation (Empower), the world’s largest district cooling services provider, recorded a net profit of AED 516 million for fiscal year ended December 2015, representing an impressive 27 per cent increase over 2014.

“Empower achieved an annual increase of 6.7 per cent in its cooling capacity, to pass it over 1,115,000 Refrigeration Tons (RT) in 2015. Moreover, the company boosted its production and commissioned new plants,” said H E Ahmad Bin Shafar, CEO of Empower. Empower follows a business model that works on the strategy of investing in plants and network infrastructure driven by actual demand in specific projects. This has resulted in sustainable growth of the company and avoided unproductive investments.

Milaha reports net profit of for 2015 Qatar Navigation (Milaha) Q S C announced its financial results for the twelve months ended December 31, 2015. Milaha delivered a net profit of QR 1.095 billion (AED 1104578981.34 / USD 300717090.60) for 2015, a four per cent increase compared to the same period in 2014.

The Board of Directors decided to recommend to the General Assembly to distribute a 50 per cent cash dividend.

Milaha Maritime & Logistics’ revenue grew by 26 per cent and net profit by 133 per cent, driven by strong trade volume growth related to increased infrastructure and other project activity in Qatar.

Milaha Gas & Petrochem’s revenue grew by 51 per cent and net profit by six per cent, on the back of strong performance from its fully owned and operated product tankers and gas

carriers, as well as investments in associates.

Milaha Offshore’s revenue grew by 21 per cent and net profit by five per cent, with stronger diving operations leading the way.

Milaha Trading’s revenue grew by six per cent and net profit by 67 per cent, with heavy equipment sales for ongoing projects in Qatar driving most of the growth. Milaha Capital’s revenue declined by 22 per cent and net profit by 41 per cent, mainly due to lower returns in the actively traded investment portfolio.

MARCH 2016 11

GCC Blockchain Technology Seminars Announced Following the recent announcement by The Dubai Museum of the Future Foundation about the formation of the Global Blockchain Council, Blockchange Consulting have announced a series of one day seminars across the GCC region.

Each of these seminars will provide an introduction to Digital Currencies and the underlying Blockchain Technology, how the technology will reshape the future of banking and financial services, and showcase what banks and financial institutions around the world are already doing with the technology.

The seminar series kicks off in Dubai on Tuesday, May 10th, 2016, followed by Abu Dhabi on Wednesday, May 11th, 2016, Doha on Tuesday May 17th, 2016, and finishing up in Bahrain on Thursday, May 19th, 2016. Registrations can be made at http://www.

Blockchanges.com

Qatar Aviation Services recognised for industry leadership

12 MARCH 2016

Qatar Aviation Services has joined the International Air Transport Association’s (IATA) Ground Handling Council (GHC), another key recognition of its industry leadership.

IATA’s GHC is responsible for providing industry expertise and guidance to all ground handling operators on the safe and efficient delivery of airlinerelated ground services.

QAS’ new IATA GHC membership builds on its IATA Safety Audit for Ground Operations (ISAGO) accreditation, which it achieved in November 2014, a key milestone for ground service providers with aspirations to grow globally. QAS will be participating in the IATA Ground Support Equipment & Environment conference, and will share its experience as the first ground handler world-wide to introduce the environmentally friendly and operationally advanced solid state Colibri battery technology to its new fleet of electric baggage tractors.

UAE SMEs Need High Performance Information Management by 2020 to Succeed in Digital Economy

Knowledge is key to MARPOL compliance for bulk shippers, warns WSS In the wake of new regulations, Wilhelmsen Ships Services (WSS) says bulk owners and operators must pay as much attention to the products used to clean their cargo holds as the holds themselves. The global provider of products and services to the shipping industry is urging firms to heed details included in the revised MARPOL Annex V Resolution MEPC.201(62), relating to the International Convention for the Prevention of Pollution from Ships, which came into force on January 1, 2016.

A key element is the Annex ‘garbage regulation’, stipulating that discharge

of garbage into the sea is prohibited, unless specifically allowed, and that every discharge must be noted in a vessel’s Garbage Record Book. The regulation states that the burden of proof that cleaning agents and additives are not HME lies with the vessel, and that they are under obligation to provide evidence to Port State Control authorities upon inspection.

WSS produces its own range of high quality Cargo Hold cleaning products, all of which are produced in a single location, Tønsberg, Norway, and manufactured to ISO 9001 and ISO 14001 standards.

UAE small- and medium-sized enterprises (SMEs) need to adopt high-performance information management over the next five years in order to succeed in the Digital Economy, industry experts have announced.

Nearly half (45 per cent) of medium-sized enterprises globally used digital solutions to grow revenue by at least 10 per cent in 2015, according to a recent IDC survey.

However, UAE enterprises face an exponentially-growing amount of data, with global data set to grow 10-fold to 44 zettabytes by 2020, when emerging markets like the UAE will comprise 60 per cent of total data generated, according to a recent IDC report.

Fewer than one per cent of global enterprises have achieved the highest level of data management, which would focus on the 1.5 per cent of highest-value data, reported IDC. With real-time information Andrew Calthorpe CEO Condo Protego management tools, SMEs can minimise the downtime of their mission-critical business applications, optimise their network and device performance, better plan and predict their maintenance and disaster recovery, and save energy costs.

MARCH 2016 13

Bahrain commences major International Airport expansion project, thanks to UAE support Abu Dhabi Fund for Development (ADFD) has taken part in the groundbreaking ceremony, which kick-started work on the cutting-edge Bahrain International Airport expansion project.

The project will see Bahrain become a major aviation hub in the coming years, and act as a catalyst for wider socioeconomic development in the Kingdom.

His Royal Highness Prince Khalifa bin Salman Al Khalifa, Prime Minister of the Kingdom of Bahrain, laid the foundation stone for the massive expansion project in the presence of His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince and First Deputy Prime Minister of Bahrain, His Excellency Mohammed Saif Al Suwaidi, Director General of Abu Dhabi Fund for Development, Abdul Redha Abdullah Khouri, the

14 MARCH 2016

UAE Ambassador to Bahrain, as well as a number of senior officials in the Kingdom of Bahrain.

The project is being funded from the AED 9.19 billion (USD 2.5 billion) grant provided by the UAE to Bahrain in 2013 as part of the Gulf Cooperation Council (GCC) development programme for Bahrain. Administered

by ADFD, the grant aims to support development projects in the Kingdom over the 10 years. Of this grant, AED 3.373 billion (USD 919 million) was allocated towards expanding Bahrain International Airport.

Under the grant, ADFD also manages development projects across key economic sectors including housing, water, health, and transportation such as implemented 2,694 housing units in the Northern City and Heart centre project.

Airbus A350 fleet is coming to Munich The first ten aircraft of the type Airbus A350900 will be based in Munich from January 2017.

This will equip Lufthansa’s second-largest hub with the world’s most modern long-haul passenger aircraft. The A350-900 is also one of the most environmentally friendly aircraft.

The A350-900 will gradually replace the A340-600. Lufthansa has ordered a total of 25 Airbus A350-900 aircraft with a list price of around USD 310 million (AED 1138676500) each. The deployment of the remaining 15 aircraft has yet to be decided. Next summer, the fleet in Munich will consist of 26 long-haul aircraft, 19 of which type A340-600, and 7 aircraft of the type A330-300.

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Falling oil prices spur diversification of industries and increased efficiency in

16 MARCH 2016

COUNTRY REPORT - QATAR

Falling oil prices mean a different set of priorities moving forward for all regional economies.

Energy-rich Qatar is no different. Diversification is the order of the day

W

hile Qatar is home to one of the world’s leading oil and gas sectors, the country has also been developing a thriving industrial sector in recent years. According to data from Qatar National Bank (QNB), more than half of the state’s GDP is accounted for by the non-hydrocarbons sector, with figures from the third quarter of 2014 showing industry – manufacturing, construction, electricity, gas and water – contributing six per cent of nominal GDP. This may still be a small proportion, but it came on the back of 13 per cent year-on-year (y-o-y) growth.

According to figures from QNB, manufacturing accounted for QR72bn (US$19.7bn) of industry’s QR112bn (US$30.7bn) total contribution to GDP in 2013, or 64 per cent, up 9 per cent on 2012. This segment now consists of heavy industries such as steel, petrochemicals, fertilisers and pharmaceuticals, as well as lighter machinery and engineering works.

All are backed by the government’s long-standing commitment to diversify the country’s economy, and benefit from a range of incentive schemes including industrial parks and tax breaks.

Indeed, until only a few decades ago the sector barely existed in Qatar, beyond a few light industrial activities in Doha and involvement offshoots of the Government Given the range of activities within the sector and its fast-expanding importance to the country’s economic development, industry is overseen by several government ministries, hydrocarbons from the Ministry of Energy and Industry (MEI) to the Ministry of Economy and Commerce, and the sector

MARCH 2016 17

COUNTRY REPORT - QATAR

Oil pipeline in the desert of Qatar

tertiary butyl ether; and Qatar Ministry of Development This broader Aluminium, in 2007.

Planning and Statistics. A vision has been Many of these heavy series of government-linked industries were created companies and corporations are broken down as partnerships with also operating, with these also usually responsible for having into a series of international outfits – Norway’s Hydro partners started up their respective shorter-term with Qatalum; Kobe Steel and industries. Indeed, until only Tokyo Boeki partnered with a few decades ago the sector plans, with Qatar Steel at its inception; barely existed in Qatar, beyond the National QAPCO partnered with Total; a few light industrial activities in and QAFCO partnered with Doha and offshoots of the fastDevelopment a range of foreign entities, expanding hydrocarbons sector.

Strategy 2011- including Hydro. Yet the One of the oldest examples main shareholder in all of of the latter is Qatar Fertiliser 2016 (NDS these ventures was, and still Company (QAFCO), which 2011-2016) the is, the Qatari government, was founded in 1969 to manufacture ammonia and current edition which embarked on a major programme of diversification urea. Qatar Petrochemical of the country’s economic Company (QAPCO) was base soon after independence in 1971. This established in 1974, and began production of programme underwent several evolutions sulphur, low-density polyethylene (LLDPE) until Qatar National Vision 2030 (QNV and ethylene in 1981. QAPCO’s products 2030), the most recent long-term economic now also include gasoline, C3/C4 and development plan for the state. This broader LLDPE. Other major players include Qatar vision has been broken down into a series Steel Company, also set up in 1974; Qatar of shorter-term plans, with the National Fuel Additives Company (QAFAC), in 1991, Development Strategy 2011-2016 (NDS which produces methanol that is primarily 2011-2016) the current edition. used as a feedstock to produce methyl

18 MARCH 2016

New priorities Initially, there was an emphasis on heavy industry, as it was felt that this could leverage the abundant local energy sources and public finances – the latter essential to kick-start any such extensive capital expenditure. QNV 2030 seeks to push the economy to a new phase of development, however, emphasising the need for a shift towards knowledgebased industries, with a larger role for the private sector. While heavy and medium industry remain major pillars, lighter, hightech manufacturing is now receiving a boost, with a concerted effort also under way to encourage the private sector to get more heavily involved.

Qatar Chamber of Commerce and Industry (QCCI) was founded in 1963. Its current Chairman, Sheikh Khalifa bin Jassim bin Mohammed Al Thani, also heads the International Chamber of Commerce Qatar.

QCCI has all the private sector enterprises in the state as its members, and represents their interests at trade fairs and abroad, as well as with the authorities at home. There are also several national chambers, including the American Chamber of Commerce Qatar and the British Chamber of Commerce Qatar, which was established in 2014.

COUNTRY REPORT - QATAR

Oil containers at Doha Airport, Qatar

IQ Since 2003 the petrochemical, fertiliser and steel companies mentioned have all been brought under the wing of Industries Qatar (IQ), which is 51 per cent owned by Qatar Petroleum (QP), the 100 per cent stateowned national oil company. A further 19

20 MARCH 2016

Initially, there was an emphasis on heavy industry, as it was felt that this could leverage the abundant local energy sources and public finances – the latter essential to kickstart any such extensive capital expenditure

per cent of IQ is owned by the government pension fund. Foreign enterprises do own shares in the IQ companies, however – Total has a 20 per cent stake in QAPCO, with IQ controlling the rest. IQ has a 50 per cent share of QAFAC, along with OPIC Middle East (20 per cent), International Octane (15

COUNTRY REPORT - QATAR

produces linear alkyl benzine (LAB) in a JV with United Development Company; Qatar Melamine Company, a JV with QAFCO; and industrial gas manufacturer Gasal, a JV with Air Liquide and Qatar Industrial Manufacturing Company (QIMC). The chemicals and related products segment of Qatar’s industrial base has thus evolved, with its 2013 exports jumping 11 per cent in value y-o-y to hit US$10.7bn, according to Reuters.

In contrast, oil and gas exports rose by 2.5 per cent.

QIMC was set up in 1990 and despite being a government initiative, ownership was tilted in favour of the private sector from the outset, with a 20:80 split between the government and private equity. It has five subsidiaries – Qatar Metals Coating Company, National Paper Industries, Qatar Sand Treatment Plant, Qatar Acids Company and Qatar Paving Stones – and it also has a 51 per cent stake in KLJ Organic Qatar, which produces chlorinated paraffin waxes.

Also important in the petrochemicals sector is Mesaieed Petrochemical Holding Company (MPHC), which is majority owned

by QP and itself directly owns facilities in Mesaieed Industrial City. In 2014 the firm held a successful initial public offering (IPO), putting 25.725 per cent of its share capital on the Qatar Stock Exchange.

The IPO, which was five times oversubscribed, was the country’s biggest such offering in five years, raising a total of QR3.3bn (US$094.5m).

MPHC owns a 49 per cent stake in both Qatar Chemical Company (Q-Chem) and Qatar Chemical Company II (QChem II), with Chevron Philips Chemical International Holding also having a 49 per cent share, with the remaining stakes held directly by QP. Q-Chem has a 453, 000-tonnes-per-annum (tpa) production capacity for polyethylene and a 47,000-tpa 1-hexene production capacity. Q-Chem II has a 350,000-tpa production capacity for polyethylene and 345,000-tpa production capacity for normal alpha olefins. MPHC also has a 55.2 per cent stake in Qatar Vinyl Company (QVC), in which QAPCO has a

Qatar Petrochemical Company (QAPCO) was established in

1974

per cent) and LCY Middle East (15 per cent).

QAFCO, meanwhile, is a 75:25 split between IQ and Norway’s Yara International. QAPCO also has three joint venture (JV) subsidiaries: Qatofin, Qatar Vinyl Company and Qatar Plastic Products Company.

Also key is Qatar Intermediate Industries

Holding Company (known as Alwaseeta), a QP subsidiary that was set up by emiri decree in 2005 to establish more downstream industries from steel, petrochemicals and fertilisers, using those industries’ outputs as their inputs. Three major industrial outfits are under its umbrella – SEEF, which

MARCH 2016 21

COUNTRY REPORT - QATAR

31.9 per cent stake, with the remaining shares directly held by QP. QVC has a 370,000-tpa production capacity for caustic soda, 180,000tpa production capacity for ethylene dichloride and a 355,000-tpa production capacity for vinyl chloride monomer.

Expansion

Another issue is that environmental standards are being raised, with a consequent increase in producers’ operational costs. Qatari feedstock prices are generally fixed on a per-project basis, and thus plants are unable to take advantage of their recent decline, according to a January 2015 Economic Impact and Energy Advisory report.

Petrochemicals have enjoyed a surge in demand over the last several years, too, and A new focus the market still has plenty of upside.“In five Nonetheless, recent times have also seen to six years global demand for petrochemical some positive development for the sector, products will double,” Nasser Jeham Al including the establishment of Qatar Kuwari, the CEO of QAFAC, told OBG.“The Chemical and Petrochemical Marketing and market is big enough to maintain a relaxed Distribution Company, known as Muntajat, competitive environment.” which began operations in 2013. Muntajat Many projects are currently has exclusive rights to underway to expand production, purchase, market, sell and Petrochemicals distribute all the chemical too.“We plan to build a new LAB facility at Ras Laffan with a and petrochemical have enjoyed a production capacity of 100,000 products manufactured surge in demand in Qatar, giving the sector tpa,”SEEF’s general manager, Ahmed Al Hitmi, told OBG.“The a focus in marketing its over the last plant is now at the feasibility goods in an increasingly several years, stage, and should be operational cost-conscious industry. in 2018. It will bring SEEF’s total “Muntajat’s creation too, and the production to 200,000 tpa of LAB, has allowed us to focus market still has more on improving our making it the largest producer in the Middle East.” plenty of upside. internal operational efficiency,”Al Kuwari said.

“In five to six QAFAC itself, meanwhile, Oil price drop launched a new CO The market has, however, been years global recovery plant in 2014, affected by the decline in oil which should prove a prices, which fell by more than demand for major boost to production 50 per cent in the second half of petrochemical and cost efficiency.

2014 and early 2015, with this SUPPORT FOR the reason cited for the decision products will SMES: QIMC also has

by QP and Shell not to proceed double,” Nasser a mandate to encourage with the US$6.5bn Al Karaana small and medium-sized petrochemical plant project in Jeham Al enterprises (SMEs), which January 2015. IQ also cancelled Kuwari, the CEO constitute the majority plans for the US$6bn Al Sejeel of private businesses plant in September 2014. The of QAFAC in the industrial sector. government’s next budget, which This encouragement started in April 2015, will assume has continued through QNV 2030 and a lower oil price than the US$65 per barrel the NDS 2011-2016, which makes specific that has been used for the past several years. reference to supporting SMEs through Qatar Several other factors have also been Development Bank (QDB). QDB itself hosts obliging industry sector players to think again SME Toolkit Qatar to assist businesses, about major capital expenditure and their while also providing start-up funding to market position. One of these is the January help manufacturers build factories, install 2014 imposition of normal Customs duties machinery and other equipment, and provide on exports to the EU, where previously the a working capital facility before beginning sector had benefitted from preferential access.

22 MARCH 2016

production. QDB also helps with business expansion costs for existing SMEs, and its Al Dhameen guarantee programme provides businesses with guarantees to help them get financing. QDB underwrites up to 85 per cent of the cost of facilities for new businesses, up to QR15m (US$4.1m), while the programme also guarantees 75 per cent of core capital for existing businesses, again up to QR15m (US$4.1m).

QDB also partners with the international SME promotion body, Silatech, which was established by Qatar Foundation (QF), to run the Bedaya Centre, which offers a range of courses and initiatives to encourage young people to pursue careers in private sector businesses. Indeed, education and training – getting young Qatari nationals interested in entrepreneurship and then reinforcing that interest with continuing programmes – is a key part of QNV 2030, which earmarks this as a “basic precondition for enabling the private sector”.

QDB also partners with QF’s Social Development Centre to run the Qatar Business Incubation Centre. This focuses on supporting start-ups, with projects given a space to develop, then to be turned over for market testing. Conditional seed capital of up to QR100,000 (US$27,400) are available for successful concepts, with a QR200,000 (US$55,000) limit on further project funds.

Another vital business incubator is ICT Qatar’s Digital Incubation Centre (DIC).

The DIC provides incentives for start-ups in the ICT sector, operating as a talent scout and awareness raiser, as well as providing support in terms of market intelligence, planning, pre-sales, coaching and training for ICT entrepreneurs. It also provides shared services – such as office space, as well as legal and technical support – for ICT SMEs within its walls.

Driving on With Qatar an established producer of steel, aluminium, plastics and artificial fibres, combining those strengths under Qatar Automotive Gateway (Qatar Ag) was a logical next step. Qatar has seen a resurgence in its domestic automobile sales market, with website Best Selling Cars reporting that as of August 2014 vehicle sales were up 8 per cent on 2013 and showing an accelerating pattern,

COUNTRY REPORT - QATAR

Dhow passes beneath some of the most massive buildings in Doha Qatar

MARCH 2016 23

COUNTRY REPORT - QATAR

as month-on-month they had jumped by 23 per cent to a 62,541-unit year-to-date total. At present, imports are the basis of the sector, but Qatar Ag hopes to establish component manufacture in the state, with potential for automotive. Launched in 2011, Qatar Ag thus has an ambitious goal: to establish an automotive cluster in the Also important state by 2020. A major step in this direction was taken in the in 2020, when the company petrochemicals signed a memorandum of understanding with sector is Pro-drive to look into the Mesaieed development and production of advanced, lightweight and Petrochemical high-tolerance carbon-fibreHolding composite automotive parts and assemblies.

Company Widely expected to see increasing demand in the (MPHC), which is years ahead as more hybrid majority owned and electric automobiles are sold, this type of product is

by QP and ideal for Qatar Ag, which itself directly seeks to position itself at the cutting edge of new owns facilities technologies in automotive in Mesaieed manufacturing, a position that dovetails with the Industrial City overall QNV 2030 objective of transforming Qatar into a knowledge-based economy.

The outfit is working hard on research and development (R&D) and education, with the aim of eventually developing local talent that can be the basis of a future automotive technology sector. choice of buying generic or branded drugs to the patient. Qatar Pharma is engaged in an ambitious, three-stage factory rollout Pharmaceuticals programme, with later phases involving Another industry established in Qatar is production of equipment such as dialysis pharmaceuticals and medical equipment. filters and sutures, as well as more tablets, While the state remains highly dependent capsules and syrups. on imports of both these product lines, the government is keen to enhance local manufacture. At present, the most significant Parklife local manufacturer is Qatar Pharma, which As part of its development strategy, Qatar has began production in 2009 and concentrates also launched a number of industrial estates, on IV generic drugs. This area was given cities and special zones over the years. The a boost, too, by the Supreme Council of MEI has a Department of Industrial Estates, Health in 2013, when it stipulated that with demand for its services in establishing doctors should prescribe pharmaceuticals new industrial zones increasing as the only by their generic names, leaving the economy grows rapidly.

24 MARCH 2016

The four longest-standing major industrial zones are the Doha Industrial Estate, which has an SME focus; Mesaieed Industrial City; Dukhan Petroleum City; and Ras Laffan Industrial City. Three more zones are being added: the Ras Bufontas Special Economic Zone, adjacent to Hamad International Airport, with a focus on advanced technology and logistics; Al Karaana Special Economic Zone, focusing on specialised industries and logistics and situated next to Doha Industrial Estate; and Um Alhoul Special Economic Zone, focusing on light manufacturing and located next to the new Hamad Port (formerly the New Port Project), near Al Wakrah.

COUNTRY REPORT - QATAR

Arabian City of Doha Qatar

In terms of oversight, the Doha Industrial Estate and the New Industrial Area fall under the remit of the Department of Industrial Estates; QP handles Mesaieed Industrial City, Dukhan Petroleum City and Ras Laffan Industrial City; and Manateq is responsible for the three new zones of Ras Bufontas, Al Karaana and Um Alhoul.

In addition, Qatar Science and Technology Park is home to many businesses active in the ICT, health sciences, energy and environmental sectors, all with an R&D focus. Doha’s Small and Medium Scale Industry Area is divided into nine zones, each focusing on a specific trade. These range from textiles to wood products, and

fabricated metals to paper and chemicals.

Mesaieed, meanwhile, is 40 km south of Doha, and has long been a centre for the hydrocarbons industry, as has Dukhan and Ras Laffan, another major centre for refineries, the liquefied natural gas sector and petrochemicals plants.

Outlook The petrochemical segment will be paying close attention to costs in the year ahead, particularly if there is little recovery in oil prices.

This may add impetus to the shift towards product diversity, with firms also seeking to utilise new technologies to increase efficiency. Elsewhere, low commodity prices

are likely to continue to impact steel and aluminium, although they may also benefit from the development of the high-tech, low-weight components segment in the local auto industry. Meanwhile, as Qatar pushed ahead with its development plans, there will likely be plenty of opportunities for SMEs and larger industrial outfits.

-This information was originally published

by Oxford Business Group (OBG), the global publishing, research and consultancy firm, appearing in the publication The Report: Qatar 2015. For economic news about other countries covered by OBG, please visit http://www.oxfordbusinessgroup.com/ economic-news-updates

MARCH 2016 25

COVER STORY

Tackling the region’s supply chain

Re-introduction of Iran to global supply chains is a mixed blessing for suppliers. The success and speed of the re-entry of Iran into the global trade arena will hinge on the effectiveness of dealing with a business culture, which has been cut off from the world for a long time, Sam Achampong, General Manager, CIPS Middle East and North Africa, elaborates on the risk to regional supply chains as Iran’s entry into the market reconfigures the equation 26 MARCH 2016

COVER STORY

MARCH 2016 27

COVER STORY

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upply chain risk in MENA remains historically high, and the region has a higher average supply chain risk than that of other regions.

That said, overall risk in the last quarter of 2015 was relatively stable, with the expected lifting of international sanctions against Iran presenting a positive outlook for the region, while the plane crash in Egypt in November had a negative effect on the eventual CIPS Risk Index rating for the region in Q4 2015.

“The overall outlook for 2016 indicates that supply chain risk in the region will remain high. This is mainly due to ongoing security risks, and an over supplied oil market, which continues to suppress the oil price. In the short term, this will impact negatively on risk in the oil exporting countries in the region where government expenditure is a major driver of the economy,”says Sam Achampong, General Manager, CIPS Middle East and North Africa.

The opening of the Iranian economy will assist regional and global supply chains in the medium term, he feels. Significant trade and investment opportunities exist, but risks remain high. The success and speed of the re-entry of Iran into the global trade arena will hinge on the effectiveness of dealing with a business culture, which has been cut off from the world for a long time.“Notwithstanding the difficulties in reintegrating Iran to global trade flows, the sheer scale of the anticipated trade that will be stimulated as a result

Ferry Pier in Bandar Abbas, Iran

28 MARCH 2016

Persipolis Iran

The UAE’s position as both a regional and global hub can only benefit from the expanded trading environment presented by Iran’s entry into the global supply chain.

MARCH 2016 29

COVER STORY

The Gate of all Nations in Persipolis Iran

of the lifting of sanctions – USD 600 billion (AED 2,204 billion) between Iran and China alone over the next 10 years - the UAE is likely to be one of the trading hubs to benefit.

“The UAE’s position as both a regional and global hub can only benefit from the expanded trading environment presented by Iran’s entry into the global supply chain. The net increase in trade in the region will have a knock on effect on established hubs like Dubai,”states Achampong.

“Ultimately, supply chain executives will need to apply short and long term strategies to their business models. Understanding the nuances of doing business in Iran and developing trusting relationships are key.

This will necessitate having a hands-on relationship and basing resources within the country. Contingencies will need to be built into this strategy, however, as the risk remains that political influence in the US and/or Iran could quickly lead to the unravelling of the current arrangements,”he warns, adding,“In addition, a contravention of the agreement could lead to the re imposition of sanctions by the international community in as few as 90 days.”

According to the CIPS Risk Index, powered by Dun & Bradstreet, however,

30 MARCH 2016

supply chain risk in MENA hovered at historically high levels in Q4 2015. The CIPS Risk Index, produced for the Chartered Institute of Procurement & Supply (CIPS), tracks the impact of economic and political developments on the stability of global supply chains.

Global supply chain risk is up for the second quarter in a row, standing at 79.3, almost twice the pre-financial crisis high of just 40.7 at the end of 2002. MENA provided 9.1 per cent of this risk in Q4 2015, a number that has stayed relatively consistent since the start of 2014. However, Iran’s re-entry into global supply chains, will add both benefit and uncertainty to supply chain risk in the region.

Suppliers contributing goods and services to the civil aviation or automotive sectors will be the first to feel the advantages of Iran’s opening up, but working with the country will also pose unique challenges to supply chain managers. The domestic market in Iran is dominated by the influence of the clergy, the Revolutionary Guard and state institutions while binding business agreements in Iran are traditionally made in person which may therefore have consequences for international trade through the country.

With 9.3 per cent of the world’s known oil reserves and 18.2 per cent of proven gas reserves, perhaps the most significant impact will be felt on the commodities market. Higher levels of supply are likely to keep energy prices low for the foreseeable future, with the possibility that more expensive production techniques such as those deployed in the production of shale gas most notably in the USA, will be forced to halt production entirely.

Said Achampong,“Iran represents a once in a generation opportunity for supply chain managers to break into a new market.

Ultimately, it will be having professionals with the right soft skills in the right places at the right time, which will determine whether Iran’s re-introduction to the global trade flows will reduce or increase supply chain risk.”

Said Dr Warwick Knowles, Deputy Chief Economist, Country Risk services, Dun & Bradstreet,“The lifting of sanctions on Iran has arrived earlier than many thought possible, but western businesses have been jostling for position since July. Significant trade and investment opportunities are on offer but risks remain high. The outcome of presidential elections in the US in December and Iran in 2017 could see the nuclear deal unravel.”

INNOVATION

Omnichannel and e-commerce

SCM As retailing changes, supply chain logistics need to keep up with the demands of the new age of customer demands. Tom Craig, President, LTD Management and supply chain expert explains the concept in detail

E

-commerce and Omnichannel - especially the e-commerce segment - have been and are changing retailing. Amazon, with its online sales and growth, is redefining retailing, selling, and supply chain management to drive it with a new business model. And they are doing it on a worldwide scale. So is Alibaba. E-commerce - and its impact on omnichannel - are not business disruptions. They have reached global mega trend status.

Omnichannel and e-commerce are not just for retailers. They are also for distributors and for manufacturers who have brand identity. That identity is an advantage. But the conundrum for some is selling against retailers who also sell the same products.

These two selling venues are for both B2C and B2B. The latter is often overlooked, despite its size, but B2B can be more complex because of order size and number of SKUs. Despite its present and growing impact, there is much uncertainty and different directions taken to deal with omnichannel. Some of the possible reasons that retailers struggle are: Retail growth is coming from e-commerce which, in turn, affects market share. This creates a challenge for retail traditionalists. It is also a significant change situation.

Omnichannel and E-commerce are new retailing and selling paradigms that have new touch points for customers. They are about customer convenience and customer expectations.

E-commerce is about customers, not retailers. That is a very different dynamic that places power in the hands of customers.

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INNOVATION

MARCH 2016 33

As store retailers ponder what to do as a coherent strategy, Amazon and Alibaba continue to grow and distance themselves from brick and mortar stores and their e-commerce efforts.

They have conventional, even myopic, views of their business. Many view retail and selling as about stores. They make an internal battle of bricks versus click, and e-commerce should support stores and store traffic.

They are not accepting that, at some point, online sales are expected to exceed in-store sales.

The fact is that e-tailers, non-store sellers, dominate online sales around the world.

As store retailers ponder what to do as a coherent strategy, Amazon and Alibaba

34 MARCH 2016

continue to grow and distance themselves from brick and mortar stores and their e-commerce efforts.

E-commerce will continue and accelerate its growth. And future events, such as virtual retailing, would increase the transition from in-store buying to online purchasing. This further adds to the uncertainty for retailers on what to do and how to do it. E-commerce is 24/7 buying by customers. It is about the customer convenience to order. What is required is the supply chain to meet the

customer expectations of immediacy that go with online buying, namely delivering orders within 48 hours—or less--of placement.

Everything should support that. It means more than a website; fulfilment and shipping; or the last mile delivery issue. What it demands is the New Supply Chain to provide the customer experience.

Online buying, with its immediacy requirement, is not limited to retailers, e-tailers, B2C, and consumer goods. It is expanding and taking root and spreading

INNOVATION

across markets, industries, and the world.

There is little immunity from immediacy, and what it will mean to manufacturers, distributors, and others. Pandora’s Box is open.

Click and Collect Perhaps nothing shows the confusion and uncertainty in omnichannel more than the Click and Collect (C&C) approach for customer order delivery. C&C is about having customers go to stores to pick up their e-commerce orders.

The practice raises the questions: Does it enhance the customer experience serving customers - or is it a way of serving retailers?

Is the purpose to get foot fall into stores?

Is it a transition programme to serve customers, while building the supply chain required to drive e-commerce and omnichannel?

How does it really differ from the customer going to the store to buy in-store, and skip the online buying?

Does requiring a customer to go to a store to pick up his order qualify as ‘delivery’ of the order?

Does it provide customer convenience or does it undo the convenience that began with online ordering?

Are some retailers trying to reverse omnichannel to monochannel?

Does it minimise the role of digital selling?

Does it generate the foot traffic and sales to offset possible sales erosion by customers changing their online activities to websites that deliver orders?

Is it used as a way not to invest in and to change to the New Supply Chain required to drive e-commerce and omnichannel for the customer experience?

What is the long-term viability of this approach against websites that deliver orders?

Does this approach limit retailers from addressing the modifying role of brick stores?

One possible positive of C&C may be fewer returned orders, with customers being able to check their orders before leaving the store. Also, it raises the

MARCH 2016 35

INNOVATION

potential of using stores as an option for returned orders to bring in customers. That changes customerretailer dynamic to a positive one, as compared to how C&C can be viewed.

Issues with Current E-commerce / Omnichannel Supply Chain Management There is a reality-check as to how well retailers and e-tailers are performing with order immediacy and meeting customer expectations. Here are some initial questions to set the stage: For omnichannel, retailers are selling into multiple sales channels. Yet many try to use one supply chain to meet the differing requirements of each channel. Is that logical?

Do customers really care about omnichannel and various platforms? Or do they just want to order and get quick delivery of their orders?

And to the point. For e-commerce and omnichannel sellers, how well do e-tailers and omnichannel retailers supply chains perform?

Findings are that, for click and collect, stores do not have the items/inventory that the consumer purchased.

Retailers are trying to force stores and supply chains to do more than they were designed for. Even catalogue, direct-to-consumer, retailers are not immune to what is happening, and are struggling with customer expectations and immediacy.

Uncertainty can be seen in the increased inventories that are being carried. They are inventory rich, and not in a positive way. It creates liquidity concerns.

What products are needed to serve each channel, and how to spread them, challenges businesses that have traditionally been one channel.

Another issue is that the current supply chain and the distribution centres are about cartons and pallet loads of product that restock stores or stock factories.

E-commerce is about eaches and individual orders to individual customers. Two very different dynamics are in conflict, and being forced to co-exist. Making one supply chain meet the differing requirements of multiple sale channels is pushing agility beyond its intent. There is a serious flaw in that one supply chain idea.

Add in that distribution centre locations for retailers are based on store placements. That network creates shortcomings to satisfying order immediacy. Also, many e-commerce-only firms have limited themselves to shipping orders nationwide from one warehouse.

Immediacy is about more than fulfilment or the last mile. Inventory levels were original based on assumptions and practices that have dramatically changed. The underlying issue is the requirement for supply chains – across the entire company – to drive growth and meet customer expectations. The purpose

36 MARCH 2016

What products are needed to serve each channel, and how to spread them, challenges businesses that have traditionally been one channel.

INNOVATION

MARCH 2016 37

INNOVATION

and role of supply chain management has changed because of e-commerce and its retail impact.

New SCM Omnichannel and E-commerce Retailers, e-tailers, manufacturers, and distributors are at a crossroads in supply chain management--stuck with old ways while dealing with e-commerce and omnichannel. Something must give.

Omnichannel is about duality - strategy, retail, and supply chain. Yet, many retailers ignore Supply Chain Duality to drive omnichannel. Different channels with different requirements should have different supply chains to deliver consistent performance that meet customer expectations across channels.

New supply chain management is required for e-commerce. That ‘new’ is an innovative imperative, and creates the duality for retailers and others to deal with traditional business and with the new business.

The New Supply Chain is about the supply chain, not just parts or functions.

Omnichannel and E-commerce need supply chains that accelerate the movement of inventory through the entire supply chain to meet customer expectations.

Being able to view inventory is not enough; companies must make it flow through the supply chain. Emphasis is on inventory velocity through the supply chain and time compression to meet immediacy.

As e-commerce and customer expectations advance, inventory velocity will increase speed to inventory velocity.

Besides the critical inventory velocity and time compression, the New Supply Chain includes: Network alignment that matches endcustomers, their locations, and service needs Advanced process integration that goes across the supply chain with no gaps or redundancies Advanced technology integration with visibility across the entire supply chain - and more. 3D printing and delivery, robotics, and RFID are additional technology areas

38 MARCH 2016

Implementing lean supply chain management across the chain and especially for the international segment to reduce the wastes of excess time and inventory Extending the supply chain upstream.

This is very important. It redefines supplier relationships Looking for short cuts in designing and implementing the New Supply Chain will mean continuing problems meeting customer expectations. Firms doing it may be potentially conceding growth and company future to those companies that do it correctly.

Immediacy of order delivery is spreading, and is not limited to consumer e-commerce sales. Companies see that it can be done, and the benefits it offers. They want them for their firms, regardless of their business.

The immediacy demand is spreading, and will spread across industries, markets, and channels and the world.

Conclusion E-commerce and omnichannel are not just new retailing. They are original ways of doing

and operating businesses. Old is out. Change is not an option. For retailers, online sellers, manufacturers and logistics service providers, there will be leaders and laggards.

What firms do, and how they do it, will determine if they see their futures ahead or if they see it in their rear-view mirrors?

Omnichannel and e-commerce are making 2016 the Year of the Supply Chain for many companies. The New Supply Chain for e-commerce and Supply Chain Duality are part of the new operating reality.

Tom is a leading supply chain and logistics consultant with LTD Management. He has real-world logistics and supply chain experience. He provides consulting for 3PLs and other logistics service providers to develop and execute strategy, create value proposition/unique selling proposition, positioning, blue ocean strategy, and service / market segmentation that improve customer retentions, increase margins, and grow the business.

Craig has practical supply chain experience with major corporations, including General Electric, Abbott Laboratories and 3M. Craig has written over 70 articles on supply chain management and logistics.

In addition he has spoken at conferences worldwide, including England, Singapore, China, Hong Kong, UAE, Chile, Panama, and Nigeria. He has also conducted a master class programme in supply chain management in China for Chinese companies and is on the advisory board of the Logistics & Supply Chain Management Society in Singapore.

Tom Craig has an MBA from The Pennsylvania State University, which has the leading supply chain programme in the U.S. Contact: tomc@ltdmgmt.com

SUPPLY CHAIN FINANCE

Five tips for successful

SCF

40 MARCH 2016

Supply chain finance has been affected by regulatory reform. In particular, the effect of Basel III on banks has put pressure on corporates to take on more of the risks in their supply chains. Katharine Morton, Editorial Director of www.eurofinance. com talks about how companies can be successful in supply chain finance

SUPPLY CHAIN FINANCE

C

ompanies have been looking to supply chain finance (SCF) to improve their working capital and manage risks across complex markets. From corporate buyermanaged, single and multi-bank programmes (many of which are run by more bank-agnostic third-party providers) through to ones that involve dynamic discounting and alternative financing sources, the range of SCF programmes in use can be confusing and challenging to compare.

Geographical location and industry may make the biggest differences to what should be

SCF is not simply about financing suppliers through reverse factoring. Reverse factoring means getting paid earlier on an invoice (for a fee) and can be attractive for suppliers

international best practice. Again the regulators may serve to mix up the pudding. Indeed, accounting out to be more important to you than the purchasing or sales functions. In an ideal world, you’ll balance all three out, but this is no ideal world.

Treasurers wanting to find a ‘plug and play’ for SCF will be disappointed, but it pays to take the initiative to make implementation easier. The keys are education, communication and incentivisation.

Over-promising and under delivering is a problem that looms large for SCF and a cold analysis of the costs, benefits (and hidden costs and unexpected

MARCH 2016 41

benefits) in multiple jurisdictions is very important. Unilever has a procurementled supply chain finance programme.

“Implementation is not easily replicable in different markets but what is replicable is that you can learn from your mistakes,”says Pascal Germain, Director Corporate Finance & Treasury EMEA at Unilever.

Here are five key pointers to get you on track 1. Define your terms Industry players tend to agree that SCF is a misnomer. For one thing, SCF is not simply about financing suppliers through reverse factoring (which is also known as ‘confirming’ even though Santander admits to rueing the day it slapped copyright on the term years back). Reverse factoring means getting paid earlier on an invoice (for a fee) and can be attractive for suppliers – extending their accounts payable and benefiting from the stronger credit’s rating.

So, inevitably, discussions on SCF tend to get bogged down in the definition. It’s taken the Euro Banking Association and the ICC to put down a marker for standardising definitions.“SCF is financing supply chain processes,”says Enrico Camerinelli, senior analyst EMEA at Aite Group.“It’s a broad umbrella, but it’s not rocket science.”

Is the lack of a comprehensive definition a roadblock? Possibly, but as long as all players have the same one, there shouldn’t be a problem.

Effective SCF means articulating complex concepts and then communicating them throughout multiple business lines. In order to get a successful programme in place you need to get all the preconditions right, to identify key players in the process and discuss what is possible. Some players call this an opportunistic coalition. But having a ‘process owner’ sitting in finance/treasury can be one successful way of engaging that coalition.

42 MARCH 2016

2. Procure procurement’s buy-in Procurement is often at the leading edge of SCF. It is the interface with the suppliers, but that is a double-edged sword. Procurement may have divergent – even opposing – metrics from treasury. After all, you are getting your procurement team to ‘sell’ the concept of SCF to get suppliers on

board, which is not always the easiest task.

“Procurement has traditionally been focused only on the cost of goods,”says Unilever’s Germain.“The ‘win’ of SCF to the corporate is not obvious if key performance indicators (KPIs) are not measured and discussed.”He adds:

SUPPLY CHAIN FINANCE

“You need to embed what the benefits are, and that means education.”

Sourcing or operating in a low cost environment (for that read most MNCs and growing medium-sized companies) has been the driving force for growth. But often a lot of working capital is locked in supply chains across the world, and that can act as a drag. SCF programmes can both protect the supply chain globally and also release working capital that’s tied up in it.

Martin Schlageter, Head of Treasury Operations at Roche, says that setting effective KPIs was the

start of a three-year journey to implementing the company’s SCF programme. Metrics have been a big part of Roche’s working capital improvements.“The best way to succeed was to embed KPIs into bonuses,”he says.

Buy-in is also necessary for logistics and IT. The same message applies: measurement, communication and appropriate incentives.

3. Share the supplier love Know Your Vendor should be as important a success factor as Know Your Customer is to a bank, some treasurers say. This is a key part of risk analysis along the supply chain.Your suppliers’ loyalty is important.You may not be your suppliers’ only client, or, indeed, your suppliers’ biggest client. They may supply your competition.“The lessons are, treat them well and

loyalty will be its own reward,”says Schlageter.

Getting suppliers to sign up to the programme (inelegantly called ‘onboarding’) is one of the most difficult aspects of SCF. Schlageter points out that even if suppliers don’t come on board, you can learn a lot more about them just by asking.“It’s a good way of finding out about their financial stability and standardising payment terms. One client said they weren’t interested in SCF because they already have too much cash – so we considered extending payment terms further from 60 to 90 days.”

4. Engage your auditors Or maybe this should be the first point. If you are not careful, your supply chain financing endeavours can be misconstrued on the balance sheet after the fact.Your SCF risks being recategorised as a lump of debt. For some, the challenge is simply one of

From corporate buyer-managed, single and multibank programmes through to ones that involve dynamic discounting and alternative financing sources, the range of SCF programmes in use can be confusing and challenging to compare

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SUPPLY CHAIN FINANCE

playing semantics with the auditors.“We changed the name of the programme to‘Accounts payable management services’, says one treasurer at a European food retailer.“And that seemed to work.”

Some treasurers are finding similar issues with setting up POBO structures (payment on behalf of) where payables get reclassified as debt. Check it works for you – you are taking risk away from the banks along your supply chain, make sure you are being effectively rewarded for it.You may only want to extend your balance sheet to key suppliers and you may, as some companies do, want to extend ‘headroom’on your balance sheet in case the programme abruptly ends.

Changing bank ‘horses’ midrace is a risk too – a factor which makes some corporates look for a bank-agnostic programme. Others have had to deal with their own credit ratings being under threat for different reasons, which can impact a programme. Again, measurement and communication of risk is important.

5. Last, but not least. SCF may not be for you after all Q: Why don’t you see many Nordic companies engaging in SCF programmes?

A: Because they simply pay faster anyway.

That may sound like the beginning of a bad joke, but the reality is that this was an exchange with a Nordic corporate treasurer and explains the corollary, why supplier finance (at the very least) gets better traction in countries where there is a tradition of late payments.

There are other reasons why SCF may not work for your company. As one treasurer of a European food group says,“Think about where you sit in the supply chain ‘food chain’ and ask yourself ‘would I want to be in somebody else’s SCF programme?’ and if not, why not?”

But in a world where late payments are increasingly being frowned upon (the EU directive on late payments, the UK prompt payment code and Italy’s CPR (Codice Italiano Pagamenti Responsabili), are both cases in point), the concept of ethical SCF is going to gain in favour, according to Aite’s Camerinelli.

“You may find yourself assessed and ranked on your payment behaviour and how proactive you are in providing support in financing supply chain processes,”says Camerinelli.

Katharine Morton is Editorial Director of EuroFinance, part of the Economist Group. This article was first published in EuroFinance’s annual publication, Treasury Perspectives. For further details of the upcoming Effective Supply Chain Finance event in Amsterdam, June 2016, please go to www.eurofinance.com/supplychain

44 MARCH 2016

SUPPLY CHAIN FINANCE

MARCH 2016 45

FEATURE

’ s a t n a Q ! r e g n e s s a p a r t ex

one of fly a new engine to to d ha s ta an Q tly So it Recen it in Johannesburg. ed ed ne at th fts ra rc its ai of its planes and e on to ne gi en a tr attached the ex alvin, e to Captain Mike G ok sp C S G e. er th it flew gistics cal details and the lo ni ch te t ou ab s, ta Qan ovement involved in such a m

W

hen a Qantas 747 aircraft needed to replace its engine in Johannesburg, the airline transported one to it from Sydney.

“The Rolls Royce engine is a ‘spare’ which we sourced from our maintenance base in Sydney. It’s next to the Sydney Airport. Here we hold millions of spare parts, ranging from the smallest screws, seat cushions, to 747 engines,” explains Qantas Captain Mike Galvin.

Once the need for the engine was identified by Qantas engineers in Johannesburg, the replacement engine was put on the next regular service to the South African city.“The engine was placed in a specially designed ‘cradle’ and tugged the short distance across the airport tarmac from the maintenance facility to the hangar where it was fitted. Once in Johannesburg, it took about one hour to remove the

Qantas engineer fitting the ‘fifth pod’ in place under the wing of the Qantas B747 in Sydney

46 MARCH 2016

There is very little extra drag, as the fuel load is reduced to compensate according to Boeing weight and speed certification

spare engine. It was then again placed in a specially designed cradle and tugged the short distance across the airport tarmac from the delivery aircraft to the aircraft in the Hangar in Johannesburg requiring the replacement engine,” explains Galvin.

The weight of the Qantas flight QF63 that brought the spare engine to Johannesburg varies according to the passenger and freight load. But the maximum take-off weight for these aircraft is 397 tonnes. And the weight of the fifth pod and its components is about seven tonnes.“There was very little extra drag, as the fuel load is reduced to compensate according to the Boeing weight and speed certification,” informs Galvin.

Which is a refuelling stop was required in Perth, he adds.

Flying at a normal altitude, climbing to about 30,000 feet and up to a maximum of 40,000 feet, the aircraft flew slightly slower, and, the refuelling stop in Perth added an extra three hours to the total flight time.

A team of engineers took about three hours to secure the spare engine to the QF63.

The engine that requires maintenance is scheduled to be shipped back to Sydney, and will take a number of weeks to get there.

Team of Sydney Qantas Engineers who fitted the ‘fifth pod’ to the underwing of the Qantas B747 which carried the spare engine to Johannesburg

MARCH 2016 47

TECHNOLOGY

48 MARCH 2016

TECHNOLOGY

The truck driver app Erhardt & Partners’ Truck Driver app links the warehouse to the road, creating a more efficient system

T

he Truck Driver app from Ehrhardt + Partner (E+P) brings mobility to logistics outside the warehouse.

As a function of the latest version 8 of the LFS warehouse control system, the warehouse experts are marketing a solution that provides crucial support to truck drivers on their daily routes.

All order data, the navigation along the optimum route, as well as the order progress are simply displayed on the mobile terminal device, for example on a smartphone or tablet. It is no longer necessary to purchase expensive special hardware. Data is transferred via LFS directly from the warehouse to the app.

The Truck Driver app from E+P networks warehouse and roads in an intelligent way. Orders which were recorded at the warehouse are transferred to the mobile device, and into the app in real time, making all data for the transport accessible with one click. The Truck Driver app

automatically guides the user through the different actions of a route, such as navigating to the individual delivery points. The app documents the progress of each route and sends all information back to the LFS in real time – this constant exchange clearly reduces the administrative work for handling routes by omitting paperbound documentation. It also avoids unnecessary waiting times at the loading dock.

The Truck Driver app runs on all Android operating systems and will soon also be available for iOS devices. This also allows the costefficient integration of external service providers into internal logistics processes via smartphone and tablet.

The app reduces the cost and effort for all parties involved in the value chain. The Truck Driver app also serves its purpose without an internet connection: The driver can create digital receipts and document broken and defective goods.

MARCH 2016 49

PORT REPORT - DP WORLD

Future strategy DP World announces intention to back potential infrastructure development in India

H

aving an invested capital of USD 1.2 billion (AED 4.4 billion), DP World is now seeking opportunities in India worth over a billion US dollars (AED 3.67 billion) over the next few years.

It is currently the only foreign operator with six port concessions in the country, with approximately 30 per cent market share.

The announcement was made during a visit to New Delhi and Mumbai by His Highness Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and

MARCH 2016 51

PORT REPORT - DP WORLD

Deputy Supreme Commander of the Armed Forces of the UAE, and His Excellency Sultan Ahmed Bin Sulayem, Group Chairman and CEO, DP World. This visit follows a twoday official trip by Indian Prime Minister Narendra Modi to the UAE last August.

The DP World investments could cover: Expansion in brownfield container terminals Long term greenfield container concessions Inland Container Depots (ICDs) Expansion of existing inter-modal rail services for rolling stock H H Sheikh Mohammad Bin Zayed Al Nahyan, said,“The UAE and India enjoy historic bilateral relations, and these potential investments reinforce our confidence in the long term growth of the Indian economy, and our desire to actively contribute to the economic development of this friendly nation. DP World has established a leading position in the Indian market, and is a pioneer in the development of container terminals. It has the biggest portfolio along the Indian coast, and is looking to enhance its presence there, transferring the UAE’s experience of infrastructure development in line with our plans to enhance the strategic

52 MARCH 2016

between the two countries amounted to AED relations between our countries and to take 109.34 billion, compared to AED 44.87 billion them to a higher level.” in 2004.

In Mumbai, H H Sheikh Mohammad Bin India was Dubai’s second largest trading Zayed Al Nahyan and H E Bin Sulayem also partner in 2015, with bilateral trade of AED inaugurated the new 330-metre berth at Nhava 73.86 billion during the first nine months Sheva (India) Gateway Terminal (NSIGT), at of 2015 – comprising imports India’s premier gateway port, of AED 41.73 billion; exports Jawaharlal Nehru Port (JNPT). of AED 14.54 billion and reSaid H E Bin Sulayem,“We are Utilisation exports of AED 17.59 billion. reinforcing our commitment In terms of its own growth, to enabling India’s growth at Jebel Ali DP World Limited handled and economic development remains high at 61.7 million TEU (twenty-foot through our operations in the country, where we have approximately equivalent units) across its global portfolio of container invested over USD one billion 90 per cent, terminals during 2015, with (AED 3.67 billion) in the past, gross container volumes supporting over 30 per cent of despite the growing by three per cent on India’s container trade. Being softer volumes reported basis, and 2.4 per cent one of the strongest emerging on a like-for-like basis. economies in the world, India in Q42015 Growth in 2015 was largely offers immense potential for driven by their European and growth in the maritime sector.

UAE terminals. The portfolio benefited from With Nhava Sheva (India) Gateway Terminal, the ramp-up in London Gateway and the DP World will contribute even more to India’s UAE handled a record 15.6 million TEU’s, growth offering our customers the ability to representing like-for-like growth of 2.3 per grow and expand their business.” cent for the year.

Dubai’s non-oil foreign trade with India Utilisation at Jebel Ali remains high at has seen a striking 144 per cent growth approximately 90 per cent, despite the softer from 2004 to 2014. By the end of 2014, trade

PORT REPORT - DP WORLD

volumes in Q42015. Market conditions in the second half of 2015 were challenging, with like-for-like gross throughput growth flat year-on-year in Q4 2015.

At a consolidated level, their terminals handled 29.1 million TEU during 2015, a 2.7 per cent improvement on a reported basis.

Consolidated like-for-like volumes grew by 1.7 per cent for the year.

H E Bin Sulayem commented,“The second half of 2015 was difficult for global trade operators, as various economic headwinds, including currency weakness and lower commodity prices adversely impacted trade growth. Against this challenging backdrop, all our three regions continued to deliver full year volume growth on a like-for-like basis which demonstrates the strength

of our portfolio. Despite the uncertain near-term macro environment, and given the high utilisation at our portfolio, we remain confident about the medium to long-term outlook of our industry, and continue to invest to meet the future capacity requirements of our customers. As we look ahead into 2016, we look forward to the new capacity at Rotterdam (Netherlands), Mumbai (India), Prince Rupert (Canada) and Yarimca (Turkey) to deliver a full year contribution to our throughput.”

DP World expects to open their third berth at London Gateway (UK) in mid2016, adding 600k TEU of new capacity. The additional two million TEU at terminal three (T3) Jebel Ali (UAE) will now be operational in the second half of 2016.

“DP World has once again delivered ahead of market throughput growth in 2015, and given this resilient performance, we remain confident of meeting full year market expectations. While trading conditions in 2016 are expected to remain challenging, we believe a portfolio focused towards faster growing markets and origin and destination cargo, coupled with the addition of new capacity can continue to outperform the market,”he added.

MARCH 2016 53

JAFZA

Giving F&B a Jafza reaffirms its commitment to the growth of the F&B industry by participating in Gulfood 2016

R

ecognising Gulfood 2016 as the ideal platform to showcase the infrastructure and incentives in the Free Zone for the food and beverage (F&B) industry, as well as to meet international companies looking at expanding their markets in the MENA region, Jebel Ali Free Zone (Jafza) participated in the exhibition.

Said H E Sultan Ahmed Bin Sulayem, Chairman and CEO of DP World and Chairman of Ports, Customs and Free Zone Corporation,“F&B has been a special industry for Jafza, with the best of the facilities for the sector here. Jafza is home to over 480 companies from around 61 countries in the F&B sector. While Jafza is attracting new players from this industry that are aiming to expand into the regional markets, we also have existing companies increasing their production lines to suit the palate of the different nationalities present in the UAE. This inflow of products into the local market has given this sector the needed fillip.”

He added,“Dubai’s surging tourism and hospitality industry have also contributed to the upward graph of the F&B, along with the increased tourist inflow to the Emirate and the launch of new shopping centres and retail outlets H E Bin Sulayem also emphasised on the factor of adding value to local products and supporting them gain foothold in

54 MARCH 2016

HE Sultan Ahmed Bin Sulayem

Ibrahim Mohamed Aljanahi

the market competing against global counterparts; thus reinforcing the role and contribution of this sector in backing the economic development of Dubai. He highlighted Jafza’s promptness in providing unwavering support to the customers in their set-up and urged customers to use innovative technology to strengthen the sector in the UAE. A number of multinationals such as Unilever, FSL, Alokozay, Mars, Gulf Seafood,

Jafza stand at Gulfood

and others, are based in Jafza, and serve more than two billion people in the Middle East and South and East Asia, Africa and the Commonwealth of independent States.

Ibrahim Mohamed Aljanahi, Deputy CEO and Chief Commercial Officer,“Our participation in the Gulfood exhibition has become an annual tradition. Jafza’s aim is to look at the new developments in the industry, and getting to know the long-term plans of international companies looking

to expand into the free zone, and drawing them to set-up base in Jafza; thus helping the companies reach out to the region with cost-effective modes of logistics and increasing their profitability.”

He affirmed that the F&B industry is one the leading sectors in Jafza, and encouraged international companies to invest in the opportunities that the region offers, boosting the presence of their products here. The sector is a catalyst in

stimulating the supply chain with trade in machinery, food processing and packaging, logistics and retail.

According to Alpen Capital report, the food imports in the Middle East are expected to reach USD 53.1 billion (AED 195 billion) by 2020. More than 40 companies from Jafza’s existing customers participated in Gulfood to offer innovative products that cater to different tastes in front of a large crowd of visitors.

MARCH 2016 55

INDUSTRY

56 MARCH 2016

INDUSTRY

Another award in the

Almajdouie has been recognised as ‘2016 Logistics Service Provider of the Year, KSA’ by Frost & Sullivan.

GSC reports

A

From left: Aroop Zutshi, Global President & Managing Partner (Frost & Sullivan) presents the award to Almajdouie Logistics CEO Baheej Beqawi

s part of Frost & Sullivan’s global conference - Growth Innovation Leadership 2016 (GIL) Middle East, the company hosted the Best Practices Awards ceremony. They acknowledged outstanding performances by companies from diverse industries. The global research and consulting organisation honoured Almajdouie Logistics as the ‘2016 Logistics Service Provider of the Year, KSA’.

Frost & Sullivan recognised Almajdouie Logistics’ achievements in continually enhancing services, meeting client expectations, and making use of latest technologies in the industry. The event hosted global C-level participants, senior analysts and exclusive invitees, who discussed business developments and future technologies, along with the mega trends impacting industries.

Baheej I Al Beqawi, CEO of Almajdouie Logistics, stated,“We have just celebrated our 50th anniversary. The golden jubilee reminded us of the remarkable success story of Almajdouie enterprise’s establishment. In 1965, Shaikh Ali Almajdouie founded this enterprise with a single truck, while simultaneously providing customs clearance services. This story seems more and more like a distant memory with the increasing developments amounting to our diverse and integrated logistics and supply chain services, provided not only in Saudi Arabia, but also across the GCC.”Keeping the awards coming, Almajdouie intends to continue on its mission to deliver innovative and reliable services and exceed client expectations.

MARCH 2016 57

HE Bin Thaniah delivering the Keynote speech

Eng. Al Bastaki, CEO of Dubai Trade

Dubai Trade Innovative Award Winner

Recognising the winners Dubai Trade honours winners and runners-up of the 8th ESEA Awards

58 MARCH 2016

I

n, what has become, an annual glittering ceremony, H E Jamal Majid Bin Thaniah, Chairman of Dubai Trade congratulated the winners of the 8th E-Services Excellence Awards (ESEA). The awards were presented by the establishment to its users for their efforts in implementing e-services in trade and logistics.

The high-profile ceremony held under the patronage of H H Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai was attended by H E Jamal Majid Bin Thaniah, Chairman of Dubai Trade; H E Juma Mohamed Al Kait, Assistant Undersecretary – Foreign Trade Affairs at the UAE Ministry of Economy, Mohammed Al Muallem, Senior Vice President and Managing Director of DP World - UAE Region and Board Member of Dubai Trade, H E Ahmed Mahboob Musabih, Dubai Customs Director, Ibrahim Mohamed Aljanahi, Jafza Deputy CEO and Chief Commercial Officer; Ali Ibrahim Ismail Deputy Director General of

the Department of Economic Development, Government of Dubai, Eng Mahmood Al Bastaki, CEO of Dubai Trade, DP World terminal managers from around the world, and senior representatives from government organisations, financial institutions and the media.

Al-Futtaim Logistics LLC won the Smart Services Award for M-Token Services, with National Fire Fighting Manufacturing FZCO as runner-up. Agility Global Logistics FZE won the Smart Services Award for Free Zone Services, with T D Williamson Middle East FZE runner-up. National Fire Fighting Manufacturing FZCO won the Smart Services Award for Clearance Services, with Unique Sea Cargo Services (LLC) runner-up.

NAFFCO Shipping & Forwarding won the Smart Services Award for Payment Services, with Vibrant Freight LLC as runner-up. While Dubai Trade Innovative Award of the Year to the best innovation project in trade and logistics was presented to Al Futtaim Logistics.

INNOVATION EXCELLENCE

Exporters of the Year Winners

Smart services Winners

Dubai Exports also partnered with Dubai Trade in recognising exporters with the New Exporter of the Year Award, won by Bilal Mohd Ballout LLC (BMB), and Natural Way Sweets LLC as runner-up. The Innovative Exporter of the Year was awarded to Taghleef Industries L L C with NAFFCO FZCO as runner-up.

During his keynote address, Bin Thaniah urged attendees to seek opportunities and embrace change, despite the geopolitical changes in the region and the decline in global oil prices. He said,“Innovation is part of Dubai’s fabric, thanks to the mandate of H H Sheikh Mohammed Bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, who marked 2015 as the Year of Innovation.”

“The winners of the awards have pioneered smart services and stimulated trade and exports in Dubai. Thanks to our visionary leadership, we are leading the world in smart services and have seamlessly integrated trade

and logistics processes on customer friendly platforms using innovative technologies.

Together, we are building the future to ensure Dubai’s position as one of the most efficient trade hubs in the world,”he added.

H E Abdullah Al Saleh, Undersecretary – Foreign Trade Sector at the UAE Ministry of Economy said the Ministry was proud to be a strategic supporter of the event.“Dubai Trade has become synonymous with innovation, leading the region in smart services, so boosting the trade and logistics sector and stimulating use of the Dubai Trade Portal to conduct business easily,”he said.

CEO of Dubai Trade, Eng Mahmood Al Bastaki highlighted the growth in trade in the country and the use of the Dubai Trade portal. He said: “UAE Foreign trade was AED 966 billion in the first three quarters of 2015, and we hope to make AED 1.3 trillion by the end of the year. Much of this trade came from some 19.5 million transactions through the Dubai Trade portal, a six per cent increase,

saving the trading community tremendous amounts of valuable time and money. We live in a rapidly changing world, with fast moving change, opportunities, discoveries and inventions. So preparation is key to sustaining our place as a trading hub and business leader. Dubai Trade will continue to cement the economic activities of the country strengthening Dubai’s position as a regional and global gateway.”

The event was supported by Gold sponsors Al Futtaim Logistics and Technopro Middle East, and Silver sponsors, Agility Logistics and Newage Software Solutions. Al Bastaki also underlined the valuable role of the government and private supporters, especially the UAE Ministry of Economy, for being partners over the years alongside DP World; Dubai Customs; JAFZA; the International Chamber of Commerce – UAE Chapter; The Chartered Institute of Logistics and Transport (CILT), and Dubai Media Incorporated, who also supported the event.

MARCH 2016 59

UNWIND

A humble yet fearless leader Walid Daniel, MD, SPAN Group, has been around before formal warehouses, as we know them today, existed in the country. He shares with Global Supply Chain his career path, leadership style and how he likes to spend his free time

problems. And today, it may be in a different field, but it is also what I and the team do.

hear different viewpoints before making a recommendation or decision.

What do they not teach you in business school?

That’s a very relevant question. Back in 1982, MBA curricula was intensively technical.

We were taught substantial material in accounting, finance, forecasting, marketing, negotiation strategy, etc.

What was not taught, but maybe is now - I graduated at a different era (laughs) - is human relations and its different perspectives; i.e within a company and with the outside world.

What do you think is most important for being an effective manager?

I will give you four words that in my opinion define an“effective manager”humility, courage, resilience and patience.

One should be humble about his team but also have the courage to empower them to aim and achieve higher goals. One must be flexible and patient with his team, allowing them to be curious, make mistakes and learn from them.

How well do you handle stress? / What is your fool proof method of de-stressing?

We constantly live in positive stress, which is fine by me. On the contrary, I believe it’s a motivation.

The challenge is found in“negative stress”. The way to handle it would be by looking at a glass half full. With this attitude, you would be amazed by how challenges can turn into opportunities.

The secret is to take a step back, have a wider look at the context of the situation, and if possible, chat with a trustworthy and knowledgeable person. From where I stand, I am lucky to be part of a network of close friends and partners.

Which school and university did you go to?

I was at the Ecole Mariste Champville in Lebanon, for high school, and then obtained a Bachelor of Mechanical Engineering at the American University of Beirut. Later, I joined INSEAD, the European Institute of Business Administration in Fontainebleau, France, to acquire my MBA. What was your first job?

My first job was as a Sales Engineer, providing precision air-conditioning systems for surgical areas and data rooms. I believe that everyone acquires a critical basis during his first professional experience, and in my case it was designing solutions for actual

60 MARCH 2016

Business is built by, with, and around people. No matter how talented you are or how hard you work, if you do not have people skills, the road to success will be a harder one (or a bumpy one?)

What do you find encouraging?

On a personal level, life itself, good health, and being able to still enjoy the little things.

On a business level, it’s the young generation looking forward to do well and to do good.

Who is your role model? Why? My father. I truly admire his resilience in the face of adversity and his continuous positive engagement with life, no matter how bad the context of the situation is.

How do you spend your free time?

My free time is mostly spent with my spouse. With her, I try to discover at least two cities a year and be exposed to new cultures and scenery.

What is your leadership style?

Human relations is not only about knowing how to communicate with others, but it is also being a good listener. That is my approach; I try to gather all the data and

What is at the top of your agenda right now?

Welcoming another generation to the family and preparing for my new job as a Grandfather.

                                                                                                          