Vertical Excellence Project partners
Vertical
excellence
Written by Nell Walker Produced by Dennis Morales
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How vertical integration has aided NADEC’s rise to agribusiness prominence
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February 2016
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he National Agricultural Development Company – known as NADEC – is one of the largest share stock companies in the agricultural and food processing sector of the Middle East and North Africa. The Saudi Arabian company was established in 1981, with 20 percent owned by the government and the rest publically traded on the Saudi Stock Exchange, and is now among the leading food, dairy, and beverage businesses in the region. NADEC’s success is in part due to its vertically integrated business model which is one the largest such dairy systems in the world. It means that the end to end value chain is owned and controlled by NADEC, which makes life simpler for Graham Burne, General Manager of Supply Chain.
“We’ve grown from an agricultural business,” Burne says. “We grow our own crops, which feed our cows that supply over 1.5 million litres of milk and juices a day to our huge factory operations. We have full control and we know what kind of quality systems we’re using, rather than having to rely on a suppliers that could potentially be unreliable. Having control in the supply chain is key to our success.” Vertical integration has helped NADEC to become one of the cheapest raw milk suppliers in the world, simply because it has no need to outsource to other businesses, allowing the supply chain to move as smoothly as possible. As important as full vertical integration is in terms of setting
7000 Number of jobs supported by Nadec
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1981 The year the company was founded
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February 2016
NADEC apart from others, Burne says the most significant element of the company is, quite simply, quality: “We ask ourselves ‘Is that product great quality? Is it safe for the consumer? Does it taste better than our competitors?’ For us, those are the defining things that make consumers choose our product and not the product sitting next to it.” Managing such a large supply chain requires extreme focus and Burne is a firm believer in setting key performance indicators (KPI’s) to manage the essential activities on a day-to-day, month-to-month basis: “We look at our performance from a KPI point-ofview, and then for me it’s about developing capabilities. Focus on people, people, people; that’s how you drive performance and really get the expertise you need. If you can’t measure it, you can’t manage it.” Burne oversees the flow of R&P materials into the factory operations, picking up the finished products from the end of lines and putting them through both our primary and secondary distribution networks. “We have very close cooperation with our dairy farms and manufacturing colleagues. It’s a real team effort considering the size of the milk supply and production operations and the volumes they produce and handle each day. Our CFR performance is world class at 99.8 percent and this can only be achieved by careful planning and daily synchronization
between all departments across our value chain. Of course our procurement teams must also receive great credit for ensuring the necessary R&P materials are continuously available at the right time, price and quality.” Ashraf Abu Shaqra, General Manager of Industrial Operations is equally focused on delivering to the highest standards, and plays in integral role to ensure the manufacturing facility and operations are run to the optimal efficiency delivering the freshest product on time, with the right quality and the right costs. Shaqra comments: “NADEC Industrial is one of the largest facilities in the world, having three plants capable of a throughput capacity of over 2 MLT per day; the products are spread over 200 SKUs in nine categories. The plants are all ISO certified, equipped
‘People, people, people is how you drive performance and really get the expertise you need. If you can’t measure it, you can’t manage it’
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SUPPLIER PROFILE
TETRA PAK Tetra Pak is the world’s leading food processing and packaging solutions company and one of the largest suppliers of packaging systems for milk, fruit juices and drinks. Working closely with our customers and suppliers, we provide safe, innovative and environmentally sound products that each day meet the needs of hundreds of millions of people in more than 170 countries around the world. With more than 23,000 employees based in over 80 countries, we believe in responsible industry leadership and a sustainable approach to business. Our motto, “PROTECTS WHAT’S GOOD™,” reflects our vision to make food safe and available, everywhere. We are committed to making food safe and available, everywhere. Our commitment extends far beyond protecting the contents in a package. It also includes supporting our customers’ businesses, a responsibility to reduce our environmental footprint and shape a better future for all our stakeholders—from our employees, to our suppliers and the communities in which we operate. Today, we are the only international company in the world able to provide integrated processing, packaging and distribution line and plant solutions for food manufacturing. This means that our customers enjoy the advantage of being able to get multi-product solutions from a single source, with matching equipment at every stage. Our environmental commitment is embedded in every aspect of our products’ life cycle – to enable our customers and us to achieve sustainable, profitable growth and to do our part in protecting our precious natural resources.
Website: tetrapak.com/protection
NADEC
with the latest processing and filling technologies worldwide which are able to deliver the best quality product at all times.” The growth of NADEC in the past several years has put a huge burden on industrial operations to seek high-capacity production units and automated solutions. Investment in state-of-the-art technologies and the building of highly-skilled resources to operate the sophisticated machines was coupled with intense planning to improve productivity and efficiency. “Lean programing and advanced tools were deployed with detailed tracking systems to measure the development of a high-performance organisation. “With more tailored production serving diverse markets, diverse consumers, and ever-expanding territories, the operation will be inevitably stretched for more dynamic flexibility and proactive planning. For NADEC to maintain its leadership
‘We have full control and we know what kind of quality systems we’re using. Having control in the supply chain is key to integration’
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FACTS ABOUT
NADEC NADEC’s seven dairy farms hold 65,000 cows The two processing plants produce 1.5 million litres of milk and juices per day The lab runs 8,000 quality control tests per day
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February 2016
position, its industrial engine needs to continuously adapt to keep up with market innovations and world class performance.” Another area of NADEC’s supply chain that requires careful planning is the large primary distribution operation which covers over 40 million kilometers a year, delivering fresh and time-sensitive products to over 30 sales depots across Saudi Arabia and the GCC countries. “We must be slick, efficient and effective with this operation,” says Burne. “Any delay impacts on the freshness we offer our consumers, and any operational deficiencies can impact the quality of the cold chain which must remain intact throughout the product’s journey.” Technological advancements are an integral part of this fast-growing company. Burne says: “We have an enterprise resource planning platform which we will be utilising more in the future. We’ve recently automated our demand and supply platforms, and we’re looking to fully integrate a warehouse management system into our operations. It’s fair to say that the roadmap is fairly busy as we look to continuously develop our operations and link automation to
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NADEC
How we build innovation for beverage and dairy industry Sipac and Emmeti offer innovative solutions and complete “turn-key� installations for beverage, dairy and chemical industry.
Sipac S.p.A., Via Berettinazza 25 43010 Fontevivo, Parma, Italy Tel. 0039 0521 611811 Fax. 0039 0521 611850 E-mail: sipac@sipac.pr.it Website: www.sipac.pr.it
Emmeti S.p.A., Via G. Galilei 9 42027 Montecchio Emilia, Reggio Emilia, Italy Tel. 0039 0522 861911 Fax. 0039 0522 861912 E-mail: emmeti@emmeti-spa.it Website: www.emmeti-spa.it
key areas within our supply chain. We’re going to be quite proactive in this area.� Agriculture is the cornerstone of the company, complementing its aim of increasing self-sufficiency and dependability for the national economy. NADEC produces onions, potatoes, fruit, olives, wheat, corn, alfalfa, dairy and juices, and nutritious animal fodder for the cows across thousands of acres of land in Haradh, Wadi Al-Dawasser, Hail, and Al Jouf. Its seven dairy farms hold around 65,000 cows between them, and the two processing plants produce over 1.5 million litres of milk and juices per day. NADEC offers more than 200 products across its range, in many variations and w w w. n a d e c . c o m . s a
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formats to suit different consumer needs and occasions. NADEC also has its own labs on site led by experts in nutrition and quality, who run over 8,000 tests per day to comply with the relevant industry and government standards. The company has achieved many international accolades thanks to its pursuit of perfection including ISO 22000, Ceres award and the most recent being a highly rated quality certificate from the BIOL 2015 awards. In terms of its continuous improvement strategy, NADEC has adopted many different means of developing the smooth-running of the company. “We adopt some Kaizen, Lean Six Sigma and ISO-type principles, so we are always benchmarking ourselves through
‘We are always benchmarking ourselves through different accreditation bodies to make sure we’re continuing industry best practice.’ different accreditation bodies to make sure we’re continuing industry best practice.” NADEC has big plans to develop its current portfolio, adding new products and even new categories under the NADEC brand while maintaining its reputation as a trusted, selfsufficient company. “In terms of our portfolio expansion, we’re always looking to grow in areas of dairy and juices which are the core of our business, but we are expanding into a broader food business with the launch of several new cheese and olive oil products over the last 24 months. We continue to develop our innovation pipeline with a range of product extensions including new juice flavours, cheese products and even creating new segments like the very successful launch of NADEC Ayran: a light, refreshing dairy based drink for the local market which is proving highly successful and is targeted at a new and younger audience. We will continue to develop our innovation capabilities to meet the ever-changing needs of the market place and our objective of becoming a major food-based business, helping the country with self-sufficiency in food.” w w w. n a d e c . c o m . s a
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2557, Riyadh, Saudi Arabia, 11461
+966 11 202 7777 +966 11 405 5522 info@nadec.com.sa www.nadec.com.sa