BrazilFive opportunities to advance supply chains in the GCC
To support the GCC’s growth and transformation, the region’s logistics industry is also having to transform and expand its operations. A new report by Eurogroup Consulting and Newton.Vaureal Consulting sheds light into five opportunities that can positively advance the landscape in 2024.
In line with Vision 2030 agenda’s, the need to upgrade the region’s logistics and infrastructure has become a pressing topic. The two sectors play an integral role in supporting the growth of other sectors, as well as export-driven growth.
But transforming the GCC’s supply chains is easier said than done. To more fully explore the challenges and opportunities at play, Eurogroup Consulting and sister company Newton.Vaureal Consulting conducted extensive on-the-ground research over the past months to identify five tangible opportunities and challenges for companies to transform their supply chains.
1) Reviewing logistics master plans
The first of the five major areas of intervention that will allow GCC companies to adapt and seize transformative opportunities, comes in the planning phase. More specifically, a ‘logistics master plan’ is a tool which the researchers suggest can help with logistics transformations, by ensuring they are understood as integral to the health of the wider organisation – and rightly prioritised.
The analysts explain, “A logistics master plan is a tool to reconsider and better prepare to meet the organisation’s current and future needs by considering the upstream and downstream elements of trade. Based on a on a vision of the forecasted evolution of distribution channels, it means proposed solutions can be future-proofed.”
“It also means it can be used for the implementation of the operational management of physical flows in addition to initiating and driving change in other functions within the company: sales, marketing, purchasing, strategy etc.”
2) Growing organizational and value chain maturity
“GCC countries have invested massively in infrastructure,” the researchers state. “They have the latest generation of automated and robotic warehouses, and some of the most sophisticated ports and airports in the world. But there is a gap between project management to implement a new solution, and day-to-day operations management.:
One of the gaps identified is people skills. However much money is pumped into technology and new systems, any transformation for a company ultimately hinges of the skills of its staff. But this can also be the hardest part of change – ensuring that the skills to make the most of opportunities have been mobilised.
In the field of supply chain and logistical change, GCC countries are still especially exposed to these risks, as supply chain training is not well-developed. To lead the great supply chain revolution in the GCC economies, the analysts contend that it is necessary to train and improve skills – something even more crucial as quotas of local employees are sometimes also imposed on companies.
3) Sustainable development
With the supply chain responsible for 20% of CO2 emissions worldwide, the transformation of supply chains inevitably requires strategic thinking on the subjects of sustainable development and the decarbonisation of logistics flows.
Opportunities here come across four key areas, according to the researchers. By enabling for increased use of decarbonised railways within logistics flows, the emissions associated with transporting goods can be dramatically decreased. At the same time, deploying alternative fuel technologies on the remaining road-transport used can further help.
Meanwhile, the redevelopment of cities to bring goods closer to the customers receiving them on individual journeys can also help minimise emissions. Warehousing – and basing larger amounts of products in warehouses within easy reach of urban centres – can help with that, but the researchers add that they need attention themselves too.
They add, “Inside the building, simple solutions such as LED lighting with sensors, electrical or hydrogen forklifts or collection and reuse of rainwater, zero waste to landfill, reusable totes, plastic pallets, eradicate stretch wrap, also contribute to reduce the consumption of energy and consumables and thus make the warehouse more sustainable.”
4) Urban logistics: Smart cities
Building on these points, the researchers point to a particular need to rethink ‘last-mile logistics’ – transforming the way residential and industrial elements of modern GCC cities interact. To meet that demand, innovative urban planning projects are emerging – from Saudi Arabia’s smart city Neom, which will use smart technology to bridge the gaps between residential and industrial districts; to Abu Dhabi’s Masdar City – which is deploying technology to create a self-sufficient metropolis, that can support life and businesses with zero waste.
These hubs are not meant as standalone achievements, though. The pre-existing cities across the region will be expected to learn from their best practices – and exporting those to other cities in the GCC offers a key opportunity to private sector players capable of positioning themselves in the local markets quickly.
For example, the researchers note that urban centres in the region must adapt to the development of e-commerce – which requires more precise postal addresses than existing PO boxes, something that companies like what3words are already moving to help with in Saudi Arabia. The platform provides a simple solution, enabling a slick last-mile delivery experience for customer and courier alike, which is why it has been adopted at pace by businesses across the Kingdom.
5) Operational excellence
Finally, the researchers highlight that future profitability will hinge on optimising and improve operations. A business mindset which aims to create a culture of self-reliance within an organisation, operational excellence means every employee can see, deliver, and improve the flow of value to a customer.
To an extent, this has already been accelerated by the impact of Covid-19 – with many supply chains having been radically altered thanks to the lockdown era to become lower cost, and more responsive to change. But according to the study, there are two further ways operational excellence can further improve GCC procurement
These are boosting service rates – allowing for a more responsive service to clients, and ensuring that products are delivered at the right time and place – and implementing technology systems. On this second point, the researchers suggest companies invest in digital technologies to smooth out the tracking of deliveries – helping the company to follow the location and status of containers, and identify problems early, correcting them before they impact a customer.
