Saudi gains Supply Chain Intelligence

The launch of the full results of the Supply Chain Intelligence Report (SCIR) 2008 in early October has led to lively debate amongst 140 of Saudi Arabia’s top Saudi Arabian supply chain and logistics executives around the controversial Do It Yourself (DIY) approach to supply chain management followed by most companies in the region.

SCIR is an international, independent study of the supply chain, management and logistics practices in Saudi Arabia and other emerging economies. Commissioned by Hala Supply Chain Services (Hala SCS), the aim of the research was to provide insight into many forces that are driving change in supply chain management in Saudi Arabia, and to demonstrate how the most successful companies are dealing with these new and evolving challenges. The launch of the full results took place in Khobar, Riyadh and Jeddah on consecutive days last week.

At the various launches of the report it was revealed that companies in Saudi Arabia are accustomed to a Do It Yourself (DIY) supply chain strategy which sees the supply chain entirely internally managed. Not only does this go against the global trend,  but due to a self-confessed skill shortage the DIY approach consistently delivers low levels of service, and low levels of success in reducing costs and increasing supply chain flexibility and visibility.

“The debate around this issue intensified as attendees expressed concern about following the worldwide trend of employing 3PL and 4PL service providers to improve supply chain flexibility and visibility. The main reason for this resistance is a fear of losing control, and whether there were enough skilled suppliers in the Kingdom. Attendees did recognise at the same time however that they simply do not have the in-house capabilities to achieve these objectives” says Brett Bowes, CEO of TerraNova, who conducted the research.

“The conclusion drawn from the DIY debate across all four launches was clear. A unique approach is required in Saudi Arabia – this being a combination of DIY and outsourcing, appropriately termed ‘insourcing.’ Such an approach sees companies form a close relationship with high quality 3PL service providers and consultants, and through the use of virtual teams, supply chain managers are able to retain control internally, while making use of external resources to reduce costs and increase flexibility and visibility. It’s a unique approach that should suit the Saudi business culture,” says Bowes.

Hala SCS also took the opportunity to announce the launch of the SCIR 2010 survey, which will open for participation in January 2010. Potential participants were assured that responses, as with the previous survey would be confidential, and that each participating company would receive a free report comparing their answers to the market result.

Anyone wanting to take part in research into the practises of the supply chain and logistics industry in Saudi Arabia can send their details to research@tnova.co.za.