How did the industry do in 2008?

David Christmas is Regional MD, Middle East, DHL Exel Supply Chain

This has been an exciting, invigorating, successful, albeit sometimes challenging year for most players in the Middle East logistics industry.

Growth has continued at a pace, and most companies have witnessed a double digit increase in volumes; whether through organic growth with present customers or new growth as more and more companies requiring logistics services enter the region.

This growth has meant that the ‘war for talent’ has increased, and the movement of managers has been at times quite fluid, particularly between the larger players; as they try to attract and retain the very best in the business. A welcome (though still too small), growing interest in the industry has been evidenced from local communities – helped by an increased number of educational courses, graduate schemes and inhouse training programmes.

The infrastructure in the region continues to creak at certain ‘touch points’, with road and port congestions increasingly becoming a thorn in day to day operations, as too is the availability of vehicles. However, it is clear to see that most countries are working very hard to address this and many initiatives are well underway to alleviate the issues.

The oil price fluctuations have clearly played a role in the movement of prices (both up and down) and have added some complexity into the decision making process, on how and when to move materials and goods. I believe the majority of companies have tried to minimise the impact of these price movements on their customers, but clearly there have been some associated effects.

The green agenda, has definitely been on the rise; globally, regionally and I am pleased to say broadly within the industry – which by its very nature is a large contributor to the regional carbon footprint. Discussion and moves towards carbon neutral warehouses and reduced emissions from vehicles (on road, sea and in the air), can only be viewed as positive.

Interestingly, the link to cost reduction is adding its own commercial impetus for change.

Pleasingly, the profile of health and safety has also increased, with a number of companies working hard to improve standards and awareness. A number of the more enlightened customers I know have already tied health and safety performance to financial return and penalise or reward their logistics supply accordingly – the oil and gas industry certainly seems to be leading the way on this.

One very clear trend is with the larger multi-national customers. They now expect the same standards, processes, behaviours and performance throughout the globe. If they have proven a successful warehouse management system (WMS) in say Dallas, Texas, they expect the same system and the same smooth implementation in Dubai. If they have global positioning systems (GPS) on the vehicles that are operated for them in Rotterdam, via a control tower platform, they expect the same for their fleets in Riyadh. They also expect to see the same high calibre of people, health and safety standards, processes and employment policies.

Technology continues to play an increasingly critical factor offering complete visibility for customers and affording accuracy, flexibility and a speed of goods movement that helps support significant cost efficiencies. And although not all the players investing in large new builds have gone the ‘automation’ route, consideration is certainly being given more seriously, particularly with the increases in labour rates and supervisory salaries.

Partnership is perhaps also being taken more seriously between customer and supplier. For years there has been ‘lip service’ to a move from transactional relations to partnership and strategic sourcing. However, more and more case studies from across the region and from within the industry are proving that the value created here can far outstrip that of the more traditional approach.

There is no doubt that more and more customers are asking logistics companies to deliver ‘value’ rather than just minimum cost. This, I believe, is in part due to increased maturity and understanding of what an improved supply chain can really deliver for a business – end to end, and also in part due to the drive to maximise market share as the regional economies continue to grow.

Competition has increased as well as the demand for both excellence and value. Whether it’s for a retailer, manufacturer, oil field supplies company, or public sector works project, the pressure has always been on doing it better, faster and more efficiently. This has been good for the industry; and it means we have to remain focused on delivering the very best service for our customers and adding tangible benefit to their top and bottom lines.

Within many of the global industry companies, the Middle East has been held up as one of the ‘shining lights of opportunity’, where ‘anything is possible’, and their associated interest and commitment has continued to grow – many investing considerably in increased footprints.

As the success of these more established industry players is witnessed by others, it has encouraged a number of new entrants into the regional market. Time will tell how successful they will be, but certainly they are doing their part to raise the profile of the industry, and to increase the competitive element in the region.

The tremendous investments in infrastructure, particularly with the advent of Dubai World Central including Al Maktoum Airport, Dubai Logistics City, Dubai Industrial City and the opportunity afforded by Jafza, (the only free zone in the world to be situated between an airport and seaport), offers infinite further possibilities for suppliers and customers alike.

It’s true that the fallout from the global credit crunch has yet to become clear, in terms of its full impact on the region. What is certain, is that 2009 will be a harder year for consumers and businesses. This is likely to have a knock-on effect for the logistics industry, but the upside is that it will further increase focus and innovation.

The year has been a successful one for the industry as a whole, and the rate of innovation and developing maturity is truly impressive. However, there are still many areas for internal improvement, external value creation and indeed further growth.

With the prevalence of a struggling world economy, 2009 should perhaps be greeted cautiously by some, but for those willing to lead the logistics agenda and focus on their customer needs (both short and long term); another exciting and rewarding year lies ahead.

The Hub

With the opening of Danzas’s massive logistics facility in Dubai, companies can use the centralised location to reach out to clients all over the world, reports Casey McFann

With the global freight market set to reach US$1.4 trillion by 2020, and the Gulf imports and exports reaching US$320 billion at the end of 2007, Danzas’s new facility will be an essential addition to the expanding GCC market.

The 80,000 sq metre facility, at the equivalent of 11 football pitches, the largest of its kind in the Middle East, is said to offer the perfect platform for companies to profitably leverage their supply chains using the new hub as a global gateway.

The facility, with a built up area of 54,000 sq metres, is fully air-conditioned and includes 6,700 sq metres of office space and an 8,000 sq metre temperature- controlled life sciences distribution centre. The building was constructed using 3,000 metric tonnes of steel and 12,050 cubic metres of concrete and is equipped with world-class security infrastructure that will be certified under the Technology Asset Protection Association (TAPA) guidelines.

The company says using advanced, scalable technology platforms and strategic warehouse management solutions, combined with an environmentally friendly green data centre, will ensure customers accuracy, flexibility and a speed of goods movement that should support significant cost efficiencies.

“The Gulf is ideally positioned, with access not just to Europe, Africa and Asia, but also to the fast developing Indian subcontinent and its huge manufacturing output. Our global experience of aligning logistics services with trade lanes will be further enhanced by the future benefits of operating from the only free zone in the world to be located between an airport and a seaport,” explained Hermann Ude, CEO, DHL Global Forwarding, Freight.

Never forget the hubs that connect us all

Tom Ronell is the CEO of Istithmar World Aviation Holdings

Once upon a time, going to the airport was a special experience. The airport was a place of dreams and flights of fantasy – both literally and figuratively. It was a place of excitement: people embarking upon new adventures, others arriving to the cheers of their families and friends.

Somewhere along the way, the romance of the airport disappeared and airports stopped being fun. Air travel became mass transit, an everyday event to be minimised by arriving at the airport as late as possible in order to catch one’s flight without having to spend any time in the airport. In the age of heightened security, that equation has been reversed: we must now allow plenty of time in order to arrive at the front door of the terminal (or as close as we are permitted to get), not to mention checking in and going through multiple levels of security checks before arriving at our distant departure gate, stressed and exhausted by the effort already expended.

The airport is the last place most people want to be, made worse by flight irregularities or lengthy connections. Facilities are mostly inadequate for the volume of departing and arriving passengers, not to mention the in-transit passengers who are often strewn all over, appearing as third-world refugees. The design of most terminals separate us from that instrument of magic – the aircraft. We often never see anything but the doorway of the aircraft from the jetway, or perhaps the nose of the aircraft. Gone are sweeping views of the airport and runways; forget about outdoor observation decks or places to park under the flight path.

On your next trip, consider what a self-contained city an airport is: thousands of workers, police department, fire squad, security, food court, hotels, ground transportation, infrastructure, etc. Imagine the organisation which is required to make everything work, from the traffic police on the approach to the terminal to the skycaps at the curb, through check-in and security to the gate, where various organisations are servicing your aircraft, cleaning, catering, supplying fuel, performing maintenance, loading bags and cargo, pushback crew, air crews, air traffic controllers, people who maintain the runways and cut the grass along the taxiways, etc. You should agree that it is remarkable how well things actually do work.

We are fortunate to be at the crossroads of the world, the Middle East. Notice faces of the people and crews that you pass in the concourses. If you find a window with a view, look at the unusual airlines from all corners of the world and the unusual aircraft types. Consider the exotic places from which these aircraft come, the passengers who travel these routes and what cargo might be carried to and from their home bases.

Imagining all these distant locales will return the flights of fantasy about the magic of aviation and the privilege of travel. Airports can still bring out the kid in us, if we will only take a moment to marvel at our good fortune to be in the airport, going somewhere….

Making your presence felt in a cutthroat industry

Manya Pamnani is the Director of Advisory & Consulting of Horwath Mak, Auditors & Business Consultants

Globalisation and recent developments in technology coupled with growth in ecommerce has brought about unprecedented
expansions in logistics, giving companies a pivotal role to play in providing the link in the customer supply chain as volumes of online purchases increase.

According to the Fred Smith, CEO, Federal Express Corporation, logistics data “allows you to operate the business more and more precisely against demand”.

A recent industry report has valued the GCC logistics market at more than AED40.4 billion (US$11 billion). Currently Dubai alone channels more than AED62.4 billion (US$17 billion) of imports annually, and this too is set to increase enormously. Michael Profitt, CEO, Dubai Logistics City (DLC), says, “Currently, Middle East air cargo growth is the highest amongst all regions in the world.”

But with vendors and customers spread across locations, there are several issues which are critical to logistics. They are movement of product and information, timeliness of service, cost and integration (within the company, between the company and its customers and between the company and its vendors).

These issues have given rise to the concept of third and fourth party logistics. The term third party logistics (3PL) describes the handover of logistical operations, which includes integrated warehousing and transportation services, supply chain services and value added logistics such as subassembly, postponed manufacturing, labelling and kitting. Operators functioning within the 3PL sphere are usually highly integrated logistics providers, with large diverse networks with the ability to customise and manage the customer’s entire supply chain.

The most recent progression in the provision of logistics services has been the emergence of fourth party logistics (4PL), which describes a company involved in the redesigning of a client’s supply chain; implementing the solution and then managing the logistics companies used as part of the overall solution. The industry is mainly dominated by players running their own fleet of vehicles and owning/leasing ships, aircraft and warehouses, while only utilising the services of other providers where their own capabilities suffer from deficiencies.

Logistics companies must make available to their clients the kind of product they expect in this competitive world. Broadly, it is a solution rather than a product. And that solution should be provided efficiently while remaining both flexible and innovative to remain globally competitive. Technology plays a pivotal role in achieving this.

There are certain areas which always pose challenging for logistics operators. They are efficient warehouse record keeping, synchronisation of material movement resulting in high inventory levels, overstaffing in the absence of integrated information systems resulting in work redundancy, integrated information systems for seamless planning and execution of work, efficient and effective information systems for customer services.

Such teething problems hinder companies in a big way. This is the challenge both for the industry and for businesses operating within it. Growth potential, demand and other unique problems are reasons a plethora of logistics companies have been researching methods for improving performance and getting expert advice.

Manya Pamnani is the Director of Advisory & Consulting of Horwath Mak, Auditors & Business Consultants

Cranes, construction and more cranes

Thanks to the continuing boom in its economy, the UAE has now seemingly become one major construction site. And the ripple effect of the construction phenomena has extended to project cargo.

In freight terms, project cargo means the movement of goods that are too big or too wide for a standard container. Traditionally, project cargo dealt with moving heavy equipment for the oil and gas sector. Now, although still considered a niche market, project cargo has grown from strength to strength in this part of the world, mainly because of the increased demand brought about by the diversity of projects.

One of the major reasons Barloworld Logistics acquired Swift Freight International is the company’s consistency and capability in providing logical logistics solutions, including in moving heavy duty cargo.

Although very young in the business of project cargo, or Project Management & Handling as we call it, Swift has dealt with of some of the most challenging projects, such as moving equipment for the Palm Island in Jumeirah. We also manage continuous assignments from loyal clients like leading engineering company ABB Group, by moving power transformers of various tonnage, measurements and dimensions from outside the country to manufacturing plants mostly in Abu Dhabi and Al Ain.

And looking at the lineup of UAE’s projects, such as Dubai Logistics City, Dubai Maritime City, Al Reem Island, Hamriya Free Zone expansion, Masdar City and Sadiyat Island, among others, it is not difficult to understand the country’s huge market potential for the transport logistics sector.

Swift has only been into project cargo for around six years, and although we have a dedicated fleet capable of handling heavy and oversized cargo, challenges are as abundant as opportunities in this industry.

For example, being situated in the Middle East, we have to overcome unique climatic conditions, such as sandstorms and extreme heat. Add this to worrying about the integrity of the shipment while meeting the timelines of the client. Indeed, project cargo is a massive undertaking that requires specialised cargo forwarding expertise.

Beyond heavy lifting In recent years, Africa and the Indian Sub Continent have become important destinations for project cargo and we see more and more companies setting up in the country to take advantage of the strategic location of Dubai as a transshipment hub.

As the project forwarding industry continues to grow bigger and branches out into new markets, the needs of the clients have also become more sophisticated.

Beyond heavy-lift resource equipment, value-added services are expected. At Swift, we have clients require delivery from origin to job site with export packing, customs clearance and trade documentation. In other instances, clients require warehousing, charters, insurance, managing the quoting process, route surveying and expediting purchase orders.

In today’s global marketplace, the key to survival for logistics service providers is to go further than ensuring clients technological advancement, sophisticated logistics capabilities and precise timing. Following an old school of thought, my idea of maximising the benefits of the burgeoning project cargo industry boils down to more than coordinating cargo movements from origin to destination – what matters is the continuous nurturing of new relationships, while exploring different distribution channels throughout the world.

Warren Erfmann is Group CEO, Barloworld Logistics Middle East and Asia

Current aggressive behaviour between insurance companies in the industry has driven insurance rates to an all time low, thus companies are struggling to break even

Sea freight volumes have heavily increased in the region, primarily due to containerisation, a tremendous improvement in logistics and transport and now the great demand for fuel and project cargo to facilitate Dubai’s construction boom. In the first quarter of 2007 alone, 8,431 vessels called into Dubai ports and a total of 34,052 by the end of the year, with a value of AED679 million (US$185 million) worth of cargo movement in foreign trade including free zone and custom warehouse trade.

Vessels are now operating at full capacity, whereas only a decade ago, shipowners were happy with 50 to 60 per cent occupancy. With the cost of steel at its peak and the current global shortage of tonnage, it makes economical sense to keep operating older vessels. For this reason insurance companies are less willing to offer hull and machinery insurance.

More owners are now operating vessels that are long over due for scrapping and insurers are reluctant to offer cover for vessels over a particular age. More insurance companies are also concentrating heavily on the volumes of cargo that are entering the country. The number of exports and re-exports are similarly soaring creating abundant opportunities but with a negative effect on insurers.

“Cover on textiles was offered at a rate of 0.5 per cent of the commercial value of the goods, where rates now have drastically dropped to an alarming 0.05 per cent,” says Balaram Kumar, Technical Manager, Millennium Insurance Brokers.

However, Albert Rodrigues, Managing Director, Millennium Insurance Brokers, reassures that despite the instability on insurance premiums, there is no imminent threat to the market itself, nor is there any indication of a disruption in the market. In fact, the current state of the insurance market commands a better rate on marine cargo. Enough profit can be gained in cargo insurance, but unless stringent guidelines are enforced to control and regulate the marine market, stability among rates will never be retained.

Banks have also made it next to impossible to open a letter of credit. Ten to 15 years ago, opening a letter of credit was an effortless process, but since conditions have toughened commanding heavy deposits, many traders have doubled up their relationship with suppliers and trade without a letter of credit in place and goods are shipped on cash-in-hand basis once the vessel arrives, while others do not insure their goods altogether.

This results in a shrink in premiums. Critically, the Middle East has no laws regulating the marine market and when damage occurs no one in the industry can be held accountable for the lack of diligence and malpractice. Dubai is a regional and international hub for the maritime industry, witnessing a fast-phase development in its infrastructure and maritime related sectors thus companies already operating in the industry should be expected to comply with certain requirements if the region aims to attract more international business into the country.

At the moment, approximately 340 to 400 freight forwarders operate in Dubai alone and less than 10 per cent operate without any professional indemnity, creating an enormous gap in the industry.

Comparatively, endless regulations govern the construction industry, inflicting heavy penalties on those who do not comply with the law. Therefore something similar needs to be structured for the marine and logistics industry to maintain healthy levels of competition.

Konstadina Kottoros is a legal consultant in the shipping department at Fichte & Co Legal Consultancy in Dubai, UAE

The healthcare business is a mature industry providing a variety of products and services such as medical consumables, pharmaceuticals, catering, laundry, waste management, home-care products, information technology, vehicle fleet management and general supplies to their customers. Analysis of the healthcare industry indicates that the supply management system is one of the potential areas where cost reductions are highly possible since the healthcare industry has historically viewed itself as being operationally different from other businesses.

This is due to healthcare providers’ myth that, unlike managers in manufacturing industries, they cannot control or project their production schedules which is not true in today’s context. As a result, healthcare supply chains not only end up with poor inventory control arising from years of outdated supply chain strategies, but also from inefficient delivery of healthcare.

Traditionally, the suppliers meet the purchasing department in each hospital
individually to determine their replenishment needs or emergency needs. After confirming the purchase order, items and equipment are dispatched to nurse stations, operating rooms and wards by its staff. Meanwhile, the staff also takes back recycled items such as surgical instruments.

The role of hospital supply has been transformed in some countries due to a reduced need for storing goods between supplier delivery and internal delivery to departments. A more efficient hospital would receive items from its supplier and deliver them directly to the appropriate unit. A central distribution centre provided by a 3PL could be built to store materials from suppliers, and sterilise and pack soiled medical instruments for each of the hospitals.

The central distribution centre can be reorganised into a single contact point for suppliers and the number of suppliers will decrease eventually due to consolidation. This will result in the elimination of supplies delivery at a loading dock in each hospital. Instead, staff can deliver orders directly to the hospital corridors from the distribution centre, dropping them to the stock supply closets in the nursing stations, operating rooms and wards. This creates a “stockless inventory” effect or just-in-time delivery for the hospital’s warehouse and result in reduced storage space and personnel.

In the new system, labour utilisation increases while inventory levels and fill rates diminish. The linkage between hospitals is strengthened by a common network that allows for the sharing of expensive life-critical supplies and medical staff. Such partnerships will help healthcare facilities to manage limited resources, resulting in savings and the possibility of encouraging other hospitals to join the network. This can be considered a good move because with the bulk purchase of common and standardised items on a regular basis, economies of scale can be achieved. However, due to the specific nature of service provisions in hospitals, the purchasing of non-common items and small items are left to the individual hospitals so that quality control can be better assured by the respective hospitals.

Hospitals can also outsource some activities such as cleaning, security, cafeteria, food and laundry, in order to cut costs. A study conducted in Singapore recently showed that outsourcing logistics activities such as housekeeping and repair is pretty prevalent. Three hospitals reported outsourcing of information system services and two hospitals reported outsourcing of linen and warehousing services. Only one hospital outsourced food service, while other hospitals showed concern about food supply and quality when it is outsourced. Some managers believed that although outsourcing did not reduce the logistics costs significantly (there have been some reductions), the maximum benefits were obtained in terms of expertise held by the outsourced companies. In the long run, due to the need to focus on core competency and to reduce the costs, hospitals may outsource more logistics services to the service providers.

Some experts have said that a strong risk management process can decrease problems on a project by as much as 80 or 90 per cent. In combination with solid project management practices — having a well-defined scope, incorporating input from the appropriate stakeholders, following a good change

management process, and keeping open the lines of communication — a good risk management process is critical in cutting down on surprises, or unexpected project risks.

Step one of the risk management process is to have each person involved in the planning process individually list at least 10 potential risk items. Often with this step, team members will assume that certain project risks are already known, and therefore do not need to be listed.

Step two of the risk management process is to collect the lists of project risks and compile them into a single list with the duplicates removed.

Step three of the risk management process is to assess the probability (or likelihood), the impact (or consequence) and the detectability of each item on the master list. This can be

done by assigning to each item on the list a numerical rating such as on a scale of 1 to 4 or a subjective term such as high, medium, or low.

Step four of the risk management process is to break the planning team into subgroups and to give a portion of the master list to each subgroup. Each subgroup can then identify the triggers (warning signs) for its assigned list of project risks. All triggers should be noted, even minor ones. Normally there will be at least three triggers for each risk.

Step five of the risk management process is for those same subgroups to identify possible preventive actions for the threats and enhancement actions for the opportunities.

Step six of the risk management process is for the subgroups to then create a contingency plan for most but not all project risks – a plan that includes the actions one would take if a trigger or a risk were to occur. This plan will be created for those risks scoring above a certain cut-off point, which is determined after looking at the total scores for all risks.

Step seven, the final step in planning the risk management process, is to determine the owner of each risk on the list. The owner is the person who is responsible for watching out for triggers and then for responding appropriately if the triggers do in fact occur by implementing the pre-approved and now established contingency plan.
Rather than start this risk management process from scratch for every new project, it can be followed once to establish a list of generic project risks and triggers, skipping step three. Then, a team simply has to add project-specific risks and triggers and assess the probability, impact, and detectability for each risk, saving a great amount of time and helping to ingrain a risk mentality into your project culture.

By Viki Wrona
President, Forward Momentum, LLC, a consulting and training company, and an instructor with Westlake Training and Development

As freight forwarding has moved into the 21st century, there has been much confusion about its legal roles and responsibilities. The sector offers a vast range of value-added services to customers who could hold the service provider accountable as the carrier. The typical role of a freight forwarder is that of an

agent, arranging shipments of goods belonging to the shipper and coordinating its transit safely to the receiver. Now, in the light of consolidation, a forwarder’s liability extends beyond that of an agent when it undertakes the carriage in its own name as principal contractor.

It is common practice in shipping to consolidate cargo belonging to different shippers in one container, a concept adopted to utilise cargo capacity, cater to small(er) consignments and maximise profits. Yet, while adopting this approach, the freight forwarder remains responsible to the shipper(s) as contractual carrier once it assumes the carriage of the goods. Although this principle is cost-effective for the forwarder, it bears huge legal implications should any loss or damage occur to the goods during transit. However, responsibility shifts at various stages of the journey, depending on the nature and agreement of carriage.

A freight forwarder’s main concern is how it can protect itself against potential cargo claims. From a legal standpoint, agents try to limit their liability via the ‘small print’ contained under their trading terms and conditions and this is where confusion starts to emerge. It is important that they minimise, or even avoid, liability as principals by ensuring that the wording contained in the house bill is consistent with what was initially agreed in keeping with the nature of the business undertaken.

In a practical sense, once damage/ loss is apparent, a forwarder will have to put in a claim (within one week) towards its own carrier under the master bill, and towards any other contractors engaged in transport and handling. This is important in order to avoid possible time bars which would otherwise reimburse any losses arising out of a cargo claim.

In ‘The Hyundai Federal’ case, goods were misdelivered without the production of a bill of lading and the agents tried to evade liability by relying on certain terms on the reverse side of the bill. They assumed the carriage of the goods and issued clean bills of lading that goods were received in apparent good order and condition, signed by Birkart Globistics without qualification under Birkart’s name, clearly indicating it as principal. Birkart’s defence was rejected and that the use of the term ‘forwarder/agent’ offered no legal protection. It is of no particular aid to the forwarder to presenting itself as a straightforward agent while also affording the role of carrier. ‘The Starsin’ decided that the contractual carrier is evidenced by the named signatory on the front of the bill, notwithstanding any exclusion clauses on the reverse side of the document.

In this case, the forwarders were solely liable as the actual carrier delivered in accordance with its carriage contract, assigning control to the agents, notwithstanding presentation, of the waybill. Nonetheless, the freight forwarder breached the contract of carriage with the shipper by releasing the goods without production of the bill.

However, freight forwarders can guard against such menacing ordeals and various defences are available. They can limit their liability by simply inserting a condition stating that they are acting as ‘agents only’, but this clearly depends on the facets of the bill. In the event where the bill has been issued by a freight forwarding agent and signed under its own name without qualification, the freight forwarder will be presumed to have signed as the principal, thus extending its liability to an entirely different plane. In addition, a condition excluding liability for loss, damage or misdelivery can be inserted but has to be very clearly drafted to be accepted by the courts.

By Jasamin Fichte,
Managing Partner, Fichte & Co.
Legal Consultancy

This is an age-old conundrum in management- do happy workers perform better?

Decades of research and empirical evidence have been unable to establish a strong link between psychological well being, intrinsic job satisfaction and manager’s performance.

Recently,using a unique methodology, fresh empirical evidence and a definitive analysis of previous theory and research, researchers have started supporting the original ‘happy productive worker’ thesis.

An Australian study of 19 organisations has yielded strong evidence to support the existence of a clear relationship between managers’ job-related psychological well being, intrinsic job satisfaction and performance. Middle managers were surveyed across a variety of public agencies and private and multinational companies in Western Australia. The findings establish that positive psychological disposition and intrinsic satisfaction with a job is a great motivator for people to perform.

Happy managers seem to be more effective compared to their miserable compatriots, especially at motivating employees. Since the main role of managers is to achieve organisational objectives through people, this is an important issue for all organisations to address. Research, including my own, provides rigorous and specific data to support the proposition that happy managers perform better.

Managers’ jobs can be changed to enhance or avoid a decline in happiness because their performance is impacting, as never before, on organisational productivity and economic prosperity of nation states. Extraordinary shifts in the global corporate environment mean maangers’ personal troubles’ have now become public concerns.

The emerging concept of Positive Organisational Scholarship (POS) is countering such forces by developing ways to create positive human and organisational well being. POS serves as a means of using the research to discover ways organisations can improve people’s psychological well being and in particular, offers advice on how changes in psychological well being and job satisfaction can assist in identifying what can be done to promote a healthier and more productive work environment for managers.

POS has an affirmative bias towards the health model’s capacity to discover and maintain ways that organisations can improve people’s working lives. From this perspective, employee health and well being are seen in terms of the presence of the potential for growth, optimism, contentment and actualisation – not simply as the absence of dysfunctional behaviour. The time has come to move away from negative forms of psychology (based on a ‘deficit model’) and affirm managers’ future by embracing the ‘happy-performing managers’ proposition.

Factors such as pressure and stress begun to take a heavy toll on people’s lives today. High-profile cases involving people such as South Australian premier, Don Dunstan, in the late 1970′s – who called a media conference in his pyjamas to announce his resignation – and more recently, the resignations of New South Wales opposition leader, John Brogden, and former Western Australia premier, Geoff Gallop, highlight the effects of heavy workload resulting in depressive illness. Others suffer in silence.

In today’s management, it is imperative to be more attentive to enchancing the positive emotions of employees. The ‘happy productive worker’ assumption spurred the human relations movement in the 1960′s. In the 1970′s, some researchers suggested that causation flowed in the opposite direction, in that performance led to job satisfaction.

The pendulum has now swung firmly back in support of the ‘happy-productive worker’ thesis, however, as evidenced by the current popularity of the new science of happiness. Researchers had earlier not established strong empirical support for the link between employees’ happiness and their performance. New studies provide comprehensive, robust evidence to support the existence of a relationship between one set of employees’ (in this case, managers’) job-related psychological well being, intrinsic job satisfaction and performance. There is every reason to believe that this line of thinking is going to dominate the world of management in the days to come.

Dr. Peter Hosie is Associate Professor, University of Wollongong in Dubai. He intends to replicate the research into Happy-Performing Managers internationally, with particular emphasis on the Middle East.

Business Process Reengineering, or BPR, is changing the way companies conduct their core businesses by ‘revising’ the business process using Information Technology as a key enabler.

By and large, many business organisations today tend to assign individual employees focused tasks. The summation of such tasks is then taken into consideration by the management team to determine the resultant impact on business performance.

However, with each individual’s contribution, there are likely to be some undesirable risks such as inefficiencies, wastages, hidden costs and bottlenecks. These risks, when compounded, could also pose a significant threat. With BPR, the objective is to minimize these risks, while reaping the benefits to produce greater business value.

BPR is proving attractive to businesses, especially in the manufacturing and supply chain management environments. This is because by authorising line employees to monitor in-process real-time helps solve problems faster and with more confidence. This results in faster turn-around time to decision bottlenecks, increased productivity, and a more skilled and motivated workforce. In addition, it increases customer satisfaction and business confidence as well. Software solutions, which help manage these processes, are termed Business Process Management (BPM) software.

Ideally, BPR should focus on crossfunctional processes that belong to a supply chain to maximise its benefits. These benefits can be especially seen in one or more of the following engagements:

Relocating work to suppliers or customers. Let suppliers manage your inventories while having customers transmit orders using internet technologies. This reduces duplication of in-house work and data redundancy, thereby increasing focus on the core of your business specialisation.

Delaying the final product as late as possible. Building a standardised generic product at the initial phase of the process not only reduces your cost of production but also increases the accuracy of forecasting. Keeping any customised configuration to the end of the process minimises wastages and improves process agility. Enterprise Resource Planning, or ERP, systems increase the flexibility and agility in the business process by allowing replication of such configuration across multiple sites and, in return, bring about better visibility of work-in-progress.

Engaging in concurrent rather than sequential processing. As time is money for businesses, collaboration among different functional teams within a supply chain eliminates bottlenecks and minimises time wastage. Having Product Data Management (PDM) software is the ideal way to enable the building of complex products as it is possible to share product data simultaneously among marketing, procurement, research and development teams, while managing document version control and release.

Assigning case managers to deal with customers. Accountability for order fulfilment using Customer Relationship Management (CRM) software means better accountability by one person to the customer organisation, leading to increased visibility on customer delivery, improved communication, and higher customer satisfaction.

Reengineering is an essential tool to achieve ambitious supply chain goals. Other techniques that companies use to improve performance, from incremental improvement through reorganisation to restructuring, though valuable, do not have the power to create breakthrough results. Only reengineering can do that.

At first, some companies reengineering their supply chain thought it would be a one-time event, a radical treatment that would overcome decades of inertia and transform obsolete processes into ones suitable for a highly competitive world. Little did they suspect that reengineering would still be going strong well into the 21st century.

The hallmark of the modern age is constant change, and no sooner do companies finish one round of reengineering than they discover they must embark on another to respond to new challenges, capitalise on new technologies and cope with new circumstances. Far from being a thing of the past, reengineering is here to stay.

Albert Tan is Assistant Professor at the University of Wollongong in Dubai. He teaches courses in Supply Chain Management and Operations Management.