HSCS presents SCIR 2008 at Saudi Aramco conference and prepares for SCIR 2009

The presentation took place at the Saudi Aramco conference centre in Dammam in June, and was highly rated by the audience.

Importantly, HSCS announced that it will turn the report into a study to be undertaken and published annually in an effort to help to assess and benchmark the Kingdom's logistics and supply chain practices. The 2009/10 study will be sent out to respondents in October, and members attending the conference were urged to respond. Quite simply, the better the response, the more useful the information.

The SCIR 2008 uncovered the strategies, perceptions and activities of the supply chain and logistics industry in Saudi Arabia through the analysis of a comprehensive survey. Respondents from all major Saudi Arabian industries took part in the survey, which covered topics such as the problems of low service levels, levels of outsourcing, collaboration and visibility, use of IT, and the impacts of increasing complexities and volumes on supply chain management.

The main findings of the report that were highlighted during the presentation included:
• The fact that service levels were being compromised by increasing volumes and changing needs, and by the shortage of skills.
• Logistics functions are in the main, managed in-house, with only outbound transport being outsourced to any degree.
• Improvement initiatives are also managed internally with low levels of success, which is not surprising considering the admitted challenge of skills and capabilities of staff, and the low level of benchmarking.
• Almost ¼ of the respondents did not know the real cost of their supply chains as many only look at their direct logistics activities when assessing costs. A further 49% believed that their supply chains cost less than 10% of sales, a figure which is clearly unrealistically low. TerraNova, who conducted the study believe that Saudi Arabian companies are not counting the cost of inbound logistics and the holding cost of inventory when estimating this cost.
• Market volatility, increased volumes and complexity together with a shortage of skills are causing a rethink in terms of the way companies service their sales globally, and supply chain managers in the region in agreement with this rethinking.
• There is an understanding that success in business is tied to marketing and sales, and that supply chain management is a major enabling function.
• The KSA supply chain and logistics environment is essentially a "Do It Yourself" environment. This approach is taken to retain control, but is a major reason behind high costs and falling service levels. Globally, outsourcing has had mixed levels of success. Hala SCS believe that a concept they call insourcing is the key to increasing service efficiency without compromising control.

"SCIR 2008 clearly indicated that while companies may recognise the value of supply chain and logistics management strategies to their success, several deficiencies in current industry practice exist. It concluded that certain vital functions must be incorporated into current supply chain management strategies. These included collaboration between players within the supply chain, improved visibility, responsiveness and forecasting abilities, in order for companies to secure a sustainable and profitable position within the Gulf region and the world,"

HSCS Business Development Manager Pieter Spaarwater told Arabian Supply Chain Society members.

Hala SCS will be looking to gain deeper insight into the supply chain and logistics industry in the KSA through the launch of the SCIR 2009/10 survey, in October, and is appealing to all companies in the KSA to take part in the survey.

"Ultimately the enormous value derived out of a better understanding of the supply chain and logistics industry in the KSA is of benefit not only to HSCS, but to industry as a whole. In sharing the knowledge that we have gained we hope to contribute to the strengthening of Saudi Arabian industry both regionally and internationally. It is also for this reason that we are launching SCIR 2009/10. The learning process needs to be continuous and is an imperative to achieving such regional and global goals. We are therefore appealing to all companies in the KSA to take part in our 2009/10 survey and in doing so, assist us in creating competitive advantage and sustainability for business in our kingdom, and in the region," said Spaarwater.