Smooth operation

Navel oranges grown in California, a DVD player assembled in China or a skirt manufactured in Cambodia —what they have in common is the highly systematic logistics and supply chain management system through which they reach stores across the world.

In today's competitive global marketplace, organisations have to constantly find new ways to deliver value to customers.
There is a growing recognition that through logistic efficiency and effective management of the supply chain both cost reduction and service enhancement can be achieved.

The goal of supply chain management is to link the marketplace, distribution networks, manufacturing processes and the procurement activity in such a way that customers are serviced at maximum efficiency and minimum cost.

"There has been a meteoric rise in the Middle East's logistics and supply chain management industry, and this has attracted the attention of companies throughout the world to enter the region with ambitious distribution centres.

The continued growth of the region has resulted in increased competition between freight forwarders and distribution centre operators throughout the region, each battling to increase their share of this lucrative market.

As a result, the number of distribution centres being constructed is increasing and the demand is expected to rise further," says Mukesh Devnani, Manager, Contract Logistics, Freight Systems Co. Ltd.

Right framework

The UAE has the right framework for an effective supply chain management system because of its geographic location, political stability, a proper information and communication system, financial capability and ready infrastructure such as airports, ports and roads.

"But the government should also put in place a strategic inventory for essential commodities in preparation for any crisis such as war or natural disaster.

This is important as the UAE relies heavily on imports and major crises in the region can interrupt supplies," says Faisal Al Arshi, Deputy General Manager, Abu Dhabi Co-operative Society (ADCOOPS).

Jebel Ali Free Zone, in particular, serves as a logistical hub to the Middle East and other key markets around the globe. For example, Aramex is able to convert sea freight containers from China into land freight shipments in the GCC and Levant and onward to Europe via air freight shipments through this hub.

"Shipments of consumer lectronics are treated differently from flowers. Even within the perishables industry, there are details that can make or break the entire cooling chain. Different products need to be stored under varying temperatures; one cannot store ethylene producing fruits with products that are affected by this gas.

Therefore, mixing tomatoes with flowers or apples in the same container can cause the latter to ripen too quickly and spoil faster," says Hussein Hachem, CEO, GCC, Aramex.

Product availability

A retailer builds a loyal customer base by providing a quality and competitively priced product.

Customer loyalty is further maintained with constant product availability on the shelves and competitive pricing.
"Guaranteed supplies with consistent quality are primary drivers in deciding supply points.

Manufacturing techniques have reduced the costs of goods by exponential factors, to a point where further reductions are no longer practical to achieve.

Cost and waste reductions of higher proportions can now be gained within the supply chain. Retailers and suppliers collaborate by sharing demand expectations and manufacturing capacities which ensure visibility across the supply chain, paramount in eliminating waste and loss," says Centin Baxter, General Manager, business development, Al Futtaim Logistics.

In an effort to reduce manufacturing costs, low cost sources such as China and Eastern Europe are becoming major sources of supply. "China is often preferred over Eastern Europe.

But this partiality is not always justified, since the collapse of the Berlin wall access to highly qualified labour pools have attracted major Western corporations producing top quality products at very competitive prices," says Baxter.

Large retail chains such as Abu Dhabi Co-operative Society source clothes from Europe, the Far East, Syria and Egypt and fruits and vegetables from all over the world and rice from India, Pakistan, Thailand and Egypt.

"We source all over the world including the UK, USA, France, Saudi Arabia and other GCC countries.

Our timelines vary depending on the level of available stocks, season, where the items are coming from, the mode of transportation and how long it takes for them to arrive here.

Cargo from Europe and Asia usually take about three to four weeks to arrive by ship," says Al Arshi.
Different products require different modes of shipment — as cost, life cycles, security and environmental requirements have to be considered.

"Reefer containers are proportionally expensive but essential for perishable goods. The cold chain is now at a level where asparagus grown in Mexico can be picked and 'suspended' during reefer transit, then 'awoken' 14 days later in time to be marketed in Dubai's supermarket chains.

FMCG products are shipped by sea freight, generally 40-foot containers. High technology items on short market life cycles such as personal computers or mobile phones are shipped by air to ensure maximum shelf life exposure to the customer base," says Baxter.

Tracking technologies

Most companies now use superior tracking technologies and warehouse management systems to keep abreast of all movement of goods.

"We use eTrack, a tracking and monitoring module that provides a web-based purchase order and consignment tracking system that is fully integrated with its operations product," says Devnani.

Al Futtaim Logistics has a vehicle tracking software - M-trak - fitted to all delivery vehicles enabling real time monitoring of goods in road transit.

"Clients can also monitor essential aspects of their business via online portals such as inventory levels and receive alerts and notifications.

This provides a degree of supply chain visibility for a client and maintains an avenue for collaboration. Problems and non-essential activities can be flagged by both the provider and client in a partnership approach towards cost reduction and service level improvement," says Baxter.

Aramex utilises the Infor warehouse management system, a leading warehouse management system (WMS), and has further developed the WMS technology to enhance its warehouse operations.

Meanwhile, Al Futtaim uses SAP for both business and warehouse management functions. "Utilising a top tier ERP system with extended WMS enables seamless passage of essential processors such as order processing and invoicing.

This eliminates data entry and system interface errors and ensures that database information does not get duplicated," says Hachem.