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The UK Modern Slavery Act

SUPPLY CHAIN Sustainability School


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EDITOR’S COMMENT

H E L L O A N D W E L C O M E T O the

September issue of Supply Chain Digital. Our leading feature this month is based around an interview with EcoVadis co-CEO Pierre-Francois Thaler who discusses how companies can make their supply chain operations safer and more sustainable. In a similar vein, a selection of legal experts from law firm King & Wood Mallesons discuss the impact and take home points following the introduction of the 2015 Modern Slavery Act. Last but not least, we speak to Robin Mellon, CEO at The Supply Chain Sustainability School about how the Australian organisation is supporting small-to-medium enterprises, specifically construction and infrastructure suppliers, contractors and service providers.

Enjoy the read

Nye Longman Editor Nye.Longman@bizclikmedia.com 3


CONTENTS

F E AT U R E S

Q&A

The necessity of sustainable supply chains Q&A

06

LEADERSHIP

The court of public opinion and the Modern Slavery Act

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16 4

Back to school

September 2016


C O M PA N Y PROFILES Al Fakher Tobacco Middle East

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Barloworld Equipment Africa

Wyndham Vacation Resorts Asia Pacific Australia

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Burger King Asia

66

Zalora Group Asia

5


Q&A

The necessity of sustainable supply chains Supply Chain Digital speaks to Pierre-Francois Thaler, co-CEO of EcoVadis – a leading sustainability scorecard company – about making supply chain operations safer and more sustainable Writ ten by: NYE LONGMAN


S U S TA I N A B I L I T Y

Could you outline your thoughts as to why current sustainability efforts are not enough to prevent workplace tragedies? Current sustainability efforts rarely lead to true change. After the Rana Plaza factory collapse in 2013, businesses, citizens and governments around the world pledged more than $280 million in funding to improve factory conditions in Bangladesh and prevent similar tragedies. Despite this outpouring of financial support, we have seen very little improvement in factory conditions and worker safety: 8

September 2016

• An NYU Stern School of Business report found that in the two years following Rana Plaza, only eight of the 3,425 factories assessed in Bangladesh corrected violations to the point that they passed inspection. • H&M signed the Accord on Fire and Building Safety shortly after Rana Plaza, but still has not fulfilled its commitment of installing necessary, life-saving doors in its Bangladeshi factories.


T H E N E C E S S I T Y O F S U S TA I N A B L E S U P P LY C H A I N S

It is important to also note that supplier audits - which have risen in popularity as a means for keeping suppliers compliant - often fail to prevent major accidents. Before its collapse, audits in Rana Plaza factories failed to identify illegal construction of the building, and in 2012, Tazreen Fashions in Dhaka caught fire after being audited by Walmart. It takes much more than auditing suppliers to prevent these types of tragedies. Financial support for sustainability can only go so far. To make a real difference in supply chain

sustainability, global companies need to leverage their influence and resources to drive true change. Large companies spend 80 percent of their revenue in supply chain activities, making it an effective platform to act through when looking to drive change. By engaging suppliers and their workers on proper health and safety standards and continually monitoring their progress towards safety goals, we can make big steps in the prevention of workplace tragedies. Some companies scrimp on 9


S U S TA I N A B I L I T Y

health and safety to cut costs – what would you recommend to change this culture? Customers are becoming more interested in and conscious of the sustainability practices of the companies they purchase from. Businesses that continue to scrimp on health and safety in their supply chain simply cannot hide anymore- the influence of empowered customers and the increasingly watchful eye of governments, local NGOs, labour, 10

September 2016

environmental and other watchdog organisations are too strong. Several new laws have emerged in the past year that aim to protect supply chain workers, including the UK Modern Slavery Act and the US Trade Facilitation and Enforcement Act, which bans slave or forced-labour made goods from being imported into the country. If companies fail to source sustainably, they face not only a loss in brand reputation and customer loyalty, but regulatory and


T H E N E C E S S I T Y O F S U S TA I N A B L E S U P P LY C H A I N S

financial consequences as well. For companies that work with multiple suppliers around the globe, going sustainable can seem like a daunting task, but approaching the process step-by-step can help create a positive mind-set and culture. The first step has to be creating a sustainable culture within your own organisation. Start by asking the following questions to gather information about the state of sustainability culture in your organisation.

What kinds of business benefits will sustainable practices bring to my organisation? (Sustainable practices can result in a revenue uplift of 5-20 percent) How do our sustainability initiatives stack up against our top-performing competitors? How many supply disruptions due to sustainability issues did we encounter last year? What are our customers saying about sustainability?

What about our employees: who can our internal sustainability champions be?. When the procurement team is armed with this information, they can head to the c-suite with a plan. Changing the culture works best through a top-down approach with commitments from the company’s executive leadership, communicated clearly and when sustainability initiatives are tied to overall business objectives. This makes it easier for procurement to create external initiatives with suppliers. Is there a way of positively incentivising more stringent health and safety standards? Supplier performance management does just that. This model motivates suppliers to move beyond minimum compliance standards by rewarding top-performing suppliers, based on a rich sustainability scoring system. This creates positive competition that ultimately gives buyers a better return-on-investment and allows them to stop focusing on chasing noncompliant suppliers. Instead they are able to invest their time and resources to work with engaged 11


S U S TA I N A B I L I T Y

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T H E N E C E S S I T Y O F S U S TA I N A B L E S U P P LY C H A I N S

suppliers to improve, innovate, create and maintain long term business relationships that ultimately support their communities economically, socially and environmentally, which in turn strengthens the business. What steps can companies immediately take to make progress in health and safety through procurement? Implementing a supplier performance management model is a great place to start and will set you up to execute on the following steps more effectively. From there, it’s important to educate suppliers and their employees on key sustainability criteria. Given the volume of new laws and regulations around this issue, it can be hard to understand where you are and aren’t compliant. Providing suppliers with a comprehensive CSR implementation guide that goes into the benefits of CSR practices, gives an overview of the core concepts, implementation guidance and recommendations based on the company’s specific size, location and sector can be extremely helpful. A well educated workforce knows

where they are vulnerable and are more likely to report problems and ensure that their factories are safe and secure. Helping and guiding suppliers as much as possible will benefit buyers immensely in the long-run. Another step businesses can take is to collaborate among industry peers and competitors. Together for Sustainability, the chemical industry’s sustainable initiative, developed and implemented a global program to assess, audit and tangibly improve sustainability practices within the industry’s supply chains. These kind of initiatives generally lead to higher standards and sustainability results for the entire industry. What solutions does your company offer to this end? EcoVadis offers reliable supplier sustainability ratings and scorecards covering 21 CSR indicators, 150 commodities and 110 countries. Some criteria we rank suppliers on include employee health and safety, working conditions, child and forced labour and labour relations. Suppliers are ranked based on how well they are doing in these 13


S U S TA I N A B I L I T Y categories and are given guidance on how to continuously improve. Our ratings foster an environment of collaboration, which we have found to be successful -- 70 percent of suppliers improve their sustainability score with each assessment. Buyers who access supplier rankings can make better decisions about which suppliers they should work with, and suppliers who are assessed by EcoVadis have a third party verification of their sustainability standards, with detailed feedback on how to improve, giving them more credibility and ultimately more buyers willing to do business with them. Companies are increasingly factoring CSR into their operations – do you see this trend continuing indefinitely? Absolutely. Sustainable operations are no longer nice to have, but a necessity for doing business and avoiding social and legal backlash. Sustainability is increasingly top of mind for consumers, and they will likely take their business elsewhere if a brand is found to be in violation of their ethical standards.

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In addition to increased social consciousness, the regulatory consequences that noncompliant businesses face are immense. EcoVadis’ barometer survey indicated that 90 percent of CPOs see sustainability as a priority in procurement functions, but we are just getting into the growth phase of this trend. Companies are increasingly implementing sustainability programs, and as those programs quickly mature, companies are expanding coverage to more of their spend and embedding it deeper in their processes. These processes include setting CSR rating targets for suppliers, buyers, categories and divisions, and creating reward schemes to motivate stakeholders to reach their goals. Even if companies don’t yet fully understand the social benefits of sustainability, we’re getting to the point where companies need to become sustainable if they want to keep business operations uninterrupted and protect their profit and overall financial health.


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S U S TA I N A B I L I T Y

Back to sch

The Supply Chain Sustainability School was launched across Australia in 2 sustainability knowledge and competency along the construction and infras chains. Here, we talk to CEO Robin Mellon on how the organisation suppor to-medium enterprises; providing e-learning, information and face-to-face for construction and infrastructure suppliers, contractors and service provi Writ ten by LUCY D I XO N


hool

015 to increase structure supply ts smalle training iders


S U S TA I N A B I L I T Y

Why do you think sustainability is important in the construction supply chain? It’s funny how the term ‘sustainability’ means different things to different people; if I asked you whether it was important for your organisation to have a ‘sustainable business model’, you’d say that it was essential. But for many people ‘sustainability’ is still a luxury, a nice-to-have, an extra or even an inconvenient chore. I think sustainability, in all its meanings, is about making sure that your organisation can sustain itself in the short-, medium- and longterms. That includes using resources efficiently, maximising opportunities while minimising costs, managing 18

September 2016

risks properly and ensuring that your business is resilient and your supply chains aware. Environmental, social and economic sustainability are now becoming intertwined, so opportunities to manage each one in a better way must be seen as opportunities to do better business. How are Australian construction companies embracing sustainability? There are many Australian construction companies that are fully embracing sustainability, completing ‘World Leadership’ Green Star-certified (GBCA) buildings and communities, ‘Excellent’ Infrastructure


Sustainability-rated (ISCA) projects, using Good Environmental Choice Australia (GECA) and Global GreenTag-certified products and services, and accessing the multiple free resources offered by the Supply Chain Sustainability School. These are the best in the industry, such as Stockland with its sustainable diversified property leadership or John Holland with innovative high-performance engineering, construction and services solutions; such commitments to completing sustainable projects in sustainable communities within a sustainable business model will leave a lasting legacy. However there remains many

large and small construction companies across Australia for whom sustainability is only a very small part of what they do, and within which sustainability is not seen as relevant to procurement teams, project managers or principals. Those are the organisations who will not have a resilient business model in ten years’ time. How can the construction industry use sustainability as a driver for innovation within the supply chain? A sustainable organisation – one that is truly economically, environmentally and socially sustainable – is one that uses its supply chain as a catalyst for 19


S U S TA I N A B I L I T Y innovation. An informed organisation regularly looks along its entire supply chain for areas of opportunity (how can we be more efficient, more streamlined, more resilient?) and areas of risk (what could go wrong, harm us, damage our reputation, impact upon the environment, hurt us financially or, worst of all, injure our people?). So the desire to be more environmentally sustainable, using less resources for example, can become a driver for innovation; how can we achieve the same outcome using less materials with fewer touch points. The desire to be more socially sustainable, ensuring that modern slavery touches no link of your supply chain for example, can become a driver for innovation; how can we get the buy-in of every person, internal and external, to promise that levels of global slavery are reduced. Supply chains are becoming a point of strategic difference for organisations since they offer a change to reduce costs, risks, waste and environmental impact whilst increasing competitive advantage, knowledge and social benefit. What can smaller construction product manufacturers/service providers do to ensure they don’t 20

September 2016

miss out on becoming part of a sustainable supply chain? There are a few priorities here, centred around knowledge, control and time. To begin with, nobody is expecting smaller firms to be instant experts on sustainability themes, but they do need to demonstrate a basic awareness of the key issues. Since these basic building blocks of sustainability education are available for free on the Supply Chain Sustainability School website (www. supplychainschool.org.au) there are fewer and fewer excuses for not knowing what’s going on. There’s a wealth of free knowledge and diverse learning options available, with the school adding more every month. The school will help organisations find out what they know, what they don’t know, what they really should know, and how they can access more information. Secondly, small organisations often feel that while they have control over their own staff they have little sway over the multiple links through their supply chains. But as Sam Walton, founder of retail giant Walmart, said: “There is only one boss – the customer – and he can fire everybody in the company from the chairman on down, simply by


HEADLINE

“A sustainable organisation – one that is truly economically, environmentally and socially sustainable – is one that uses its supply chain as a catalyst for innovation”

spending his money somewhere else.” Every small company has the ability to start asking questions; where things are made, and how; whether things are certified or verified, and if not why not; or whether companies around them have policies around vendor conduct, modern slavery or recycling of materials. So asking questions, and exercising as much control, influence and inspiration as possible to ensure supply chains become more sustainable is good. Ultimately, taking your business elsewhere may result in 21


S U S TA I N A B I L I T Y

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September 2016


BACK TO SCHOOL

better triple bottom line outcomes. And finally, smaller businesses are not expected to be instant experts, but setting a target with a medium-term range will be a good way to encourage improvements over time. For example, committing to improve sustainability knowledge on set topics by the end of next year, with a few relevant metrics, would be a good starting point. Regular, frequent, small steps towards improved knowledge are so much easier, cheaper and less timeconsuming than being forced to take large, sudden steps when government regulation or smarter markets catch up with you. And, of course, the Supply Chain Sustainability School can help with regular re-assessments of knowledge, and in turn recommend further sustainability learning options. What do you think is the biggest challenge, particularly in Australia, of embedding sustainability into the construction supply chain? The biggest challenge is the prevalence of short-term thinking, rather than medium- or long-term thinking. I totally understand the pressures behind current project deadlines (and

budgets), financial year accounting and modern electoral cycles, but these are all examples of short-term influences. When a building, community or infrastructure project is going to be around for 50-100 years (or hopefully more, depending on quality!), why would the deciding factor be whether a lower-performance product can be obtained $5,000 cheaper? Especially when the lifetime of environmental, social or economic benefits will probably far, far outweigh it. So many of the ‘arguments’ for sustainability, whether around solar panels, water tanks, better materials, energy- or water-saving initiatives, focus on medium-to-long-term paybacks. Which means we have a fundamental discord between decision-making priorities and lasting benefits. This isn’t something we can ‘fix’ immediately; it’s going to take multiple movements, and understanding around issues such as performance-based specifications, life cycle assessment (LCA) and whole-oflife analysis, social sustainability and non-political infrastructure delivery to really change how we design, construct, operate and recycle fit-outs, buildings, communities and infrastructure. It is rare that short-term fixes eventuate into 23


S U S TA I N A B I L I T Y long-term satisfaction, especially with low levels of supply chain knowledge. And this knowledge, or lack of it, is a growing risk. According to Deloitte in its 2016 Chief Procurement Officer (CPO) survey, whilst ‘procurement risk is on the increase’, cost reduction remains the top priority for CPOs and ‘62 percent of CPOs do not believe their teams have the skills and capabilities to deliver their strategies’. These figures are echoed in this year’s Hackett CPO study, which shows that although ‘market risk is increasing’, the top priority for 2016 is still to ‘reduce and avoid procurement costs’. How does the Australian approach to sustainability measure up to that of other countries? There are wonderful, awe-inspiring, magnificent parts, and then there are shameful, embarrassing, cringe-worthy elements to Australian sustainability approaches. In some respects Australian cultures are very much aligned with sustainability; the essence of vast distances, scant resources, extremes of climate and relatively few people spread across the world’s driest inhabited continent seems to align with the core tenets of sustainability. I’ve 24

September 2016

seen many buildings and communities that play to these strengths; making best use of the water, energy, resources, biodiversity and environment, as well as the technologies developed to help overcome labour shortages and extremes of climate. But in other regards, the way in which Australians don’t recycle much (despite having to import so many things), don’t capture much rainfall (despite being the driest inhabited continent), don’t ride-share very much (despite the number of single-occupant car trips made) and don’t capture much solar or wind power (despite the numerous hours of sunshine and wind) is just humiliating. And how does construction measure up compared to other industries? I have been fortunate enough to travel extensively over the past decade, looking at other countries’ efforts in the built environment sustainability space. There are many countries doing extraordinary things through their building, infrastructure, supply chain and procurement sectors. Germany has made some amazing advances in energy efficiency and renewable energy production, with


HEADLINE

buildings that reflect this (see DGNB). Across Latin America there are some great examples of infrastructure being completed to best practice sustainability principles, such as the Mato Grosso do Sul State Road Transport Project in Brazil, in which application of more sustainable approaches to erosion control saved about US$46 million, or the roadbuilding project through a valuable biodiversity corridor in the Gran Chaco region of Argentina that included special wildlife crossing/ connectivity points with eight

underground and three canopy wildlife crossings. The UK has been targeting more sustainable supply chains throughout construction and infrastructure, with the original Supply Chain Sustainability School launched in the UK in 2012 by Action Sustainability with the groundswell of activity around the London Olympics. And the procurement practices in the USA have shifted tremendously around the changes specified by the US Department of Defense, whose small and steady improvements in sustainability criteria send massive 25


S U S TA I N A B I L I T Y ripples through US and global procurement and supply chain networks. In fact, the US Department of Defense’s (DoD’s) Sustainable Product Purchasing program states that ‘the Department’s vision of sustainability is to maintain the ability to operate into the future without decline either in the mission or in the natural and manufactured systems that support it. DoD embraces sustainability as a means of improving mission accomplishment’. However Australia is definitely leading the way in ‘putting it all together’, especially within the construction sector. Maybe it’s that with a (relatively) small population it’s possible for innovation to spread quickly, maybe it’s that with eighteen different climate zones there’s no ‘one-size-fits-all’ approach and so project teams learn to adapt their own unique solutions. Overall I’ve seen Australian projects assembling the energy, water, materials, emissions, waste, transport, innovation, biodiversity, health and safety, education, workplace and social solutions in a way that creates truly world-leading developments.

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Can you give a few examples of Australian companies you think are doing great work in this field? Three good examples of organisations doing great work would be Mirvac, Laing O’Rourke and Sustainability Victoria, each of whom are Founding Partners of the School. Mirvac is one of the leaders with its ‘This Changes Everything’ strategy, engaging businesses with Vendor Codes of Conduct and Supplier Annual Reports, and engaging people with its ‘House with No Bills’ initiative and diverse community projects. Laing O’Rourke is investing heavily in innovation through its Engineering Excellence, Digital Engineering, Product & Process Innovation, R&D and Skills & Education initiatives. And Sustainability Victoria, the Victorian statutory authority that facilitates and promotes environmental sustainability in the use of resources, has produced an amazing range of services and advice for households, schools, communities, businesses and local governments. These organisations are the ones writing the future of where and how we do business.


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LEADERSHIP

The court of public opinion and the Modern Slavery Act Supply Chain Digital explores the steps companies can take to ensure that their supply chains are compliant with the UK Modern Slavery Act

Writ ten by : DARREN R O I S E R , PA R T N E R ; JOSIE GREENER , A S S O C I AT E ; A N T H O N Y LYO N S , TR AINEE SOLICITOR , KING & WOOD MALLESONS


LEADERSHIP

“21 million people around the world are currently subjected to some kind of forced labour and in the UK alone that figure is estimated to be around 13,000”

ACCORDING TO THE UN, modern slavery and human trafficking is the second-largest criminal industry in the world, with the International Labour Organisation putting annual profits from forced labour at $150 billion globally. 21 million people around the world are currently subjected to some kind of forced labour and in the UK alone that figure is estimated to be around 13,000. Consumers, stakeholders and governments are more sensitive than ever to such issues and sectors particularly at risk/ under scrutiny 30

September 2016

include retail, agriculture, construction and the extractive industries. The Modern Slavery Act 2015 (MSA) is the first piece of legislation to come out of Europe specifically aimed at tackling modern-day slavery and human trafficking. Among other things, it requires businesses over a certain size operating in the UK to prepare and publish a “slavery and human trafficking statement” in each financial year. This reporting requirement has a global reach requiring any commercial organisation carrying on a business


T H E M O D E R N S L AV E R Y A C T

or part of a business in the UK, with a turnover of over ÂŁ36 million, to report on steps they are taking to “clean upâ€? their supply chains. Businesses should therefore be preparing now for a year that will see pressure for increased transparency across various sectors. What does the statement need to cover? The statement must describe the steps an organisation has taken to ensure that there is no slavery and human trafficking in any part of its business or supply chains,

or alternatively, state that no such steps have been taken. While there are no specific requirements regarding layout, content or level of detail, MSA guidance encourages clear and informative statements. In practice, the first statements for many companies will be conservative and the inclusion of key performance indicators will go some way to helping champion improvements achieved in future statements. Who must approve the statement 31


LEADERSHIP and where must it be published? The MSA requires that the statement be approved at the highest level: by the board of directors in the case of companies; and by the members in the case of limited liability partnerships. The statement must then be published on the organisation’s website with a link in a prominent place on the homepage. For businesses with no website a copy must be available on request. When will reporting begin? Businesses with a year-end of 31 March 2016 or later will be the first to be required to publish a statement. The statement itself should be made as soon as reasonably practicable after the end of the financial year to which the statement relates (within six months is encouraged). What are the consequences of failing to comply? The Secretary of State may seek a High Court injunction to force compliance with the reporting requirement, with any subsequent failure to comply putting an organisation in contempt of court. The real risk in non-compliance however is 32

September 2016

likely to lie in public and media scrutiny and the reputational implications of failure to comply or a statement that no steps have been taken. Naming and shaming by rights groups, such as the Asian Floor Wage Alliance, cannot be underestimated. In the US, the world’s leading supermarket chain was boycotted by the Netherland’s biggest pension fund (Algemeen Burgerlijk Pensioenfonds) in view of their employment practices resulting in a sharp drop in share price. Baptist World Aid has gone so far as to galvanise the “court of public opinion” in the form of the Australian Fashion Report which gives clothes manufacturers a grading from A to F based on efforts to improve workers’ conditions. What practical steps should business be taking now? It is critical that businesses know their supply chains. This will involve getting to grips with the operations of the business and the way it procures goods/services. To assist in the preparation of the statement the following should be considered: • an information-gathering


T H E M O D E R N S L AV E RY A C T

exercise to determine what measures are currently taken to ensure that slavery and human trafficking is not taking place within an organisation; • the introduction of internal policies and training; • ensuring that the business can map all its suppliers and establish communications with them to find out about any measures they take to avoid modern slavery and human trafficking; • a risk assessment of the business and its supply chains to determine which parts are most at risk; • where risks are identified, the preparation and implementation of concrete measures to mitigate that risk and to strengthen existing measures. These might include ceasing to deal with certain businesses altogether, or other steps such as strengthening audit or inspection regimes; 33


LEADERSHIP

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T H E M O D E R N S L AV E RY A C T

• the review of any audit regime in place relating to suppliers and consideration of how to strengthen this (e.g. through pre-contractual screening, selfreporting, training, inclusion of contractual provisions and increased dialogue); and • whether to include wording which prohibits the use of forced or trafficked labour in commercial agreements that have a connection with a supply chain. What tools are available to combat modern slavery? There are a range of tools that can assist businesses with assessing and managing risk, and with compliance more generally. In the absence of a mandatory requirement for companies to upload their statements to a central register, the Business & Human Rights Resource Centre has collated statements in a free searchable database to help businesses appreciate the level of diligence their sectors have adopted. To date, the Resource Centre claims

only 22 of 75 statements collected so far comply with MSA. The Global Slavery Index by the Walk Free Foundation ranks 167 countries according to a wide range of factors that can assist businesses to inform their risk assessments by looking at the rankings of countries in which they operate or which otherwise form part of their supply chain. Additional information specific to particular typologies, individuals and companies is becoming significantly more accessible through professional third party information providers and specialist bodies. Dun & Bradstreet has released a Human Trafficking Risk Index incorporating information on over 240 million companies worldwide. Conclusion Achieving full and proper compliance with the reporting requirement in the MSA will not be a straightforward or quick process. Swift action should be taken by those businesses subject to the requirement to ensure that they are ready both to produce the statement itself and to deal effectively with subsequent scrutiny by stakeholders, pressure groups and, quite possibly, competitors seeking an advantage. 35


SUPPLYING THE WORLD’S FINEST MOLASSES Written by Tom Wadlow Produced by Heykel Ouni


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MIDDLE EAST

Al Fakher Tobacco is the global leader in the production and distribution of high quality molasses products, driven by a supply chain operation on a path to excellence

Y

ou might be forgiven for thinking that a global leader in the tobacco industry had been built on a foundation stretching back several generations. For Al Fakher Tobacco however, the rise to the world’s most renowned tobacco molasses company has been a rapid one. Formed in 1999 and owned by Jordanian parent Al Eqbal Investment Company, the UAEbased organisation is now present in 150 countries with a team of 550-plus staff of 20-plus different nationalities. Othman Tahboub is Al Fakher Tobacco’s Senior Director

of Supply Chain. With more than 15 years’ experience in the procurement industry, he joined the company in 2007 as a Commercial Manager before heading up the supply chain operation in June of 2015. His intricate knowledge of the wider business strategy is critical in the way supply chain operations are approached, allowing the company to differentiate itself from the competition in all of its markets. “Al Fakher differentiates itself in many markets through quality,” he says. It’s a very competitive market out there, that’s why we always need to provide our sales

w w w . a l f a k h e r. c o m

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Contract Logistics across the

UAE – SAUDI ARABIA – QATAR –


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• Warehousing and Distribution • Packing • Project Management • Airfreight • Ocean Freight • Road Transport

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teams with the best quality and Supplier landscape best priced products possible Al Fakher Tobacco’s supply chain to become more competitive. landscape is made up of two world“We also need to be flexible class manufacturing facilities in the in order to meet sudden peaks UAE, one dedicated to the local in demand, while at the same market and the other, larger site time offering consistency in our producing for export. The company product quality. All of this helps also hosts a network of warehouses the company to become across the country containing more competitive in tailored storage systems our markets.” for particular products Al Fakher’s and materials product range used. And it is the consists of more suppliers of such than 100 flavours materials, and across standard, having visibility over Number of employees gold and special the entire network, at Al Fakher Tobacco edition ranges, that is the number one with accessories priority for Tahboub. such as high quality “The most important part glass shisha also sold worldwide. of our supply chain operations is “We have also entered the vapour choosing the right suppliers,” he market which is massively popular explains. “If you choose a good one in the UK and the USA, which your life will become much easier. makes it crucial that we are flexible Al Fakher is risk certified and we to meet ever-changing customer work with top risk management demands with new products and providers in the world to identify, variations,” Tahboub adds. assess, and mitigate risks. “We have to diversify our

550

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MIDDLE EAST

w w w . a l f a k h e r. c o m

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With over 45 years of experience, Cosmoplast is a leading plastics manufacturer that inco Founded in 1970, Cosmoplast pioneered the supply of building materials, infrastructure p

At the outset, Cosmoplast started with the production of transport crates and polyethylene bag and well casing manufacturer. Renowned for their product range that includes house ware prod coolers and iceboxes that are sold in retail outlets, hypermarkets, supermarkets, sporting good

Services: Molded Products Infrastructure Pi

Head Office Industrial Area # 1, P.O. Box 6032, Sharjah, UAE., Tel: +9


orporates its values of service and reliability with quality products. products and consumer goods in the emerging markets of the Middle East.

gs and today the company has grown to be the Middle East’s largest and most diversifi edpipe ducts, plastic thermoformed disposable cups and containers, outdoor furniture and a full line of ds, hardware and speciality stores in the UAE, GCC and 35 countries worldwide.

ipes Plumbing System Disposable Products

971 6 5331264, Fax: +971 6 5331917, Email: cplast@cosmoplast.com


“If you can’t develop people, then how can you develop a business forward?”


MIDDLE EAST

supply base, that’s why we work with multiple suppliers around the world to minimise supply risk. Our suppliers are the best in their fields, profitable and add value to what we do. “Supply chains are more complex than ever and we need visibility of the whole chain to make sure we comply with regulations across borders, for example with sustainability and CSR. We have regular meetings with suppliers and get to know them inside out.” Shipping providers handle the inbound logistics operations, with 85 distributors making sure the products reach wholesalers and retailers in the 150 different national markets. Al Fakher’s team of marketing and sales managers frequently touch ground in these different territories, acting as a vital point of direct communication and scouts for new business opportunities.

Continuous improvement Suppliers and partners aside, Al Fakher is also embarking on its own internal continuous improvement programme in order to achieve supply chain excellence. For example, it is investing in a new warehouse management system to enhance analysis of inventory data, a move which should result in quicker issuing and movement

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A L FA K H E R T O B A C C O

of goods and an improved cash conversion cycle. The most significant continuous improvement project, and what the whole of Al Fakher’s supply chain operation is aiming to reach, is platinum standards. “We are aiming is to achieve platinum standards within three years, which would recognise us as being on a par with the procurement departments in” in the biggest multinationals Tahboub says. “Such standards are very efficient and strategically aligned. There are more than 20 criteria to achieve this, five of which are leadership and organisation; strategy; people management; processes, procedures, systems and performance, measurement and management. Even within these there are many more subcategories. This is very focussed way for us to improve.”

success to date, is Al Fakher’s loyal employee base. Across all business departments employees benefit from a range of incentives and initiatives, resulting in a 99.5 percent retention rate. These policies are grouped into a triangle, at the top of which is a positive, safe and comfortable working environment.

We make a difference in the supply chain. We are a prominent regional supplier of oleo, functional, detergents, paint, cosmetics, tobacco, dairy farms and specialty chemicals. Selling in to 23 countries around ME and Africa. Representative of WILMAR (World # 1 in agribusiness)

Custodians Crucial to attaining excellence, and indeed crucial to the company’s

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September 2016

www.al-behar.com / ammar.rafie@al-behar.com


MIDDLE EAST

The second is competitive packages, from salaries to benefits like accommodation, transport and profit sharing. “The third part is development and training, and this is why we have a high retention rate,” Tahboub adds. “The company invests a lot in internal and external training, case studies, site visits, active learning, and experiential learning. We never look at this as a cost but an investment – if you can’t develop people then how can you develop a business forward?” As well as looking after its people, Al Fakher is also

increasingly becoming a custodian of the local environment in which it operates. “We are also working on a waste management programme to make sure we are known as a sustainable producer as well as a worldclass one,” says Tahboub. The waste management programme involves a new water treatment facility which cleans water before it reaches sewage works. Other initiatives include a tobacco dust capturing system and a rubbish compressing systems to cut down on waste output.

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Q&A

CEO Samer Fakhouri Samer Fakhouri is the CEO of Al Fakher Tobacco. He is also EICO’s chairman of the board. In addition to his position in Al Fakher and EICO, Fakhouri held the position of General Manager of the International Tobacco & Cigarette Co. (ITC) in Amman – Jordan since 1995 and until EICO was founded in 2008. Under his command, ITC was sold to Philip Morris International in 2011. Fakhouri’s experience in tobacco business extends beyond two decades. He is the driving force behind EICO’s acquisition and subsequent expansion of Al Fakher in 2006. Fakhouri holds a BBA from Oklahoma State University gained in 1993.


How has Al Fakher progressed since you arrived? Al Fakher has experienced tremendous growth since it was acquired in 2006. Distribution networks didn’t exceed 20 countries. Our distribution network now encompasses 85 countries and with presence in 150+ countries. Manufacturing capacity has increased tremendously. Usage of technology was minimal compared to a high usage of best technology now. Al Fakher have partnered with the world best technological providers to combine their technologies with our platform setup to create complete solutions tailored to fit our high-end requirements

What defines Al Fakher Tobacco? Leadership. Our Leaders are humble, they take their ego away, their ambition is for the larger cause, Visionary, adaptable to change, and can be change catalysts. Mentality. Our team have a winning mentality. We believe that Success is being the best in what we do and that Success is choice and discipline. The team. Our team is empowered, motivated, engaged, enhanced, and enabled. We are a team, not just a group of people. Environment of truth and transparency. We have a climate where truth and not compliments are heard. People can speak up freely and will be heard. Simplicity. We simplify work. We don’t complicate things or processes. We work smarter, not harder. Culture of discipline. People operate with freedom in a system of responsibilities. In a culture of discipline, people do not have "jobs", we have responsibilities.

Tell me about the wider business strategy. What are your aims and ambitions for the coming years? Al Fakher focuses in maintaining its market leadership, through sourcing top quality ingredients, to produce premium products, and sell through a competitive pricing strategy, supported by aggressive marketing. We will focus on strengthening its premium offerings, unlocking new markets and M&A opportunities going forward, while maintaining operational and supply chain excellence.

How important a role does supply chain play in formulating this strategy? I t’s all about Efficiency, and flexibility. Our supply chain is an essential element to our

operational excellence. Our efficient supply chain enables al Fakher to be more competitive in the market place and helps controlling costs which maximizes our profits. Our flexible supply chain always aims to speed up products flows. It is fast in detecting and responding to short term requirements and in adapting to new strategies to support change in overall company or changing market dynamics.

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Othman Tahboub Senior Director of Supply Chain Othman Tahboub is the Senior Director of Supply Chain, responsible for the procurement of all materials and services for the company, raw materials and finished goods warehouses, material management and in-bound logistics. He joined Al Fakher in 2007 as a Commercial Manager. Prior to joining Al Fakher Tobacco, Tahboub spent seven years at the International Tobacco & Cigarettes company in Amman, Jordan, where he held a variety of roles in production, data analysis, procurement, shipping, and logistics. Tahboub has an MBA from Hult International Business School in Boston and is a full member MCIPS in the Chartered Institute of Procurement & Supply in the UK.


MIDDLE EAST

Bright future Al Fakher Tobacco’s strategy revolves around maintaining its position as a global industry leader through maximising its competitive advantage, namely quality of product in vast array of guises and flavours costed at competitive prices. “In our strategy framework, every department has a goal,” Tahboub says. “We know the molasses industry will continue to grow, as opposed to cigarettes industry which is a declining sector. Whether its quality management, operations, HR or supply chain management, the target is to achieve excellence and sustain our competitive advantages and core competencies by providing customers with the best products possible. Achieving competitive advantage is difficult, but sustaining it is even harder and we cannot stop at where we are now.”

Tahboub is also passionate about encouraging more talent to pursue a career in the supply chain at large, especially given how complex supply chain processes have become at global companies such as Al Fakher. He concludes: “For anyone looking to pursue a career in supply chain I would emphasise the importance of being an effective communicator, a change catalyst and a positive thinker. It is a stressful world but you really have to keep spirits high and motivate yourself and others because we deal with many stakeholders in this business. “I would also stress the need to aim high with certifications and executive education and to also get involved with other areas of the business, as this will help to understand the requirements of the supply chain even more. This is what is happening at Al Fakher Tobacco.”

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Making moves in Africa’s mining industry Written by Wedaeli Chibelushi Produced by Charlotte Clarke


BARLOWORLD EQUIPMENT

We speak to Daisy Kgosi, Head of Procurement at Barloworld Equipment, about procurement, the movement of mining and construction tools, and how the two areas combine

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frica is renowned for its burgeoning mining sector. Mining processes and big gems snare media attention, but there is less public focus on the movement of crucial equipment. How much do you know about the companies that transport essential mining and construction equipment in and outside of Africa? Daisy Kgosi, Head of Procurement at Barloworld Equipment shares a detailed insight into the supply chain aspect of transporting this equipment. Barloworld Equipment is the sole dealer for Cat earthmoving machines and other mining and constructing equipment in several countries. It operates in Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia and the Democratic Republic of Congo’s Katanga province. The company has existed for over 100 years and is supported by 62 billion rand firm Barloworld Limited. Team leader As Head of Procurement, Kgosi manages the procurement of indirect goods and services. She tells us about how she got this role. “I started my career in the automotive industry in a supply chain training environment,” Kgosi says. “After, I moved to management consulting, where I was exposed to underground mining supply

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chains. My role evolved from just management consultant into strategic sourcing specialist for underground mining equipment. Through this experience, I was then recruited into Barloworld Equipment.” Kgosi was a Strategic Sourcing Manager before landing her current role. Kgosi leads one of two supply chain departments. “We’ve got two supply chain departments: we have a supply chain related to the distribution of Cat equipment. This does not fall within my responsibility. My role is more to do with all categories of goods

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and services that are supporting the organisations’ processes,” Kgosi explains. Kgosi’s supply chain enables business to support the customers, ensuring that Barloworld is able to deliver the services required. It covers facilities and transportation of parts to customers and the sourcing of third party contractors. Well-versed in procurement, Kgosi describes wider industry trends. For example, the supply chain market is simplifying buying technology. “You have easy access to your catalogue; you can actually


AFRICA

log on to your ERP system and have live information in terms of what your approved supplier base is able to offer you as a business. Especially in a changing market environment, that is one things that we are struggling with.” Keen perception Barloworld Equipment keeps up with the industry through innovative projects like Vision 2020. “Vision 2020 is about inspiring a world of difference as an organisation and creating shared value that makes a positive difference for all our stakeholders.

It does this by building a world class business generating superior shareholder return,” Kgosi explains. “From a procurement perspective, our vision is to create a procurement function which is supported by high performance procurement capabilities. We do this to ensure that we add value to the wider business and also to ensure recognisable impact on our company’s bottom line. That’s how we align with our corporate strategy.”

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Augustino General Construction and Labour Hire Augustino Construction and a Labour hire is a company that was founded on the 23rd August 2008.We specialise in metal Fabrication and Mechanical Engineering. We have been conducting Dragline shutdowns from 2011. We have grown from strength to strength with initially a team comprising of 60 employees to our current level of 640 employees. Our mission is to deliver the best quality, safe and affordable service to our clients at all times. We strive to be the unquestionable dragline shutdown team of choice on the market. We also empower our staff through numerous training programmes and are involved in various community development projects.

Contact: Address: 18 Sunflower Street Pineridge Witbank 1039 Tel: 082 365 2184 | Fax: 013 6927233 Email: augustinoconstruction@yahoo.com www.augustinoconstruction.com


AFRICA

5,000 Building bonds Barloworld Equipment doesn’t stand alone; it works closely with likeminded suppliers. “We have regular engagements with all our service providers and to get to a situation where it’s a win-win relationship,” Kgosi states. To Barloworld Equipment, suppliers are invaluable partners. It’s not in the company’s interests to drive its suppliers’ prices down and risk running them out of business. Rather, the firm makes the effort to thoroughly understand its suppliers and in turn, give them the opportunity to understand Barloworld Equipment. Kgosi says: “In terms of innovation we heavily rely on our suppliers to say ‘okay’. For example, there is a new innovation that is available in the market and we believe it can create savings within

The total number of staff working at Barloworld Equipment

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Cape Town | Tel: +27218528250 | Tel: +27119740932 | www.sllogistics.co.za SL Transport is an efficient Overnight Service from Cape Town and Johannesburg to the West Coast Mining Industry. At present we are the leading Overnight Transport Company on this route and offer the most reputable and professional services throughout the country. Our Emphasis is on delivering the freight entrusted to us on-time and safely.

“VISION 2020 IS ABOUT INSPIRING A WORLD OF DIFFERENCE AS AN ORGANISATION AND CREATING SHARED VALUE THAT MAKES A POSITIVE DIFFERENCE FOR ALL OUR STAKEHOLDERS” 62

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AFRICA

our customers’ businesses. These are the type of suppliers we look for and maintain relationships with.” However, not just any company can be a Barloworld Equipment supplier. A supplier must align with the company’s core values. “It’s a little bit difficult to work with somebody that doesn’t fully align with your values,” Kgosi affirms. Barloworld Equipment also looks for suppliers that are progressive in their use of technology. They also

do a lot of business with small to medium enterprises (SMEs), because they believe that not only do SMEs have a reduced turnaround time, they have a large impact on Barloworld Equipment’s economy. Kgosi adds, “you get to work directly with the CEO or the owner of the business as opposed to bigger corporations.” Barloworld Equipment seeks out suppliers that are interested in the economic transformation of Africa.

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Looking ahead Along with acquiring and maintaining relationships with suppliers, Barloworld Equipment has several other plans for the future. “We plan to step up our sustainability efforts. We will ensure that we get the right skills and capabilities in-house and also develop a governance framework that will ensure sustainability in the long term. I think a combination of the right skills, the right governance framework and the right technology will ensure sustainability,” Kgosi says. The organisation also wants to enhance its current way of doing business. We want to ensure efficiencies, visibility and transparency of spend. “We are currently busy with our procurement transformation Barloworld programme; part of our overall business Equipment’s annual revenue transformation,” Kgosi reveals. Barloworld hasn’t started this programme yet, but Kgosi tells us it’s in the pipeline. “It’s taken us longer than we expected, but it will transform the way we do procurement because we have done an overall assessment of all our activities and we have identified a lot of opportunities where we can create value and add value to the entire business. That’s one very exciting project we’re working on”.

$2

billion

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Procurement

strategy pays off for Wyndham

In the hospitality industry, it’s the smallest details that can leave the biggest impact. The Wyndham Vacation Resorts Asia Pacific procurement team delivers on value, quality and price on an international scale – and they do so without sacrificing that personal touch. Written by Sarah Megginson Produced by Erika Kracer


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Key People

M

alcolm Parker, Director of Procurement at Wyndham Vacation Resorts Asia Pacific, is always focused on the bigger picture, but he also knows only too well just how important the finer details can be. Starting his career in hospitality as “the person who checked and stocked the hotel mini bars”, Parker says the polished outcome that guests experience when staying at Wyndham resorts is only possible due to the efforts of hundreds of people collaborating behind the scenes. “I have seven people on my team, but overall we’ve got close to 550 people in the Queensland office supporting the Wyndham Hotel Group and Wyndham Vacation Resorts Asia Pacific, our vacation ownership business,” Parker says. “The company has grown really very quickly; 12 years ago, we had half a floor. Within a few years we had employees spread across five different buildings. Then five years ago we had to move into our current building, and our growth has continued ever since.” Parker’s group, which procures and purchases all operating goods and services, capital purchases, furniture, fixtures and equipment, has been particularly busy recently, developing its new ‘Procure to Pay’ solution. It aims to automate every step of the process, from raising a purchase order and receiving an invoice to approving payment, with an electronic process

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Malcolm Parker Director of Procurement Malcolm Parker joined Wyndham Vacation Resorts Asia Pacific in 2004 as Director of Procurement, bringing with him more than 20 years of hotel industry experience. Malcolm is based at the Wyndham Corporate Centre on the Gold Coast and is responsible for a team of seven, overseeing the procurement functions for Wyndham Vacation Resorts Asia Pacific and Wyndham Hotel Group in the South Pacific and South East Asia regions.. He joined the company after relocating from New Zealand, where he worked in a similar role with Millennium & Copthorne Hotels.


“We were consider: w look lik

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e always projecting ahead to what is our business going to ke in five to 10 years’ time?” – Barry Robinson, President and Managing Director

Barry Robinson President and Managing Director

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Barry Robinson has been the President and Managing Director of Wyndham Vacation Resorts Asia Pacific since September 2003. In 2009, Barry launched Wyndham Hotel Group in the South Pacific. Barry has been the driving force behind many significant new property acquisitions, enhanced resort developments and has brought a renewed customer focus to the business. Under his leadership, both Wyndham Vacation Resorts Asia Pacific and Wyndham Hotel Group in the South Pacific have expanded their portfolios in the Australian, New Zealand and South Pacific regions and are poised to actively expand into new Asian markets. Appointed President and Managing Director of Wyndham Hotel Group South East Asia and Pacific Rim, effective January 1, 2015, Barry will continue to lead the expansion of both Wyndham Vacation Resorts Asia Pacific and Wyndham Hotel Group South East Asia and Pacific Rim across the region. Barry oversees a property portfolio of close to 100 hotels and resorts. With more than 30 years’ hospitality experience, Barry has a vast knowledge of the hotel and resort industry – from management, operations, development, branding and franchising. He has held a number of senior leadership positions in the Asia Pacific region and has worked for some of the world’s largest hospitality companies including Swiss-Belhotel International, Swissôtel Worldwide Partner Hotels and Choice Hotels International.


S U P P LY C H A I N

Key People

Liam Crawley Chief Financial Officer that promotes full end-to-end visibility, thereby simplifying the complexities of procurement. “Traditionally the system has been very paper-based; we’ve had to raise a purchase order, get it approved and then authorise payment, which is a process that can take up to three or four weeks,” Parker explains. “Under the new system, assuming the right process is being followed, this is reduced down to a matter of days. It’s a hosted solution and it will provide some very good efficiencies.” The software system will streamline payment procedures and smooth out procurement processes across international sites. It will eventually be implemented across the entire business, including the hotels, vacation ownership reports and the corporate head office. “We’ve partnered with Birch Street Systems, a big player globally in this space, and we’ve been working with them on the complexities of our business for around eight months to get this right,” Parker says.

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Liam Crawley joined Wyndham Vacation Resorts Asia Pacific in 2008 as Chief Financial Officer. He leads a team of more than 140 employees providing centralised support services and is responsible for all aspects of accounting, financial reporting, planning and analysis, payroll, procurement, internal audit, information technology, treasury, taxation and the consumer financing division within the Asia Pacific region. Liam has over 20 years’ experience as a senior finance executive at corporate, divisional and regional levels within publicly listed corporations. Prior to joining Wyndham, he commenced his career in Melbourne, Australia with Deloitte Touche Tohmatsu and later held senior finance positions at Mayne Group Limited in Melbourne in the corporate office, asset management, group finance, healthcare, diagnostics and logistics. He later served as the regional finance head for the Americas based in New Jersey (USA) - for Mayne Pharma Limited and then served as Global Vice President of Finance and Group Financial Controller, based in their London global office. He was responsible for the group’s ASX financial reporting, financial control and led a global finance and accounting team of 125 finance professionals throughout the Asia Pacific, EMEA and US regions. Liam is a member of Chartered Accountants Australia and New Zealand (CA), a Fellow of the Australian Institute of Company Directors (FAICD), and a member of the AICD Gold Coast Regional Committee.


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S U P P LY C H A I N

“There are a number of different aspects, such as tax codes, which need to be considered. It has been a long process but we’re now ready to launch, starting with our South Pacific sites.” This latest initiative has been the primary focus of Parker and his team for the last 12 months or so, but he admits it is just one of a number of areas where he is focusing his attention. As he manages procurement for Wyndham’s two different business arms – the vacation ownership (or timeshare) properties and the franchise-owned hotels – he must keep on top of two different procurement strategies, as each business model has unique requirements. Wyndham Vacation Resorts Asia Pacific develops, markets and sells vacation ownership interests across a network of 27 resorts in the Asia Pacific region. Meanwhile, the Wyndham Hotel Group, as part of the Wyndham Worldwide family of companies, is the world’s largest hotel company, with over 8,000 hotels under brands including Wyndham Hotels and Resorts, Ramada, Days Inn, TRYP by Wyndham Super 8 and Howard Johnson. Parker’s territory encompasses close to 100 of those properties across South East Asia and the Pacific Rim. This means Parker provides procurement support across a range of functions, to provide value to a range of stakeholders

Key People

Matt Taplin Senior Vice President Resort Operations and Property Development Matt Taplin joined Wyndham Vacation Resorts Asia Pacific in late-2012 as Senior Vice President of Resort Operations and Property Development, bringing with him more than 25 years of hotel industry experience. In his role with Wyndham Vacation Resorts Asia Pacific, Matt is located at Wyndham Corporate Centre on the Gold Coast and is responsible for a team of approximately 540 employees who work in resort operations and property development across Australia, New Zealand and Fiji. He joined the company after relocating from New Zealand and has extensive experience in a variety of roles across different locations, with a proven record of building and leading large and diverse hotel teams. In his previous role as Vice President of Operations at Millennium & Copthorne Hotels New Zealand Ltd, he was responsible for the overall operation and performance of 30 owned, managed or franchised hotels with more than 1,200 employees.

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Established in 1949, Higgins is Australia’s and New Zealand’s premier commercial painting and building services contractor. We have completed projects for all the major Hotel & Resort Groups which includes full internal and external repaints, render repairs, abseiling access and building wash downs. The Hotel & Resort industry is fast paced and often requires timing strategies to meet project needs without disrupting the supply of services to clientele.

P 1300 HIGGINS

info@higgins.com.au

Whether we are working on small or large-scale projects, our focus is on setting the standard for exceptional services. . Central to this is our commitment to consistency which helps us to deliver predictable outcomes for our customers, regardless of building type, location or age. That is why international Hotel brands and small, local organisations trust us to deliver their spaces on time, at quality and on budget.

www.higgins.com.au


S U P P LY C H A I N

based on volume and economies of scale. “We were predominantly vacation ownership, which was quite simple in itself, as it enabled us to ensure consistency of product and manage supply. We are now also looking after the hotel group’s interest, which covers both managed and franchised hotels,” he explains. “We also have a mixed-use model, where we have timeshare apartments and hotel rooms within the same building. Across the whole portfolio there are a lot of variations and moving parts to consider.” Now overseeing around $190 million per year worth of supplier contracts across the Asia Pacific region, Parker says there is “a lot of ground work” behind the scenes to promote seamless processes at the front end. “What we’ve got here is a very large direct spend, so that really helps in a lot of ways. With our resorts, we have a six to seven-year cycle where we refurbish on a cyclical basis. There are always three to four of these refurbishments going on at any one time, so

Year founded

2000

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there’s an ongoing relationship going projecting ahead to consider: what with some key suppliers,” Parker says. is our business going to look like in “As a result of this, we’ve got five to 10 years’ time?” he says. strong compliance and we’re “We wanted to work with supply able to provide our franchise partners who were keen to come on customers with that added value that journey with us and who had the as well as purchasing power.” footprint to deliver on an international When he joined Wyndham Vacation scale. Ecolab, Xerox and Samsung are Resorts Asia Pacific in 2004, good examples: they’re global Parker adds that there players. They’ve got were only three or people on the ground four properties to in various countries, consider; now which makes it Approximately with Wyndham a lot easier for Hotel Group us when we operating in move into a the region, new country, employees at there are more rather than Wyndham Vacation than 100. Their going in cold.” Resorts Asia Pacific position now has Developing a not been arrived at by range of strategic accident, but is instead the alliances and relationships culmination of a long and considered with suppliers has been paramount approach that Parker has been to their success in building a positive building towards for over a decade. brand and guest experience, as it “We have always been looking allowed them to leverage group buying toward the future. We knew where power without sacrificing quality. we were going, so we put the work in However, fostering seamless with the suppliers that we partnered supplier partnerships is one side of the with. For example, we were always coin when managing procurement for

2,000

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W Y N D H A M VA C AT I O N R E S O R T S A S I A PA C I F I C

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“We’ve got strong compliance and we’re able to provide our franchise customers with that added value and that buying power” – Barry Robinson, President and Managing Director

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an international hotel chain; the other side involves factoring in each market’s unique characteristics. “There are so many different countries we’re working in, and they each have their own systems and local customs, so we do have to be very mindful of that,” Parker says. “About 18 months ago we were appointed to look after South East Asia, which had previously been handled out of China, and fortunately we get great support out of our Singapore office in this regard. They’re on the ground working hard and that helps us a great deal when we’re looking to initiate any procurements in those regions.” He also leverages the resources of Wyndham Worldwide, based in the United States, which boasts a strategic sourcing and an international team that includes Parker and his colleagues in the UK, China and Latin America. “We communicate on a regular basis and push out global initiatives where we can,” he says. Whether working out of Wyndham’s Asia Pacific headquarters on the Gold Coast, collaborating with Parker’s global counterparts in various overseas markets, or leaning on their team in Singapore, one thing is clear: Wyndham’s extraordinary success in delivering superior procurement value and support is a team effort.

$

250 million Wyndham Vacation Resorts Asia Pacific annual revenue

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Written by Nye Longman Produced by Charlotte Clarke

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ZALORA GROUP

With a footprint in seven Southeast Asian countries, ZALORA is transforming the fashion supply chain with a local presence and operational innovations

A

s fashion trends change by the hour, one thing remains constant for ZALORA Group – the ability to adapt. ZALORA has achieved success in this industry, meeting the demands of different markets, through carefully delivering a responsive, locally-relevant supply chain, transforming old operational models. Not only has the company strengthened an already renowned brand name in the region, it has also been able to pass benefits on to its customers. Business Review Australia & Asia speaks to Regional Operations Director Alessandro Durì about how ZALORA has effected this change and discusses the impact this has had for both the business and its customers.

Operations As the fastest growing online fashion retailer in Asia, ZALORA adds hundreds of new products every week to its 100,000-strong offering. These include top brands in men’s and women’s clothes, shoes,

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ASIA

Alessandro Duri Regional Operations Director

worldwide.zalora.com

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YCH Group

Proven Expertise and Commitment t – Driving e-Business Excellence in Pa Fueled by the rapid digitisation of retail markets, YCH Group believes the way forward is to leverage on domain knowledge and technology to optimise the supply chains of retail businesses for e-Commerce. Through continuous technological and process innovation in partnership with leading Supply Chain Technology provider Y3 Technologies, we are committed in shifting paradigms in an increasingly complex operating environment, empowering businesses with game changing capabilities and enhancing operational efficiencies. As the region’s leading supply chain partner to some of the world’s most reputable and favourite brands bolstered by a comprehensive footprint and strong connectivity across the key hubs and cities of Asia, we strive tirelessly to innovate supply chain solutions for small and large companies – giving them a unique competitive edge. We offer customised e-Commerce centric solutions designed for scalability, ensuring they remain relevant in a multitude of business climates.

For e-C end con edg aut

Lev to o An the wit des lev

SINGAPORE | MALAYSIA | INDONESIA | THAILAND | PHILIPPINES | VIETNAM |


to Deliver artnership with Zalora

r close to two decades, YCH Group has been overseeing the full spectrum of Commerce activities for our global customers. Our services encompass an end-to d process from call centre management through the last mile fulfilment to the end nsumer. Scalability and efficiency are also enhanced through incorporating cutting ge technology into operations such as Internet-of-Things (IoT) enabled devices and tomation to ensure fulfilment requests are handled in a timely and reliable manner.

veraging on YCH’s proprietary The Last MileŽ (TLM) solution, our customers are able optimise route management and last mile distribution from their fulfilment centres. overall increase in logistical efficiency is gained through effective management of e last mile distribution network, enabling deeper reach and penetration into markets th challenging geographical layouts. Flexibility and scalability in infrastructural sign are also maximised through customised storage solutions which enable optimal vels of productivity.

INDIA | AUSTRALIA | HONG KONG | CHINA | KOREA

www.ych.com


ZALORA GROUP

accessories, sporting gear and beauty products. It sells the majority of these via its extensive online shop and mobile app to customers in seven countries across Asia. Not only has the company developed a strong presence in each of these countries, it has managed to achieve this in the face of a rapidly maturing and evolving market, where competitors close to the point of manufacture are all fighting for the same consumers. Duri charts the journey ZALORA has taken to reach critical mass: “When we arrived the industry was definitely very far away from where an eCommerce industry should be. The learnings from developed e-comm markets like the US or China had not reached the market yet, so there was a lot of ground work that needed to be done.” Since then the company has set about aligning its operations to suit both the nuanced fashion demands of the markets its serves while developing a supporting supply chain that is not only functional but also brings new competitive layers to the business.

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Supply chain and transformation Transforming ZALORA’s supply chain had to be approached from multiple angles, starting with the consolidation of its distribution centres into a single operation in Malaysia serving the majority of its markets. “The key here is integration, on top of traditional e-commerce warehouse management systems and technology to manage our fulfilment centres,” notes Duri. “The consolidation of our operation around a main hub based out of Malaysia was a great success for ZALORA. Despite major infrastructural changes in the order fulfillment, customer experience has remained untouched and our customers didn’t even perceive the change. “We kept on delivering the next day to all destinations with exactly the same amount of orders we were doing the day before. This was a great team achievement and unique result in the e-commerce sphere made possible not only


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Automated guided vehicles from SSI Schaefer WEASEL® – Winner of the IFOY AWARD 2016 Innovations are developed with passion – and the latest WEASEL automated guided vehicle is no exception. The system has been designed by our SSI Schaefer engineers, who fully understand the requirements of our customers with regard to efficient intralogistics processes. The result is an automated guided vehicle that combines maximum performance with high cost-effectiveness. The WEASEL can be easily integrated into warehouse processes and masters almost all transport tasks for goods weighing up to 35 kg. The vehicle speeds up cycle times, without the need for permanently installed conveying systems or a complex control system. The solution is so impressive that it has been presented with the IFOY AWARD 2016 in the „Intralogistics Solutions“ category. For more information about the cost-effectiveness and application areas of the WEASEL, please do not hesitate to contact us.

www.ssi-schaefer.com/weasel


Weasel® – innovative, creative, connective The automated guided vehicle (AGV) Weasel® from SSI Schaefer has been designed for internal goods transport. Its high flexibility and scalability allow for easy integration into warehouse transport processes. From containers and cartons to miscellaneous products of various sizes, the Weasel masters practically every transport task.

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ncreasingly short product life cycles and constantly changing market requirements call for a high level of flexibility. In some cases, tried and tested continuous conveyors are only able to satisfy this requirement to a limited extent. With the Weasel AGV, SSI Schaefer now offers an innovative solution that is highly impressive in terms of flexibility and scalability. Changing customer requirements and fluctuations in demand can be managed at any time, both cost-effectively and at short notice. Numerous advantages all add to the appeal of the Weasel. There are no access restrictions in the warehouse, creating room for personnel and material flow. The vehicles navigate along an optical track that can be installed quickly, easily and in a flexible manner.

Thanks to its compact design, this AGV can even be used in inaccessible areas. From containers and cartons to trays or miscellaneous products of various sizes (up to 35 kg) the Weasel handles practically every transport task. The goods are transported gently and securely to the intended destination. Another advantage is the easy integration into existing systems. The Weasel is flexible in terms of system customisations and extensions. It can be integrated on a fixed or needs-related basis for handling peaks in output. Both manual and automated connections can be quickly established to internal goods flows. Standardised control software permits a use independent from the customer

and its sector – there is no need for any complex installation and customisation work. As a result, short-term scaling of the system is no longer a problem. A fleet controller manages the orders generated by the in-house ERP system and assigns them to the relevant vehicles after release. The Weasel follows its route via predetermined waypoints. Power is supplied by maintenance-free rechargeable battery packs, which can be exchanged effortlessly via a quick-change frame and recharged. Low purchase and operating costs as well as low maintenance costs complete the profile of this AGV. With the new Weasel AGV, SSI Schaefer once again demonstrates a sustainable innovation and market-driven development while expanding its broad product portfolio.

www.ssi-schaefer.com/weasel


Your Go-to Global Specialist for

RETAIL SOLuTIONS In 2014, Zalora partnered APL Logistics as part of the company’s growth strategy to expand its presence rapidly across South East Asia. Throughout the partnership, APL Logistics has provided Zalora with the right solutions within the logistics spend. APL Logistics prides itself to be innovative and adaptable. The dynamics of an ecommerce company deviates from the traditional brick and mortar set ups, and APL Logistics has stood up to the challenges to meet the requirement of fast growing Zalora. In automating the processes through introduction of technology to reduce tedious manual work at the origins, APL Logistics has enabled Zalora to achieve cost savings as well as speed to market by having inventory readily available when cargoes arrive at the respective National Distribution Centre. This was not possible in the past with manual reworks required on the products at the destinations.

For more information, please visit www.apllogistics.com

Thanks to the partnership with

APL Logistics, ZALORA managed to achieve important productivity improvements inside its national distribution centers and smoothed out it’s upstream supply chain solutions leveraging the expertise and proficiency of APL Logistics in the industry. APL Logistics has been proved to be a trustworthy and visionnaire partner for a fast growing e-commerce player like ZALORA

ALESSANDRO DURI Regional Operations Director Zalora


ASIA

2000

Number of employees at Zalora

by the strong dedication of many Zalorians but also by our partners who supported us day and night.” The company’s integration drive has benefited knowledge sharing with more developed economies and eCommerce markets: “ZALORA is part of a wider eCommerce fashion group; we share knowledge with our sister companies in Russia, Brazil, Middle East and Australia.” Technology also plays a pivotal but sometimes difficult to manage role, Duri explains: “We have the

delivery data in our system, so that at any point in time we can provide visibility to our customers related to where their order sits. “The industry generates a tremendous amount of data and it can be very challenging to put it all together. Integrating the various forms of system and data feeds into our databases and making them available to our customers is definitely a differentiation point with respect to competitors in this part of the world.”

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Thinking local “We have a very local footprint,” says Duri. “That is one of the key competitive advantages that we have in the market.” And this is no mean task. Given that not all of the countries covered by ZALORA can be reached by global logistics companies – not to mention patchy infrastructure connections – delivering world class order fulfilment becomes challenging. But this has been surmounted. “We’ve managed to partner with local logistics providers on our own in order to reach every corner of the country and provided a nationwide location delivery option to all customers,” Duri explains. “We cover first and second tier cities with our own fleet and then we partner with the local delivery providers that are key in order to have the best level of service and integration for our customers.” And ZALORA’s plan isn’t to simply use local suppliers to fulfil a need – the company is actively engaging with them in order to enhance their capabilities. Duri says: “Across Southeast Asia, for example, on top

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“We have a very local footprint. That is one of the key competitive advantages that we have in the market�

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“As the fastest growing online fashion retailer in Asia, ZALORA adds hundreds of new products every week to its 100,000strong offering”


ASIA

of building our own delivery fleet, we partnered and integrated into our data system more than 20 local providers assuring comparable service level and an enhanced offering to all our customers, no matter where they are located. “Cash on delivery was another example. Back in 2012 only very few last mile delivery providers wanted to offer cash on delivery to customers. We patiently started with one of them, discussed and jointly developed the processes together and showed them that it was actually possible to perform this service at scale. “In a short time this allowed us to be different to everyone else in the market and it became a virtuous cycle in the logistics industry. They see that together you can achieve certain results, and this allows you to raise them up to the next level.” Alongside massively improved next day delivery services (more than half of the orders are delivered on the next working day across all Southeast Asia), ZALORA’s local strategy has enabled a

number of other key business benefits. By partnering with local convenience stores, the company has been able to offer customers free collections and returns, affording them an unprecedented level of service and choice. “There is an educational component that we need to bring to markets with very low eCommerce penetration; we tried to build this confidence in the industry also through these added services. Convenience stores are a big request, especially in capital cities where the working hours are longer and customer wants to have something more convenient for when they are not at home,” Duri adds. Having transformed its supply chain without compromising its dedication to the constantly evolving expectations of the modern fashion customer, ZALORA has found the sweet spot for supply chain management. Not afraid to invest in its partners in order to consistently meet customer expectations, the company’s future in Asia is assured.

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Written by Tom Wadlow Produced by Charlotte Clarke


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BURGER KING

Burger King India’s supply chain operation is expanding and innovating with suppliers at a rapid pace, leading the already popular QSR chain into new markets and territories

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urger King is enjoying a fast-track journey on a growth express in India; a journey which shows no sign of slowing down. If anything, the quick service restaurant (QSR) operator is about to step up another gear as 60 stores becomes 100plus by 2017. The global fast food chain only arrived in the country towards the end of 2014, reaching 15 cities in very little time and offering added value through apps and home delivery much quicker than established rivals did several years ago. A key driver of this expansion and a crucial backbone of ongoing product and service innovation is Burger King India’s supply chain,

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headed up by Chief Supply Chain Officer Sandeep Dey. Originally holding a packaging innovation background, Dey’s path took him from Unilever to franchise giant Yum!, where he spent six years heading up procurement operations for its brands before taking on the new challenge at Burger King. The journey has been non-stop since. “The last 18 months has seen amazing growth,” Dey says. “We have successfully positioned our brand with consumers thanks to a uniquely localised menu, made entirely from scratch, with an incomparable guest experience. “India is a unique market - the taste palate, though, is experimental; mostly people like to


BURGER KING

“As a brand that has just started from scratch, the initial phase involved very close collaboration over menus, kitchen equipment and logistics in order to launch successfully�

REAL BOLD. REAL FOOD.

Our mission at Tasty Bite is to be a socially responsible company that provides consumer delight. Every product is designed keeping the consumer in mind and aims to deliver great taste, good value and real convenience. This is what makes Tasty Bite the partner of choice for International and domestic QSRs. We develop and manufacture a range of innovative vegetarian frozen products & specialty sauces for these brands. TFS has been associated with BK India since their launch & provides a range of frozen vegetarian burger patties, starters & specialty sauces. www.tastybite.com | +91-20-30216000 | ujjawal@tastybite.com

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savour the taste they are brought up with. That is why we have created an entirely new menu for India backed by extensive research and understanding of the local consumer preferences. Special emphasis was given on the extensive vegetarian menu and both our vegetarian and non-vegetarian menu has been well appreciated by the guests across India. “We are one of the fastest growing companies in the Indian QSR space and we welcome vendors operating in the industry to join us on the journey and leverage our growth.” Supplier-led innovation Currently, Burger King India’s supply chain landscape contains fives distribution centres, 21 specialist multi-temperature trucks and around 20 vendors that are responsible for more than 140 skus. This amounts to a spend of 100 million Indian rupees a month, a figure set to double as more

restaurants open this year. The network helps to supply a menu containing a range of chicken, mutton and vegetarian products, form its best-selling whopper burgers to tandoori grills. A rigorous vendor selection process ensures the food lives up to its customers’ high expectations. This involves close examination by Burger King’s global vendor approval programme as well as internal commercial and technical evaluations. Once approved, product samples are gathered and tested in labs at least twice a year. Vista is the company’s most significant supplier partner, not only in India but also other parts of the world, providing the flagship whopper burger range and many of the menu’s value products. Dey explains: “We work very closely with suppliers to get the most out of each other – this is our philosophy. As a brand that has just started from scratch, the initial phase involved very close collaboration over menus, kitchen

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equipment and logistics in order to launch successfully. Our CEOs and top executives all communicate together to make sure we are all going in the same direction. “Our Supplier-Led Innovation Programme (SLIP) involves partners coming up with their own ideas based on the gaps in our menu and the briefs we set them, who then work closely with our chefs and food scientists.” Shortlisted entries then go on to consumer research, and once a winner is chosen it is test launched in a region before being rolled out across the wider network, with unsuccessful entries forming a promising backlog of innovation which can be tapped at a later date. “The suppliers are also tasked to come up with cost reduction options through various product engineering, and we adopt the same process with multiple options being tested with customers in order to make sure quality is not sacrificed,” Dey adds.

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“We want to work with vendors who share this vision for innovation. We want to work with vendors who invest ahead of time in terms of people, processes and innovation capability so that we can achieve our goals together. Our volumes are going to increase quickly so there are some brilliant opportunities for suppliers all over the country.” Rapid growth Burger King’s immediate rivals KFC and McDonald’s enjoy a reach of 350-400 stores across 30 or more cities, and it is these areas which Dey is targeting for quick expansion. The company is also committed to growing its presence in airports and train stations. This presents a number of extra demands on the supply chain, but Dey has a number of initiatives in place. “We are creating regional distribution hubs ahead of time to become cost effective as we grow,” he says. “This involves opening a


ASIA

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warehouse in an outsourced location which is already used by other QSR operators, meaning our overall costs will be reduced. We are also encouraging our distribution partners to invest in these areas eight to 10 months in advance, ready for when we enter those markets.” An example of this is distribution

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partner Coldex Logistics, which has raised close to US$20 million to expand its infrastructure and support Burger King’s future business activity. Another way of controlling cost of sales in an expanding business is to get involved further upstream. Burger King India has been negotiating with original ingredient suppliers on behalf of its own suppliers, speaking to farmers to ensure fair prices for higher volumes which will pass on savings further down the supply chain. Technology is also helping Dey’s operations to become more cost effective. “We are optimising inventory levels with the help of technology,” he says. “Instead of analysing bases individually one store and one warehouse at a time, we can see everything in one system. We can see what products are where and how much is at each place – this takes away the need to create buffers.” By continuing to grow quickly, innovate and impress customers


ASIA

“Thanks to some extensive consumer research the new vegetarian, mutton and chicken products have been extremely well received and sales are phenomenally good” with its QSR experience, Burger King India is set to continue its express pace journey around the country. It is an exciting time for both its supply chain teams and suppliers, with Dey eager to welcome equally innovative and fast-moving partners on board. “We want our suppliers to continue to invest with us, and we will continue to support and collaborate with our existing partners. Vendors not associated with us we encourage to look at our growth and be part of it,” he concludes.

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MOVING FROM P R E S E R VAT I O N T O I N N OVAT I O N

Connectivity is a major and essential component of your digital platform. But your business needs more. So we take a more holistic approach. From front to back, we step up. We take responsibility for the design, build and maintenance. We’re accountable for ensuring your connectivity is not only high performance, but integrated and optimised with your LAN, cloud services, apps and hardware.

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Profile for Supply Chain Digital

Supply Chain Digital - September 2016  

Supply Chain Digital - September 2016