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FREIGHTOS: BRINGING FREIGHT ONLINE

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EDITOR’S COMMENT

PRYSMIAN POWER HELLO AND WELCOME to the April edition of Supply Chain Digital. Our cover feature this month looks at Prysmian Group and its supply chain division. Other exclusive insights come from executives at EGYTRANS and Middle Eastern Independent Purchasing Company. Before this you will find commentary from MSDUK on championing inclusivity in the supply chain, along with a look at 10 of the best 3PLs in Asia. Technology is never far away from our discussions either, and I spoke to CEO and founder of online shipping platform Freightos, which aims to speed up what has been widely considered to be an archaic distribution channel in terms of booking. Finally, take a look at our feature from DHL’s Bill Meahl, who assesses China’s new ‘Belt and Road’. Is this the new Silk Road connecting East to West? I hope you enjoy the read, please join the conversation @SupplyChainD

Enjoy the issue! Tom Wadlow Editor tom.wadlow@bizclikmedia.com


F E AT U R E S PROFILE

Challenges, risks and real opportunities for a truly inclusive SUPPLY CHAIN

10

Lessons learnt over 10yrs of MSDUK

20

INSIGHT

28

TECHNOLOGY

Fast-forwarding freight to the 21st century

THE NEW SILK ROAD

CHINA’S INITIATIVE TO REVIVE GLOBAL TRADE

34 34 Asia-Pacific 3PLs TOP 10

5


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PROFILE

Challenges, risks and real opportunities for a truly inclusive SUPPLY CHAIN Lessons learnt over 10yrs of MSDUK Wr i t t en b y: M AYA NK SH A H, F OUNDER A ND CEO, MSDUK


HEADLINE

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PROFILE DIVERSITY WITHIN THE workplace is something that many businesses today strive for. They want teams made up of people from different backgrounds and different cultures because of the benefits that they bring in terms of ideas as well as more efficient ways of working. The same is true of a company’s supply base with many recognising the benefits that a diverse supply base can bring. An inclusive approach to sourcing brings innovation, positive disruptive new products and services, mitigates risks within supply chain, drives competitive advantage and removes all biases making procurement transparent and sustainable. However, when sourcing teams are always under pressure to deliver cost savings, support a heightened risk agenda and drive consolidation, an inclusive approach becomes wishful thinking! Minority Supplier Development UK (MSDUK) was established by Mayank Shah, Founder and CEO in 2006 as UK’s first corporate-led organisation that encouraged large private sector firms to drive inclusive procurement behaviour 12

April 2017

13,000 Number of people employed by MSDUK network of businesses

About Mayank Shah Mayank Shah is the founder and CEO of Minority Supplier Development UK Ltd (MSDUK), UK’s leading non-profit, corporate membership, supplier diversity advocacy organisation, driving inclusive procurement practices in corporate supply chains through introduction of ethnic minority owned businesses (EMBs) in the UK. Now in its 10th year of operation, Shah has led MSDUK to become one of the leading supplier diversity advocacy organisation outside of the USA and has worked with over 100 global corporations to help them set up supplier diversity programmes in the UK. MSDUK’s extended business network reaches out to over 3000 ethnic minority businesses in the UK and has helped generate over £70m worth of business so far for EMBs from MSDUK network. Shah has presented and spoken about inclusive procurement as a business imperative at national and international conference in the USA, South Africa and across Europe.


LESSONS LEARNT OVER 10YRS OF MSDUK

13


PROFILE

“An inclusive approach to sourcing brings innovation... and removes all biases, making procurement transparent and sustainable” and engage with ethnic minority owned businesses (EMBs). 10 years on, they have worked with sourcing teams of over 100 large firms, more than 500 sourcing professionals and nearly 1000 small and medium size businesses owned by ethnic minorities with a combined turnover in excess of £1bn employing over 13000 people. In addition, they have organised 84 industry specific meet the 14

April 2017

buyer events, hundreds of learning sessions and five global conferences. All these efforts have generated over £100m of business for EMBs and made a huge socio-economic impact within the communities they are located, creating and sustaining hundreds of jobs in those places. Large firms have in return got access to a new, improved and innovative supply base, but what


LESSONS LEARNT OVER 10YRS OF MSDUK

is more important is that these ten years of real stakeholder engagement has left big lessons – good and bad and proven without doubt that if done smartly and diligently, inclusion of diverse owned SMEs brings real tangible economic and social benefits for everyone in the supply chain. Some of the household brands that are part of MSDUK and driving inclusive procurement within their

supply chains include IBM, Coca-Cola, Citi, Barclays, Cummins, CBRE, EY, KPMG to name a few. Its extended network of over 3000 EMBs’ represent cross section of industries, including FM, technology, engineering, recruitment, marketing, digital, food and construction. Over £100m worth of business success over last 10 years has been in areas of clinical research, 15


PROFILE recruitment of technical and scientific staff, hospitality, workwear, commercial cleaning, energy efficient lighting systems, management and consultancy as well as construction and FM. Some of the case studies can be found here. MSDUK is set to enter the next decade with ambitious plans to extend its operations in select countries in Europe with Germany and Ireland in 2017 and building its global network (www.gsda. global) with partner networks in Australia, Canada, China, South Africa and the USA. In Feb 2017, MSDUK, in partnership with Accenture and CVM Solutions will be launching the UK’s first ever supplier diversity benchmarking tool that will allow organisations to measure their supplier diversity performance against the best in industry and the country.

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April 2017


MAYANK SHAH, FOUNDER AND CEO, WHEN ASKED TO PICK TWO THINGS THAT HAVE WORKED AND TWO THINGS THAT HAVE NOT WORKED TO MAKE SUPPLY CHAIN INCLUSIVE, SAID: THINGS THAT MAKE INCLUSIVE SUPPLY CHAIN EASY TO ACHIEVE • The desire for new products and services to support both members client growth / satisfaction and internal efficiency: One of the most critical factors to drive supply chain inclusion is the desire from every single procurement/sourcing team member- from top to bottom- to have the belief that bringing new products and services, breaking the status quo and working with SMEs’ that bring new ideas and innovation will improve internal efficiency. Yes, inclusive procurement is a ‘good thing to have’ but what is more important is that it adds ‘value’. • Corporate endorsement/commitment and individual passion: In my 10 years of working with 100s of large purchasing organisations, many have done extremely well but at the same time there are many organisations that never succeeded in introducing and engaging with EMBs/ SMEs. What made some organisations succeed and benefit from inclusive approach? Well, one commonality those organisations had was endorsement and commitment on supply chain inclusion from top management but more importantly it was driven by passionate people within the sourcing team. You have to get boththe top level commitment and individual drive to make inclusion a reality.

THINGS THAT MAKE INCLUSIVE SUPPLY CHAIN A NON-STARTER • Client push with no self-belief (ticking the box): I mentioned earlier about many organisations that we worked with that never succeeded in getting anywhere with their supplier diversity /inclusion programme and in many cases, it was just a ‘tick box’ exercise. These organisations only engaged because of client demand, asking them questions in tenders and in performance reviews about their supplier diversity programme which lacked a coherent strategy, top level commitment and individual drive to deliver results! • Project and not a process: Supplier Diversity/Inclusion, if taken as a fixed term project managed by individuals on ad-hoc basis, hardly brings any success. Procurement has to make inclusion part of the sourcing process, invest in educating buyers as well as tier 1 suppliers, make it part of procurement strategy and allocate budget/ resources to manage it. If it is taken up as a project, it will not work! More information on MSDUK can be found on www.msduk.org.uk

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TECHNOLOGY


Fast-forwarding freight to the 21st century

Zvi Schreiber is founder and CEO of Freightos, the global online marketplace for shipping which expanded tenfold in the space of four months since being fully operational in July. We ask him about the story behind the remarkable rise of the platform and what lies ahead W r i t t e n b y : To m W a d l o w 21


TECHNOLOGY

FREIGHT IS WORTH a trillion dollars a year. In the western hemisphere, 90 percent of everything that is eaten, worn or used is shipped by this behemoth industry. With consumers and business so dependent on the capacity, capability and efficiency of the freight industry each and every day, the fact it has effectively sleepwalked through the rise of connectivity and remained offline in the 1990s is somewhat surprising. Name a well-established industry with ceaseless demand and you are likely to find a price comparison website or online commerce portal. Shipping, however, was not one of those, at least until Freightos burst onto the scene last year. “So why hasn’t this been done before?” asks Zvi Schreiber, the company’s Founder and CEO. “The truth is that it is complicated. In the airline space, even before the likes of Expedia, there were systems for getting prices like Amadeus and Sabre which helped travel agents to sort their pricing. “The data was already there. In international freight it wasn’t like that – there was no standard electronic feed for prices of getting ships or planes or trucks. The data is spread around the world in thousands upon thousands of Excel files.” 22

April 2017


F A S T- F O R W A R D I N G F R E I G H T T O T H E 2 1 S T C E N T U R Y

Four years in the making Gathering this data was no mean task. Indeed, it took the Freightos team four years to get into a position where it could successfully launch. For Schreiber, it is a project that stretches all the way back to 2010/11 and his time as CEO of lighting power supply producer Lightech. “We designed the power supplies in Israel and manufactured them in Shenzhen in southern China, so I was a customer for shipping them by air and by ocean from China to the US and to Europe,” he explains. “I saw from first-hand experience just how tough it is to arrange import and export, waiting for days just to get a price. As soon as the business was sold to GE Lighting I decided to get back into software, only this time for logistics.” While Schreiber was aware of the magnitude of the task ahead, even he underestimated by a year how long it would take for the platform to be fully operational. But with $23 million of investment successfully raised, it was only a matter 23


TECHNOLOGY of time before Freightos took off. “These are big big freight companies with massive history and legacy, so getting them to trust a start-up with their precious data was a challenge,” Schreiber says. “We also had to convince them to trust the cloud as a means of storing this data, but they have made this leap of faith and it has become easier now because these big players have been talking about their success. People are coming to us now, it is starting to become the norm to automate pricing with Freightos.”

“There has been a touch of nervousness about it, as there is no doubt much greater transparency in the pricing”

Rapid rise Evidence of this need stretch no further than by simply looking at the figures. In the four months after launching fully in July 2016, Freightos grew tenfold, and the company now has offices in six locations spread from east to west across the world. Operating on a similar revenue model to the likes of insurance comparison sites, freight forwarding companies have been taking full advantage of what is a low-cost, lowrisk way of boosting their own sales. But there is a second revenue model that is also serving Freightos and its clients well, which involves shipping 24

April 2017

companies using the software and database to formulate their own pricing strategy. Freightos earns a subscription for granting access to the Software-as-a-Service solution. Though clients in the freight industry have doubtless been excited by the new opportunities presented, Schreiber notes a small degree of nervousness, perhaps natural with any transformational change in the way pricing is generated. “There has been a touch of nervousness about it, as there is no doubt much greater transparency in the pricing,” Schreiber explains.


Zvi Schrieber

Founder and CEO, Freightos

“While some freight forwarders were already sharp with their pricing, others no doubt were taking advantage of the fact that it used to be opaque. With more transparency and instant online pricing, the market will become more efficient and competitive.” The priority for Schreiber is to drive home the massive first mover advantage that Freightos has built up over the past five years of work. “At the moment there is surprisingly little competition for us given the size of the opportunity, although some individual shipping companies like Kuehne+Nagel are starting to offer

their own online quote services,” says Schreiber. “I wouldn’t call it competition however, it is simply another way of bringing the industry online. So yes, we have first mover advantage, and our job is to make sure we make the most of it.”

Fizz Prior to setting up Freightos, Schreiber dedicated time away from the everyday business grind to put pen to paper, authoring Fizz between January 2010 and December 2011. “The style was inspired by a famous book called Sophie’s World, which 25


TECHNOLOGY told the history of philosophy through the medium of a novel,” he explains. “Fizz is based on the same concept, only with a girl travelling through time meeting the likes of Galileo, Newton and Einstein to understand the history of science and the universe. “I just find the subject incredibly interesting and thought it would be fun to do something different to business. It was a fun project for me, but at the moment it is hard to think beyond Freightos. I think I will be focussed on maximising this for some years to come yet.” And it is the question of how and what Freightos can do to stretch ahead of the game even further where the conversation concludes. “There is always more we can add,” Schreiber says. “We have the world’s biggest freight rate database but we don’t have everything, there are more companies we can add. We want to grow at least another 500 percent this year, and make sure we are the marketplace for international freight. Competition will come so we need to grow fast while we’re pretty much the only show in town.”

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April 2017


F A S T- F O R W A R D I N G F R E I G H T T O T H E 2 1 S T C E N T U R Y

27


INSIGHT

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April 2017


THE NEW SILK ROAD CAN CHINA’S “BELT AND ROAD” INITIATIVE REVIVE THE FUTURE OF GLOBAL TRADE? Writ ten by : B I LL M E A H L , CCO, DH L Edited by: N Y E LONGMAN

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INSIGHT ON JANUARY 18TH, the first freight train from China arrived in London, marking a new highlight on the 12,000 mile China-Europe route that originates in Yiwu, a commodities center in the eastern province of Zhejiang. Mainly loaded with textiles and consumer goods it reached its destination after an 18-day journey, about half the time it would have taken to be shipped via ocean freight. London is the latest destination in an expanding rail network that connects across countries such as Afghanistan, Kazakhstan, Turkey, Spain and Germany under the “Belt and Road” corridor, a Chinese government initiative under the direct leadership of President Xi Jinping to recreate the ancient Silk Road trading routes. This rail service is both a complementary and an alternative option to air and ocean transport, offering a costeffective, environmentally friendly solution combined with timely delivery. It is therefore popular with companies shipping more time-sensitive goods, including fashion, automotive and electronics. Forecasts are promising, with the overall market rail volume expected 30

April 2017

“CHINA’S PLAN TO OPEN UP A NEW AVENUE FOR GLOBAL TRADE ACROSS OVER 60 COUNTRIES WILL REQUIRE FUNDING ESTIMATED BETWEEN $4-8 TRILLION”


THE NEW SILK ROAD

CONNECTING AFRICA One Belt One Road also contains a strong ocean network that will see expanded connectivity across the South China Sea, the South Pacific and Indian Oceans. Alongside increased sea links between Asian countries and Europe across the Maritime Silk Road, East African countries are also set to benefit. Due to their strategic coastal locations, Kenya and Tanzania are already signing agreements to facilitate the movement of goods, and are also making commitments to use renewable energy.

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INSIGHT

“THE CONSTRUCTION OF RAILWAYS, ROADS, PORTS, AIRPORTS AND OTHER INFRASTRUCTURE DOES INDEED HAVE THE POTENTIAL TO FOSTER TRADE AND BRING DEVELOPMENT TO SOME OF THE LEAST DEVELOPED PARTS OF THE WORLD”

DHL IN ASIA It almost goes without saying that DHL has a particularly special relationship with Asia. Home to the world’s top technology and garment manufacturers (not to mention rapidly growing home consumer markets) Asia offers myriad growth opportunities. In response to Asian countries containing some of the highest numbers of cross-border shoppers in the world, DHL now offers on-demand deliveries to mainland China, Singapore, South Korea, Taiwan, and Thailand. 32

April 2017


THE NEW SILK ROAD

to be around one million TEUs by 2020. As initiatives go, “Belt and Road” is ambitious. China’s plan to open up a new avenue for global trade across over 60 countries will require funding estimated between $ 4-8 trillion; however, some experts estimate that it could also generate over $2.5 trillion of annual trade value by 2025, once fully activated. In an era where protectionism is being hailed by some, Chinese president Xi stood out by speaking up for globalization at the recent World Economic Forum in Davos. The construction of railways, roads, ports, airports and other infrastructure in countries along the ’new Silk Road’ does indeed have the potential to foster trade and bring development to some of the least developed parts of the world. It will create new markets for Chinese exports and jobs for a part of the country’s workforce, but will also open up new avenues for trade to go East. From a logistics and trade perspective, we welcome the initiative. However, in order for it to develop to its full potential, much needs to be done to ease complexity at borders. Governments and business are called upon to work hand in hand, with authorities focusing on simplifying the crossborder customs, regulatory and infrastructure conditions. Should governments in particular succeed in creating common frameworks and put the implementation of the WTO Trade Facilitation Agreement from 2013 on the top of their agenda, “Belt and Road” might indeed eventually become a boon for global trade. 33


TOP 10

Top 10 Asia-Pacific 3PLs

Based on revenues, Supply Chain Digital ranks the region’s largest third-party logistics service providers and explores the secrets to their success Writ ten by: NYE LONGMAN


TOP 10 It is becoming clear that the Asia-Pacific region is a hotbed for supply chain activities. Home to some of the world’s largest logistics companies – not to mention ever expanding manufacturing outfits - economic growth for the region is expected to level at around 5 percent annually. Using revenue data submitted to 3PL consulting and market research firm Armstrong & Associates, Supply Chain Digital takes a look at each company and explores what current projects they are involved in, faced with the global slump in shipping levels.

10 KERRY LOGISTICS

COUNTRY HONG KONG REVENUES 2015 $1.47 BILLION Hong Kong-based Kerry Logistics lays claim to the “Largest distribution network and hub operations in Greater China and the ASEAN region”. Alongside integrated logistics, the company has interests in integrated freight forwarding, express and supply chain solutions. Its expertise covers fashion, lifestyle, electronics, technology, food, FMCG, and a number of industrial segments. 36

April 2017

9

SANKYU

COUNTRY JAPAN REVENUES 2015 $2.13 BILLION Starting operations almost a century ago, Sankyu’s company name originates from the English expression “thank you” which is unusual to say the least. The company employs over 11,000 people and has an original business model that blends plant engineering, logistics and operational support- known as Sankyu Unique.


A S I A - PA C I F I C 3 P L S

8

SAMSUNG SDS LOGISTICS

COUNTRY SOUTH KOREA REVENUES 2015 $2.33 BILLION Founded in 2015 as logistics arm of Samsung SDS, the subsidiary is heavily involved in supply chain management software and technology. Its core operations offer logistics solutions through a network spanning 28 countries and 45 branches, as well as over 144 site – all supported by the company’s logistics technology platform.

7

PANTOS LOGISTICS

COUNTRY SOUTH KOREA REVENUES 2015 $2.73 BILLION

Branding itself a “global total logistics company” Japaneseowned Pantos Logistics, with nearly 350 logistics networks, is South Korea’s most connected 3PLs. Alongside typical land, sea, and air freight, the company also offers its own IT services which provide end-to-end supply chain visibility. 37


TOP 10

YUSEN LOGISTICS

COUNTRY JAPAN REVENUES 2015 $3.83 BILLION

6

KINTETSU WORLD EXPRESS

COUNTRY JAPAN REVENUES 2015 $3.72 BILLION One of many large Japanese 3PLs, Kintetsu World Express (KWE) has developed its own corporate philosophy: “To contribute to the development of a global community through logistics services – by creating new values, sustaining the environment and collaborating with our clients, shareholders and employees.” The company’s operations cover air and sea freight, as well as logistics. Outside of Japan, KWE has over 1.3 million square metres of warehousing space, spread across almost 200 facilities in 219 cities and 34 countries. 38

April 2017

With operations covering transportation, warehousing and business solutions, Yusen Logistics has sector-specific skills covering healthcare, technology, food retail, aerospace and automotive. With 2.2 million square metres of warehousing, the company has more than enough space to add consulting, management and planning services. Keeping up with Mexico’s increasing demand for airfreight from Asia, Yusen Logistics has recently constructed a dedicated hub that not only meets this need but is also strategically located near to a manufacturing centre.

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A S I A - PA C I F I C 3 P L S

HITACHI TRANSPORT SYSTEMS

4

TOLL GROUP

COUNTRY (ACQUIRED BY JAPAN POST, 2015) – ORIGINALLY AUSTRALIA REVENUES 2015 $5.82 BILLION Japan Post acquired Toll Group in 2015 after the company celebrated its 125th year since it was founded in Newcastle, Australia. With 1,200 sites spread across 50 countries, the company offers a range of services to customers. These primarily consist of freight logistics, warehousing and a multiplicity of supply chain management capabilities. Since JP made the acquisition, it has benefitted from the company’s extensive international presence – an aspect that has helped stem the company’s debts.

COUNTRY JAPAN REVENUES 2015 $5.61 BILLION Hitachi Transport Systems is well known for its all-encompassing logistics outsourcing covering procurement, production, sales and distribution, and after service. Other aspects of the business cover heavy transport and freight forwarding, as well as a range of sector-specific solutions. According to reporting from Nikkei Asia, the company has improved efficiency in order to consolidate during the global shipping downturn, citing the use of artificial intelligence for a 7 percent pre-tax earnings growth.

3

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TOP 10

SINOTRANS & SCS

COUNTRY CHINA REVENUES 2015 $7.31 BILLION Sinotrans (HK) Logistics Limited is China’s largest logistics company and was formed in 2003 from the merger of Sinotrans (HK) Shipping Limited, Toho Shipping Limited and Waiwell Shipping Limited. The company announced last year that it was going to further merge with CMESS and the CSC Group. Alongside freight forwarding, bulk cargo, and shipping, Sinotrans provides contract, project and trading logistics services. It is also able to offer customers logistics services covering both chemicals and the cold chain. The company has recently entered into an agreement with Ezion to construct offshore windfarms off the Chinese coast. 40

April 2017

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A S I A - PA C I F I C 3 P L S

NIPPON EXPRESS

COUNTRY JAPAN REVENUES 2015 $15.82 BILLION

1

Nippon Express has 60,000 employees in 700 offices across 34 countries, giving the Japanese 3PL a truly global footprint. Its capabilities cover air, sea, road and rail transportation, as well as storage services. Its extensive experience has also been applied to overseas moving, heavy haulage, precious cargos and a range of logistics design services. Recently, the company has teamed up with Alibaba’s TMall in order to ship a range of products to China at a preferential shipping rate. It has also been reported that Nippon is planning to add a China-Europe rail link.

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PROCURING

FOR PRYSMIAN THE INFORMATION WORLD IS WAKING UP TO ITS LARGEST GLOBAL PROVIDER OF THE CABLES THAT SUPPORT ITS INFRASTRUCTURE – WELCOME TO THE PRYSMIAN GROUP Written by: John O’Hanlon Produced by: Denitra Price


E

ven today, 12 years after the name was adopted –when Goldman Sachs bought the cables business of Pirelli – and six years after the group was created in a €2.7 billion merger with the 100 year old Dutch company Draka, to make Prysmian Group the world’s largest cable company, the name of Prysmian is taking some time to become generally recognized. Broadly speaking, Pirelli Cables, which in 2005 became Prysmian, was best known for its capacity to supply transmission lines, whereas Draka tended to serve the more specialized industry markets including elevators, automotive and aerospace, with a strong capability in fiber optic. The group now has a presence in 50 countries, with 82 plants and more than 21,000 employees; its global

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S U P P LY C H A I N

headquarters is located at Milan, Italy.

Prysmian operates in the business of underground and submarine power transmission and distribution cables and systems, special cables for applications in many different industrial sectors, and medium and low voltage cables for the construction and infrastructure industries. For the all-important telecommunications market, the group manufactures cables and accessories for the voice, video and data transmission market, with a comprehensive range of optical fibers, optical and copper cables

and connectivity systems. At group level the company identifies three main operating segments. Energy Projects includes high-tech and high value-added businesses where the focus is on the project and its execution, as well as on product customization, namely: terrestrial high voltage, submarine and subsea umbilicals, risers & flowlines (SURF), which includes umbilical cables, flexible pipes and down-hole technology cables for the petrochemical industry. The Energy Products operating segment includes businesses

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P RY S M I A N G R O U P

characterized by the ability to offer a comprehensive and innovative product portfolio, that can meet a wide variety of market demands such as energy & infrastructure (including power distribution and trade & installers) and industrial & network components (including specialties and OEM, Oil and Gas, Elevators, Automotive and Network Components). Finally, the Telecom operating segment makes cable systems and connectivity products used in telecommunication networks. The product portfolio includes optical fiber, optical cables, connectivity components and accessories, OPGW (Optical Ground Wire) and copper cables. The years since the creation of Prysmian Group have been a time of consolidation and gradual migration to the new brand, while carefully nurturing its historic loyalties. Brian Schulties, VP for Procurement, whose office is located at the North America headquarters at Lexington, South Carolina, is responsible for the supply chain to the 13 plants serving the telecommunications

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and energy markets across Canada, the USA and Mexico as well as fiber optic manufacturing facilities covering 1.5 million square feet (including the only co-located fiber and cable facility in North America). Three directors that report to him, one responsible for raw materials, one for base metals and one for non-raw or ‘indirect’ material. This pattern being reproduced at HQ level and in each region, EMEA, Asia/Pacific (APAC) and South America, his is as much a global as a regional role, he says: “We are structured as a matrix organization. Many of the things we do are groupaligned. Much of the activity we do is managing global commodities.” For this reason, he works as closely with the group’s CPO in Milan as with the CEO of the American business. Schulties came into his present role one year prior to the merger, so he has been involved with every step along the procurement evolution of the last six years – and it’s not been without pain, he admits. However despite having had 17 years working in procurement in the


S U P P LY C H A I N

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C O M PA N Y N A M E

INNOVATIONS FOR THE CABLE AND “Isequidu citistes nis et rem doluptatem velit mi, utem PLASTICS INDUSTRY

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demanding automotive industry he did not come unprepared into the business of cables, having worked as a Director of Purchasing with Prysmian Power Cables & Systems for three years starting from 2003, and until 2010 as VP for one of the larger competitors in North America. “I spent the first 17 years of my career in the foundry industry which supported the automotive business, as a Tier I supplier, and I exited ahead of the offshoring of what was predictably a dying industry as far as North America was concerned. I came to Prysmian while it was still Pirelli Cables in March 2003, then I left to join General Cable in 2006 and came back to Prysmian in early 2010. When I came back, within a year we became the largest wire and cable producer in the world. It was a very exciting opportunity.” It was a massive merger, but it went remarkably smoothly, he recalls. “We integrated very quickly. I’ve known suppliers that have taken five years to integrate their companies after a merger – we did it in less than twelve months.”

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BRIAN D. SCHULTIES C.P.M. VICE PRESIDENT OF PROCUREMENT

Brian D. Schulties has been Vice President of Procurement for the Prysmian Group since February 2010. Mr. Schulties began his career as a Purchasing Manager with U-Brand Corporation in 1986. He has over 30 years of experience in the procurement field; holding several senior level management positions in the automotive, foundry and wire & cable markets. He also has significant experience working with suppliers around the globe. Prior to joining Prysmian, he was the VP of Sourcing for General Cable Corporation in Highland Heights, KY. 51


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S U P P LY C H A I N

Schulties was quickly identified as the right person to run procurement in North America. Following his appointment, Giancarlo Angelini joined the company from the Fiat Group as Chief Procurement Officer, based in Milan, bringing a vision of how to leverage the complex global commodities and legacy companies that went to make up the merged group. Among the large tasks which have faced the organization over this period, consolidation and rationalization of IT platforms has been one of the biggest challenges. The group has been a long term SAP client, but this is not as straightforward a picture as it may seem at first, as different versions of SAP are still being operated in different segments of the business. At group level, the strategy is to migrate all the businesses to SAP One Client, and the Prysmian high volume cables part of the business has already migrated to this platform, accounting for some 80 percent of the group. However the plants of Draka Elevator, Draka

Automotive and others including the Cableteq division, remain under earlier versions of SAP. “This is still a work in progress,” says Schulties. “We will be rolling SAP One Client out at our Cableteq division in January 2018 – these are very specialized businesses, handling very large numbers of different parts and raw materials.” The side of the business that supplies highly specialized clients in industries such as nuclear, defense, airport lighting and the like has many requirements that set it apart from the high volume work. “Some of the cables these customers specify may only be 1,000 feet in length, compared to the transmission lines the Prysmian factories are turning out on huge drums or reels.” Nevertheless, whether customized or bulk, volumes have been exploding in most of the territories. Fiber optic is a case in point, he points out. “Fiber is an exponentially growing business, both in terms of volume and complexity. We are constantly innovating as higher fiber counts, different fiber and different

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P RY S M I A N G R O U P

ADVERT

bend radiuses are demanded, to name a few.” The fiber business has always been cyclical, he adds, but these days it appears to have become a super cycle, with significant growth anticipated over the next three to five or even ten years. “We are very confident about the global and domestic prospects for fiber and fiber optic cable. Four years after 4G was launched it is already becoming obsolete: IoT and automation are propelling us into a 5G world and beyond.”

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On that side of the business, the Prysmian mantra is ‘do more with less’. Innovation is not cheap. Spending on R&D in 2015 at group level amounted to approximately €73 million. The mission of the Prysmian Group’s R&D function is to identify innovative products and technology, to add new products and services to the existing range and to reduce production costs for both existing and new products, says Schulties. “The quality of our products is assured by strict monitoring at


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every stage of production, from the procurement of raw materials through to delivery of the finished product.” Controls during raw materials procurement involve supplier selection and quality testing of individual supplies, which must be accompanied by certificates stating their conformity to the standards agreed by contract, he adds. A rigorous approach to quality has helped the company to maintain its world-leading position and made a significant contribution to the company’s continued success.

THE QUALITY OF

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Customer satisfaction is the numberone priority for the Prysmian Group and the company’s quality initiatives include “zero defects” and “right first time” approaches for all customer-related activities. 21,000 employees may seem like a big global headcount, but it is really very small considering the sheer volumes of cables produced by the group. The key is lean thinking, says Schulties. “We leverage the experience we have in the factories. While we invest heavily in improvement and expansion we remain very focused internally on selecting the “right” capital equipment for the future and also utilizing the equipment we have so we are not wasting the effort of our overall capital investment. Inventories are kept low, not just on the factory floor – we are trying to reduce inventories across the supply chain. Long term we keep a close eye on the slow moving or obsolescent inventories too.” There are many challenges in keeping control over inventories in a global supply chain, he explains.

Many of his raw materials are sourced globally, but he is also now working in a ‘Buy American’ and/or Buy America environment. Government contracts are very rigorous in specifying locally sourced content, and the defense sector typically demands 100

€7.5

billion annual revenue

percent. The current administration is known to favor strengthening these constraints, and additional tariffs on imported materials may be around the corner. At least he is not alarmed by the fact that he has just been to Durango, Mexico, to open the newest North American plant. This is a state of the art fiber optic cable plant purpose-built close to its existing Draka plants. In

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S U P P LY C H A I N

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Durango, Prysmian also operates a cable factory for the automotive industry – which Draka acquired in 2006 from International Wire Group and which has been active in the state since 2001 – and the factory, in addition to producing automotive wire harness cables, since 2009 has produced much of the cabling that is used in the most modern Airbus aircraft as well as the production of latest generation cables for the aerospace industry, with the technological characteristics demanded by OEMs to create lighter and more efficient units. The new fiber optic cable plant will serve the burgeoning Mexico market, rather

than the USA which is adequately served by domestic plants, including the one in Lexington, SC, one of the largest employers in the city and the NA headquarters. The way Prysmian is now structured gives them an unparalleled visibility across its logistics and supply chain, but there’s a lot more work to be done, and Brian Schulties was recently over in Milan to present the tools he is introducing in North America to improve spend visibility, business intelligence and the reduction of supply chain management risk. “These are initiatives we could roll out to the rest of the world,” he says. “We have approximately 15,000 vendors in North America. Consolidation is a must – managing so many suppliers is costly and it is a resource draw” He believes the supply base could be reduced by about 75 percent overall, though he cautions that this can never be a blanket policy, considering that some government specifications can

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S U P P LY C H A I N

lie dormant for ten years or more before replacements are needed. Schulties and his colleagues in the global procurement team are therefore driving change in the strategy, however, as he says frequently: “If you can’t see it (spend visibility) you don’t know what you are dealing with.” Visibility was the lacking component, where it was possible, for example, that the same product was categorized or named differently by different plants. With a large number of suppliers in the IT space, he and his team went through

a process of assessment before forming a partnership with a third party vendor to adopt a tool that is already making great improvements in spend management. After just three months he can foresee that this investment will pay for itself in a very short time, with massive benefits when applied globally. “Frankly our procurement IT platform for spend visibility was not really adequate, but now we can say with some certainty that it is better than anything we could have done with internal tools available to us currently.”


s s e c c su

Manufacturing

Written by Nell Walker Produced by Denitra Price


C I N C I N N AT I I N C O R P O R AT E D

How Cincinnati Incorporated has achieved such incredible machine tool innovation fame

B

ehind the scenes of every industry are the companies which create the necessary tools for success. Cincinnati Incorporated (or CI) has for many years been ubiquitous in the manufacturing arena for its press brakes, shears, lasers, powder metal presses, and, more recently, it has a reputation as one of the most innovative global leaders in big area additive manufacturing (BAAM). Founded in 1898 and privately held since day one, the ever-thriving machine tool manufacturer remains the last of its kind from a century-ago era in the Queen City; we speak to Carey Chen, President, CEO, and Vice Chairman of the Board to find out why. “In 2015, CI’s BAAM system was recognized by R&D 100 as one of the top 100 most technologically significant new products for that year, and was the Editor’s Choice in the category of process/prototyping as the best of the best,” Chen explains.

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“In 2016, BAAM was selected by JEC Composites for best overall innovation across over two dozen different industries, and at the end of that year, was also recognized by the Guinness Book of World Records for its contribution in building the single largest 3D printed tool in the world – a tool for a component of a Boeing 777 wing. Even if we wanted to spend marketing dollars to prop up the technology, we could not have paid for the kind of attention that followed.” Ground-breaking products These achievements all come down to the fact that what CI does is unique. BAAM is its specialty, which allows it to create items on a larger and more efficient scale than any other. “Our BAAM system is something unique to the market,” says Chen. “Historically, most 3D printers are about a meter cubed, can sit on a desktop, and print parts at a relatively slow rate of grams per hour. CI’s


S U P P LY C H A I N

THE KEY

to being around

for the next

100 years will

be an unwavering focus on our customer – Carey Chen, CEO, President, Vice Chairman of the Board

BAAM is as large as eight feet wide, 20 feet long, nine feet tall, and we can print anywhere from 80 to 100 pounds per hour. We also have an advantage in that while other 3D printing companies are focusing on printing materials that are very expensive, we are able to print economical commodity materials. That’s our strength. “Also, we can custom manufacture. For example, for most printing

Carey Chen CEO, President, Vice Chairman of the Board

Carey Chen is currently President, CEO, & Vice Chairman of the Board at Cincinnati Incorporated (CI) since joining the Company in January 2015. Immediately prior to joining CI, Chen spent eight years as Vice President at Hypertherm, Inc. in Hanover, NH holding various management positions including: General Manager – Light Industrial Businesses, CFO, and CIO. While at Hypertherm, Chen was named as a Top 40 Under Forty by New Hampshire Union Leader.

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companies, if you had to print a car thousands of times, but the body of every car was slightly different, that would be totally cost-ineffective due to the relatively high cost of required tooling. We, however, are able to quickly customize production with our technology by simply modifying software codes.” CI’s highly inventive level of skill extends beyond incredible 3D printers. In another renowned sector of the business – press brakes, which are machines for bending sheet metal – an electric version of the press brake has been recently introduced; these tools are traditionally hydraulic or mechanical. CI has introduced a 40 ton electric press brake called the GoForm which is approximately the size of a large refrigerator according to Chen, but highly mobile and inherently clean thanks to being electric. “That means were can now introduce this technology into industries that we have not been able to penetrate before,” Chen says. “Applications that require clean rooms or the medical industry as examples.

It’s our intent to introduce a 60 ton version of the GoForm as a follow up act in the near future.” In terms of lasers, another of the company’s most popular products, it is offering both CO2 and fiber lasers and, with fiber becoming increasingly more prevalent, Cincinnati Incorporated is working towards making them cut thicker, faster, and with a higher cut edge quality. Currently two, four, and six kilowatt versions are available, with a view to offer lasers with eight kilowatts and beyond in the coming years. The power of partnership Chen attributes the success of Cincinnati Incorporated’s industrychanging products to the company’s approach to technology, an element of which is having the confidence to ask for help. “We would not have been able to achieve all these wonderful things on our own steam,” he admits. “We have great partners, one example of which is Oak Ridge National Laboratory. We are able to leverage their expertise through a long-term CRADA – a cooperative

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research and development agreement – that we have in place. They have certain pieces of the technology and expertise that we were interested in, and we were able to contribute some of the hardware, software, and motion control elements, so we were able to commercialize the technology jointly. “If you want to advance technology very quickly, you have to take stock of what you have in-house, and if you do not have the necessary critical pieces, you need to be humble enough to ask for help. That’s how we have been able to keep up with the technology curve.”

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Logistics Due to the size and value of CI’s products, they historically had to be transported using rail cars to travel across the United States, and by ship to reach other countries. Now, tractor trailers are generally used, but the company has been known to require specialized equipment, such as a 78-wheeler in one instance to move a Powder Metal Press, in order to adequately displace the weight of very large items. While logistics can be complex, with legal permits and relevant escort vehicles


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To advance technology very quickly, you have to take stock of what you have in-house, and if you don’t have the necessary pieces you need to be humble enough to ask for help – Carey Chen, CEO, President, Vice Chairman of the Board

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1

5

2

4

having to be organized, these arrangements are made in-house. As CEO, Chen oversees day-to-day operations within the business alongside the higher level corporate governance aspect, and ensures his team appropriately handles scheduling and communication with transportation partners. Corporate responsibility As a company that produces significant waste, CI rightly considers itself to have a responsibility towards

3

1. Baam 2. Lasers 3. Pm-presses 4. Press-brakes 5. Shears

sustainability. “We’re trying to do a better job of taking care of the environment,” Chen explains. “We have an ‘adopt-a-road’ type program where we are cleaning up the road that CI is located on a quarterly basis. We also inherit a significant amount of cardboard packaging from our venders, so we invested in a baler that regularly collects the cardboard and compresses it, which we send to a recycling facility. Similarly, we create a lot of scrap from our use of metal, so we implemented a

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recycling program that captures the scrap, separates different metals into appropriate bins, and in that instance we actually get some cost recovery through recycling.” But Chen and his company actually look at corporate social responsibility more broadly than that: “We have a code of ethics including an anonymous silent whistle, wellness initiatives for the employees, and a 501(c) non-profit that’s about giving

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back to the community. We have a full circle mentality that if we take care of the community, hopefully the citizens in that community will be better off overall, and then if we hire someone from the community, he or she will be a better candidate. By hiring that person we are also sending money back into the community and continuing the cycle.” It is this selection of qualities and skills which has ensured CI’s longevity


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and the kind of reputation that cannot be bought. A hundred years ago, there would have been dozens of machinery manufacturers around Cincinnati – Chen’s company, which employs over 400 people across 325 acres of land, is the last to remain from that era. “I think the key to being around for the next 100 years will be an unwavering focus on our customer,” he states. “Making sure we deliver great machine tools, that we service

them properly, listen to customer needs going forward and provide the solutions they want versus the solutions we want to give them – there’s often a difference. If we can do all those things, we have a very good shot at being around for the next century and continuing to grow profitably during that time.”


A franchisee supply model that delivers Written by Dale Benton Produced by Heykel Ouni


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IPC MIDDLE EAST & AFRICA

IPC helps Subway franchisees remain profitable and sustainable, all the while delivering products and services to the highest standard expected of Subway across the world

I

n 1965, the first ever Subway sandwich store was opened in Connecticut in the United States of America. Fast forward 52 years and Subway is the world’s largest QSR chain by shop count; with more than 44,000 locations around the world. Of those 44,000 stores, close to 700 are in the Middle East and Africa region, and this is where the regional Independent Purchasing Co. (IPC) comes in. Formed in 2010, IPC (MEA) is a non-profit making organisation owned by Subway Franchisees in the Middle East and Africa. Through a

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unique business model, the company strives to deliver financial and service benefits through volume purchasing and supply chain operations. The first IPC was set up as a cooperative in the US in 1996 and over the past 20 years a total of 5 IPCs now manage the global supply chains needs of Subway franchisees; handling


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and is therefore in a position to objectively evaluate how can we get the best out of suppliers.”

Fresh Perspective

DUBAI The location of IPC Middle East & Africa HQ

collectively $5B+ worth of procurement. But the IPC/ Subway Franchisee relationship goes deeper than simply supporting the procurement and supply chain. “IPC acts in an advisory capacity to franchisees in the fact that it is neither transacting nor executing,” says Ramzi Baroudy, CEO of IPC (MEA). “It is about looking for the best interests of the franchisees

Ramzi has been with IPC (MEA) since 2015, having spent a large part of his career with Fast Moving Consumer Goods (FMCG) across Nestle, Kraft Foods, General Mills and PepsiCo spanning the sales and marketing spectrum as well as some experience in an operations and manufacturing capacity. It is this atypical experience that he feels places him in a good position with IPC as it allows him to come into the business with fresh eyes and to “see the bigger picture”. “My experience provided me with an understanding of the end to end supply chain and procurement and how it affects overall costs as well as how a product gets to market,” he says. IPC(MEA) works with and supports Subway franchisees across the Middle East and Africa regions by ensuring that suppliers comply with the Subway Gold Standard product specifications, while delivering the same level of high

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standard services as is expected from Subway the world over. “Ultimately, as a business we only have one customer and that is Subway,” he says. “Subway as a brand receives the benefit from the fact that it can depend on a qualified organisation that is implementing its standards, ensuring it is working with the best suppliers and harmonising the business models across multiple markets.”

Diverse Markets When IPC (MEA) was first formed it only operated in the UAE, over the past few years IPC (MEA)’s footprint has expanded to include Saudi Arabia, and more recently Turkey with plans to expand into Pakistan and South Africa. In order to achieve this growth, IPC (MEA) works on

the sustainability associated with the relationship with Subway. Naturally, the success of IPC (MEA) and any Subway franchisee lays in the overall growth in consumption and sales. IPC (MEA) operates in a number of diverse markets, each presenting different challenges that can factor into the success and growth of a franchisee. Understandably, diverse markets present diverse challenges. “With such varied markets, you have to ask yourself, how do you support them remotely? If not, then how do you build towards that? Is there a creative way to ensure that every single franchisee, regardless of location, is getting the service they deserve?” This isn’t a challenge unique to IPC (MEA) however, with IPC’s all across the world each

2010

The year IPC Middle East & Africa was founded

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within a different market. Recognising the challenges, and acknowledging the importance of overcoming said challenges, is key in progressing as a business. “By virtue of the diversity of those markets, it would be very naive not to think of it as a challenge to try and respond to trends, be it a growth or a drop and managing that,” he says. Ramzi strives to mitigate these challenges, be it in fact the fluctuating market or the remoteness of a franchisee in Mauritius, by leveraging the flow of the operations in the larger markets to support the servicing of smaller markets.

Building Synergies The upside of diversity is that it presents certain challenges that forces an organization to work holistically as well as pragmatically. “What we have tried to do is build a clustering of markets ideally through a single service provider trying to

standardise the quality of service, managing recalls and similar issues all through one point of contact,” he says. “This will help us manage the region easier and maintain control to ensure that everyone is following a consistent high quality standard.” This consistent high quality standard across all operations worldwide is achieved through Unaterra. Unaterra pools together similar organisations to IPC in North America, Europe, Australia, Latin America and the Caribbean to work in unison and deliver consistent standardised benefits at a global level. “The various different IPC’s are unified through Unaterra which leverages global best practice and ensure that, through a global procurement project, there is a single voice with suppliers,” Ramzi says. “Unaterra is almost two tier, there are regional IPCs managing regions and areas of global management supported through Unaterra, which leverages the collective muscles of all the IPC’s together.”

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A Growing World One of the biggest challenges for IPC (MEA) is, despite its mix of challenges and successes, the fact is it is still a young company. This brings with it the additional need of raising awareness of what the company does and the significant role it can play. “Given our size, it’s been a natural challenge from the beginning because people aren’t clear as to how the business model works and the fact that we had a small footprint in the region.” Looking to the future, IPC (MEA)

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“It is about looking for the best interests of the franchisees and is in a position to objectively evaluate how can we get the best out of suppliers” aligns itself with Subway’s aggressive target with regards to growth within the Middle East. Currently, IPC (MEA) stands at around half a dozen members of staff, but Ramzi expects that IPC (MEA) headcount will continue to grow over the next three to five years. “IPC is an innovative business model and there is ample room for growth in the Middle East,” he says. “Beyond the headcount, I see us really beginning to have better expertise and becoming a very robust organisation in every area, whether that’s procurement, supply chain, business intelligence or even HR and Finance.” The UAE represents what Ramzi describes as a showcase market, with IPC (MEA) looking to better develop

its capacities and provide services beyond procurement and supply chain; and where technology will play a major role in this future growth development. “This ties very well with how Subway is looking at technology in terms of improving customer experience as its the name of the game now with millennials looking for more digitally enabled experiences,” he says But when all is said and done, the ultimate mission we live by will continue to be that “Subway franchisees are profitable and competitive today and into the future.”

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INNOVATING EGYPT’S TRANSPORT INDUSTRY Written by Wedaeli Chibelushi Produced by Connor Williams

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We spoke to Egytrans’ CEO Abir Leheta and GM Khaled Hussein about the company’s recent developments

Since I started, it’s always been something I had a strong sense of belonging to,” Abir Leheta, CEO of Egyptian Transport and Commercial Services Company SAE (Egytrans) tells us. Egytrans was established in 1973 by Leheta’s father, and was a family business until it started trading on the Egyptian stock exchange in 1998. Since its inception, Egytrans has provided integrated transport and related services like freight forwarding, customs clearance and warehousing, working closely with partners who are selected for their stellar reputations, experience and quality of service, where both parties can achieve ultimate success. Abir Leheta has been working

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for Egytrans for 20 years. “I was originally responsible for IT in the company, then I moved into strategic planning and implementation,” she explains. After her brother, Hussam Leheta passed away in 2015, she stepped into his Chairman & CEO role. Abir tells us that her current role focuses on strategic development for the group, corporate governance and increasing Egytrans’ shareholder value. On the operational side of Egytrans is General Manager Khaled Hussein. Leheta credits Hussein as being crucial to recent company developments, and also complementing her strategic role. “I was appointed as General


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Number of employees at Egytrans

350

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Manager in 2015, prior to which I was Chief Commercial and Operations Manager for six years,” Hussein says. Hussein is also the CEO of ETAL, one of Egytrans’ sister companies. “I’ve worked with Abir for 10 years on many projects and tasks, even before she became Chairman,” he tells us. “I find us to be the perfect team. We had a wonderful year in 2016, full of successes and achievements!” These achievements include an increase of 522.78 percent in Egytrans’ consolidated net profits, which climbed to EGP 62 million in 2016 from EGP 9.9 million the previous year. We ask Leheta how Egytrans plans to top 2016’s wild success. “We’re involved in a lot of projects, particularly power stations, which have really been booming in Egypt,” she says. Egytrans is handling the logistics and transportation for two large Siemens power projects – the Beni Suef and New Capital stations. “The power stations will be the world’s

biggest gas-fired combined-cycle power plant complexes, with total capacities of 4800 MW,” Hussein adds. Egytrans is also working with the Hitachi and Mitsubishi Alliance on its South Helwan power project. Leheta adds: “We’re also working on transporting wind farms, because it’s part of the Egyptian government’s strategy to raise the amount of renewable energy to 20 percent of the energy that’s generated. A large part of that is windfarms.” One windfarm project is with Spanish company Gamesa, Gabal El Zeit 2. It consists of 130 towers and turbines, comprising imported components, alongside locally manufactured ones. Siemens, Hitachi, Mitsubishi and Gamesa are high-profile, multinational companies. How does Egytrans build and maintain relationships with such clients? “Well, we call ourselves a customer intimate company,” Leheta explains. “We really study each customer’s requirements. We act as their consultants, always trying to find the most cost effective and time efficient

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S U P P LY C H A I N

solution for whatever logistics needs they might have. We’ve had customers, for example in project logistics, who have been with us for almost 20 years. Our focus is on building these types of long-term relationships.” Hussein adds that Egytrans communicates with clients through numerous channels: email, face-to-face, phone, newsletters and customer satisfaction surveys. Egytrans’ strong reputation is also attracting clients and is a leader in the Egyptian transportation sector, and has a long history of innovation. “We have often been the first to

introduce new things, new services or new ways of doing business,” Leheta says. For example, Egytrans was the first company to introduce bonded warehousing in the country. It was also the first company to introduce LCL services. “That has always been a part of our strategy,” Leheta maintains. “We continue to explore the opportunities that we believe are not just good for the company, but are good for the industry and the economy overall.”

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“I find us to be the perfect team. We had a wonderful year in 2016, full of successes and achievements!”

One core opportunity is corporate governance. In her role as Chairman of the Board, Leheta is heavily involved in ensuring that all stakeholders’ interests are balanced. She guides us through the Egytrans’ rich history of governance. The company first began to upgrade its corporate governance practices in 2006. Egytrans implemented a formal Code of Corporate Governance,

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along with other policies. In 2007, the company pushed further, asking the International Finance Corporation (IFC) to benchmark them against international standards and assist with other structural changes. After the IFC’s assessment, Egytrans added new executives, non-executives and independents to its board. “We’re one of the first companies in Egypt to appoint independent board members,” Leheta states proudly. The company is also well-known for its transparency. Egytrans significantly upgraded its public disclosures; it now discloses information such as ethics practices, ownership details

and remuneration information. “We’re always going above and beyond, not just keeping up to standard. We take our transparency and disclosure and all of our other corporate governance standards above what’s actually required,” Leheta adds. Consequently, Egytrans won the 2009 GTM/EMX Best Corporate Governance Award the 2008 EIOD Best Disclosures Citation. Not ones to rest on their laurels, Leheta and Hussein describe numerous plans for the future. “We’re exploring a lot of different opportunities,” Leheta says, “I think

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that in Egypt there are a lot of possibilities for development”. For instance, a huge amount of Egytrans’ internal transportation happens by road. The company is optimistic about the possibilities for shifting more transportation to river and rail. Egytrans is also interested in

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developments in the Suez Canal Economic Zone; Leheta believes that it will be a very important transport hub in the future. Along with new ventures, Egytrans wants to build upon the projects that it already has. Leheta explains: “We also think there’s a lot of room for development, for providing professional services up to international standards. At the same time, we continue to invest in our sister companies. One is in specialized transport for heavy lift and exceptional dimensions’ packages and we will always continue to develop that.” Egytrans also owns an ISO tank cleaning, repair and storage company. There are plans to expand this in the future. With two ambitious leaders in Hussein and Leheta, Egytrans is likely to achieve its many expansion goals.


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10 million USD Annual revenue at Egytrans

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Emirates NBD

First-class banking in the UAE Written by Catherine Rowell Produced by Heykel Ouni


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Senior Vice President of Procurement and Realty Services Abdullatif Albastaki discusses how the move towards digitisation has impacted financial services in the UAE

S

ince its formation in 2007, Emirates National Bank of Dubai (NBD) has been going from strength to strength, with operations in nine countries across the world including the UAE, Egypt, the Kingdom of Saudi Arabia (KSA), United Kingdom, Singapore and other countries such as India which will start operation in Q4 2017. With the potential to grow and deliver value to shareholders, customers and employees, the bank is staffed by over 10,000 employees representing 70 nationalities,

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cementing its position within the UAE with the potential to expand into further markets. With the aim to grow the business and its operations in alignment with Dubai’s Smart City vision, Emirates NBD is continually reassessing its procurement and supply chain strategies, remaining innovative with the creation of new products and services, with over 200 branches in the UAE and worldwide. With a multitude of roles under his umbrella, Senior Vice President of Procurement and Realty Services Abdullatif Albastaki is responsible for the group procurement for the entirety of Emirates NBD, including Emirates Islamic Banks and the company’s international branches. In addition, Albastaki is behind the delivery of the bank’s supply and management in all regions, physical security, travel and transportation, alongside projects and engineering. Furthermore, his remit includes the fit outs for the bank and facilities management for both owned and lease branches. However, with regards to residential buildings, Albastaki confirms that this service


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is outsourced to specific companies, with contracts monitored closely. “We provide all the support, strategic services and project management skills to ensure products that are required for businesses run smoothly and for products to reach the market on time, according to schedule,” explains Albastaki. “Last year was the best collaborative year between procurement and all the other businesses.”

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Procurement power With one of the biggest brand names in the region’s banking industry, Emirates NBD has significant buying power and presence within the UAE. To this effect, the bank continually focuses on providing an advantageous space for employees and customers through leasing management, fit outs and design. Albastaki sits on multiple steering committees, which incorporates the visibility and budget of new branches, alongside ones which need refurbishing and remodeling. All of this is allocated before the end of the year, with the aim to provide focus for the year ahead. It also ensures that all buildings under Emirates NBD are designed in alignment with the rules and regulations of the country, and that they are designed smartly to ensure collaboration with multiple teams. Albastaki comments: “Through negotiation and research, we find the best spaces, working with consultants and contractors to provide this in the best way possible, but at the same time, providing the best value for money,

alongside the use of ISO certified and environment friendly materials.” With approximately AED 3 billion invested in purchasing operations, Emirates NBD utilises procurement software Zycus to successfully undertake strategic sourcing, at which Albastaki is behind every purchase. Both requirements and budgeting is finalised at executive level, which is then cascaded down and allocated, enabling all teams to understand their forecast, build the required resources and allocate them accordingly in alignment with the number of projects planned. “We collaborate and sit together to plan all of the projects realistically, so we are able to hand it over due to the required time,” comments Albastaki. This has enabled the bank to achieve no delays in any given project, with products and services delivered on time and on schedule. Albastaki continues: “This highlights that we have strong teams in both Procurement and Realty Services in addition to the outstanding suppliers and service providers that led us to build strong stakeholders trust.”

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Quick to market The bank’s IT procurement team works closely with the group’s IT services to ensure first mover advantage with new products and ideas, with a strong focus on customer feedback and requirements. “From a strategic point of view, we are using a strong brand name which allows us to be the first in the market most of the time”, explains Albastaki. With a continual focus on sourcing technologies, Emirates NBD ensures these are consistently up to date, up to speed and open in the market, providing a stream of procurement earlier than everyone else, or alongside everybody else. Albastaki adds: “It’s really essential for us

to be advanced with technology in our procurement and supply chain and of course, from the supplier perspective, we look at all these points as well.” The bank has announced that it aims to invest AED 500 million over the next five years towards digital innovation and multichannel transformation of processes, products and services. Listening to customers’ feedback and providing consistent innovative solutions has enabled Emirates NBD to win a multitude of awards, such as Bank of the Year, Best Customer Experience in Banking and Best Mobile Banking app. It has also become the first bank in the UAE and the Middle East to win in three


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categories at the Euromoney Awards for Excellence in 2016. Albastaki adds: “All of these are of course useful leverages, which we can use in negotiations with suppliers.” The bank utilises approximately 2,000 suppliers - a mix of both national and international - enabling it to cement its status as leaders in the market, manage all sourcing elements to a high standard and remain ahead of the game. Albastaki explains, “the number of suppliers goes up and down, because some smaller suppliers we sometimes bring in for one time only”. However, he adds: “We have

approximately 100 or more strategic suppliers”, which is continually fluctuating. From a spend perspective, Albastaki confirms that there can be up to 200 suppliers that the bank can consider. Nonetheless, the growth of Emirates NBD has not been without its challenges. One common issue is governance, both in Dubai and countries where the bank imports from, whilst logistics, lead time and benchmarking services are also regular challenges. Albastaki explains: “We are on boards with leaders and consultants which give us insight on

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“Being a brand name, we are strong and can mutually come to a common ground with suppliers and service providers to finalise our contracts”

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what prices are around the world, and we try to benchmark them on current market conditions as well.” Emirates NBD also encounters internal challenges with regards to contracting, insurance and risk, at which Albastaki explains, “some governing bodies we have internally would want to see a minimum requirement which might not fit the suppliers’ appetite”. However, he concludes: “Luckily, being a brand name, we are strong ourselves and can mutually come to a common ground and finalise our contracts.”

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Abdullatif Albastaki Senior Vice President Group Procurement & Realty Services

“We need to be digital, secure, and influence our customers to use and explore the digital world�


E M I R AT E S N B D

Millennial influence Technological innovation is imperative for Emirates NBD to retain and attract further customers, remain competitive and bring requirements and products to the market effectively, ensuring positive, continual customer engagement. IT has become the biggest spend at Emirates NBD, where over 87 percent of the bank’s customer transactions are now undertaken through digital channels. For this year, the bank will be focusing on the millennial generation and its influence within banking and digitisation. “We have noticed that the new generation want everything at their fingertips. People do all their payments online, transfers online, sort their credit card payments online, so the need to carry cash is becoming less, year on year,” explains Albastaki. “To allow this, we need to be digital, secure, and influence our customers to use and explore the digital world.” The bank’s aim to be proactive with customers and solve problems before they occur through providing solutions before customers ask for

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them is something Emirates NBD is striving to achieve. Use of online and mobile apps and products, creating a seamless and convenient financial service, will allow it to do just that. With the vision to be globally recognised as a financial services provider, delivering tailored, innovative banking solutions, Emirates NBD will continue to listen to customers and drive key products to the market, whilst ensuring all new services encompass accessibility and remain user friendly through embedding smart technologies, strategic sourcing and essential procurement services. In 2016, the bank achieved all targets, despite a slowing in the market, and achieved steady growth, cementing its position within the UAE and opening up the future for expansion into new markets in years to come.


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