Almarai is a multinational organization that works in the food processing industry. The headquarter of the organization is located in Riyadh, Saudi Arabia. The organization was established in the year 1977. In its early years the organization does not have major infrastructure facilities. However with the passage of time organization enhanced its facilities in Saudi Arabia and increased its production of milk. In the 1990s, the organization transformed its decentralized structure into centralized structure. According to the statistics of 2014 the organization has 44% dairy market share in the gulf region.

Company Size of The Supply Chain Drivers of Almarai

Source: https://www.almarai.com/wp-content/uploads/2018/01/2017-Q4-Earning-Presentation-Final-1.pdf

In the above figure, the market share of different products of the company can be seen. It can be seen that Laban, Fresh Milk, Chicken, and Jar Cheese have the highest market share and are among the most popular products of the company.

Areas of Operations of The Supply Chain Drivers of Almarai

Source: https://www.almarai.com/wp-content/uploads/2018/04/Almarai-AR2017-ENG-web.pdf

Almarai has its operations in the GCC countries. Apart from GCC, Almarai is operating in Jordon, Egypt, and the USA. Almarai has expanded internationally and become one of the largest companies in the food processing sector. The longstanding partnership of the Almarai is the NHAD “National Geographic Abu Dhabi” which launched the operation of Almarai. Into the operation of the Almarai the unique documents providing the rare insights which is world largest vertically integrated dairy and the region of the company is the largest beverages and food manufacturing company. The showcase of the Almarai documentary is the pivotal operations in the role of the producing the 8 million units for the juice product, bakery fresh diary every day although its maintain the highest standard of the quality. Almarai massive operations by the highly efficient logistics and ten transport division of 9,000 vehicle feets which is also delivering the 100,000 retailer. A documentary is also presented the Almarai contribution for the economies of the kingdom along with other countries by its supply chain operations (NEWS, 2017).

Competitors of The Supply Chain Drivers of Almarai

Source: https://www.owler.com/company/almarai

The main competitors of Almarai include Nadec, Al Safi Danone, Fonterra, and Baladna. Although Almarai has a major market share however the corporation should keep on meeting the needs of its customers otherwise the competitors might affect the market share of the company.

Design of Goods and Services

Goods designing strategy is to provide highly attractive products to customers. Products designing includes designing product packaging style under different sizes, basic layout, logo design, and labelling.

The design of the supply chain Almarai of is very help which improve the shareholder valuation and the profitability. Almarai management needs to follows the sourcing and the market strategies which are also generate the financial performances if the supply chain activities of Almarai. Supply chain of the Almarai also needs to manage the margins and the constrains. The design of the supply chains requires to provide the organisation with the detailed insights that is also shows the demand which achieved the profitability of business.

Managing quality

The quality management system is essential for Almarai Company as the managerial staff is highly concerned about product quality and service quality for better customer experiences. Company organize the testing system and monitoring system to control quality standards and follow up policies.

Layout strategies

Company has developed some layout related strategies for all operations and organizational activities. Layout design considers improved flexibility, improved information flow system, better distribution system, and effective use of resources including employees, equipment, and financial assets. Almarai is also focused on process layout strategy. In this layout strategy, all operations are aligned, integrated and scheduled for the execution of operations. In layout strategy, the cost control system was given importance to enlarge profit margin from the revenue stream.

Supply Chain Activities of Almarai

The supply chain network is responsible for the design, production, and delivery of the products to the market. The changing dynamics of the contemporary world demands the businesses to have the best mix of efficiency and responsiveness in their respective markets (Hugos, 2018). The degree of responsiveness and efficiency of the businesses are dependent upon the supply chain capabilities. Nevertheless, a company can enhance supply chain capabilities through key supply chain drivers (Prater, 2013). The purpose of this report is to describe the major supply chain drivers of Almarai, a well-known Arabian company that manufactures dairy products (Almarai, 2018).

Figure 1: Dairy products- Almarai (Source: Annual Report, 2017)

Supply Chain Drivers of Almarai

The supply chain network is bifurcated into vertical integration and horizontal integration. Horizontal integration refers to the business process operating at a single level of the supply chain within a similar industry. Vertical integration, on the other hand, entails the activities where the company is responsible for controlling more than one step of the supply chain.

Figure 2: Vertical Integration (Source: Strategic Management Insight, 2013)

Lin, Parlaktürk, and Swaminathan (2014) highlighted that vertical integration is further categorized as forwarding integration and backward integration. Forward integration is focused on the end stage of the supply chain by focusing on the product retailing. Backward integration accounts for the entire business operations for instance when a company is involved in manufacturing, production, distribution, and other drivers of the supply chain. Keeping in view the supply chain networks, Almarai follows backward integration. The Production, Inventory, Transportation, Location, and Information are the key supply chain drivers of Almarai Company.

Figure 3: Supply Chain Drivers (Source: Hugos, 2010)

Production of Almarai

Almarai is included in the list of the largest vertically-integrated companies in the world. The entire aspects of production, ranging from crop production, dairy farming, processing, and packaging, are in control of Almarai (Almarai, 2018a).

The Almarai for enhancing responsiveness has exceptional production facilities. The production of raw milk, fruit juices, dairy, and other related food manufacturing activities of Almarai are undertaken in the United Arab Emirates (UAE), Saudi Arabia, Jordan, and Egypt. Almarai has the latest manufacturing technologies that help in the production of wide-ranging products. The poultry production plant located at Ha’il shows its commitment to innovation comprising advanced production facilities (Annual Report, 2017). The poultry production plant of Almarai has the output capacities of more than 20 million chickens per year (Almarai, 2018).

Almarai is an integrated dairy processing company that maintains its own 7 super farms to supply the best quality of the milk. The super farms of Almarai have the largest output capacity in the Kingdom. The dairy production of Almarai exceeds one billion liters per year that are produced by a herd of over 170, 0000 cows (Almarai, 2018). It is to acknowledge that Almarai, with an investment of SAR 1.2 billion, has commissioned a Central Production Plant (CCP3) manufacturing facilities in Al Kharj in 2017 (Mubasher, 2017). The objective behind this recent development is to boost the dairy production capacity so that demands of regional as well as domestic markets can be fulfilled successfully.

Figure 4: The production and logistic building at Al Kharj (Source: KUKA, 2018).

Inventory of Almarai

Almarai has the best fit of responsiveness and efficiency in their respective tracking systems. Almarai considers all aspects of inventory information, such as purchasing, shipping, warehouse storage, tracking, reordering, and turnover. The company optimizes inventory planning to manage the short shelf life of its dairy products (Annual Report, 2017).

Almarai has incorporated an efficient inventory management system, namely Radio Frequency Identification (RFID) Inventory Systems, in their respective warehouses (Corcoran & Cochrane, 2012). The RFID technology provides Almarai with the opportunity to track the inventory throughout the supply chain process from production to point-of-sale. The fixed tags attached to the products transmit radio signals that are passed through an RFID reader in order to collect, process, and store the information into inventory management software (Hellström & Wiberg, 2010). The RFID inventory system is fundamental for Almarai for stocking of products. In addition, it assists in the quality control of its dairy product that has relatively a limited shelf life.

Location of Almarai

Almarai has achieved efficiency in its supply chain network as it serves its major operating markets from a centralized location (Hugos, 2018). The figure below demonstrates the different locations that Almarai uses for business operations. It is to acknowledge that the headquarter of Almarai is in Saudi Arabia (Almarai, 2018). In addition, due to its centralized location, around 67 percent of the total sales of Almarai are generated in Saudi Arabia (Annual Report, 2017). Almarai’s strategy of centralization is fundamental in terms of economies of scale and has a significant impact on the efficiency of the business.

Figure 5: Locations of Almarai (Source: Annual Report, 2017)

Transportation of Almarai

Almarai has the best fit of efficiency and responsiveness in its logistics and transportation. The responsiveness in the supply chain is achieved through the fast and flexible mechanism to deliver the products. On the other side, efficiency is the transportation of products in large consignments via truck, ship, and railways (Hugos, 2018).

Almarai has a highly efficient transport and logistics divisions, with an increasing number of the 9000-vehicle fleet that delivers to around 100,000 retailers available in North Africa and the Middle East (Arab News, 2017). Almarai, in the year 2017 has delivered approximately 2.0 billion Kilograms/Litres of product in real-time and with best conditions through refrigerated containers. Almarai has also made an investment in driving simulators that enables truck drivers to deliver products from their factories to the local sales depots. The transport and logistics team of Almarai is greater than any other logistics company in the Middle East (Annual Report, 2018).

Almarai is keen to become an innovator through its transport and logistics system. The company, at present, is under process to build a computerized warehouse comprising robotic systems for unloading and loading the pallets (Almarai, 2017). The company currently uses separate trucks for each product type. However, to achieve efficiency in logistics, Almarai is planning to implement dual-temperature transportation in the short-haul vans and long-haul trucks respectively (Staff, 2015).

Figure 6: Refrigerated Containers of Almarai (Source Annual Report, 2017)

Information of Almarai

Almarai is the largest dairy manufacturing company having operations in 8 major countries of Gulf Cooperation Council. Almarai highly recognizes the importance of the correct and timely flow of information in order to remain competitive with its vertical integration business model (Almarai, 2018c). Almarai has high responsiveness to information systems. It collects and disseminates the information collected through the operations of other four supply chain drivers in real-time (Hugos, 2018).

The Almarai has a single integrated information system for the majority of its business functions. It is to acknowledge that Almarai, with the help of Au2mate- a leading provider of automation and software has implemented a complete Manufacturing Execution System (MES) solution, including OEE (Overall Equipment Measurement) as well as SAP integration mainly in its new production plant at Al Kharj. The MES solution is an information system that ensures the data flow of complex manufacturing activities (Kletti, 2015). The MES solution at Almarai is comprised of an advanced barcode scanner solution that assists in handling and tracking of data as well as identification of pallet (Christiansen & Winther, 2018).

Figure 7: Features of Almarai MES Information System (Source: Christiansen & Winther, 2018).

Scheduling

In this operations management activity, Almarai Company develops schedules and timelines for various business related activities such as raw materials purchase, inventory production, inventory distribution, and transportation. Scheduling enables them to manage operational activities within the allocated budget and time duration.

Conclusion of Almarai

In conclusion, the production, transportation, location, information, and the inventory are the key supply chain drivers of Almarai. Almarai is observed to have the best fit of responsiveness and efficiency that enhances its supply chain capabilities. Almarai is one of the largest vertically-integrated businesses that have comprehensive control over all aspects of its production processes. The CCP3 manufacturing plant is an exceptional investment of Almarai that significantly boosts the production capacity. Similarly, the RFID inventory system of Almarai is critical to attaining inventory information fundamental to protect the shelf life of dairy products. In addition, the centralized business location is a competitive advantage for attaining economies of scale. Furthermore, the availability of huge logistics and transportation systems as well as MES system is fundamental to fast delivery and accessing real-time information. Therefore, it is stated that Almarai has a sound supply chain management system

References of The Supply Chain Drivers of Almarai

NEWS, A. (2017, December 14). Operation Almarai’ — four decades of success and growth. Retrieved from https://www.arabnews.com/node/1208976/corporate-news

Almarai. (2017). Quality You Can Trust. Almarai. Retrieved from https://www.almarai.com/wp-content/uploads/2017/12/corp-book-EN.pdf

Almarai. (2018). Corporate Profile. Almarai. Retrieved from https://www.almarai.com/en/corporate/almarai/profile/

Almarai. (2018a). Almarai Company. Prospectus. Retrieved from https://cma.org.sa/en/Market/Prospectuses/Documents/Marai_eng.pdf

Almarai. (2018c). Almarai Future Leaders. Almarai. Retrieved from http://uroleb.org/sites/default/files/Almarai%20Future%20Leaders%20Microsite5E%20copy.pdf

Annual Report. (2017). Value through innovation. Almarai. Retrieved from https://www.almarai.com/wp-content/uploads/2018/04/Almarai-AR2017-ENG-web.pdf

Arab News. (2017). Operation Almarai’ — four decades of success and growth. Arab News. Retrieved from http://www.arabnews.com/node/1208976/corporate-news

Christiansen, S., A, & Winther, L. (2018). Consumer-driven Innovation – local and global. Danish Dairy & Food Industry Worldwide. Retrieved from https://ddfi.dk/sites/default/files/udgivelser/DDFI/DDFI_2018/2018_danish_dairy_food_industry_2018_0.pdf

Corcoran, B. & Cochrane, P. (2012). The Global Drinks Industry Logistics. Just-Drinks. Retrieved from https://www.just-drinks.com/management-briefing/middle-east-and-south-africa_id108393.aspx

Hellström, D., & Wiberg, M. (2010). Improving inventory accuracy using RFID technology: a case study. Assembly Automation, 30(4), 345-351.

Hugos, M. H. (2018). Essentials of supply chain management. John Wiley & Sons.

Kletti, J. (Ed.). (2015). MES-Manufacturing Execution System: Moderne Informationstechnologie unterstützt die Wertschöpfung. Springer-Verlag.

KUKA. (2018). Swisslog and KUKA are automating the distribution logistics at Almarai. KUKA. Retrieved from https://www.kuka.com/en-de/industries/solutions-database/2017/08/solutions-industries-swisslog-almarai/

Lin, Y. T., Parlaktürk, A. K., & Swaminathan, J. M. (2014). Vertical integration under competition: forward, backward, or no integration? Production and Operations Management, 23(1), 19-35.

Mubasher (2017). Almarai: opens the SAR 1.2b production plant in Al Kharj. Market Screener. Retrieved from https://www.marketscreener.com/ALMARAI-CO-6498310/news/Almarai-opens-SAR-1-2b-production-plant-in-Al-Kharj-25562207/

Prater, E. (2013). An introduction to supply chain management: a global supply chain support perspective. Business Expert Press.

Staff, A. (2015). Swisslog to automate Almarai distribution logistics. Logistics Middle East. Retrieved from https://www.logisticsmiddleeast.com/article-12112-swisslog-to-automate-almarai-distribution-logistics

Strategic Management Insight. (2013). Vertical Integration. Strategic Management Insight Retrieved from https://www.strategicmanagementinsight.com/topics/vertical-integration.html