The Digital Supply Chain podcast

Digitisation and Procurement in Supply Chains of the Middle East - PwC's Dr Bashar Eljawhari and Haitham Khalifa

April 23, 2021 Tom Raftery / Bashar Eljawhari / Haitham Khalifa Season 1 Episode 124
The Digital Supply Chain podcast
Digitisation and Procurement in Supply Chains of the Middle East - PwC's Dr Bashar Eljawhari and Haitham Khalifa
Show Notes Transcript

I realised recently that many episodes of this podcast are very Europe/North America centric, so I set out to get a different perspective.

I invited Dr Bashar Eljawhari a partner at PwC, and his colleague Haitham Khalifa, Director Enterprise Solutions at PwC Middle East to come on the podcast to discuss supply chains in their region, how they have fared in the last year, and why they have fared better than other regions.

We had an excellent conversation and, as is often the case, I learned loads, I hope you do too...

If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).

To learn more about how Industry 4.0 technologies can help your organisation read the 2020 global research study 'The Power of change from Industry 4.0 in manufacturing' (https://www.sap.com/cmp/dg/industry4-manufacturing/index.html)

And if you want to know more about any of SAP's Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

And remember, stay healthy, stay safe, stay sane!

Haitham Khalifa:

I recall our evidence that was issued or produced by the Dubai future Council, and clearly stated that he has not seen shortages of essential goods, such as food and medicine, and of the scale experienced by countries in other regions. And if they would highlighted that this would be because to add to the significant investment in multimodal facilities and infrastructure over many decades.

Tom Raftery:

Good morning, good afternoon, or good evening wherever you are in the world. This is the digital supply chain podcast, the number one podcast focusing on the digitization of supply chain. And I'm your host, global vice president of SAP. Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have my two very special guests. Bashar and Haitham. Gentlemen, I hope First of all, I've pronounced your names correctly. And second, would you mind introducing yourselves just to confirm that maybe starting with Bashar first.

Dr Bashar Eljawhari:

Thank you, Tom, this Bashar Eljawhari. I'm a partner at PwC. And I've been with the firm for just over 40 years. Prior to that, I worked with other firms and I was in the US in the industry for quite some time. Here I actually manage our procurement supply chain localization agenda for the region. And proud to be or I'm happy to be on the on this call. Thank you.

Tom Raftery:

Thank you Bashar, Haitham....

Haitham Khalifa:

Thank you, Tom. Based on Khalifa here, I'm a director of the museum at least have been almost it's been almost a year now I was the firm. I basically run or manage all the sap related engagements and deployments in the Middle East. Anything that's related to the core SAP digital solutions as for HANA arriba, ibp, LBM supply chain, more or less Susan's regions all regionals release all to countries. Thank you.

Tom Raftery:

Superb. Now, we're here to talk a little bit today about procurement, for example, and I thought maybe you could start talking to us a little bit about that, you know, we've seen a massive shift globally in the last 12 months as a result or more than 12 months at this point as a result of COVID. How is that impacted on the whole procurement space?

Haitham Khalifa:

There is a significant improvement, of course, transformation I would say that we're seeing is released. Let me let me start by a small example of all of us have seen house e wallets that supply chains were exposed earlier this year. Or last year, you know, this video was showing the empty shelves and supermarket as a COVID-19. And rolled in and again was the second wave sweeping Europe, some supermarkets in the UK have started restricting how much customers can come by to ward off another stock crisis, right. However, here in the Middle East, the problem of balancing supply and demand was less common. And as the shelves have remained full, right, and liberals have they have continued to float flow freely. And so what exactly did we do in the Middle East? That was suppose right. And the answer to that is basically investing as technology in digital technology and supply chain technology. So I recall our evidence that was issued or produced by the Dubai future Council, and clearly stated that he has not seen shortages of essential goods, such as food and medicine, and of the scale experienced by countries in the last regions. Okay. And his report highlighted that this will be because to add to the significant investment in multimodal facilities and infrastructure over many decades. So we've been seeing or noticing a significant shift over the last, it's not just here, but but over the last five or 10 years into supply chain. A couple of examples in Saudi Arabia, Saudi Arabia right now all the supply chain, or all the official governmental contracts usually have to go through the automated platform, which is a government ecosystem for tendering, and then sourcing and supply chain. And we're seeing the same direction happening here in UAE, happening in Qatar and most of the various countries on more or less digitizing the overall governmental supply chain ecosystem. Recently as well, Saudi Arabia have launched a project plan project for invoicing as well to automate all governmental invoices through our unified governmental platform. This is just a couple of examples to showcase how the government is moving towards digital technology. But if you want to speak specifically on the supply chain, I will say The Middle East have an innovative approach to technology. It's really established it is the Middle East as a supply chain pioneers. So in the middle of the bell demmick, one of the global supply chain leaders based on the way they managed to accelerate the rollout of blockchain, our digital container logistics platform to replace many of their manual time consuming, you know, administrate administrative tasks that can typically slow supply chain down and cause inaccuracies. So in a time of a systematic shock, you know, this inefficiencies can really cannot be really underestimated. Many of the other things that we have done as well, along with the Dimmick is the investment of the back end, advanced DRP systems joined to his business intelligence. This enables or allows modules, real time capabilities to be visualized, and allows us to manage the everbridge supply chain, let's say challenges. Again, so this is something more or less of a quick, high level overview Thurman on the trends that we're currently following or going into released in terms of digital supply chain technologies.

Tom Raftery:

Sure, appreciate it Haitham, and Bashar, any additional comments to add?

Dr Bashar Eljawhari:

Yeah, if you would like to probably add few things, if you look at what were the top three priorities before the pandemic, a lot of companies were focused on cost efficiencies, cost reductions as a key driver, which drives also the globalization agenda, where you suppliers are, how you source them, and so on. And digital transformation was just starting, I mean, not just started, but it was really one of the top three, all the change after the pandemic, with about 60. Some people companies we surveyed 60% of the companies we surveyed, is that they shifted risk management to be the top priority, cost reduction is still part of it. And they accelerated the digital transformation. So unlike what everybody thought it would happen, that they will reprioritize or take away from the digitization, it did totally the opposite. And the reason for that it drove the fact that I need to be more accurate in my demand planning. I need to be more accurate now in my, what I'm getting through my logistics and so on, just because of the pandemic showing me what are my bottlenecks? And what are my issues. And I want to make sure now with big data that I can really be a bit more proactive, more predictive of where the issues will be. And I'll hide How can I address them? And I think this is really an interesting trend that was counterintuitive that we will move more and more towards digital transformation investments.

Tom Raftery:

Interesting. And do you think that this trend will keep going our will people back off once things start to settle back down? I mean, personally, I suspect that we're going to get more shocks like this to the system as things like climate change increase. So but you know that that's just my personal opinion, what what do you what are you seeing out there?

Dr Bashar Eljawhari:

What, what everybody is looking at now is saying it's not a black swan any more those types of pandemics. Or if it's natural disasters, if it's political situations, whatever it is, it's going to be repeating, it's not going to be one off. And it's really a matter of putting the foundation now rather than getting caught cold later on. As a matter of fact, when we looked at some of the investments that companies are making, or putting forward, it has been actually growing, not declining. So if you look at just before the pandemic, about 36 or so what third of the transactions and procurement and so on, were automated or digitized, as we look at 2020 during the pandemic and just after the pandemic that has gone up to 49%. So it shows that there is a continuous investment in digitizing and automation. And I think that will only continue to happen. There are also moving a bit away from just purely transactional into getting into more value add eventually activities where you're using artificial intelligence to help with the decision making and supporting the category managers and so on. So I see it growing. I don't see it actually going down.

Tom Raftery:

Okay, fantastic. And you mentioned in our prep call a term procurement 4.0 Which may be something that you're used to hearing a lot, but it was a new term to me. So presumably, it's a new term to some of the people listening to the podcast. Consequently, as well, would you mind explaining what you think procurement 4.0 is, first of all, and then talking a little bit a bit more more about that?

Dr Bashar Eljawhari:

Yes, as we speak about if we even start with the industry, 4.0, and the revolution of what 5g is gonna get us also, and the amount of data, the 3d printing, all of these elements, procurement will have to also adapt and be part of it. And what we looking at is really how you can fully integrate your technological ecosystem, how you can actually use the market data, the analysis that comes from retail, let's say, to really drive what you're going to procure, eventually. So you're taking massive or big data, analyzing it in order to look for trends that can support eventually, not just your procurement, but your manufacturing, feeding into your manufacturing as well. This kind of mass analysis or analytics is really new to us. And we are becoming capable of doing it one for the available technology that can do that. And now with the enablement of 5g will be even more capable of doing that. And I think maybe Haitham can even add on some of the advancements that they see in technology.

Haitham Khalifa:

Definitely, definitely, Bashar. So. So we've seen recently, the fact that most of the ERP solutions or Supply Chain Solutions are now available on the cloud. The high speeds available by 5g and the, let's say the breadth and depth of technological solutions, and enabled it to go down deep down into each and every, let's say functional aspects within the supply chain process. So we now have a fully capable cloud solutions that can go in depth into not just extended warehouse management, but into your logistics applications as well transport management applications as well. And all of that is seamlessly integrated with the back end DLP system, not just on the operational supply chain level as well, but on the planning side, as well. So we have ibp, logistics, Business Network applications, that can enable an enterprise to visualize the entire supply chain network in real time across the world identifies the potential bottlenecks in each and every step along the way. So let's put it this way. Right now you have the capability of in real time, identify whether it is better for me if I'm manufacturing a certain product in let's say, in Dubai, and I'm procuring the components in from China, would it be better for me to get this product Chairman through a fryer, for instance, from Japan, or from China, straight to Dubai, or would it makes more sense if I can ship it by train from let's say, from Russia all the way to Europe, and then store it for a couple of weeks in Germany, and then ship it by train to abort in in Spain, for instance, and then ship it to Dubai. So in real time, you can factor all the current ever changing costs of the storage fees, transportation fees, even labor cost as well can be factored into consideration. And it can give you a weightage of how much time would it take and how much effort to take. And accordingly it takes a decision or recommended decision on your behalf. So all of this is now happening in real time on the cloud without the need of investing millions of dollars in an infrastructure and extremely expensive infrastructure that you have to maintain regularly.

Dr Bashar Eljawhari:

And, Tom, if I may, if you would allow me Sure. All of this technology cannot really happen without the addition of people's capabilities. So we really need to upskill the people to really be able to manage such type of technology to really interpret it to really use it for the decision making, and so on and so forth. So I want to just highlight there is a softer side as well, that needs to go with the technology and it's just not purely technology driven.

Tom Raftery:

There always is, isn't there?

Dr Bashar Eljawhari:

Yes, absolutely.

Tom Raftery:

Where are we on the kind of adoption curve of this? Well,

Dr Bashar Eljawhari:

if if we look at where we are in the Middle East, the the advantage we have It's the young countries in the sense of, they are eager now to catch up to where the rest of the world is or even to get ahead of it. And I think the adaption started and I think haven gave examples not only in the private sector, but also in the government sector, the good that they are trying to move further down the or up the, I'd say I should say, the maturity curve, to really adopt more digital solutions. And we can give a lot of different examples, I've just give a quick one here, for for the sake of during the pandemic, one of the key problems was, as you are aware, the protective equipment, personal protective equipment became an issue. A company in in the UAE, they started using 3d printing to really develop visors for the medical staff. So that's really leveraging technology as an example of really feeding or helping a situation like this one, we saw similar examples of leveraging technology in the region. A good and again, recent example of that was, if you look at the Chinese vaccine, for example, while it was developed originally in China, a lot of the testing happened also in the UAE. And then the UAE decided they adapted technology and brought it here as well. And this is what I mean, it's very dynamic region that has been that's really catching up to the rest of the world.

Tom Raftery:

Okay, super. For organizations that, you know, are listening to this and are interested in rolling out some more procurement 4.0 technologies, our processes, you know, what would be kind of first steps for them?

Dr Bashar Eljawhari:

This is a an interesting question, at least I'll get started and maybe a lead item if he wants to add, the first thing is really to have a clear objective of why you want to do it. Rather than jumping into technology starting first with what is the problem of trying to solve what why I need it, and then start looking around buying it from how clean is my data, and so on. So that's our first building block to have proper data, or I have to create the data I need. Number two, what is my operating model for really, that I want to go forward how I'm going to structure my organization to really address what I need from procurement 4.0 for example, I may need more data analysts on it or data mining individuals on it on my in my organization, and how I'm going to link that organization to either manufacturing or if it's services then the services I provide. And then finally, the point that I mentioned a bit earlier, building the right capabilities for the people or the individuals who are going to be using this technology and so on. So there are really These are some of the building blocks that I see are important to stop adapting. Now there are other success factors, which is a little bit different. But at least that will be my starting point if I am to advice

Tom Raftery:

okay and Haitham

Haitham Khalifa:

Same so as Bashar, highlighted or focused on the organizational empowering it seem and the staff making sure that they are capable of doing the job. The internal capabilities of the infrastructure, IT infrastructure within the organization matters a lot as well. So initially, they need to make sure that they have a backbone, your P that is actually working, that's actually collecting the right data, and all the supporting necessary, let's say components needed, for instance, IoT you might need, especially when it comes to large shipping companies. IoT plays a huge role, and in collecting valuable information again, and eventually helps him in deciding or taking important decisions in the future. On top of Zerbe and IoT and additional machine learning, let's say components needed income to supply chain part. So there are certain components definitely is that helps them with the demand planning and demand management on the upstream level. But there are also additional components that can focus more on the downstream operational and execution let's say bots, and like we highlighted the area of transport management, your logistics etc. So, ultimately, the organization need to make sure that we currently have the proper framework set in place to have the right information and accordingly build start building up from up down so basically from the upstream onto demand planning aspect and then go down We and there are lots of components available right now in the market that can help in both of these areas.

Tom Raftery:

Okay, super, super. In other podcasts on these kind of topics, people have referred to the kind of trend of going away from globalization to localization. Is that, is that something that's happening in the Middle East as well? Or is that? Is that a global thing? or regional? Or?

Dr Bashar Eljawhari:

This is a very interesting question. The pandemic has been really the catalyst for this localization. As a matter of fact, in the best way to address the bottlenecks in the supply chain is to have the shortest possible supply chain, which is next to you if possible. However, there is also an advantage of having a global organization than the global network because they bring this scale they bring the efficiencies they bring, and so on. So now what's trending or started to merge is how I can get the benefits of a localization with the benefit of a globalization and put them together. And it's now the new trend is globalization. It's basically taking the efficiency is a hybrid model where I take the efficiency of a global company, and I customize or I have a footprint for manufacturing or services closer to my customers or a client base. If I may give a quick example of Azure. I can be a manufacturer of tractors, let's say I was part of a company that used to make manufacturer attractors, we were having difficulties selling it in one of the other countries it was in India actually. Then we discovered it was designed, or us in the US, it was not designed for our customers in the Indian looking, it was a funny example. But it's true example. People use it for transportation as well. So they need to sit on the fenders, our fenders are made out of plastic, they needed them to be made of fabricated out of steel, in order for them to sit on it. So our tractor was not attractive. As an example of a simple thing. There were 28 features, we discovered that we were pushing to the market in a global way. But it was not matching what the local customers wanted from us. And eventually, we changed that footprint. We created a facility there. And we started customizing to the clients or to the customers in that region

Tom Raftery:

Superb, and Haitham, anything to add to that?

Haitham Khalifa:

More or less, this is what we do as well. So when it comes to the backend, and software, or digitalization, we do have a global template. Usually we have the best practices, but industries, right. And on top of that, we always add the localization flavor, which is more or less stationary requirements or legal, let's say mandates that has to be met in central certain areas. Usually it's mostly financial advisor, or as well as the supply chain, in lots of cases, certain tweaks or amendments. So we do have this flavor. Definitely, this is something that we maintain as we go along. And especially in the Middle East now, as there are multiple, let's say region. So in Saudi Arabia, there are certain rules when it comes to, let's say, tendering, right for med integration was a governmental ecosystem, different rules, certain areas, as well as UAE as Qatar. So we factor all of that into consideration solutions that we deploy.

Tom Raftery:

Okay, tremendous. Gentlemen, we're coming towards the end of the podcast. Now, is there any question I have not asked you that you kind of wish I had or any topic that we've not touched on that you think it's important for people to be aware of?

Dr Bashar Eljawhari:

I will probably it's not a question, but it's more of added to the comments so far. Okay. Change Management is another key success factor that gets ignored. Usually, when companies move into new technologies and digitizing their operations, it is really important to take the stakeholders, the employees, the beneficiaries of this technology, with you through this journey, through proper communication, proper training, and so on to get them to where you want to go. A technology that does not have proper change management actually can fail miserably. And this is really one of the items that I've seen failures happen. Because the people the change management side, the softer side has not been managed properly. And this is really something I just wanted to add as we conclude our podcast. Thank you.

Tom Raftery:

Yeah, no, it's a very good point. But I sure if I've said many times in this podcast that changing technology is easy, changing people as a lot harder. Absolutely. Hated many last comments from yourself. Any any topics we've not touched on.

Haitham Khalifa:

No, no, that wi l be all Tom. Thank you all Thanks a lot Bashar and Tom.

Tom Raftery:

If if people want to know more about either yourselves Bashar and Haitham or PwC or procurement 4.0 or any of the other topics we've discussed today, where would you have me direct them?

Dr Bashar Eljawhari:

Oh, we will send you a link that you can put on your podcast that will make it easier for them to find us or find relevant topics to this one.

Tom Raftery:

Brilliant. Okay. S perb gentlemen. That's been g eat. Thanks a million for comi g on the podcast t

Dr Bashar Eljawhari:

Thank you. Thank you very much.

Tom Raftery:

Thank you. Okay, we've come to the end of the show. Thanks, everyone for listening. If you'd like to know more about digital supply chains, head on over to sa p.com slash digital supply chain or, or simply drop me an email to Tom Raftery at sa p.com. If you'd like to show, please don't forget to subscribe to it and your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.