Issue 11 - SCLG

5 

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for the Supply Chain & Logistics Group 

Editorial 

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David Wild 

Jan Bak 

Mike Lee 

Hamdi Osman 

Graham Burne 

Dr Madrecha 

Rob Turner 

Sanjay Babur ACII 

Dear Readers, 

Shashi Shekhar 

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EDITORIAL 

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Dr. Imtiyaz Majid 

magazineeditor@sclgme.org 

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Medilyn M. Manibo 

ONLINE 

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SALES & MARKETING 

PRINT 

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rakesh@middleastlogistics.com 

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vinod@middleastlogistics.com 

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Change and innovation are two of the most important words in 

the supply chain lexicon, and logistics and supply chain 

professionals must keep abreast of the evolution taking place in 

their world. They need to know the individuals and companies 

behind these trends. They must understand the impact of these 

changes. And they must know how to cooperate with - or 

counteract - what’s taking place. 

This year, at Global supply Chain and Logistics Conference 2006, 

it was a pleasure to see delegates with notebook in hand, shuttling 

from one conference hall to the next, trying as much to pick up 

the buzz in the hallways during the breaks as to listen in on the 

keynotes and presentations going on inside the meeting rooms. 

This conference organised by Council of Supply Chain Management 

professionals, USA and supported by Dubai Chamber of Commerce 

and Industry and Supply Chain and Logistics Group was attended 

by nearly 200 delegates and speakers from all across the globe to 

comprehend bottom-line values of supply chain. 

Dubai is destined to play a major role in the ever-expanding 

reach of global supply chains. Its strategic location combined with 

visionary projects like Dubai World Central will further strengthen 

the emirate's position as a regional logistics hub. 

SCLG is committed to bring such opportunities of conferences, 

education and business to advance the cause of logistics and 

supply chain management in the region. 

Together, we shall be able to contribute in making Dubai the 

largest and most efficient supply chain and logistics hub around 

the globe. 

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All rights reserved. The opinions and views expressed in this publication are not 

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acting on information contained in this publication, which is provided for general use and 

may not be appropriate for the reader’s particular circumstances. The publishers regret 

that they cannot accept liability for any error or omissions contained in this publication. 

We would like to hear from you ! 

We welcome your comments and views on this issue of The LINK Magazine. Your 

opinion is valuable to help us serve you better. 

Keep us updated on the activities in your organisation. Send all the exciting news 

about your company to: 

The Editor, 

magazineeditor@sclgme.org 

Supply Chain & Logistics Group | www.sclgme.org

Contents 

8 SCLG-A ROUND UP 

Global Supply Chain and Logistics Conference 2006 

14 RETAIL 

Retailing Online: Jacky’s showing the way 

08 

16 SUPPLY CHAIN 

Supply chain strategy: Importance of aligning your strategies 

18 LOGISTICS 

Dnata FLC: Gearing up for ‘prime time’ 

20 WAREHOUSING 

Cool Warehouse 

23 MARKET WATCH 

Jafza unveils Dubai Auto Zone 

26 MATERIAL HANDLING 

PVAXX, ready to take on global pallet distribution 

31 

28 PRODUCT WATCH 

Very narrow-aisle turret trucks 

31 TRANSPORTATION 

Does perishable-transport really require freighter traffic? 

36 GATEWAYS 

FFZA to set up logistics park 

38 CASE STUDY 

Symbol helps Tesco store managers stay connected 

40 CONSTRUCTION 

King Abdullah Economic City: An amazing business vision 

43 HUMAN RESOURCES 

People: The key to productivity 

38 

44 BANKING & FINANCE 

10 Tips for reducing logistics costs 

46 Legal 

Collision at Sea... Who's at fault 

48 INSURANCE 

Check your insurance cover 

49 INFORMATION TECHNOLOGY 

Tejari, Jafza to create virtual free zone 

50 ACADEMIA 

The effect of supply chain glitches on shareholder wealth 

40 

52 EVENT SPOTLIGHT 

InRetail 2006: New dedicated retail exhibition for the 

Middle East 


8 

Supply Chain & Logistics Group - A Round Up 


The Council of Supply Chain Management Professionals 

(CSCMP) hosted its first conference in Dubai, The Bottom- 

Line Value of Supply Chain Management, in February 2006. 

Held in collaboration with the Supply Chain Logistics Group 

(SCLG), the two-day event - a first in the Middle East for 

CSCMP - was attended by supply chain professionals 

representing over 20 nations from around the globe. 

Session presenters included widely recognised industry 

experts like Rick D. Blasgen, CSCMP’s president and CEO; 

Fadi Gandour, CEO of Aramex International; Michael Proffitt, 

CEO of Dubai Logistics City; Martin G. Christopher, professor 

of marketing and logistics, Cranfield University; and 

Mohammed Al-Muallem, executive director, technical and 

technology, DPA. 

The positive response to the program and its content 

attests to the success of the event on multiple levels. 

“Supply chain management is finally getting attention as one 

of the tools that adds to bottom-line value,” observed Shashi 

Shekhar, Dubai conference co-chair. 

Conference co-chair and chief executive of iPlan Industries 

South Africa, Abré Pienaar, agreed that the Dubai conference 

was a supply chain achievement on many levels. “The 

program was topical and relevant,” he said, “offering 

content that underscored the importance of thinking globally 

about supply chains and logistics, yet stressing the need for 

sensitivity to local issues as a practical concern for successful 

implementation.” 

Collaboration and flexibility were cited by conference 

speakers as critical components to realizing bottom-line 

supply chain management value. “Collaboration is key to an 

efficient, effective supply chain,” Blasgen stated in his 

opening presentation. “Without collaboration, the supply 

chain would be nothing more than a collection of firms, each 

following its own pathway.” 

Dr. Christopher explored the new rules of competition and 

risk management, emphasizing that the resiliency of a supply 

chain is dependent upon its responsiveness to change. 

Another conference speaker, Al-Muallem, discussed the 

benefits of consolidation, pointing out that “working 

together creates supply chain flexibility while reducing risk 

and complexity.” 

The collaborative, global efforts of many individuals were 

key to the high level of satisfaction expressed by conference 

participants. “The success of this event was the result of a 

collaborative, focused endeavor by the CSCMP & SCLG 

teams,” affirmed co-chair Shekhar. 

He appreciated his SCLG peers Mike Lee, Clifford Cuttelle, 

Dr. Madrecha, Dr. Satish Mapara, Sanjay Babur, Pradeep 

Melakandy, Dirk Van Doorn, and others for their efforts and 

support. “ There was a great unity and everyone worked 

together collaboratively and it had a great value on the 

outcome,” Shekhar said. 

SCLG President Mike Lee also acknowledged the 

extraordinary teamwork that produced this international 

event where supply chain education eliminated geographic 

boundaries and transcended cultures. 

Another factor contributing to the success of The Bottom- 

Line Value of Supply Chain Management was the program’s 

format. According to one participant, it was “…a unique 

experience for the region, with breakout sessions and three 

tracks running at the same time.” 

In a region where program quality and content are quickly 

judged, CSCMP’s director of education and roundtable 

services, Kathleen Hedland, observed that attendees not 

only remained engaged throughout the event, but also 

actively participated in session discussions and networking 

opportunities. 

After enjoying a successful event, with participation of 

over 250 industry professionals representing top companies 

and organisations, the SCLG and CSCMP have committed to 

join efforts to organise such vital events in the future for 

promoting supply chain process in the region. 


Supply Chain & Logistics Group - A Round Up 

9 

NEW MEMBERS 

We take great pleasure in welcoming our members and 

together hope to attain new heights of excellence. 

SCLG Executive Committee 

NEW CORPORATE MEMBERS 

ONLINE DISTRIBUTION 

OnLine Distribution Ltd. brings the 

leading names in networking to the 

Middle East, Western Asia and North 

Africa. A value-added distributor of 

data networking products, we serve the region through 

outstanding levels of channel support and unmatched 

relationships with our channel partners. 

Some of the world’s leading vendors who are market 

leaders choose to work with OnLine Distribution in the 

region. They recognize our ability to provide complete 

connectivity solutions and bringing together products 

and services that support end-to-end networking for 

organisations. 

Vendors like Symbol and Zebra, market leaders in 

providing solutions to the supply chain industry work 

with OnLine Distribution. We support and market their 

product offering in the region. For more information 

log on to www.online-dubai.com 

NDTE 

National Trading & 

Developing 

Establishment (NTDE) was established over three 

decades ago. The company has grown since it was 

founded in 1971. The company has evolved into a 

multi-million dollar business across the UAE, Oman and 

Iran. Adil Alsmadi, logistics manager, NTDE says we 

now offer a diverse range of products, which are 

distributed among over 9000 customers in the Middle 

East. Today NTDE is responsible for bringing brands 

such as Cadburys, Haagen Dazs and Lay's to the Middle 

East. We will continue to expand further and this will 

place greater heights and challenges on the logistics 

operations,” concludes Alsmadi. 

EVEREX 

EVEREX has own offices in London, 

Bangkok, Dubai and Tehran active in 

freight forwarding and logistics. We are GSA of Mahan 

Air and ABAN Air. ABAN Air has scheduled freighter 

flight in THR/DXB/THR route and offer charter flights 

in the region. Mahan Air is PAX/cargo airline. EVEREX 

main office is in THR active in Cargo Sales, Courier, 

Airport Handling, Warehousing and Travel and Tourism. 

The HUB for cargo activities is in Dubai working 

closely with our offices and nominated agents around 

the world. 

New SCLG Logo unveiled 

SCLG has unveiled its new 

corporate identity to consolidate 

the group's official legal backing 

by the Dubai Chamber of 

Commerce and Industry (DCCI), to 

broaden its capabilities and 

introduce a new portfolio of 

supply chain services. The change reflects the significant 

relationship between DCCI and SCLG. 

Members of the SCLG Executive committee voted for the new 

logo from a short-list of three submitted designs selected by the 

logo committee. Characteristics important for the new logo were 

simplicity, appealing form and color choice, and identification 

with the Group’s mission and its relationship with the DCCI. 

Saadi Al Rais joins SCLG's 

Advisory Board 

Saadi Al Rais 

RHS Logistics 

NEW INDIVIDUAL MEMBERS 

Saadi Al Rais, a UAE citizen, was born in 

Dubai based family which was the oldest 

established national shipping company in 

the country. 

He received his higher education in 

the United Kingdom and on return in 

Dubai in the late 1970’s, joined his 

father and later, by his younger brother, 

in managing the Rais Hassan Saadi family 

business. 

The area was, by then, on the verge of 

development and under Saadi’s guidance, what has by now 

developed into a sizeable group, has kept pace with the 

remarkable growth witnessed by the UAE in the last three 

decades. 

From originally a shipping related business, it has expanded 

into logistics, cargo and transportation services with a major base 

in the Jebel Ali Free Zone, offshore, towage and lighter age, 

insurance, real estate, civil contracting and general trading. With 

branches throughout the Gulf and the sub-continent, the Group 

offers a comprehensive coverage of the Middle East area. 

Saadi has presided over this significant era of the company’s 

development, reflected in his election as President of the 

prestigious Dubai Shipping Agents Association. 

New Zealand Milk : Chidambaram Nagarajan 

Barcode Gulf : Murli Nair 

Dubai Industrial City : Dheeraj Chhabra 

BDP Gulf : Sunita Bhambhani 

Alphamed : Urbino Patt Fernandes 

Rhode & Liesenfeld : Jonathan Percy 

International Tobacco 

Machinery ME Fze : Thomas K K 


10 

About SCLG 

SUPPLY CHAIN & LOGISTICS GROUP 

SCLG BOARD OF ADVISORS 

Shashi Shekhar 

Emirates SkyCargo 

Mohammed Sharaf 

Dubai International 

Sanjay Naik 

Emirates Group 

Fadi Ghandour 

Aramex 

Mishal Hamed Kanoo 

Kanoo Group 

Clifford Cuttelle 

Tagstone 

David Wild 

DHL 

Michael Proffitt 

Dubai Logistic City 

Supply Chain & Logistics Group (SCLG) of the Middle 

East is a non-profit organisation, working under the 

umbrella of Dubai Chamber of Commerce& Industry to 

promote the cause of supply chain and logistics 

industry. This group brings an opportunity for personal 

and professional developments by offering networking 

prospects among like-minded professionals and 

corporations on a global basis. 

The SCLG was founded with the help of senior 

management professionals representing a wide 

spectrum of industries on Supply Chain. This group shall 

strive to bring the best of education, seminars and 

interaction through partnership/ alliances with a 

variety of similar bodies across the globe. 

The Link is the official magazine of the SCLG 

addressing the needs of the Logistics and Supply Chain 

Professionals/Management in the region. It presents 

news, views, developments and information to its 

readers drawn from the industry experts. The magazine 

aspires to serve as a benchmark guide to the industry, 

the first of its kind in the region. 

The articles offer valuable insight and information 

for today's Supply Chain executives. These articles and 

news features cover innovative supply chain practices, 

emerging technologies, e-commerce, market 

information from industry leaders and reports on breakthrough 

innovative practices. The Supply Chain and 

Logistics industry is still in the development stage in the 

region, but activities of SCLG will help build renewed 

professionalism in the industry. 

Hamdi Osman 

FedEx 

Saadi Al Rais 

RHS Logistics 

SCLG MEMBERSHIP 

CORPORATE MEMBERSHIP 

Membership is open to all organisations. Corporate 

members shall/may nominate 4 representatives. All 

nominated members shall be allowed to vote at the 

Annual General Meeting (AGM), and at any 

Extraordinary General Meetings. Board of Advisors 

and Executive Committee members shall decide the 

annual fees for membership. 

INDIVIDUAL MEMBERSHIP 

Open to any individual from any part of the world. 

The annual subscription shall be set from time to 

time as deemed necessary by the Board of Advisors 

and Executive Committee members. 

STUDENT MEMBERSHIP 

Open to students, full-time education only. 

Student membership shall not convey any voting 

rights to the individual. The annual subscription 

shall be set from time to time as deemed necessary 

by the Board of Advisors/ Executive committee 

members. 

Rob Turner 

Nestle Middle East 

Jinendra Sancheti 

TNT Express 

For details log on to: www.sclgme.org 

MORE REASONS - WHY BELONG TO SCLG? 

Access to Educational Training and Seminars at 

concessional rates. 

A Membership Certificate - to distinguish you/ your 

company as professionally focused enterprise 

committed to the cause of Supply Chain and Logistics 

• Access to networking evening(s) at 

rebated rates 

• Access to 'member only' section of 

SCLG coming soon 

• Rebates on Subscription of Membership to 

international partnering body of SCLG 

• Membership Card (discount offers being 

discussed at leading retailers /service 

providers) and many more to come............ 

Visit our website (www.sclgme.org) for more details. 

Wish to volunteer on various Sub Committee to 

support us in managing and fostering Supply Chain & 

Logistics Community? 

Contact - Kanchan Vora at admin@sclgme.org 

MISSION OF SCLG 

To provide an accessible, dynamic and professional 

networking environment that facilitates the 

achievement of professional, educational and personal 

goals, by members of SCLG community in an 

atmosphere that encourages professional development, 

diversity and innovation in Logistics and Supply Chain 

Management. 

OBJECTIVES OF SCLG 

• To promote the cause of Logistics and Supply Chain 

industry and raise the overall standards of all industries 

on end to end supply chain 

• To protect the interest of member organisations and 

support government bodies in formulation of policy 

framework for logistics organisations 

• To encourage the free exchange of knowledge and 

skills relating to supply chain and logistics within the 

members of the organisation 

• To provide all members an opportunity to network 

among each other and help facilitate an overall 

efficient commercial environment 

• Undertake studies, compute and maintain 

information, statistical data and official documents 

relating to various aspects of supply chain and logistics 

industry for the benefit of all 

• To establish and maintain contact with similar 

organisations internationally and provide all members 

an opportunity to network with like-minded 

organisations/ members across the globe 

• To conduct training courses, seminars, conferences 

and studies relating logistics and supply chain; also 

establish a library and research centre relating this 

industry to expand the knowledge base 

• To establish good relations with other professional 

groups or societies that are existing or to be established 

locally or globally 

• To promote the cause of education in Supply Chain 

and Logistics among nationals of UAE and thereby 

contribute to build a cadre of professional and extra 

competent nationals to take up current and future 

challenges of Logistics/ Supply Chain industries. 


About SCLG 11 

SCLG CONSULTIVE COMMITTEE 

Jan Bak 

PVAXX Limited 

Johnson Soans 

Panasonic Gulf FZE 

Pradeep Melakandy 

FMCG Logistics 

Dr. Satish Mapara 

GlobeApex Management Consultants 

C. Rajmohan 

Free Ports Shipping 

Dr. Madrecha 

Kanoo Group 

Roy A. Patterson 

UTi 

Graham Burne 

Kraft Foods 

Ravi Kashyap 

Steinweg Sharaf 

Arup Gupta 

Smart Logistics 

Alnoor Nagji 

Great Circle Lines 

Madhav Kurup 

Trident Freight 

VSCLG EXECUTIVE COMMITTEE 

Mike Lee 

President 

Global Shipping & Logistics 

(Al Shirawi Group) 

Sanjay Babur 

Vice President 

Cosmos Insurance 

Sai Kumar 

Treasurer 

Maltrans Logistics 

Tayssir Awada 

Dirk Van Doorn 

Abed Shaheen 

FedEx 

DHL 

Aramex 

Nigel Moore 

Usha Kaul Saraf 

Mohammed Asghar 

Logistics Recruitment 

DUC 

The Tutelage 

SCLG Endorsed Events Calendar 

4 th ASEAN Ports & Shipping 2006 

6 - 7 June 2006, Venue - Malaysia 

Southern Asia Ports, Logistics & Shipping 2006 

14 - 15 September 2006, Venue - Mumbai, India 

3 rd Intermodal Asia 2006 

26 - 27 October 2006, , Venue - Brisbane, Australia 

2 nd Trans Middle East 2006 

29 - 30 November 2006, Venue - Dubai 


About SCLG 13 

Meet SCLG Advisory Board Member 

Clifford Cuttelle 

Tagstone 

( 

Clifford Cuttelle) 

Please tell us how SCLG started over, when and how you 

got associated with it? 

I guess that the SCLG started as the result of meetings that 

took place between myself and a number of other interested 

parties both here in Dubai and in the UK a number of years 

ago, around the mid nineties, as the result of problems that 

I, and a number of other international manufacturers had run 

into in the USA/UK with agents selling by the kg, companies 

employing staff with limited training in exports and worst of 

all, the forwarder not asking the question what it was he was 

shipping. One of the results was the company going for the 

lowest rate found that their goods took 3 times as long to get 

to its destination. 

Therefore their approach had to change, and over a period 

it did, but it took a long time to get the message through to 

some of the agents, and only when some of them started to 

lose contracts did they realise that they had to change 

their thinking. 

From there on, Shashi Shekhar, Sanjay Naik, and a number 

of others put together the idea that we as a group could 

improve things in Dubai first, but after the first ”Roundtable 

meeting”, found that there was a lot more support than we 

had first anticipated for this type of organisation. So, the 

stage was set, you could say. And around late 1998/1999 we 

started to put ideas on to paper. As of today, the majority of 

core people are still with the group, although time is now at 

a premium as Dubai advances. 

Being one of the founding member of SCLG, can you give 

us an idea of how the group has evolved over the years? 

One of the problems that we had was other groups thinking 

that we were “Taking over their pitch”, which was not the 

case. Those who came to the meetings were from so many 

walks of life, that the idea that we were taking other group 

members fell by the wayside. As we have grown, not only in 

members, but a lot of those members are at the top of their 

profession, therefore expertise increased, different working 

groups were set up, including one for Education and the 

advancement of Training, which we really came in with a 

number of years ago. Since then we have gone from strength 

to strength, but as is the case in Dubai, your work load 

increases, time flies by, and all of a sudden, you find another 

year has gone by. However, the two members that I 

mentioned, Shashi Shekhar, Sanjay Naik and others (too 

many to mention all), did a lot of work with the Dubai 

Chamber of Commerce and Industry (DCCI), and without their 

support and guidance, we may not have grown as fast as we 

have, I know that a lot of members have burnt the midnight 

oil at times. Our aim is to continue to grow and make the 

SCLG the leading groupin the GCC. 

By profession Cliff Cuttelle is a qualified printer, having 

worked in a number of European and American 

countries before branching in to Export and Logistics. 

He is a Member of the Institute of Export, as well as the 

Charted Institute of Logistics and Transport and a 

Member of the Freight Professions in the UK. Cliff 

moved to Dubai in the early part of 1997, but previously 

used Dubai as part of a turn key operation servicing and 

supporting the export distributor operation, covering 

the GCC, North and South Africa as well as the sub 

continent, starting back in 1984. His hobbies are 

reveling old aircraft (the real ones), trying to keep the 

weight off, and travel. Cliff and his wife Trish celebrate 

their 30th wedding anniversary this year. 

Where would you like to see SCLG in next five years? 

In the near future, I am confident that the group will grow 

as a leading Business Group not only in the GCC region but 

also around the globe with the help of contacts that SCLG 

have built up worldwide over a period of time. Add to this, 

Dubai’s growing stature as an international logistics and 

supply chain hub will require it to provide the right expertise, 

qualified staff and training facilities to keep apace with the 

growth, the SCLG sees itself as a means to providing some of 

the services that will be required. 

We will reach the top of the ladder in the next 3 to 5 years, 

but we will have to burn a lot more of the midnight oil to 

achieve this. 

You have a full time job in addition to being on SCLG’s 

Advisory Board. How do you balance job and SCLG 

obligations? Do you find enough time? 

No, none of us have enough free time to spare. At times, 

it seems to go in Fits and Starts… a couple of us are out, some 

have to go to other meetings, but, never-the-less, we are 

able to do it. Communicating through e-mail can be a 

blessing, but it, sometimes, can also be a problem. As yet, I 

do not know of any members who have got divorced, but a 

few have got very near the mark! Especially when the phone 

rings on holidays. 

On a general note, do you think general public is aware of 

the immense role that supply chain management (SCM) 

and logistics play in its everyday life? 

We can and will improve awareness, one of our key tools is 

the bi-monthly magazine ‘LINK’ that goes out to all members 

and a good many others, not just in the GCC but Europe, 

North America and the sub continent. 


14 

Retail 

Online Retailing 

- Jacky’s showing the way 

An early adopter 

of technology, 

Jacky's has been 

using the Internet 

for its mail order 

business since 

1999. “Retailing is 

ever-evolving and 

as the online 

population in the 

Middle East 

increases and as 

customers become 

Ashish Panjabi more confident of 

Chief Operating Officer 

the Internet, 

Jacky's Electronics 

Jackys.com will 

become the top-of-mind recall for most prospective 

online buyers in the region,” says Ashish Panjabi, 

Chief Operating Officer, Jacky's Electronics. Ashish 

recently sat down with Editor of The LINK to share 

his thoughts on online retailing concept and Jacky’s 

success. 

Tell us how Jacky’s came up with 

the idea for online store and how 

does it work? 

We came up with the idea of our 

website around about 1997. 

Jacky’s has had a mail order 

business running since the 

1970’s and we always used to 

have mail order catalogues so 

moving to the Web was a natural 

progression for us. 

What we aimed to do 

when we made it a fully 

e-commerce enabled site in 

1999 was to make sure you 

could have all the best 

brands on one website and 

create not only a user-friendly shopping site but also 

a consolidated source of information for all the 

world’s leading brands. 

Otherwise, it was a very 

tedious task to go to the 

website of each brand owner 

and find out what is new or to 

compare products. 

What range of products does your online 

store offer? 

The product range is more or less similar to 

what you would find in Jacky’s Electronics 

retail outlet. Through www.jackys.com, we 

offers shoppers the convenience of buying online 

with multi-brand choices - from IT products and 

mobiles to electronics and appliances to health and 

beauty care products. 


Retail 15 

Please compare benefits of 

shopping online to offline? 

Benefits of shopping online to 

offline vary on the type of product or service 

being bought. In our case, the benefits of online 

shopping is that you can confirm your purchase 24 hours 

a day and have it delivered to your doorstep. If you are 

looking for information on what product to buy, again, 

our website is accessible any time, any day and you can 

get your comparisons done online whether you decide to 

buy online or offline. 

What makes your online store stand apart from others? 

I think we have been successful because we had a good 

mix of mail order and retail experience. That means we 

had the back-office logistics expertise to handle e- 

c o m m e r c e 

transactions and the 

Online customers are by retail inventory to 

nature not loyal because help in terms of 

your competition is 

expediting deliveries 

lead times. We also 

literally a click away. 

You need to serve the 

customer well and make 

sure he returns. 

have linked up our 

website to our ERP 

seamlessly done. I 

system so price 

updates, etc. are 

think the fact that we 

also have a strong 

retail presence has given many customers an increased 

sense of confidence in dealing with us. 

Tell us about the buying habits of online shoppers. Are 

they more brand or price conscious? 

Online shopper's of course compare prices. It is easier 

to compare on the Internet but then again, we tend to 

sell only branded products on our website so I guess all 

consumers buying on our site would also be brand 

conscious. 

Studies show that among non-purchasers, concern 

over giving out their credit card number tops the 

reasons for not shopping online. Your comments… 

The biggest challenge initially was not this but that 

most people didn’t have credit cards. Most banks have 

become more liberal in the last few years and we have 

seen an explosion in terms of the number of credit cards 

that people now have. With this, there is increased 

confidence in using a credit card overall. We also use 

advanced 

verification and 

encryption 

technologies to protect card 

holder data. In any case, we also 

have a cash on delivery option 

which customers can always 

avail of. 

How can an online store 

retailer meet and exceed customer expectations? 

Service is the key to satisfying a customer. Online 

customers are by nature not loyal because your 

competition is literally a click away. You need to serve 

the customer well and make sure he returns. The 

attention span of an online customer is very short and 

the alternatives are plenty so you have to ensure you 

don’t lose out. 

Do you have any advice for other retailers looking to 

distribute their products online? 

Plan out your systems well. It is more than just 

building a website. You need to have the entire back end 

interface in place also. 

Do you have any advice for online shoppers? 

Be careful where you shop. There are a lot of genuine 

websites out there but there are also a lot of online sites 

that don’t always have the best intention. Remember, it 

is your right to counter-check anything an online store 

might say and please verify the information for yourself. 

How do you deliver your products? Is delivering them 

on time a challenge? 

Due to the fact that we have been an established Mail 

Order company and we also have a strong retail 

presence, the logistics of deliveries has been quite 

smooth for us. We have a back-end logistics team as it 

is dedicated for our Mail Order business which can 

handle the back-office activities normally required for 

despatching deliveries quite efficiently. Added to this, 

we have the benefit in being a retailer which means we 

have got most of the goods in stock in any case and we 

are using an ERP system which allows us to track the 

order through the different stages within our internal 

logistics cycle. 

Furthermore, we have excellent relationships built up 

over the years with courier companies and they ensure 

our packages reach on time. 


16 Supply Chain 

Supply Chain Strategy 

The Importance of Aligning Your Strategies 

- by UPS Supply Chain Solutions 

Chances are you’ve heard the term 

supply chain strategy. Used informally, 

it is often confused with supply chain 

management, where supply chain 

operations are controlled to reduce 

costs. There’s some truth to this 

definition, but supply chain strategy 

really is broader; it defines how the 

supply chain should operate in order to 

compete. Supply chain strategy is an 

iterative process that evaluates the 

cost benefit trade-offs of operational 

components. 

Business strategy involves leveraging 

the core competencies of the 

organisation to achieve a defined highlevel 

goal or objective. It also includes 

the analytic and decision-making 

process surrounding what to offer 

(e.g., products and services), when to 

offer (timing, business cycles, etc), 

and where to offer (e.g., markets and 

segments) as a competitive plan. While 

the business strategy constitutes the 

overall direction that an organisation 

wishes to go, the supply chain strategy 

constitutes the actual operations of 

that organisation and the extended 

supply chain to meet a specific supply 

chain objective. 

That being said, most companies 

have a business strategy, but are 

unlikely to have overtly designed a 

supply chain strategy. So, why is a 

A well executed 

supply chain 

strategy results in 

value 

creation for the 

organisations 

supply chain strategy so important? 

Well, one good reason is to 

operationalise and support your 

business strategy. At some point, a 

business strategy must be executed 

and typically this is done through the 

operational components of a company. 

Supply chain strategy also focuses on 

driving down operational costs and 

maximising efficiencies. For example, 

an organisation may choose a strategy 

directed at supplier management as a 

way to remain competitive. By 

providing a clear purpose, the 

organisation keeps sight of the strategy 

and is able to devise tactical steps to 

achieve these goals. 

Another reason for having a supply 

chain strategy is to establish how you 

work with your supply chain partners, 

including suppliers, distributors, 

customers, and even your customers’ 

customers. As the marketplace 

becomes more competitive, it is 

critical to reinforce existing 

relationships and work together. And 

for all these reasons, a well executed 

supply chain strategy results in value 

creation for the organisation. 

DEVELOPING A SUPPLY CHAIN STRATEGY 

Understand the Business Strategy 

The first step is for supply chain 

executives to clearly understand how 

the enterprise chooses to compete. 

This is important not only for the 

obvious reason of working off the 

“same play book,” but also for the 

reason that it forces the supply chain 

operation to see itself as a customer 

facing entity serving the competitive 

goals of the enterprise - not merely an 

operational department. Supply chain 

strategy is not simply a linear 

derivative of the business strategy. At 

best, supply chain strategy can be the 

enabler of the business strategy. If the 

business strategy is to be the low cost 

provider, the supply chain strategy 

should support this. And just like when 

developing a business strategy, look to 

your core competencies, focus, and 

means of differentiation when 

developing a supply chain strategy. 

Being able to strategically source parts 

at an attractive price may support both 

your supply chain strategy and business 

strategy, but only if you have the 

capabilities to do so effectively. 

Look to your supply chain 

competencies and leverage what you 

do well. You may want to focus on a 

particular market or segment in which 

to gain supply chain efficiencies. Or 

you may want to differentiate your 

organization operationally by providing 

lower costs to customers or providing 

services that other industry players are 

unable to do. 

Assess the Extended Supply Chain 

The next step is to conduct a detailed, 

realistic assessment of the capabilities 


Supply Chain 17 

Case in Point: Inamed 

Rising from humble beginnings, Inamed, a leading medical 

device company, has seen itself grow to become a $300 million 

dollar company with its stock value increasing almost 200% 

over the last year. The company is credited with a clear 

business strategy of growth through acquisition and new 

product innovations. Anticipating continued growth and 

business success, Inamed needed a supply chain strategy 

consistent with an expanding organisation. Faced with such 

challenging supply chain questions as “what is our optimal 

distribution network?”; “should we outsource some supply 

chain activities?” and “how can costs be better managed and 

contained?” the company conducted a global supply chain 

assessment to identify supply chain costs and opportunities. 

In addition to offering supply chain strategy 

recommendations, the study provided a total picture of 

Inamed’s supply chain costs and compared them to industry 

and non-industry benchmarks. Over $4 million in process 

improvements and cost saving opportunities were identified. 

Now armed with a supply chain strategy, Inamed is in the 

process of implementing these changes. 

that exist within the organisation and 

even the extended supply chain. Begin 

by closely scrutinising your 

organisation’s assets and evaluate how 

well they support the strategy. Old 

machinery and disparate systems may 

mean high operational overhead and 

costly process inefficiencies and 

redundancies – clearly not supportive of 

a low cost provider strategy. A formal 

supply chain assessment by a nonbiased 

outside party may assist you in 

strategy and the operational assets, you 

may have to make capital investments. 

Of course, the other alternative is to 

change your assumptions and alter your 

strategy all together! 

Develop an Implementation Plan 

From this critical work emerges the “go 

forward” supply chain strategy – 

directly tied to the business strategy, 

highly specific as to enablers and 

metrics, and with a defined set of 

implementation requirements and 

contingencies. The development of an 

implementation plan should include 

activities and tasks, roles, 

responsibilities, a corresponding 

timeline, and performance metrics. 

Establish a sub-team to shepherd the 

execution and provide project 

management responsibility to resolve 

issues and track status. 

DEVELOPMENT CONSIDERATIONS 

better understanding your operational 

strengths and opportunities for 

improvement. Look for a firm that can 

provide you with operational 

benchmarks both inside and outside of 

your industry in order to gauge core 

competencies. Once the assessment is 

complete, assemble a team to review 

and prioritise recommendations, 

validate the opportunities, define the 

risks, and the requirements for 

implementation. Ultimately, if there is 

a disparity between the supply chain 

A formal supply 

chain assessment by a 

non-biased outside 

party may assist you 

in better 

understanding 

your...opportunities 

for improvement 

Cooperate and Collaborate with Your 

Partners – Throughout the development 

process remember to include your 

supply chain partners. While you don’t 

necessary need to divulge the full 

details of your strategy, you can 

certainly communicate how you would 

like to do business. Ideally, seek out 

mutual goals that both organisations 

can execute on. Not only will you be 

one step closer to realizing your supply 

chain strategy, you will learn more 

about the companies that you do 

business with. For example, 

collaboration in product design may 

meet your need to stem R&D costs and 

also alert you to new product concepts 

that you wouldn’t discover without 

working with your customer. 

Outsource Where Appropriate – Part 

of developing a supply chain strategy 

includes evaluating opportunities to 

outsource areas that are not your core 

competency. If someone else can do it 

cheaper, it may be worth outsourcing 

not only to drive down costs, but also to 

focus more resources on the core 

competencies your organisation 

does well. 

The above article has been authored by UPS Supply 

Chain Solutions Consulting Services 


18 

Logistics 

Dnata FLC : Gearing 

up for ‘prime time’ 

Jean Pierre L. De Pauw 

Senior Vice President, Dnata Cargo 

Dnata Cargo, operator of Dubai’s air cargo terminals, 

is on track to complete the final expansion of its 

Freezone Logistics Centre (FLC) at Dubai 

International Airport. The new unit will more than 

triple annual throughput capacity of the FLC 

complex to a massive 500,000 tonnes and offer the 

cargo community streamlined import-export 

services. 

FLC III, scheduled for completion in early 2007 

with 16,000 square metres of warehousing and 

10,000 square metres of office space, will contain 

Dubai’s first fully-automated air cargo storage and 

retrieval system handling facility and a complete 

portfolio of 24-hour government import-export 

services, all under one roof. 

When operational, the four-storey FLC III will 

extend existing FLC facilities to create a giant 47,000 

square metre warehouse and office complex. It will 

also significantly boost storage and handling 

capabilities, enabling the FLC to accommodate 

Dnata’s cargo growth until 2010. 

Construction of FLC III has recently advanced, 

with steel framework towering alongside existing 

FLC buildings - FLC I, which opened in 1999 as a 

9,000 square metre dedicated charter terminal for 

freighter operators, linking Dnata’s Main Cargo 

Terminal (MCT) and the Airport Freezone community 

with flexible, cost-effective handling; and the 2003 

FLC II extension, which doubled capacity. 

Jean Pierre L. de Pauw, Senior Vice President, 

Dnata Cargo, said: “FLC III, with its vastly enlarged 

capacity and sophisticated fully-automated 

facilities, is fast becoming a reality and will 

transform cargo handling in Dubai.” 

“Airlines, agents, freight forwarders and charter 

operators will be able to complete their business 

transactions faster, with government agencies 

including Customs, Municipality, Health and Police 

located on the premises to provide round-the-clock 

services,” he said. 

FLC III’s state-of-the art cargo operating system 

will incorporate fully automated elevating transfer 

vehicles (ETV), truck docks interfaced to land and air 

sides, and automatic storage and retrieval systems 

(ASRS) to ensure a seamless flow of cargo through 

the building. 


Logistics 19 

It will be integrated with Dnata’s computerised DACS+ 

cargo handling system to provide customers with improved 

service standards, real-time information, speedy delivery, 

optimum utilisation of space and time, and cost reduction. 

Once FLC III is operational, Dnata will further streamline 

services by introducing its innovative web-based CALOGI 

customer interface portal. Linked to DACS+, CALOGI will be 

the first initiative connecting ground handling agents, airlines 

and freight forwarders directly to the end shipper and 

consignee. 

FLC has expanded to keep pace with Dubai’s relentless 

cargo growth and customer demand since opening in 1999 

with a handful of freighter operators. By 2003 the number of 

FLC operators was 26, the average number of flights each 

month had grown to 260 and annual cargo volume had 

reached a record 50,000 tonnes, triggering the FLC II 

expansion which doubled capacity, extended customer 

facilities, and increased aircraft parking bays from 10 to 46. 

“The flexible and tailor-made characteristics of FLC’s 

services attracts new charter operators on a regular basis, 

many of whom bring in business on a project footing, such as 

carrying supplies for relief operations, infrastructural 

developments and rebuilding activities including various UN 

programmes,” says De Pauw. 

Kalitta Air recently increased its frequency to seven 

services a week with 747 freighters to Amsterdam. Sun Light 

Aviation, which operates charters, has now begun regular 

operations through FLC. Galaxy Air has joined the bandwagon, 

servicing with an IL–8 freighter thrice weekly Dubai–Delhi. 

Consolidated Shipping Services, the GSA for Ariana Afghan, 

recently shifted its flights to the FLC and now offers regular 

services to Kabul. 

Following the earthquake in Pakistan in October 2005, FLC 

handled more than 30 fully-laden freighters in four weeks, 

carrying more then 543 tonnes of relief goods to Islamabad. 

Almost all the operators based at the FLC had at least one 

flight carrying humanitarian aid, using AN-12, IL76 and IL18 

aircraft to transport tents, clothes, blankets, food, medicines 

and mineral water to the affected areas. Major operators of 

relief flights included Jet Set, Fab Air, Royal Airlines, 

Aerospace Consortium, Qeshm Air and Galaxy Air. 

“Currently, the number of operators at FLC is 48, monthly 

flight frequency is more than 500, and annual cargo 

throughput exceeds 100,000 tonnes,” De Pauw informed. 

Dnata Cargo provides a broad range of products and 

services to meet the diverse needs of more than 100 airlines 

operating through Dubai International Airport, and serves 

1,000 cargo agents based in Dubai. Its cargo terminals are the 

MCT and EHC at Dubai Cargo Village; FLC at Dubai Airport 

Freezone; and the Freezone Air Cargo Terminal (FACT) at 

Jebel Ali Freezone. 

“In addition to FLC throughput, Dnata also handles around 

450,000 tonnes annually at its MCT and Express Handling 

Centre (EHC) in Dubai Cargo Village,” he concluded. 

Supply Chain & Logistics Group | www.sclgme.org 

Fully-automated FLC III is scheduled for completion in early 2007

20 

Warehousing 

Cool warehouse 

(R-L) Khalid Al Shirawi, Executive Director, GSL and 

Mike Lee, General Manager, GSL. 

For years, the typical warehousing and logistics facility was located by 

a water/air port, railroad tracks, and/or freeways, often if not usually 

in the least desirable parts of cities or large towns. This stereotype has 

faded as gigantic, state-of-the-art facilities located in carefully 

designed investment parks/ free zones in more rural areas have become 

the new standard. 

Over the past decades, third-party logistics (3PL) providers have 

moved even further away from this stereotype by evolving from simple 

storage to providing innovative supply chain solutions to customers by 

focusing on value-added capabilities to differentiate themselves from 

the competition. They focus on key objectives, such as implementing 

information technologies, instituting effective management processes, 

integrating services and technologies globally, and delivering 

comprehensive solutions that create value for 3PL users and their supply 

chains. 

Dubai-based Global Shipping & Logistics, the latest industry player to 

diversify into 3PL services, is building new state-of-the-art 200,000 

sq mt. warehousing facilities, spread across two locations in the UAE – 

Dubai Investment Park (DIP) and Dubai Logistics City (DLC). The new 

facilities, capable of meeting all storage requirements including dry, 

temperature controlled, chilled and frozen, will be the largest 

temperature-controlled warehouses in the region. 

“Our vision is to be the No.1 warehousing organisation in the UAE both 

in terms of physical size and inventory handling services,” said Khalid Al 

Shirawi, Executive Director of Global Shipping and Logistics (GSL). “The 

facilities will add a new dimension to warehousing solutions in the UAE 

and will provide an exceptional option for customers seeking qualified 

logistics partners with on-site management capabilities,” he declared. 

“The warehouses have been designed to meet the needs not only of 


Warehousing 21 

local traders but also of international 

retailers and manufacturers in the 

automotive, electronic and food and 

drink sectors,” added Khalid. 

GSL’s DIP-facility will comprise of six 

individual units, which can be 

customised and modified to individual 

customer requirements. With cargo 

lifts and enough racking for the storage 

of 85,000 pallet locations, the initial 

facility can maintain ambient 

temperatures between +15 C and +25 C 

for 17,000 pallet locations. In addition, 

the first phase boasts a cold store 

capable of maintaining cargoes at 

temperatures between –25 and +4 C for 

8500 pallet locations. 

“We are very excited to be able to 

provide our clients with a secure, 

state-of-the-art cold storage facility 

that will support and enhance their 

cool chain capabilities,” said Mike Lee, 

Our vision is to be the 

No.1 warehousing 

organisation in the UAE 

both in terms of physical 

size and inventory 

handling services 

- Khalid Al Shirawi 

Executive Director, GSL 

the newly appointed General Manager 

of GSL. “With its controlled capacity, 

the cold storage facility will be an 

enabler for temperature-sensitive 

products businesses such as: dry and 

fresh fruits, codfish, dairy products in 

general, and for chemical products and 

pharmaceuticals.” 

GSL have invested a good deal of 

time and money in people and 

equipment in order to ensure that they 

are competent to serve clients. At their 

warehouses, it is not the stuff of 

science fiction but of daily operations 

that machines and automation will be 

moving things along in refrigerated 

warehouses, as real time internet 

reporting tracks all items in and out. 

The Automated Storage and 

Retrieval System (AS/RS) lives up to its 

name - it stores and retrieves at the 

push of a button - representing a 

palpable improvement in manpower 

efficiency, outmoding the days where 

storemen had to climb lofty heights to 

retrieve goods, and eliminates the 

associated risks. 

For fast-moving, frequently used 

items, there is the Mobile Racking and 

Shelving System - whole shelves that 

actually move along the girths of their 

Very Narrow Aisles (VNA). Super flat 

floors complement the VNA trucks, 

which carry out real-time inventory 

updating operations along the VNA - no 

mean feat when you consider the 

number of pallets involved. 

For its WMS, GSL has chosen 

Manhattan Associates Warehouse 

solutions. Psion Techlogix has supplied 

handheld terminals and Rf solutions. 

Both partners helped GSL to implement 

the new system. 

Lee explained: “Manhattan 

Associates solution will enable GSL to 

efficiently manage the handling and 

storage of ambient and temperaturecontrolled 

goods throughout the 

warehouse. Our solution also offers 

Internet visibility to our customers on 

both stock movement and temperature 

environment, thus, providing visibility 

of temperature sensitive inventory 

across our link in their supply chain.” 

Furthermore, the billing 

management solution will provide the 

improved billing accuracy and service 

and allow the tracking of all inventory 

handling, storage and fulfilment 

activities by client. 

Khalid, says the company is building 

these new facilities with the Dubai’s 

long-term retail sector growth 

potential in mind. “There is a definite 

shortage of professionally managed 

temperature-controlled warehousing 

space in UAE. The import volumes are 

increasing day-by-day and the local 

manufacturing sector is also picking 

up… both creating more demand. ” 

Khalid is very confident of success in 

GSL’s warehousing endeavour. “We 

have a strong understanding of the 

local logistics market and will be 

capitalising on this expertise. After all, 

we belong to a credible 1972 

established local corporate house – Al 

Shirawi Group. Our territory is close to 

our history,” declared Khalid. 


ARAMEX unveils state-ofthe-art 

logistics center 

at JAFZA 

Market Watch 23 

ARAMEX has unveiled its AED 26 million 

worth state-of-the-art logistics center 

at Jebel Ali Free Zone. Built on a land 

area of 430,000 sq. ft., the new facility 

includes a state-of-the-art covered 

area of 161,000 sq. ft. and a special 

area for temperature-controlled 

storage with degrees ranging from 

18 - 20 C. 

Fadi Ghandour, CEO of ARAMEX, said: 

“This Jebel Ali facility is a very 

important milestone in our plan to 

build an advanced logistics 

infrastructure which is a continuation 

of our global expansion strategy. The 

facility is designed to play an integral 

part in facilitating commerce in the 

region by creating solutions capable of 

adapting to the constant changes in the 

global trading system." 

“With globalisation taking root in the 

region, and Free Trade agreements 

being the order of the 

day, we realise the 

significance of 

providing a multimodal 

transportation 

infrastructure and the 

management of 

distribution networks 

that are operated by 

i n n o v a t i v e 

technologies and run 

by logistics specialists. This is precisely 

why we are placing this unique facility 

at the service of this growing and 

demanding market,” Ghandour 

continued. 

The new Aramex center is equipped 

with inventory management systems 

that allow real-time visibility of 

inventory levels and is designed to 

store goods requiring special handling 

such as information technology 

products and heavy machinery. ARAMEX 

applies the latest in logistics quality 

operations standards as dictated 

through its Documented Quality 

Management System (DQMS). The 

center is also equipped with 

sophisticated security and around-theclock 

surveillance systems. The loading 

and unloading bay at the center has a 

capacity that manages ten loading 

docks simultaneously. 

Volvo Group inaugurates facilities at JAFZA 

The Volvo Group has opened new office and distribution 

facilities in Jebel Ali Free Zone, Dubai. The facilities 

comprise a regional parts distribution center, regional 

competence development center and representation offices 

for Volvo Trucks, Volvo Construction Equipment and Volvo 

Buses. 

The distribution center at JAFZA will deliver spare parts 

to dealers for Volvo, Mack and Renault Trucks in various key 

markets in the Middle East. Currently, there are more than 

20,000 part numbers in inventory for trucks, construction 

equipment and buses. 

The competence development center is equipped with 

premises for vehicle and equipment training as well as for 

component training. The premises can support training of 

more than 100 persons at the same time. 

The facilities also include the regional representation 

offices for Volvo Trucks, Volvo Construction Equipment and 

Volvo Buses. As a consequence of the new premises, the 

Volvo Group Middle East unit is gathered under one address 

in Dubai for all business areas and business units in the 

Group. 

Srinivasan Muralidhar, General Manager, Volvo Group 

Middle East said: “Volvo sees a great advantage in setting up 

the parts distribution centre at the Jebel Ali Free Zone, 

which as the region’s dynamic industrial hub, offers logistical 

support through its connectivity to regional ports, airports 

and the road network. This strategic location will allow the 

Centre to ensure better and speedier availability of parts. By 

greatly reducing supply times to key regional markets, the 

Centre will be able to improve customer service, decrease 

the amount of capital tied up in transit inventory and will 

help dealers to focus on growing their businesses.” 


24 

Market Watch 

Jafza 

unveils 

Dubai 

Auto Zone 

To satisfy the region’s growing demand 

for auto businesses, Jafza & Business 

Parks Management have announced a 

multi-billion dirhams Dubai Auto Zone 

(DAZ) project. 

Located in Ruwaya on the Dubai 

Bypass Road, DAZ will facilitate 

traders, light manufacturers, service 

providers, and others in the 

automotive and machinery industry. 

Salma Hareb, the CEO of Jafza & 

Business Parks, said: “The introduction 

of DAZ will extend Dubai’s vision as the 

centre of tourism, business and 

finance and now as centre of an Auto 

Industry Marketplace, which will cater 

to Buyers, Sellers, Service Providers, 

Principles and Traders alike.” 

Hareb added: “We have followed a 

customer centric approach in the 

development of DAZ. The facilities we 

are developing would aim to improve 

end-users experience. 

Dubai Auto Zone will consist of a 

Free Zone to attract foreign direct 

investment, a Specialised Economic 

Zone to Cater to the GCC market, and 

a Retail Zone to serve the local 

market. In addition to high quality 

customer service, Dubai Auto Zone will 

provide its partners with state-of-theart 

facilities including advanced 

telecommunication system, high 

capacity power supplies, integrated 

road network, Waste Treatment Plant 

and various service facilities. 

The master plan for Dubai Auto Zone 

will be ready by the 3rd quarter of 

2006, and from that date the plots will 

be allocated to those registered in the 

zone. 

Emirates fleet just 10 aircraft short of 100 

The countdown begins as Emirates’ 

ultra-modern aircraft fleet moves 

closer to becoming 100 in size, after 

taking delivery of its 90th aircraft, a 

Boeing 777-300ER. 

Emirates, boasting one of the 

youngest and most technologically 

advanced fleet in the skies, 

currently consists of 90 Boeing and 

Airbus aircraft, including 29 Airbus 

A330-200s, 12 Boeing 777-300ERs, 12 

Boeing 777-300s, nine Boeing 777- 

200s, 10 Airbus A340-500s, eight 

A340-300s, one A310, six Boeing 747 

freighters and three Airbus A310 

freighters. 

Emirates also has over 100 aircraft, 

including 45 Airbus A380 and 60 

Boeing 777 worth over US$ 33 billion, 

pending delivery. 


Market Watch 25 

GSL appoints Mike Lee as General Manager 

Al Shirawi's 

G l o b a l 

Shipping & 

Logistics 

(GSL) has 

taken a major 

step towards 

its mission 

statement 

Mike Lee 

with the 

SCLG President 

appointment 

of Mike Lee as the company's new 

General Manager. 

GSL is the company behind the 130 

million Dirham warehousing and 

distribution centre at Investment Park, 

and Mike's appointment is seen as 

crucial in achieving its ultimate aim of 

offering exceptional service in a value 

for money environment. 

A holder of MBA in Marketing, and a 

Bachelor of Arts (Hons) degree from 

Leicester University in the UK , Mike, 

aged 40, will be responsible for the 

strategic direction and performance of 

the logistics services business. 

Having spent more than 18 years in 

the logistics industry, his experience 

includes working in Europe's 

automotive sector, as well managing 

the acquisition of new companies in 

the UAE and winning the Dubai Quality 

Award in 2004. 

Mike has been elected President of 

the Supply Chain Logistics Group for 

2006. 

NTDE Group opens new warehouse 

National Trading and Developing 

Establishment (NTDE) Group, 

distributors of over 6,000 products in 

the UAE, has now opened its largest 

warehousing facility, expanding its 

potential to serve the needs of the 

rapidly growing retail environment in 

the emirates. 

Located in the Al Rumool industrial 

area, between Dubai International 

Airport and Dubai Festival City, the 

new 40,000 sq. ft. facility, at seven 

pallets high, is one of the highest in the 

region. Operated by two forklifts, the 

state-of-the-art warehouse is capable 

of accommodating up to 350 

containers. The new facility increases 

NTDE's storage capacity by 53%. 

“The main challenges in managing a 

facility of this size are inventory 

anagement and optimising operational 

speed - ie. loading, off-loading, 

picking, transferring goods etc. The 

new warehouse has addressed these 

issues by incorporating a ducting zone 

and adjustable jack levels for loading 

and offloading containers. A narrow 

aisle racking system has been used for 

better pallet accessibility from two 

sides, and a full-fledged warehouse 

management system (WMS) was 

implemented recently to automate all 

the transactions and operations. In 

addition, an AC ducting system was 

used rather than split units to spread 

the cool over the length and width of 

the warehouse to help better maintain 

the inventory,” said Adel Alsmadi, 

Logistics Manager, NTDE. 

The total space of NTDE warehouses 

in Rashidiya is 325,000 sq.ft, excluding 

the new warehouse, which is an 

additional 40,000 sq.ft. In the Free 

zones, NTDE has warehouses of total 

125,000 sq.ft in Jebel Ali, Hamriya, 

Sharjah and Umm Al Quwain Free Zones. 

“There are plans to build two more 

warehouses (similar or bigger in 

capacity to the new one). One of the 

future warehouses will be in NTDE's 

Rashidiya premises and the second 

one will be in Jebel Ali Free Zone,” 

Alsmadi said. 

The new facility is over seven times 

the size of NTDE's first warehouse. 

While currently the existing NTDE 

facilities are being used for storage of 

FMCG products distributed by NTDE 

only, such as Lays and Vitaene C, the 

group may soon start third party 

logisitics operations to serve other 

companies. 


26 

Material Handling 

PVAXX, ready to take on global pallet distribution 

Jan Bak 

Senior Vice President 

Pvaxx Ltd. 

Following the successful inauguration 

of its newest headquarters in Dubai, 

and an impressive product launch in 

Singapore at the FHA (Food and Hotel 

Asia 2006) event, PVAXX Ltd, makers of 

the revolutionary Siluma-made pallets, 

is more than ready to take on the 

increasing, global demand for 

innovative, non-traditional transport 

facilities. 

A pallet is a flat transport structure 

that secures goods, while being shipped 

across different cities around the globe. 

Pallets are traditionally made of wood. 

However, environmental pressures, 

regulations, increasing lumber costs and 

other economic and social factors are 

driving a transition to the use of plastic 

pallets in many situations. 

Consequently, PVAXX Ltd, a Bermudabased 

materials Science and Technology 

corporation, created the innovative, 

non-wood, re-useable shipping pallets 

and platforms made from Siluma, a 

versatile proprietary composite 

material with impressive load-bearing 

properties. 

According to Jan Bak, PVAXX Ltd. 

Senior Vice President for Sales and 

Marketing, the Company’s decision to 

focus on the global pallet market was 

based on a number of factors. “The 

global pallet market is currently 

dominated by wood pallets, but a 

number of industry trends have 

accelerated a shift to plastic 

alternatives, including superior 

performance, improving economics, 

environmental concerns and security 

and safety issues. In addition, the 

industry is highly fragmented and 

stresses the importance of 

standardisation, allowing PVAXX and its 

customers with the PVAXX-automated 

process to achieve a strong market 

position,” Bak explained. 

The Siluma benefit 

As expected, consumers want their 

pallets to have lower cost; lower 

weight; improved reusability and endof-life 

recycling; with supreme 

resistance to contaminants and zero 

impact from insect attack. Plus, 

environmental bodies want less 

deforestation and waste. And 

fortunately for PVAXX, their Silumapallets 

meet these requirements. 

“The strong interest in PVAXX’s 

Siluma pallets and platforms 

demonstrates the importance and 

growing desire among industry majors 

to identify and secure the right storage 

and transportation facilities for their 

products. Most industries recognise that 

the PVAXX-patented Siluma rack-able 

PVAXX is working with 

commercial, local authority, 

educational and science interests to 

‘promote environmental innovation’ 

with processes including injection 

moulding, blown film extrusion and 

blow moulding. 

The company draws a distinction 

between degradable, biodegradable 

and compostable materials. 

Degradable polymer uses the 

normal LDPE, HDPE and PP 

materials with an additive to 

promote degradation. Starch- based 

additives break down within the 

product, causing it to degrade into 

small particulate. The starch 

additive may degrade but the plastic 

remains in small pieces. 

Biodegradable products must 

ultimately biodegrade to carbon 

dioxide, water and biomass by 

microbial action, namely by 

bacteria, moulds and fungi, within a 

certain time. Performance claims 

must be supported by independent 

testing based on the measurement of 

oxygen consumed and carbon 

dioxide produced. 

Compostable products must first 

be proved to be biodegradable. They 

must also contain no toxic materials 

such as heavy metals and break 

down within 12 weeks. The resulting 

compost must not impede plant 

growth. DIN 54900 Parts I, II and 

III are accepted standards in 

Europe with specific ISO, ENI and 

ASTM standards also recognised for 

certification. 

pallets and platforms offer a 

recyclable, more durable and costeffective 

alternative than what is 

otherwise available in the market,” he 

said. 

Market research proves that PVAXX 

Pallets are cheaper than existing 

comparable alternatives; are rust and 

distortion-free; are more resilient to 

damage; weigh less than its 

competitors, reducing load tonnage; 

and are much more easy to sterilise and 


Material Handling 27 

clean. And these qualities, according to Bak, “secure a hasslefree 

movement of products across international boarders in a 

more cost and operationally efficient manner.” 

Dubai HQ 

PVAXX Ltd recently inaugurated its 100,000 sq. ft. corporate 

headquarters and planned training and demonstration facility in 

the Jebel Ali Free Zone, Dubai, UAE. The Company chose this 

location, according to Bak, for its strategic position as one of the 

world’s fastest growing ports and in close proximity to their 

key customers. 

And since global trade is growing, so is the pallet requirements 

and usage. “Loose cargo in containers is a reducing trend, as all 

parties within the supply chain are looking for automated rather 

than manual processes. Companies are looking to simplify their 

supply chain, reducing manual input and safeguard their 

products with minimum handling and the pallet and platforms 

support this element.” 

“The volume of different products manufactured within the 

Gulf is growing substantially every year, which supports our 

growth aspirations within the GCC. Raw materials such as Silica 

sand and Polyethylene are competitively available within the 

region, which along with encouraging labour and energy costs 

topped with excellent logistics support high success rate for our 

business model within the region,” Bak explained. 

Bak also related that their Dubai HQ is capable of producing 

some 1.5 million composite re-useable shipping pallets and 

platforms for Global distribution. 

“Initially, we looked to operate PVAXX-owned Mega plants in 

the Arabian Gulf, Europe and USA and that way cover the globe 

but we have decided to offer large business and industrial groups 

in specific geographic territories an opportunity to produce the 

pallets and platforms tailor-made for their markets. This will 

secure a faster global roll-out, as we will benefit from our 

customer’s local knowledge, relationships and facilities, achieving 

an operational capability in each territory within a shorter and 

more practical timeframe,” he explained. 

In the next couple of years, PVAXX Pallet’s growth “will 

primarily be coming from our manufacturing customers, as these 

sign on around the world and will commence producing within 

their own territory. However, we will enter the market initially by 

selling pallets and platforms from the PVAXX Centre in Dubai 

directly to end-users, which will support our global manufacturing 

roll-out through product awareness, acceptance and recognition,” 

Bak said. 

According to Bak, further production facilities will be rolled out 

in various parts of the world, through the implementation of the 

company’s Territorial Manufacturer and Distributor (TMD) 

Program, where the company’s technology and state-of-the art, 

proprietary rotational molding equipment is being leased to TMDs 

who will be allowed to manufacture and sell the PVAXX Pallet 

within a defined geographical territory. 

In effect, companies of today are looking for the right quality 

pallets and platforms, procured at the right price, located in the 

right place and at the right time, which, Bak said, “is quite a 

challenge to achieve.” 

“But we believe the PVAXX pallets and platforms, business 

model and logistic solutions, support all of these criteria and is 

the long-term solution our customers are seeking,” he concluded. 


28 Product Watch 

Planned for High Demands 

Consistent in their efforts to offer the UAE market the best in material 

handling solution specialists, WSM Machinery Equipment, now offer the 

Pramac range of electric stackers and pallet trucks. Pramac LX 14 is a 

machine designed to satisfy the demands of handling and warehousing 

professionals. Besides the remarkable lift height of 4.5m, the upgraded 

motor (3kW), the MOSFET transistor control and the SEM drive motor, this 

new version is fitted with a full free lift of 1.6m. 

Very Narrow-Aisle Turret Trucks 

When your warehousing challenges require more efficient use of space, equipment 

and labour, the Crown’s TSP 6000 turret truck deliver maximum flexibility and 

productivity. Its compact design, excellent maneuverability and precise control help 

you optimise your warehouse, maximising cube utilisation and provides superior 

performance at heights. Designed for full pallet handling or a combination of case 

picking and pallet handling, TSP 6000 work in aisles only inches wider than the truck 

itself and can lift to 459" and has a maximum capacity of 3000 Lb. 

Zebra releases the RW 220 

The Zebra RW 220 is a 2-inch mobile printers ideal for receipts on the go. Its modular 

design allows users to choose among secure wireless options and card readers. The 

compact printer also offers convenient vehicle mounting and charging options, as 

well as user-intuitive interfaces and angled display for easy use while on the go! 

Additionally, the RW 220 has a high speed processor and large memory for quick and 

efficient processing of complex receipts, graphics and fonts using sophisticated 

wireless options. 

Unrivaled power, speed and flexibility 

To compete in the new economy, businesses must move products and services 

more rapidly than ever before. The Psion Techlogix 7035 hand-held, user-programmable 

computer offers the ideal solution, combining real-time accuracy, speed, ruggedness and 

ease of use. Lightweight and ergonomically designed, the 7035 transmits and receives data 

in sub-seconds, and can stand up to the harshest conditions in warehousing, manufacturing, 

distribution or intermodal operations. And it‚s also suited to condensing cold-chain 

environments like cold storage and yard applications down to -22°F/-30°C. 


Transportation 

31 

Does perishable-transport really 

require freighter traffic? 

What are the perspectives of a 

growing perishable market for 

the top retailers? Are there 

alternatives to the way things are 

done today? 

Tomatoes from Spain, tomatoes from 

the Netherlands, or homegrown 

tomatoes fresh from the garden - 

European customers know the 

differences in price, quality and taste. 

But are customers that aware when it 

comes to tropical fruit? Maybe, but 

they are certainly not aware of the 

extensive worldwide logistics behind 

the cross-seasonal delivery of fresh 

food to their markets twelve months 

a year. 

The availability of fresh flowers, 

exotic fruit and special kinds of meat, 

fish or seafood has become common 

place and customers have quickly got 

entirely used to this fact. Even highly 

seasonal products are available all year 

round at highest quality. 

GAINED IMPORTANCE 

And this is exactly where business 

opportunities develop through the 

optimisation of logistic chains for 

shippers, forwarders, airlines, or on 

the demand side for wholesalers and 

supermarket chains. 

Nothing new? However, it is 

noteworthy how the perishables 

business has gained importance 

worldwide. Once considered a 

seasonal, low rate fill-up commodity by 

most airlines, today approximately 15% 

of total worldwide air cargo are 

perishables. 80% are classical 

perishables like flowers, fruit, seafood, 

fish or meat. For some countries more 

than 80% of their total exports consist 

of fruit or flowers. 

COMMON DISTRIBUTION PLATFORM 

By definition, perishables deteriorate 

over a given period of time, or if 

exposed to extreme temperatures 

(heat or cold), humidity or other 

environmental conditions. Therefore, 

it is of utmost importance to handle, 

store and cool them properly along 

their entire journey through the 

logistics and value chain from 

harvesting to the retailer’s 

shelf. 

Today, up to 40% of 

perishable products are 

wasted or spoiled between 

production and reaching the 

consumer. Every percentage 

point of this rate that is 

reduced adds one percentage 

point to margins. 

At their point of origin perishables 

are collected, consolidated and 

shipped by sea or air to Europe in large 

quantities and respectively large units. 

Air transport is mostly carried out by 

freighter aircraft that fly to a few 

selected locations providing specialist 

infrastructure and services, such as the 

Netherlands’ huge flower markets. Fish 

is mainly distributed via Frankfurt 

Airport’s Perishable Center or Vitoria 

Airport in Spain. From there, a trucking 

based distribution network guarantees 

overnight delivery to retailers and 

consumers in most European cities. 

“Classical” distribution channels 

with wholesalers accumulating 

purchasing power for each perishable 

commodity have developed and gained 

importance over the recent years. 

Designated infrastructure has been 

built for the handling and trading needs 

of perishable goods. The market power 

of wholesale markets has grown and 

customers now pay a premium included 


32 Transportation 

in the retail price for all of these 

services provided. But is that really 

necessary? Given the large quantities 

of perishable products shipped and 

consumed nowadays, are there no 

opportunities to re-route some of the 

wholesalers’ premium into the pockets 

of other industry stakeholders? 

WHO NEEDS WHOLESALERS? 

Definitely, such opportunities exist and 

first attempts to change some of the 

current business structures have 

already been made. 

Great Britain’s supermarket chains 

already question whether it is 

generally necessary to incorporate 

wholesalers in their value chain and 

these supermarket chains have started 

to purchase directly from the producer, 

thus circumnavigating traditional 

points of entry while obtaining 

excellent conditions in price and 

quality. 

Is it then generally still necessary to 

ship perishable goods in great amounts 

and in large units through the classical 

distribution chain? 

Yes, there are good reasons why the 

need for mass transportation of 

perishable goods continues. The 

wholesale concept still pays off for 

small traders and retailers as long as 

their purchasing power remains 

insufficient to justify bringing 

wholesalers’ service capabilities inhouse. 

Freighter transport, for example, is 

necessary in central regions of Africa. 

There, the low demand for passenger 

transport does not provide an adequate 

number of passenger flights, freighters 

are the only remaining option for the 

transport of perishable goods out of 

these regions. The high seasonality in 

production of some perishables also 

necessitates their use. 

But generally, large production 

quantities seem to justify the charter 

of freighters. But is this distribution 

system really the best solution for all 

perishable goods and especially for all 

kinds of customers? 

POINT-TO-POINT TRANSPORT 

WORTH CONSIDERATION 

Lufthansa Consulting’s research proves 

that the answer is “no”. Good 

opportunities exist for large retailers of 

perishable goods to develop alternative 

solutions outside of the classical 

distribution chain. The larger the 

retailer, the more attractive it is to 

rethink purchasing behavior. 

CONTROLLED ATMOSPHERE WAREHOUSING 

The wholesaler accumulates market 

power by consolidating demand but 

does not add value for the consumer as 

he keeps a sizeable share of the savings 

obtained for his services and profit 

margin. 

With the existing and anticipated 

future purchasing power of large 

retailers in a growing market, the need 

to use wholesalers as intermediaries 

decreases. 

The cost savings achieved through 

point-to-point transport compared to 

routing via a European trucking hub 

and wholesaler are worth 

consideration. As remaining shelf-life is 

the primary driver of a perishables’ 

value, faster, more direct distribution 

pays off. Our research has shown that 

two to three days can be gained by 

using innovative and more direct 

distribution channels. 

THE BELLY ALTERNATIVE 

The opportunity therefore is to use the 

combination of intercontinental 

passenger services with their seamless 

connection to continental airline 

networks more extensively for 

distribution purposes. Not using these 

existing high frequency scheduled 

passenger flights as a network for 

perishable distribution means 

neglecting opportunities. 

So instead of flying a freighter full of 

roses from Columbia via Miami to 

Amsterdam and then trucking a few 

tons of them trimmed and bundled to 

Munich, why not prepare them in 

Columbia and load them onto a direct 

flight to Munich in Miami? 

MORE FLEXIBILITY AND DIVERSITY 

Current technologies allow for an 

increased shelf life of up to 50% 

through the use of ethylene control in 

storage. Particularly fruit and 


Transportation 33 

vegetables can then be provided in 

the countries of origin even outside of 

the peak season. This enables peaks 

driven by crop cycles to be 

smoothed/spread while making 

products available for just-in-time 

delivery to the consumer markets in 

immaculate, fresh condition 

throughout a longer period of time. 

The key to success in the future of 

perishable logistics will be more 

flexibility and diversity in transport, 

storage, and distribution. While not 

amounting to a paradigm shift, 

Lufthansa Consulting’s analyses have 

revealed a shift of value adding 

activities in the logistics chain. 

Perishable transport and 

distribution is demand driven. The 

utilisation of highly frequent, highdensity 

networks allows retailers to 

order commodities to be delivered 

right on time. This keeps stock levels 

and prices at planned levels and 

demand is satisfied without waste, 

spoilage or loss of revenues and 

profits. The producers’ benefit 

increases with extended periods 

where perishable products can be 

provided in the right amount and 

quality. 

The use of controlled atmosphere 

warehousing improves shelf life of 

products and ensures extended 

availability of perishable products in 

the country of origin. With regard to 

the efficiency of transport, freighter 

traffic should not be the only choice in 

perishable transportation. 

CHECK YOUR SUPPLY CHAIN! 

Opportunities exist for every link in 

the chain, from producer, shipper, 

forwarder, airline, wholesaler, 

supermarket chain to the retailer as 

final recipient of the shipments. An 

unbiased assessment of a whole 

supply chain is essential to detect 

optimisation potential and the 

implementation of quality oversight 

and management systems. 

Improvements are beneficial not only 

for all the companies and 

organisations involved, but also to a 

significant extent for trade balances 

of exporting countries. 

Author: 

Matthias Hüttner 

Consultant Air Cargo Development 

Lufthansa Consulting 

Matthias Hüttner serves as 

Consultant for Lufthansa Consulting 

in the prin-cipal unit Air Cargo. 

He focuses on both Air Cargo & 

Airport Logistics and Cargo 

Business Development. 


35 

SCM in Air Cargo Industry : An overview 

The following paper provides an overview of Supply Chain Management in air cargo industry. It also attempts to 

provide some of the possible measures companies can take to sustain a competitive advantage 

In the fast paced world, quick 

transportation of goods has become an 

integral part of the business models 

especially of items related to 

technology. 

Companies are investing huge 

amount of money to strengthen their 

supply chain to remain competitive. 

The transportation, especially Air 

Cargo Industry has been influenced by 

the latest attempts at re-engineering 

the business processes. They have been 

making huge investments in their 

people, process and technology to 

ensure that they are able to integrate 

well with the emerging trends and 

benefit from various conceptual 

changes in the supply chain 

management. The supply chains are 

becoming more global (due to globally 

active business enterprise concepts). 

The Global and highly integrated 

nature of supply chains make it as 

difficult to manage and control. 

The concept of outsourcing has also 

hit the Air Cargo industry as 3rd Party 

Logistics (3PL) companies have 

emerged on the horizon offering a 

comprehensive Logistics solution to 

customers and taking care of complete 

supply chain operation ensuring that 

the material is available when it is 

needed and where it is needed – 

something advocated and attempted 

by the concepts of Just In Time (JIT) 

way of managing Manufacturing 

processes. 

Airlines have hence responded by 

attempting to ‘Integrate Well’ with the 

attempts to play a more integrated 

role in managing the supply chains of 

their customers as a value-added 

service. In doing so, air Cargo 

companies have not only positioned 

themselves as strong competitors to 

the 3PL companies but also expanded 

into becoming preferred logistics 

providers in their regions. 

But this is easy said than done. There 

are many hurdles on the way. Hence, 

companies have to carefully chart their 

course. Technology is likely to play a 

major role in attempts to integrate. 

Big Air Cargo carrier with their vast 

database and business processes will 

find it easier to integrate well. The 

large clients will also find it easy to 

deal with them due to their already 

proven international business records. 

With the emerging trend of 3PL’s, an 

analysis suggests that 3PL’s are not only 

providing traditional services like 

warehousing, transportation and 

inventory management, but also a 

number of value added services 

including a range of good information 

processing tools to meet their clients 

demand. Airlines have traditionally 

been airport to airport transportation 

solutions provider. But of late many 

airlines have been looking at designing 

door to door solutions. These value 

added products are being created in 

collaboration with medium size 

forwarders/ small size forwarders. 

In terms of integration of IT systems 

Author: 

Manoj Kumar Jha is a Certified Project 

Management Practitioner specializing in 

implementation of ERP, Data Warehousing 

and DSS solutions. 

of business partners, airlines have 

more challenges to face. David Upton 

and Miles Mcafee have argued that ERP 

systems are focused more on 

integration of processes within a 

company than on integration between 

business partners. Many airlines are yet 

to master the art of integration of 

processes within their organisation 

internally. ERPs are still not common 

names in Airlines industry. (Source: 

Harvard Business Review) 

Airlines are also upgrading their 

infrastructure of IT to support supply 

chain. The trace and track is a facility 

common to web-sites of most airlines. 

However a real customer value can be 

realized only if the inventory across 

supply chain can be reduced to a great 

extent. It is reported that it takes a 

typical box of cereal more than three 

months to get from a factory to a 

supermarket. 

Points to Ponder 

Some of the steps that could be considered by 

companies to improve their supply chain could be 

summerised as follows: 

•The best way to improve a supply chain is to reduce the 

total replenishment time and to feedback actual demand 

information to all levels. 

•Change structure in terms of Capacity, Facilities, 

Process technology, vertical integration 

•People, Information Systems, Organisation, Production 

and Inventory control, Quality control systems 

•Forward and Backward Integration to ensure overall 

cost, effectiveness and efficiency. 

•Major process simplification to ensure efficiency. 

•Changing the configuration of factories, warehouses, or 

retail locations 

•Major product redesign to suit the changing needs 

•Partnerships with the supply chain co-players 

•Leveraging Information systems for efficient, 

information sharing across the supply chain 

•Implementing the concept of ‘virtual Companies’ – 

Highly flexible, successful in highly dynamic 

environment, computer and internet are the main 

catalysts 

•Virtual Supply Chain consists of at least one virtual 

company that coordinates all activities of the supply chain. 


36 Gateways 

Hamriyah Free Zone attracts 

Saudi Arabian investment 

Signing Ceremony of Al Ruya Cement Plant Project in Hamriyah Free Zone 

Hamriyah Free Zone (HFZ), one of 

the fastest growing Free Zones in the 

Middle East, has announced that 

Saudi Arabia-based Al Ruya is 

establishing a Cement plant at the 

Free zone with an initial investment 

of AED 1.5 billion. The plant will 

have a capacity of 3.6 million tones 

per year and will be set over a 24 

month time frame. 

The agreement between Al Ruya 

and HFZ was signed by Al-Ruya 

Industry Chairman HRH Prince Talal 

bin Badr and Hamriyah Free Zone 

Chairman Sheikh Khaled ibn Abdullah 

bin Sultan A1-Qasimi. The project is 

considered one of the largest 

projects of its kind in the Middle 

East. 

Al Ruya has leased one million 

sq.m of land in the free zone for 

establishing its new plant. This lease 

has been signed for a period of 25 

years and is renewable thereafter. 

Addressing a press conference to 

mark this occasion Prince Talal bin 

Badr expressed his utmost 

appreciation & gratitude to HH Dr. 

Sheikh Sultan Bin Mohammed Al 

Qassimi - Supreme Council Member 

and Ruler of Sharjah, HH Sultan Bin 

Mohammed Bin Sultan Al Qassimi – 

the Crown Prince & Vice-ruler of 

Sharjah for the infinite cooperation 

& offered by all the concerned 

officials in the Emirate of Sharjah in 

general and Hamriyah Free Zone in 

particular. HRH mentioned that the 

emirate of Sharjah has been selected 

due to its unique & strategic location 

on the Arabian Gulf & the facilities 

and services that Hamriyah Free 

Zone provides to its investors. 

Following the signing process on 

the project contract, Shaikh Khaled 

Bin Abdullah Bin Sultan Al Qasimi 

expressed his great pleasure on the 

project and congratulated Prince 

Talal on this strategic project which 

would undoubtedly lead the emirate 

towards progress. He also promised 

the support and co-operation of 

Hamriyah Free Zone in the successful 

implementation of the project. 

UAE currently faces a shortage of 

cement production by about 5 

million tonnes per year with a 

current production capacity of 11 

million tonnes per annum, which is 

set to increase by 3 to 4 million 

tonnes per annum by 2007. 

According to a report, the estimated 

consumption of cement in the Gulf is 

more than 40 million tonnes and 

would increase tremendously in the 

next three years as the investment in 

key sectors will be around $8 billion 

in coming three years. 

Airbus sets up 

Middle East 

subsidiary in DAFZA 

Airbus Industrie has created a subsidiary 

called "Airbus Middle East". 

Headquartered at the Dubai Airport Free 

Zone (DAFZA), it will be in charge of 

all commercial activities, including 

marketing, sales, contracts and 

customer relations, as well as all 

customer service activities, such as 

spare parts, training, and technical 

support. 

Airbus is also establishing a new spare 

parts centre for the Middle East, for 

which work has already begun at DAFZA, 

is due to become operational in April 

2007. The spares centre will stock 

parts made by Airbus and majorequipment 

suppliers, and will be built 

on a 5,100 sq m site. 

Jadaf Dubai 

continues strong 

performance 

Jadaf Dubai, the oldest ship repair and 

industrial marine yard in the Arabian Gulf 

area, has once again demonstrated a 

remarkable performance, successfully 

carrying out 570 ship lifting operations 

during the first quarter of 2006. 

The Dock No. 1 at Jadaf Dubai, which 

handles all types of sea faring vessels 

weighing up to 250 deadweight tones 

(DWT), has successfully docked and 

undocked 405 ships during the first 

quarter of 2006. Dock No. 2 has handled 

a total of 165 ship lifting operations 

during 2006 as compared to 158 

operations conducted in 2005. 


Gateways 37 

FFZA to set up logistics park 

The Fujairah Free Zone Authority 

(FFZA) is planning to set up a Logistics 

Park that will offer a whole range of 

warehousing and related services 

under one roof. The 100,000-squaremetre 

first phase, the cost of which 

has not been revealed, is expected to 

be operational within a year and will 

accommodate 200 business units. Also 

in the pipeline is the development of 

an industrial zone closer to Dubai. 

Commenting on the Logistics Park, 

Sharief Habib Al Awadhi, Director- 

General, FFZA said: “The initiative 

fulfils FFZA's strategy of offering the 

entire range of logistics services from 

a single source. Our intention is to 

provide all services in the logistics 

chain as cost-effectively as possible 

and provide essential services to our 

customers. The new logistics centre 

will provide operational advantages 

as well as long-term cost savings." 

"On an average, companies in the 

UAE are spending 12 to 15 per cent of 

their revenues on logistics and supply 

chain management. Besides, we 

anticipate that the involvement of 

the DP World with the Port of Fujairah 

will further boost the logistics 

business in the UAE," asserted Al 

Awadhi. 

The Fujairah free zone, which has 

been bustling with activities, 

recorded 25 per cent growth in 2005 

as compared to the previous year. 

Besides modern and cost-effective 

infrastructure facilities and the 

logistics convenience, FFZA's 

advantages include customer-friendly 

Sharief Habib Al Awadhi 

Director-General, FFZA 

policies, simplified procedures, an 

efficient licensing facility, service 

structure, various investment options 

and cost-effective tariffs. Currently, 

the free zone has more than (450) 

foreign-owned companies that mark a 

dramatic increase over the past few 

years. 

As part of its expansion drive, FFZA 

also has set aside one million square 

metres of land at Al Hayl to cater to 

heavy engineering projects. 

RAK Free Trade Zone to build 400 warehouses 

The Ras Al Khaimah Free Trade Zone Authority (RAKFTZ) has 

started the construction of 400 warehouses as a part of the 

zone’s new expansion plan. The expansion plan will mainly be 

carried at the zone’s Industrial Site in Khor Khowair, north of Ras 

Al Khaimah and the Technological Site, south of the emirate. 

Oussama El Omari, RAKFTZ Director General said: “The 

construction of the warehouses will be completed in four 

months”. “New warehouses will be ideal for companies of 

different industrial purposes including the light industries like 

the electronic industries, and logistic services, and other 

industries like the amour vehicles,” he added. 

El Omari stressed that the close location of the Industrial 

Site to Saqr Port is yet another advantage for the 

warehouses. “Companies will have the chance to move their 

stuff to and from the port in no time” he said. 

He explained that the new warehouses will be constructed 

on 95,000 square meters at the two sites, adding that each 

warehouse will be constructed on 200-400 square meters. 

“(RAKFTZ) has also completed advanced infrastructure for 

one million square meters of land ready to be rented for 

registered industrial companies to enable them set up their 

projects” said El Omari. 

He said the (RAKFTZ) is currently constructing residential 

units at the Industrial Park and the Technological Park for 

the employees of the registered companies. He added that 

the residential units will be constructed on 24,000 square 

meters and will be provided with all the necessary 

entertainment facilities to spare them the burden of housing 

and enable them to become more focused at work. 


38 Case Study 

Symbol helps Tesco store managers 

stay connected 

The company 

Tesco is one of the world’s leading 

international retailers. Since the 

company first used the trading name 

of Tesco in the mid 1920s, the group 

has expanded into different formats, 

markets and sectors. The principal 

activity of the group is food retailing, 

with over 2,000 stores worldwide. 

Nearly 80 percent of the group’s sales 

and profits come from the UK business. 

The challenge: Delivering realtime 

data to Tesco store managers 

Tesco wanted to give store managers 

the freedom to spend more time on 

the sales floor by ensuring they were 

constantly connected to email and 

other business-critical IT applications 

when away from their desk. A key 

objective was that this would increase 

the profitability of each store by giving 

managers more time on the shop floor 

interacting with customers and staff 

alike. 

To achieve this aim Tesco wanted to 

equip managers with a real-time data 

solution that would enable them to 

continue to do their office-based work 

while on the shop floor, giving them 

the right business processes, 

technology and information. An 

increased shop floor presence would 

help store managers motivate and 

monitor staff, investigate operational 

performance and be able to interact 

with customers. Managers would 

therefore be in a good position to 

deliver a more memorable, 

personalised shopping experience. 

The solution: The MC50 Enterprise 

Digital Assistant 

To replace time-consuming, paperbased 

processes and unchain store 

managers from their desktop e-mail, 

Tesco evaluated four different 

vendors. The company opted to equip 

its UK based managers and supervisors 

with 750 Symbol MC50 mobile 

computers across its biggest stores. 

The MC50 is a rugged, durable 

handheld device that delivers 

enterprise class functionality. Unlike 

typical consumer PDAs, the MC50 is 

more robust and reliable, able to 

withstand the demands of a high usage 

environment. Running the Microsoft 

Windows Mobile Operating System, it 

integrates seamlessly with Tesco’s 

enterprise business applications and 

includes support for e-mail, phone and 

scheduling/calendar. The MC50 also 

easily integrates into other 

applications, such as those for 

inventory management. As such it is an 


Case Study 39 

ideal handheld for Tesco store 

managers. Its capabilities include 

options such as data capture, voice 

telephony (push to talk (PTT), peer to 

peer (P2P) and private branch 

exchange (PBX), smart battery, device 

level management, wireless and 

security options. Key to the decision 

was the MC50’s built in barcode 

scanner. The scanning feature quickly 

scans items with barcodes for a 

convenient and speedy service and 

since the product features the same 

keying sequences as most POS 

systems, checkout is possible 

anywhere in or around the store. This 

all helps in delivering a more powerful 

customer experience. 

now spend more time with staff while 

still having access to enterprise level 

applications. 

The MC50 also provides the store 

managers with online, real-time access 

to point of sales (POS) reports. Store 

managers can now monitor the POS 

system from the MC50 to get current 

information about the movement of 

merchandise throughout the store. 

Store managers can also utilize this 

information to maximize category 

profits and optimize merchandise 

displays. The MC50 has enabled store 

managers to check shelf labels, locate 

stock or expired product and identify 

returns in a more efficient manner and 

in real time. Having up to date 

"Using Symbol MC50s will help 

managers spend more time on the 

selling floor while still remaining 

connected to essential IT 

applications," said Simon Hick, Project 

Manager at Tesco. "The use of e-mail 

on the shop floor frees around seven to 

eight hours of a store manager’s time 

per week." 

The benefits: Customer 

satisfaction 

The MC50 has transformed the working 

style of Tesco’s store managers. 

Traditionally they would have to make 

frequent trips to the back office in 

order to access e-mail and view store 

sales reports. Now, however, managers 

have constant access to all of this 

information on the move in real time 

regardless of their location within the 

shop. It has helped in increasing 

productivity and sales and customer 

satisfaction levels, since managers can 

information on the inventory also helps 

to remain ahead of the competition. 

Eager to help its managers achieve a 

good work/life balance, Tesco uses an 

RF Network to send and receive data to 

the MC50. Employees can only pick up 

e-mails when in store in range of the 

Wireless LAN. Overall, the MC50 has 

redefined the store managers’ working 

days by enabling them to capture, 

move and manage customer 

information to and from the point of 

business activity. 

Future plans 

Tesco is also looking at capitalising on 

the VoIP telephony functionality 

offered by the MC50. VoIP was a key 

consideration in choosing the MC50 

and Tesco hopes to start using VoIP 

capabilities by end of the year, 

keeping store managers constantly 

contactable without running up 

additional phone bills. 


40 Construction 

King Abdullah Economic City: 

An amazing business vision 

In what is considered the single largest private sector 

investment in Saudi Arabia, the announcement of the ‘King 

Abdullah Economic City’ to be built at a pristine location off 

the Red Sea in the north of Jeddah with an investment of 

SR100 billion (US$ 26.6 billion), is a signal of the dawn of a 

new era of economic prosperity for the citizens of the 

Kingdom. 

The project, which will be a New Age City being built 

today for tomorrow’s generation of Saudi citizens, was 

officially launched by The Custodian of the Two Holy 

Mosques King Abdullah bin AbdulAziz Al Saud in the presence 

of HRH Prince Sultan bin Abdulaziz Al Saud, Saudi Crown 

Prince, Minister of Defence & Aviation and Inspector 

General, and HH General Sheikh Mohammed Bin Rashid Al 

Maktoum, UAE Vice President and Prime Minister and Ruler 

of Dubai and several dignitaries. 

“The King Abdullah Economic City will be another jewel in 

the crown for Saudi Arabia and a shining example of what 

can be achieved for the common good when two brotherly 

nations get together for ever closer co-operation,” said HH 

General Sheikh Mohammed. “I am certain that what will be 

achieved through this project will create its own chapter in 

the annals of the GCC.” 

The King Abdullah Economic City will be a multi-stage 

development for which construction has already begun on 

Wednesday, 21 December, 2005. This mega project will 

closely integrate itself into the Kingdom’s on-going drive to 

expand the economy, create employment opportunities for 

its youthful population and function as a catalyst to attract 

foreign investment, global trade, commerce and industry. 

Based on initial forecasts, the project and its several 

components will create up to 500,000 employment 

opportunities in the various industries and service-oriented 

companies that will open in the City. 

The City will be a mixed-use development located north of 

the commercial hub of Jeddah to ensure easy access from 

the Holy Cities of Makkah and Madina. A massive 55 million 

square metres of greenfield land with a 35 km shoreline 

close to the industrial city of Rabegh has been earmarked for 

the master development. The City will have six distinct 

components – a modern world-class Seaport, Industrial 

District, Financial Island, Education Zone, Resorts and The 

Residential Area. Completion of the overall project will be 

done in stages with the first batch of businesses and 

residents moving into the City in a period of 24 to 36 months. 

Emaar Properties, the world’s largest real estate company 

in terms of market capitalisation, is the master developer of 

this ambitious project, the biggest outside of its home 

market of the UAE. SAGIA (Saudi Arabian General Investment 

Authority), the apex body responsible for inward 

investments into the Kingdom, is the prime facilitator for 

the development. 

SAGIA’s Investor Service Centre will facilitate the provision 

of services to potential investors. The Centre is SAGIA’s 

“one-step” solution aimed at minimizing the number of 

formal steps associated with investment in the Kingdom. 

Central to the mega project is the creation of a 2.6 million 

square metre new Millennium Seaport similar in size to the 

world’s top 10 ports, such as Rotterdam, that would allow 

even the world’s largest super vessels to drop anchor. With 

its strategic location on the Red Sea and the instant access 

to key cities within Saudi Arabia, the port will have a 


Construction 41 

• City is symbolic of King Abdullah’s vision and will create 

its own chapter in the annals of the GCC, says 

H.H. Sheikh Mohammed, UAE Vice President and 

Prime Minister and Ruler of Dubai 

• SAGIA facilitated SR100 billion investment is single 

largest from private sector 

• Emaar is master developer of City north of Jeddah 

• 500,000 new jobs to be created; construction 

already begun 

• 30% of equity for IPO 

designated area for light industry and logistics and be a 

natural platform for onward movement of goods to Europe, 

Africa, Asia and beyond. The port will have an integrated 

transport system with seamless high speed transitions from 

sea to rail, road and air, making the City the main gateway 

to the central and eastern provinces as well as the entire 

Kingdom. 

The port, with its close proximity to the two Holy Cities of 

Makkah and Madina, will have a dedicated Hajj terminal that 

can receive over 500,000 pilgrims every season. To cater to 

the pilgrims’ every need, there will be adjoining hotels, 

medical centres and other world-class amenities. 

The second component of the City – The Industrial District 

– will cover 8 million square metres, and is exclusive to the 

requirements of a range of manufacturers – small, medium 

and large scale industry. They will represent sectors such as 

downstream petrochemicals, pharmaceuticals, research and 

development activities as well as a host of educational 

institutions that will prepare young Saudis for the jobs that 

the City will bring in. A sizeable area has also been set aside 

to develop accommodation for employees and their families. 

The waterside Resort will serve up a most compelling mix 

of waterfront hotels and boutique residences. The master 

plan envisages 3,500 well-appointed hotel and residential 

bedrooms and suites, premium villas, plus an extensive 

retail element and an international-class signature 18-hole 

golf course and an equestrian club. 

The fourth element of the City will be the Financial Island, 

conceived to be a ‘city within a city’ for financial 

institutions. The Island will offer 500,000 square metres of 

office space for the leading international and regional 

financial entities, business hotels and a new exhibition and 

convention centre. Up to 60,000 professionals are to operate 

from the Financial Island on a daily basis. 


42 

Construction 

Financial Island will be topped by two towers reaching up 

to 100 and 60 storeys that offer compelling views of the 

surrounding city skyline. 

Three residential districts form the fifth component of 

the new City. The first district wraps itself around a town 

centre, which will be a blend of the traditional and the 

modern. The second district will have a corniche as its main 

theme. It is in keeping with this concept that the district 

will ‘curve’ around a top-of-its-class marina and yacht club 

with 450 boat moorings. The souq and retail elements will 

contribute 350,000 square meters of prime space. Around 

75,000 residents are expected to live here. The third 

district will be a secluded residential community set on an 

island on a choice water location. 

The sixth component is the Education Zone which 

comprises of Universities, Schools and Research & 

Development Centres. 

Headed by Emaar, a group of giant Saudi and UAE 

companies has been formed to facilitate investments for 

the project. The group includes companies such as: Aseer 

Company for Trade, Tourism, Industry, Agriculture, Real 

Estate and Construction, as well as Saudi Binladen Group. 

30% of the equity of the company will be offered in an IPO 

in due course. 

“It is no coincidence that the City is being formally 

launched, as Saudi Arabia has now become a part of the 

World Trade Organisation. The City is one of the most 

impressive projects Saudi Arabia has attempted in the New 

Millennium. The fact that we were able to move ahead with 

this project on a fast track basis shows that Saudi Arabia is 

moving ahead with confidence to transform the economy 

and build more sustainable prosperity for its citizens,” 

commented HE Amr Al- Dabbagh, SAGIA Governor. 

He explained that this project will have a major role in 

attracting the Saudi and foreign investment and assured 

that all necessary licensing procedures will be done within 

one week of application in coordination with other 

concerned government departments. Al-Dabbagh also 

stressed that the project will fulfill SAGIA’s ambitious plans 

and it will help promote Saudi Arabia as an international 

investment destination while pushing forward the Saudi 

economy into a new phase of adapting international 

standards. The private sector involvement in this project 

will create huge job opportunities, with no additional cost 

on the Saudi government except for the services and 

facilities, which will be provided by SAGIA and other 

government departments. 

“It is also in keeping with the spirit of co-operation that 

binds the fraternal countries of the GCC, that the City 

brings closer Saudi Arabia, the UAE and the Emirate of 

Dubai to work towards a common endeavour. SAGIA is proud 

to be part of this important milestone in the epoch-making 

moment for our Kingdom and the GCC,” Al-Dabbagh said. 

Mohamed Ali Alabbar, Emaar Chairman, said: “The six 

components - seaport, industrial district, education zone, 

financial island, resorts and the residential area - of the 

City - will work seamlessly together to make it an important 

global destination and a focus area for the development of 

both heavy and light industry, services in various sectors 

and bring in a greater level of local investment as well as 

regional and international Foreign Direct Investment into 

the Kingdom and thus more job opportunities for 

Saudi youth. 

“This City will be a world class location to work, live and 

play and a shining example for Saudi Arabia’s 

transformation into a global economic powerhouse and 

further consolidate its position as the Middle East’s largest 

economy,” Alabbar concluded. 


Human Resource 43 

People: The key to productivity 

Productivity has always been one key 

measurement for a company’s success; 

however, it is even more significant in 

today’s global business environment. 

According to a Rashad Kanbar, CEO, 

impaQta, premier Management 

Advisory firm, focused human capital 

investment is essential for long term 

organisational survival and prosperity, 

and strategic human resource 

development could increase 

productivity by as much as 30 percent 

in regional firms. 

The potential of human resources in 

increasing organisational productivity 

came to light during independent 

research carried out by impaQta as it 

gears up to meet the challenges of new 

hybrid economies and focuses its 

consultancy and development tools to 

aid business partners in aligning human 

resources to corporate objectives. 

“The challenges and obstacles in 

today’s knowledge-intensive 

economies mean that organisations are 

increasingly coming to the realisation 

that sustainable growth is impossible 

without human capital investment. 

Multinational organisations and small 

and medium businesses are all facing 

issues in developing personnel 

expertise cores that can serve as viable 

platform for organisational change and 

development,” said Kanbar. 

Studies show that over 50 per cent of 

organisational diversification and 

expansion plans in the region achieve 

less then half of their initial objectives 

due largely to people related issues. 

Attracting, training and retaining 

talent is increasingly important in 

successful change management and 

sustainable growth. Human resource 

has become an integrated function 

within strategic planning, and 

competitive advantage in the 

knowledge economy comes from 

aligning personnel goals with business 

objectives and organisational culture. 

impaQta research indicates that 

industry sectors can increase their 

competencies and boost gains by 

relying on a diversified, multi-cultural 

workforce that includes UAE nationals, 

mitigating the risk of 

communication failure 

and lack of target 

market understanding 

due to cultural 

differences, 

behavioural norms and 

modes 

of 

presentation. 

“Nationals are vastly 

under-represented in 

the regional workforce 

that draws largely on 

expatriate expertise, 

leaving a dearth of 

skill and transferable 

knowledge in the 

indigenous workforce. 

In order for the UAE to 

take the next step 

forward, concrete 

steps must be taken to 

empower, train and 

gainfully employ 

Rashad Kanbar, 

CEO, impaQta 

nationals,” commented Kanbar. 

“Today, skilled human resources have 

become even harder to retain due to 

The challenges and 

obstacles in today’s 

knowledge-intensive 

economies mean that 

organisations are 

increasingly coming to the 

realisation that 

sustainable growth is 

impossible without human 

capital investment. 

Multinational 

organisations and small 

and medium businesses 

are all facing issues in 

developing personnel 

expertise cores that can 

serve as viable platform 

for organisational change 

and development. 

rapid demands on career 

development, financial compensation 

and general appreciation, and 

impaQta studies indicate that the new 

competitive paradigm will be as much 

about retaining talent as grabbing 

market share,” he added. 

impaQta is a leading knowledge 

aggregation and integration company 

in the Middle East, with core 

competencies including training, 

facilitation and management 

consultancy with emphasis on 

knowledge definition, acquisition and 

utilization. 

“Human resources play a primary 

role in sustainable development 

strategies, and it must be given 

greater priority, not just at the 

national level, but also at corporate 

levels. Such improvement cannot be 

effected merely radical changes and 

enforcing regulations. impaQta is 

concentrating its efforts towards 

providing overall strategies for 

sustainable human resources 

development based on the tenets of 

information dissemination and 

knowledge sharing.” Kanbar 

concluded. 


44 

Banking & Finance 

10 Tips for reducing logistics costs 

As companies continue to manufacture 

and source materials from overseas, 

controlling costs remains a top priority 

for those involved in international 

trade. One key factor that should be 

monitored more closely is logistics 

management, which covers all 

activities relating to the procurement, 

transport, transshipment and storage 

of goods. Depending on the industry 

sector, supply chain logistics costs 

account from 5% to 50% of a product’s 

total landed cost. 

Some issues effecting logistics costs: 

Fuel prices remain high and ports 

continue to experience delays, 

resulting in higher transportation fees. 

Increasingly complex international 

trade laws and security 

measurements threaten to 

lengthen delivery times 

and increase warehousing 

costs. According to a recent 

report by Technology 

Evaluation.com, a typical airfreight 

shipment takes eight to 

twelve days. Of this, the 

cargo is enroute only 5% of the 

time. The rest is spent sitting in 

warehouses waiting for the 

required documents and 

compliance checks. 

Recently I surveyed our Trade 

Management Consulting experts to 

bring to you JPMorgan Chase Vastera’s 

10 Tips on Reducing Supply Chain 

Logistics Costs: 

1. Understand the true costs of 

sourcing overseas. Calculate 

freight, duty, brokerage, and inventory 

carrying costs to support these 

lengthened supply chains. Also factor 

in such items as the costs of engineers 

flying overseas. Once you understand 

the true total landed cost and total 

impact to the business, that domestic 

buy may look a lot better. Sourcing 

from Ohio to your U.S. plant, 

distribution center or customer may, in 

the long run, be more cost effective 

than sourcing from China. 

2. Focus on eliminating the 

variability out of transit times. The 

more variable the transit times are, 

the more likely it is that the receiving 

party is using more premium freight, 

building buffers of inventory, or 

ordering more often and more quantity 

than necessary to compensate for the 

uncertainty. Understanding these 

dynamics can lead to the conclusion 

that paying higher freight costs to 

insure higher variability actually saves 

your company in total costs. 

3. Tariff engineering. Strategically 

source and manufacture products to 

take advantage of classification duty 

rates and eligibility for special trade 

programs such as NAFTA. 

4. Consolidate. If you have multiple 

suppliers in one country, consolidate 

their goods into one shipment. In 

addition, if you always have LCL (less 

than container load) shipments out of 

one country, try to find another LCL 

importer of goods from that country. 

You may be able to partner and 

consolidate to a more cost-effective 

FCL (full container load) shipment. 

5. Informed decision-making. 

Provide to the decisionmakers/customers 

of your logistics

Banking & Finance 

45 

network the cost of freight for each service level, the reliability 

of each lane for each service level, and the true cost of carrying 

inventory so they can make informed decisions. People generally 

want to be good corporate citizens and will select the less 

expensive option that still meets their needs. 

6. Sometimes insurance doesn’t pay. Often when a 

company has a shipment of premium goods they tend to use the 

Carrier’s Insurance. Carriers Insurance is very expensive. If the 

company is self insured, which most companies are, they should 

check their insurance policy to see if it covers shipment of 

goods. If it does, then they do not need to add the extra cost of 

Carrier’s Insurance. 

7. Automate compliance processes. Companies that 

implement software solutions to automate trade compliance are 

able to speed the cycle times associated with tasks being 

performed manually, such as document preparation, and 

eliminate the associated errors. Automated compliance 

procedures also bring fewer delays at border crossings, resulting 

in on-time delivery, adequate inventory levels, increased 

customer satisfaction, and the avoidance of fines. 

8. Control your express shipping costs. Typically when a 

company runs into a supply chain issue, it will have an entire 

shipment sent on an express/expedited (highest cost) service 

level basis. Panicking often results in higher costs. If the 

company would just do a little bit of calculating it can 

determine the amount of goods that are needed immediately 

and have that amount sent using express/expedited service 

level, while the balance of the shipment can be sent using a 

standard (lower cost) service level. 

9. Planes, trains and automobiles. Which is cheapest? In 

general, rail is more cost-effective than trucking or air. Water is 

cheaper than air shipment. No matter the mode of delivery, 

always try to get three quotes for movements. 

10. Be aware of Non-Tariff Trade Barriers. Companies 

need to be more aware of the increasing level of non-tariff trade 

barriers that are in force to reduce sweat shop labor and support 

human rights and animal welfare issues. These restrictions can 

bring importers increased liability and compliance costs. 

Author: 

Bernie Hart 

Global Product Executive, 

JPMorgan Chase Vastera 

As the Global Product Executive for JPMorgan Chase Vastera, Bernie 

Hart leads a business of 650+ employees as the company delivers endto-end 

global risk management and operational solutions that drive 

cost savings, increase efficiency and provide best-in-class compliance 

across physical and financial supply chains. 


46 Legal 

Collision at Sea ...Who's at Fault? 

Author: 

Dr. Khalid M. Kadfoor Al Mehairi 

Emirates Advocates 

The provisions of UAE Maritime Law on 

Collision at sea patterned after the 

Brussels Convention for Collision at Sea 

of 1910 and the French Maritime Law of 

the Sea Accidents No. 545. There are 

three conventions pertinent to the 

collision at sea signed in Brussels, 

namely, Brussels Collision Convention 

of 1910 and the other two were signed 

on October 5, 1952 which pertains to 

civil and criminal jurisdiction of 

collision. By virtue of such 

conventions, some European and Arab 

states have incorporated such 

provisions to their domestic laws which 

included the United Arab Emirates. 

The nature of marine collision is 

defined under Article 318 of the UAE 

Maritime Law, which states that: 

• If a collision occurs between 

seagoing vessels or between such 

vessels and boats navigating on inland 

waters, compensation due for damage 

caused to the vessels, objects and 

persons on board the vessels shall 

apply in accordance with the provisions 

contained in this section without 

regard to the legal status of the waters 

in which the collision took place, with 

the exception of pontoons tied to a 

fixed anchorage or any floating object. 

• The aforesaid provision shall apply, 

even if no material collision occurs, to 

compensation for damage caused by 

one vessel to another or to things or 

persons on board if such damage 

results from the vessel’s undertaking 

an action or neglecting to undertake an 

action or failing to observe the 

provisions laid down by national laws or 

international conventions which have 

been ratified in connection with the 

regulation of the movement of vessels. 

• The provisions of maritime shall 

apply even though one of the vessels in 

the collision may be allocated to public 

service by the State or by one of its 

public bodies or organs. 

Under the second part of paragraph 1 

of Article 318, the provision “with the 

exception of pontoons tied to a fixed 

anchorage” is an expansion of the 

concept of the floating establishments 

on which the provisions of collision at 

sea are applied. Hence, the collision 

rules of UAE Maritime Law and the 

Brussels Convention are applicable to 

damages caused by another vessel due 

to the wave movement caused by the 

vessel or the whirlpool caused by the 

vessel even if no material collision 

occurred between the two 

establishments. 

With regard to the obligation of the 

vessel which is at fault for the collision, 

Article 320 states that the vessel which 

is at fault shall compensate the 

damages arising from that collision. 

Moreover, if the collision is due to the 

joint mistake of both vessels, each 

vessel shall be responsible according to 

the extent of fault made by her. The 

liability shall also be joint if the 

collision leads to death or injury of a 

person on board the vessel. In all 

circumstances, the vessel which pays 

more than its share shall have a right of 

recourse against the other vessel. 

In proving the fault of a vessel, fault 

must not be presumed regarding the 

responsibility resulting from the 

collision but it must be proved by the 

party claiming it. Therefore, the study 

of fault in marine collision is significant 

as well as the rules regarding the 

establishment regarding the same. 

Considerations for the Avoidance 

of Collision 

One of the things to consider for the 

avoidance of collision is the observance 

of safe speed. Regulations for 

Prevention of Collision of 1972 states 

that every vessel shall at all times 

proceed at safe speed so that she can 

take proper and effective action to 

avoid collision and be stopped within a 

distance appropriate to the prevailing 

circumstances and conditions. 

The International Rules for 

Prevention of Collision at Sea define all 

matters to determine whether the 

speed used by a vessel in the relevant 

circumstances is regarded as safe 

speed and as such the degree of fault 

can be assessed accordingly. 

The International Rules for 

preventing collision at sea includes the 

lights to lit on vital areas such as the 

mast, sides and stern of the vessel. 

Each vessel must observe the intensity 

of light that the Rules allowed for each 

type. Violation on the rules on light is 

one of the causes of collision at the 

sea. Violation can either be from 

insufficient lights or wrong lights to 

non-lighted vessel. Non-observance on 

the rules on light may mislead the 

other vessels in terms of the 

dimensions or position of the vessel or 

its movement or the other vessel may 

believe that the circumstances are 

normal, hence they shall proceed on 

and collision may occur. The courts are 

strict in bringing the negligent vessels 

to account. 


48 Insurance 

Check your insurance cover 

Too many transport operators, from 

NVOCCs (Non Vessel Owning Cargo 

Carriers) and logistics providers to 

terminal facilities, are worryingly 

uninformed about the extent of their 

insurance cover, the TT Club has 

warned. Speaking at a transport 

industry conference in Chile, C Daniel 

Negron, vice president in the 

Americas for the Bermudaheadquartered 

mutual insurer, urged 

all operators to review their current 

insurance programmes to ensure that 

their liability risks are adequately 

protected. 

Referring to the raft of security 

legislation now in place, especially on 

shipment routes touching the United 

States, the Club is concerned that, 

even years after September 11, 2001, 

not all operators understand the 

changed security and insurance 

landscape. 

Negron drew specific attention to 

some of the more prominent securityrelated 

legislation such as the 

Bioterrorism Act, the 24-hour Advance 

Manifest Rule and the International 

Ship and Port Facility Security (ISPS) 

Code, and spelt out the potentially 

business-threatening risks to 

operators throughout the supply 

chain. 

“Recent security initiatives have 

put the responsibility for anti-terrorist 

measures on all participants in the 

transportation process, from shipper 

through to receiver,” said Negron. “In 

the event of a terrorist incident, 

every link in the chain will be the 

focus of intense scrutiny. Companies 

would be well advised to ensure they 

can withstand that scrutiny,” he 

added. 

Negron highlighted typical risks 

emerging from the security 

regulations: detention delays, 

financial losses, death and bodily 

injury and property damage. 

“For example, there is a great risk 

of exposure to third party cargo 

interests for loss of market or other 

consequential loss resulting from an 

incorrect declaration on a manifest. 

Since there is no direct relationship 

between an NVOCC and third 

Dan Negron 

Vice President, TT Club 

party cargo owners, there is no 

benefit of a limitation of liability,” 

Negron pointed out. 

“In that every shipper with a 

consignment on a delayed vessel can 

potentially assert a claim for ‘loss of 

market’ on the value of his 

merchandise, on a 3,500 or 4,000-plus 

TEU ship, the potential exposure can 

be significant,” he said. 

The Club is warning that insurance 

cannot be viewed as a substitute for 

good business practices. Rather, it is 

one part of a comprehensive loss 

prevention program. 

In structuring an effective insurance 

and risk management programme, 

one which provides the maximum 

benefit at the most efficient cost, 

operators must be mindful of the 

extent of their insurance coverage, 

and must take affirmative steps to 

address their potential exposures to 

liability, the TT Club says. 

To that end, all operators should 

review their current insurance 

programme, to ensure that their 

liability risks are adequately 

protected. 

“Today, perhaps more than ever, the 

transportation industry will be 

required to engage in loss prevention 

initiatives as part of an effective 

insurance and risk management 

programme,” was Negron’s summary. 

“But by undertaking these measures 

before an event takes place, it 

will be in a better position to 

address the event after it has 

occurred,” he concluded. 


Information Technology 49 

Tejari, Jafza to create 

Even before the advent 

of the world-wide web, 

it was widely recognised 

that emerging global 

communication networks 

offered the potential 

to revolutionise trading and 

commerce. The web 

explosion of the late 1990s 

was thus accompanied 

immediately by a frenzy 

of effort attempting to 

translate existing markets 

and introduce new ones to 

the Internet medium. 

Although many of these 

early marketplaces did not 

survive, quite a few 

important ones did, and 

there are many examples 

where the Internet has 

enabled fundamental change in the 

conduct of trade. 

In Middle East, although we are still 

in early days, automating commerce 

via online marketplace like ‘Tejari’ has 

in many sectors already led to dramatic 

efficiency gains through reduction of 

transaction costs, improved matching 

of buyers and sellers, and broadening 

the scope of trading relationships. 

Jafza, Tejari join hands 

Tejari and Jafza are set to create 

virtual free zone to advance e- 

Commerce for trading partners. 

Through a partnership deal between 

Jafza and Tejari, more than 5000 

companies located in Jebel Ali Free 

Zone (Jafza) will soon have access to a 

virtual free zone which will enable 

Jafza’s community to send and receive 

trade leads, create online company 

profiles and product showrooms, and 

find suitable trading partners through 

Tejari’s secure business-to-business 

environment. 

The virtual free zone is the latest 

community portal created by Tejari 

following the recent launch of 

virtual free zone 

Jebel Ali’s business 

partners can spare 

themselves the time and 

cost of countless phone 

calls, faxes, emails and 

sales calls by taking 

advantage of the ‘marketmaking’ 

capabilities of 

this new online 

community 

-Omar Hijazi, CEO of Tejari 

CommuniTEA, a joint online initiative 

with the Dubai Multi Commodities 

Center to support the regional and 

global tea trading sector. 

“While Jebel Ali has a twenty-year 

history of fostering trade in the Middle 

East, our more than 5000 member 

companies are still avidly looking for 

new ways to meet potential partners as 

well as additional sales opportunities,” 

said Salma Hareb, Jafza’s CEO. 

“Expanding to an online platform will 

enable organisations in Jebel Ali to 

widen their market potential and allow 

companies of all sizes to locate buyers 

and suppliers in a dynamic and costeffective 

new medium. As members 

of Tejari ourselves, this is a new service 

for our partners that we consider to be 

of measurable value, ” she continued. 

In addition to building the online 

community portal within the larger 

Tejari marketplace, Tejari is providing 

the Free Zone members with easy 

entry to the virtual free zone 

community by means of a three month 

free trial. Tejari will also be offering 

its world-class customer support for 

Jebel Ali-based organisations that join 

(L-R) Omar Hijazi, CEO of Tejari, with Salma Hareb, 

CEO of Jafza, during the signing of partnership deal 

the new electronic trading zone. 

“It’s absolutely certain that there 

are promising trade opportunities 

within the region itself, of which Jafza 

member companies may be unaware 

and which can be uncovered quickly 

and affordably through the new virtual 

free trade zone,” said Omar Hijazi, 

CEO of Tejari. “Jebel Ali’s business 

partners can spare themselves the time 

and cost of countless phone calls, 

faxes, emails and sales calls by taking 

advantage of the ‘market-making’ 

capabilities of this new online 

community.” 

Since inception, Tejari has played a 

major role in growing the eCommerce 

adoption in the region through offering 

B2B e-trade solutions. The recent 

agreement with Jafza will encourage 

Tejari to further extend its offering to 

different trading communities in the 

region. Following the initial agreement 

with Jafza authorities, Tejari has 

entered the development phase of the 

new virtual free zone and expects it to 

be operational within the third quarter. 


50 

Academia 

The effect of supply chain glitches on 

shareholder wealth 

As supply chain 

complexity increases, 

so does the potential 

for operational 

disruptions. And 

these seemingly small 

rumblings can 

actually shake a 

firm’s performance 

foundations 

Senior executives are becoming 

increasingly aware that supply chain 

performance is critical to business 

success. Firms are more dependent 

upon their supply chains networks to 

deliver value. In most industries supply 

chain performance has become a much 

more strategic and competitive issues 

as it directly affects a firm’s ability to 

generate revenue, manage cost, 

improve asset productivity, and 

enhance customer satisfaction. In 

recent years, supply chains have also 

become more vulnerable to 

disruptions. While some of this 

vulnerability has been due to unique 

events such as acts of nature, many of 

the recent supply chain disruptions 

have been due to the inability of firms 

to better manage and control their 

internal as well external supply chain 

networks. 

As supply chains have become more 

efficient, have they also become more 

vulnerable to risk of disruptions. Lean, 

globally dispersed networks of 

suppliers, producers, distributors and 

customers must live with the possible 

consequences of more “everyday” 

supply chain disruptions. As supply 

chain complexity increases, so does the 

potential for operational disruptions. 

And these seemingly small rumblings 

can actually shake a firm’s 

performance foundations. Parts 

shortages, changing customer 

requirements, quality problems, rampup 

and rollout issues, and various types 

of production problems are some of the 

primary causes of disruptions. 

Although the negative link between 

supply chain disruptions and corporate 

performance has been extensively 

talked about in the business and 

academic publications, hard evidence 

on this linkage is very limited. Much of 

the evidence that is offered is 

anecdotal. While anecdotes are useful 

to get attention, they do not provide 

the hard and objective evidence that 

many senior executives are looking for 

to better understand the value 

creation potential of supply chains and 

to make decisions about the initiatives 

and investments they should undertake 

to improve the effectiveness of their 

supply chain. 

Our recent study provides objective 

evidence of the economic 

consequences of disruptions. This 

study tracked and analyzed the 

financial performance of nearly 800 

instances of disruptions at publicly 

traded firms. Most of these disruptions 

seemed to be caused by the firm’s 

inability to better manage and control 

its internal and external supply chain 

network. The important financial 

implications of disruptions are: (See 

Figure below) 

■ Firms suffering from supply chain 

disruptions experience 33 to 40% lower 

stock returns relative to their 

benchmarks over a three year time 

period that starts one year before and 

ends two years after the disruption 

announcement date. 

■ Disruptions increase share price 

volatility. Share price volatility in the 

year after the disruption is 13.50% 

higher when compared to the volatility 

in the year before the disruption. Such 

increases in volatility could undermine 

investor confidence as well as raise the 

cost of capital for the firm. It can also 

make a firm’s shares a less attractive 

currency for acquisitions as potential 

targets may be less inclined to do deals 

that depends on volatile share prices. 

■ Disruptions have a significant 

negative effect on profitability. After 

adjusting for industry and economy 

effects, the average effect of 

disruptions in the year leading to the 

disruption is: 

– 107 % drop in operating income 

– 114% drop in return on sales 

– 93% drop in return on assets 

– 7 % lower sales growth 

– 11 % growth in cost 

■ Disruptions have a debilitating affect 

on performance as firms do not quickly 

recover from disruptions. Firms 

continue to operate for at least two 

year at a lower performance level after 

experiencing disruptions. 

■ Disruptions have a negative across 

the board effect on stock price, 

profitability, and share price volatility. 


Academia 

51 

It does not matter who caused the disruption, 

what was the reason for disruption, what 

industry a firm belongs to, or when the 

disruption happened - disruptions devastate 

corporate performance. 

These findings have major implications for 

senior executives: 

■ It underscores the need as to why senior 

executives must be aware of the primary 

sources of disruptions in their supply chains, 

what can be done to mitigate the risks of 

disruption, and take proactive actions to 

mitigate risks. Disruptions, even if infrequent, 

have the potential to destroy value that might 

have been painstakingly created over years. 

■ Although the focus on making supply chains 

more efficient and lean makes economic sense, 

senior executives must recognise that lean and 

efficient supply chains face higher risk of 

disruptions. There is a direct relationship 

between efficiency and risk. Firms can no 

longer afford to focus solely on cost reduction. 

Major supply chain investments and initiatives 

must also consider how these investments and 

initiatives affect the risks of disruptions. 

Furthermore, such investments and initiatives 

must often be undertaken not because they 

reduce costs but because they increase the 

reliability and responsiveness of supply chains. 

Such investments and initiatives should be 

viewed as insurance against avoiding 

shareholder value destruction should 

disruptions happen. 

We outline some possible steps that could 

help mitigate the frequency and the negative 

economic impact of disruptions. 

Improving the accuracy of demand 

forecasts: A primary reason for demand supply 

mismatches is inaccurate forecasts. Bringing 

quantitative rigor to forecasting can improve 

the accuracy and reliability of forecasts. In 

developing plans, firms should consider not 

only the expected forecast but also the 

forecast error. Firms should also recognize that 

long-term forecasts are inherently less 

accurate than short-term forecasts. Forecasts 

often go bad when firms do not dynamically 

adjust forecasts, ignore background noise, and 

fail to consider events outside their own 

organisations that could have a material effect 

on forecasts. 

Integrate and synchronise planning and 

execution: Although firms have become 

sophisticated in their planning activities, plans 

are often insulated from execution reality. The 

throw over the wall mentality still exists. By 

better coordinating and integrating planning 

and execution many cases of supply demand 

mismatches can be avoided. 

Reduce the mean and variance of lead time: 

Forecasting inaccuracy and disconnect 

between planning and execution can be 

particularly devastating when lead times are 

long and highly variable. Reducing the mean 

and variance of lead time can help reduce the 

level of uncertainties in the supply chain. 

Collaborate and cooperate with supply chain 

partners: Collaboration and cooperation 

among supply chain partners will only happen if 

there is trust among the various parties, 

upfront agreement on how to share the 

benefits, and a willingness to change existing 

mindsets. Once these elements are in place, 

supply chain partners can do joint make 

decisions and solve problems, as well as share 

information about strategies, plans, and 

performance with each other. 

Invest in Visibility: To reduce the probability 

of disruptions, firms must be fully aware of 

what is happening in their supply chain. This 

includes internal operations, customers, 

suppliers, and location of inventory, capacity, 

and critical assets. 

Build flexibility in the supply chain: Firms 

must build flexibility in their supply chains to 

enhance responsiveness. Such flexibility could 

be on the product design side, sourcing side, 

and manufacturing side. Delaying product 

differentiation at a point closer to the time 

the orders are received reduces demand-supply 

mismatches. This strategy involves designing 

and manufacturing standard or generic 

products that can be quickly and inexpensively 

configured and customised once actual 

customer demand is known. 

Invest in technology: Investment in 

appropriate technology can help reduce the 

chances of disruptions. Web based 

technologies can link databases across supply 

chain partners to provide visibility of inventory, 

capacity, status of equipment, and orders 

across the extended supply chains. Such access 

to real time information alleviates information 

distortions and provides true demand and 

supply signals, all of which can reduce the 

chances of demand-supply mismatches. 

Although there are a number of strategies 

that firms can use to mitigate the chances of 

disruptions, which of these would be 

appropriate for a particular firm depends on 

the firm’s operating environment. To identify 

what strategies to adopt, firms need a 

systematic process for supply chain risk 

management that is carefully and regularly 

applied. The process should be championed at 

the highest executive level as this is critical for 

bringing about awareness of the importance of 

managing disruption risk. 

Authors: 

Vinod R. Singhal 

College of Management 

Georgia Institute of Technology, 

Atlanta, GA 30332, USA 

e-mail:vinod.singhal@mgt.gatech.edu 

Kevin Hendricks 

Richard Ivey School of Business 

The University of 

Western Ontario London, 

Ontario N6A-3K7, Canada 

e-mail:khendricks@ivey.uwo.ca 

This article is based on the report “The 

Effect of Supply Chain Disruptions on Longterm 

Shareholder Value, Profitability, and 

Share Price Volatility. 


52 

Events Spotlight 

Global Supply Chain and Logistics 

Conference 2006! 


Events Spotlight 53 


54 Events Spotlight 

New dedicated retail exhibition for the Middle East 

InRetail exhibition, making its debut 

from June 4-6, 2006 at Dubai's 

International Exhibition Centre, will be 

a total one-stop retail solutions event, 

featuring a comprehensive range of 

products, services and technologies 

that will shape the future of retailing in 

the Gulf, Middle East and North Africa. 

A regular survey of over 200 shopping 

malls in the Gulf States and Saudi 

Arabia has shown that the current 

investment value of shopping malls in 

the GCC countries is US$65 billion - it 

also revealed that by the end of 2005, 

some 4.9 million square metres of floor 

space have been completed in the 

GCC, with a further 900,000 square 

metres in the Levant. By 2010, it is 

anticipated that around 14 million 

square metres will have been 

completed across the region. 

“Global retailers have huge 

opportunities in the Middle East, but to 

really maximise these opportunities 

will take more than just skill - it's 

essential to build an understanding of 

the local market and the preferences 

of shoppers,” said Paula Al Chami, 

Project Manager, InRetail. “That's why, 

in addition to an all-encompassing 

product profile that will highlight 

the very best retailing products 

and techniques available 

anywhere in the world, the core of 

InRetail will be a series of industry 

expert led seminars - our objective is 

to create a platform that will make a 

meaningful contribution to the overall 

quality of the Middle East's retailing 

landscape.” 

The event is expected to draw 

visitors not only from the GCC and 

Levant, but also North Africa and India. 


Interview with Abre Pienaar, Co-Chair CSCMP Dubai Roundtable 

Abre Pienaar 

Co-Chair CSCMP Dubai Roundtable 

Congratulations on organising such a 

fascinating and useful conference. 

What made CSCMP, USA choose Dubai 

for this prestigious event? 

Dubai is symbolic of the programme of 

the conference. It is global in outlook 

yet considerate of local issues. It is a 

cosmopolitan city with people from all 

over the world yet the character of the 

Middle-East is felt everywhere. 

What prompted CSCMP to collaborate 

with Supply Chain and Logistics Group 

(SCLG) for the event? Could you speak 

about some of the positive impacts of 

this partnership in the near future? 

Supply Chain Management is what the 

conference was all about and the 

essence of Supply Chain Management is 

collaboration across boundaries to 

create win-win results for everybody. 

The collaboration between CSCMP and 

SCLG worked exceptionally well in the 

mutual pursuit of a common goal – a 

successful conference. 

What can be done to further unify the 

supply chain and logistics 

professionals across continents? 

The exchange of knowledge is in my 

opinion the most useful sharing 

professionals in supply chain and 

logistics can do. Conferences are a 

great way to achieve that but there are 

other mechanisms, such as regular, 

short cycle meetings to exchange ideas 

and of course magazines such as this one. 

What next, where will CSCMP be 

holding its next conference? 

That decision has not yet been taken as 

far as this region is concerned. (The 

Global CSCMP conference will be in 

Texas in the US in October.) The 

success of this past conference in Dubai 

and the great response from the 

attendees convinces me that there will 

be a next one in this region and 

another one after that; it only remains 

to be scheduled. 

Any closing thoughts... 

Special thanks for making this 

conference happen should go to Shashi 

Shekhar and his SCLG team. They were 

the true heroes of the day.

Issue 11 - SCLG

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