Alsafwa: cementing the supply chain
Business Review Middle East speaks to Riad Bestani, the CPO of Alsafwa, about how the evolving role of procurement.
Alsafwa is a joint venture between four partners, with half of them private and half public, the former being two industrial partners – LafargeHolcim, the world leader in the building materials industry, and El Khayyat, a red brick manufacturer. Based in Saudi Arabia, this cluster of companies has led to Alsafwa becoming a trusted and respected company across the GCC, to the point that it plans to double capacity by 2017.
Riad Bestani, the CPO of Alsafwa’s cement arm, joined the company in 2013 after many years of procurement experience. This familiarity with the industry means that he is well aware of the safety issues of providing cement in a region like Saudi Arabia, even outside the company’s property. “Road safety is a real challenge in this part of the world,” he says, “and Alsafwa people need to drive back and forth more than 300km per day. One of the things we’ve done to ensure the best health and safety conditions for our staff is reducing the travelling hazards for them by providing buses, in addition to adequate accommodation on-site for the majority of plant staff. Our plant is far from town, so the least we can do is reduce risks by making sure our employees get back home safe and sound. ”
The processes involved in creating cement – grinding stone, burning it (up to 1400 degrees Celsius) until it’s liquefied, and grinding again into a powder – involves behaviors and practices that can be dangerous if they are not properly anticipated and secured. The company ensures strict control of every situation to guarantee safety procedures are followed. “The quarry area we have on-site has a very tough mountain topography, and working on it is very complex,” Bestani explains. “We need to drill, to blast materials, vehicles need to go up and down, and we need excavators to ensure full control over falling rocks. Geomining experts that have visited our quarry warned us on the high numbers of hazards that have to be monitored and anticipated. We have strict safety exigencies towards our suppliers working on-site, and our employees make sure health and safety requirements are being fulfilled.
“We have to be very careful, so we assess suppliers to ensure they understand our safety procedures. We train them, and we refresh that training regularly. We make checks and audits across every level, and really these are basic requirements. Lives are at stake. When a safety problem appears, everyone is empowered to stop it and report it for deep analysis of its root causes. We have company-wide reviews with health and safety committees which makes sure we’re implementing the action plans.” When Bestani joined the company, one of his main missions was to create a proper process for procurement activity and build a structured procurement organisation.
Due to a growing market and a high number of job opportunities, one challenge in Saudi Arabia – and across the GCC – is employees’ tendency to quickly move on, especially the younger generation, making it challenging to acquire and retain the right staff. Bestani immediately brought on board new people for his team composed of trusted connections he had made during his career, and he ensured the existing team was properly positioned for tasks they fitted into. “It’s about networking, putting together the right organisation, delegating to people in key areas, and building trust with people you believe can bring you the performance. The procurement team was split into three groups – industrial sourcing, general services sourcing, and performance activities, which give you the performance and evaluation of the way you’re managing your supply chain. We track a number of KPIs among the suppliers, assessing their performance, cost reduction for main strategic suppliers, and lead time between requests and orders as well as spend coverage.”
Bestani spent two years implementing a task force composed of people from main interacting departments of the company – plant, finance, and IT – making sure they worked intelligently and understood what their individual responsibilities were. It has meant enormous progress in terms of procurement, but it is a continuous task to keep people trained and engaged in their job role. Bestani explains: “I had to drive far-reaching changes. It’s not easy to accept that there are hurdles to overcome and a lot of convincing that needed to happen, but in the end it was worth the effort, and it’s been quite positive with results translating to some big savings. Saudi having such a high employee turnover is challenging, so you have to stick with your managers to understand how to overcome the situation and to retain the talent.”
Saudisation is being heavily promoted in the country, and involves retaining as much business as possible in the Kingdom itself. The rule in Saudi is that if a foreign company wants to invest, it has to be making a partnership with a local company. It is also required that investors procure obligations depending on the sector – for cement, there has to be a minimum level of Saudisation. “HR, for example, needs to be Saudi national,” Bestani says. “The minimum general Saudisation in our sector needs to be 12 percent, and we have 49 percent as of today. It gives us all kinds of advantages; there’s a sort of mileage card and the more Saudi nationals you have on board, the more you can get loans and subsidies from banks and the government. It’s a great incentive.”
The company also tries hard to increase female employees number into work, since national laws allows it only in specific areas. Alsafwa hired its first female employee in 2010, and Bestani is pleased to have contributed in his department last year with the first female employee in procurement: “I’m proud of being able to do that, because it’s challenging, since women have a long way to go to gain access to the job market. We hire most of them into entry positions and train them up for better opportunities later on.”
The cement business in Saudi Arabia is enormous; the nation produces 50-60 million tons a year, compared with the US which creates 75 million tons with ten times the population. Most of the companies that produce it are 20-30 years old, and the way Alsafwa’s cement business differentiates itself is through innovation and sustainability. “We focus a lot on innovative solutions. Oil is becoming a scarcer commodity, so we’re looking at alternative fuels, and we’re working with municipalities and utilities companies who are eager to develop more environmentally-friendly use of energy through waste management and recycling initiatives. This is one of the great advantages the LafargeHolcim group has in terms of developing solutions.
“Its highly state-of-the-art research center in Lyon, France, allows different business units of the group around the world to benefit from its knowledge and experts in key practices. However, the move is very slow here, and it takes a while to get approvals. It requires a lot of involvement, patience, and commitment to achieve what we want to. We are one of the very few, if not the only company to be using alternative fuel in the cement industry.” The company’s motto is ‘think global, act local’, and Bestani is keen to stand out from other Saudi businesses with Alsafwa’s unique approach: “The support we get from the group in terms of worldwide supplier panel and Best Cost Countries solutions – a platform based in China helping to source alternatively to European brands – is definitely giving us a step ahead compared to competition, and we always need to keep that advantage.
“In two years’ time, we are not going to be doing procurement the same way. Procurement evolves with the needs, and sustainability will change with it. This procurement department wasn’t always making use of all these advantages, and I’ve had to adapt it to bring it up-to-date. Business isn’t static; we’ll be improving all the time.”
Read the August 2016 issue of Business Review Middle East magazine