Supply Management: Al Baik, Almarai, Emirates Airlines

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Table of Contents

Introduction
Purchasing Issues
Supply Issues
Logistics
Information Systems
Quality
Customer Service
Suggested Improvements
Conclusion
References

Introduction

The firms selected for this analysis are Al Baik, Almarai, and Emirates Airlines. Al Baik is a fast-food restaurant chain that operates 51 branded outlets in strategic city locations across Saudi Arabia (Al Baik, 2020). Its main products are the proprietary “broasted” chicken, shrimp, and spice blends. Shakour AbuGhazalah founded the first restaurant in 1974 in Jeddah, and currently, Al Baik is the third-largest brand with a market share of 5.7% (Al Baik, 2020). The company’s mission is to provide a satisfying experience to its customers craving for high-quality dining experience and service and a secure environment. Al Baik works with different suppliers and franchisees to deliver high value for customers.

Almarai was incorporated as a joint-stock company in 2005. This Riyadh-based firm operates in the food and beverage industry through its branded dairy products. As the world’s largest vertically integrated organization, Almarai markets fresh and preserved milk, juices, yogurt, laban, cheddar, and butter in the Arabian Peninsula, where it enjoys a 28% market share (Almarai, 2018). Prince Sultan bin Mohammed founded Almarai in 1977 to meet the growing demand for dairy products. The company currently operates six dairy farms and multiple processing plants with about 674-million-liter production capacity (Almarai, 2019). Its growth strategy is founded on organic products, diversification into promising brands, and expansion to new markets. Almarai positions itself as a market leader in dairy farming, processing, and distribution.

Emirates Airlines is a dominant player in the air transport industry in the Middle East region and beyond. The Dubai government-owned airline was founded in 1985 as The Emirates Group’s subsidiary with two leased planes (The Emirates Group, 2020). The company’s core operations include aircraft maintenance, ticketing, airport services, and ground handling. Emirates Airline operates in 155 destinations in over 80 countries globally, with the Dubai International Airport as its central hub (The Emirates Group, 2020). Its supply chain involves different fuel suppliers, aircraft, in-flight entertainment systems, and food and catering services.

Purchasing Issues

Effective supply chain management (SCM) is a critical source of competitive advantages for firms. Purchasing is an SCM element linking the business and its suppliers. It includes vendor selection, contract negotiation, and procurement of the supplies needed to produce products for the market (Stevenson, 2018). Typical purchasing issues relate to evaluating potential suppliers to ensure the quality, reliability, and cost-effectiveness of the materials. Additionally, inspecting the goods delivered to ensure that they support organizational needs is important.

Al Baik sources its chicken from potential suppliers, primarily from Brazil, meeting high-quality standards. Al Baik’s supplier evaluation is based on Saudi specifications, and international quality standards for rearing, slaughtering, refrigerating, and shipping chicken would ensure safety (Al Baik, 2020). The main issue is that these guidelines may differ between jurisdictions, affecting the restaurant’s ability to provide consistent quality. Suppliers can also use in-house standards in addition to international specifications. Further, shipments are subjected to microbiological and chemical testing in Saudi Food and Drug Authority-approved labs to ascertain their quality before being cleared for use. Therefore, while the inspections guarantee safety and quality, timely delivery and reliability of the supplies are affected at Al Baik.

In contrast, Almarai uses vertical integration besides joint ventures and mergers to enhance supply chain (SC) synergies. Among its recent acquisitions is Hail Agricultural Development Company, a fodder producer, to support its procurement function (Singh, 2016). The acquisition of specialized suppliers ensures product quality, safety, and freshness. Although this approach has streamlined the supply chain, price alignment issues and unstandardized procurement policies remain outstanding. For Emirates, the servicing of planes poses some purchasing risks. The spare part suppliers are located in Europe and America, which means that the components are bought in dollars or euros. Fluctuations in the exchange rate can impact costs, affecting Emirates operations. Additionally, without forecasting the requirements, delivery delays may arise.

Supply Issues

The supply element of the SCM comprises multiple suppliers providing different materials and services. According to Stevenson (2018), effective coordination of these actors and monitoring quality, timely delivery, ensuring sustainable practices, and managing supplier relations contributes to overall SC effectiveness. Al Baik engages the Latin American Islamic Council to ensure its chicken suppliers abroad (Brazil) adhere to Halal slaughtering and equipment requirements. However, coordinating compliance and close supervision abroad may be costly, and the local supply of plastic bags, spoons, and plates is unsustainable given their environmental impact. In contrast, Almarai is a vertically integrated company; thus, it can control quality, sustainability goals, and delivery schedules (Almarai, 2018). Because the firm has a strong influence over production processes, it can mitigate procurement risks and ensure optimal inventory. In comparison, Emirates’s suppliers (Boeing and Airbus) sign Product Supply Agreements to guarantee high-quality components and timely delivery (Al Saed et al., 2020). However, fluctuations in fuel prices and maintaining the inventory of its many suppliers impact the supply portion of its SC.

Logistics

Inventory decisions depend on logistics, and therefore, information sharing with suppliers is important. The location of processing plants impacts delivery time and cost (Stevenson, 2018). Inbound and outbound logistics for Al Baik are mostly convenient since most inputs (wheat, eggs, and beef) are sourced locally, and no intermediaries are involved in distribution (branded outlets). However, chicken is procured from Brazil, which leads to high shipping costs (Al Baik, 2020). Additionally, rejected substandard shipments are be returned to overseas suppliers. In contrast, Almarai’s logistics operations use third-party operators to transport products to 83 depots in five countries in the Middle East (Almarai, 2019). Its fuel efficiency initiatives, such as the engine idling program, have reduced shipping costs to and from farms, processing plants, and outlets. Emirates has a hybrid logistics strategy with materials transported via air and road. Efficiency is achieved by locating its facilities within its Dubai central hub. For cargo services, its emphasis is on economies of scale, which are dependent on demand.

Information Systems

Advanced information technologies are key sources of supply chain efficiency and strategic advantages. According to Kakhki and Gargeya (2019), IT systems are designed to support informational processing capabilities and SC decisions to create value for customers. Al Baik’s logistical operations involve limited use of information systems. Home deliveries involve third parties not linked to Al Baik. In contrast, Almarai deployed an enterprise resource planning (ERP) system in 2002 to support its logistical operations (Singh, 2016). The ERP contains control features, each dedicated to its operational units. Emirates also uses information systems for inventory and reservation management. As a result, the company is highly responsive to customer needs and enjoys operational efficiency.

Quality

Consistently meeting customer needs or preferences is a critical success factor. The main product quality features aligned to consumer expectations include superior performance, aesthetics, dependable performance, and durability (Stevenson, 2018). Al Baik is committed to quality, and its partners (chicken suppliers) must deliver high-quality service and tasty food. Almarai adopted quality assurance systems to ensure the best production practices. Periodic internal audits of its farms and processing plants to ensure consistent standards. Additionally, the company’s dairy farms were the first ones in the Gulf region to receive ISO 9001 certification in 2003 (Almarai, 2018). In contrast, Emirates ensures service quality through flight scheduling systems that avoid delays, baggage tracking, online booking, and in-flight entertainment.

Customer Service

Al Baik targets different Saudi market segments with its broasted chicken and sauce. The restaurant chain provides high-quality, affordable food “served fast and courteously in a clean, inviting environment” (Al Baik, 2020, para. 4). Thus, it is committed to offering high customer value through its branded products and outlets. In contrast, Almarai delivers healthier food options, leveraging its sales expertise, farming, and processing technologies, and integrated supply chain to identify and meet consumer needs. Similarly, providing quality customer service is central to Emirates’ operations. Online booking and check-in services, baggage collection from a traveler’s home, onboard entertainment systems, and dedicated lounges for business and first-class customers are meant to enrich the travel experience and return purchases.

Suggested Improvements

Vertical integration with suppliers would help Al Baik and Emirates minimize supply chain risks such as delayed input deliveries and stock-outs. Emirates can form strategic partnerships with jet fuel suppliers to avoid costly SC disruptions related to price fluctuations. For Al Baik, establishing firm-owned farms in Saudi Arabia would lead to logistical efficiency gains and ensure compliance with Halal standards. In-house expertise in aircraft maintenance and component manufacturing would also strengthen Emirates’ competitive position. Almarai should adopt standardized procurement practices for newly acquired companies across the Gulf region. Alternatively, a centralized SCM function would ensure consistent quality standards for its products.

Conclusion

Supply chain management is an important business operation that ensures adequate inputs to meet demand. The three Saudi-based companies have adopted strategies to streamline their SCs and attain cost advantages and efficiency gains. Optimized procurement processes, logistics, quality, and customer service contribute to efficient production and delivery of products. The key drivers are market demand, perceived threats, and opportunities for growth and better performance in the target market.

References

Al Baik. (2020). Corporate: Putting MMMMMs and WOOOWs on our customers’ lips, every time, everywhere, the world over. Web.

Almarai. (2018). Corporate. Web.

Almarai. (2019). Better everyday: Sustainability report 2018.

Al Saed, R., Upadhya, A., & Saleh, M. B. (2020). Role of airline promotion activities in destination branding: Case of Dubai vis-à-vis Emirates Airline. European Research on Management and Business Economics, 26(3), 121-126.

Kakhki, M. D., & Gargeya, V. B. (2019). Information systems for supply chain management: A systematic literature analysis. International Journal of Production Research, 57(15-16), 5318-5339.

Singh, A. (2016). Performance measurement of Almarai products and customer satisfaction. International Journal of Management Science,4(1), 1-12. Web.

Stevenson, W. J. (2018). Operations management (13th ed.). McGraw-Hill Education. The Emirates Group. (2020). About us. Web.

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