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15 May 2014 | Paul Snell
Supply chain professionals have a responsibility to develop local suppliers and must step up to meet the challenge.
This was the view of Peter van Rijs, supply chain manager, MENA at Shell speaking at the CIPS Middle East Conference in Dubai this week.
Van Rijs told delegates that both governments and communities expect to benefit from the investment and resources of businesses through capacity building and job creation, and there are advantages for companies too.
“It is efficient for a company to have your equipment and materials locally sourced, instead of getting them from outside the country – specifically in countries like Iraq where you have to take a lot of security measures. From a cost perspective that is also an efficient way of doing things,” he said.
“That is what we have to think about, and take action as supply chain professionals to drive this philosophy.”
He gave examples of Shell projects in Qatar, Iraq and Oman, where the oil and gas supermajor is working with local suppliers to diversify the supply base. He said supply managers don’t only have to focus on raising capacity and capability, but that these companies are qualified and certified to deliver materials and provide services too. “This is another example of where supply management has to step up and work together to achieve these goals,” he added.
There are also cost benefits. “It is in all companies' interests to reduce their supply chain costs. Using local companies [does this], and also reduces dependence on the expatriate workforce.
“From the supplier’s point of view, diversification gives them the opportunity to develop and step up. For the government [the benefit] is the development of capacity and creation of jobs and opportunities.”
When asked for one piece of advice on how to boost local content in the supply chain, he responded: “Think ahead, understand what the market developments are, what the government thinks and understand where the opportunities are to do that. It requires a much broader perspective.”