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GCC facing supply chain challenges

Manama, August 10, 2010

Senior management in the GCC are optimistic about economic recovery, but their global operations are ill-prepared to meet a significant upturn in demand, according to a report.

'The economic crisis of 2008 and 2009 provided significant disruptions and high demand volatility in supply chains for companies across many industries,' said the report by management consultants PRTM.

'In a number of sectors, demand and supply almost came to a halt, forcing companies to enact short-term measures to tightly manage inventories, costs, and cash flow.

'The optimism that we have seen may not show the whole picture, and that is a concern,' the report said.

'Our findings indicate that many companies lack the capabilities critical for meeting a growth in demand or for managing an increasingly complex international supply chain. Driven by short-term demand, many companies did not strengthen critical capabilities during the recession.”

'Only a small percentage truly improved supply chain flexibility and processes needed both to capture an increase in demand and to better manage high volatility,' it added. 'While executives worldwide are gearing up their supply chains for the expected recovery in global demand, the Middle East represents a special case.”

'Blessed with a central location, and a distinctive mix of domestic and international market focus, this region has enjoyed continuous strong growth and escaped some of the recent global economic turmoil.

'Yet the Middle East faces its own set of supply chain trends and challenges over the next few years. The Middle East's unique geographical position allows it to act as a hub and a trading partner with both Africa and Asia - a critical asset and a potential boost in the face of flat Western demand,” the report noted.

'Proximity to energy and relative ease of access to capital are two other obvious competitive advantages. The region has strong logistics and distribution capabilities, with a well-established third party logistics industry and continued infrastructure investments.

'But it has some difficult challenges to contend with. The local supply base for raw materials, other than oil and gas, and manufactured components is narrow,' the report said.

'In addition, the Middle East lacks regional tariffs and trade agreements, which puts it at a disadvantage with the EU, Nafta, and Asean blocs.

'Middle East companies should focus on finding end-to-end supply chain opportunities, as opposed to just logistics and should continue to develop supply chain capabilities across functions and technologies and integrate those capabilities with those of suppliers and customers,' the report concluded. – TradeArabia News Service




Tags: GCC | Manama | supply chain | logisitcs | PRTM |

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