Dubai Port, Coursework Example

Role of supply chain management and strategies in the success of Dubai Port

Q 1. Mission and SWOT analysis of supply chain strategies

Mission

Mission of Dubai port is “a global approach to a local business environment where excellence, innovation and profitability drive our core business philosophy of exceptional customer service” (Overview).

Swot

The competitive performance of Dubai port depends largely on supply chain strategies and not on traditional factors of port competition (Wouter and Peter). In order to understand present condition of supply chain strategies of Dubai Port and to analyze its future performance best method available is to conduct SWOT analysis.

Strengths

Biggest strength of Dubai Port is its enduring partnership with stake holders and customers. Delivery of superior service and operational efficiencies acts as the key to win confidence of customer and is sustaining it (DPworld). Dubai port is the main transportation hub of Middle East. Superior facilities provided by Dubai Port include professional service, slick marketing machine, super structure and a state-of-the-art infrastructure. There is no intra port competition for Dubai Port from other terminal operators. Jebel Ali Free Zone is hosting 3,880 businesses from more than 100 countries at present and this is an integral part of Jebel Ali port. DPA is part of Port Customs & Free Zone Corporation (PCFC). PCFC can mobilize capital through various other divisions and this can be transferred to Dubai port. This helps Dubai Port to provide various competitive advantages to its supply chain. Only Dubai port can handle containers directly portable to United States (Wouter and Peter).

Weakness

Lack of dedicated terminals at Jebel Ali port is the major weakness for Dubai Port. During 1999 Dubai Port lost 20 – 30% of Maersk-Sealand transshipment business due to increased demand for dedicated terminals at Jabel Ali port from shipping lines (DPworld). Lack of skilled labour for specialized operations is a great weakness effecting supply chain of Dubai Port. Labour force is powerless and extremely vulnerable and no expense is incurred by Dubai port to recruit best labour in industry (Wouter and Peter).

Opportunity

Development of Jebel Ali International Airport is one of the biggest opportunities for Dubai Port as it will strengthen industrial cluster of port with increased sea-air modal shifts. Reducing insurance rates for ships entering gulf can add advantage to Dubai port. Expansion of Jebel Ali port by land reclamation to add three more container terminals will help to increase its capacity to more than 20 million TEUs in another eight years. Management of ports of Port of Fujairah and Abu Dhabi Seaport Authority are other opportunities for Dubai Port (DPworld). Another great opportunity is acquiring of rights for running of terminal operations at six Unites States ports (Deborah).

Threats

Emergence of regional competitors like Salalah, Aden and Khor Fakkan is the biggest threat faced by Dubai Port. These ports situated in Arabian sea is enjoying some geographical advantages over Dubai Port. Distance to Dubai Port is more for ships transiting through Straits of Hormuz than to Khor Fakkan which can be reached by ships for almost 24 h less than to Dubai Port. Improvements of India and Pakistan ports are also posing threat to Dubai Port’s position as major transshipment terminal to Asian Subcontinent (Wouter and Peter).

Q 2. Application of strategic decisions at Dubai Port

Inventory and logistics management

One of the biggest advantage of Dubai Port is its location. Head office as well as Central Ware house of Dubai Port is located in Jebel Ali Free Zone (JAFZA). This provides various facilities for container transshipment including reduction in cost. Jafza is one of the fastest and largest growing free zones in the world. It covers an area of 48 sq kms. More than 6400 companies are operating in this free zone and among them there are more than 120 Fortune Global 500 enterprises. Jebel Ali Port connected to whole world and is the seventh largest port in the world. It is connected to all continents and countries (DPIbearings).

Inventory management system of Dubai Port is very crucial in its supply chain strategies. Along with that is its delivery system. Inventory management solutions of Dubai Port make it sure that the customers of Dubai Port receive their belongings at correct time and place as per their requirements. They are also having a Customized ERP Software which is created and managed by IT experts and In House team of the company (DPIbearings).

To ensure most speedy and efficient delivery to customers in a safe and accurate manner Dubai Port maintains an Art Warehouse Racking system. This helps Dubai port to meet the requirements of customers seamlessly. They are also having most sophisticated equipments for material handling. Storage capacity is of 6500 Pallets and Dubai Port is capable to deliver belongings of customers with in a span of 24 hours after placing of order. Immediate shipment is made possible trough Jebel Ali Port and Dubai Airport. Zero downtime is offered by the Fleet of vehicles along with immediate availability and service to meet customer needs (DPIbearings).

Dubai Port also provides the facility for customers to choose the trucking company. For this all trucking companies associated to it is mentioned online from where customers can make their choice. On receiving an order from customer, trucking company is informed of the same only when container is ready for transport. Only 30 minutes is taken for the truck to get in and get out. The time is measured in the case of each truck. 6000 trucks are fitted with RFID tags for managing and optimizing this process of in and out. Every container carried by truck is photographed for security purpose from 360 degrees. This is also helpful for optimization, damage claims etc. This also helps to track the entire value chain along with identity of driver. All this is done in an automated method which makes it fast and safe with accuracy (Hassan).

Technology standards

Dubai Port has adopted very well advanced system of integration to help world class operations by maintaining security and safety standards. Dubai Port is very keen in its strategies regarding technological advancement and technology driven efficiencies. Dubai Port for managing cargo movements through terminals is using Navis SPARCS N4 version 2.1 terminal operating system (TOS) in August 2011. This will help to increase crane moves to 30 per hour. This system will allow automating the planning of terminal at gate, berth and yard itself. This will also help to increase throughput of container. This will also increase operational efficiency and will also provide with expertise and technological advancement they are in need of for providing best service to customers. Further technological advancements also help Dubai Port to provide lowest total cost in an adaptable and maintainable method to ownership. Technological advancements also help them to integrate operations with banks, customers, shipping line, Weight Bridge and other customer applications (Business wire).

In order to reduce operations cost further Dubai Port has deployed BravoSolution’s eSourcing platform. This will further help to improve procurement operations. The implementation of BravoSolution’s eSourcing platform is supported by Tejari strategic partner of BravoSolution’s and one of the leading B2B online market place in Middle East. Tejari will help in implementation by providing end user support, training and eEnablement best practices. This will help to drive Dubai port to adopt successful platforms across enterprise. A ‘BUY World’ programme is also instituted for continuous improvement of procurement policies, technology, processes, competencies and capability. This consists of a ‘centre led’ procurement strategy and standards that are corporate approved. With this Dubai Port will be able to achieve high performance procurement culture globally among its 5,000 buyers (Burnett).

Distribution strategy

Dubai Port since its inception tries to understand customers view point with regard to cargo shipping. It has 49 terminals and operates in 31 countries as major expansions. It is one of the largest marine terminal operators in the world. It has formed in merger with Dubai Ports Authority (DPA) and DPI (Dubai Ports International). Dubai Port since inception provides with innovative solutions in automation and optimized port operations. It also recognizes advantageous partnership as well as acquisitions. It is this attitude of Dubai Port that acted as a driving force in its global logistics. Dubai Port adopts ‘total system’ approach in its business and market as a whole. In this approach Dubai Port influences global supply chain and business models across the world (Wouter and Peter).

Process automation, speed and optimization is considered as key strategies of success. An integrated approach is made possible which is beneficial for customers. Automated system is used in business to increase speed and accuracy. Payments are possible online and same is used for clearing of goods. This speeds up the process and it is less complicated as well. Thus customer centered approach is adopted by Dubai Port in its operations.

Customers are also free to choose the trucking company of their choice. Trucking process is safe and fast and the whole process is carried out in a value chain system. Automation of all these have made operations of Dubai Port less costly and fast (Hassan).

Strategic alliance

Dubai Port operates in five strategic areas of growth – Transport & Logistics, Urban Development, Energy & Natural Resources, Drydocks & Maritime and Investment & Financial Services. Developing strategic competence and its importance is understood by Dubai Port and at the same need to develop a diverse business portfolio across geographies and industries. Dubai Port believes that for successful expansion areas of long term benefits to both shareholders and company is to be identified and distinguished. It is with this strategy that Dubai Port is expanding its operations (Sulayem).

This idea brought to the face increasing opportunities in emerging economies of Asia, Latin America, Middle East and Africa. It was found that these places offer lots of space and potential for growth. It was found that the benefits in this area can be shared by both, host as well as investor. Thus Dubai Port aims in growth of both company as well as country where it operates (Sulayem).

Dubai Port offers its customers as well as partners quality assurance of trust. Control mechanism offered by Dubai Port evaluates corporate performance along with progress and growth accurately (Dubaiport).

Expanding of port management agreements is one of the most important factor behind growth strategy. A management services agreement was made between Dubai Ports Authority (DPA) and Abu Dhabi Seaport Department in 2005 regarding operation of Mina Zayed. Mina Zayed was integrated in to network of DPA where DPA looks after day to day management at Mina Zayed. Now Mina Zayed is marketed along with Mina Rashid and Jebel Ali. It is the strategic alliance that helps Dubai Port to compete at international and national level (Ibrahim, Peter and Peter).

Container terminal of Port of Fujairah is under the management of DPI as per a 30 year agreement. Operations and development of terminal is now conducted by DPI and the terminal is known as DPA (Dubai Ports Authority) Fujairah Terminal. For operations and development of this terminal DPI issues around US$155 million. Only container terminal of Port of Fujairah is operated by DPI. Agreement also contain clause to extent the concession mutually by another 20 years. Operations of another five international ports like Kochi and Vizag in India, Djibouti, Constanza in Romania and Jeddah in Saudi Arabia is also carried by DPI (Ibrahim, Peter and Peter).

CSX World Terminals was acquired DPI in 2004 and there by acquired its operations in Latin America, Europe, Asia and Australia. By acquiring this leading international terminal operator and developer Dubai Ports became world’s sixth largest ports operator (Ibrahim, Peter and Peter).

Supply chain integration

In order to increase its supply chain efficiency Dubai Ports effectively integrates its management of container along with other bulk and terminal cargo. All operations of port is integrated from procuring of orders to delivery. Online facility is available for making orders, payment and even up to booking of trucks. All this saves time and offers hassle free service to its customers. Activities of Dubai Port is integrated and automated to help customers and the whole supply chain is customer centred. E token, Asra’ a and e payment helps to increase speed of transaction. It is according to feedback of customers that Dubai Port integrates and enhances its services (Dubaiport).

When a customer chooses particular truck for transportation of container through the website of Dubai Port he is assured speedy delivery with quality. For this purpose truck in which cargo is sent will be undergoing vigilant surveillance for whole 30 minutes with in which truck enters the port and gets out with cargo (Wouter and Peter).

Integration is made possible in all levels of operation other than this. Activities of supply chain is so well operated and coordinated that sites of global consumption and production, shipping lines, air lines, logistics providers and all others are attracted towards Dubai Port.

To ensure high performance level Dubai Port has made sure to employ state of the art technology which will also enhance safety. Custom built tandem lift gantry cranes are employed by Dubai Port which was built by ZPMC in conjunction with Dubai Port World (DP World). These cranes can simultaneously lift four twenty foot containers or two forty foot containers. They are the most advanced lifts available both technologically and in operational ability (Dubaiport).

Q 3. Improving supply chain to reduce cost

Supply chain of Dubai Port can be further improved by integrating existing operations to scalable and open technologies. They can be further extended as per increase in needs. Creatively tailored practical solutions are necessary in supply chain management of Dubai Port in order to optimize inventory management, limit transportation cost and reduce lead time further. Practical solutions uniquely tailored to suit their unique relationships and needs are to be made out of long term experience in supply chain management. A system driven approach from taking of order to delivery in perfect synchronization will help to reduce any existing complexities further. This will also increase strategic advantage with reduced costs. Upgrading to custom tailored supply chain strategy will help to improve the whole process, reduce costs for management and integration of system, improve decision support and visibility of operations across world wide.

Adopting a sustainable business model is of great importance today for world is behind sustainability. Every action need to be environment friendly and in a manner to protect environment and reduce carbon emission. For this what is to be taken care of is reduce energy conservation, reduce wastage, increase recycling and procurement. Reduction of wastage will further reduce costs towards wastage handling. Supply chain activities of Dubai Port must be able to achieve a successful business model that is sustainable. It must be able to remain as a good steward to communities and environment where it exist and operate. Sustainability goals must be set to support Planet, People and Profit.

Q 4. Outsourcing actions

Though major portion of activities of Dubai Port is carried out by itself there are few areas which are outsourced by the company. One of them is its integration with Tejari a leading business to business market place to support implementation of BravoSolution’s eSourcing platform. BravoSolution’s eSourcing platform was implemented to reduce operational costs. Dubai Port has successfully interconnected Maximo-based Computerized Maintenance Management System (CMMS) to Tejari market place with the aid of MRL software which is an integration service from manufacturer of Maximo. CMMS system of Dubai Port manages the procurement of machinery, parts and equipment of DPA along with its maintenance and requirements of upkeep. CMMS system is now directly integrated to Tejari which is the first kind of its outsourcing operation. With this connectivity DPA will be able to streamline their buying cycle. This integration will further help to increase efficiency and speed in online sourcing of new machinery, elimination of administrative task and speedy delivery of goods and services of maintenance (ameinfo.com).

Q 5. Learning outcomes

This assignment helped to get a clear picture of supply chain operations of Dubai Port, which is one of the most successful new generation ports in the world. It is understood that factor behind success of Dubai Port is effective implementation of a supply chain that is customer oriented and highly integrated. Role played by supply chains and its effective management is evident from the success of Dubai Port which took less than 40 years to establish as one of the major ports in the world. Such management also helped the company to success over nearby regional ports even through they possessed several geographical advantages.

Dubai Port aims to grow globally in a sustainable manner by excelling in its service. They give priority to innovation and excellence in service and it is with this that the company is aiming profits. Top most priority is towards commitment to its people and customers. They also aim global growth in a profitable manner. Dubai world ensures responsibility for their personal and corporate behaviour which is of great importance in its growth strategy. Success of such a strategy can be seen in the growth of Dubai Port.

Even though there are certain threats and weaknesses for the company they are able to grow further and reach its vision by introducing new systems and improving its processes. Customer centred approach is the pursuit of success as far as Dubai Port is concerned. In order to enable easy and fast movement for customers a facility called Asra’s is provided. This helps to improve entry and exit times. Customers time is very much valued by Dubai Port and it is to reduce waste of time that facilities like e-token and e payment is facilitated. E-token is for scheduling of trucking services and e payment for facilitating payment of port charges online. Dubai Port tries to provide convenience to its customers in most efficient manner through an integrated supply chain management system that keeps on improving as per customer needs.

Thus to be successful in its global and to become a global leader in few years Dubai Port has adopted a cost effective, highly integrated, customer centred, technologically advanced, sustainable. Supply chain management strategy.

References

ameinfo.com. Tejari integrates with MRO Software for End-to-End Procurement with Dubai Ports Authority. 13 November 2001. 2 June 2012 <www.ameinfo.com/15223.html>.

Burnett, Leo. DP World Launches ‘Buy World’ In Partnership with Tejari and BravoSolution. 28 July 2011. 2 June 2012 <http://www.tejari.ae/cms/uae/news/press-center/air-liquide-selects-bravosolution-to-align-global>.

Business wire. “DP World Callao Upgrades Navis SPARCS N4.” 2 April 2012.

Deborah, M, Mostaghel. “Dubai Ports World Under Exon-Florio: A Threat to National Security or a Tempest in a Seaport?” Albany Law Review (2007): 70 – 72.

DPIbearings. Logistics and Inventory Management. 2012. 2 June 2012 <http://www.dpibearings.com/?page_id=56>.

DPworld. Dubai’s Ports Sector Growth Keeps Pace With the Uae’s Economic Progress. Port Rashid’s 40th anniversary marks celebrations at DP World, UAE Region’s annual grand gala for stakeholders. Dubai: DP World, 2012.

Dubaiport. World in Progress. UAE Region Handbook. Dubai: DP World, 2012.

Hassan, Kamal. Changing Tides: DP World Achieves Market Leadership through Business Model Innovation. 2011. 2 June 2012 <http://i360institute.com/wp-content/uploads/2011/10/Leadership_AlMuallem_Dubai_Port_World.pdf>.

Ibrahim, Al Abed, Hellyer Peter and Vine Peter. United Arab Emirates Yearbook. London: Trident Press Ltd, 2006.

Overview. www.dpworld.ae. 2012. 2 June 2012 <http://www.dpworld.ae/Overview/VisionandValues.html>.

Sulayem, Sultan Ahmed Bin. Dubai World. UAE region handbook. Dubai: DP World, 2012.

Wouter, Jacobs and V, Hall Peter. “What conditions supply chain strategies of ports? The case of Dubai.” Geo Journal (2002): 327 – 342.