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Challenges in Local Manufacturing

 

A look at how local manufacturers in the Middle East sailed through the pandemic...

 

Filed under
Business
 
June 28, 2021
 
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Challenges in Local Manufacturing
 

The previous year saw some unprecedented changes in the demand for cleaning products, especially disinfectants and hand sanitizers. While the entire world grappled for the limited resources and raw material, the supply chain suffered. Local manufacturers especially bore the brunt of immense shortages in raw materials, demand, skyrocketing prices and a lot more. 

In this article, let’s take a look at some of the common challenges faced by local manufacturers and how they overcame it. 

Challenges in manufacturing cleaning supplies 

With our industry playing a vital role in the global battle to manage the COVID-19 pandemic, the importance of cleaning and hygiene standards has never been greater. A hand sanitiser can now be found almost anywhere – so much so that a bottle is probably sitting within arm’s reach of you right now – and integral to that incredible achievement has been our ability to navigate the unprecedented strain on the global supply chain. When the pandemic first hit in Q1 2020, Reza Hygiene was given a stark reminder of why China is known as the world’s factory as production lines halted, and the problem was compounded by the decimation of airline and sea shipping schedules. With critical shortages and delays of raw materials and components, as well as dramatic cost increases, the world rapidly found out just how dependent we all are on the far east for even the simplest of plastic components.

The pressure on the supply of biocidal actives, disinfection products, dispensers, pumps and sprayers was high and increasingly uncertain as demand surged to levels that had never been witnessed before. As an example, at Reza Hygiene, pre-pandemic sales of hand care dispensers averaged 10,000 per annum. As the pandemic took hold and the need for sanitisation products escalated, they fulfilled orders for 80,000 in just six months! Likewise, alcohol-based hand sanitisers previously represented 500,000 litres per annum, but within six months it hit eight million litres. 

Another example is NEFCHEM Speciality, which mainly deals with the speciality range of chemicals, for which most of the raw materials are imported from the UK, Europe and USA. Currently, the major challenge NEFCHEM faces is the procurement of these materials and maintaining their continuous supply. With the help of shrewd planning, till date the company has not faced any delay in production due to a shortage of raw materials. Another challenge the company is facing at the moment are the skyrocketing shipping rates, due to a plethora of reasons, which has urged it to purchase materials in much higher quantities.

Overcoming the challenges

 

These challenges however, do not deter the company from shining. With its vast experience, NEFCHEM has learned to overcome this challenge by advanced forecasting and procurement systems. “For this, we started maintaining a higher safety stock of raw materials and managing a much more effective stock management system. By identifying such materials, it has been made sure that they never run out of stock at least in the forthcoming six to seven months,” says Vishnu Alayil, Operations Manager, NEFCHEM. 

As a homegrown Saudi company, Reza Hygiene was able to play a part in contributing to public safety in the Kingdom, as well as in the region and beyond.“The can-do spirit of our team and the level of collaboration with our partners was truly remarkable. We overcame every challenge that came our way by applying innovative solutions to increase efficiencies, all the time constantly optimising our operations in order to avoid passing cost increases to our clients: our state-of-the-art manufacturing facility in Jeddah ramped up production, working around the clock, with senior management working on the production lines alongside the workforce; our process engineering teams pioneered new ways to speed up productivity and increase output; our supply chain department were in contact with our international partners 24-7; our sister company provided bulk tank storage capability at the Arabian Chemical Terminals in Yanbu and Jubail; and our team managed customer expectations transparently,” says Keith Watson, Division Manager, Reza Hygiene. 

“At the height of the crisis in Q2-Q3 2020, demand from major clients continued to surge, yet at the same time local trucking companies were curtailed by curfews. We worked closely with these clients and the authorities, forming WhatsApp groups, reviewing protocols, product requirements and delivery schedules regularly and even arranging for client trailers to collect products daily. Customers quickly saw the advantage of a strong and agile local/regional supply chain, coupled with high quality products and services. With US and European supply chains severely impacted also, new customers came on board and once they experienced our services, they did not look back. It is this commitment to service excellence that creates jobs and attracts the best local talent to Reza Hygiene, enabling us to contribute to a thriving economy in line with Saudi Vision 2030, as well as support the global fight against COVID-19,” Watson continues. 

Evolution of the challenges

Vishnu highlights how over the past year even though countries have opened up, production facilities around the globe are functioning at half their usual manpower, which in turn has affected their outputs. Due to this, there is a major shortage of specialty chemicals in the market and hence made local manufacturers more vigilant about their availability. Additionally, NEFCHEM has witnessed a major delay in shipping of raw materials from Europe and UK, over the past year, which has aided them in finding new alternative suppliers who are ready to support the demand.

The pandemic impact

During the early stages of the pandemic, there was a huge demand for alcohol-based hand sanitizers and disinfectant based products. Initially, it was challenging to cope up with the demands from both local and other GCC countries. “We handled the situation by adding more workforce, shifts, production lines and investing in new machineries. In 2021, NEFCHEM Speciality invested in a much larger facility in Dubai Investment Park Phase 1, where we are able to maintain a much higher inventory of both raw materials and finished goods, which in turn has helped us in reducing order delays and increasing our customer satisfaction,” says Vishnu. 

The large demand puts the entire global supply chain under immense pressure. However, it would be fair to say that the local manufacturers of the Middle East have successfully overcome the challenges posed by the pandemic. 

 

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