EFFICIENT PRODUCTION

Oman 2020 | INDUSTRY | INTERVIEW

As a manufacturer, Areej Vegetable Oils & Derivatives continuously adapts its entire value chain system to end users' needs and requirements.

Salem Nasser Al Bortmany
BIOGRAPHY

Salem Nasser Al Bortmany graduated with a bachelor's degree in chemical engineering from the UK and obtained his MBA there. He attended various management and leadership programs including senior executive programs at Harvard Business School. He joined AVOD as an executive engineer and subsequently took on various positions. He sits on numerous boards including Reem Batteries and Power Appliances, Oman Textile Mills, and Al Madina Logistics Company. He is chairman of the Working Group Committee of Export Development Committee at Ithraa and a member of Oman Product Exhibition OPEX Committee.

How has digital transformation enhanced your company's productivity?
Management information systems and digital planning are becoming crucial for us. We have an enterprise resource planning (ERP) system that is a state-of-the-art quality management, namely SAP. It helps unify our entire information bank as well as the flow of information from planning to procurement, ingredients, packaging, products, and all the raw materials. It also links our sales and marketing, which helps us come up with manufacturing to see the optimum quantity and quality that goes into manufacturing and production.

Looking to the next three to five years, how do you see these market requirements evolving?
The dynamic of the market has two main elements: the needs and requirements of the end users. The lifestyle in Oman has changed, also changing the entire concept of the needs and requirements of end users with it. As a manufacturer, we have to adapt with our entire value chain system to the end users' needs and requirements. This requires an understanding of modern trade, where they come from, where they come in, and the power of negotiations.

What does it mean for the pricing strategy?
The power of the negotiation was once in the hands of manufacturers; however, today it is in the hands of large, chain supermarkets. Before getting into the pricing structure, first, one has to register the product and then make it available on the shelves that the company has rented. If a product is slow moving, then it obstructs other products from the shelves. This means it needs a more exposed location, though then the fees will increase. We have to remember that we are not alone in the market, and other similar products are also available.

How do changes in customer needs and increasing manufacturing costs reflect on your strategy?
That is the challenge. At the end of the day, we want our product on the shelves at a cost-effective, competitive, and affordable price. The game is to increase the entire value chain efficiency, whereby the cost of production has to fall, and the capacity of factory utilization should be at economy of scale. The more one produces, the lower the cost of production, the greater the power of negotiation they will have with their supplier, and the more cost effective it will be for their products to be on shelves.

How would you evaluate the government's efforts to modernize the logistics sector?
The logistics sector plays a crucial role, particularly for the products we export to foreign markets. The strategic location of the Sultanate of Oman facilitated our exports and enabled us to expand our units, since we are within 1,800km of these markets. This logistical advantage helped us to increase our export volumes, as we are able to also import materials, produce them there, and reexport them to the West and the MENA region.

How can the national logistic strategy be improved in terms of customs and regulatory issues?
There is a synergy between the public and private sectors, with the government helping the industrial sector by attracting FDI and increasing employment opportunities. This synergy is crucial, since it serves the country's economic growth, as well as encourages companies to enter new markets and develop new products. We also have more than 75 companies that support our products around Kenya and have had success in the East African region, where we have exported many of our products. This is why expanding in Africa is beneficial, so our next step is Central Africa. In turn, the coordination between the private and public sector is growing, and it is beneficial for both parties.

What are your strategic priorities for 2020, and how do they incorporate innovation?
We seek to identify the activity per unit to define each individual's goals and overall activity to increase productivity and effectiveness. We are also using more sophisticated tools to eliminate defects in production lines. Hence, our priorities for 2020 are three important elements: efficiency, effectiveness, and productivity.