Building a sustainable business

Transcription

1 Building a sustainable business DUBAL Supply Chain

2 01 Corporate profile Dubai Aluminium Company Limited (DUBAL) owns and operates one of the world s largest modern aluminium smelters with a captive power station. Built on a 480-hectare site in Jebel Ali, our complex s major facilities comprise a one million metric tonne per annum primary aluminium smelter, a 2,335 megawatt power station (at 35 C), a large carbon plant, casthouse operations, a 30 million gallon per-day water desalination plant, laboratories, port and storage facilities. Our Jebel Ali site has the capacity to produce more than one million metric tonnes of high quality finished aluminium products a year, in three main forms: foundry alloy for automotive applications; extrusion billet for construction, industrial and transportation purposes; and high purity aluminium for the electronics and aerospace industries. More than 300 customers are served in at least 45 countries predominantly in the Far East, Europe, the ASEAN region, the Middle East and Mediterranean region, and North America. As a corporate entity, DUBAL holds ISO 9001, ISO/TS 16949, ISO/IEC 27001, ISO/IEC 20000, ISO and OHSAS certification at its Jebel Ali site; and has twice won the Dubai Quality Award in the Production and Manufacturing sector (1996 and 2000). About 4,000 skilled operators, tradesmen, administrative staff, technicians, professionals and managers are employed by DUBAL. Some 22 per cent of our total workforce is drawn from the local population, with UAE Nationals holding over 70 per cent of Senior Management positions. DUBAL also holds a 50 per cent share in Emirates Aluminium Company Limited (EMAL), a green-field smelter development being built in two phases at Al Taweelah, Abu Dhabi. Commissioning of EMAL Phase I (comprising a 756-cell smelter plus associated power generation, reduction material and casting infrastructure) began in December Driven by a quest for continuous improvement and ongoing innovation, DUBAL has invested substantially in developing advanced reduction cell technologies that not only improve productivity but also reduce our operations impact on the environment through enhanced energy efficiency and minimized emission levels. This has culminated most recently in DUBAL s proprietary DX Reduction Technology a UAE flagship technology that operates at 370kA plus and performs among the best aluminium reduction technologies available. Developed in 2006, DX Reduction Technology has been implemented in a dedicated 40-cell potline at our Jebel Ali smelter complex; and has been licensed to EMAL Phase I.

3 03 Contents Supply Chain 01 Purchasing Strategic Materials 02 Purchasing General Materials 02 Purchasing Contract Services & Direct Materials 03 Supply Warehouse 03 Supply Logistics 04 Vendor registration 07 Payment cycles 08 Security & access controls 09

4 01 02 Supply Chain Our mission To support our company s strategic plans, Supply Chain s mission and purpose is to: Ensure continuity between functions and maintain sufficient stock to meet demand and protect production by adhering to the six R s the Right Materials at the Right Time in the Right Quantity of the Right Quality at the Right Price and from the Right Source while taking care not to tie-up corporate capital unnecessarily; and Support our company s Corporate Social Responsibility (CSR) ambitions through implementation of Green Supply Chain principles. At the same time, we continually strive to develop long-term relationships with our suppliers, thereby positioning DUBAL as a customer of choice Our role in DUBAL The operations of every corporation have unique requirements and constraints. Maximized performance is essential to achieve the best return on investment while satisfying customers demands. This requires a thorough understanding of all operational aspects and the associated costs, together with implementation of best practices throughout the organization. formal agreements with suppliers of goods and services requires not only a complete understanding of the business requirements and organization needs, but also up-to-date knowledge on supply management strategies and practices. We are also keenly aware that the DUBAL Supply Chain department plays a vital role in providing the services and materials needed to ensure the smooth operation of our smelter complex. This is evidenced, a m o n g o t h e r w a y s, b y t h e f a c t t h a t the Supply Chain department procures materials and services worth some AED 5 billion (US$ 1.36 billion) every year, 80 per cent of which is spent on Raw & Process Materials and the balance on General & Contract Services. In any given year, approximately 6,000 Purchase Orders and 300 Contracts are issued. Our department comprises 125 Supply Chain professionals in various fields of expertise, working in five sub-departments, namely: A brief summary of the individual departments is provided in this booklet. Purchasing Strategic Materials This sub-department is primarily responsible for procuring the major raw materials required by DUBAL, including: We acknowledge that an effective and responsive Supply Chain is essential to the continued success 4% 3% 5% 4% of DUBAL. Especially as a substantial Purchasing Strategic Materials 11% proportion of our annual operating GCC 28% Middle East & N.Africa budget is dedicated to paying our Purchasing General Materials Far East contractors and suppliers for the 6% China raw materials, parts, equipment Purchasing Contract Services & India 36% 5% and services they provide. Direct Materials Europe Effective expenditure depends on Australia successful contract management, UK Dubai Supply Warehouse US & other American Rest of UAE excellent purchasing strategies Other 23% 11% International and stringent inventory control. Supply Logistics To negotiate, secure and manage Figure 1: Strategic materials suppliers by region (%). Figure 2: Geographic distribution of orders by value (%). Alumina CP Coke Liquid Pitch Baked Anodes Aluminium Fluoride Potlining Materials Process Materials Refractory Items These raw materials are procured from various sources so as to ensure uninterrupted supply to our operations. Depending on the raw materials, either long-, medium- or short-term contracts are placed with suppliers for security of supply. The annual budget allocated to Strategic Materials for purchasing raw materials amounts to approximately AED 3.7 billion (US$ 1 billion), the breakdown of the number of suppliers by region being shown in Figure 1. Stringent terms and conditions are imposed throughout the process of enquiry to order or contract; and vigorous negotiations are conducted before finalizing any orders or contracts. Priority is always given to product quality, competitiveness of price and previous history in terms of supply. Supplier development is a major focus area for this sub-department. This is achieved through various trials and plant visits. We also encourage all suppliers to hold International Organization for Standardization (ISO) certification for environmental and other standards relevant to their industry. As part of our stance on Corporate Social Responsibility (CSR), DUBAL does not deal with companies who employ child labour. Purchasing General Materials This sub-department is responsible the procurement of approximately 80,000 different stock items (excluding strategic items such as Relining Materials and Process Materials), with a total annual purchase value of AED 220 million (US$ 59.8 million). The items are stored in our Warehouse infrastructure and are replenished in time to meet operational requirements across the plant. For effective management purposes, the stock items have been categorized into 52 categories, which 57% 7%

5 03 04 in turn are arranged in five specific commodity groupings each of which is managed by a dedicated team of purchasing specialists. Named by commodity type, the five groups are: Major equipment spares comprising spare parts for Casthouse, Pot Rooms, Conveyor, Anode and Rodding Equipment, and Cranes. Mechanical equipment spares including items such as Hydraulic and Pneumatic Products, Valves, Lifting Equipment, Metals and Pipes, Bearings, Power Transmission Components, and Spares for Mobile Equipment). Electrical Spares which covers Motors, Instruments, Electronics, and all Electrical Products (such as switches, fuses, lamps and cables). Power & desalination spares including spares for Turbines, Pumps, Transformers, Compressors and Filters. General materials which ranges from Chemicals, Gases, Paints and Lubricants, Tools, Fasteners, Hoses, Safety Items to Office Supplies. Purchasing General Materials handles about 1,950 stock lines every month. To improve the internal efficiency of the Supply Chain process, suppliers are encouraged to accept Longterm Contracts and/or Consignment Stock Contracts for various commodities. Such contracts also give vendors greater confidence of assured business for longer periods while motivating increased costcompetitiveness and flexibility of deliveries to meet DUBAL s needs. Emphasis is also placed on building partnership-based relationships with suppliers, so as to optimise the procurement of the right items at the right time (vital for absolute satisfaction of our internal customers!) even during unexpected surges in production activities. Reliability, value-for-money pricing and the inclusion of ecofriendly alternatives in suppliers respective product portfolios is encouraged. While a conscious effort is made to develop local suppliers so as to boost the economy of Dubai, equal opportunity is provided to all suppliers of general materials items. A geographical distribution of orders by value is presented in Figure 2. Adherence to the highest ethics and best business practices creates a solid foundation for healthy, trustbased and enduring relationships. Purchasing Contract Services & Direct Materials As its name suggests, this subdepartment has two main areas of activity, each staffed by contract officers who are professionals in their respective disciplines: Contract Services is responsible for managing and executing all service-related activities of DUBAL by issuing Purchase Orders and Contracts for Civil, Electrical, Mechanical, Instrumentation, Maintenance, Information Technology, Consultancy and various other outsourced general services (such as rental services, car hire/services, public relations, refurbishment and fabrication). Direct Materials is responsible for procuring Non-Stock Direct Materials, ranging from Abrasives and Chemicals to Maintenance Spares and Building Materials. In addition to establishing long-term service and maintenance contracts, Purchasing Contract Services & Direct Materials is responsible for co-ordinating with all areas of operation for regular, urgent or unplanned service jobs and emergency call-outs. Every department of DUBAL has a dedicated allocation of contract officers who facilitate their purchasing requirements. Supply Warehouse Warehouse is the custodian of all stock items within DUBAL, the range of which is extensive in order to meet the entire plant s needs. The Warehouse is also the first Supply Chain contact for internal customers, whose raw material, general materials, consumables and spare parts requirements are filled by Warehouse; and external suppliers, who deliver stock to the facility. Warehouse Operations This area has three sections: Warehouse Receiving which checks and receives materials; and co-ordinates with end-users for material inspection and refurbishment (open for deliveries from 07:00 to 14:00 on normal working days). Maintenance & Locating which is responsible for locating stock and maintenance-related activities, carryout internal transfers, handling stock returns and perpetual stock counting. Warehouse Issue Counter which serves internal customers through reservations made either for site delivery or collection from the counter during standard working hours (open 24x7 for urgent requirements only). Our Warehouse Operations comprises two main warehouses, four satellite warehouse facilities plus material yards with storage for up to 50,000 pallets; and covers a total area of 43,000 square metres. More than 81,000 SKUs are held, with an average total inventory value of AED 621 million (US$ 169 million); and approximately 15,000 item reservations are received and processed every month. Warehouse Inventory Control The primary function of Inventory Control is to manage the inventory within the Warehouse at the agreed optimum levels. The overriding aim is to reduce inventory value and holdings, while still ensuring availability of materials at all times as per customers requirements. This aspect of Warehouse has two sections: Inventory Control which has two sub-sections, namely: a Strategic Materials which handles the replenishment of raw materials and alloys. b General Materials which deals with all the other materials and spare parts for regular and one-off consumption requirements of all the operational and maintenance areas in DUBAL. Cataloguing which creates and maintains material master data so as to ensure the integrity and quality of DUBAL s material catalogue. Continuous and process improvement initiatives are implemented within Warehouse with a view to achieving the levels of efficiency, effectiveness and operational excellence required to ensure 100 per cent satisfaction of our internal customers and suppliers alike. A Warehouse Bar-coding system was implemented throughout our Warehouse Operations in March The bar-code scanning system uses the OneMobile platform, which enables SAP-based Warehouse processes to be accessed from hand-held computerized scanners connected wirelessly to SAP. Supply Logistics Supply Logistics department ensures that deliveries of all major raw materials such as Alumina, Petroleum Coke, Pitch and Anodes are scheduled as per DUBAL s operational requirements. Vessels carrying these materials are nominated to meet target times for loading at origin and discharge at destination, thus ensuring that there are no clashes on arrival, but instead the materials are discharged promptly at DUBAL s dedicated berths in Jebel Ali Port. The vessels are also managed in such a way as to not incur any demurrage at discharge. More than 170 bulk shipments are co-ordinated each year, amounting to almost 4.4 million metric tonnes of raw materials. Close co-ordination is maintained with Smelter operations, to handle all the import shipments; and to ensure that their requirements are met in full. Supply Logistics is actively involved in negotiating contracts

6 05 06 of affreightment with leading international shipping lines for transporting raw materials in bulk from loading ports to DUBAL dock. The annual budget for shipping contracts for all strategic raw materials is AED 560 million (USD. 155 million). Supply Logistics actively manages all the orders placed by Supply Chain s Purchasing sub-departments (i.e. Strategic Materials, General Materials and Contract Services) with suppliers so as to ensure the readiness of the materials. A standard process flow is used for this purpose, and entails reviewing the terms of purchase for all materials procured and transported to our site, with a specific focus on the mode of transport, and initiating the necessary actions. The department works closely with all major shipping lines for full container loads (FCL). Less than full container load (LCL), air freight and courier shipments are managed through third party providers. On average, more than 2,850 import shipments (air- and sea freight) are handled each year, comprising 14,000 FCLs and representing 246,775 metric tonnes worth of goods. Upwards of 13,850 document and non-document courier shipments, weighing a total of 106 metric tonnes, are processed annually. Support is provided to Warehouse by way of ensuring that materials arrive at the right time and inventories are maintained at optimum levels. This is achieved by initiating actions on the priorities raised by Warehouse and/ or the end-user. Importantly, Supply Logistics supports DUBAL s green initiatives through the sales and transportation of production wastes for recycling, thus helping to minimize environmental and atmospheric pollution in the UAE. The department also manages the disposal of scrapped company assets, production wastes and requests for disposals. All these measures have resulted in earnings averaging about AED 8 million annually.

7 07 08 Vendor registration Payment cycles A formal policy and procedure is in place for vendor registration. This is summarised as follows: Vendor registration flow chart A formal request letter addressed to Senior Manager, Supply Chain from the new vendor to register their company with DUBAL with the following details: STEP 1 Vendor Detailed company profile including financial and technical capabilities, references, resources, locations (with map) STEP 2 STEP 3 STEP 4 DUBAL DUBAL & Vendor DUBAL & Vendor Copy of valid trade license (for UAE suppliers) Copy of valid ISO certificates (if any) Memo prepared and forwarded along with vendor profile to internal customers (engineers/planners/stock controllers/consultants) for their technical evaluation. If recommended for registration, then Supply will: Arrange for site visit Arrange for technical presentation Arrange for sample evaluation If rejected for registration: Regret memo forwarded to vendor After completion of above requirements, and agreed by internal customers, the following forms are forwarded to the vendor for completion and returning to Supply Chain addressed to Manager, Purchasing General Materials (or) Contract Services: Vendor assessment forms DUBAL s Accounts Payable (AP) department endeavours to ensure that all vendor payments are made on a timely basis; and that accurate and precise information is provided to allow for correct cash outflows and efficient cash management. To leverage the SAP system deployed at DUBAL, AP has begun using the best business practices available, including (but not limited) to AP Automation, E-payable, best practice invoice numbering, and so forth. Electronic Invoice Processing All invoices are categorized into two types: MM invoices (purchase order (PO) related or contract related) Invoices may be submitted in two ways: Online (soft copy) Invoices may be sent to AP department via (invoices@dubal.ae), from where they are forwarded directly for verification and electronic processing. This is the preferred method. Printed (hard copy) Original, printed invoices may be submitted to AP department as physical documents, which will then be forwarded directly for verification and electronic processing. Safety, health & environmental requirements for contractors ( for services vendors only) FI invoices (Non-PO related) After receipt of completed forms: STEP 5 DUBAL Internal memo is forwarded to finance for updating accounts details Vendor file is created in system Advice letter is forwarded to vendor informing approval

8 Security & access controls Access to the DUBAL site for personnel, material and vehicles is controlled by our Security Services. There are two access points, namely Main Gate and South Gate (marked on the DUBAL location map, which may be downloaded from our website There are specific procedures for using either gate, as follows: Main gate: Visitors to Supply Chain department and delivery vehicles below 3 tonnes will be granted access through this access point. All visitors and suppliers are required to obtain an entry pass from Security Reception before approaching Main Gate; and must return the entry pass at the Main Gate upon exiting the site. Visitors who arrive at the site without a prior appointment will only be allowed access after confirmation from Supply Chain department. All deliveries to Warehouse will be verified by checking against the invoice (which must be presented before access will be granted). Both visitors and delivery personnel are required to produce proof of identity such as Emirates ID Card, Labour Card, Driving Licence or Passport to obtain an entry pass. South gate: Heavy vehicles for delivery to Warehouse will be granted access through this access point and directed to follow the commercial route (i.e. from the operational area). The procedure for obtaining an entry pass, including identification of driver and verification of the consignment, is the same as at the Main Gate. Safety requirements DUBAL is committed to safeguarding the health and safety of our people, as well as visitors to our site. Accordingly, the following rules are in place and enforced by our Security department: All visitors and suppliers are required to follow DUBAL s traffic rules and security instructions thoroughly. Our entire site is monitored and controlled by a CCTV system. The maximum speed limit on site is 30km/h. All vehicles entering our site for delivery purposes will be checked by DUBAL Security personnel for safety of the load and roadworthiness of the vehicle, prior to being granted access to site. Personal Protective Equipment (PPE) such as safety shoes, safety helmet and so forth must be worn by the drivers of all delivery vehicles.

9 011 For additional information, contact: Dubai Aluminium Company Limited P O Box 3627, Dubai, United Arab Emirates Tel: Fax: supply@dubal.ae