Stop and consider the possibilities for Japanese-based companies like Toyota, Mazda, Toshiba, and Sony if they were to build highly automated manufacturing plants in Saudi Arabia. The location provides proximity to Europe, Asia and North Africa. With the Kingdom directing large-scale investments into sea, air, rail, and road infrastructure, we can only anticipate improved links to the global economy. Multinational manufacturers can even receive direct government support during transition through a liaison office called the Saudi Arabian General Investment Authority (SAGIA). Furthermore, there is a long list of advantages to building in this economy aside from being pegged to the US dollar.

Is Toyota’s decision to move manufacturing out of Japan the beginning of a new trend? Toyota has long been the world leader in running a ‘Lean’ business model.  This model contains an inherent sensitivity to both customer needs and supplier impacts that act as early indicators of extraordinary changes in the markets.  With Toyota’s announcement, our readers may well be wondering, what other manufacturing plants are suffering losses from the rising JPY.  Perhaps more importantly, what would it take for them to consider moving their automated manufacturing facilities to the Kingdom?

The answer is obviously a return to profitability with a systemic solution to the currency volatility issue. They need to seize the opportunity and the competitive advantages in both the currency peg to the dollar and the ideal location found in the Kingdom. Take a close look at the existing automotive business models and examine how they created their success. This inevitably leads us to a discussion of the lean model and customer satisfaction.

The lean business model is built on the idea of systematically eliminating anything that does not create value for the customer. A lean process is characterized by high levels of value added work, standardized work practices, and evenly distributed product movement from raw materials to the customer. An example of how two famous authors Womack and Jones would respond to a company asking for advice on efficiency would typically start with a tour. Usually starting at the point where the company and its customers meet; for example, a retail aisle, a car showroom, a shipping dock, or a computer company support hotline. Then with executives in tow, they stroll backward up the supply chain through storerooms and assembly lines, pass order-taking desks, until they reach the entry points for raw materials. Each step across the way, they point out blocks, glitches, and redundancies that inhibit the flow of work.

Every company will tell you they’ve got a lean initiative, but a true lean initiative integrates four different systems: Production, product development, supply chain management and customer management. These two famous authors have led the charge promoting efficient end-to-end business models.  The more SAGIA and the various economic cities orient themselves with these principles, the easier it will be to transition these automated high tech manufacturers to the Kingdom. 

The challenge for the Kingdom is to implement these efficient automated manufacturing facilities for high tech products and heavy industry. The Japanese robotic auto manufacturers seem to be shopping for suitable locations around the world. Let’s see what the future will bring. Imagine a future where the salesman and the customer have direct access to the manufacturers. Consumers will take the term warranty or guarantee of the quality of products seriously. People will regain the confidence in the marketplace, and the retail outlets will raise their heads with pride. They will finally have a manufacturer who can be held accountable for the goods and services that they produce. The days of the importer of substandard products are literally numbered.

From our rudimentary search of the Internet we have found that GE (General Electric) and IBM have literally dozens of programs designed for the automation of the manufacturing process. They have programs that are designed for the pharmaceutical manufacturing process, steel manufacturing process, auto manufacturing process, and the list goes on. They cover both qualitative and quantitative analysis of the process with end-to-end business solutions. It’s simply a matter of applying the seamless hardware and software configuration to this growing region.

Stay tuned for the evolution of the Saudi Arabian economy.
 
— Khalid I. Natto ([email protected]) is chairman & CEO of The KIN Consortium.