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.
