Business

Almarai Company has claims of being the largest integrated diary company in the world has made notable progress in the recent past. The thriving business as well as the acquisition has resulted in the emergence of Almarai as the leader of food and drink companies in the Gulf region. Almarai brand has been indicated as being one of five food and drink brands worldwide.

According to Saudi Arabia food and drink report, Almarai has stolen the show in 2009. After acquiring Western Bakeries Company in 2006, Almarai aligned with Pepsi Co in February 2009 and created International Dairy and Juice Limited to expand outside Gulf markets.

Four months later, the company acquired the Jordan-based dairy and fruit juice producer (Teeba) and  also paid  115 million to buy  the Egypt based dairy company International Company for Agro-Industrial Projects (Beyti). In same year Almarai completed acquiring HADCO (Hail Agricultural Development Company) and introduced its plans to produce infant milk formula at the new plant by the end of 2010.

With expanding business on a worldwide scale and with facilities scattered around the gulf region the question aroused of the viability of the already implemented information system to meet the companys growing needs and in helping the company to achieve its expansionist aims. The Almarai quickly recognized the need of having an efficient Information system, therefore, in 2001, Almarai company went live with SAP ERP system .

But before Almarai went live with SAP in 2001 the IT infrastructure was normalized to Cisco switched Local Area Networks, CompaqHP Alpha GS and ES series servers and CompaqHP desktop computers in anticipation of the roll-out of SAP R3 . By October 2002 almost all the divisions and across more than a dozen locations this IT infrastructure was successfully implemented. To support this system a WAN infrastructure was built using an amazing array of technologies including Very Small Aperture Terminal (VSAT) Satellite technology, leased lines, Avayas Orinoco Wavelan RF networking and Internet VPNs.

Here a SWOT analysis of the implemented SAP Information system at Almarai is presented elaborating its efficiency.

SWOT ANALYSIS ON THE INFORMATION SYSTEM

Strengths

Almarai Company has the most advanced systems

SAP system is used widely in large companies of the world such as Apple Computer, Chevron Corporation, Intel, IBM and the Exxon Corporation. SAP system serve wide rang of business functions such as plant management, production and human resources via integrated modules enabling users to share data between these modules.

At Almarai, the sales management information system has also been developed by providing salesmen with hand held computer terminals in order to provide key analytical information to ensure the achievement of high level of sales effectiveness. This has helped to achieve the targeted sales growth through energetic and effective customer servicing.

Less amount of time and effort required to complete transactions

The information system allows the company to improve its ability to complete the transactions in the different departments in sufficient time. In Payments department for example, the number of outstanding invoices is very small if compared with the last information system (BAAN sytem). The company suppliers are paid on time and this has resulted in making Almarai company important customer for them ,as can be recalled by the statement be a better customer and obtain better services  ADDIN EN.CITE EndNoteCiteAuthorWardAuthorYear2002YearRecNum34RecNumrecordrec-number34rec-numberforeign-keyskey appEN db-id5vdtarwfspdefsev0snpxdt5s05d20zde5tt34keyforeign-keysref-type nameBook6ref-typecontributorsauthorsauthorJohn WardauthorauthorJoe PeppardauthorauthorscontributorstitlestitleStrategic Planning for Information Systemtitletitlesdatesyear2002yeardatespublisherJohn Wiley and sons ,LTDpublisherurlsurlsrecordCiteEndNote(Ward and Peppard 2002).

Saud Alsubaie , the manager of the payments department, indicted that the systemized and centralized system is the key reason of lesser amount of pending payments. He explains the payment process at his department as follows when invoice is received a from a supplier it contains Purchase Order Number and by just entering this number on the unified system, an easy  comparison can be made between the agreed prices and the actual items delivered when making a payment . This further helps to eliminate the risk of processing a duplicate invoice and also helps in managing the inventory movements in an appropriate manner.

Almarai also uses Q-Pulse system to ensure that the documents are managed in an appropriate way. This system has been acknowledged for its ability to improve the work environment in large organization, it has proven its wroth in large organizations such as NHS in UK. This system enabled Almarai staff to minimize the resources used such as time and effort in terms of obtaining approvals and reducing the risk of losing important documents. The implementation of Q-Pulse system has reduced the time required to manage the documents from several weeks to less than two days.

Value Chain

By linking the pervious mentioned points with the theoretical model of Porter Value Chain, it is observed that the information system implemented in Almarai is successfully fulfilling the role of industry value chain and has resulted in satisfied customers.

The Multinational flavor of the information system

Almarai Company has business in Gulf area as well as many countries outside Saudi Arabia resulting in large number of transactions with different currencies. SAP system assists in overcoming this challenge by creating a special code for each company to record sales and expenses using the currency of the different country.

Weaknesses

One of the main difficulties of the current information system is that the users are not fully trained on how to benefit form many facilities provided by the system. This problem is primarily due to the high cost of training in addition to the time required to obtain this knowledge.

Almarai recognized the need of benefiting from all SAP system facilities and   therefore Almarai has created a special team to ensure that all users in all the divisions get the expected benefit from the system and eradicate this weakness of the company. This team is responsible to help users to solve the issues related to the system. Most of the team members are expertise in different areas in addition with knowledge of SAP. This enables better understanding for users requirement.

However, despite the efforts to ensure better use of the current information system, many users feel that the system is still not user friendly and very complicated.  A study  ADDIN EN.CITE EndNoteCiteAuthorGoergeAuthorYear2009YearRecNum33RecNumrecordrec-number33rec-numberforeign-keyskey appEN db-id5vdtarwfspdefsev0snpxdt5s05d20zde5tt33keyforeign-keysref-type nameElectronic Book44ref-typecontributorsauthorsauthorW Goerge authorauthorAndersonauthorauthorDcharlesauthorauthorNilsonauthorauthorTim Rhodesauthorauthorscontributorstitlestitlestyle facebold fontTimes New Roman size14SAP Implementation Unleashed A Business and Technical Roadmap to Deploying SAPstylestyle facenormal fontTimes New Roman size14xDstyletitletitlesdatesyear2009yeardatespub-locationUnited States of Americapub-locationpublisherSamspublisherurlsurlsrecordCiteEndNote(Goerge, Anderson et al. 2009) indicated the same which shows that this is a general problem faced by new SAP users and is not particular to the Almarai. This has become a cause of concern in Almarai as this could lead in delaying the transactions and face the risk of not meeting the deadlines but this problem has been continuously resolved by seeking the support from the SAP various times .

Opportunities

The current IS system supports the diversification strategy of the company

It has been indicated earlier that the efficient networks and the use of SAP system in addition with the strong SAP support team can help company to meet the requirements of making new acquisitions and entering new market.

The successful implementation of SAP system in Western Bakeries company located in Jeddah is a good example.  Amit Chakravarty , SAP Application Manager in Almarai company, indicated that the important transactions such as payments process are centralised in order to apply more control , and the company did not experience any  major issues such as loosing data, he also said that the team is ready to handle any further acquisitions by Almarai.

Threats

Sales and distribution system

Fresh dairy products have a limited shelf life of six days hence any problem on the sales and distribution system could lead to losses in terms of revenue and reputation. Every day the company delivers to many remote places including locations outside Saudi Arabia , therefore any disruption with this system would be harmful for the products.

Poor technology infrastructure in the intended countries
Company plans to expand its operations in some countries in Africa but this expansion plan and subsequent help from the SAP system could be affected by the fact that the intended country has lack of technology infrastructure such as poor telephone lines and internet which will lead to difficulty in implementing SAP system, to ensure the control of transactions.

From the findings above, the main problems with the current Information System is the difficulty of training the personnel especially the new employees. Training for SAP System is very costly and time consuming and due to the economic growth in the country, which is resulting in new job opportunities specially for the skilled people, providing intensive training can face the risk of losing the employee, also because the work laws in the country are quite fixable. Hence Almirai can lose significantly if it invests in developing its Human resource and then losing it to other companies using SAP.

However, the lack of training of employees in the company does not have severe impact on the companys business. The strong Information System in place along with a strong SAP support enables the company to dominate the food and drink company in the Middle East by using the best possible value chain practices.