A recent report by management consulting firm Oliver Wyman emphasizes the need for Gulf Cooperation Council (GCC) countries to bolster supply chain resilience to support their expanding industrial sectors. The report highlights the strategic importance of establishing robust supply chain frameworks as these nations pursue extensive industrialization. Oliver Wyman points out that logistics risks are particularly acute for GCC nations like Saudi Arabia and the UAE, which rely heavily on critical imports such as transformers and minerals essential for industrial expansion. The report notes, “In Saudi Arabia, 75 percent of transformer imports come from just three countries, posing significant risk to the power, manufacturing, transportation, and healthcare sectors in case of supply disruptions.” The consultancy warns that logistical issues could potentially disrupt power supply, leading to reduced industrial productivity, vulnerabilities in infrastructure, and economic instability.
Frederic Ozeir, partner and head of Automotive and Manufacturing Industries at Oliver Wyman for India, the Middle East, and Africa, stresses the importance of GCC countries enhancing their supply chain strategies to prevent disruptions that could affect societal and economic stability. The report also sheds light on the heightened vulnerabilities in global supply chains that have become evident in recent years due to the pandemic, natural disasters, cybersecurity threats, and geopolitical tensions. These challenges have led to production delays, shortages, and price increases across various industries, underscoring the critical need for resilient supply chains. For instance, the report details that a significant portion of electrical machinery and equipment imports to Saudi Arabia and the UAE are sourced from a limited number of countries, which could pose risks to the continuity of industrial operations. It also mentions the dependence of these countries on specific imports like desalination machinery, crucial for water supply in urban areas.
Highlighting Saudi Arabia’s proactive steps, the report commends the Kingdom’s Global Supply Chain Resilience Initiative, launched in 2022 as part of its National Investment Strategy, aimed at attracting global industrial firms and mitigating the effects of global disruptions. Additionally, the UAE is noted for its efforts to improve food supply chains through support for local and sustainable food production and the establishment of new logistics hubs. Oliver Wyman recommends that GCC governments develop comprehensive supply chain resilience strategies aligned with their national industrialization goals. These strategies should involve collaboration across ministries and with the private sector to enhance governance, capabilities, and technological adoption in supply chain management.
The report further suggests that GCC countries focus on integrating advanced technologies such as 3D printing, robotics, augmented reality, and automation to strengthen their industrial sectors. It also calls for attention to industrial cybersecurity to protect interconnected manufacturing systems. In conclusion, Oliver Wyman asserts that fostering supply chain resilience is essential, not optional, for sustaining the growth and stability of the industrial sectors in the GCC region. The firm advises that each country should tailor its approach to enhancing supply chain resilience, considering the specific needs and risks associated with critical supply components.
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