Abu Dhabi Distribution Company: Supply Chain Management

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Introduction

Supply Chain Management is the movement of funds, information, and materials from the supplier to the producer until they reach the ultimate user. It involves organization and incorporation of the processes both in and outside the company (Blanchard 146). According to Hugos, the sole purpose of valuable supply chain management is to minimize on record costs (96). To aid in supply chain management software programs that enhance user interface are used.

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Abu Dhabi Distribution Company is an auxiliary company to Abu Dhabi Water and Electricity Authority. The government owns the company and it is involved in the provision of electricity and water to its customers in the Abu Dhabi region of the United Arab Emirates. He adds that the only region that Abu Dhabi Distribution Company does not offer its services is Al Ain. The company also designs plans, operates, and constructs all the networks for the Abu Dhabi Water and Electricity Authority (William 56).

Mission

Abu Dhabi Distribution Company has an undertaking to expand, protect, maintain, and drive price effective and secure electricity and water supply services in the United Arab Emirates. The company also has a mission to enter into contracts with allied partners in the sector. Abu Dhabi Distribution Company aims to develop and establish regulations governing water and electricity distribution in the United Arab Emirates and make amendments to the existing ones. While offering its water and electricity services, Abu Dhabi Distribution Company has a mission to maintain excellent customer relations and make use of the best billing systems for payment available. The company aims to build up and run water and electricity supply networks for consumers. Abu Dhabi Distribution Company has a mission to amplify its projects to cater to the high industrial, domestic, and agricultural demand for water. The company also aims to enhance career development in its staff through regular training. The company has also a mission to offer its employees the best tools for work to enhance performance among its staff (William 101).

SWOT analysis of ALDAR Properties PJSC

Strength

Abu Dhabi Distribution Company has its headquarters in Abu Dhabi. The company has a current customer base of 412,540 customers whom they supply with both water and electricity. Electricity power is distributed at 11 kV and 33kV levels in the Abu Dhabi, Western, and Eastern regions. The government and the public jointly through shares own the company. The Regulation and Supervision Bureau regulates Abu Dhabi Distribution Company’s services. The Bureau is in charge of monitoring and licenses the operations of all companies in different sectors in Abu Dhabi. The Regulation & Supervision Bureau regulates prices administered by Abu Dhabi Distribution Company to enhance customer utility. Regulation and Supervision Bureau also ensure that services offered by Abu Dhabi Distribution Company are of high quality (William 121).

Weaknesses

Abu Dhabi Distribution Company has been existent in the market for a short time. The company, therefore, lacks a strong record of accomplishment. The Regulation and Supervision Bureau regulate prices for the company’s services. This entity also dictates the amount of revenue that Abu Dhabi Distribution Company should make in a year. This, therefore, is a hindrance to the company achieving its aim, purpose, and objectives (William 126).

Opportunities

The rate of economic growth in the Gulf region especially Abu Dhabi and the United Arab Emirates is rising at a steady rate. There is also an increase in population in these areas because of expatriates coming to work in this economically booming region. The government has recently enacted a new law, which permits expatriates to acquire property in Abu Dhabi on a 99 years leasehold contract. Since 80% of the inhabitants of Abu Dhabi are expatriates. Laws also permit Abu Dhabi nationals to buy and sell property of free will.

Therefore, there lies a big opportunity for Abu Dhabi Distribution Company in the provision of water and electricity for domestic, agricultural, and industries in the United Arab Emirates (William 127).

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Threats

Abu Dhabi Distribution Company faces stiff competition from existing and new entrants in the industry for example Tourist Development and Investment Company. There has also been a rise in the cost of materials used for construction and a further augment in interest rates for mortgages. Instability in the Geopolitics of the United Arab Emirates has also affected the sector negatively (William 129).

Strategic Decisions for Abu Dhabi Distribution Company

Strategic alliance

Abu Dhabi Distribution Company’s objective is to expand in international emerging and established markets. The company aims to blend its exposure to high risks in other low-risk markets. The company aims to establish itself in emerging international markets through a strategic alliance with locally leading real estate companies in the target markets. Entry into established markets will by the acquisition of water and electricity companies that are well developed. The acquired company must also have a strong investment ratio.

Forecasting

By the year 2012, demand for electricity in the United Arab Emirates is estimated to reach 10, 600MW. This will be a 14.8% increase, megaprojects contributing 7.2% of this increase. A summary of the demand forecast model is indicated below.

Description

2010

2011

2012

Capacity (MW)

8,517

9,523

10,600

Figure showing a forecast of electricity demand

Abu Dhabi Distribution Company aims to strengthen its place as the market leader in water and electricity. The company is devoted to successful and timely developments of business districts, communal and tourist attraction facilities. The company also aims to remain within the strategic plans set by the government. Abu Dhabi Distribution Company aims to consolidate half of its developments in property investment to enhance a sustainable cash flow. This will be through present higher investments. The company is also in the process of coming up with maintenance and management of services developed by the company. Abu Dhabi Distribution Company has also capitalized on the expected growth of real estate developments in Abu Dhabi (William 21).

Supply contracts

Abu Dhabi Distribution Company has the objective of providing the highest standard services for its clients. This calls for a diverse international system of suppliers who act as intermediaries between the company and its stakeholders. The suppliers must be legally registered within the United Arab Emirates or in the particular countries that they operate. The suppliers must also act within laws set within the jurisdictions in which they operate. Abu Dhabi Distribution Company reserves the right to terminate supplier contacts once the supplier contravenes this agreement.

Potential supplies must meet registration criteria and undergo a rigorous registration process before acceptance. Once registered a supplier is included in the company’s supplier base for consideration once a business opportunity arises.

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Distribution strategies

Abu Dhabi Distribution Company has an objective to procure services and products at the best quality, price, technology, and delivery. The company selects its suppliers and obtains bids and quotations for tenders. Abu Dhabi Distribution Company also offers orders for the purchase of products, software, equipment, and other services that the company requires. The company begins work only when a formal order procured is received. A supplier who provides an order that has not followed the authorized criteria does so at his own risk (William 301).

Importance of an effective supply chain management

William argued that “Abu Dhabi Distribution Company was keen to ensure that its developments are managed to the best standards of cost control, performance management, and supply chain management” (56).

Abu Dhabi Distribution Company is in the process of introducing an advanced payment system. On its integration, this system will allow for better cash management and effective control of costs of the companies projects. The system will allow for cost tracking, payment, valuation, and invoicing of projects developed by the company. It will allow connection between a projects consultant, subcontractor, developer, and the contract allowing for the effective supply chain management.

“The new joint venture reflects Abu Dhabi Distribution Company commitment to continuously improving the cost effectiveness of its diverse operations” (William 367). The system will allow each party to a contract to gain access to invoices, compliance, and payments for a given project. William adds that “the system will revolutionize the existing process, which is largely manual, inefficient, prone to error, and results in poor visibility, delayed payments and disputes” (367).

Substitution effect

As the price of a commodity rise, its consumption rate decreases (Chopra, and Meindl 45). They add that customers who cannot bear the higher price can no longer buy the product. The customers, therefore, opt for lower-priced related commodities constituting to the substitution effect. An increase in price of a product may be because of an increase in government taxation or an increase in costs for production of the product in question (Chopra, and Meindl 121).

An example of substitution effect is in the internet sector. “Companies ought not to be pleased with substitution effect in case they are enjoying benefits of internet in their distribution strategies” (Lambert 67). He adds that companies should lay out strategies to change the structure of their supply chain instead and facilitate the change top occur. This should lead to strategic alliances and fresh commodities development.

Outsourcing

Outsourcing refers to the act of an organisation entering into a contract with another for provision of services, which might if not performed by internal employees of the organisation (Jacobs, and Richard 154). These companies are usually experienced in their fields hence need for outsourcing.

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ALDAR recently embarked on mega construction of Yas Island in Abu Dhabi with an aim of developing it to a major commercial, residential and tourist hub (William 154). Because of the tight programme of its development, ALDAR outsourced the services of TRANSCO a secondary company to Abu Dhabi Water & Electricity Authority. The company operates, develops and maintains power transmission though high voltage. The company also ensure distribution of water in Abu Dhabi (William 98).

The main purpose of TRANSCO in the development of Yas Island was per the guidelines set by Abu Dhabi Water & Electricity Authority and the ADDC. TRANSCO would work closely with the developer in ensuring permanent and temporary provision of power and electricity within the island.

Abu Dhabi Distribution Company recently outsourced the services of Egypt Contracting Company in construction of water tanks and a pipeline between Umm Al Nar and Al Taweelah regions. This was a positive response to Foreign Direct Investment for the Egyptian government. The contract was worth 1.2b Egyptian pounds.

Works cited

Blanchard, David. Supply Chain Management Best Practices. San Francisco: Wiley, 2010. Print.

Chopra, Sunil, and Meindl Peter. Supply Chain Management. New Jersey: Prentice Hall, 2009. Print.

Hugos, Michael. Essentials of Supply Chain Management. San Francisco: Wiley, 2006. Print.

Jacobs, Robert, and Chase Richard. Operations and Supply Chain Management. Maidenhead: McGraw-Hill, 2010. Print.

Lambert, Douglas. Supply Chain Management: Processes, Partnerships, Performance. Gurgaon: Supply Chain Management Institute, 2008. Print.

William, Corbin. Emaar Properties PJSC – Financial and Strategic Analysis Review. London: Sage Publications, 2009. Print.

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BusinessEssay. 2021. "Abu Dhabi Distribution Company: Supply Chain Management." December 24, 2021. https://business-essay.com/abu-dhabidistribution-company-supply-chain-management/.

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