Bottled up demand

Saudi Arabian soft drinks giant, Aujan Industries, is doubling its capacity with the opening of a 50,000m2 production facility in Dubai Investments Park. The centre is key to the company’s dream of becoming a US $500 million business.

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By  David Ingham Published  June 1, 2005

|~||~||~|Aujan Industries is on the move. The Saudi-based beverage maker is putting the finishing touches to a US $51.77 million facility that will almost double its manufacturing capacity. The construction of the new 50,000 m² fab, which is located in Dubai Investments Park, comes as the result of Aujan’s spectacular export growth. The company has outlined plans to double revenue from 2004’s figure of US $250 million within five years and the bulk of that growth will come from markets such as Iran, Iraq and North Africa. The majority of the output from Aujan’s new facility will go to these emerging markets. “Most probably, more than 60% of production will be for export, to other GCC countries or other parts of the world,” explains Hussain Ali Aba Hussain, general manager, beverage plant, Aujan Industries. “We are already very strong in North Africa, and we are very strong in Iran and in Iraq as well,” he adds. When the factory formally opens, most probably in the first week of July, it will have two production lines: one for cans and the other for non-returnable bottles (NRBs). The speed of the can line is a spectacular 1200 cans per minute, which translates into about 55,000 cases per 20 hour production day and almost 18.5 million cases per 335 day production year. The NRB line will run at a targeted 750 bottles per minute, which translates into about 36,000 cases per day and just over 12 million per production year. This overall capacity of 30 million cases per year is close to the 40 million figure of Aujan’s sole existing facility in Dammam, Saudi Arabia. However, 30 million cases per year is just the target for phase one of the facility. “We are going to add three more lines, and depending on what we add, we expect this factory to do 50 million cases,” explains Hussain. “The other lines will be used for family sized packs, where you have fewer units in the case [nine or six rather than 24].” The opening of the facility will also mark the first time that Aujan has had the capability to produce Barbican, its non-alcoholic beer, in the region. Since the brand was created over ten years ago, Barbican has had to import the product from contract manufacturers in Europe. The addition of the facility’s third line will take place in 12-18 months. Within 24 months from now, the fourth and fifth lines will be added. The space that those lines will fill is currently being used for warehousing, but once the lines are put in place, storage will be shifted towards the back of the facility. “We have tried as much as possible to build this factory in the most optimum way,” enthuses Hussain. “We have built something that people, when they come and visit, will see has been built very, very efficiently with the correct flow of packaging, materials and finished goods. We already have 25 years of experience of a factory with eleven production lines [in the Dammam facility.] You can imagine the experience we have carried forward in the implementation and design of this factory.” The equipment used in the warehouse’s production area is described as ‘state of the art’ and comes from a variety of top European suppliers, whose identity Hussain would not reveal. “It was bought to run at high speed, very efficiently and most importantly, with the least human intervention,” he explains. “You just tell the machine you would like to produce Rani Orange Float in 240 ml. The machine has all the formulas stored in it: all you have to do is put in the raw materials and the machine will give you the final product with almost 99% accuracy between one batch and the other.” When Logistics Middle East visited the enormous facility in late May, Aujan’s technical team was in the midst of commissioning the can line, which had by then reached a speed of around 300 cans per minute. The second line is due for commissioning by mid-June and the formal inauguration of the factory has been pencilled in for 20th June. “We will be in full commercial production, hopefully, by the first week of July, running at about 90% efficiency,” says Hussain.||**|||~|Representatives---EMITAC---.jpg|~||~|Hussain expects few problems with after sales technical support, as the plant team has been put through extensive training on how to use the equipment and has worked alongside the supplier during its commissioning. If any problems do emerge that cannot immediately be fixed, a team of 40 maintenance technicians based at the Dammam facility is also always on call. “We can bring them over if there are any problems the people here cannot solve. However, I do not foresee we will have problems as far as the mechanical side is concerned,” says Hussain. At the back end, Aujan uses MFG/PRO as its ERP system. A definite plan has also been put in place to begin deployment of RFID once the new factory is running at full steam. “The Dubai plant here is so well structured and so well organised that I believe we can begin our automated warehousing here,” explains Hussain. “RFID will help to control our stock and reduce our costs, especially here in Dubai where our costs are high.” Within the GCC, Aujan delivers finished products direct to store using its own branded trucks. In Saudi Arabia, it has now equipped its fleet with handheld global positioning systems (GPSs) that help it optimise delivery routes and track deliveries. Plans are in place to roll out the system in the UAE. Outside Saudi Arabia, Aujan’s strategy is to continue to work with the in-country partners it has had in place for many years, even though legal changes may no longer require it to. Iraq, one of its biggest markets, is currently supplied by trucking products from Saudi Arabia to Jordan and then from Jordan to Iraq. The company hopes that direct container shipment services will start soon. Iran, a massive market for Aujan, is supplied using container ships. The company has offices and warehouses there, but it currently has little need for distribution facilities and operations on the ground. “As soon as goods land, they are sold off the container,” explains Hussain. The opening of the facility in Dubai Investments Park is just the beginning of Aujan’s ambitious growth plans. The market could immediately absorb the 30 million cases that the factory will produce and there will still be extra demand, according to Hussain. For that reason, plans for a third facility, of the same size and with the same equipment, are already on the drawing board. “It is going to be a facility as big as this [one], it is also in the region and whatever we have learned here, we will make sure we execute there,” says Hussain. “We are looking at having this facility fully operational in less than 24 months from today.” Even once this project is complete, Hussain and the rest of Aujan’s plant team will still not be able to relax. By 2013, Aujan’s management aims to have five more production facilities of the same size and capacity in place.||**||

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