SABIC's business model 'resilient' amid COVID-19, markets starting to recover: exec

Abdullah Al-Garni, Vice President - Global Procurement, Saudi Basic Industries Corp.

The market started to recover after the COVID-19 travel and movement restrictions eased, Abdullah Al-Garni, Vice President - Global Procurement, Saudi Basic Industries Corp. (SABIC), told Argaam in an exclusive.

The COVID-19 pandemic caused material changes in SABIC’s way of implementing business. During the pandemic, SABIC proved to have a resilient business model and a strong ability to adapt to various conditions, as it overcame these challenges.

SABIC successfully proved the resilience of its global business profile and its ability to weather challenges through the company’s supply chains, he stated.

Here’s the full interview with Argaam:  

How did the cost of transport, storage and packaging change during the COVID-19 pandemic?

- The COVID-19 pandemic caused material changes in SABIC’s way of implementing business and the entire world as well. These factors impacted all business sectors on various levels, including costs and the period of implementation. Today, the COVID-19 restrictions have been eased, compared to the pre-pandemic level, as the market started to recover.

In light of the previously mentioned challenges, SABIC proved to have a resilient business model and a strong ability to adapt to various conditions, as it overcame these challenges through its long-term relationships with suppliers. This helped SABIC limit the fluctuation risks that could impact the business of related parties.

What is the role of governance in dealing with suppliers?

- Integrity and professional ethics are the main pillars of SABIC’s operations and dealings with related parties. SABIC adopts various policies and bylaws that ensure a fair, transparent, organized relationship with suppliers.

In this regard, we can cite the following examples:

- SABIC procurement policy: This policy embodies the core of business practice, within the framework of legal, ethical and fair practices.

- Supplier qualification and due diligence: SABIC launched a platform to register and qualify the suppliers that meet its conditions, including the environment, health, safety and security requirements, social responsibility and due diligence measures.

- SABIC supplier code of conduct: SABIC regularly reviews the supplier code of conduct, and expects its supplier to comply with this conduct. It also expects the external parties, related to those suppliers, to comply with our standards.

- Fair terms and conditions that govern the relationship through contracts or purchase orders.

- Enabling full automation of the system when interacting with the supplier.

The abovementioned represent the basic aspects on which SABIC focuses to enrich its applied model, which reflects positively on the company’s reliability and reputation among shareholders, customers, investors, suppliers, and other related parties.

SABIC affirms commitment with these aspects, which represent the main pillar for implementing its operations.

What are the lessons learnt from the pandemic in 2020 for improving the resilience of supply chains?

- The pandemic had a real impact on the entire world and everyone learnt various lessons from this crisis. SABIC successfully proved the resilience of its global business profile and its ability to weather challenges through timely demand via the company’s supply chains.

SABIC’s global network, strategic suppliers, multiple supply channels and streamlined information technology systems helped the company mitigate the COVID-19 impact on the manufacturing facilities. This, in turn, helped SABIC maintain its production and supplies without disruptions. Thus, SABIC affirmed the resilience of its operating model and its ability to weather challenges in the inbound and outbound logistic services.

SABIC will continue adopting the principles of development and improvement, which include benefiting from local investments and procurements, close cooperation with suppliers and related parties, as well as investing in technology.

Moreover, we adopted a smart model that predicts risks, ensures fast performance and resilience, mitigates risks to maintain operations and meet the expectations of related parties.

How can SABIC develop a successful and diversified group of highly-experienced suppliers? How can you keep those suppliers to maintain your leading position in this field?

- SABIC took several aspects into account in this regard:

- It worked on enhancing its growth and realizing its clear vision to become the leading global company of choice in the chemical industry, making it the client of choice for suppliers.

- It applies sound governance principles and policies that ensure fair and ethical practice of business, and requires its suppliers to comply with the same policies.

- It makes an accurate and clear classification of the supply chain, linking it to the company’s business.

- The company also benefits from its global reach and reliability. Therefore, it enhances the value-added of its suppliers.