The issues faced by Operations Management

The changing times have made the businesses more competitive thereby making it obligatory for them, as well as for the working force to become more flexible and swiftly adapt to the changing technologies and work environments. Thus in the changing paradigms of business environment, there is imperative need for organizations to identify factors and issues that would help meet the challenges with efficiency and unmatched proficiency. DP World has been one of the global giants in the area of marine terminal operations who have successfully adapted changes in their work methodologies to meet the challenges of the recessive trends of the contemporary times.

Founded in 2005 as a result of integration of terminal operations of Dubai Ports Authority and Dubai Ports International, the company has taken leadership initiatives in development, operation and management of terminals operations, in collaboration with the local authorities. It has been innovative in its approach to tackle the wide ranging implications of the changing technology and rapid globalization process through well defined and identified strategic goals and visions. It operates 49 marine terminals with 12 new development projects spread across 31 nations and employs more than 30,000 people.

The corporate objectives of the organization have incorporated the socio-environmental values and corporate social responsibilities within the framework of its strategic goals and visions. The company has been able to contribute towards environmental conservations and social issues which have considerable impact on the sustainable development. The company has not only been creative in introducing various innovative measures to propagate its environmental policies among its in-house staff and business partners but it has also facilitated wider interaction with various focus groups and forged alliances to motivate and promotes proactive participation of the public in its drive for environmental conservations.

Vision Statement

In the fast advancing technology, the company plans to gain leadership position and promote sustainable values through global growth, service and excellence to meet all futuristic needs of its customers.

Mission Statement

The mission statements of the company are designed to meet the needs and requirements of the customers through well planned strategy which would help fulfil the long term vision of the organization. Committed approach towards clients and people through innovation and excellent services in the field of marine terminal operations and effective supply chain management of container and cargo services. The company believes in profitable global growth while ensuring that it meets all its corporate social responsibilities.

Indeed, the company has been voted as ‘best seaport in the Middle East’ in 2008 for the consecutive 14 years. The has shown an incredible growth of nearly 8% by handling 46.8 million TEUs (twenty foot equivalent container units), even in the recessive global economy with low business quantum. The company has maintained its ambitious plans of expansion and continues to prove its market leadership through its expanding client base, especially in the emerging new economies like India and China which have high growth potential. The company has expanded its business interests and has entered into the operation of P&O Maritime Services and P&O Ports Stevedoring SA. Through the venture, it provides government shipping, cargo, defence, port, charter and consultancy to various government and industries across the globe.

2) Description of company’s marketing strategy

Through the evolving process of entrepreneurial creativeness, it has been able to assess the challenges faced by the company in meeting all its aims and objectives within the framework of its principle and professional and organizational ideologies. While changing dynamics of the global business has necessitated formation and incorporation of management strategies that go beyond the realm of individual company’s concern, planning for distinctive competencies along with considerations for wider ramifications of the socio political environment of the place, has given the company market leadership. Market research and effective use of media have been two of its most important corporate objectives.

Media

The fast changing socio economic dynamics have created a fiercely competitive business environment and the organizations need to have effective public relation campaigns that can strengthen company’s position and provide an effective competitive edge over its competitors in business. Sandra Oliver has emphasized that ‘public relation decisions involve complex situations at corporate, business units or other stakeholder levels which affect or be affected by many parts of the organizations’ (Oliver, 2001).

The company uses various forms of public relation exercise, including updated website and media in the image building process of the organization so that larger number of public may become aware about the organization’s ideologies, product and services and other activities that are designed to benefit the society at large. A good image created through media lends credibility to the organization’s product and services that help to increase its financial status and helps to maintain an edge on their rivals.

It is important that general public is kept informed about the work performance of the organization because transparency in the functioning greatly enhances the credibility of the organization and helps to build a more customer friendly image. The projection of its image to the public has strong influence on factors that have direct implications on issues that defines its stand to the issues and the way it is handled by them. The credibility and its positive image are market assets and inculcate trust amongst its various stakeholders.

Market Research

The company is committed to continuous market research in the area of marine operations so that it is able to provide innovative solutions and excellent service to its expanding database of satisfied global clients. In the volatile market conditions, the company needs to test new approaches in its market strategy and evolve dynamic equations of exploring fresh opportunities through innovation and effective tools of control in its areas of operations. Through effective market research, the company has strengthened its supply chain and diversified into general and bulk cargo, Ro Ro vessels and passenger ships.

The company has also been able to provide state of the art security measures in all its marine terminal operations uses C-TPAT (Custom Trade Partnership against Terrorism) initiatives. The certification in C-TPAT demonstrates DP World’s commitment to ISO 28000 standards (Security Management System standards for securing the global supply chain) and promote safe practice and excellence in service.

3) Identification and ranking of order winners and qualifiers:

DP Worlds’ position in the market & It’s comparison to competitors

DP World is considered to be the most dominant logistics and marine terminal operator in the world operating for the fifth year running since 2004. The company has implemented itself in the worldwide wide market with intense commitment. The company’s commitment to quality and customers has given it the right to brag about its record management and ownership of around 49 marine terminals and 12 new developmental projects across 31 countries. In 2008 the company has handled more than 46.8 million TEU’s (twenty-foot equivalent container units) across its state of the art facilities stretching from the Americas to Asia which calculates as an increase of 8% since 2007. The number of containers handled is so massive that if the containers were placed end to end, they would circle the world more than six times! The company is not willing to stop there since the number of TEU’s is expected to rise over the next ten years to a whopping 95 million units caused by a pipeline expansion and development projects in key growth markets including India, China and the Middle East.

The graph above shows the ports that DP World handles in the beginning of their journey as of 2004, a modest and humble 6 terminals.

However in this graph , it clearly shows the development that the company has gone through from a simple 6 terminals to an astonishing number of 49 terminals across 27 countries.

And this graph below shows all the upcoming development projects of DP World all around the globe.

The company has shown a great deal of commitment to continue its expansion. An example of that commitment is the attainment of P&O Maritime Services. DP World acts as a monopolistic company seeking perfection and seeking to take over any ports or terminals across the world whatever the cost; however, it still maintains its respect in the worldwide scale of companies as an admired and valued company. It has had many competitors over the years but has extinguished them with unique qualities and services. The top 3 direct competitors are A.P. Møller – Mærsk of Copenhagen – Denmark, Hutchinson Whampoa of Hong Kong, and PSA of Singapore. It is considered to be the leader of these top 4 global operators. Many other competitors exist in the United Kingdom, United States of America, China, Taiwan, and the Netherlands but are considered to be on a smaller scale which doesn’t pose a threat to the company as dominant as DP World.

DP Worlds’ Unique Qualities

DP World has a wide range of unique abilities, qualities, and strategies. The company is able to offer a complete package of unique expertise to a project that includes:

Container Terminals: A massive number of 49 terminals across the world.

Logistics Centers: DP World owns and operates the largest warehouse in the world.

Free Trade Zones: DP World Operates 3 free trade zones including the world’s largest free trade zone through one of the company’s associations.

Customs: DP World is able to provide a unique customs training, development, and systems implementation.

Innovation: DP World uses the largest cranes in the world, and were pioneers with the quad-container lift capability.

Another prime quality that DP World possesses is their undeniable loyalty to their primary customers since the company is extremely sensitive towards prioritizing customers especially in terminal operations. As a global independent terminal operator, DP World ensures that their customers be treated equally and fairly. This does not prevent them from forming strategic alliances with customers like Flinder Ports of Australia managing their container terminal operations; however, forming an ever growing alliance must and will not limit Flinders access to DP Worlds’ exclusive services, especially if they have the capacity to service their business and others at the same time. This is one very important factor of DP Worlds’ strategy.

DP World not only cares about its customers and the money they generate, but they also look out for their own employees and the environment. The company is committed to a ZERO harm policy towards people and the environment. It has achieved more rewards than any other competing company. Some of these rewards include:

The 2009 Asian Freight & Supply Chain Awards (AFSCA) best Middle East Sea Port. It has won this award for 15 consecutive years.

2009 Best Global Terminal Operating Company.

2008, 2006, and 2005 Lloyd’s List “Global Port Operator” of the year.

Not only that, but it also has its original and flagship facility head quarters in Jebel Ali which:

Is the 6th largest container port in 2008.

Handled more than 12 Million TEU’s in 2008.

Is the largest container port outside Asia.

In addition, DP World is very keen on maintaining a high level of security, safety, and environment preservation and protection. The company is:

The Global Industry Leader in Supply Chain Security Excellence.

The First International Port Operator to adopt Standards for securing the Global Supply Chain (ISO 28000:2007).

The first, and one & only, International Port Operator which was invited to join the US Customs Trade Partnership against Terrorism (C-TPAT).

One of a few that has a 20% reduction in injury frequency rates per annum and it is ready for accreditation under Safety Management System (OHSAS18001) by the end of 2009.

The Lowest in numbers globally to have serious spills that may harm the environment.

Continuously maintaining its 27% reduction in CO2/MTEU emissions for the next 5 years. Commencing in 2009 and will be ready for accreditation under Environment Management System (ISO 14001) by end 2009.

Although is it the largest company of its sector, DP World has not yet reached its peak. The leaders of DP World are still seeking for more and more. They are committed to the company’s future portfolio which will include these countries:

4) Operations strategy a: Identification and description of key business processes as well as main process business policies:

DP World’s main process is part of the broader logistics supply chain and consists in loading and discharging cargoes to and from the vessels, storing the cargo in the port and receiving and delivering cargo through port gates via road and rail transport. There are many types of cargo that DP World handles:

Container Cargo: With their 45 cranes installed in the Jabil Ali container terminal, DP World is able to satisfy their costumer’s at a very fast response time, even during peak seasons.

General Cargo: With their superior handling facilities and services, DP World handles more general cargo than any other type of cargo making it at important type of business for them.

Bulk cargo: DP World handles a lot of cargo that come in big volume with great care, like chemicals, mineral, and petroleum.

Sea-Air Cargo: DP World has a very good relationship with Dubai International Airport’s Cargo Village, which makes their customers feel like they are in good hands when shipping perishable goods, or goods that can not be stored.

The main types of commodities that DP World handle include steel, minerals, bagged rice, timber, sugar, wheat bran, frozen foods, and various types of construction materials that come in all kinds of cargo.

Typically, DP World has commercial contracts and agreements with their customers which include service levels commitments. Their planning and execution process is aimed at satisfying the committed service levels to their customers in the most efficient manner. When considering commercial agreements with customers, revenues either derived from volume or price or the combination of both. These are central to committing to a contract. DP World has a wide range of customers that are located in over 25 countries around the world.

DP World also plans in the future to expand their operations in 11 more terminals around the world including France, China, Peru, Turkey, and many more.

Inventories are extremely important for DP World’s business since the resources that they are using to provide services are limited and therefore they need to ensure velocity of their inventories in order to maximize throughput. DP World is a pioneer in the container terminal industry. They have been successful in operating and developing container terminals very effectively and efficiently to satisfy their customers’ needs all around the world. In maximizing the allocation of resources, DP World uses a very sophisticated IT system that has a main purpose of delivering its cargo efficiently. This IT system also helps DP World become more flexible and respond quickly to customer’s needs.

The following is one of DP World’s flow charts on their current operations:

5)   Operations strategy b: Identification and description of strategic infrastructure support:

–      What human resources strategy is used?

DP provides a safe, secure and healthy work environment where the employees are motivated and aligned with business objectives. They are in the business for the long term and due to the risk associated with investments they need their employees to be flexible and able to adjust to any changing environment in order to ensure longevity.

–      Salaries and incentives?

DP World provides an annual review of salaries (subject to business outlook) which is merit based and forms part of the Company’s performance management system. In addition, bonus payments are paid annually to employees on staff contracts which are a combination of the financial performance of the company and personal objectives. Also, as you move up the organizational structure, the stock options and benefits increase depending on the performance. The personal objectives are intended to be stretch targets for exceeding beyond the normal activities of the role.

 With a revenue growth of 20% in 2008 the bonuses and benefits the employees receive every year also increased. This method of care shows how dpworld actually concern for their employees and allows the company to have motivated employees that are ready to take on any task at any time.

“2008 was another year of excellent performance for DP World

where our focus on the faster growing emerging markets and

origin and destination cargo allowed us to once again outperform

the market, delivering results ahead of expectations. Profit after

tax was in excess of $600 million and cash generation in excess of

$1 billion. This excellent performance in 2008 leaves us in a strong

financial position to meet the challenges that lie ahead in 2009.”

Sultan Ahmed Bin Sulayem

Chairman

The company also has a comprehensive ‘Learning & Development’ program which allows employees to acquire and expand their skills, resulting in global opportunities. The new abilities built in the employees give them incentive to increase their performance making them more flexible around different areas and more efficient.

–      What type of organizational structure is used?

The company has a relatively small Corporate Office for an organization of their size; however, they have organized their management of the global business into geographical regions managed by regional managers who in turn support the management team at a business unit level. The corporate office is a combination of functional divisions that specialize in certain activities that are mandated by the CEO and Board of the Company (e.g. Legal, Commercial, Safety, Security etc..)

DP has 7 global senior vice presidents that report to the COO.

COO with the 11 senior vice presidents (SVPs in UAE) and the CFO all report back to the CEO

The CEO reports to the members of the board and the chairman.

–      What type of quality system is applied?

DP World does not adopt an “off the shelf” quality system such as Six Sigma for example, but they do measure the business units with a comprehensive set of business metrics that are reported monthly and are auditable by company representatives and external parties.

–      What types of planning and control systems are used?

DP has Global systems applying to key financial data. In addition they have information flows between Shipping Lines and the activities within the Container Terminal (Terminal Operating Systems), Maintenance systems (EAMS), Safety, Environment and Security systems that allow them to maintain control of assets used in the facility, all supported with appropriate IT infrastructures.  

With those methods of operating as mentioned above, DP world operates in a flexible manner that allows them to operate in around 100 countries with over 50,000 employees and holding over 80 companies all across the globe.

Concerning safety, DP world has stated the following in their website:

“At DP World, safety is managed as a key resource. the organisation follows the principle that safety is a condition of employment and is committed to exceptionally high safety standards. Integrating awareness, training, policies and procedures to achieve environmental protection, healthy work environments and zero harm to people is a vital undertaking. 

DP World has strengthened safety awareness by implementing terminal Safety Rules in addition to the international Health, Safety & Environmental Policy an  Operational Safety Standards. the Fatal Risks, denoted by recognisable icons, are safety standards of mandatory adoption, geared to manage and prevent any potential risk.”

Also, the employees working in the physical operational sector are provided with a safety manual that gives them instruction protecting them from any harm.

6) Assessment of strategic operational alignment and present operations strategy limitations:

Security and Flexibility

Dubai Ports (DP) world is know as one of the leading ports internationally, one of the main important ways in which DP was able to achieve such title was by stiring for efficiency when it comes to technology. The company aims to improve service in advance of customer demand. The company therefore has flexibility in adapting a software to customer requirements.

This software is to enhance the companies ability to quality change measurment and concentrate on specific areas of interest that require in depth control and provide security, reliability and fast efficient services for DP worlds customers. Whether they are consumers , suppliers, investors, employees, government agencies with this innovative service this will allow the proccess of business transactions, with all of the mentioned customers.

Envirmoment and Safety

DP is known as a leader in international port terminal operations and development, logistics and related services. The whole purpose of the company’s World Safety & Environment Policy is, committment to providing a safe workplace and ensuring that its business activities are conducted in a manner that minimizes any adverse environmental impact. This policy has been established on the basis that concern for the safety of employees and guardianship of the environment, it is essential to lead them to a successful conduct and future growth of the business. This is in the best interest of each of the organization. According to the company, these special safety and environmental policies will be accomplished through the following:

Identification and evaluation of all safety and environmental hazards and the establishment of controls to manage risk to acceptable levels. Risk assessments should be updated whenever significant change in the working environment has occurred. Additional and special emphasis will be given to controlling those hazards that represent the greatest potential for fatal injury known as the “Fatal 5”. These include:

i. Pedestrian Safety

ii. Mobile Equipment

iii. Working at Heights

iv. Handlings Loads

v. Contractor Management

The management and supervisory staff at each business unit will be responsible for

implementing and maintaining the safety and environmental management system

necessary to comply with this policy, and will be held fully accountable for compliance and performance. (DP World)

Every employee whose work may create a significant safety and environmental impact will be trained and held accountable for complying with the policy and related standards, procedures, practices, instructions and rules. (DP World)

Requiring contractors and suppliers to follow all site safety and environmental requirements, and working with partners to achieve comparable safety and environmental standards.(DP World)

In addition, according to, the Chief Executive Officer of world DP, Mohammed Sharaf believes that through the active participation and commitment of all DP World employees, we will strive to meet or exceed the requirements of this policy.

DP Securities

DP World regards security as a core service to its customers and is implementing the international standard throughout its network of 49 terminals. The addition of the five terminals takes to 24 the number of independently audited ISO security certified DP World terminals globally so far. The ISO 28000 standard sets in place mechanisms and processes to address security vulnerabilities at strategic and operational levels, as well as establishing preventive action plans. The certification at each facility was granted after a stringent series of audits of each of the facilities, focused principally on container security, physical access controls, personnel security, procedural security, security training and threat awareness, business partner requirements and IT Security. The standard complements all international and national security legislative codes to which DP World already conforms to at its terminals.

DP World’s investment in the ISO security management system has been recognized by the US Customs Border Protection agency, which has invited DP World to join their Customs Trade Partnership Against Terrorism (C-TPAT) programme. DP World is the only global marine terminal operator to have achieved ISO 28000 certification and simultaneous membership of CTPAT.

Due to all the types of ISO’s DP has aquired, this has lead to building a strong relationship between DP and customers. The brand name “DP” has built only a certain amount of trust. After aquiring the ISO, the company has received a much larger quantity of customers.

The two recent ISO’s they aquired are:

“ISO 28000:2007: Security Management System certification acheived for implementing international security management standards. “(www.dpworld.ae)

“ISO 27001:2005: Information Security Management System Certification achieved to international standards. ” (www.dpworld.ae)

Government Authorities

Looking at the aspects that DP world has upon government authorities and port securities, we have contacted DP World in the UAE; they were not able to provide us with the required information as they responded at the last minute with unclear information about what is required regarding this field. Nonetheless; I have researched through the company’s website and through credible resource websites. However, I could not come up with the sufficient information therefore, the only information that I would come up with was about the 2006 conflict between the U.S. Ports and the U.A.E Ports . The vast growth and achievement that DP has went through the past years and what it has become today.

This is an example of my findings:

Port operators at major transshipment centers including Dubai, have led the charge towards increased integration, responding to the rapid growth in container shipping during the past decade by developing world class harbors, 24-hour processing of cargo, and the systems and technologies for moving containers efficiently and rapidly. The Port of Dubai is a relative newcomer to the field, but has already grown to be the 10th largest and third fastest growing container port in the world, moving 6.24 million TEU in 2004.

Government of Dubai should have good relationships with other countries who are involved in exports and imports. Governamnet should pass rules and regulations which are important for the betterment of port.

Refrences

www.dpworld.ae

www.dpworld.com

DP World Standard Presentation  Link: http://portal.pohub.com/portal/page?_pageid=761,282638HYPERLINK “http://portal.pohub.com/portal/page?_pageid=761,282638&_dad=pogprtl&_schema=POGPRTL”&HYPERLINK “http://portal.pohub.com/portal/page?_pageid=761,282638&_dad=pogprtl&_schema=POGPRTL”_dad=pogprtlHYPERLINK “http://portal.pohub.com/portal/page?_pageid=761,282638&_dad=pogprtl&_schema=POGPRTL”&HYPERLINK “http://portal.pohub.com/portal/page?_pageid=761,282638&_dad=pogprtl&_schema=POGPRTL”_schema=POGPRTL

PDF file: DPWORLD Operations Procedure

Dpworlds Safety Manual

Also:

Interview with Andrew Adams (Vice President of Global Marketing)

DP World. Available from: <www.dpworld.com> [Accessed 18 June, 2009)

Oliver, Sandra. (2001). Public Relation Strategies. Institute of Public relation. Kogan Page.