Implementing an end-to-end Local Content development programme at a leading petrochemicals company
- Case Study
Developing Local Content is a core focus for the Kingdom of Saudi Arabia (KSA) and, as one of the largest businesses in the country, our petrochemicals client had a critical role in driving the nation’s localisation efforts.
Efficio was selected to help the business align its Local Content programme with national standards, establish a Local Content baseline and develop 2030 targets, identify key Local Content growth areas in the supply chain, embed Local Content into procurement processes, and develop process frameworks to enable the attraction of foreign investment and development of existing local suppliers.
The Kingdom’s Vision 2030 programme aims to reduce the country’s dependence on oil revenues and diversify the Saudi economy. As part of Vision 2030, our client was tasked with developing Local Content as the “National Champion” in the Petrochemicals sector, which involved boosting its procurement spend with local manufacturers and service providers, increasing its Saudi workforce (“Saudisation”), and growing the capacity and capability of the local workforce and suppliers.
To succeed, the company needed to lay a strong foundation for its Local Content programme.
With Efficio’s support, the business has built a world-class, integrated platform to achieve its Local Content goals:
- A Local Content baseline across the business and detailed annual targets until 2030
- Detailed profiles of localisation opportunities across the end-to-end value chain of key spend categories
- A clearly defined Local Content operating model in which Local Content is embedded into the company’s entire procurement lifecycle
- An interactive, digital, and automated Local Content measurement and reporting system to track progress against targets
- Process frameworks for investor identification and outreach, and evaluation of the localisation and socio-economic benefits of various investment opportunities
- A comprehensive supplier development programme to help address identified capability gaps in the current supply chain, with a special focus on small- and medium-sized enterprises
- A world-class Strategic Partnership programme, establishing long-term alliances with international OEMs to drive Local Content growth in critical supply areas
An implementation programme has subsequently been rolled out to support the embedding and implementation of the Local Content programme, with extensive training provided through the Efficio Academy, and multi-year collaboration to drive Local Content growth through implementation of the initiatives. This Local Content growth enabled the business to create procurement value that extended beyond cost, through reduced lead times, decreased working capital, improved environmental sustainability through the use of local supply chains, and it increased social value through local job creation.
The first step of the process was to analyse the spend data to establish a detailed Local Content baseline.
The next step was to identify opportunities to increase Local Content. Efficio consultants analysed spend categories to identify “localisation value pools”. This included reviewing current and future demand and identifying core supply market characteristics, including potential local and international suppliers.
Using the baseline and identified opportunities, annual localisation targets were set up to 2030.
We then developed detailed procedures, where Local Content was embedded into each step of the company’s procurement process – from tendering through bid evaluation to contract management – as well as the wider supplier development and investor enablement frameworks. Training was developed to help buyers and other stakeholders understand and implement the new processes.
With Local Content processes established, we then developed an interactive, digital online Local Content Reporting System to measure progress against targets. With the infrastructure for localisation established, Efficio then supported the company in the implementation of Local Content across key contracts, the delivery of a local supplier development programme, the identification and attraction of international investors, and the delivery of a Strategic Supplier Alliance programme targeting localisation, cost reduction, manufacturing excellence, and knowledge transfer opportunities with key global OEMs.
- Establishing a baseline for Local Content and defining realistic growth targets
- Identifying the localisation focus areas with the highest impact
- Implementing automated tracking and reporting on the localisation progress
- Identifying the right local suppliers with the quality and capacity to meet requirements
- Overcoming resistance from the business to new processes and new suppliers
- Growing Local Content while protecting bottom line costs and service and quality levels
Efficio’s Local Content expertise
Efficio has a holistic Local Content & ESG development service offering, covering the baselining of Local content and identification of opportunities and targets, development and execution of worldclass Local Content operating models and localisation procedures. This is supported by our digital systems and Efficio Academy offering to manage Local Content performance and sustain benefits. Our projects are delivered through Local Content & ESG subject matter experts and enabled through our dedicated Local Content & ESG Centre of Excellence. Efficio has extensive experience working with both private and public sector organisations on Local Content and ESG development and execution. Localisation of supply chains is also one of our key levers to improve our clients’ environmental footprint as part of their sustainability development efforts.
We’re here to help
If you would like to explore ways we can help you to achieve your Local Content and In Country Value programme goals, please contact us by filling out the form on our Local Content and ICV service page.
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