Building a sustainable business

DUBAL Supply Chain

01

Corporate profile

Dubai Aluminium Company Limited

(DUBAL) owns and operates one

of the world’s largest modern

aluminium smelters with a

captive power station. Built on

a 480-hectare site in Jebel Ali,

our complex’s major facilities

comprise a one million metric tonne

per annum primary aluminium

smelter, a 2,335 megawatt power

station (at 35°C), a large carbon

plant, casthouse operations, a

30 million gallon per-day water

desalination plant, laboratories,

port and storage facilities.

Our Jebel Ali site has the capacity

to produce more than one million

metric tonnes of high quality finished

aluminium products a year, in

three main forms: foundry alloy for

automotive applications; extrusion

billet for construction, industrial and

transportation purposes; and high

purity aluminium for the electronics

and aerospace industries. More than

300 customers are served in at least

45 countries predominantly in the

Far East, Europe, the ASEAN region,

the Middle East and Mediterranean

region, and North America.

As a corporate entity, DUBAL holds

ISO 9001, ISO/TS 16949,

ISO/IEC 27001, ISO/IEC 20000,

ISO 14001 and OHSAS 18001

certification at its Jebel Ali site;

and has twice won the Dubai

Quality Award in the Production and

Manufacturing sector (1996 and

2000). About 4,000 skilled operators,

tradesmen, administrative staff,

technicians, professionals and

managers are employed by DUBAL.

Some 22 per cent of our total

workforce is drawn from the local

population, with UAE Nationals

holding over 70 per cent of

Senior Management positions.

DUBAL also holds a 50 per cent

share in Emirates Aluminium

Company Limited (EMAL),

a green-field smelter development

being built in two phases at Al

Taweelah, Abu Dhabi. Commissioning

of EMAL Phase I (comprising a

756-cell smelter plus associated

power generation, reduction

material and casting infrastructure)

began in December 2009.

Driven by a quest for continuous

improvement and ongoing innovation,

DUBAL has invested substantially

in developing advanced reduction

cell technologies that not only

improve productivity but also

reduce our operations’ impact on

the environment through enhanced

energy efficiency and minimized

emission levels. This has culminated

most recently in DUBAL’s proprietary

DX Reduction Technology – a UAE

flagship technology that operates

at 370kA plus and performs among

the best aluminium reduction

technologies available. Developed

in 2006, DX Reduction Technology

has been implemented in a

dedicated 40-cell potline at our

Jebel Ali smelter complex; and has

been licensed to EMAL Phase I.

03

Contents

Supply Chain 01

Purchasing Strategic Materials 02

Purchasing General Materials 02

Purchasing Contract Services & Direct Materials 03

Supply Warehouse 03

Supply Logistics 04

Vendor registration 07

Payment cycles 08

Security & access controls 09

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Supply Chain

Our mission

To support our company’s strategic

plans, Supply Chain’s mission and

purpose is to:

• Ensure continuity between

functions and maintain sufficient

stock to meet demand and protect

production by adhering to the six

R’s — the Right Materials at the

Right Time in the Right Quantity

of the Right Quality at the Right

Price and from the Right Source

— while taking care not to tie-up

corporate capital unnecessarily;

and

• Support our company’s Corporate

Social Responsibility (CSR)

ambitions through implementation

of Green Supply Chain principles.

At the same time, we continually

strive to develop long-term

relationships with our suppliers,

thereby positioning DUBAL as a

“customer of choice”

Our role in DUBAL

The operations of every corporation

have unique requirements

and constraints. Maximized

performance is essential to achieve

the best return on investment while

satisfying customers’ demands. This

requires a thorough understanding

of all operational aspects and the

associated costs, together with

implementation of best practices

throughout the organization.

We acknowledge that an effective

and responsive Supply Chain is

essential to the continued success

of DUBAL. Especially as a substantial

proportion of our annual operating

budget is dedicated to paying our

contractors and suppliers for the

raw materials, parts, equipment

and services they provide.

Effective expenditure depends on

successful contract management,

excellent purchasing strategies

and stringent inventory control.

To negotiate, secure and manage Figure 2: Geographic distribution of orders by value (%).

International

Dubai

Rest of UAE

57%

7%

36%

formal agreements with suppliers

of goods and services requires

not only a complete understanding

of the business requirements

and organization needs, but also

up-to-date knowledge on supply

management strategies and

practices.

We are also keenly aware that the

DUBAL Supply Chain department

plays a vital role in providing the

services and materials needed to

ensure the smooth operation of our

smelter complex. This is evidenced,

among other ways, by the fact that

the Supply Chain department

procures materials and services

worth some AED 5 billion (US$ 1.36

billion) every year, 80 per cent of

which is spent on Raw & Process

Materials and the balance on

General & Contract Services. In

any given year, approximately

6,000 Purchase Orders and

300 Contracts are issued.

Our department comprises

125 Supply Chain professionals in

various fields of expertise, working

in five sub-departments, namely:

• Purchasing Strategic Materials

• Purchasing General Materials

• Purchasing Contract Services &

Direct Materials

• Supply Warehouse

• Supply Logistics

A brief summary of the individual

departments is provided in this

booklet.

Purchasing Strategic Materials

This sub-department is primarily

responsible for procuring the major

raw materials required by DUBAL,

including:

• Alumina

• CP Coke

• Liquid Pitch

• Baked Anodes

• Aluminium Fluoride

• Potlining Materials

• Process Materials

• Refractory Items

These raw materials are procured from various sources so as to ensure uninterrupted supply to our operations. Depending on the raw materials, either long-, medium- or short-term contracts are placed with suppliers for security of supply. The annual budget allocated to Strategic Materials for purchasing raw materials amounts to approximately AED 3.7 billion (US$ 1 billion), the breakdown of the number of suppliers by region being shown in Figure 1.

Stringent terms and conditions are imposed throughout the process of enquiry to order or contract; and vigorous negotiations are conducted before finalizing any orders or contracts. Priority is always given to product quality, competitiveness of price and previous history in terms of supply.

Supplier development is a major focus area for this sub-department. This is achieved through various trials and plant visits. We also encourage all suppliers to hold International Organization for Standardization (ISO)

Figure 1: Strategic materials suppliers by region (%).

28%

23%

11%

4%

Other

UK

US & other American

Australia

India

Europe

China

Middle East & N.Africa

Far East

GCC

11%

5%

6%

5%4%

3%

certification for environmental and other standards relevant to their industry. As part of our stance on Corporate Social Responsibility (CSR), DUBAL does not deal with companies who employ child labour.

Purchasing General Materials

This sub-department is responsible

the procurement of approximately

80,000 different stock items

(excluding strategic items such

as Relining Materials and Process

Materials), with a total annual

purchase value of AED 220 million

(US$ 59.8 million). The items

are stored in our Warehouse

infrastructure and are replenished

in time to meet operational

requirements across the plant.

For effective management

purposes, the stock items have been

categorized into 52 categories, which

0403

in turn are arranged in five specific

commodity groupings — each of

which is managed by a dedicated team

of purchasing specialists. Named by

commodity type, the five groups are:

• Major equipment spares —

comprising spare parts for

Casthouse, Pot Rooms, Conveyor,

Anode and Rodding Equipment, and

Cranes.

• Mechanical equipment spares —

including items such as Hydraulic

and Pneumatic Products, Valves,

Lifting Equipment, Metals and

Pipes, Bearings, Power Transmission

Components, and Spares for Mobile

Equipment).

• Electrical Spares — which covers

Motors, Instruments, Electronics, and all Electrical Products (such as

switches, fuses, lamps and cables).

• Power & desalination spares —

including spares for Turbines,

Pumps, Transformers, Compressors

and Filters.

• General materials — which ranges

from Chemicals, Gases, Paints and

Lubricants, Tools, Fasteners, Hoses,

Safety Items to Office Supplies.

Purchasing General Materials handles

about 1,950 stock lines every month.

To improve the internal efficiency of

the Supply Chain process, suppliers

are encouraged to accept Long-

term Contracts and/or Consignment

Stock Contracts for various

commodities. Such contracts also

give vendors greater confidence of

assured business for longer periods

while motivating increased cost-

competitiveness and flexibility of

deliveries to meet DUBAL’s needs.

Emphasis is also placed on building

partnership-based relationships

with suppliers, so as to optimise the

procurement of the right items at the

right time (vital for absolute

satisfaction of our internal

customers!)— even during

unexpected surges in production

activities. Reliability, value-for-money

pricing and the inclusion of eco-

friendly alternatives in suppliers’

respective product portfolios is

encouraged.

While a conscious effort is made

to develop local suppliers so as

to boost the economy of Dubai,

equal opportunity is provided to all

suppliers of general materials items.

A geographical distribution of orders

by value is presented in Figure 2.

Adherence to the highest ethics and

best business practices creates a

solid foundation for healthy, trust-

based and enduring relationships.

Purchasing Contract Services & Direct Materials

As its name suggests, this sub-

department has two main areas of

activity, each staffed by contract

officers who are professionals in their

respective disciplines:

• Contract Services is responsible

for managing and executing all

service-related activities of DUBAL

by issuing Purchase Orders and

Contracts for Civil, Electrical,

Mechanical, Instrumentation,

Maintenance, Information

Technology, Consultancy and

various other outsourced general

services (such as rental services,

car hire/services, public relations,

refurbishment and fabrication).

• Direct Materials is responsible

for procuring Non-Stock Direct

Materials, ranging from Abrasives

and Chemicals to Maintenance

Spares and Building Materials.

In addition to establishing long-term

service and maintenance contracts,

Purchasing Contract Services &

Direct Materials is responsible

for co-ordinating with all areas of

operation for regular, urgent or

unplanned service jobs and emergency

call-outs. Every department of

DUBAL has a dedicated allocation of

contract officers who facilitate their

purchasing requirements.

Supply Warehouse

Warehouse is the custodian of

all stock items within DUBAL, the

range of which is extensive in order

to meet the entire plant’s needs.

The Warehouse is also the first

Supply Chain contact for internal

customers, whose raw material,

general materials, consumables and

spare parts requirements are filled

by Warehouse; and external suppliers,

who deliver stock to the facility.

Warehouse OperationsThis area has three sections:

• Warehouse Receiving — which checks and receives materials; and co-ordinates with end-users for material inspection and refurbishment (open for deliveries from 07:00 to 14:00 on normal working days).

• Maintenance & Locating — which is responsible for locating stock and maintenance-related activities, carryout internal transfers, handling stock returns and perpetual stock counting.

• Warehouse Issue Counter — which serves internal customers through reservations made either for site delivery or collection from the counter during standard working hours (open 24x7 for urgent requirements only).

Our Warehouse Operations comprises two main warehouses, four satellite warehouse facilities plus material yards with storage for up to 50,000 pallets; and covers a total area of 43,000 square metres.

More than 81,000 SKUs are held, with

an average total inventory value of

AED 621 million (US$ 169 million); and

approximately 15,000 item

reservations are received and

processed every month.

Warehouse Inventory Control

The primary function of Inventory

Control is to manage the inventory

within the Warehouse at the agreed

optimum levels. The overriding

aim is to reduce inventory value

and holdings, while still ensuring

availability of materials at all times

as per customers’ requirements.

This aspect of Warehouse has two

sections:

• Inventory Control — which has two

sub-sections, namely:

a Strategic Materials —which

handles the replenishment

of raw materials and alloys.

b General Materials — which

deals with all the other

materials and spare parts

for regular and one-off

consumption requirements

of all the operational and

maintenance areas in DUBAL.

• Cataloguing — which creates

and maintains material master

data so as to ensure the integrity

and quality of DUBAL’s material

catalogue.

Continuous and process improvement

initiatives are implemented within

Warehouse with a view to achieving

the levels of efficiency, effectiveness

and operational excellence required

to ensure 100 per cent satisfaction

of our internal customers and

suppliers alike.

A Warehouse Bar-coding system

was implemented throughout our

Warehouse Operations in March

2010. The bar-code scanning system

uses the OneMobile platform, which

enables SAP-based Warehouse

processes to be accessed from

hand-held computerized scanners

connected wirelessly to SAP.

Supply Logistics

Supply Logistics department ensures

that deliveries of all major raw

materials such as Alumina, Petroleum

Coke, Pitch and Anodes are

scheduled as per DUBAL’s operational

requirements. Vessels carrying these

materials are nominated to meet

target times for loading at origin

and discharge at destination, thus

ensuring that there are no clashes

on arrival, but instead the materials

are discharged promptly at DUBAL’s

dedicated berths in Jebel Ali Port.

The vessels are also managed in such

a way as to not incur any demurrage

at discharge. More than 170 bulk

shipments are co-ordinated each

year, amounting to almost 4.4 million

metric tonnes of raw materials.

Close co-ordination is maintained with

Smelter operations, to handle all the

import shipments; and to ensure that

their requirements are met in full.

Supply Logistics is actively

involved in negotiating contracts

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of affreightment with leading

international shipping lines for

transporting raw materials in bulk

from loading ports to DUBAL dock.

The annual budget for shipping

contracts for all strategic raw

materials is AED 560 million

(USD. 155 million).

Supply Logistics actively manages all

the orders placed by Supply Chain’s

Purchasing sub-departments

(i.e. Strategic Materials, General

Materials and Contract Services)

with suppliers so as to ensure the

readiness of the materials. A standard

process flow is used for this purpose,

and entails reviewing the terms of

purchase for all materials procured

and transported to our site, with

a specific focus on the mode of

transport, and initiating the necessary

actions.

The department works closely with all

major shipping lines for full container

loads (FCL). Less than full container

load (LCL), air freight and courier

shipments are managed through

third party providers. On average,

more than 2,850 import shipments

(air- and sea freight) are handled

each year, comprising 14,000 FCLs

and representing 246,775 metric

tonnes’ worth of goods. Upwards of

13,850 document and non-document

courier shipments, weighing a total

of 106 metric tonnes, are processed

annually.

Support is provided to Warehouse by

way of ensuring that materials arrive

at the right time and inventories are

maintained at optimum levels. This is

achieved by initiating actions on the

priorities raised by Warehouse and/

or the end-user.

Importantly, Supply Logistics

supports DUBAL’s green

initiatives through the sales and

transportation of production

wastes for recycling, thus helping

to minimize environmental and

atmospheric pollution in the UAE.

The department also manages

the disposal of scrapped company

assets, production wastes and

requests for disposals. All these

measures have resulted in earnings

averaging about AED 8 million annually.

08

Vendor registration flow chart

Vendor registration

A formal policy and procedure is in place for vendor

registration. This is summarised as follows:

Payment cycles

DUBAL’s Accounts Payable (AP)

department endeavours to ensure

that all vendor payments are made

on a timely basis; and that accurate

and precise information is provided

to allow for correct cash outflows

and efficient cash management. To

leverage the SAP system deployed

at DUBAL, AP has begun using the

best business practices available,

including (but not limited) to AP

Automation, E-payable, best practice

invoice numbering, and so forth.

Electronic Invoice ProcessingAll invoices are categorized into two

types:

• MM invoices (purchase order (PO)

related or contract related)

• FI invoices (Non-PO related)

Invoices may be submitted in two

ways:

• Online (soft copy) — Invoices may

be sent to AP department via

email (invoices@dubal.ae), from

where they are forwarded directly

for verification and electronic

processing. This is the preferred

method.

• Printed (hard copy) — Original,

printed invoices may be submitted

to AP department as physical

documents, which will then be

forwarded directly for verification

and electronic processing.

If recommended for registration, then Supply will:

• Arrange for site visit

• Arrange for technical presentation

• Arrange for sample evaluation

If rejected for registration:

• Regret memo forwarded to vendor

•

VendorSTEP 1

A formal request letter addressed to Senior Manager, Supply Chain from the new vendor to

register their company with DUBAL with the following details:

• Detailed company profile including financial and technical capabilities, references,

resources, locations (with map)

• Copy of valid trade license (for UAE suppliers)

• Copy of valid ISO certificates (if any)

DUBALSTEP 2Memo prepared and forwarded along with vendor profile to internal customers

(engineers/planners/stock controllers/consultants) for their technical evaluation.

STEP 3

DUBAL

& VendorSTEP 4

After completion of above requirements, and agreed by internal customers, the following

forms are forwarded to the vendor for completion and returning to Supply Chain

addressed to Manager, Purchasing General Materials (or) Contract Services:

• Vendor assessment forms

• Safety, health & environmental requirements for contractors ( for services vendors only)

DUBALSTEP 5

After receipt of completed forms:

• Internal memo is forwarded to finance for updating accounts details

• Vendor file is created in system

• Advice letter is forwarded to vendor informing approval

DUBAL

& Vendor

07

01009

Security & access controls

Access to the DUBAL site for

personnel, material and vehicles is

controlled by our Security Services.

There are two access points,

namely Main Gate and South Gate

(marked on the DUBAL location map,

which may be downloaded from our

website — www.dubal.ae). There are

specific procedures for using either

gate, as follows:

Main gate: • Visitors to Supply Chain

department and delivery vehicles

below 3 tonnes will be granted

access through this access point.

• All visitors and suppliers are

required to obtain an entry pass

from Security Reception before

approaching Main Gate; and must

return the entry pass at the Main

Gate upon exiting the site.

• Visitors who arrive at the site

without a prior appointment

will only be allowed access after

confirmation from Supply Chain

department.

• All deliveries to Warehouse will be

verified by checking against the

invoice (which must be presented

before access will be granted).

• Both visitors and delivery

personnel are required to produce

proof of identity — such as

Emirates ID Card, Labour Card,

Driving Licence or Passport — to

obtain an entry pass.

South gate: • Heavy vehicles for delivery to

Warehouse will be granted access

through this access point and

directed to follow the commercial

route (i.e. from the operational area).

• The procedure for obtaining an entry

pass, including identification of driver

and verification of the consignment, is

the same as at the Main Gate.

Safety requirements

DUBAL is committed to safeguarding

the health and safety of our people, as

well as visitors to our site. Accordingly,

the following rules are in place and

enforced by our Security department:

• All visitors and suppliers are required

to follow DUBAL’s traffic rules and

security instructions thoroughly.

Our entire site is monitored and

controlled by a CCTV system.

• The maximum speed limit on site is

30km/h.

• All vehicles entering our site for

delivery purposes will be checked by

DUBAL Security personnel for safety

of the load and roadworthiness of the

vehicle, prior to being granted access

to site.

• Personal Protective Equipment (PPE)

such as safety shoes, safety helmet

and so forth must be worn by the

drivers of all delivery vehicles.

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For additional information, contact: Dubai Aluminium Company Limited

P O Box 3627, Dubai, United Arab Emirates

Tel: + 971 4 884 6666

Fax: + 971 4 884 6292

Email: supply@dubal.ae

www.dubal.ae