SADAFCO’s manufacturing base has seen the completion of several long term investments principally focused on increasing capabilities in all factories to meet ever-changing consumer needs. The continued focus on automation and operation systems have again generated significant efficiency gains in Manufacturing and further down the Supply Chain.
New lines have been introduced over the years to meet the sales demand, thereby increasing capacity. Consequently, the factory experienced space constraints due to this expansion. Production area became overcrowded and lacked proper workflow owing to the excessive labor required to run the factory. At the same time, there were technological developments and upgrades resulting in financials and environmental benefits. Over the past 5 years, we worked to create space in the factory and used the technological advantages to improve efficiency.
Processing and mixing areas were renovated and upgraded to permit the inline mixing of more local content (fresh milk). These works were all linked with space utilization to allow for relocation of project. Finally, all 12 production filling lines were put in a straight line which are connected to robot palletizers and automatic roll-on loading of tucks from the factory. Apart from creating more space for future growth, we also took advantage of having a more ergonomically designed factory where employees can work in an improved environment, which is lighter, and reduces walking distances. All of this led to an overall increase in efficiency by reducing conversion cost, improving product quality, optimizing use of higher skilled workforce and increasing line efficiencies.
At end of 2021 the milk factory embarked into creating a proactive manufacturing execution system that that will reduce cost, and support continuous improvements and LEAN initiatives.
Digitization ensures error-proof processes and provides a complete electronic audit trail.
The closing down of the old ice cream factory was completed with the consolidation of the new ice cream facility on the same site as the milk factory. This new factory has space to service the aggressive growth plans for our ice cream business for the next 10 years.
In late August 2021, we commenced decommissioning the old and obsolete Tetra Pak Spiraflow plant at our Dammam Factory. This was one of our Tomato Paste processing plants which had served SADAFCO for over 25 years.
Much like the last financial year, this has been a unique year. While the first half of the financial year was weak, the second half has provided growth to the business and sets the company back on a strong growth trajectory. While FMCG performance in 2020 was led by COVID-19 induced consumer stock up and VAT increase, 2021 was largely affected by consumers rationalising purchases due to pressure on the wallet and rising inflation. Overall FMCG and Dairy markets remained flat on a value basis in 2021.
Key Category trends – The overall Plain Milk market was on a declining trend in 2021 owing to deep discounting of prices and rationalisation of consumer spending. However, with the easing of deep discounting in the last quarter of 2021, there are signs of recovery for the Saudia brand. On Flavored milk, Saudia Value shares grew almost 3 points on a Moving Annual total basis, spurred by strong brand campaigns and improved distribution and visibility in stores.