Driving Supply Chain Innovation at SABIC

Penn State Executive Programs earned its fourth Gold Award from Chief Learning Officer in 2015 for its academic partnership with one of the world's largest and most successful petrochemical manufacturers. Established to boost in-house development programs and accelerate career development, the initiative began with a performance assessment of the supply chain organization. This led to the creation and implementation of an organization-wide learning architecture built around an Applied Learning model that uses cross-functional projects and coaching to help teams to realize significant business improvement opportunities. To date projects and learning efforts have taken place in the US, Asia, and Europe.

Saudi Basic Industries Corporation (SABIC) is among the world’s largest and most successful petrochemical manufacturers. Launched by royal decree in 1976, it employs a global workforce of over 40,000 and has operations in more than 40 countries. SABIC is composed of six strategic business units (SBUs) − Chemicals, Polymers, Performance Chemicals, Fertilizers, Metals, and Innovative Plastics.

“Our collaboration with Penn State University has not only produced exceptional financial benefits for SABIC, but also given us a repeatable process we can use to even greater benefit across the company. The Gold Award is further recognition of both the value of the Applied Learning program and the strength of the SABIC-Penn State collaboration.”
- George Brennan, Chief Learning Officer, SABIC

SABIC recognizes the importance of its supply chain discipline to its continued global growth and competitive financial performance goals. Moreover, it understands the interconnectedness of knowledgeable talent and leadership performance to direct business results. In 2013, SABIC entered into a strategic partnership with Penn State’s Smeal College of Business and Penn State Executive Programs to develop learning programs that accelerate supply chain career development across all business units and to keep the company on the leading edge of supply chain innovation. The partnership has helped SABIC realize their growth and financial performance strategy by substantially reducing working capital by hundreds of millions of dollars while improving cost and customer lead- time performance.

Learning Strategies for Better Process Alignment and Teamwork

SABIC, realizing the tremendous gain that could be achieved through better process alignment and cross-functional teamwork, partnered with Penn State in the establishment of an organization-wide supply chain education platform. Penn State worked with the SABIC Learning Academy and SABIC’s Global Supply Chain Center of Excellence (GSC COE) to devise a comprehensive learning architecture that combines customized face-to-face learning, applied learning projects, and coaching for cohorts from across SBUs.

The program curricula is segmented into four levels that take the participant from foundational knowledge in supply chain concepts thru advanced mastery of practice in the areas of rapid problem solving in complex situations, end to end supply chain constraint diagnostics, process improvement excellence, and measuring improvement value contributions. Select high-performers are eligible to enroll in the online Master of Professional Studies in Supply Chain Management Program from Smeal and Penn State’s World Campus.

The introductory level is designed to “bench set” a common supply chain language and problem-solving skills across SABIC constituents and stakeholders. The mid-level programs build cross-functional teams to address complex constraints both within SABIC’s Supply Chain and across the entire Value Chain, including internal groups such as sales, planning, production, customer service, logistics, as well as major collaboration with suppliers and customers. The capstone program cements thought-leadership capacity across all of the SBUs. Throughout all levels, applied learning and coaching are key in developing internal diagnosis, analysis, and solution competencies. Learners become leaders in supply chain design and execution.

As of 2015, 19 programs have been successfully delivered to close to 400 SABIC employees.

The Proof is in the Polymers

The impact of the Applied Learning methodology on process and profit is solidly illustrated by Penn State’s work with a team at SABIC’s Polymers SBU. The goal of the project was to resolve supply chain constraints that were delaying movement of finished product to end-customers in Asia.

Every aspect of the Applied Learning methodology was designed to maximize active participation, drive innovation, and provide “quick wins.” Faculty acted as coaches to keep the focus on team members and to encourage a sense of experimentation. Emphasis was placed on rigorous tracking of results to inspire team members to see the power of working together as well as to reinforce the business benefits they could achieve. Managers were consistently apprised of the excitement being generated and of progress to ensure continued support.

Guided by Penn State Smeal faculty, the Polymers team developed a process-improvement design for the Singapore hub that shortened the end-to-end process time from customer engagement to product delivery. By accelerating process velocity, SABIC has realized significant additional sales revenue, working capital reduction, and annual supply chain savings.

More importantly, the project solidified the value of implementing Applied Learning methodology in building independent, in-house capacity for cross-functional teamwork to identify, analyze, and resolve limitations in SABIC’s supply chain. Within 90 days of the project start, the Polymers team had developed innovative solutions to alleviate or overcome a wide variety of operational challenges and had begun implementing new concepts in real time.

The application of their solutions was rigorously measured over the next twelve months, and the results were formally presented to SABIC’s management. Their efforts slashed product delivery cycle time by over 37%, enhanced profitability, and buoyed rapid growth in less than a year. This improved supply chain process velocity translated into reduced supply chain costs and released working capital while increasing customer satisfaction and driving additional sales revenue.

With Penn State’s assistance, SABIC has adopted a new approach to learning and development that empowers an educated workforce to analyze and solve their own problems with innovative solutions – SABIC’S new best practices. Created jointly by Penn State Executive Programs, the SABIC Learning Academy, and SABIC’s Global Supply Chain Center of Excellence (GSC COE), an Applied Learning model enables teams to recognize a significant business improvement opportunity, then requires participants to apply their new skills immediately. The participants consistently retain knowledge and practice what they have learned, thereby making an impact through that application and accelerating the return on the company’s human capital investment.

“This Applied Learning program has helped SABIC deliver significant benefits to our customers and shareholders.”
- Uwaidh Al-Harethi, Executive Vice President, Chemicals

In October 2015, SABIC was ranked by Gartner, Inc. a global research and advisory company, as one of the top five petrochemical/agribusiness companies for supply chain excellence in their annual Supply Chain Top 25 ranking. SABIC ranked high for its demonstration of leadership in applying demand-driven principles to their global supply chains. SABIC has also achieved the distinction of winning 63rd position among all global companies in various industries for supply chain excellence.