Dafza Expo 2015 Innovation Challenge Case study Prepared by DAFZA Sept 2015
Dafza Expo 2015Innovation Challenge
Case study
Prepared by DAFZASept 2015
Presentation Outline
① Introduction② Brief presentation of Free Trade Zones and their essential role in the
Global Economy③ Why innovation is critical and important within this area.④ Presentation of DAFZA (basic details to give participants an
overview)⑤ Presentation of the Challenge (a description of the area (location),
target, and the focus area of the challenge)⑥ Market overview/ fact sheet⑦ Challenges related to food distribution regionally & locally ⑧Q&A
• Established in 1996, wholly owned by the Government of Dubai, located right next to Dubai airport, in the heart of Dubai.
• 169,000 sqm office space – 13 office buildings in total
• 90,396 sqm warehouse space – 256 warehouses in total. Excl al Qusais.
• Lists over 1,600 companies • 15,000+ investor employees• Last two year employment growth:
Aviation 18%; Logistics 14 % ; Electrical and electronic materials 13%
Free Zones & DAFZA Background
Free Trade Zones and their essential role in the Global Economy
Dubai Airport Freezone A Snapshot
• Minimize int’l trade barriers eg tariffs, import duties, etc.
• Enhance global market presence by attracting new business and foreign investments – FDI’s.
• Promote employment
• Encourage free trade
• Contribute to GDP growth
• Facilitate exchange of goods & services.
• 100% corporate & personal income tax exemption
• 100% repatriation of capital and profits
• No customs duty
• No currency restrictions
• Business conducive environment.
• Help produce innovative ideas for DAFZAs new free zone park in al Qusais, within the food industry value chain concerning Al Qusais Light Industrial Units - LIU’s.
• Ideas must be achievable, usable and implementable for real world use.• Ideas must be substantiated enough and supported by research, not by
“personal” thoughts.• Ideas should not require long development time by DAFZA post event.• Ideas must have a clear benefit to DAFZA, be it monetary or process
benefits
Context
• The Dubai Airport Freezone Authority (DAFZA) is the governing body for trade licenses and visas to international companies that are willing to conduct business within DAFZA free-zone areas in Dubai. DAFZA offers companies a modern environment (offices and warehouses also known as LIU – Light Industrial Units), enabling services, tax & duty exemptions, complete business ownership and full repatriation of earnings. (Read more: http://www.dafz.ae/en)
• In summary, DAFZA plays a crucial role in enabling companies to expand into MENA region by providing the necessary infrastructure, services and access. In this context, DAFZA is seeking to explore innovative ideas to serve its customers more effectively and efficiently within its new free-zone plot at Al Qusais.
Background to the innovation challenge
About DAFZA’s new free-zone at Al Qusais
• DAFZA’s new plot is located in Al Qusais Industrial Area and focuses on the in-bound logistics, warehousing and distribution needs of food industry and other industries including electronics, luxury goods & fashion industry.
• The total size of the plot is approximately 16,000m2 in which DAFZA will provide its future tenants with light industrial units (exterior already designed) . 30% of the available area will be allocated to companies operating in the food industry, while the remaining area will be allocated to companies operating across other industries .
Centrally located between 7Emirates & near airport terminals makes transport ofgoods easy & fast to reach destinations & reduces carbonfootprint in transporting goods
• In order to promote sustainability and energy-efficiency whilst increasing DAFZA’s contribution to feeding the planet and creating energy for life in addition to increasing DAFZAs’ impact on the UAE economy, remaining profitable and boosting its competitiveness, the participants are expected to formulate innovative solutions that will:
1) Focus on one of the Food industries: 2) Address one or more of the following key questions:
- How can DAFZA optimize the use of available space in Al Qusais? - What type of innovative warehousing internal designs should be explored ? - Which warehouse related technologies would foster DAFZA’s position as a leading, differentiated and value add free-zone services provider?
The Al Qusais Innovation challenge
Ideas will be evaluated based on the following criteria: • Novelty of the solution• Financial, economic and environmental impact• Feasibility, achievability and usability• Required time for development, quick-wins are encouraged• Justification (Solutions must be substantiated in detail and supported by research.
Personal beliefs lacking objective justification are highly discouraged)
The Al Qusais Innovation challengeKey Assessment Criteria
The Al Qusais Innovation challengeMarket Overview / Fact Sheet
DAFZA Stats Food companies represent a mere 6% of the total number of companies within DAFZA park in 2014. Opportunity for growth is thus high since Al Qusais is a new site & we expect to fill 30% of the space allotted to it quite quickly.
Some of our current food company clients are Heinz foods, Hershey’s, Red Bull to name a few. They set up their operations within DAFZA park to be closer to and serve their regional clients in MENA.
Most companies import from Europe /US and re-export regionally to ME, Africa & Asia. Within DAFZA 55% of firms come from GCC, 22% come from Europe, 16% from Asia Pacific & 7% from US/ CDA..
The site warehouse facilities at Al Qusais are already designed from the exterior. The challenge is for the inside areas. Challenge ought to focus on the process improvements & technologies inside the warehouses.
There is no heavy manufacturing within DAFZA. Business models relate mainly to import and ship straight to their on-shore distributors , others import, store, print/package or re-package and re-export.
The Al Qusais Innovation challengeDo food product firms face any challenges? Any challenges related to food distribution regionally or locally?
Source: World Bank, Food Code - Government of Dubai, Colorado State University, MWPVL Logistics
Choice of food categories (eg: canned, meat, wheat, cereals, fresh,etc)
Formulation of value proposition to customers Allocation of space (frozen, chilled, dry, open yard) Cooperation with other supply chain players ( eg: dhl, freight co’s) Demand forecasting and planning Delays in border clearance Food resilience (not contaminated, no undesired human intervention Economic, environmental and social sustainability Energy consumption Identification systems (e.g. RFID, barcodes) Accurate inventory quantity & location Pick & pack efficiency Proper rotation (First-In-First-Out) Handling over capacity Warehouse design for risk reduction (environmental damage) Waste reduction and disposal
Food quality assurance Warehouse sanitation and cleaning Employee hygiene Heating, ventilation and air conditioning Temperature, humidity, moisture controls Sunlight exposure Pest control Contamination control
StrategicChallenges
Warehouse Efficiency Challenges
Control Challenges
Categories Challenges Combined logistics cost of importing goods to the region is
higher than other geographies Average cost of importing wheat into Arab countries is
nearly twice as much as that of importing wheat into Netherlands
Regional Considerations
High Logistics
Costs
Reliance on Imports
Food Security
The MENA population and food consumption per capita are increasing in the region
Food is of strategic importance for the countries in the region
Some countries introduced food security programs to mitigate the risks of food shortages
The mix of food consumption in the region is shifting to high-calorie food categories as result of demographic trends and urbanization
Countries in the region import a significant amount of their food consumption
GCC countries import >90%, while MENA countries import >50%
Consumer Preference
Increasing Volume
FactorsWarehousing Challenges Regional Challenges
The Al Qusais Innovation challengeWhy it is really important to develop innovative solutions within the Free Trade Zones, the "case", and fact overview
Reason Description
One of the recent challenges in the free zone industry is the continuous increase in competitionCompetition
DAFZA will capitalize on its strong brand and promote its position to provide top of the line food distribution services governed by international standards and excellence criteria in a hassle free business environment
Action Plan
Adding value to UAE economy by providing integrated business solutions, to attract regional and international investors looking for a unique business platform, through service excellence in a customer centric business environment, by dedicated, competent and loyal people
DAFZA’s Mission
Statement
In alignment with DAFZA mission statement, DAFZA will provide innovative solutions to resolve the food distribution challenges in the region. To create a win-win for DAFZA, its tenants and the final consumers, DAFZA will formulate innovative solutions to position itself as a key player in the food distribution domain
Dubai government’s transformation towards the smart government sets a clear path for DAFZA to excel in providing innovative services and facilities
Government Directives
In line with the Dubai’s government strategic direction, DAFZA will continue to contribute to the welfare and betterment of the community with innovative solutions in the food distribution domain
Land limitation is another challenge that shall guide DAFZA to creatively enhance its profitabilityLand Limitations DAFZA will identify new value added products & services in addition to
innovative opportunities for diversification into food distribution domain
Source: DAFZA Strategic Plan 2014-2016
The reasons for Developing Innovative Solutions within DAFZA
Q & A
Thank you