How ROSHN is building supply chain resilience in Saudi Arabia

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Saudi Arabia today is one of the fastest-growing economies globally, with the country forecast to achieve nearly 5 percent GDP growth in 2024, according to the World Bank. The GCC’s biggest economy, Saudi Arabia is surpassed only by Indonesia and India as one of the world’s fastest-growing economies this year.

As a result, living standards in Saudi Arabia are naturally rising as employment levels continue to increase. Saudi Arabia’s Vision 2030 initiative, in particular, is further driving this momentum. And as part of Vision 2030, Saudi Arabia aims to achieve 70 percent home ownership — an ambitious target compared to the approximately 50 percent mark in developed nations such as the UK.

Saudi Arabia is already on the right track to achieve this goal. According to a report by researchers at iMarc, the country’s residential real estate market is projected to experience a continued annual growth rate (CAGR) of 6.89 percent during 2024-2032. Whether it is local Saudis or expatriate professionals, more people who are making a home in the Kingdom will want to live in modern communities and have access to world-class amenities. This is a focal point for ROSHN, a leading real estate developer in Saudi Arabia. Wholly owned by the Public Investment Fund (PIF), ROSHN is one of the largest developers in the GCC region.

“There’s real estate development, and there’s real estate development in the context of what ROSHN is doing, which is building out entire communities. We’re not building small developments, of say a couple of hundred units. We’re building residential assets in the thousands,” Iain McBride, Head of Commercial at ROSHN, tells Gulf Business. “Plus, it’s all the primary and secondary infrastructure that goes along with that. This involves building schools, mosques, clinics, hospitals, civic buildings, fire stations, police stations, and more. Therefore, it’s a different set of challenges,” adds McBride.

Before ground can be broken on any project, having a solid supply chain is key to success. Building resilience into the DNA of your supply chain is crucial. “It’s all about building relevant redundancies into your systems. We’re focused on the key areas of having a diverse supply chain. It’s about having a Plan A, Plan B, and Plan C and ensuring that our partners are aware of these plans. It’s about being open and transparent with our partners and stakeholders so that we ensure everyone is realistic from the outset. This strategy is also developed with the input of our key partners. We have to make sure everyone has a clear appreciation of the scale we’re trying to achieve,” says McBride.

The scale of development in Saudi Arabia is set to further benefit from the GCC region’s advancements in recent years, where development in places such as the UAE and Qatar, especially leading up to the 2022 FIFA World Cup, has helped spur on the development of the supply chain in the region.

“I think Saudi Arabia is very well positioned. The massive transformation you see in some of the GCC countries over such a short period of time is not completely unheard of. As a result, suppliers, clients, professionals, and contractors in this region are all approaching building up the supply chain in Saudi Arabia with a can-do approach,” McBride notes.

Supply chain forum

It’s one thing to talk about beefing up a company or country’s supply chain, but it’s another to actually start enacting this in a meaningful way. This is why ROSHN moved to host a Supply Chain Forum earlier this year on January 11 in the capital, Riyadh. At this event, ROSHN invited commercial partners from across the real estate sector to explore opportunities in helping to deliver ROSHN’s real estate development projects throughout the kingdom. Consultants, contractors, and manufacturers from all spheres were invited, and ROSHN Group’s senior leadership team were also in attendance to discuss potential areas of collaboration. It was hugely oversubscribed, which highlights how the market values transparency,” says Iain McBride, Head of Commercial at ROSHN.

“We were able to announce some of the exciting partnerships that we’ve concluded recently, and we had entities such as the Saudi Contractors Authority participating,” McBride tells Gulf Business. While the event brought together key stakeholders, including senior government officials and CEOs, it also highlighted ROSHN’s goal of helping to localize manufacturing and supply chains in the Kingdom, a key part of Saudi Vision 2030.

These goals include promoting local content, fostering the SME sector, creating investment opportunities, establishing long-term partnership agreements to support supply chain growth, setting new standards while identifying innovative solutions for the development of the real estate sector, and adding value to customers. Registered guests included a number of high-level government officials from various entities, showcasing the significant public sector support available to parties interested in collaborating with giga-projects like ROSHN.

“Our supply chain strategy is built on shared values, a commitment to sustainability, and the highest international standards,” says McBride. “Partnering with us is an opportunity for consultants, contractors, and manufacturers from Saudi Arabia and around the world to support ROSHN in the joint achievement of our mandate and showcase their expertise on some of the most promising, rewarding, and transformational projects in the Kingdom,” McBride adds.

At the event, ROSHN also recognized existing contracting partners for exemplary quality of design, innovation, execution quality, design to budget, and transparency and collaboration.

A commitment to local content

“At ROSHN, we have a strong focus on local content, and when it comes to our supply chain, in particular, it’s at the heart of what we’re doing,” says McBride. “We want to target and collaborate with local, established partners. Traditional procurement is just not going to work with what we’re trying to do. We can’t be developing our requirements in isolation and then coming out with a very transactional traditional procurement process,” says McBride.

One of ROSHN’s key strategies involves investing directly in the local ecosystem surrounding its partners and their extended supply chain. The company aims to move beyond transactional engagements, encouraging suppliers to grow, not just in terms of supply capacity, but also by raising the bar of the Saudi real estate sector as a whole.

The commitment to local growth extends to open discussions about direct investment by ROSHN in its partners. “We’re completely open to investment. We’ve identified a massive pipeline of work, and we want our partners to grow with us. We’re not just talking about supply capacity. We want to invest in upskilling the workforce and producing higher quality, innovative components,” says McBride.

The company is also determined to foster technology transfer, experience sharing, and efficiency improvements within Saudi Arabia. The vision is to establish manufacturing and assembly capabilities within the Kingdom, providing employment opportunities to the local workforce and creating a sustainable manufacturing sphere.

Collaborating with international partners, though, is not off the table for ROSHN. However, the company places a key emphasis on incentivizing foreign direct investment with a clear focus on transferring expertise into the Kingdom. This approach aligns with ROSHN’s broader goal of upskilling small and medium-sized enterprises (SMEs) and ensuring long-term collaboration with local partners.

Maintaining its position as a client of choice is also a paramount consideration for ROSHN. This involves a commitment to transparent communication, fair treatment of partners, and clear contracting strategies. ROSHN aims to set itself apart by being an organization that is not only known for its massive mandate but also for its ease of collaboration, says McBride.

“It all boils down to a win-win-win situation – benefits for ROSHN, benefits for partners, and ultimately, a higher quality finished product for our customers.” ROSHN’s dedication to boosting local content in its real estate supply chain is a multifaceted strategy that goes beyond mere procurement. This commitment not only benefits ROSHN and its partners but also contributes to delivering higher quality and more efficient finished products to its customers. As ROSHN raises the bar in the real estate industry, it aspires to inspire others to follow suit, ultimately bridging the gap and driving positive change across the sector.