restructuring Transforming a giant

21 November 2003
Recent years have seen a major restructuring being carried out at Sabic, with the stated aim of streamlining and increasing efficiency. 'First, what we did was look at our organisational structure,' says Sabic CEO Mohamed al-Mady. 'We invested a lot of time and money in revising this structure. We now have what you call a corporate core, shared services and strategic business units [SBUs].'

Within the corporate core, Sabic has established four departments: finance, human resources, audit & legal and research & technology. The SBUs formed comprise basic chemicals, intermediates, polyvinyl chloride (PVC) and polyester, polyolefins, fertilisers and metals. The SBUs are complemented by the three international business units: Sabic EuroPetrochemicals in Europe, the result of the acquisition of DSM Petrochemicals from the Netherlands; Sabic Asia Pacific PTE, the firm co-ordinating sales and marketing activities in Asia; and Sabic Americas, the independent and wholly-owned US subsidiary in Houston.

The implementation of the shared services organisation is aimed at raising efficiency by pooling various corporate services to provide a common resource for all SBUs.

With an increasingly internationalised business and a global workforce of 16,000 people, the need for restructuring has been a requirement rather than an option for Sabic. 'In order to link and integrate Sabic worldwide, one must have one business solution,' says Al-Mady. 'We opted to introduce ERP [enterprise resource planning], utilising technology from [Germany's] SAP. We have more or less utilised it and have applied it in our overseas offices. We are now in the process of installing it in our head office here in Riyadh but we still have to apply it in our affiliate companies in Jubail and Yanbu.'

Al-Mady says that the restructuring process should be completed by 2005, with all Sabic affiliates inside and outside the kingdom being connected through one business solution. 'We hope that by that time we and our customers will feel the benefits, such as faster feedback and reduced cost and time. This will truly make us a global company. In the meantime, we are consolidating all the shared services, procurement and information technology under one umbrella. We think with this new structure and the acquisitions, Sabic will be a strong company.'

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