Dar Al-Hekma University

Operation Management BMGT3302-2nd Semester

Company name: United Sugar Company

Final Project

Due date: Tuesday, May 3rd, 2015

Group Members:

Ferdous Mohammed

Nemah Alsayed

Shaima Alaidaroos

Hadeel Sulemani

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Introduction

The company that we chose for our project is “United Sugar Company”, which is

specialized in sugar processing, refining and trading, under the Consumer Goods Industry.

Located in Saudi Arabia and a subsidiary of Savola group Holdings, it was founded in 1998. It

has 23,806 employees with more than 17,000 Saudi nationals. It puts a great amount of effort to

recruit as much Saudi nationals as possible in its workforce. Its international business is

comprised of 6,738 employees. The vision of the USC is to create the most successful sugar

processing and trading company.

USC is also committed to provide the best quality of sugar with stable prices in the long

run. Also the company has rules about ethical behavior which are governed through Honesty

(Amanah), Conscientiousness (Taqwa), Caring Justice (Birr), and Personal Control

(Mujahadah).” They promise to continue to be innovative, progressive and always open to

changing customer needs and market trends.

Financial Statement

USC is part of Savola Group holdings and they own 74.48%o of it with Capital per Nominal

Share of SAR 395 million. The following figure shows revenue comparison of 2012 & 2013.

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Figure 1: 2013 Income Statement

United Sugar Company strategy

United Sugar Company strategy is mainly based on the concept of TQM and continuous

improvement. USC design and develop products and packs with due obligation of

environmental safety and focused not only in meeting the customer needs, but enhancing to

their best satisfaction, through consistent products and attractive pack quality, by keeping the

applicable regulatory requirements meeting all the times. In the USC the senior managers are the

ones who actually align the operational strategy with the organizational strategy by taking care of

all the process included in product development from the introduction to its decline stage with

the help of its employees who actually make sure that the product is up to standards and report if

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there are any faults involved in product to the quality assurance. Their high standards and ISO

certificates helped them to be differentiated in the market as sugar providing leaders.

Global Operational Strategy

The United Sugar Company uses a multi domestic strategy that has decentralized

authority with substantial autonomy at each business. They have subsidiaries, franchises and

joint ventures with substantial independence. This strategy helps them to maximize the

competitive response for the local market, but this strategy has no cost advantage as their main

concern is quality.

Competitive priorities

Ferdous I will write it later

Improving Productivity

Productivity Variables

1. Productivity  is an average measure of outputs (goods and services) divided by the inputs

(resources such as labor and capital)

Inputs: Outputs:

Main Material Raw Sugar Fine sugar (0.6 mm)

Steam (steam is deference than

vapor)

Coarse Sugar (1.2 mm)

Water for dissolving raw sugar Extra fine (0.3 mm)

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Air ( pressured Air) Molasses ➔ is the black liquid is a result of the

last production phase

Chemicals for performance

improvement  

Green mud can be used in agriculture

United sugar company measure employee productivity by using key performance indicator

(KPI). The key performance indicator is measurable value that shows how efficaciously a

company is achieving key business objectives. The Company used this tool to evaluate

factors that are crucial to the prosperity of an organization and to understanding what is

paramount to the organization.

Product design and development

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The united sugar company follows a series of steps to refine the sugar and produce a high

quality food grade product, theses processes are the raw sugar purchasing, affication and melting,

carbonation, decolourisation, Evaporation and Crystallisation, Separation and Drying, and finally

recovery. It also produces different types of sugar which are the Fine sugar, coarse sugar, extra

fine sugar, Ice sugar and Liquid sugar, with each type of sugar having different uses and stored

differently. Just like other food product standards, the united sugar company pays a great

attention to the microbiological and environmental consequences of wet cleaning process lines

and the handling areas because all of it affect the final product design.

Before Designing the sugar, the company must take into consideration the demand of

sugar (specifically which type) also the product appearance, size, shape, storage and handling.

Also the overwrap of the sugar should contain a clear labeling of how the sugar was made. To

ensure that the product is safely used, the intended users and use environments should be

considered at the start of product development, before the design is finalized, so that

modifications to the product can be made in the interest of avoiding errors. The outputs of

design and development are fully reviewed prior to its release and extra care is taken to ensure

that it meets the objective of customer satisfaction. Detailed drawing and specification are

performed to facilitate the process of acquiring the raw materials. All the types of sugar and

packs development process then pass through a series of steps for verification. If any change

occurred during the design and development stage of the product then its further recorded and

approved by all of those concerned with the implementation.

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Capacity and constraint management

Capacity management is a very effective tool that helps business understand their short

and long term capacity needs. The united sugar company manages the capacity by documenting

the types of sugar with their criteria such as odor, appearance, polarization and the typical value

of each criteria. The USC also documents the typical uses of each type of sugar with its safety

information, storage, spillage, engineering and packing. All of this information and

specifications helps it to forecast its needs and manage its demand. As a result of its excellent

capacity management the USC has the necessary capacity when needed and avoids negative

impact on quality services. This also helps reduce the cost of maintenance and administration

associated with unnecessary equipment needed to manufacture the sugar.

All the necessary equipments are calibrated in detail and any instrument found out of

calibration during testing will be immediately calibrated irrespective of the calibration schedule.

If by any chance a product has been produced during the period of operation with the faulty

instrument then that particular product will be subject to resample and testing to make sure that it

followed the specification required. All the product that confirm to the specification needn’t

further action and those that do not confirm to the specification will have to be dealt with

reprocessing then they are checked by the department manager who in turn will consent with

quality assurance manager.

Quality Control

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1. Quality definition at USC

USC manufactures a range of Sugars, their integrated quality systems and international

standards are directed to meet the demands of local and international markets in order to achieve

customer satisfaction in line with regulatory requirements and environmental obligations.

2. International Standards and Certificates   

United sugar company (USC) follows procedures for maintaining the company's

integrated quality systems in accordance to the clauses of ISO 9001:2008, ISO 22000:2005, ISO

18001:2004, ISO 14001:2004, BRC Global standard for Food safety and SASO (Saudi Arabian

Standards Organization).

3. Total Quality management (TQM)

USC outline TQM in the scope of “Quality, Food Safety & Environmental Management

System”. They believe those three covers all organizations, aiming to an effective and

continuous improvement of product development, design, packaging, and delivery, who are

obligated of environmental safety. Their QMS (quality management system) Dept. supervise

regular inputs from internal and external sources with continuous improvement and

development. They also responsible of documenting all the standards and quality procedures

manuals and updates. They focus not only on meeting their customers’ needs, but on achieving

their best satisfaction. In addition, product consistency and attractiveness are maintained with the

applied regulatory requirements with utmost attention of “Food safety rules” and compliance to

health and safety hazards and environmental aspects affecting population.

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4. Customer focus view

USC has establish a centralized laboratories well equipped to meet the customer

requirements for developing products suiting to their needs and providing testing and know how

facility, thereby enhancing customer confidence. All the specifications are controlled and tested

in line with controlled specifications manuals. USC sales are to play a vital role, in giving best

and prompt services focusing the customer satisfaction.   

5. Risk Management

To overcome unprecedented situations, team headed by Senior Vice president with BLT

(building leadership team) members forms the “Risk Management” task force. Emergency

preparedness and response to situations are dealt accordingly. Actions are already in place for

enhancing storage capacities, safety systems, targets and controls. They stand by generators to

cope with any challenges, to ensure commitment to customers and market are met fully without

any major negative environmental impacts.  Moreover, substitute suppliers are established to

keep the smooth process of production and supplies.   

6. Employees’ Empowerment

The sense of responsibility towards company’s objectives is clear and all employees

recognize product quality requirements in line with the environmental obligations in their area.

They are empowered to take any necessary actions according to the specified procedures to

guarantee conformance with all specifications and legal requirements. These actions may

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include notifying manager’s supervisors, tagging products, or initiating corrective actions and

taking preventive measures.  

7. Continuous improvement

The compliance and awareness of the company policy among employees, and the need to

have sound knowledge in their respective fields is a core pillar of the company strategy. To

achieve that Talent & development section is under the Human Resources department arranges

trainings accordingly. Training is an essential part of the continuous improvement process in

USC.  As such, training is conducted on needs basis in functions such as sales, safety, quality,

auditing, special job skills, communication, management and leadership. Section Managers shall

determine the training needs of each member of the section and in correlation with human

resource will conduct required “Functional” job related as well as other trainings as deem fit.

Process Strategy

1. Product Focus Strategy  

Product focus strategy is followed at USC, as they are a manufacturing company who is

specialized in producing sugar with its all different types. Product focus strategy is used when

products are standardize, each product at USC is highly standardized to meet the comprehensive

specifications and quality control standards set by the company. The process is so detailed and

organized through documentations available for each employee at his specific field. It starts with

even sampling the row materials to make sure they adhere to the requirements of ISO 8213

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which is meant for “Chemical products for industrial use, sampling techniques: Solid chemical

products in the form of particles varying from powders to coarse lumps”. ISO, 1986

2. Product Focus Advantages

The company’s product line is narrow and allows for little customization only for B2B customers

and exports. Their process is always improved by team of engineering specialist to find the best

methods of optimizing the equipment to reduce sugar lost and environmental damage. The

standardization and extensive rules allow them to best meet their objectives of satisfying market

demands with competitive, global quality standards.    

Process Design

1. Sugar Refinery Process

The process is summarized in these main steps: raw sugar purchasing, melting,

carbonatation, De-colorisation, crystallisation, drying, recovery, and integrated quality control.

Raw Sugar Purchasing Department handles the planning, Organizing, Controlling of the Raw

Sugar to send them to the refinery where the process starts to refine sugar and make ready for

user consumption. The process is simplified in the following figure:

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Figure 1 sugar refinery process

After the sugar is refined, it moves to packaging the facility which its specifications and

requirement are set in product design phase. Last, if end products passes all safety inspections,

then it is ready for distribution or shipment.

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Process control

USC produces various types of sugar using its refinery. Operations are the responsibility

of the production section.  Development and installation of new processes, equipment, and

control are the responsibility of the maintenance and engineering section.  These improvements

and changes are documented through all stages by the engineering section under manufacturing.

Reference samples are collected at several steps of the manufacturing process to verify sound

processing technique. Samples are collected at regular intervals to verify sugar properties and to

update the process control procedures.  Batch samples are taken during packaging to test product

quality. Lots of samples are collected after packaging to verify product specifications.  Final in-

process testing is conducted after Packaging to ensure that the correct labeling is used and to

check against leakages or damages.  Finished product is not released to warehouse for

transportation until it has been certified as satisfying the product specifications.  

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Location & Layout Strategies

United Sugar Company’s refinery is the largest refinery in the Middle East. It produces

more than 3,400 MT of sugar per day. This refinery is located in Jeddah Islamic port. Often,

sugar refinery is located near the sugar cane fields. It is here that the raw sugar is separated from

the plant and shipped to a refinery. However, sugar can need to be continually irrigated by water,

and Saudi Arabia is located in a dry and hot region.  Therefore, Saudi Arabia imports the raw

sugar from the countries that planting sugar cane such as Australia and Brazil.

Administration Board of Savola Group chose Jeddah as a best location in Saudi Arabia

because Jeddah is located in the middle of the eastern coast of the Red Sea known as the Bride of

the Red Sea and is considered the economic and tourism capital of the country. Also, Jeddah is

the second largest city after Riyadh. Moreover, a huge ship is transferring raw sugar from

country to another. Therefore, Jeddah Islamic Port has been chosen to be the location of USC.

This location assist USC to save raw sugar transportation cost as they built a loge conveyer (a

length of 3 km) from the ship’s berth to the USC raw sugar warehouse.  Otherwise, USC will

rent dump truck to transport the sugar from port to their location. This process will be much

slower in feeding the raw sugar warehouse as well as it will cost the company a lot.  

In addition to the above, process of sugar purification consumes a lot amount of water,

and this water needs to be pumped continuously. Existence USC in Jeddah Islamic port assists it

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to use the seawater after desalination by using its own water desalination plant to provide

desalinated water to the refinery as well as the administration office. This idea (water

desalination plant) saves a lot of the expenses of the water provided by the Government.

Furthermore, USC owns its power plant. This power generator consume water as well and their

water is been provided by water desalination plant. Therefore, choose city of Jeddah practically

Jeddah Islamic port to be a place of establishment of the USC is correct decision and it has save

a lot of expenses on the company.

USC is located in Jeddah Islamic port in area of 122,000 m2. This area has five main

sections (See Figure 1).

1. Admin Building which include admin offices, HR, Sales, Purchasing and finance.

2. Utility area which power plant and water desalination plant.

3.  Refinery where sugar is crystallized.  

4. B2B packing area where pack 50Kg bags and above size is packed

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5. B2C packing area where pack 10Kg bags and less size is packed

Sugar is been transferred from place to another by belt conveyor until it reach packing

area. This section will select B2B backing area to illustrate how layout is utilized. B2B packing

area is divided into two areas: warehouse and packing area. In packing area, there are four

machines packed 50Kg bags and three machines packed 1,250 MT bags. Also, there are four

palletizers where pallets are arranged. As it illustrates in the B2B area below that the size of the

packing and the warehouse are almost same which mean the warehouse is too small to store raw

materials as well as the sugars’ bags. This warehouse is too small and sometime the company

forced to store in rent warehouse, which cost the company a lot.  Also, the layout shows that the

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packing area is not utilize well and most areas are empty. In addition to this, the transportation of

the forklifts (car transfers sugar bags) as show in the below layout (Random lines) are very

complex and need to be improved.

Regarding to the Operation Manager, that it is very costly to improve the layout of the area as

it needs to change the conveyors direction as well as it increases number of hopper (a container

for a bulk material such as grain, rock, or trash, typically one that tapers downward and is able to

discharge its contents at the bottom) and any improvement will affect the production and it will

cost the company millions of Dollars.

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Recommendations:

1. Utilize the space in the packing area to install rack system to increase the capacity of

storing.

2. Clarify clear direction to the forklifts to avoid accident and save the sugar bags from

damages.

3. Activate marketing channels such as TV or social media to remind customers for the

quality sugar and the USC brands.

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