- Saudi Aramco building a world-class supply chain
- It will result in a diverse, sustainable and globally competitive energy sector
- The seeds are being sown for a thriving industrial ecosystem
Iktva: The five letters transforming the economic landscape of a nation
The In-Kingdom Total Value Add (iktva) program has been a story of tangible, incremental success and is a cornerstone of Saudi Aramco’s strategic intent.
It was in 2015 that Saudi Aramco launched a program that would take the lead in localization and spur new opportunities for a youthful and skilled workforce.
The In-Kingdom Total Value Add (iktva) program has been a story of tangible, incremental success and is a cornerstone of Saudi Aramco's strategic intent.
The stated intent of the iktva program is to localize 70% of the company's supply chain's content by 2021, while raising energy related exports to 30%, in the process of creating thousands of jobs for young Saudis.
Over the next decade, the projected spend for Saudi Aramco is in the region of SR 1.5 trillion.
Fast forward to the present day and the company has already reached a 52% iktva score, and the results are plain to see:
Since 2015, our suppliers have doubled their local spend on materials and services, dramatically increased their spend on Saudi workforce by 60%, and the training and development of Saudis has increased fourfold.
Closing supply chain gaps
There are more than 100 iktva action plans being executed covering multiple services and commodities such as oilfield services, construction, pumps, turbines, and chemicals.
"While creating quality jobs, building a well-trained workforce and stimulating economic growth are key objectives, localization is ultimately about sustainability," Al Shammary said.
In tandem, the company is driving local investment through closing supply chain gaps creating over 140 investments opportunities, which attracted more than 460 investments with an estimated capital expenditure of $6.5 billion.
The iktva program has also seen Saudi Aramco partner with entities such as the Saudi Industrial Development Fund, the Saudi Arabian General Investment Authority, MODON, the Local Content and Government Procurement Authority, Monshaat, the General Authority for Statistics, the Export Authority, and the Royal Commission to share best practices and achieve success in localization.
"Saudi Aramco also has a keen eye on emerging technologies. Digital transformation and the exploration of the potential of nonmetallic materials in the field are very much at the heart of the company's strategy." Al Shammary says.
"Saudi Aramco also has a keen eye on emerging technologies. Digital transformation and the exploration of the potential of nonmetallic materials in the field are very much at the heart of the company’s strategy."
Mohammed A. Al Shammary, Saudi Aramco’s vice president of Procurement and Supply Chain Management
Additionally, Saudi Aramco is developing the King Salman Energy Park (SPARK) — an energy industry hub and city that will help Saudi Aramco and other major companies in the Kingdom to localize their supply chains and allow for a continued increase its local procurement.
Central to all of this is equipping the workforce with the relevant skills to deliver the new economy.
Thousands of students are undergoing vocational training in 19 academies in 10 cities Kingdomwide.
Saudi Aramco is working with 60 stakeholders to ensure that vocational training keeps pace with industry demands.
Empowering women
The company has spearheaded the startup of the Leading National Academy, the first female vocational training academy in the Kingdom, which is seen as a sign of the commitment to empowering women who want to play an active role in the local workforce.
All of this stands as evidence that the iktva program is delivering tangible progress within an economic ecosystem created to meet the needs of suppliers and investors.
To showcase the opportunities offered by iktva, Saudi Aramco hosts an annual event that attracts businesses of all types to the Dammam Expo.
Last year, over two days, the iktva Forum and Exhibition drew together more than 4,000 participants representing 1,000 companies from 40 countries.
Local and international investors also attended a full program of panel discussions, seminars, workshops, and exhibits.
Mohammed A. Al Shammary, Saudi Aramco's vice president of Procurement and Supply Chain Management (P&SCM), says the ultimate goal of the iktva program is to fuel a sustainable Saudi economy and equip it for a bright future.
“While creating quality jobs, building a well-trained workforce and stimulating economic growth are key objectives, localization is ultimately about sustainability,” said Al Shammary. “Sourcing Saudi Aramco's value chain in our own backyard is a strategic move for greater integration and agility, with business benefits that dramatically multiply our contribution to the Kingdom's long-term prosperity, in addition to being a win for our global suppliers, subject matter experts, manufacturers, and service providers.