Logistics and Supply Chain Management Project Proposal The case of The OCP Group By: Omar El Fezghari Aawatif Mounkid Asmae Guemrani Nassima Ait Benichou Hajar Boutaleb Supervised by: Dr. Yassine Benrqya As the Group is exposed to fluctuating prices of phosphate-based fertilizer and other phosphate-based products as well as to seasonality, which may result in excess inventory or product shortages. The wholesalers and distributors, who typically have significant storage capacity change inventory levels to account for seasonal variations, local demand levels and can take advantage of low market prices (OCP S.A). If seasonal demand is less than the Group's projections, the Group may be left with excess inventory and higher working capital and liquidity requirements. The degree of seasonality of the Group's business can change significantly from year-to-year due to conditions affecting the agricultural sector and other factors, including changes in purchasing and import timing, which can vary depending on importers' and consumers' purchasing behavior. Differences in seasonal demand from the Group's projections could impact the Group's capacity to deal with the increased demand or result in product shortages, and therefore could have a material adverse effect on the Group's business, results of operations and financial condition. Therefore, the Group opted for changing the levels of inventory as a strategy to account for fluctuations with respect to the maximum capacity. Another factor that has an impact on the levels of demand and consequently on the strategy of inventory adopted by the Group is Agricultural crop prices and their effect on the ability of farmers to purchase fertilizers that driven by a tighter global supply and demand balance in grains markets (OCP S.A). The most significant components that compose the largest portion of the cost Included in the cost of the inventory of raw materials and purchases consumed of the Group is represented in Ammonia, Sulphur and energy. Inventories are measured at the lower of cost and net realizable value. The cost of inventories is determined according to the weighted average cost method (OCP S.A). It comprises the costs of purchase, production, conversion and other costs incurred in bringing the inventories to their present location and condition. For manufactured inventories and work-in-progress, the cost includes an appropriate share of the overheads based on normal production capacity. Forecasting is one of the important fields that ceased to exist as it provides us with a vast amount of future knowledge. For the case of the OCP group, one of their main activities is fertilizer production, and it constitutes 23% of their market share, and back in 2018 it cemented its position as a market leader with its exports of all three segments: phosphate rock, phosphoric acid, and phosphate fertilizers. Forecasting is very important when it concerns fertilizers. The information it provides is crucial in order to support crop production in the future, to both public and private enterprises. The choice of forecasting that needs to be used is usually an intense process, since fertilizer demand is not stable and depends on a myriad of factors. Thus, the prediction might be inaccurate. That is why the choice of a forecasting method is really important (Tenkorang, 2009). Fertilizer forecasting can be divided into three stages complementary to each other: assessment of potential, forecast of demand and forecast of sales. To the government the first two stages are significant. To marketing organizations, the second and third stages are relevant. The most common models are time series models where the forecast is based on past observations and historical data of the variable being forecasted. We are relying on a specific assumption while using this model, and it is that the future is a continuation of the past. Causal models such as simple regression is also used when we want to estimate specific changes and at the same time forecast the demand. Basically, it seeks to establish a cause-and-effect relationship between the fertilizer demand and another independent variable. ASMAEEE The OCP group is a big company, and all the main activities are achieved within the organization. However, it may use outsourcing as a strategy to accord less focus on simple tasks to focus more on its main business activities. In terms of outsourcing, OCP used this strategy for different activities including equipment maintenance, the pension fund, cleaning and others. Moreover, it took a following step in order to focus on the strategic businesses through outsourcing the transport of personnel in the Safi production site, which is considered one of the its most important sites. An important goal for all companies is to optimize their supply chain performance. To do so, it is necessary to reach excellence in operations management in all echelons of the supply chain: procurement, inventory management, production, and transportation optimization. For that purpose, Office Chérifien des phosphates (Groupe OCP) defines a set of Key Performance Indicators to maintain a continuous assessment for its logistics performance. Pursuing these measures allows a better control of the company’s supply chain. OCP supply chain consultant’s team intervenes on all echelons of the supply chain starting from setting strategies to applications. Also, they intervene on the product life cycle with its different steps such as designing, maintenance, recycling, etc (OCP Groupe, Supply Chain & Logistics | OCP Solutions). For the production side, the company has four industrial facilities revealed in mining sites. OCP maintains a sustainable plan that aims at improving the efficiency of the mining process and minimizing the costs needed for energy and resources. The drivers are mainly related to the percentage of OCP’s share in the world phosphate market, and the quantity of phosphate rocks produced each year (OCP Groupe, Opérations Industrielles). As another metric to assess production, the company perform an analysis of production options so as to improve the business flexibility and minimize costs (OCP Groupe, Supply Chain & Logistics | OCP Solutions). For inventory and transportation, OCP refers to a cost optimization plan, updated based on recent data, while keeping the capacity constraints on mind. The plan includes all echelons included in the process starting from procurement until finishing the product (OCP Groupe, Opérations Industrielles). To avoid uncertainties and surprises in supply chain flow, the company keeps always a “What if” scenario. The usefulness of this step is to predict changes happening in market due to anomalies and world conditions. OCP also keeps in mind the competitive market it is in, and for that reason, a competition analysis is always established to maximize profits compared to competitors. This is an OTIF (On Time In Full) analytical strategy (OCP Groupe, Opérations Industrielles).. Reference: OCP S.A. (n.d.). Retrieved October 19, 2022, from https://ocpsiteprodsa.blob.core.windows.net/media/2021-06/OCP%20Preliminary%20Prospectus%20notes%202031-2051.pdf Tenkorang, F., & Lowenberg-DeBoer, J. (2009). Forecasting long-term global fertilizer demand. Nutrient cycling in agroecosystems, 83(3), 233-247. Supply Chain & Logistics | OCP Solutions (no date). Available at: https://www.ocpsolutions.ma/en/metiers-ocp-solutions/supply-chain-logistics-en (Accessed: October 19, 2022). Opérations Industrielles (no date) OCP Group. https://www.ocpgroup.ma/fr/op%C3%A9rations-industrielles Available (Accessed: October 2022). https://www.fao.org/3/t4240e/T4240E01.htm https://www.challenge.ma/locp-franchit-un-nouveau-pas-dans-sa-politique-dexternalisation70591/ at: 19,
