A new report from management consultancy Arthur D. Little warns that rising product portfolio complexity is quietly eroding profitability in the manufacturing sector, constraining digital growth, and limiting operational flexibility.

The study, Rise of Complexity in Manufacturing, highlights that companies must take decisive action to simplify their offerings and leverage modularisation to stay competitive.

“Unchecked complexity is a silent profitability killer,” the report states. “With resources limited and markets increasingly commoditised, companies must reduce product portfolio complexity to drive profitability and innovation.”

Manufacturers often expand product variants to meet customer demand, but without systematic portfolio pruning, these efforts generate hidden costs. Non-customer-facing complexity such as outdated products, excessive SKUs, and intricate internal processes can slow development, reduce scalability, and impede time to market.

The report identifies four key challenges for manufacturers: maintaining profitability amid market commoditisation, differentiating through digital solutions, ensuring supply chain resilience, and balancing legacy systems with emerging technologies such as new materials, battery-powered engines, or alternative fuels.

Arthur D. Little recommends a data-driven approach to complexity, starting with measuring the cost of complexity (CoC) across product lines and functions. A monetary proxy for CoC can capture inefficiencies in development, manufacturing, warehousing, and support, helping firms identify underperforming products for phaseout.

Strategic modularisation is highlighted as a crucial tool for managing complexity. By designing standardised, interchangeable product modules, manufacturers can simplify portfolios, accelerate time to market, and reduce costs while enabling cost-effective customisation.

The report cites Electrolux, which cut component numbers by 40% and reduced development time by 30% through modular design, and Siemens, which applied modularity to its industrial automation systems, reducing design time by 40% and improving scalability.

Arthur D. Little stresses that complexity reduction requires more than technical solutions: it demands cross-functional coordination, strong governance, and a cultural shift away from short-term gains. Companies must embed modular principles in product development, eliminate low-performing products, and ensure that both hardware and software systems are designed with simplicity in mind.

“Reducing product portfolio complexity is not a technical fix — it is a strategic transformation,” the report concludes. “By making complexity measurable, pruning underperforming products, and embedding modular design, manufacturers can release trapped value, improve speed to market, and build more resilient operations.”

The consultancy urges manufacturers to act decisively now, turning awareness of complexity into structured strategies for long-term profitability and innovation.

Achilles Information Ltd has signed a Memorandum of Understanding (MoU) with the Ministry of Industry and Mineral Resources, marking a key step in supporting Saudi Arabia’s industrial sustainability goals.

The agreement, signed in the presence of senior government and industry representatives, establishes a partnership via a newly formed non-governmental organisation, SIDAM, to conduct ESG and sustainability assessments across the Kingdom’s manufacturing sector. Dr. Ahmed Alshehri signed on behalf of SIDAM, while Katie Ferrier represented Achilles.

Achilles was selected from an initial shortlist of ten organisations for its global expertise in supply chain risk, ESG performance, and sustainability assurance. The collaboration is designed to help Saudi factories strengthen ESG practices, improve transparency, and align sustainability performance with national industrial objectives, contributing to broader efforts to enhance the competitiveness and resilience of the manufacturing sector under Vision 2030.

“This MoU reflects growing recognition that ESG performance and supply chain transparency are now fundamental to industrial competitiveness,” said Katie Ferrier, regional director UKI & MEA at Achilles. “We are proud to support this initiative and to contribute our global experience to Saudi Arabia’s manufacturing ecosystem.”

The partnership gives Achilles a platform to support responsible growth across the Kingdom’s industrial base and promotes regional collaboration on sustainability standards. It comes amid increasing momentum across the Middle East for ESG-driven industrial development, with governments and manufacturers prioritising data-led approaches to sustainability, risk management, and supplier assurance.

Seagull, a UAE-born pioneer in HVAC solutions, has strengthened its industrial footprint with the launch of a new manufacturing facility in the Ras Al Khaimah Economic Zone (RAKEZ).

The company has established its manufacturing unit in RAKEZ’s Al Ghail Industrial Zone with a total investment of AED15mn. Covering an area of 17,045 sq m, the facility comprises a pre-built manufacturing plant designed to enhance operational efficiency while prioritising workforce wellbeing. The plant is now fully operational, with further enhancements underway to position it as a benchmark for world-class manufacturing workplaces.

The new facility has a monthly production capacity of 50,000 sq m of GI coils and will supply key regional markets, including the UAE, KSA, Oman, and Qatar. Seagull currently employs 180 people, with plans to increase its workforce to 300 by mid-2026 as output expands and additional product lines are rolled out.

The development represents the next phase of Seagull’s growth strategy in Ras Al Khaimah. Looking ahead, the company plans to double its factory floor space and expand staff accommodation facilities by 2026 to support rising demand.

Commenting on the expansion, Seagull CFO Taimor Khan said, “Ras Al Khaimah has proven to be a highly strategic base for our operations, offering a cost-effective and growth-oriented environment. RAKEZ team’s professionalism and guidance were instrumental in facilitating our expansion; providing clarity, efficiency, and access to the ideal infrastructure. Their support throughout every stage, from planning to full operational launch, ensured a smooth and successful establishment in the emirate.”

RAKEZ Group CEO Ramy Jallad added, “We are delighted to see Seagull deepen its roots in Ras Al Khaimah with its new facility. Their expansion underscores the growing confidence that industry leaders have in the emirate’s strong industrial ecosystem and business-friendly environment. At RAKEZ, we remain focused on empowering such ambitions with world-class infrastructure, streamlined processes, and long-term partnerships to help them thrive and scale across regional and global markets.”

Through this expansion, Seagull aims to strengthen the UAE’s HVAC manufacturing capabilities while contributing to Ras Al Khaimah’s rapidly developing industrial ecosystem.

Emirates Global Aluminium (EGA), the world’s largest producer of premium aluminium, and Sunstone, the world’s largest independent pre-baked anode producer, have announced that construction of a new anode manufacturing plant in the UAE will commence in 2026.

The facility will have an annual production capacity of 300,000 tonnes of anodes, marking a significant step towards the UAE’s industrial ambitions under the Make it in the Emirates and Operation 300bn strategies. Once operational, the plant will replace the majority of EGA’s current anode imports and position the UAE among a select group of countries capable of exporting anodes globally. First anode production is anticipated as early as 2028.

EGA and Sunstone formalised the project through a Joint Venture Agreement, with EGA holding a 45 per cent stake and Sunstone 55 per cent. The partners plan to invest approximately US$300 million, proportionate to their respective shareholdings, to develop the new plant. Sunstone will be responsible for building the facility on behalf of the joint venture, with EGA acting as a financial investor and off-taker.

New UAE facility

Anodes are a critical input in aluminium smelting. EGA currently produces around 1.35 million tonnes of anodes annually at its Jebel Ali and Al Taweelah plants, with the remainder of its requirements sourced through imports. The new UAE-based facility will significantly strengthen EGA’s long-term security of supply while supporting domestic industrial growth and export potential.

Abdulnasser Bin Kalban, Chief Executive Officer of EGA, said, “This project creates additional export opportunities for the UAE, further increases EGA’s local procurement and our contribution to UAE economic growth, and supports EGA’s long-term security of anode supply. We are pleased to partner with Sunstone, combining our decades of anode manufacturing experience to establish their first plant outside China in the UAE. This project is Make it in the Emirates and Operation 300bn in action – leveraging UAE industrial demand to build new manufacturing in the UAE to meet local needs and expand exports.”

Lang Guanghui, Chairman of Sunstone, added, “We are honoured to establish our first overseas foothold in the UAE and partner with a benchmark enterprise like EGA, which carries half a century of industry heritage and a mission to shape the future of aluminium. This collaboration represents a substantive move by both parties to respond to the green transformation of global manufacturing. We will go all out to set new benchmarks in efficiency and lay a solid foundation for future sustainable operations.”

EGA and Sunstone have been collaborating through a series of early-stage agreements during project development, most recently signing a joint development agreement at the Make it in the Emirates Forum in May 2025, underscoring their commitment to advancing the UAE’s industrial and export capabilities.