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Supply chain management

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Supply chain management is a basic concept in the broad business management concepts. The broad arena of business management seeks to analyze and synthesize the most adaptable methods of business operations, which would yield the most appropriate and efficient manner. Generally, supply chain management are the tools, methods, systems and processes that are used to provide the most adequate and efficient methods of production and distribution of firm products in the various processes in a business activity.

Product/service output forms a basic part in most of the business processes. Indeed, every activity in supply chain management should be aimed at creating efficiencies through optimal costing and maximization of output. The costing system involved in a supply chain should be adequately controlled to incorporate the least cost possible above using the most efficient means and modes that creates efficiency in space, operational tools and structures as well as the human resource capital used in supplying process. (Aqrawal, 2001)

            For the Industrial Chemicals and Specialty Chemicals divisions, various tools define the scope of its supply chain management. However, the company has a compound of various tools worth to be recommended in the management of its supply chain, which are both a compound of various transport tools as well as physical placement of permanent structures.

            Economically, establishment of the facility would create a high economic impact to the Northeast region. This is due to the economic empowerment and the inter-corporate economies which would be created. Firstly, without the facility, the existing two competitors would suffer a declining market share of 5% per year for the next five years before recouping up.

However, the entrance of the facility world create various economies in the region where the market share would get to increase by 10- 15% in each year for the first three years before dropping to 5-8% within the following two years. Economically, the project would draw up various economic benefits to the region through the changing competition structure operating within the three competitors. (Cook, Dabree, Ferole, 2001)

            However, the physical placement of the facility accompanied by the transport and infrastructure network remains an important tool in analyzing the most adequate structure, which would provide a profitable operational system. Otherwise, unoptimal and poor system would only provide inadequate tool for profitable functionality.

            The implication of an adequate data is highly important in defining the scope with which the adequacy of the facility would be. Generally, the economic implication of the currently existing competitors is an important phenomenon in defining the scope of the game theory and the pattern of success or failure in the market.

This data would comprise of the total output for the competitors above the operational costs, which are involved in their production process. Since market share for the incoming facility would be defined in terms of the production/ market share of the already existing competitors. Economically, this is due to the positive economies on demand that the state of the total market demand which is assumed to be constant, would always reduce proportionately for the two competitors when the facility is built. (Cook, Dabree, Ferole, 2001)

            The location strategy for the facility captures various variables in regard to the transportation costs. From the former analysis done about the project, both operational costs as well as transport costs would imply market losses in the market revenue with the same cost out weighing the possible inflows from the sales. However, adequate management in the supply chain would provide an environment for profitable revenues which would provide a standard base for authenticity in the implementation of the facility. (Cook, Dabree, Ferole, 2001)

Perhaps however, a basic placement of this facility at eastern PA is the most potential geographical position, which would create market economies in its supply chain management. The location is described as been at a juncture of some three interstate highways, which adequately serve the location. Elsewhere, the same location has two railroads which are described as serving the city. At the location, it is a basic link to three highly populated areas, which can therefore serve as a good market for the production.

Generally, therefore location of the facility at eastern PA would provide an adequate placement for the highest consumption/sales of the products. Since various transportation methods would imply various cost/benefit implications, a combination of shipments and railway would perhaps provide a combination of the most cost efficient methods of supply chain management. Since the location would be an inland, the chemical would cost effectively be transported from the facility through tank truck or/and a sea going ship barge whose cost is slightly higher than that of a sea going ship.

The description of the location is provided as having two major railroads. Since rail is slightly cheaper than trucking of the product to the facility on the land, the inflow of the product to the facility center can therefore be done through rail at the expense of the trucks. Either shipping of the products by truck from the Charleston, SC would substantially be uneconomical due to relative cost of using trucking. This would formulate a cost inefficient location at Charleston SC. However, the geographical location of eastern PA, which is served by a dense network of railway system above the availability of sea going ship perhaps, provides the most authentic tool for this vocational adequacy. (Aqrawal, 2001)

Therefore, shipment of the product from the eastern PA to northeast would thus provide the most adequate tool for efficient costing factor. Generally, since the facility is liquid chemical, this facility is perhaps the most adequate one for such a product. Globally, liquid chemical are adequately transported across the sea using sea-going ships. On the land, railway transport system has provided the most cost efficiency method of transportation for such a product.

            However, the validity in the choice of the facility placement depends on the facilitation process availed by the facility cost. Firstly, an adequate estimation of the construction and placement cost for this new facility is highly important. However, the correct estimate of the facility would concur with the capacity and the size of the facility in relation to the other existing facilities. However, the correct facility’s cost should be used in estimating the cost of this facility, which is duly to be set up. Since construction and set up cost of one or more structure would be equal / almost equal to those that exists currently, such costs incurred in constructing the already existing facility should be used in estimating such new facilities. (Aqrawal, 2001)

The cost of the real estate is equally estimated from the size and capacity, which would be held by the facility. A fair and trial comparison with the cost of the already existing company real estates should be used in estimating the active/approximated cost of the real estate for developing the facility. Either, since the cost of operation both fixed and variable would largely be comparable at a close perspective to the already existing facility, the cost variable used as operating costs for the same new facility should be shadow prices to what is spend in the already operational facilities. (Aqrawal, 2001)

Summarily therefore, establishment of this facility is largely an important concept in sphere heading the economic potentiality of this region where its establishment would even create an increasing market share. Therefore, its establishment would largely be economical. However, a concise study and analysis of its system of supply chain remain highly important in defining its profitability index


Aqrawal, M, & Pak, M, (2001) Getting Smart about Supply Chain Management. The Mickinsey Quarterly

Cook, J, Dabree, K, & Ferole, A (2001) From Raw Material to Customer: Supply Chain Management in the Service industry. SAM Advanced  Management Journal, Vol. 66

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