GENERALITIES OF THE STUDY Over the last decade, the supply chain management has influence to business all over the globe. Purchasing is one function within supply chain which becomes the most important element to establish value-added products or services. The major aspect of purchasing is supplier selection. It is recognized that selecting appropriate supplier is one of the key success factors of a firm. Selecting the right supplier is always a difficult task for purchasing manager (Liu et al., 2005). Right suppliers selection can lead the company to success and achieve the objectives. On the contrary, wrong supplier selection can lead the company to financial problem. Therefore, purchasing departments need to emphasize about supplier performance evaluation which not only concern one criterion such as price, but also consider of multi criteria for evaluating suppliers in order to select the right supplier. 1.1 Background of the Study Nowadays, oil and gas industry plays a major role to driving the business in both local and global level. It provides energy and essential chemical for industry, homes and transport which is increasingly consumed by user every day. There are around fifty oil and gas companies located in Thailand and ten out of fifty are ABC Company’s customer. The ABC Company is one of the leading trading, stockist, sole distributor and engineering company who supply industrial process equipment of piping materials for instance pipeline, flanges and fitting. The company was established in May, 1998 with 100% Thai shareholder. The company caters the materials and supply to oil and gas industry in order to construct and maintenance for transmission pipeline project and shutdown plants. Figure 1.1: Piping Material of ABC Company Description Picture Pipeline Flange Fitting Source: ABC Company The company is growing gradually 4.42% in trading materials likewise the purchasing amount is also incessantly increased 11.87%. The increasing in purchasing is from the company committed to stock the material in order supply anytime when customer needed to fulfill the customer’s satisfaction. Table 1.1 shows the comparison of sales data and purchase data from 2012 to 2013 of the ABC Company. Table 1.1: Sale and Purchasing data of the ABC Company Year % Increase 2012 2013 Total Sales (Million THB) 747 780 4.42% (Approx. 33 Million THB) Total Purchasing (Million THB) 438 490 11.87% (Approx. 52 Million THB) Source: ABC Company During the year, the ABC Company has to purchase piping materials which compose of pipeline, flanges and fitting as the proportion shown in figure 1.2. Figure 1.2: Purchasing proportion of the ABC Company Source: ABC Company Source: ABC Company From figure 1.2, the amount purchase of ABC Company from year 2012 to 2013 of pipeline, flange and fitting are approximately equal 68%, 18% and 14% respectively.
Sales growing at a faster rate than cost of goods sold. Projected FY4 and FY5 also had projected sales growing faster than cost of goods sold. See graph for details (Derived from Exhibit 1).
While analyzing the data for The Body Shop International case, I noticed some trends and have compiled my assumptions for the next three years. I have compiled pro-forma statements for the fiscal years 2002, 2003 & 2004. These figures are based on the percentage of sales method for pro-forma financial modeling. Simply put, I used the sales figures from the past three years 1999, 2000 & 2001 and applied a growth rate of 13% increase to sales. Below are some additional assumptions that I have created to illustrate how the firm can become profitable while increasing market share and maintaining stockholder interest within the firm over the next three years.
The Riverbend Telephone Company is experiencing growth and had previously tried outsourcing some of its installation work to handle the overflow above its capacity. This was unsatisfactory, and so to accommodate the new customers, RTC needs to obtain a new maintenance truck and crew. It is considering whether leasing or buying the new truck necessary to their operations is the preferable method of investment.
The industry is divided into three distinct sectors including the upstream, midstream and downstream sectors. The upstream sector includes the exploration and production of crude oil as well as the exploration and production of natural gas. This sector has experienced the largest amount of deals in terms of mergers and acquisitions, which will be further discuss in section III. The midstream sector involves the transportation of extracted petroleum from the upstream sector through pipelines, rail, barge, truck as well as storage. Finally, the downstream sector connects the end consumers through derived products such as gasoline, liquefied natural gas (LPG), liquefied natural gas (LNG), kerosene (aircrafts), and diesel…
The business environment is increasingly becoming competitive and challenging. In the recent past, manufacturers have found themselves facing the threat of dwindling profit margins due to unfortunate global events such as the 2007 global financial crisis and the on going Europe economic crisis. The need to improve operation efficiency so as to ensure current and future investment yield the highest rate of return has therefore become extremely important. Manufacturers are now actively engaged in, managing their costs, Research and Development, adopting best procurement strategies, among other Actions. While such actions might eventually lead to positive results, additional business value can be achieved through proper management of the supply chain (Waymer, Ivanaj & Mussa 2009; Krivda 2004).
ADCOP – Abu Dhabi Crude Oil Pipeline Project." IPIC. N.p., 2014. Web. 13 May 2014.
The Oil & Gas Industry within the Energy Sector includes Oil and Gas exploration and Production, Oil and Gas Refining, Storage and Transportation. The three major focus areas of the oil and gas industry is firstly; exploration and production of oil and natural gas known as the “upstream”, secondly; transportation, storage, and selling refined oil and gas products called the “midstream’, and thirdly; refining and promoting of crude oil or “downstream”. The major international oil and gas companies (Exxon Mobil, Conoco Phillips, Chevron, Royal Dutch Shell, British Petroleum and Total S.A.) also known as “supermajors” are vertically integrated which means they are involved in all aspects of the upstream, midstream, and downstream activities. All the “supermajors” have around a 6% of global oil and gas reserves and market capitalization of approximately $100 billion or greater (Supermajor Companies). Saudi Aramco is the largest Oil and Gas Company in the entire industry. As Oil and Gas being scarce non-renewable natural resources and massive demand on the planet, yielding profits for oil and gas companies.
Since mid-90, technology changed procedures for evaluating supplier’s relationships. Before technology, Suppliers relationships used to be an isolated activity disconnected from others companies’ activities highly influenced by conflict of interest. But when technology started to provide accurate data, companies begin the focus on inventory management activities increasing the importance of procurements departments’ evaluation as a way to reduce supply chain cost. With data, procurement can evaluate suppliers and their benefits for the company. In today business environment, the company dilemma is evaluating if the supply chain should be vertical, full outsourced of mix, considering industry maturity impact and price competition (Chopra & Meindl, 2007; Slack & Lewis, 2011).
The inventory turnover is almost half compared to the industry average, although it managed to increase by 0.3 compared to 2002. The company needs to maintain a constant cost of goods sold and at the same time manage inventory more efficiently to maintain market competitiveness. The average collection period also increased slightly to 58 days, three days increase compared to 2002. The company needs to negotiate or persuade on efficient payment methods to customers to decrease the collection period down to industry average. The total asset turnover increased 0.1 to 1.6 but still failing to meet the industry standard of 2.0. Martin Manufacturing needs to boost sales while maintaining a constant asset value to meet or exceed industry standards.
Russel Y., Topper S., Akerman L., Oliveira J., Strydom Z.; 2013; Studying Business NSC Business Studies Grade 12; 2013 Edition; Paardekraal; Excom Publishers; 26/05/2014
• Pipeline: pipeline transports unrefined petroleum and characteristic gas from oil fields to refineries and afterward to the core of the dial.
...he flow to pass through the pipes. There are different types of the valves with different sizes, and each valve has several features that make suitable for different process. The most important feature is the efficiency.
As pointed by Parsons A.L (2002), there was increasing dependent on the relationship and customers is demanding to receive high standard of products and services for them to sustain the business in the intense manufacturing environment. Besides, Xu et al. (2008) has highlighted that supplier is developing a long-term relationship with their crucial suppliers to increase the competitiveness and to establish an effective and efficient supply chain. Trend (2005) also mentioned that work closely in partnership with suppliers is the only way to survive in today’s competitive business environment.
It is inside of the human beings nature to trade with each other since their apparition there are million of years. From the middle age to nowadays societies, the use of the currency as mean of trade become popular among societies and more people were able to establish commerce of different articles. Having Decided to open a small ice cream stand on campus called “Ice-Campused” to apply my business and economical skill I noticed that there are days where ice creams remain unsold but other days where there are not enough ice creams for the number of customers. Knowing that Fluctuating Demand corresponds to the demand in the commerce sector, which rises and falls sharply in response to changing economic conditions and consumer spending patterns there are several factors, which cause the shifts in demand.
The key performance drivers of Supply Chain Management (SCM) are - facility effectiveness, inventory effectiveness, transportation effectiveness, information effectiveness, sourcing effectiveness, pricing effectiveness, delivery effectiveness, quality effectiveness and service effectiveness. These drivers include various performance markers that may be measured quantitatively by gathering information and applying them in SPSS. The works here may principally be quantitative with spellbinding measurable investigation. In the current world, practical supply chain management to help the triple primary concern, (nature, domain, and economy) is likewise included in the extent of supply chain performance drivers. This is relatively a quite new research region.