Aramco Supply Chain Managment
Table of Contents
Page Number
Introduction 3
Background of the Company 8
The Dilemma in Saudi Aramco Supply Chain Management 10
Analysis of the operation of the Company’s Supply Chain Management 12
Conclusion 16
References 17
Introduction:
Several company managers are continuously searching for the best possible way of reducing cost and utilizing their inventories so that the company can implement cost reduction strategy. With all prices of prime commodities are accelerating for increases to maintain the business, the challenge for manufacturing companies nowadays is to come up with a management strategy that could lessen the burden of imposing additional prices to the consumer’s purchases. Yet seemingly, it seems impossible to achieve due to the domino effect in the market offering. Starting from the raw materials to the manufacturing plant then to the manufacturing plant to its distribution centers and from the distribution centers to the consumers, the process entails expenditures either from the supplier or from the manufacturing plant. Once transporting raw materials is affected by the movement in the prices of gasoline and oil, salary increases of its work force and additional price for the vehicle’s spare parts suppliers cannot but face the reality that they must charge additional cost to their buyers. So goes the trend. The usual thinking about a supply chain is a vertical flow of the entire materials for production that is fully integrated because it is owned by a single firm although its channels are operating independently. Hence, an efficient coordination among the managers of its channels is demanded for the success of the supply chain. However, a supply chain need not only be limited to a single ownership of the entire process. By its definition, according to the paper of B.B. Arntzen, G. G. Brown, T. P. Harrison, and L. Trafton
Page Number
Introduction 3
Background of the Company 8
The Dilemma in Saudi Aramco Supply Chain Management 10
Analysis of the operation of the Company’s Supply Chain Management 12
Conclusion 16
References 17
Introduction:
Several company managers are continuously searching for the best possible way of reducing cost and utilizing their inventories so that the company can implement cost reduction strategy. With all prices of prime commodities are accelerating for increases to maintain the business, the challenge for manufacturing companies nowadays is to come up with a management strategy that could lessen the burden of imposing additional prices to the consumer’s purchases. Yet seemingly, it seems impossible to achieve due to the domino effect in the market offering. Starting from the raw materials to the manufacturing plant then to the manufacturing plant to its distribution centers and from the distribution centers to the consumers, the process entails expenditures either from the supplier or from the manufacturing plant. Once transporting raw materials is affected by the movement in the prices of gasoline and oil, salary increases of its work force and additional price for the vehicle’s spare parts suppliers cannot but face the reality that they must charge additional cost to their buyers. So goes the trend. The usual thinking about a supply chain is a vertical flow of the entire materials for production that is fully integrated because it is owned by a single firm although its channels are operating independently. Hence, an efficient coordination among the managers of its channels is demanded for the success of the supply chain. However, a supply chain need not only be limited to a single ownership of the entire process. By its definition, according to the paper of B.B. Arntzen, G. G. Brown, T. P. Harrison, and L. Trafton
References: Al-Naimi, A. I. (2002) Saudi Arabia 's Minister of Petroleum and Mineral Resources, Washington, D.C., April 22. http://www.saudiaramco.com/html/speeches (access June 5, 2009) Al-Naimi, A Expanding Energy Frontiers - The Institute of Energy Economics of Japan, Osaka, Japan http://www.saudiaramco.com/html/speeches (access June 5, 2009) Arntzen, B Ballou, R. H. (1992) Business Logistics Management, 3rd Edition, Prentice Hall, Englewood Cliffs, NJ, p. 21 - 23 Cohen, M Cooper, M. C., and L. M. Ellram (1993) Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy. The International Journal of Logistics Management, No. 23 pp. 4, 2, 13-24. Jum 'ah, A. S. (2002) President and CEO Saudi Aramco, Calgary, Canada, June 11. http://www.saudiaramco.com/html/speeches (access June 5, 2009) Lee, H Lee, H. L., and C. Billington (1993) Material Management in Decentralized Supply Chains, Operations Research, No. 41 pp. 35-47 Masters, J Thajudeen, S.M. (2009) Foster Wheeler Group of Companies Middle East Region, Al Khobar, Saudi Arabia, February 15. http://www.saudiaramco.com.sa/homepage/projects (access June 5, 2009)