Effect of Supply Chain Compromise on Chemtech

This study discusses the effect of supply chain compromise on Chemtech, a distributor and importer in the Indian Ocean. It assesses the impact of shortage of key materials, loss of a key distribution site, and the strategic implications of losing key suppliers and customers. Suggestions are provided to mitigate the negative impacts on the business operations.

SUPPLY CHAIN COMPROMISE

Table of Contents
Introduction 3
a) Assess what would be the effect on the whole supply chain of shortage of a key
material. 3
b) Describe the effect of the loss of a key distribution site for the organization. 3
c. Analyse how the loss of a key supplier and a key customer could have strategic
implications 4
d) Make suggestions on how to mitigate the negative impacts on the operations of the
business. 5
Conclusion 5
Reference 6

Introduction
Chemical and Technical Suppliers also known as Chemtech is a distributor and
importer in Indian ocean and is serving Mauritius, Madagascar and Seychelles
(Chemtech.mu, 2019). The company mainly deals in business such as medical
division, customer product and the automobile vehicle parts. The company has a good
reputation in the customer service industry and a strong customer base has been
created by the organization. However, it is important for the organization to have a
broad sense of supply chain management activity as it requires a lot of activity
ranging from planning to control to supply of product. In this study the loss of supply
chain management and its improper working will be discussed that can have long-
term effect to the organization.
a) Assess what would be the effect on the whole supply chain of shortage of a key
material.
It is important to design the network of supply chain effectively especially with the
key component or materials that plays a key role for the success of the organization.
Chemtech is a distributor and importer various automotive parts and the company has
build huge reputation in the medical division as well. Thus, the loss of any important
material may lead to huge disruption in the working performance of the organization.
Moreover, no proper structure can be designed for the transfer of material from one
stage to another in a strategic manner but it is important to analyze the various ways
so that the matter of shortage of material does not arise which can have short term
effect to the organization (O’connor et al. 2016). The demand of raw materials is ever
growing in an organization with continuous development and the emergence of new
technology; growth of population has increased the demand of the product. Therefore,
with the imbalance of supply and demand the business management can have various
effect in the working and the performance of the organization. As Chemtech is
involved in various business field from medicine to automotive parts, it is important
to have a regular supply of the article in the business so that the company can run
smoothly. Retamal (2017) states that various challenges are faced by an organization
in terms of financial instability, scarcity effect and the long-term competitive
advantage in case of shortage of raw materials.

b) Describe the effect of the loss of a key distribution site for the organization.
The company gets an order in Mauritius to supply product and have the advance
money, but due to some reason, they need to shift their place from Mauritius to
Madagascar (Bowie et al. 2016). The company will not only suffer from a huge loss
but also their goodwill or reputation will suffer in the market and which their
product’s demand will be reduced and the entire market of Mauritius will be closed.
There are many reasons for the downfall of any company. It is not reliable for the
company to suffer from huge loss by shifting their place from one to another. They
will suffer from various other problems, firstly they suffer from establishment that the
company has created over the years and secondly they will need to create demand in
other place where they are shifting their organization. For this they need money and
they will not be able to pay that huge amount (Hugos, 2018). Any particular company
like Chemtech can create their goodwill or reputation by the supply of best product or
those products that the consumer really wants on their terms or condition. Due to the
lack of place if the company will not be able to supply then the consumer need to shift
their wants to the other substitute product. Those are not good because they will not
be happy with that product due to the substitute product. Therefore, by shifting or lack
of place, not only the company will suffer but also the consumer will also suffer.
Company suffers from loss and consumers suffer from substitute goods and the result
will prove dangerous for the organization as the company will get closed in the
market (Gabriel and Lang, 2015).
When a company shifted his place of production like Chemtech, then not only this
company suffers but also the customers as well as the suppliers suffer from a huge
loss. As this company is deals in three sectors which are Medical Division, Consumer
Products as well as Automotive Parts. We can analyze that the company manufacture
the products in bulk or in large amount. Therefore, if the company will suffer from
loss then the amount will be huge. Along with this, the other shops of the small-scale
business who are connected with this Chemtech will also suffer from loss.
c. Analyse how the loss of a key supplier and a key customer could have strategic
implications
Managing relationship with supplier is highly essential for a company as it enables to
interact with third part vendors. Selecting an efficient suppliers can be cost efficient

step for the company and it increases the relationship value. Losing a key supplier
have strategic impact because the company fails to achieve competitive advantage and
thereby sustaining for long-term period does not become possible (Cheverton, 2015).
Besides, suppliers have huge impact on the process of company as it enables to drive
revenue that cannot be ignored to maintain long-term sustainability. Along with this,
the other shops of the small-scale business who are connected with this Chemtech will
also suffer from loss.
Chemtech makes sure to import and distribute the goods to the customers they need to
exchange their hands that are called middle man. If the company shifts their company,
it does not mean that the shops will also shifts. The ultimate result will be they suffer
from loss along with this they will lose their customers as well. They need to start
their occupation from the beginning that is next to impossible for them (Rosyidi et al.
2017).
With the shifting of the company, many internal as well as external will also get
hampered. The public will hamper because they will not get their regular product but
somehow they can manage with the substitutes but the internal customer will suffers a
lot. The company can remunerate themselves with the other place’s company or some
other sector that are medical or automotive. In this case, the internal candidates will
lose their jobs, now they will start to find a new work, and again they will have to
adjust themselves in that new company which they will go to join. However, the
problem is their starting salaries will not that much which they get in Chemtech. This
can affect the key customers as their demands and requirement may not get fulfilled
and in retirn they will shift their preference to other companies. (Wang et al. 2018).
Indeed loosing key customers can have negative implication as customer loyalty will
be missed. The potential or new customers may not step forward to be connected with
the company.
d) Make suggestions on how to mitigate the negative impacts on the operations of
the business.
Planning plays a crucial role in the management of the organization. Unexpected
problems always arise in the working of the organization (Frijns et al. 2016). There
are some ways by which the risks can be managed:

● Avoid- It is high important to avoid the negative factors that may influence the
business operation and the easiest way to do such things is by predicting the
nature of the business and its outcome in advance.
● Mitigate- Avoiding the risks plays a crucial role in mitigating it. Mitigating the
risks will helps to take appropriate certain actions that will help to resolve the
risk and cause little damage.
● Outsource- One of the other way to manage the working of the business is by
outsourcing the tasks that are not within the initial limits of the organization.
● Accept- After all the above tools have failed it is important to accept the
challenge and work efficiently in this behalf. Identifying the risks is the major
part of the business process and analyzes it to make the business run smoothly.
● Contingency plan- The contingency funds must always be set aside for the
organization to manage the events that are unforeseen for the organization.
Conclusion
Thus, it can be concluded that Chemtech is managing the process of business in
various ways and has diversified products in the field of medicine, automobile and the
consumer goods. The supply chain management must have to be acknowledging very
carefully by the organization. Disruption of process or shortage of supply has a very
huge impact in the business operation. The loss of major distribution sites has also
caused a lot of unforeseen problem to Chemtech and a lot of customers are
disappointed because of the certain change in the working and management of the
organization.

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