Supply Chain Management - a Basf Case Study

Topics: Logistics, Supply chain management, Management Pages: 17 (5404 words) Published: March 8, 2008
Journal of Supply Chain management and other Business issues

BASF Case Study – Challenges in Supply Chain Management

Thomas Schuster, Daan Cramer, Niek Nigg, Bart van Gorp, Myrthe Jansen, Alla Lashmanova, under the supervision of Dr. Peter Bollen

University College Maastricht Business Press, Universiteit Maastricht Zwingelput 4, 6220 MD Maastricht

Abstract. This paper primarily discusses and analyzes theories and implications of supply chain management. A case study of the German chemical company BASF is going to illustrate main concerns regarding the topic of logistics and especially outlines the challenges and problems companies face when expanding in other geographical areas. BASF failed to realize the importance of an efficient supply chain management, and the related implications for successful implementations of strategies in all layers of the command chain.

Key Words: BASF, Supply Chain Management, Logistics, South East Asia, Strategy

1Introduction

The Asian economies, especially its South Eastern regions, recorded extraordinarily high growth rates in the last decades. This development triggered vast changes in these market structures and also had an influence on the local people's consuming behavior. Western corporations immediately realized lucrative business opportunities and started to expand into those regions. On the other hand, running a multinational or international corporation, which is active in multiple geographical regions, requires sophisticated information technology and an efficient supply chain management. However, only the past two decades showed vast advances in information technology. Similarly to other multinational companies, the German chemical company BASF at first failed to realize increasing impact of an efficient supply chain management on the overall business strategy. These implementations caused new logistical challenges, however. Still, BASF made due to a lack of expertise in this field and other challenges wrong decisions that restricted the prospected benefits. Later implementation of a specialized supply chain management department brought the expected advances. The main purpose of the essay is to analyze BASF's process of expanding its operations to South and Eastern Asian regions by following the problem statement:

What logistical challenges did BASF encounter in their Asian Expansion?

This essay is going to be build up as follows. First, the BASF case is going to be introduced. This part concerns the company's background, the organizational structure as well as a special focus on the companies South and Eastern Asian operations. Further, the applied logistical system is also going to be illustrated in order to build the foundation for the following analytical part. Here, conception and theories of supply chain management are going to be introduced and applied to the BASF case study. This section includes a general introduction, changes, as well as strategic implications of supply chain management. Finally, recommendations and a conclusion will be given.

2BASF Case Study

2.1Company Background

BASF is one of the largest chemical companies in the world. The German company was founded in 1865 and has grown into a multinational corporation. The company is engaged in the entire value chain in the oil and chemistry industry ranging from the production of general crude oil to heavily refined products. [1] In the beginning of the company, BASF only produced coal-tar-based dyestuff but constantly broadened its business portfolio. Currently, BASF engages in chemicals, plastics, performance products of chemical nature, agricultural products, nutrition, as well as in the production of oil and gas. (Appendix I) The production range consists of 22 major product categories counting a total number of over 8000 different products. Furthermore, it serves customers in more than 170 countries and runs production facilities in 41 countries. BASF's headquarter is...

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Appendix III
Source: Taylor, D. (1998). Global Cases in Logistics and Supply Chain Management. International Thomson Business Press. London, UK
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