Value Chain of Sasol - Management Essay Example

Sasol is one of the largest companies in Africa and is in South Africa. It produces oil made from coal making it one of its kinds to exist in the African soil. Some of its products include electricity, technology, and chemicals, liquid and synthetic fuels. The management at Sasol owes its success to its ability to manage its value chain and ensure that products move from the production unit to reach the end consumer within a short time (Roberts & Rustomjee, 2010). A value chain facilitates additional services to a product so that customers can have a better commodity that satisfies their goods both in the short-term and in the long-term. Therefore, management at Sasol has to maximize its value chain so that it can market its products to the local and international market. In addition, a value chain acts as a support to the decision-making process for the management team.

Some of the main activities that value chains help enhance include the research and development stage, components, final assembly, and marketing. The management leader in each department designs ideas that a value chain should fulfil so that it can provide its services and enable a product move to the next level before releasing it to the public ready for consumption (Roberts & Rustomjee, 2010). Some of the support departments that help define the boundaries within which the value chain should work include the human resource department, logistics, and infrastructure designer. They all brainstorm and bring their ideas to the management team and make it easier to incorporate value-adding services into the oil production process. However, some organizations deal with an internal management team that designs the value-adding services while others contract external providers. This happens when the strategic manager oversees the conditions, capabilities, and strengths of the organization and realizes that it has limitations that would prevent it from reaching its full potential. Outsourcing some of the activities needed to add on the value chain enables the management give some form of control over an external service provider, and they are in a position to focus on the core functions of the business. For instance, Sasol considers outsourcing logistics service providers who assist them in the final assembly stage.

Sasols value chain comprises of incorporating technological ideas in the production process of one of its major products natural gas (Roberts & Rustomjee, 2010). This enables the company focus on the production and processing of synthetic commodities that do not cause any harm to the environment. Increasing and adopting innovative ideas have helps Sasol remain among the best oil producers in a global market that has many competitors. The management team focuses on production and ensures that products released to the public are of high quality, which helps create high levels of customer satisfaction.

Despite the success Sasol enjoys from its ability to manage its value chain, it faces some challenges, which limits its ability to reach its full potential. For instance, coordination and configuration are the main issues management faces when overseeing the entire value chain in the organization (Pooe & Mathu, 2011). It might be hard to harmonize all departments in the value chain and ensure that they align with goals and objectives of the firm. It means that some departments might understand the role a functional value chain plays while others might resist its activities. Therefore, a manager must come up with a tactical way in which they can coordinate all activities so that the firm can reach its highest potential and achieve both short-term and long-term goals and objectives (Roberts & Rustomjee, 2010). On the other hand, configuration issues arise when it comes to the actualization of ideas and suggestions forwarded by the management team. Sometimes it might not be practical to apply some of the knowledge managers have, which means that the value chain will not attain its objectives.

The management at Sasol Company goes through a change as they introduce new ideas and concepts on the value chain to enable the firm to increase its clientele base and make more profits (Roberts & Rustomjee, 2010). The idea is to adjust the value chain at the facilities until they reach a position where production of products and services in the organization incur limited costs while the outputs are high. Both local and international clients demand services and products from Sasol, and it is important to ensure that the company has amounts of stock in the warehouse that will help requests on time.

Figure 1: Sasol's integrated value chain

Source: Sasol, 2017

Source: Sasol, 2017

According to Pooe & Mathu (2011), Sasol uses an integrated value chain as it undertakes more than one unit of production at the same time and it is important to meet deadlines and maintain the high quality of the oil. In addition, it must respond to customer requests on time. Projecting the operations helps the strategic team at Sasol Company evaluate a potential outsource company that will help direct the organization towards its goals and objectives. A reliable and functional value chain means that all activities meant to add quality and significance to the oil produced is done at different stages.

References

Pooe, D., & Mathu, K. (2011). The South African coal mining industry: A need for a more efficient and collaborative supply chain. Journal of Transport and Supply Chain Management, 5(1), 316-336.

Roberts, S., & Rustomjee, Z. (2010). Industrial policy under democracy: apartheid's grown-up infant industries? Iscor and Sasol. Transformation: Critical Perspectives on Southern Africa, 71(1), 50-75.

Sasol. (2017). Value Chain | Sasol. Retrieved December 3, 2017, from http://www.sasol.com/innovation/gas-liquids/value-chain