Supply chain is a crucial aspect of every business. It involves the movement of finished products from the producer to the consumers. One vital factor in this field is the terms and conditions which enable firms to ensure that the supplier is effective enough and guarantees the delivery of quality products which is a key performance measure. This provision also provides that the organisation does not have to wait until the supplier fails to deliver based on the performance measures in order to raise alarm. There are various approaches that may be adopted by the Saudi Basic Industries Corporation (SABIC)in engaging with its stakeholders as part of enhancing the procurement process and making the consumers satisfied with the delivery services. The company can reduce its costs by carrying out portfolio evaluation in line with product indexing. It can as well check on its fixed and variable costs and find an alternative to the high prices through available means to make more profit than incurring expenses (Tatoglu et al., 2016). The need for performance appraisals and cost budget analysis would also help the firm make substantive approaches to the maximization of proceeds and lowering the costs. Nonetheless, this paper analyses the viability of the supply chain as an operation management aspect in SABIC.

To begin with, before SABIC takes on supply and chain contract, it would need to put the supply policies into consideration as a priority not only in Saudi Arabia but also across the world.Such provisions, for example, cite the penalties that are to come about as a result of failure to deliver the right goods at the scheduled time. Also, the company would have to account for the damages caused. This also applies to the liability for damages arising from ethical issues. Other consequences include the termination of contracts as a result of default by the supplier or the failure to meet the performance measures outlined (Maczka et al., 2015). The consequences that are described in the terms and conditions make it possible to manage the supplier to ensure that they meet the performance measures under the contract. The management and monitoring of the critical actions under the agreement are achieved by providing that the supplier gets a good understanding of the terms and conditions. These outline some of the critical performance measures under the contract such as timeliness and the quality of the goods delivered.

Furthermore, any form of compromise on the key performance indicators is established in advance for necessary action to be made. The terms and conditions also allow for the inspection of goods during the production process, before they are packaged and when they are delivered. Inspection and teasing during the production process ensure that the right raw materials are used and that all theprocedures are effective and this calls for the use of Big Data analytics (Tang and Musa, 2011). The goods are also inspected before packaging to ensure that only those ofthe highest quality are packaged and after delivery to guarantee that they are in the right condition. Among the approaches that may be adopted by the company in engaging with the stakeholders is involving the suppliers. On this note, SABIC’s management engages with the suppliers on the ways that the supply chain operations should be improved to reduce errors, which would be costly in the end (Schönsleben, 2016, p. 90). The suggestions that are made by the management and the suppliers are combined to bring out the optimum solution towards the enhancement of the procurement process.

The employees are also important stakeholders within the procurement process ofSABIC Company. This is because they are responsible for the actual implementation of the concepts that have been suggested by the management and other parties. Equipping the workers with the skills required for the implementation of an effective procurement process is vital towards improving overall competitiveness in Saudi Arabia (Wang et al., 2015, p.9). The employees who are deployed down the supply chain need to be conversant with the specific concepts that enhance value in the firm. This will uphold competitiveness in the petrochemical industry(ArabianBusiness.com. 2019).In this regard, SABIC may survey to determine the extent of demand for a specific product. Data collected in this context helps the company in determining the amount of stock to hold.In the long term, this helps in reducing the levels of inventory and the costs of maintaining the same.

SABIC may notice weaknesses in the production process and raise the alarm in advance to avoid delivery of goods that do not meet the set standards. The organisation will be able to give feedback to the supplier on the assessment made in a professionally and constructively.This applies in cases where it feels that the supplier is not in line with the performance measures either as a result of compromise on quality, timeliness, ethical issues or any other concerns (Coenen et al., 2018). This way, the two parties are able to work together to come up with the necessary changes to guarantee that the supplier is able to function in line with the performance measures. There are a number of issues that SABIC need to put in consideration in the event of curbing loopholes in expenditure with the intention of adding value to the entire supply chain process of the firm (Baumgartner et al., 2016). It is remarkable that SABICinvolves itself in two significant industries which include manufacturing and retail sectors. As for the manufacturing industry, a critical success factor is the accounting treatment on research and development cost within the supply chain (Wild, 2017). As for the retail industry, its significant success factor is inventory management. Thus, SABIC is adopting appropriate policies because it is suitable for its operation in two sectors (Schönsleben, 2016).

In the case of SABIC, there is a risk of increased costs in the process of contracting for supplies where the supplier may want to raise the prices as a result of the changes in the market conditions and associated rates. This would be expensive as it would mean that the goods have to be sold at a higher cost to cover for the increased input charge (Zairi, 2000). This kind of price increases will, however, be prevented since the terms and conditions state clearly that the price quoted will remain fixed. This means that the supplier has to stick to the agreed prices despite the changes in the market trends. Besides, the currency in which the prices are set is also stated clearly which means that the supplier cannot decide to use a devalued currency which would result in increased expenses as a result of the exchange rate costs. Besides, the terms and condition identify the taxes that have been included in the price and those that have been excluded. In Saudi Arabia, price, for instance, is exclusive of VAT which means that the supplier cannot decide to embracethis on the price stated in the invoice presented (Chopra and Meindl, 2007). The terms and conditions, therefore, are effective in ensuring that there is no risk of price increase for the goods that have already been ordered.

Additionally, at SABIC, the net realizable value of inventory is estimated according to future turnover of inventory for sale and predicted selling price. This enables managers to estimate the accurate value of existing inventory considering the value of time.There are several issues to analyse any business accounting strategy as that of SABIC (Prajogo, Oke, and Olhager, 2016). Firstly, it disclosed a series of new and changing accounting standards while some of them are not intended to apply immediately. The annual report also points out some current measures which have been published but they still not to adopt in SABIC. This is because there is seldom evidence to show how these new standards can affect financial statements substantially. The second issue is whether the manager faces incentives to use accounting discretion (Mangan, Lalwani, and Lalwani, 2016). Moreover, as for capital market consideration, the managersare recently facing a powerful incentive to use accounting discretion due to its current remarkable decline in the stock price of SABIC.

Moreover, the central forecast variable in SABIC’s model is profits, assets, and sales. If either of the variables in the model gets a hitch, the firm needs to respond accordingly to evade any escalation. The variables namely assets (both fixed and current assets), proceeds for the firm, as well as sales,  need to be worked upon and in the show a positive trend all the time to filter in aspects of positive feasibility in the supply chain management. There are a variety of roles for the procurement and supply department concerning expenditure in matters relating to inputs and stakeholders. Still, the positive economic growth in the recent past has impacted on the investment decisions made by the business (Sharma and Bhagwat, 2007). The positive outlook of the Saudi economy implies that businesses are able to invest in office construction projects. Consequently, the floor space that is available for the companies within the office cleaning sector such as SABIC increases (Wang, Wallace, Shen, and Choi, 2015). The implication of this development is the significant rise in the levels of profits that are made by the firm within the sector over time as far as the supply chain is concerned.

Studies also suggest that the levels of negative impact that undesirable economic conditions such as recession have on the demand for cleaning services is low. Even when there is a tough financial time such as a recession, the demand for cleaning services is still high, hence the supply chain would usually be busy.This maintains the profitability of the company within the industry in such periods (Schönsleben, 2016). Further, the relatively low prices that are charged by the companies in the office cleaning sector also help in sustaining the levels of demand within the industry. The overall impact of such decisions is that the marginal profit of such companies is improved due to their ability to reduce the prices that are charged to the consumers. As it gains more customers, the procurement process continues to play a vital role in improving the level of efficiency over time and minimise the lead time.

As SABIC fights for more market share, it is good to note that the consumers within the market spend only a small percentage of their income on the cleaning services. Thus, being unique in the supply chain and reducing the chances of errors is vital. This calls for the use of big data analytics. As indicated by Addo-Tenkorang and Helo (2016), “the value-adding potential of big data has played a key role in supply chain management.” When petrochemical products are introduced to the target market, their packaging and delivery are usually the same in most companies. In the case of SABIC, the consumers get the value for their money through the integration of technological know-how. However, there are many suppliers of the office cleaning services within Saudi Arabia which compete with SABIC such as Clariant. As such, SABIC has automated the cleaning and management of such services so that they can make the clients happy (Fredendall and Hill, 2016).

In conclusion, it is evident that supply and chain management as part of the operation management in any firm follows a given laid down rule as put in place by the business and the supplier. The parties in business also follow the set guideline by the government in place so as to remain within the bounds of the law. SABIC firm is no exception to the business to the rule and law of supply and chain management. It has also applied Big Data analytics to ensure that everything runs smoothly as expected in the supply chain and that the end consumers get the value for their money.

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