Cost reduction evolution

Product Discovery Product evolution Cost reduction Full commercialization... 

The concept of core competency is important to SCM. Traditional views of roles in the supply chain are giving way to new views. Chapter 18 describes the emerging model for supply chain partnerships. The traditional and emerging models reflect the impact of both cost reduction and competence building in the evolution of supply chain partnerships. 

DR Processes Under Development. The 1990s have seen continuous evolution of direct reduction technology. Short-term development work is focusing on direct reduction processes that can use lower cost iron oxide fines as a feed material. Use of fines can represent a 20 30/1 (20%) savings in DRI production cost compared to use of pehets or lump ore. Some examples of these processes include FASTMET, Iron Carbide, CIRCOFER, and an improved version of the EIOR process. 

The present analysis shows that when a thermodynamic gradient is first applied to a system, there is a transient regime in which dynamic order is induced and in which the dynamic order increases over time. The driving force for this is the dissipation of first entropy (i.e., reduction in the gradient), and what opposes it is the cost of the dynamic order. The second entropy provides a quantitative expression for these processes. In the nonlinear regime, the fluxes couple to the static structure, and structural order can be induced as well. The nature of this combined order is to dissipate first entropy, and in the transient regime the rate of dissipation increases with the evolution of the system over time. 

Most of the processes discussed either have been or are being used to supply synthetic fuels on a commercial basis. There is, therefore, little question as to the feasibility of these processes. In most cases, however, these ventures have proved and continue to prove economically unattractive in the face of abundant supplies of cheap natural gas and oil. When supplies dwindle and prices escalate, as is likely to happen eventually, specific processes can be expected to become marginally attractive. In the United States, probably the most competitive of the synthetic fuels are shale oil and low-CV and medium-CV gas. The more complex routes to liquid transportation fuels from coal can be expected to be more costly. In all cases a reduction in costs will occur as experience is gained from initial plants. Coal and, eventually, oil shale reserves will, however, also become depleted. Because biomass can probably make only a limited contribution to the total energy demand, other sources of energy will have to be harnessed. The development of synthetic fuels will probably be necessary to obtain the time needed for the evolution of such alternative energy sources. 

Competition, in the market of polypropylene licensing technologies, has been a driving force to improve the available processes, with the aim of reducing the investment and variable costs obtained by a simplification of the process, reduction of raw materials and utilities consumptions, improving also the environmental impact with lower gas emission and liquid effluents. The evolution of catalysts and technology has allowed the polypropylene properties to be expanded, to fulfill the market demand and to widen its application. 

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