Profit supplier

If the price is such that firms supplying the product make more than a normal profit, new firms will be induced to shift their investments to enter the market, causing the supply curve to shift from to S, as illustrated in Figure 2.6a. A new, lower price will then be established at the equilibrium point E. The lower price may cause some marginally profitable suppliers to stop making the product, whereupon the supply curve will shift back to the left. Under ideal conditions, the profits for every product would be the same normal profit, so that there is no incentive for any firm to enter or leave a market. 

The BP-Amoco Empress plant complex consists of three interconnected facilities located on a one mile square site. It operates 24 hours a day, 365 days a year, employing 70 personnel who work two shifts. If the plant were to shut down for a period of time, suppliers would have to sell their product on the spot market and forego profits. Also, from the customer s perspective, even a plant with reserves would soon run out of products. 

So far, no scientific extrapolation has been published on the cost savings for the chemical industry when using micro reactors. Industrial experience is also not known at least, it has not been communicated. Thus, one is boimd to rely on expert opinions given in the press and trade press. Mostly these come from suppliers of the technology, aiming to convince industry of the benefits of their systems, by prognosis of a return on investment. Considering the pharmaceutical R D efforts of the order of US 50 billion worldwide, CPC/Mainz sees a potential for an increase in profit of more than US 15 billion if micro reactors are implemented consequently [246]. 

In market economies, however, companies are confronted with competition when selling to customers and they use the market competition when purchasing from suppliers. On the other hand, market constellations can change, when many customers compete for limited resources or raw materials provided by few large suppliers. In these situations, prices, values as well as ensured profitability within each company are decisive for the sustainable survival of the business. While the supply chain emphasizes the supply aspects including ensured supply and availability (Corsten 2001, p. 94), an essence of Porter s value chain underlining the value focus and the supply chain concept is required as basis for the study. 

There are two other possible scenarios. In one, the installer offers the fuel-cell heating appliance just as he does other heating systems then he has to cope with additional training needs, because of the double qualification and the calculations for operation efficiency. In the other scenario, the installer works for the energy supplier, an alternative that is not profitable, as he loses the profit margin of the heating system. 

Contrary to the commodity chemical business, the key to win in the specialty products market does not lie in squeezing out profits by means of economies of scale or process optimization. Rather, it lies in the ability for fast new product launches in order to capture the largest market share as soon as possible. Since superior product quality and performance is what really differentiates one specialty product from another, the product properties need to be adjusted as required by business needs. For example, the ability to manipulate functional chemicals in detergent products such as enzymes and zeolites, as well as backbone chemicals like surfactants, is often the key to success for both the detergent manufacturers and chemical suppliers [3], This trend has created an urgent need for an efficient and effective product and process development for these products. 

The creation of tougher national and international laws in the late twentieth century has resulted in a slight transformation of the opium trade. Laws have become stricter and limited success has been made in raising public awareness concerning the dangerous nature of opium and its constituents. The trade has not stopped, however it has only changed hands. In the past, the demand for opium created a large and complex distribution chain, complete with opium producers, suppliers, manufacturers, distributors, and consumers. Today, that trade, while now primarily in the form of nonmedical pharmaceutical use and heroin, is equally complex and perhaps even more profitable than ever. 

Define the terms marginal-costing , monopoly supplier , joint-venture , market-survey , by-products and retained profits . 

More common than pure Ecstasy overdoses, it is not unusual to take too much of a laced Ecstasy tablet. Pure MDMA tablets are increasingly rare, as suppliers aim to lace the drug with additional chemicals to either increase the high, increase the addictiveness, or just maximize their profit by putting cheaper chemicals in the tablets. 

The principle behind these units of payment leads to a "less is more" situation - this means higher earnings for the supplier within Chemical Leasing while less chemicals are provided. And it means higher earnings for the user because its costs are reduced. In Chemical Leasing models the added value is shared between the partners. Efficiency increase is the interest of both partners both partners have a commercial interest in reducing the consumption of chemicals as both partners increase their profits. 

Fig. 2. Example chemical producer Realisation of added value. In the classical business model 100 t of solvent are needed for the cleaning process. Consequently the chemical supplier sells 100 t of the solvent with an annual turn over of 100,000 and a resulting net profit of 10,000 after subtracting variable and fix costs (see How to realise added value example)...

The concept of Chemical Leasing can also be extended to other fields. An example can be seen in the improvement of energy use by an intensified co-operation of supplier and user. Again the result will be a win-win situation for both, environment and economic profits of supplier and user. 

Increasing the profitability of the supplier can only be realised by the expansion of the business activity since the price is fixed. It must therefore be the aim of the supplier to sell more of its product or to find new potential revenues by combining sales with services. One solution could be the new business model Chemical Leasing. 

These assumptions lead to a revenue of EUR 300,000/year and a gross profit of EUR 30,000/year for the supplier with a cost structure of the producer as described above leading to variable costs of EUR 195,000 and fixed costs of EUR 75,000. 

Plus Difference of gross profit for the supplier before and after imple-... 

Chemical suppliers generating profits from selling their know-how, participation in the proceeds from Chemical Leasing co-operations after implementation, improved customer loyalty, and many more. 

The user is not the only one to profit from this close co-operation. The chemical supplier and ChemKit, too, profit from this model, as will be shown below. 

The chemical supplier does not incur any financial losses from the reduced quantity of chemicals sold. Now the company sells the effect of the chemicals. By making its specific know-how available - in practice this is often an unpaid service - the supplier refines its product, for which it is now suitably remunerated. The chemical supplier gets a share of the profit and the lower the volume of chemicals used, the higher the profit it derives from the project. Its payment is based on "number of pieces chemically treated, cleaned m2", etc. 

The used chemicals are taken back by the chemical supplier for treatment, provided it has a waste treatment facility. Such a facility could also be located on the user s premises this differs from case to case. If no waste treatment facility exists, ChemKit will put the supplier in touch with a suitable waste disposal company with whom it can work together. Parts of the waste output are thus recycled and fed back into the user process, closing the loop of the Chemical Leasing model. Since the chemical supplier will need to use fewer new chemical substances in the future, it profits from the cut in material costs. In addition, it makes a sustainable contribution to environmental protection (Fig. 12). 

The partners will collaborate with the person in charge of processes in the user companies and advise them on inter-company implementation and optimisation of the chemical and technical processes. Furthermore, they will co-ordinate the business aspects of Chemical Leasing projects, such as the logistical optimisation and profit-sharing between chemical supplier and chemical user. 

In conclusion it may be summarised that the Chemical Leasing business model represents an interesting additional offer, which results in a distinct decrease of chemicals usage and wastes (above all dangerous wastes). Furthermore, total costs of the user are decreasing on the one hand and on the other hand total profits of the supplier are rising. 

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