Upstream Supply Chain for High$-$Range

Cements

In order to manufacture the high$-$range cements, Kerneos has

to procure various raw materials. These raw material needs include

metallurgical grade alumina, and quicklime, along with other raw

materials. The procurement of the alumina is centrally handled by the

Purchasing department at the corporate office in Paris. This is done

to leverage the alumina requirements of all of the sintering plants

within the company. Contracts are negotiated with the major alumina

suppliers throughout the world, and Kerneos, Inc. has input as to the

suppliers' annual requirements. The alumina is shipped in a bulk ves$-$

sel and the material is transported to Elizabeth River Terminals $($a

subsidiary of Kinder Morgan$)$ located in Chesapeake, Virginia. The

material is unloaded into bulk tank trunks, and trucks haul the mate$-$

rial to the Kerneos site $1\mathrm{.}5$ miles away $($see Exhibit $1).$ The alumina is

then blown into a silo in preparation for the sintering process.

The Procurement of Quicklime

The procurement of the quicklime is handled and purchased

locally by the Purchasing Manager at Kerneos, Inc. The Purchasing

Manager receives input from the Production Manager regarding the

quantity of quicklime needed for its annual production. The Purchas$-$

ing Manager then negotiates contracts with at least two suppliers to

ensure adequate supplies. The quicklime is trucked to the plant in

bulk trucks and pumped off into a silo in preparation for the sinter$-$

ing process. Other raw materials arrive in bulk railcars, and are then

pumped into silos.

Describe and graph the purchasing process at Kerneos, Inc.