Any manufacturing supply chain with (say) one stage of value addition or processing can be located close to the source of raw materials or close to the demand centres, or something in between. For example, cement plants can be located close to limestone deposit (raw material source) or consumption centres (e.g. urban agglomerations). What are the pros and cons of each option? The same issue arises in the location of power plants close to coal mines (pit head generation of electricity) versus location close to consumption centres (urban areas).

(II) Discuss whether the setting up of a supply chain in such an environment (e.g. corporatisation of some part of the activities or privatisation and the introduction of competition), actually helps the end customer effectiveness.