Building terminals in collaboration will be a winning proposition for everybody.
What are the challenges in supply chain management the cement industry is facing?
The key challenges for the cement industry are as follows;
a) Rising fuel cost.
b)Primary mode of transportation is by rail (50 per cent) , but there is a huge shortage of wagons.
c)Shortage of roads and rail line for timely transportation of cement.
d)Heavy congestion at rail terminals.
How is your supply chain cost divided on the different fronts?
For the cement industry, we should look at inbound and outbound separately as both have totally different dynamics. Coal is the major portion for inbound for which supply is uncertain so you need to stock more, whereas cement supply is more than the demand and order to manufacturing time is negligible in the cement industry.
Are you considering automating the cement loading and unloading process?
Today, almost all the cement plants have automated loading facility. We have state- of- the- art automated loading facility at our plant. This gives us an edge in terms of faster loading, low cost and delivering required volumes on time.
However, at the unloading point which is a warehouse or rail head, automation is negligible. We are working on this and holding two pilot trials at our warehouse for automation of the unloading process.
This kind of automation will remove manual intervention and the customer will receive untampered cement bags.
Why has cement transport via BCCW not picked up too well here?
It has not picked up for the following reasons:
a.It requires huge investment for buying a BCCW rake, installing loading and unloading terminal.
b.A bulk terminal is required at metros and land availability in metros or nearby areas is a major issue for BCCW not picking up.
This can pick up if the Indian Railways can come forward and collaborate with the cement industry for providing rakes and terminals. Building terminals in collaboration will be a winning proposition for everybody.
Are you planning to build a terminal in the near future?
We are working on the option of building a terminal but the major hindrance is availability of land near the consumer market near an existing railway network.
How do you deal with warehouse shortages?
We deal with warehouse shortages in various ways; one of them is supplying directly to the customer from the plant, keeping a dedicated fleet of trucks and bulkers. Nowadays, we use big trailers with carrying capacity of 35 to 50 tonnes for cement transportation, which is utilised for cross- docking. We have converted a threat into an opportunity.
How do you ensure that your fleet is performing at its best?
We keep real-time track of our fleet. We have GPS-enabled trucks and we keep monitoring the fleet movement in real time to improve the turnaround time, so our fleet is utilised to its maximum. Also, at loading and unloading points, we ensure minimum waiting time for our fleet so that they perform better.
What are the advantages / disadvantages of using carry and forward agents?
Carry and forward agents offer the advantages of utilising their strength in understanding and knowing the local area better. They make available labour and also their network, which helps to build brand equity. The disadvantage can be the additional cost for these services.
Are you open to collaboration with other cement companies for setting up a terminal? If options are available, we will be happy to collaborate with other cement companies for setting up a terminal, after a detailed study on its advantages and disadvantages. In a growing economy like India, constant fluctuation in demand and raw material is a big challenge.
What are the factors considered while designing a logistics plan?
While designing our logistics plan, we first look at the need of the customer, the form and time- frame the customers wants the cement. Accordingly, we then make our plan. We also look at the market size and the distance to decide the primary mode of transportation.
For larger distances, we plan the dispatch by rail and for shorter distances, we plan by road. We make our logistics plan based on demand forecasting and available infrastructure like the cement plants, warehouse and fleet. While formulating the strategy we keep lowest delivery cost as the primary objective since it is a major cost driver in our business.
How can the logistics system be modified to accommodate these variations? Constant fluctuation in demand is always a major concern for the cement industry. In the current scenario, there is a huge gap between demand and supply. We are operating in a highly over- supplied market.
We have modelled our logistics system is such a way that it takes care of normal/seasonal fluctuations in demand. We also do our demand forecasting very meticulously. However, for some abnormal fluctuations in demand, we utilise our resources accordingly.
What leads to errors in demand forecasting and how can they be avoided?
Cement is a commodity and sudden change in prices leads to huge changes in demand forecasting. Fluctuation in economy and political instability also leads to errors in demand forecasts as cement consumption is also governed by these two factors. This can be avoided by decreasing the period of forecasting and keeping a close watch on the economic and political situation.
How can one improve synchronisation between supply and demand?
Synchronisation between supply and demand can be improved with better planning and designing logistics infrastructure suited to the demand.
What are your future plans for the company?
Our future plans are to have manufacturing facilities closer to the customer, in order to be efficient where our supply chain is concerned. We are planning for automation at the warehouse point. We have plans to strengthen our logistics infrastructure in such a way that it can give us a competitive advantage.