Supply chain excellence in India – Part 1

For a cement manufacturing company in a country as vast as India, nothing is more critical than supply chain excellence, a factor that is beginning to gain recognition.

The Indian cement industry has grown at a commendable rate over the last decade, registering a compound growth of approximately 8%. However, the growth rate has slowed in recent years as a result of sluggish economic conditions throughout the country. Moreover, the per capita consumption of cement in India still remains low when compared with the global average. This underlines the tremendous scope for growth in the Indian cement industry in the long-term.

With 15 integrated plants and 14 grinding units across the country, Holcim has a major footprint advantage over its competitors in India. Holcim’s presence in India is established through its two major cement companies: ACC and Ambuja Cements Ltd.

In an extremely competitive environment amid rising input and other costs, a stringent focus on logistics costs and an improvement in supply chain efficiency will assist cement producers in getting an edge over their peers. Supply chain is an absolutely crucial element to determine the success of a cement manufacturer.

Ambuja’s Rabriyawas plant.

Cement distribution

Much of cement transportation in India is done through rail and roads, depending on the proximity of the plant to the market. Sea transportation is also utilised and Ambuja Cements has been a pioneer in this. It is the first Indian cement manufacturer to build a captive port with three terminals along the country’s western coastline to facilitate timely, cost effective and more environmentally friendly shipments of bulk cement to its customers. The company also possesses its own fleet of ships.

Road transportation accounts for a substantial portion of the distribution of cement around the country. This is primarily carried out through commercial vehicles or trucks – Ambuja uses a large number of trucks. One of the major problems in India is that the size of trucks that carry cement are much smaller than those used in the US and Europe. This leads to efficiency problems throughout the country. Most trucks fall into the 9 t category, compared with sizes of 28 t and 32 t used in other countries.

Trucks standing in truck yard.

Supply chain excellence

Ambuja is investing efforts in the supply chain area to improve customer service levels, lower costs through increased operating efficiency and to make the supply chain safer for all stakeholders. In order to help offset the increased cost of fuel, Ambuja is focusing on improving efficiency through better use of assets. This includes improving Ambuja’s efficiency in utilising the truck fleet and rail system. Several different projects are running to bring the strategy to fruition on the ground.

The company has been focusing on the four dimensions of the supply chain: cost, service, evacuation capacity and safety. Constantly changing its footprint is one method that Ambuja employs to stay relevant to its customers and improve its customer service. As the markets are changing, the company is adjusting its asset base in order to offer service in different ways – for example, by providing facilities and building new locations so that the point of dispatch can be closer. There is also a need to constantly remove supply chain constraints and reduce bottlenecks, thereby improving supply chain efficiencies. The company believes that a focus on dust emission is also relevant.

In terms of safety, the country as a whole has a long way to go to reduce fatalities, especially in the area of vehicles and traffic. In general, the roads in India are in poor condition with many undulations and incomplete roadwork. Trucks are not maintained to the highest standards, leading to failure of critical components at crucial moments. The single biggest issue is that the driving community does not yet have a safety mindset; therefore, there are numerous cases of indiscipline and poor judgment whilst driving.

At Ambuja, the aim is to prevent fatalities during transportation of cement and the company is engaged in many projects to facilitate safe driving. The project SPARSH focuses on people, vehicles and infrastructure. It also involves working with vendors to identify risks and potential safety hazards. A big part of SPARSH relates to driver training, as well as engaging with drivers, employers and transporters in order to raise awareness. Furthermore, as not all unsafe traffic incidents are reported due to fear of reprisal, Ambuja has been working on improving the reporting of traffic incidents.

Read part 2 here. 

Written by Jacques van Niekerk, Ambuja Cements, India. This is an abridged version of the full article, which appeared in the June 2014 issue of World Cement. Subscribers can view the full article by logging in.

Read the article online at: https://www.worldcement.com/asia-pacific-rim/28052014/supply_chain_excellence_in_india_part_1_254/