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CASE BRIEF

Imamul Ansari (051)


Abhay Shah (031)
Chirag Shah (073)
Ajinkya Pawar (093)
Amit Pandey (042)
GLOBAL COMPARISON
PER CAPITA CONSUMPTION
INDIAN SCENARIO
- CORRELATION
Capacity is surpassing Demand
Demand and during sluggish period
it gives a lot of pressure to margins
of cement companies.
ROAD AHEAD

Expected
Demand (2025)
550-600
MMTPA
MANUFACTURING - COST ELEMENT ANALYSIS
MARKET SHARE INDIAN CEMENT INDUSTRY
ABOUT AMBUJA CEMENTS VISION & MISSION
ABOUT AMBUJA CEMENTS - PHILOSOPHY
LOCATIONS

Integrated Units Grinding Units Bulk Cement Terminals


Ambujanagar, Gujarat Bhatinda, Punjab Cochin, Kerala
Bhatapara, Chattisgarh Dadri, Uttar Pradesh Panvel, Maharashtra
Korpana, Maharashtra Farakka, West Bengal Muldwaraka, Gujarat

Jaitaran, Rajasthan Magdalla, Gujarat Managlore, Karnataka

Darlaghat, HP Nalagarh, HP
Ropar, Punjab
Roorkee, Uttarakhand
Sankrail, West Bengal
01 02 03
In plant logistics / Improve customer and Brand development
Production Planning channel service and management
Control Vs Operational through advertising
Excellence to gain Cost
leadership

CASE BRIEF OUT OF BOX THINKING


CASE BRIEF
Fusion of IT with logistics
Cross functional approach to logistics Management
Marketing, Production , S&D, Transportation,
Warehousing, Finance
Review the process recommend - Implement
CASE BRIEF
Quick flow of information and
effective order processing system
Higher order inventory management
through Inter departmental combined
efforts
Packaging innovation ( Jute bag to
HDPE to Paper bags)
CASE BRIEF TRANSPORTATION AND
WAREHOUSING
SALIENT FEATURES
SALIENT FEATURES
Cross-functional approach
Pillars of Logistic Management System Integrated with IT Tools
Order Processing System
Inventory Management
Packaging
Transportation
Warehousing

Implementation of SAP Project Connect


Integrated Logistic System (ILS)
SALIENT FEATURES
Strategic Location of Plants
Location of dumps and Trans-shipment point type warehouses
Large distribution network over 11,500 outlets
Fleet of 350 trucks and a railway sliding in factory premises
OLIGOPOLY
Market Structure characterized by few sellers and interdependent price/output
decisions
Significant barriers to entry
Product could be homogenous (similar) or differentiated
Potential for economic profits in the long run
Incentive for illegal price setting
Competition can be vigorous among the few firms
STABLE PRICE CONDITIONS
(KIRK DEMAND CURVE)

In oligopoly firms operate


under imperfect competition.
Demand is relatively inelastic
because all other firms leading
to similar price cut leading to
price war.
With the fierce competitiveness
created by sticky upward
demand curve firms use non
price competition in order to
accrue greater revenue and
market share.
CLASSIFICATION OF COST
Research & Development
Depreciation
Rent
Fixed Costs Advertising & Marketing
Expenses
Inventory Management
Order Processing Systems
Electricity
Raw Materials
Wages
Variable Costs Packaging
Transportation
Fuel
Consumables
TECHNIQUES USED TO REDUCE COST OF
PRODUCTION
V belt drives which consumed more energy were replaced by flat
belt drives.
Improved version of mechanical conveyor was used to eliminate
breakdown and spillages.
Adjusted retention time, maximised temperature and the rate of
cooling to reduce power cost from 120 units per ton to 90 units per
ton.
Reduced mining expenses by implementing ripping technology.
Introduced an Australian device called Surface miner to recover
more material from the given area and save energy.
TECHNIQUES USED TO REDUCE COST OF
PRODUCTION
Computerized process control system for easy access
and regulating the production process.
Zero Error Electronic Rotary Machines to increase
capacity utilization.
Improvement in efficiency and lower shutdown rates to
increase capacity utilization .
This clearly says that
by reducing the
different costs on the
raw material, power
cost, repairing cost,
shutdown cost,
transportation cost
Gujarat Ambuja has
brought down its
average costs which
helps in increasing the
profit.
STRENGTH
STRENGTH & OPPORTUNITIES
Efficiency
High Brand Identity
Adaptation of new technology
Use of sea route
Assets
Good reputation
Capital Intensive Industry
High level of infrastructure required
Favorable location having raw material site at a distance of 1 KM near production line
EFFICIENCY
Adoption of 2 Prolonged Strategy :-
1. Enhancing Plant Productivity.
2. Reducing cost of each component .
Cost Efficiency
Quality Control Management.
Capacity Utilization.
ADAPTION OF NEW TECHNOLOGY
ORDER PROCESSING SYSTEM
GACL has linked all the major office through WAN
They uses sophisticated tools like EDE MRP System to ensure timely and accurate
processing order.

INVENTORY MANAGEMENT

GACL has well developed system for the inbound Raw Material . It extract
limestone from near by mines and is transported to the production site with the
help of OBC (overland Belt Canveyar) and in some case with help of trucks.
ADAPTION OF TECHNOLOGY
PACKAGING
Packaging innovation at GACL ia a landmark in the history of cement
industry
It follows International Norms for different types of cements
It provides information about quality date of mfg , location of plant
The journey begins with the use of HDPE (High Density PolyEthylene.)
TRANSPORTATION
Effective transportation strategy is responsible for the product to be
placed in the right market at the right point of time and reaching the
customer.
Goods can be transported by road and rail.
In all by road transportation 18% of the total cost is freight , which has
been paid .
Road transport beyond 200 km is not economical
Therefore 55% is managed by Railway.
Problem by Railway are inadequate availability of wagons especially on
western railway and south eastern railway.
TRANSPORTATION
MANY looked for SEA ROUTE TRANSPORTATION
It is cheaper than other mode
It also reduces losses in transit
It has taken full advantages of Multi Modal Transportation
And has become 1st Cement company in India to use water transportation.
THEREFORE GACL has become the lowest cost supplier for the market.
GOOD REPUTATION
Biggest Opportunities
Today GACL is the most efficient player today in Market.
GACL was the Rule Maker.
Can Persue Growth and New Business Development through channels and
Operational Activities .
ASSETS
GACL has plants terminal at Kochi in Kerala
Entered MOU with cochin port Trust for building Storing and packaging
Infrastructure in Wellington Island (Kerala)
GACL had set up captive backwater and Jetty Facilities in Gujarat ,
Maharashtra & Kerala
A Fleet around 350 Self Finance Trucks and railway siding in its factory
Premises .
ALL THIS TANGIBLE ASSETS CREATED TO REDUCE COST AND ENHANCED
TRANSPORTATION.
WEAKNESS AND THREATS
Do not have a huge market and hence scale of economy
Could not serve wholesale market
Lesser technological changes
Product differentiation
Freight intensive industry
Many competitors
Susceptible to Government Rules and Regulations, Recession
WEAKNESS AND THREATS
Deals primarily with cement and concrete while many global players manufacture
other construction materials along with cement to provide greater portfolio to the
customers.
Facing strong competition from Indian and Global players in cement sector.
If it tries to increase its global operations, it would face tough competition and
moreover, each country has different policies that might hamper its expansion.
RECOMMENDATIONS
THE CEMENT INDUSTRY
Regional Pricing Non uniform input costs and zonal capacity imbalances

Too many regional players, Standard Products, Simple technology and limited
Fragmented Market R&D requirement

High-entry barrier Large CAPEX requirement

Value Added Services Ready Mix Concrete, Training and site inspection by qualified engineers

Cyclic Demand Low demand during monsoon, recession

Mining site rehabilitation, Fugitive emission control, Renewable purchase


Sustainability obligation for electricity as per as SEB rules

Government Control Mining Royalty, SEB Charges, Rail Freight charges

Market Growth Largely correlated with GDP growth


SOURCING
Raw Quantity/Ton Main Source Major Cost Procurement
Material* Cement Drivers Strategy
Lime Stone 1.3 India has sufficient reserve of good quality Mining royalty, Captive mines and
limestone scattered all across India Diesel, Price plants near quarry
Coal 0.25 Domestic low quality, high ash coal is used for Linkage coal Maximize linkage
making cement which accounts for majority prices coal price
consumption. Imported coal used during peak
demand season to hedge supply risk
Fly ash 0.3 Power plants are the main source of fly ash Fuel Prices Nearest point
situated uniformly across India. sourcing
Gypsum 0.05 Concentrated around Rajasthan. Mostly Import duty, Nearest point
imported from Thailand and Middle-East Freight sourcing
charges

* All RM consumption fig. are approximate and only main raw material has been mentioned
ADOPT EFFICIENT SCM MODEL
Make to Forecast
Extra capacity in outbound logistics, to absorb demand
Reduce the number of "high variation, low demand" SKUs
Minimum order-size policy of a full truckload is recommended
Extra warehousing capacity should be available in anticipation of the need
Invite Regular customers to participate in collaborative programs
Try to avoid lead-time order cycle as it could create demand peaks
Buffer high-variance SKUs with higher levels of inventory.
ADOPT CONFIGURE-TO-ORDER (CTO) SCM DESIGN
CTO maximizes the benefits of the Raw-As-Possible (RAP) principle
CTO usually increases the customer lead time but offers flexibility in product
configuration
Grind-to-Order (GTO) and Pack-to-Order (PTO) aggregate demand in the
manufacturing process reduces variability and improves forecast accuracy. Their
implementation requires a continuous information flow and close coordination
between order processing and manufacturing.
FORM STRATEGY TO TARGET SOUTH INDIA
ALTERNATIVE/SUPPLEMENTARY SOURCE OF FUEL
Bio Fuel (Bio Mass / Agriculture waste / Animal Waste / Rice Husk etc.)
Waste Products
Solar Energy / Wind Energy
PetCoke (Petroleum Coke)
Polythene Bags
Tyre Chips
TRANSPORTATION AND LABOR OPTIMIZATION
Avoid Reverse Logistic e.g. Dispose of rejected by auctioning them off.
Use Automated loaders wherever possible
Have 2-3 more Rail Sidings (e.g. Ghaziabad)
Use Road Transport for only last mile connectivity preferably less than 200 KM.
Warehousing only at ports in South India
Re-use Self Financed Vehicles for multiple tasks except for Transportation
Adopt Vertical Integration of Supply Chain avoid Outsourcing
Adopt RFID technology.
VALUE ADDED SERVICE
E.g. - Cement resistance to Water to protect corrosion of metal inside
Consultation Service / Architecture Guidance
Ready Mix Concrete.

Thank you