Supply Chain Management at Dalmia

Cement Ltd.
Submitted To : Rajendra Thodalbagi

Submitted By : ANAND SHARMA 18005

TRILOCHAN MOHANTA 18027
DARSHAN G K 18008
VASUDHA DALMIA 18029
SOUPARNIKA HP 18046
SHIVANGI CHOUDHARY 18059
 INTRODUCTION

Dalmia is a 60 year old company which has its plant located in Dalmiapuram .
They operate in TN and Kerala which is divided into 7 zones each having 1 depot to serve a zone.
Excess capacities in the northern and western regions are likely to result in price erosion in the
south as well.
Determining the optimal transport-mode mix and deciding the shifting to pack to order are
long-term decisions needed to be made by Dalmia and are the focus of the case.
The company is expected to face tremendous pressure on the profitability due to fluctuating
demands and inefficient supply chain management.
Dalmia’s Manufacturing Process and Distribution
Kerala Trivandrum
Clinker
Ernakulum
Gypsum Cement
manufacturing
(Dalmiapuram) Trichur
Fly ash

Tamil Nadu Kollam

Slag

Palghat

OPC PPC PSC

Madurai
CLINKER 95% 80% 60%
GYPSUM 5% 5% 5% Trichy
FLY ASH 15%
SLAG 35% Coimbatore
• Company keeps adequate amount of clinkers as buffer, it has enough stockpiling limit with
regards to clinkers, and can be put away for significant lot without affecting the quality.

• For putting away concretes organization has 14 storehouses bond, It is packed in standard
size of 50kg however with various packaging materials, bringing about 10 SKUs in market
place.

• There are inclinations for various colours, packaging in various markets

 Mode of Transportation

• Company usually would send in a lot of 40 Wagons and each wagon would
have a capacity of 18.6 MT.
• Company usually asked for 40 wagons at a time, the cement was reaching
the location in a day or two, where materials were shipped to stockiest or
depots directly.
• Apart from this company used various other modes to reach the stockiest
 Mode of Transportation

• Two truck engagements to reach the same distance would be more

expansive than that of direct shipping ,using only one truck engagements.
• As Dalmia shipped cements for short distances, railway freight used to be
more expensive than truck freight.
• After conversion to broad gauge, each wagon would have a capacity of
40MT ,and company was not sure about the lead time.
 Continued

• Rail freight and road charges per MT for various destination are (Rs)
Ernakulam Trichur Kollam Palghat Madurai Trichi Coimbatore
Rail 393 335 401 266 181 107 249
freight
Road 385 350 395 320 156 70 235
freight

• A truck could carry 10MT of cement at a time.

 Q 1 : What is the impact of railway gauge
conversion on Dalmia cement’s distribution
operations?
• Unavailable of railways would imply greater stocking in the depot with high
inventory holding cost.
• After the railway is made into broad gauge the capacity of the wagon will
increase 18.6MT to 40MT. this involves greater inventory carrying cost.
• Transport by railway would involve moving material in bulk so would results
in higher cycle stock but the lead time would increase.
• As transportation by railways would involve longer lead time they would
need higher safety stock.
 Q 2 : What should be the optimal transport mode
mix for Dalmia Cement?

Optimal Transport Mix

Option Mode Through Depot %of Material

• Option 1 : Rail + Truck - via Depot 45%

• Option 2 : Rail + Truck - No depot routing 5%

• Option 3: Truck - via Depot 30%

• Option 4: Truck - No depot routing 20%

Cement being low value density transportation cost is major component
Option 1 is the most expensive as the material handling and its cost is more and multiple modes of
transportation
Option 4 is direct shipping ,and was most preferred by from cost point of view
Transport cost /MT for the 7 depots and distance for all is given
Using Linear regression model for both Road and Rail , (x) being the distance and (y) being the transportation
cost

Road Rail

It is found that for the distance less than or equal 330 km Road, and beyond 330 km Rail would be optimal for
the company
The cost would change in monsoon season and Mango season where the Freight charges would be higher
 Q 3 : Suggest ways in which Dalmia can get
assured supply of trucks throughout the year

Cement is highly freight intensive in nature. The industry faces serious

transportation constraints in terms of timely- available rail wagons.
This has forced manufactures to move progressively large quantities by road.
This company should utilise own your wagon (OYW) and build operate Lease
Transfer schemes of railways.
 Q 4: Should Dalmia change its transport policy
and manage a fleet of trucks on its own for its
distribution function?
Yes, Dalmia should change its transport policy by owning its transport system by
• Dependency on the brokers should be less
• Cost savings
• Making trucks available throughout the year
• Better negotiation with truck drivers
• Ensuring prompt and fast delivery
• Management supervision, time and planning is required to make it work effectively
• seasonal uncertainty is a concern because few trucks will remain idle and the maintainace cost will be
high
 Q 5 : Why was Dalmia Cement exploring the option of moving from pack to stock to pack to order
strategy? What conflicts or barriers internal to Dalmia would the pack to order strategy create?How
should Dalmia Cement handle these issues ?

• Eliminating depots and servicing stockists directly from Dalmiapuram would result in considerable cost
savings per year.
• When moving from pack-to-stock to pack-to-order , there are considerable savings in inventory costs.
• The issues like resistance to change and acceptance to the organizational change should be considered.
• Dalmia can start pack-to-order for the Tamil Nadu region and one depot for Kerala market. And once
all the system are in place and the organisation is convinced about the operation, Dalmia can start pack-
to-order for the Kerala market.
Conflicts and Barriers:
• Varying seasonal demand . Not much impact because entire cement industry demand is almost
constant.
• The company operates in 2 states, inter-state road permits may cause delay – one depot in Kerala
Packing & Silo Operations:
• Since only peak demand for May 97 (monthly demand for May 97 not available) can be found out from data
in exhibit 4
• For worst case scenario, peak demand = 2291 MT < 2835 MT (Total capacity of both Silos small & big)
• Assuming all machines start at once instantly, total capacity = 455 MT/hr
• Time to pack reqd. output = 2291/455 = 5.035 Hrs.

Assuming truck speed at= 48 Km/Hr

For the distance of plant to Chingalpet = 315 Km
Time taken for travel= Dist/speed =315/48= 6.52 Hrs
Loading/Unloading: Time not given
Total Time = 5.035+6.56= 11.60 Hrs < 24 Hrs
Thus Pack to Order system is capable provided process is run tightly inclusive of loading & unloading operations
Thank You