A supply chain refers to the network of organisations, people, activities, information, and resources involved in producing, handling, and distributing goods and services. In the cement industry, the supply chain includes everything from sourcing raw materials, such as limestone and clay, to transporting and distributing finished cement products to customers.
The importance of the supply chain in the cement industry cannot be overstated. Cement production is a capital- and energy-intensive process, and efficient supply chain management can significantly impact a cement company’s costs, productivity, and competitiveness.
Stats prove that power, fuel, and freight charges account for 50–55 per cent of a cement manufacturer’s overall cost, and if inbound and outward logistics are added together, they account for more than 35 per cent.
Challenges faced in the Cement industry
Rising raw material costs – It can be a significant challenge for the cement industry. The cost of raw materials can substantially impact a cement company’s costs, and when these costs rise, they can put pressure on a company’s profitability.
Transportation and logistics – Transportation is a high-cost process in the cement industry, and rising fuel costs can significantly impact a company’s bottom line. In some cases, transportation infrastructure may need to be improved to meet the needs of the cement industry, leading to blockages and delays in the supply chain. Also, the cement industry is subject to various environmental laws, including emissions and air quality.
Coexistence of bulk and bags – Cement companies must develop two distinct supply chain strategies for each product type to obtain a competitive advantage. For the bulk cement supply chain to profit from optimisation procedures and improve usage, efficiency must be the main focus. The supply chain for bagged cement must be flexible and availability-focused. Bulk cement differs from bagged cement; the two are comparable to consumer goods. Supply chain leaders in cement firms in emerging markets need a team that can function in these supply chain conditions to handle the bulk and bagged difficulty.
Cement’s low price-to-weight ratio – Because it is entirely in charge of transporting the product by truck over 300 kilometers, this arrangement lowers supply chain management to an operational responsibility. The utilisation of river, rail, and ocean transportation increased the reach of a production centre, enabling SCM to broaden its reach, simplifying access to new markets and dramatically lowering costs. SCM expenses are typically not included in the financial statements of the company. A thorough cost analysis is needed to discover the potential savings of SCM.
Lack of technology and automation – Lack of technology and automation worsens the cement manufacturing sector’s issue. India has a surplus of labour, and many people agree that hiring people is a better investment than investing in advanced automation technology, which may be able to eliminate 50% of physical labour and human participation. The logistics sector in India receives much less investment than those in other countries for this single reason. Lack of access to innovative and cutting-edge resources that deal with data science, operational automation, and technical trackability is a significant problem for cement manufacturers. Inefficient manual processes waste resources, labour, and time.
Strategies that cement companies can adopt to address these challenges
1. Adopting a customer-centric approach: One way to address changing market dynamics and customer demands is to adopt a customer-centric approach. This involves focusing on understanding and meeting the needs and preferences of customers and adapting products and services to meet these needs.
2. Developing new products or services: Cement companies may also want to consider developing new products or services that meet changing customer needs. This could involve introducing new product lines or adding features or services in high demand.
3. Using data analytics: Data analytics can also be a powerful tool for understanding market trends and customer preferences. By analysing data on customer behaviour, cement companies can gain insights into what customers want and tailor their products and services accordingly.
4. Diversifying sourcing: One way to reduce the impact of rising raw material costs is to diversify sourcing. This can involve sourcing raw materials from a broader range of suppliers or locations, which can help mitigate the impact of price increases in any market.
5. Improving efficiency: Another way to address rising raw material costs is to improve efficiency in the production process. This can involve adopting new technologies or best practices that help reduce waste, optimise the use of resources, and improve the overall efficiency of the production process.
6. Adopting new technologies: New technologies, such as those related to alternative raw materials or carbon capture and storage, may also help reduce the reliance on traditional raw materials and mitigate the impact of rising costs.
Intugine’s solutions can help companies gain visibility across their network and provide outstanding customer service to their shippers. Our solution enables quick identification of exceptions and bottlenecks, more innovative analytics that facilitate predictive planning, and cutting costs through automated status reporting. In addition, they produce IoT gadgets, including smart locks, GPS trackers, and GSM trackers. Customers can place orders online, track shipments in real-time, manage docks, determine freight payments, and capture electronic proof of delivery with Intugine’s automated end-to-end supply chain operations. Contact us if you’re interested in finding out how these solutions might be useful for your organisation to replace legacy practices.