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Gujarat Ambuja Cement Case Study

SARANG KALE G031


TARUSHI BHATIA G009
ROHIT SINGH H055
MRIDUL GROVER H013
PRAKHAR SINGH G051
ARNAB SINHA G054
Case Overview
 Highlights steps taken by GACL to further strengthen its brand
positioning in cement business
 Cement industry suffers from surplus capacity and only efficient
players can survive.
 GACL took unconventional approach to achieve cost
leadership by focusing on operational excellence, customer
centricity and distribution.
 Enabled GACL to gain leadership position in Gujarat and
Mumbai
 Logistics initiatives formed a backbone in achieving cost
leadership, better availability and faster speed of delivery
 Integrated logistics with other organisations functions by
coupling IT with logistics to ensure seamless flow of information
 Cross functional approach by having a committee comprising
of managers from several departments at each manufacturing
site for periodic review of the entire system.
Salient Features of Logistics

Order Processing System Inventory Management


•Information flow from order generation to order •Monitors level of inventory with combined
fulfillment efforts of various depts.
•Offices connected through WAN •Online ordering of raw resulted in cost and
•Electronic Data Exchange, MRP systems time reduction

Transportation
Packaging •Multi Modal Transportation System
•Introduction of Paper bags •Uses Water Transportation system
•Low pilferage and leakage of cement •Set up own ports and Freight handling terminals
•Collaboration with kochin port to build cement
•More presentable and enhances the visibility
storing infrastructure
at POS
•Routing and Scheduling for shortest possible
•Charges premium on paper packaging routes

Warehousing
• Two types of warehouses, Dumps and
Transshipment point storage
• Warehouses are connected online with marketing
and production units
• Strategic locations of warehouses based on
Transportation facility, tax factor, cheap
manpower
LOGISTICS INITIATIVES AT
AMBUJA Pillars of Logistics Management
System at Ambuja

Integrated Logistic Order Processing


System(ILS) System

Inventory Management

Logistics Packaging
Initiatives
Transportation
Cross
Fusion of IT
Functional
with logistics
Approach
Warehousing
LOGISTICS INITIATIVES AT AMBUJA

Production
Department

Accounts Cross
Sales and Recommendation to
Functional Top Management for
Distributio
Committe n Immediate Action
e

Transportatio
Warehousing
n
ORDER PROCESSING SYSTEM

Informa
Transmi Retrieva Dispatch Adjustm
Paper tion to
ssion of l from Packagi to ent of
Processi producti
Custom wareho ng Transpo Inventor
ng on
er Order use rter y Level
planning

• Flow of every bit of information from point of generation to point of


order fulfillment
• All major office linked to WAN for quick and accurate processing of
orders
• Use of Electronic Data Exchange and Material Resource Planning.
INVENTORY MANAGEMENT

 Monitors levels of Inventory with the combined efforts of other departments:


Production, Purchase, Planning, Raw Material Planning.

 Online Ordering of raw materials- reduces order in time as well as transaction


cost

 Well developed system for inbound logistics: extracts limestonefrom near by


mines - Transportation with the help of Overland belt Conveyor(OBC) and
trucks

 Company maintains a buffer of 10 to 20 days depending on the location of


production unit
PACKAGING

• Packaging ensures proper delivery of material to the point of


consumption
• GACL follows international norms for packaging

First to Introduce
Paper Bags

Low Pilferage And Better Preservation Enhanced Visibility


Leakage Of Cement & Penetration At POS
Transportation
• Responsibility to place the product in the right market, at the right
point of time, reaching the right customer.
• Cement is highly freight intensive in nature and accounts for around
18% of the total cost.

Lowest Cost Supplier in Market Gaining Cost Advantage

Rate No. of fleets


Mode
(Rs/Tonne) Required
Sea
Use of Multi-Modal
Transport Road 670 Many
Transportation System
System
Rail 580 Moderate

Set up Own Water 190 Few


Entered into Route
Ports & Survey for
MoU with
Freight shortest
Cochin Port.
Handling possible
terminals. route.
Warehousing

• Adopted a policy to have 2 type of Warehouses – Dumps and Transshipment


Point Storage
• Warehouses are connected online with marketing office and production unit
for better coordination and hassle free delivery.
• Location of Dump decided based on location of various factors like
transportation facility, parking space, availability of trained and cheap
manpower to work.
• Location of Transshipment decided based on input given by marketing team.
SWOT ANALYSIS

• Second largest cement • Cyclical Nature of the cement


producer in India industry
• Lowest cost producer in India as • High cost of Transportation –
well as the world just able to move 1 percent
• Cross Functional approach to cement produced by Sea while
Logistics Management global average is 70 percent
• Pioneer in using Multi Modal • Dependent on Government for
Transport System license of mines
STRENGTHS WEAKNESSES

OPPORTUNITIES THREATS
• Infrastructure boom and • Rising input cost of materials
government expenditure in like Limestone, Gypsum
programs like Housing for All • High cost of mining due to high
• Low Per capita consumption of duty and stricter environmental
175 kg as compared to 250 kg in regulations
developed countries • Threat of New Entrants
• Industry not influenced by rapid
technological obsolescence
Weakness in logistics &
Recommendation
Weakness Recommendation
Freight cost is 18% of total  Outsourcing to large 3PL service
 Plants are quite far from mining areas like providers
Bihar & Meghalaya
 Use tools to design network for
 Inadequate availability of wagons
multimodal transportation

Over dependence on coal  Invest in efficient fuel sources


 Increased environmental pollution  Alternate technology
 High operational cost
implementation for fly ash
Poor distribution network in North & Focus on large distributors, retailers
South India

Lack of use of modern technologies  Integrate IOT devices to


automate the plant & reduce
expense on man power
 Block Chain integration
THANK YOU

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