mahindra navistar outperformers’ league cement 15 th jun 2012 jaipur sushil cherian 1© 2012, all...

MAHINDRA NAVISTAR

Outperformers’ LeagueCement

15th Jun 2012 Jaipur

Sushil Cherian

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Cement Logistics Importance and Opportunities

Industry Overview• Current Installed Capacity is 245 million T

– 139 Large plants produce ~ 234 million T– 365 mini plants produce ~ 11 million T

• Players in market

• Unequal distribution of production areas and consumption areas leads to logistics playing critical role in Cement Supply Chain

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Industry Overview

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• Critical components of cement costs

• Logistics cost is 19-25 % of Cement Production cost

Cement Logistics

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Distribution Puzzle ?

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You have a product that is inexpensive to make and has a phenomenal demand !

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Not quite….

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What takes away a chunk of the winning is the disproportionate

transportation cost.

This is the dilemma which Cement Makers face

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Preferred Transportation Model

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• Transportation • Transportation costs high - freight accounts for 19-20 % of the production

cost • Road preferred mode for transportation for distances less than 250kms.

However, industry is heavily dependant on roads as the railway infrastructure is not adequate - shortage of wagons.

• Capacity additions • Acquisitions have been the mainstay of the business • Regional imbalance resulting in cross regional movement -

limestone availability in pockets has led to uneven capacity additions • Capacity additions have slowed down

Rajasthan scenario

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Distribution logistics

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> 1000 kms

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Plant Locations vsDistribution

Road Freight Determinants - Cement

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Return Load

Distance

Road Condition/ Congestion

Loading Time/ Load Timings

Waiting Period

Unloading Time/ Unloading Timings

Mode / Transport Availability

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Logistics HUB- Cement

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• Explore secondary delivery and invoicing (on behalf of distributor) for region

• How does it work ?– Identify local area along highway for downsizing Cement Consignment ( Bulk

Breaking)– Place Containers ( 40 ft ) along periphery with multi opening– Cement bulk is transported to HUB Container and reloaded to small capacity

vehicle– Possibility of Invoicing system on small vehicle to facilitate quick delivery– This works well where rail freight can get offset ( bulk loading)

Value Addition by you …

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• Portable Container warehousing• Timely delivery with in 6-12 hrs• End to End Logistics Solution• Reduction in shortages and wastage• Bag Damages reduction• Other Labour related issues at Plants• Reduction in payment of wharfage charges • Improving sales efficiency by 15-20 % ( cycle time)• Overcome Railway indent issues

WINWIN

SITUATION !

Benefits

Thank You

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