CHAPTER – III

Supply Chain Management Practices in Cement companies:

Cement is an essential component of infrastructure development and most

important input of construction industry, particularly in the government’s infrastructure
and housing programs, which are necessary for the country’s socio economic growth and
development. It is also the second most consumed material on the planet. The Indian
cement industry is the second largest producer of cement in the world just behind China,
but ahead of the United States and Japan. It is consented to be a core sector accounting
for approximately 1.3% of GDP and employing over 0.14million people. (Sunil kumar. Et
al 2013). In recent years, companies have faced increasing challenges in their ability to
manage their supply chains. Long and complex supply chains are significant parts of our
global business life as a result of vertical disintegration, product proliferation, focus on
core activities, multichannel set ups and global sourcing (Balasubramanian and Tewary,
2005)

In recent years, several trends have been observed in relation to the Supply Chain
Management. Firstly, competition has become a high dimension; it evolved to an inter-
supply-chain level so SCM has have more and more importance and has become a central
part of the strategic management process (Hult et al., 2007). Secondly, it has become
clear that effective supply chain management provides the possibility to deliver increased
revenue (extended markets and accelerated product/ service innovation), lower costs
(lower cost for materials, production, inventory, transportation, or taxes), reduced assets
(leveraging outsourcing or improved asset utilization), but successful supply chain
strategies require more than the traditional cost-reducing focus (Linton et al., 2007).
Thirdly, more and more scholars and practitioners have thought that Supply Chain
Management has to integrate responsibility into its process and has to relate to
sustainability management.

51
3.1 Cement Manufacturing:
Cement plays a key role in our lives; it is a basic material for all types of
construction, including housing, roads, schools, hospitals, dams and ports and may even
be used in decorative items such as tables and bookcases. In general, cement is a mixture
of limestone, sand, clay and iron. Cement is the major component of concrete. Concrete
is an artificial rock, a material made from a proportioned mix of hydraulic cement, water,
and fine coarse aggregates, air (Oss.Van H.G. 2009), and sometimes additive concrete
can also be made from a ready mix formula in a concrete plant. Concrete is one of the
most important and widely spread building materials in the world.
The most common type of hydraulic cement is Portland cement. The term hydraulic
cement is used because cement hardens when mixed with water. Portland cement is a
closely controlled chemical combination of calcium, aluminum, iron and small amounts
of other ingredients to which gypsum is added in the final grinding process. Portland
cement may be grey or white, but blends can be generated based on the two products.
A cement production plant consists of the following three processes.

! Raw material process

! Clinker burning process
! Finish grinding process

In addition to the above the distribution is an important area where with the help of
supply chain management the best distribution channel can be framed.

3.2 Cement Supply Chain:

The process of cement supply chain is shown in figure 3.1. Figure 3.1 show how
the upstream cement supply chain operates, including sourcing of raw material,
manufacturing and delivery from the plant. There are two main steps in cement
production. The first step is the production of clinker from raw materials. The second step
is the production of cement from clinker.
The first step requires raw materials to be transported to the plant and to be
crushed and homogenized using a large rotating drum called a kiln. The kiln is heated to

52
very high temperatures, and then it is inclined, allowing the raw materials to roll to other
end, where they are quickly cooled. The result is a solid grain called clinker.
The second step is the transformation of clinker into cement in the grinding mill.
Additional elements like gypsum, and perhaps other minerals, might be aggregated to
obtain a fine powder called cement. Finally, cement is moved into storage until a
customer places an order.

53
A supply chain is an integrated manufacturing process wherein raw materials are
converted into final products, then delivered to customers. At its highest level, a supply
chain is comprised of two basic, integrated processes:
! The Production Planning and Inventory Control Process, and
! The Distribution and Logistics Process.
These Processes, illustrated below in Figure 3.2, provide the basic framework for the
conversion and movement of raw materials into final products.

Distribution
Suppliers centers

Manufacturing Storage Transport vehicle Retailer

facility faciity

Customer
Figure : 3.2 The Supply Chain Process
Source: Benita M. Beamon, Supply Chain Design and Analysis:Models and Methods,” International
Journal of Production Economics (1998) Vol. 55, No. 3, pp. 281-294

3.2.1The Production Planning and Inventory Control Process:

The Production Planning and Inventory Control Process encompass the
manufacturing and storage sub-processes, and their interface(s). More specifically,
production planning describes the design and management of the entire manufacturing
process (including raw material scheduling and acquisition, manufacturing process design
and scheduling, and material handling design and control). Inventory control describes
the design and management of the storage policies and procedures for raw materials,
work-in-process inventories, and usually, final products.

54
3.2.2 Distribution and Logistics Process:
The Distribution and Logistics Process determines how products are retrieved and
transported from the warehouse to retailers. These products may be transported to
retailers directly, or may first be moved to distribution facilities, which, in turn, transport
products to retailers. This process includes the management of inventory retrieval,
transportation, and final product delivery. These processes interact with one another to
produce an integrated supply chain. The design and management of these processes
determine the extent to which the supply chain works as a unit to meet required
performance objectives.

3.3 Model simulation:

In general, Model simulation shows how the values are added step by step in the
chain and which process might cause the most cost. Optimizing a supply chain network
can be carried out by different scenarios with the help of Input, Process and Output
Analyzer. Therefore, it gives the decision makers a chance to know how to reduce the
cost and improve facility utilization.

3.3.1 Main Simulation model

The simulation model covers the industrial process from the Quarry and Crushers to
different customers Records and discrete modules. This simple model is oriented in
customers’ sectors, for instance,
! Clinker customers’,
! Concrete producers or constructors,
! Retailers or distribution centers (dc) and
! Bags customers and further emerging customers.

55
 Figure 3.3: Main simulation model
Source: Bernd Noche and Tarek Elhasia, “Approach to innovative supply chain strategies in cement
industry; Analysis and Model simulation” Procedia - Social and Behavioral Sciences 75 ( 2013 ) 359 –
369, 1877-0428 © 2013
Main Model (Figure 3.3) is divided into 3 Sub-models:
! Raw materials crushing sub-model,
! Clinker production Sub-model (Clinking), and
! Cement grinding Sub-model.
! Raw materials crushing sub-model- I,

56
(1) Raw materials crushing sub-model,

Figure: 3.4 Crushing Raw Material and Inventory Mangement

57
(2) Clinker production Sub-model II (Clinking)

Figure: 3.5 Sub-model 2. Clinkering and Clinker-inventory management

58
(3) Cement grinding Sub-model – III

Figure : 3.6 Sub-model 3. Cement grinding and Cement inventory management

According to inventory control, the production process either continues or shut down.
When the raw material or clinker inventory reaches its full capacity, the production will
be stopped, otherwise it will continue. In General, the production will be stopped when
the stock is full. At the same time, if the inventory is smaller than the customer demand

59
the cement plant will lost customer/s. W.C. Bentona, Michael Maloni (2005) Supply
chain management offers a promise of increased market share for competitive firms.
Intense implementation challenges, however, often prevent effective exploitation of
supply chain management benefits, thereby proving detrimental to any planned
operations advantage.

Aysegul (2009) RFID technologies may improve the potential benefits of supply chain
management through reduction of inventory losses, increase of the efficiency and speed
of processes and improvement of information accuracy. Various RFID systems can be
obtained by combining different tags, readers, frequencies and levels of tagging, etc. The
cost and potential profit of each system change in a wide range. In this paper, a state-of-
the-art on RFID technology deployments in supply chains is given in order to analyze the
impact on the supply chain performance. Potential benefits, particularly against inventory
inaccuracy problems, the bullwhip effect and replenishment policies, are briey surveyed.
Various works addressing analytic modeling, simulations, case studies and experiments
as well as ROI analyses are reviewed.

RFID is a form of automatic identification and data capture (AIDC) technology that uses
electric or magnetic fields at radio frequencies for identification, authentication, location,
or automatic data acquisition and transmit, and support a wide range of applications—
everything from asset management and tracking to access control and automated
payment. RFID systems have the capability of sharing information across organizational
boundaries, such as supply chain applications.

3.4 Types of process of Supply Chain Practices in Cement Companies:

Cement Companies have become prime sector for the economic development of
the country. Implementation of supply chain management practices can result
strengthening and running company for long duration. A Supply chain Management is
compressed of different process.

60
 There are different types of process that supply chain management consists
namely,

! Customer Relationship Management

! Customer Service Management:
! Demand Management
! Order Fulfillment Management
! Manufacturing Flow Management
! Supplier Relationship Management
! Product Development and Commercialization
! Returns Management

FIGURE 3.7. Supply chain management: integrating and managing business

processes across the supply chain.
Source :Cooper, M. C., Lambert, D. M., and Pagh, J. D.: Supply Chain Management: More Than a New
Name for Logistics. The International Journal of Logistics Management 8(1), 1–13 (1997).

61
These eight processes and their functions are described as follows:

(a) Customer Relationship Management: Provides structure to customer relationship

and how such relationships are developed, maintained, and managed. Identifies target
customer groups as part of the business mission and develops agreements with key
accounts. Performance reports also measure profitability and financial impact for key
customers.

(b) Customer Service Management: Provides customer information such as shipping

dates, product availability, and real-time information between customers and the firm.

(c) Demand Management: Balances the customers’ requirements with the firm’s
supply capabilities. This would include forecasting demand and managing the
demand in production, procurement, distribution, and in all other outputs of the
company.

(d) Order Fulfillment Management: Provides integration of the firm’s manufacturing,

logistics and marketing plans. This would require the management of partnerships
maintained by the company to meet customer requirements.

(e) Manufacturing Flow Management: Helps to manufacture products and establishes

the manufacturing flexibility required to service target markets. Requires
management of product flow and maintaining the flexibility established.

(f) Supplier Relationship Management: Defines how a company interacts with its
suppliers. Similar to customer relationship management, partnership management is
required to develop key relationship with core suppliers potentially providing a
competitive advantage.

62
(g) Product Development and Commercialization: Provides the development of new
products by integrating customers and suppliers in reducing time to market. Timely
development of new products and services are keys to firm’s success.
(h) Returns Management: Provides a critical component of sustained competitive
advantage for the firm. Allows firm to monitor productivity improvements and
identify valuable projects related to products or services.

Out of these eight processes, we have chosen and identified four processes that include
demand management, order fulfillment, manufacturing flow management, and return
management where RFID plays a critical role and creates the most value. The table 3.1
shows type of business process across supply chain management practices

Table: 3.1 Types of business process across supply chain

Name of cement company CRM CSM DM OFM MFM SRM PD&C RM
M/s Madras Cements Ltd., Y Y Y Y Y Y Y
M/s Kesoram Cements Ltd., Y Y Y Y Y
M/s Sri Vishnu Cements Ltd., Y Y Y Y
M/s KCP Cements Ltd., Y Y Y Y
M/s Zuari Cements Y Y Y Y Y Y Y Y
M/s Raasi Cements Ltd., Y Y Y Y
M/s The India Cements Ltd., Y Y Y Y Y
M/s Andhra Cements Ltd., Y Y Y Y
M/s Cement Corporation of Y Y Y Y Y
India Ltd.,
M/s Deccan Cements Ltd., Y Y Y Y
Source: Primary Data

CRM = Customer Relationship Management, CSM=Customer Service Management, DM= Demand

Management, OFM=Order Fulfillment Management, MFM=Manufacturing Flow Management,
SRM=Supplier Relationship Management, PD&C=Product Development and Commercialization,
RM=Returns Management, Y=yes

63
From the table 3.1 the following observations are made
M/s Madras Cements Ltd.:
This cement company is following all the business process which constitutes
Supply Chain Management except PD&C.
M/s Kesoram Cements Ltd.,:
This cement company is practicing CRM, OFM, RM, MFM and DM.
M/s Sri Vishnu Cements Ltd.:
This cement company is practicing DM, OFM, MFM, RM.
M/s Sri Vishnu Cements Ltd.,
This cement company is practicing DM, OFM, MFM, RM.
M/s KCP Cements Ltd.,
This cement company is practicing DM, OFM, MFM, RM.
M/s Zuari Cements
This cement company is following all the business process which constitute
Supply Chain Management
M/s Raasi Cements Ltd.,
This cement company is practicing DM, OFM, MFM, RM.
M/s The India Cements Ltd.,
This cement company is practicing CRM, OFM, RM, MFM and DM.
M/s Andhra Cements Ltd.,
This cement company is practicing DM, OFM,MFM,RM.
M/s Cement Corporation of India Ltd.,
This cement company is practicing CRM, OFM, RM, MFM and DM.
M/s Deccan Cements Ltd.,
This cement company is practicing DM, OFM, MFM, RM.

3.5 Supply Chain Strategy – An essential necessity for the company’s success:
The challenge is to achieve alignment of a cross-company supply chain (SC) strategy
with the strategic intent of the businesses to create value and enable growth over the
whole SC(S. Monahan and R. Nardone 2007). Despite the apparent necessity of a cross-

64
company synchronization of value-adding activities to satisfy customer needs, developing
and managing a SC strategy is neither a matter of course nor widespread (S. Cohen and J.
Roussel 2005). (J. Godsell 2009) identified indicators of the immaturity of a SC strategy
that may sound familiar to a broad field of companies:

The primary essential necessities for SCM Practices are as follows

! Full time In-charge Supply Chain Director
! ‘One-size-fits-all’ approach
! Customer segmentation according to account value
! Strategic SC alignment is still in its beginning phase although SCM is partly
executed in companies.

3.5.1Supply Chain Director:

In top management there is only a limited presence of SC directors and those who
do exist rarely have the responsibility for the full scope of the SC. The table 3.2 depicts
the views of the Cement Manufacturers regarding full time in-charge director for
handling SC Practices.
Table 3.3: Having director who is full time in-charge for handling for SC Practices

Name of cement company Having director No of Percentage No of Percentage

companies of response companies of response
who is full time
response response
in-charge for as yes as No

handling for SC
Practices
M/s Madras Cements Ltd., Yes 1 10 0 -
M/s Kesoram Cements Yes 1 10 0 -
Ltd.,
M/s Sri Vishnu Cements No 0 - 1 10
Ltd.,
M/s KCP Cements Ltd., No 0 - 1 10

65
Name of cement company Having director No of Percentage No of Percentage
companies of companies of
who is full time
response response response response
in-charge for as yes as No

handling for SC
Practices
M/s Zuari Cements No 0 - 1 10
M/s Raasi Cements Ltd., No 0 - 1 10
M/s The India Cements No 0 - 1 10
Ltd.,
M/s Andhra Cements Ltd., No 0 - 1 10
M/s Cement Corporation No 0 - 1 10
of India Ltd.,
M/s Deccan Cements Ltd., No 0 - 1 10
Total 20 80
Source: Field Survey

Having director who is full time in

in-charge
charge for handling
for SC Practices

Yes
20%

No
80%

Chart 3.2: Pie Chart showing a special director who is full time in-charge
in for
handling for SC Practices

The Table
able 3.3 reveals that 80% of the Cement Companies namely M/s The India
Cements Ltd., M/s Andhra Cements Ltd., M/s Cement Corporation of India Ltd.,,
Ltd., M/s

66
Deccan Cements Ltd.,, M/s Sri Vishnu Cements Ltd., M/s KCP Cements Ltd. And M/s
Raasi Cements do not have a special director who is full time in-charge for handling for
SC Practices and remaining 20% of the Cement Companies namely M/s Zauri Cements,
M/s Madras Cements, M/s Kesoram Cements appointed a special director who is full
time in-charge for handling for SC Practices.

When the time comes of SC Implementation or Performance Evaluation or

Changes/modification in the ongoing process the general directors and top level
employees are involved. There may be some percentile error in decision making or
correction in Strategies framed processes. It is necessary that they may appoint a full time
director for SC Practices. Few of these companies instead of appointing a separate
director for SC Practices the existing director/directors is/were given extra burden of
looking after the activities of SC Practices. Some of the supply chain analyst and research
studies say that this type of practices may not be seen at present but may effect in the
long run process.

Strategic SC alignment is still in its beginning phase although SCM is partly executed in
companies. The companies have to understand thoroughly the working and execution of
SC Practices and see that 100% execution is made. The Pie chart 3.2 shows the
respondents view on a special director who is full time in-charge for handling for SC
Practices
3.5.2: ‘one-size-fits-all’ approach:
The majority of companies focus on a ‘one-size-fits-all’ approach to develop a SC
strategy and lose track of the main aspect – the customer. The table 3.3 depicts the views
of Cement Companies on ‘one-size-fits-all’ approach a SC strategy and lose track of the
main aspect.

67
68
 ‘one-size-fits-all’ approach to develop a SC strategy and lose
track of the main aspect customer..
70

Response of Cement Companies 60

50

40

30

20

10

0
yes indifference
60 40

Column chart 3.4 Respondents views on ‘one-size-fits-all’ approach

From the table 3.4 the following observations are made

60% of the cement companies namely M/s Madras Cements Ltd., M/s Kesoram
Cements Ltd.,, M/s Sri Vishnu Cements Ltd., M/s KCP Cements Ltd., M/s Zuari
Cements, M/s Raasi Cements Ltd focus on a ‘one-size-fits-all’ approach to develop a
SC strategy and lose track of the main aspect – the customer. Customer is the final
and prime target for the growth of any Cement company. The strategy has to be
framed in such a way that customer inclusion be made. These Cement Companies
made late realization and started giving importance to lose track aspect Customer.
Remaining 40% of the Cement Companies like M/s The India Cements Ltd., M/s
Andhra Cements Ltd., M/s Cement Corporation of India Ltd.,, M/s Deccan Cements
Ltd., failed in their early stage of implementation. These Cement Companies were
eager in implementation of new SC concept. With this small strategy mistake they
went wrong in handling the SC Practices. Now these companies have realized slowly
and are in the process of implementing that lose track aspect Customer.

The Column chart 3.1 shows the respondents view on a ‘one-size-fits-all’ approach to
develop a SC strategy and lose track of the main aspect – the customer.

69
3.5.3 Customer segmentation according to account value:
Customer segmentation is often only done according to account value – with no
direct link to SC strategy. Cement Companies when framing a SC strategy has to
consider customer segmentation and create a linkage.
Table 3.5: customer segmentation according to account value – with no direct link to SC
strategy.

70
71
 customer segmentation according to account value – with no direct link
to SC strategy.

70

60
Response Percentage

50

40

30

20

10

0
Yes No
choice of Cement Companies

Chart 3.5: Line chart showing customer segmentation according to account value –
with direct link to SC strategy

The Table 3.5 reveals that 40 % of the Cement Companies namely M/s Kesoram
Cements Ltd., M/s Sri Vishnu Cements Ltd., M/s KCP Cements Ltd M/s Raasi Cements
Ltd had customer segmentation according to account value – with direct link to SC
strategy and remaining 60% of the Cement Companies namely M/s Madras Cements
Ltd., M/s Zuari CementsLtd, ., M/s The India Cements Ltd., M/s Andhra Cements Ltd.,
M/s Cement Corporation of India Ltd. and M/s Deccan Cements Ltd. had no customer
segmentation according to account value – and direct link to SC strategy

The Line chart 3.3 shows the respondents view on customer segmentation according to
account value – with direct link to SC strategy and the analysis indicates that customer
segmentation according to account value – with direct link to SC strategy only 60% of
the companies are operating.

72
3.5.4 Strategic SC alignment:
Cement Manufacturers are gaining strength in the area of Supply chain. the
companies have started realizing the fruits of Supply Chain. Strategic SC alignment is
still in its beginning phase although SCM is partly executed in companies.

3.6 Supply Chain & Business Strategy for Cement companies

There are three elements which play a vital role in supply chain and Business
Strategy. Three Steps to Align Supply Chain & Business Strategy is as follows

73
TIPS & ECHNIQUES

Figure 3.7 Supply Chain & Business Strategy

74
Supply Chain Management in Cement Company is the management of upstream and
downstream relationships with and customers to deliver superior customer value at less
cost to the supply chain as a whole. A supply chain is the process of moving goods from
the customer order through the raw materials stage, supply, production and distribution of
products to the customer. All organisations have supply chains of varying degrees,
depending upon the size of the organisation and the type of product manufactured. The
cement companies has to understand the requirements of the customers, define core
competencies and roles the companies are going to play to fulfill the requirements of the
customers and finally develop a SC capabilities to support the roles of company has
chosen. In this aspect now let us examine the study

Table 3.6The Supply Chain and Business strategy in manufacturing companies.

Are roles the Are SC
Are core company going to capabilities to
Name of cement company competencies play to fulfill the support the roles
defined requirements of of company are
the customers developed
M/s Madras Cements Ltd., Yes Yes Yes
M/s Kesoram Cements Ltd., Yes Yes Yes
M/s Sri Vishnu Cements Ltd., Yes Yes Under process
M/s KCP Cements Ltd., Yes Yes Under process
M/s Zuari Cements Yes Yes Yes
M/s Raasi Cements Ltd., Yes Yes Yes
M/s The India Cements Ltd., Yes Yes Yes
M/s Andhra Cements Ltd., Yes Yes Yes
M/s Cement Corporation of Yes Yes Under process
India Ltd.,
M/s Deccan Cements Ltd., Yes Yes Under process
Source: Primary Data

75
 Elements in supply chain and Business Strategy
Yes
120
Response of Cement Companies

No(under
100 process)
80

60

40

20

0
Are core competencies Are roles the company Are SC capabilities to
defined going to play to fulfill the support the roles of
requirements of the company are developed
customers
Choice of the Respondents

Chart 3.4: Column chart showing elements in supply chain and Business Strategy

From the Table 3.6 it is found that 100% of the cement companies have defined core
competencies and roles the company going to play to fulfill the requirements of the
customers. SC capabilities to support the roles of company are developed in M/s Madras
Cements Ltd., M/s Kesoram Cements Ltd., M/s Zuari Cements, M/s Raasi Cements Ltd.,
M/s The India Cements Ltd., M/s Andhra Cements Ltd. And remaining 40% of the
cement companies namely M/s Sri Vishnu Cements Ltd., M/s KCP Cements Ltd., M/s
Cement Corporation of India Ltd.,, M/s Deccan Cements Ltd., SC capabilities to support
the roles of company are under development process in Cement Companies

The Column chart 3.4 shows the respondents views of cement companies on elements in
Supply Chain and Business Strategy. The analysis indicates that all Cement Companies
defined 100% core competencies and roles the company going to play in fulfilling the
requirements of the customers.

76
3.7 Supply Chain Practices in Cement Companies:
In today’s world SCM Practices are gaining its importance. Every Cement
company is trying hard to compete with its competitors and create a place to stand in the
market. SCM Practices concept is becoming a catalyst for them to achieve it. There are
different types of SCM Practices prevailing in Cement Industry. They are classified as
follows
! Commonly used SCM Practices
! Moderately used SCM Practices
! Very less used SCM Practices

3.7.1 Commonly used SCM Practices:

Commonly used SCM Practices are as follows
3.7.1.1 Close Partnership with Suppliers:
In the current competitive scenario we know that suppliers play a predominant
role. A supplier is the starting process in the supply chain. Strategic commitment from
suppliers is crucial determinant of business for its successful growth of the organisation.
Hence close partnership with suppliers boast up the organisation in its operations. The
key dimensions of strategic sourcing are strategic supplier partnership; trust in supply
chain members, and flexibility in sourcing and supplier evaluation. Strategic sourcing
helps companies to get required raw material on time as per the requirement of
production department thereby able to send product into market correctly as per schedule
prescribed by the retailers/dealers.

3.7.1.2 Close Partnership with Customers:

Customers are the end point of any business entity. Even it is end point in the
process of Supply chain practice. As they are the main purchaser of the finished product
companies has to have strategic relation with customer otherwise a close partnership with
them. This strategy helps to supply the end product of the production to directly to ware
house and markets. It also helps to know the changing preferences of customers in short
span of time. This strategic relation decides the success of operation of business. The
companies gain many benefits by adopting the Supply Chain Practices.

77
3.7.1.3 Holding Safety Stock
Stocking of the finished product is a primary entity in the inventory management.
Good inventory management leads to growth and prosperity of the company. In the
current scenario markets are fluctuating depending the taste and preferences of the
customers. So, strategic relation with the inventory department in supply chain is
necessary and a catalyst in success of its operations. Companies plan their production
schedule according to the reports of the inventory department and market needs,
unexpected events like transport union strike, workers strike etc.,. hence holding sagety
stock is prime concern of the company.

Table: 3.7 commonly used SCM Practices

Commonly used SCM Practices
Close
Close
Name of cement company Partnership Holding
Partnership
with Safety stock
with suppliers
Customers
M/s Madras Cements Ltd., Following Following Following
M/s Kesoram Cements Ltd., Under process Following Following
M/s Sri Vishnu Cements Ltd., Following Under process Following
M/s KCP Cements Ltd., Following Following Following
M/s Zuari Cements Following Following Following
M/s Raasi Cements Ltd., Following Under process Under
process
M/s The India Cements Ltd., Under process Under process Following
M/s Andhra Cements Ltd., Following Following Following
M/s Cement Corporation of India Ltd., Following Under process Following
M/s Deccan Cements Ltd., Under process Under process Following
Source: Primary Data

78
 Commonly used SCM Practices
100

Response of Cement Companies

90
80
70
60
50
40
30
20
10
0
Close Partnership Close Partnership
Holding Safety stock
with suppliers with Customers
Following 70 50 90
Under Process 30 50 10

Chart 3.5: Column Chart Showing Commonly used SCM Practices

From the Table 3.7 it is found that

70% of the Cement Companies namely M/s Madras Cements Ltd., M/s Madras
Cements Ltd., M/s KCP Cements Ltd., M/s Zuari Cements Ltd.,M/s Raasi
Cements Ltd., M/s Andhra Cements Ltd., M/s Cement Corporation of India Ltd
are following all the commonly used Supply Chain Management Practices with
close partnership with suppliers Remaining 30% of the cement companies namely
M/s Kesoram Cements Ltd.,, M/s The India Cements Ltd., M/s Deccan Cements
Ltd., which not having the close partnership,
50% of the companies are following the practice Close Relationship with
Customers namely M/s Madras Cements Ltd., M/s Kesoram Cements Ltd.,, M/s
Zuari Cements, M/s KCP Cements Ltd., M/s Andhra Cements Ltd. and M/s
Cement Corporation of India Ltd., Cement Companies. And remaining 50% of the
Cement Companies namely M/s Raasi Cements Ltd., M/s The India Cements
Ltd., M/s Cement Corporation of India Ltd., M/s Deccan Cements Ltd M/s Raasi
Cements Ltd., are under process. The Column chart 3.5 shows the respondents
views of cement companies on Commonly used SCM Practices.The analysis

79
 indicates that 70% of the cement companies are following close partnership with
suppliers.

3.7.2 Moderately used SCM Practices:

Moderately used SCM Practices are as follows
! Just in Time
! Electronic Data Interchange
! Outsourcing
! Subcontracting
! Use of External Consultants
3.7.2.1 Just in Time:
Just in Time is also called JIT practice. It is a practice which schedules the supply
channel in synchronizing according to the requirements of the market or customers. It is
operating philosophy for meeting the goal of having the right goods at the right time at
the right place. It is alternative to inventory management. A company gets benefits from
JIT as reduction in set up times in production department, better scheduling and work
hour consistency, designing and usage of multiple skills of employees, efficient flow of
goods from inventory department to the market etc.,

3.7.2.2 Electronic Data Interchange

Electronic Data Interchange is also called EDI practice. It is a practice which
refers to the structured transmission of data by electronic means between two entities. A
data can be transferred from one computer to another computer, one trading company to
another and between organisation without human interventions. In different locations
EDI can communicate in pre-determined format of document with reliable speedy and
effective way. It facilitates the exchange of documents between two entities. EDI
provides competitive advantage, expansions of purchase or selling locations, binding
strong and smooth relationship between companies or suppliers and its clients, increase
accuracy in dealing, reduce lead time and production cost etc.,

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3.7.2.3 Out sourcing:
Capital is the prime concern for the business operation. Companies are searching
for all innovative strategies in reduction of capital. Out sourcing is process of obtaining
goods or services from an outside source or other firm. In a Company the decision of
outsourcing depends up on strategic and non-strategic parts to make or buy. In general
strategic parts are produced in company premises for competitive reasons. In case of non
strategic parts can be produced or out sourced. In large scenario companies are out
sourcing the non- strategic parts. Out sourcing helps companies to focus on core
competencies, reduction of cost, saving of capital, increase of investment capital thereby
giving option for diversification or innovation in its operations, access to emerging
technology etc.,

3.7.2.3 Sub-contracting:
Sub contracting is a process of giving some part of manufacturing operation to
other firm. When customer need finished product on time organisation realize
manufacturing the part is difficult in context of financial resources, lack of technology,
shortage of man power, shortage of raw material etc.,. start implementing subcontracting.

3.7.2.4 Use of External Consultants:

In organisation managing of Supply Chain practices becomes difficult in handling with

addition to regular operation. In such situation organisation can hire external consultant
professionals in managing SC practices. External Consultants are responsible for
planning the SC operations and executing the same. The table 3.9 depicts the moderately
used SCM Practices.

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 Table: 3.8 Moderately used SCM Practices

Moderately used SCM Practices

Electronic
Name of cement company Use of External
Jit Data Outsourcing Subcontracting
Consultants
Interchange
M/s Madras Cements Ltd., Following Following Following Following Following
M/s Kesoram Cements Ltd., Following Not following Following Under process Following
M/s Sri Vishnu Cements Ltd., Not following Not following Following Under process Not following
M/s KCP Cements Ltd., Following Following Following Following Following
M/s Zuari Cements Following Following Following Following Following
M/s Raasi Cements Ltd., Not following Not following Following Following Not following
M/s The India Cements Ltd., Not following Not following Following Under process Following
M/s Andhra Cements Ltd., Following Following Following Under process Following
M/s Cement Corporation of Following Not following Following Not following Following
India Ltd.,
M/s Deccan Cements Ltd., Not following Not following Following Under process Not following
Source: Primary Data

Moderately used SCM Practices

120
Response of Cement Companies

100

80

60

40

20

0
Electronic Use of
Subcontracti
Just in Time Data Outsourcing External
ng
Interchange Consultants
Following 60 40 100 40 70
Not following 40 60 0 10 30
Under process 0 0 0 50 0

Chart 3.6: Column Chart showing moderately used SCM Practices

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From the Table 3.8 the following observations are made
The 60% of the cement companies namely M/s Madras Cements Ltd., M/s KCP
Cements Ltd. and M/s Zuari Cements Ltd., M/s KCP Cements Ltd., M/s Andhra
Cements Ltd., M/s Cement Corporation of India Ltd and remaining 40% of the
Cement Companies namely M/s Raasi Cements Ltd. M/s Sri Vishnu Cements Ltd.,
M/s Cement Corporation of India Ltd., M/s Deccan Cements Ltd are following all the
moderately using Supply Chain Management Practices.
60% of the companies are following Just in Time Practice, 40% of the companies
namely M/s Madras Cements Ltd., M/s KCP Cements Ltd., M/s Zuari Cements Ltd.,
M/s Andhra Cements Ltd., are following Electronic Data Interchange.
.60% of the cement companies namely M/s Kesoram Cements Ltd M/s Sri Vishnu
Cements Ltd., M/s Raasi Cements Ltd., M/s The India Cements Ltd., M/s Cement
Corporation of India Ltd., M/s Deccan Cements Ltd not following moderately used
SCM practices, electronic data interchange. 40% of the cement companies namely
M/s Madras Cements Ltd., M/s KCP Cements Ltd., M/s Zuari Cements Ltd., M/s
Raasi Cements Ltd following subcontracting in moderately used SCM practices.
50% of the cement companies namely M/s Kesoram Cements Ltd M/s Sri Vishnu
Cements Ltd., M/s The India Cements Ltd., M/s Andhra Cements Ltd., M/s Deccan
Cements Ltd., subcontracting under progress in moderately used SCM practices, 10%
of the cement companies namely M/s Cement Corporation of India Ltd., not
following subcontracting in moderately used SCM practices and remaining 40% of
the Cement Companies were following.
.70% of cement companies namely M/s Madras Cements Ltd., M/s Kesoram
Cements Ltd M/s Madras Cements Ltd., M/s KCP Cements Ltd., M/s Zuari Cements
Ltd., M/s The India Cements Ltd., M/s Andhra Cements Ltd., M/s Cement
Corporation of India Ltd.,are using external consultants. Remaining 30% of cement
companies namely M/s Sri Vishnu Cements Ltd., M/s Raasi Cements Ltd., M/s
Deccan Cements Ltd are not using external consultants in moderately used SCM
practices.

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Column chart 3.6 shows the respondent’s views of cement companies on Moderately
used SCM Practices.The analysis indicates that 100 % of the cement companies are out
sourcing regarding moderately used SCM Practices.

3.7.3 Very less used SCM Practices:

Very less used SCM Practices are as follows
! E-Procurement
! Supply Chain benchmarking
! Vertical Integration
! Third Party Logistics

3.7.3.1 E-procurement
E- procurement is also called as Electronic Procurement. It is a process when
organisation is developed as extended enterprise supply chain becomes a continuous and
un-interrupted process extending from buyer through selling partners. In the present
situation eE-procurement is hot topics liked to supply chain. E- procurement exists in
different forms namely E- tendering, E-Sourcing, E- Informing, ERP( Enterprise
Resource Planning) and E- reverse auctioning. Strategic E-Procurement is a costly and
reliable speedy process.

3.7.3.2Supply Chain Benchmarking:

In today’s world the markets are existing with fierce competition among
companies of same industry. Every company is trying to improve its performance to the
best standard of the industry. Supply Chain Bench Marking is a process of fixing the best
company in the same industry as target and striving to achieve the same. In this way
company can identify the areas of opportunities for efficient performance. After
identifying the areas the company can use eminent, reliable methods and strategies
regarding best performance of Supply Chain. by comparing with best company applying
SWOT analysis helps to know the Strength, Weakness, Opportunities and Threats of
company provide a chance for better improvement.

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3.7.3.3 Vertical Integration
There are different entities in the organisation as selling, distribution, technology,
production; suppliers, inventory and Human Resource etc.,. are to be integrated for
Excellency. Vertical Integration is a process of combining the above said entities within
the confines of a single firm. Usage of Vertical Integration in Supply Chain obtain the
good results. The success of Supply Chain practices depend up on the degree of
integration. It reduce reduction of cost, better performance when compared to other
companies in the industry and increased control.
3.7.3.4Third Party Logistics:
The maintenance of Logistics in the organisation sometimes become challenging.
A need may arise for assistance for efficiency. Third Party Logistics is a Process existing
in any form of outsourcing of logistics activities previously performed inside company.
The process bridges a gap between manufacturer or seller on one side and user or buyer
on the other side. 3TPL provides a typical specialize in transportation services,
warehousing and integrated operation which scaled and customized to customer’s needs
based on market conditions and demands delivery service requirements for its products
and materials. The table 3.9 depicts the very less used SCM Practices.
Table: 3.9 Very less used SCM Practices

Very less used SCM Practices

Name of cement company

Third Party
Supply Chain Vertical
E-Procurement Logistics
benchmarking Integration

M/s Madras Cements Ltd., Not following Under process Under process Under process
M/s Kesoram Cements Ltd., Under process Not following Not following Not following
M/s Sri Vishnu Cements Ltd., Not following Not following Not following Not following
M/s KCP Cements Ltd., Not following Under process Not following Not following
M/s Zuari Cements Under process Under process Under process Following
M/s Raasi Cements Ltd., Not following Not following Not following Not following
M/s The India Cements Ltd., Not following Not following Not following Under process
M/s Andhra Cements Ltd., Not following Not following Under process Under process
M/s Cement Corporation of India Ltd., Not following Not following Not following Not following
M/s Deccan Cements Ltd., Not following Not following Not following Not following

85
 Very less used SCM Practices
80

Response of Cement Companies

70
60
50
40
30
20
10
0
Supply Chain Vertical Third Party
E-Procurement
benchmarking Integration Logistics
Following 0 0 0 10
Not following 8 70 70 60
Under process 20 30 30 30

Chart 3.7: Line chart showing very less used SCM Practices

From the Table 3.9 it is found that

The 80% of the cement companies namely M/s Madras Cements Ltd., M/s Madras
Cements Ltd., M/s KCP Cements Ltd., M/s Raasi Cements Ltd., M/s The India
Cements Ltd., M/s Andhra Cements Ltd., M/s Cement Corporation of India Ltd., M/s
Deccan Cements Ltd M/s Sri Vishnu Cements Ltd., are not following the e
procurement And remaing 20% of cement companies namely M/s Zuari Cements,
M/s Kesoram Cements Ltd the E-Procurement Practice is under progress.
70% of the cement companies namely M/s Kesoram Cements Ltd M/s Madras
Cements Ltd., M/s Raasi Cements Ltd., M/s The India Cements Ltd., M/s Andhra
Cements Ltd., M/s Cement Corporation of India Ltd., M/s Deccan Cements Ltd M/s
Sri Vishnu Cements Ltd.,are not following supply chain Benck marking and the
remaining 30% cement companies namely M/s Madras Cements Ltd., M/s KCP
Cements Ltd., M/s Zuari Cements Ltd. are underprogress of supply chain
benchmarking.

86
70% of cement companies namely M/s Kesoram Cements Ltd M/s Sri Vishnu
Cements Ltd., M/s Raasi Cements Ltd., M/s The India Cements Ltd. M/s Cement
Corporation of India Ltd., M/s Deccan Cements Ltd are not following vertical
integration.And remaining 30% of cement companies namely M/s Madras Cements
Ltd., M/s Zuari Cements Ltd., M/s Andhra Cements Ltd are uderprogress in vertical
integration.
10% of the cement companies namely Zuari Cements is following Third Party
Logistic. 30% of the cement companies namely M/s Madras Cements Ltd., and M/s
Andhra Cements Ltd. M/s The India Cements Ltd., are under progress of third party
logistics.And remaining 60%of the cement companies namely M/s Kesoram Cements
Ltd M/s Sri Vishnu Cements Ltd M/s KCP Cements Ltd., M/s Raasi Cements Ltd M/s
Cement Corporation of India Ltd., M/s Deccan Cements Ltd are not following thir
party logistics.

The Line chart 3.7 shows the respondent’s views of cement companies on very less
used SCM Practices.The analysis indicates that 70% of the Cement Manufacturing
companies are not using the SCM Practices like E-Procurement, Supply Chain
benchmarking, Vertical Integration and Third Party Logistics and 60% not using
Third Party Logistics.

*******

87
References

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2) Christopher, Martin L. (1992), Logistics and Supply Chain Management, London:
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