SUPPLY CHAIN(DISTRIBUTION CHANNEL) FOR AMBUJA CEMENT

AMBUJA CEMENT

A Concrete Story..

AMBUJA CEMENT
Presented by: Pallav H. Chandrani

Cement factories Sea terminals

UNIQUE LOGO

FOUNDATIONS
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Began its operations in 1986 The Swiss Company Holcim has a 78% stake in ACIL while GACL owns 22% Capacity built up from 0.7 Mn tonnes in 1986 to 18.0 Mn tonnes at present Vision – To be India’s most admired company Mission – delighted customers, inspired employees, empowered partners, energized society

STRATEGY A COMPREHENSIVE PLAN GUIDING RESOURCE ALLOCATION TO ACHIEVE LONGTERM ORGANIZATION GOALS COMPETITIVE ADVANTAGE OPERATING IN SUCCESSFUL WAYS THAT ARE DIFFICULT TO DUPLICATE .

PURPOSE & OBJECTIVE OF RESEARCH  PURPOSE: To gather information about all the departments in GACL that are concerned for the value chain and in turn supply chain management system(Distribution channel) of an organization and the contribution of activities of all the departments to overall results.  OBJECTIVE: My objective of this research is analyzing the value chain system in GACL and to find out what else can be done to improve .

GACL .MARKETING RESEARCH FOR VALUE CHAIN MODEL .

but also generate more collaborative relationship with internal organizations. In my study.  . which will ultimately result in a more effective business process from which all parties will benefit. i tried to exploit the system which AMBUJA is using. because efficient and effective inbound logistic performance would benefit all participants in the value chain.1) INBOUND LOGISTICS  Turning attention to inbound logistics will not only reduce costs. suppliers and logistic providers.

SCOPE OF LOGISTICS Materials management Physical Distribution Suppliers Inbound materials flow Outbound finished goods WIP Production Finished Goods Inventory in the field Transit Depot Customer Intermed iary LOGISTICS .

 . We can say that production activity is nothing but the step conversion of one from of material into another either chemically or mechanically. All other revolve around this activity. GACL uses the dry process for cement manufacturing. Selection is based on the fact that dry process consumes less thermal energy and minimizes the pollution.2) OPERATION  Production is the basic activity of all the industrial units.

3) OUTBOUND LOGISTICS  In recent years companies and academic organizations have focused on outbound operations due to their being the customeroriented part of the business whereas the control of the inbound operations was generally left to the suppliers. Manufacturer Stockiest/dealer Sub stockist Retailer . But now outbound operations have become modernized and extracting additional benefits has become more and more difficult.

The head office of marketing department is at Mumbai. which looks after the marketing of all regions centrally. .4) MARKETING & SALES  Marketing is a comprehensive term and it includes all resources and set of activities necessary to direct and facilitate the flow of goods and services from producer to consumer in the process of distribution. states of country as well as in foreign countries too. Essentials of cement marketing Focus on brand name Effective differentiation Effective public relations Price differentiation Strong distribution network   GACL has created marketing department in Gujarat. Rajasthan. Maharashtra. etc.

To provide a successful distribution of consumer product. To encourage the customers & know the fault in their products & then try to make quality or . To sell their products in new areas to make new customers & satisfy old ones. To study the market problems according to circumstances & suggest the solutions. Try to convince the customer about better & quality product.OBJECTIVES OF MARKETING DEPARTMENT        The following are the objectives of marketing department at GACL To find new & new customers to sell them more & more of companies product.

A.Product Mix Cement industry does not have a large product mix and the same applies for Ambuja Cements.L. Product line (OPC). (Grade-53) G.Cement.C. is producing mainly Ordinary Portland Cement Market Segmentation . Product item: A single product .

280 per 50kg bags. GACL also follows policy of resale price maintenance is that all the retailers are bound to sell their brand of goods at a fixed retail price decided by them.  When it comes to setting up the price. is Rs. Price decides the market share and profitability. So any mistake in deciding price will affect too much to unit. No retailer can exceed the limit fixed by the manufacturer. So we can say that price is one of the most important element determining company’s market share and profitability.  The present price of Ambuja Cement is approx. .Price Mix:  Price is the only element of marketing mix that produces revenue. it is the most crucial decision.

SALES & DISTRIBUTION .

TRANSPORTATION  Transportation in value chain refers to efficient and price sensitive movement of final finished goods from source to destination the physical distribution aims at 7 R’S in transportation        RIGHT RIGHT RIGHT RIGHT RIGHT RIGHT RIGHT PRODUCT QUALITY CONDITION TIME PLACE CUSTOMER COST .

to avoid unnecessary pressure/ action by Govt. fed back with marketing branches. Better co-ordination.ACTION PLANS      To ensure execution of orders within 48 hrs. Effective liasoning with the concerned Govt. To comply with all statutory requirement/ documentation. authorities. To study the activities of nearby plants To co-ordinate and monitor unloading operation of material trucks for speedy unloading. To ensure adequate availability of material at muldwarka terminal as per ship planning To plan & monitor the tanker movement to bring down the cycle time to minimum 10 trips per tanker.    . officials. for non-compliance.

SERVICES  GACL provides services to customer in tremendously helpful way it has created different departments for that like CUSTOMER SUPPORT department which has number of civil engineers to provide testing facility and technical support to the customer. Recently in earthquake time these engineers has provided technical guidelines in terms of seminars for topics like consistency and strength in construction and also have provided  .

Seasonal seminars by technical experts Quality exhibitions Construction guidelines by civil engineers. Its concrete testing lab and the engineer’s staff is famous in the whole world. So we can say GACL has mechanized after sales service the major activities done by GACL as a tool to enhance its after sales services is as follow: Set up complaint redress committee of experts. .

For production plant High efficiency fans for all process fans. and different types of agro waste etc. . Roller press for cement grinding In house energy audit for effective monitoring of energy consumption.rice husk. Use of agro waste fuels like Ground nut husk (GNH). Mines in nearby areas to reduce the material movement cost.  Mechanical conveying in place of pneumatic conveying Six stage low pressure drop cyclone preheater Captive power generation by sets GEB power cost 7. Basic raw material order placing at center level to take the advantage of Bulk ordering.75 per unit while this captive power plant gives 2.ANALYSIS OF COMPANY’S VALUE CHAIN  For Inbound Logistics Use of imported coal Continue searching for new sources of raw material availability at nearby areas.25 per unit.

If transporting in packed bags. Grouping orders area wise to reduce the transportation cost. it can transport maximum 200 bags in one trip that is 10 tons per trip but transporting in loose give 21 to 35 tons per trip. Established own jetty to speeding the export and domestic distribution of cement Using technique of big vehicle to small vehicle to reach at remote area and reduce wait time . For Outbound logistics Sea transport of loose cement. Established Regional and central sales office to transfer the orders of nearby area so as to minimize the transportation cost.

This adds value to the final consumer. GACL is providing excellent after sales services to the customer for that it has establish altogether different department of civil engineer for guiding customer in construction activity.ANALYSIS OF CUSTOMER’S VALUE CHAIN  As the cement industry is one of the most energy and power intensive industry so.    . It has built check dams and temples and many more things for citizens. GACL is the pioneer in thinking about Environment protection & has done many activities for Environment prevention it has fitted dusting control bag at every dust producing stage in production plant and has established green city nearby and GACL is using surface miner rather than blasting technique for environment protection. GACL has performed its corporate citizenship very well. GACL is doing through many activities for energy conservation as discussed above for which it has got awards too which no any competitor is doing.

The trend started with Ambuja it was the pioneer in giving ad of cement like products. It is the pioneer in giving saving concept to the customer. Focus on brand name :  “VIRAT COMPRESINVE STRENGTH” Ambuja cement has given more focus on Strength as any cement manufacturing company is supposed to do.  Effective differentiation Ambuja is crating differentiation by the following ways. It using best quality bags that are HDPE bags to pack the cement which are reusable. It has established totally different unit in the plant for controlling the quality of the produced cement hourly checking is done and then only given for dispatch. This is thoroughly understood to dealers. Ambuja is the first in providing engineering services to the customer as after sales services. It was the first in proving foreign tours to dealers. It’s using best quality lime stone in manufacturing of cement to provide best strength to the customer. One of its ad 100-7 = 0 which means if the 7th part of the cement is extracted from the concrete that its nothing. The first ad was given in newspaper. It is the first line name in providing ON TIME delivery to the customer which is very important in cement like product without which entire activity is worth less. Firstly there was no ad in cement industry. It is proving many services to the dealer like scholarship & other supportive programs specially designed for its dealer and treating dealer as the family members. . Now they giving more in sports events. GACL always believes in delivering value product to the customer for that it is doing the following things.

  Price differentiation : Ambuja has always maintained the premium price which is truly convinced to the customer by the activities listed above. ACL is pricing on the bases of Supply and demand gap.   .  Effective public relation Ambuja has maintained good relations with the public for that it has organized many seminars done many things for public welfare as corporate governance.    Strong distribution network : Ambuja has its presents in the entire market in interior level of villages too. In this area too all are direct dealer and reputed personality in town.

Establishment of Internal Audit Framework Strong financials and expansion strategy through mergers and acquisitions enabling growth Set up own R&D facility in 1989 department to encourage innovation Adhering to International quality standards Having stringent Internal Control Systems      .FINDINGS .CORPORATE INFRASTRUCTURE  First cement producers of the country to introduce an Integrated Logistics System (ILS).

TECHNOLOGY .

GACL acquired the Nadikudi (about 100 kms from Guntur) and Proddatur (near Cuddaph) limestone mines to enhance its presence in Southern India A strong network of clinkerisation plants and grinding units      .PROCUREMENT Basic raw materials: limestone. clay. silica and gypsum An Australian device ‘Surface Miner’ was installed in 1997 which helped in procuring more limestone from a given area It ensured cement quality In 1998.

PROCUREMENT Cement-Linkages were taken off Cheaper and better quality coal was sourced from South Africa and furnace oil from the Middle East Ambuja’s leading position has strengthened its bargaining power The company’s engineers had picked up best practices during visits to overseas plants in countries like Japan and Australia     .

compared to Rs 4.50 per kilowatt 60.30 per kilowatt.OPERATIONS   Captive power plant GACL set up captive power plants in Gujarat (40 MW) and Himachal Pradesh (12 MW) in 1998.3% of its total power requirement   . Rs 1.

natural gas and oil.    .OPERATIONS   Coal production .western and southern parts Transporting coal Quality of coal Cement companies had to decide whether to use imported coal or substitutes like lignite.central and eastern parts the cement industry .

OPERATIONS Imported coal Imported better quality furnace oil Operating costs of power plants Consumed only 96 kwh of power per tonne of cement against the industry average of 110-115 kwh per tonne     .

OPERATIONS  Coal .170 kg per tonne of cement. industry average 250 kg per tonne Ambuja Nagar plants located in the agricultural belt of Saurashtra. crushed sugarcane   . groundnut husk available in plenty Groundnut husk.

Cement moved in bulk – reduced packaging costs Savings of roughly Rs 160 million annually    . Rs 1800 per tonne by road. Cost of transporting cement to Bombay .OUTBOUND LOGISTICS  Rs 1 billion .Rs 400 per tonne by sea.modern ports and freighthandling terminals at Muldwarka and Surat (south Gujarat) and Panvel (near Bombay).

finest quality Many coastal markets within easy reach.OUTBOUND LOGISTICS Far less wastage and spillage Untouched by human hand . became one of the largest exporters of cement Convenience to import coal owing to the ports Strong focus on logistics management reduce finished goods inventory levels A Mumbai dealer could obtain stocks       .

With no additional capital expenditure. 000 tonnes. handling capacity increased to 100.  Managed to cut stabilizing time from upto 18 months to a mere 3 months.OPERATIONS   Going beyond 100% capacity utilization 20 years old Ambujanagar plant.    . keeps increasing productivity year after year At the Mumbai terminal .000 tonnes as against the terminals stated capacity of 60.  Managed to keep power bills to virtually the same amounts they were in 1989.

down to the village level      .MARKETING STRATEGY Emphasis is on Quality Advertising and Publicity campaign Improvement in Packaging by information provided by suppliers Stronger positioning in the housing sector in smaller towns and rural areas over the last two decades FMCG approach was adopted to create a wide retail network of small shops.

   .000 retailers across India are covered under this model.MARKETING STRATEGY Channel Excellence Programme (CEP) Over 7000 dealerships and 20. Initiatives are structured and packaged as Ambuja Parivar and Ambuja Parivar Mahotsav.

MARKET SHARE (10-11) .

THE ROAD AHEAD .

500 retailers  Captive Infrastructure Port. Receiving Terminals and Power Plants (230 MW)  Sea Transportation  .DISTRIBUTION NETWORK  Strong presence in growing markets of North & West  Largest exporter of cement  Grinding close to market  Premium brand  Extensive & primarily exclusive distribution network  Over 6.600 dealers and 20.

Thank You .

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