Group-8

Supply Chain Management at

Dalmia Cement Ltd

Under The Guidance of

Prof Jithesh J Thakkar
 INTRODUCTION
Dalmia Cement is founded by Mr. Jaydayal Dalmia in 1939 and the
company with the cement division contributed 85 % of its revenues. In the
last couple of years, it had diversified into a number of areas such as
electronics and travel services. Its cement manufacturing plant is located
at Dalmiapuram, which is about 45 km from Trichi.

• Dalmia Cement operates 14 cement plants across 10 states with a

manufacturing capacity of 35.9 MnT per Anum.
• Dalmia Cement has 33000 dealers and sub-dealers across 22 states.
 TYPES OF CEMENT:
The company manufactures mainly three types of cement
Clinker Gypsum
95% 5%
OPC: Ordinary Portland Cement

Gyp
sum
Clinke 5%
r
80%
Fly PPC: Portland Pozzolana Cement
ash
15%

Gyp
Clink
sum
er
5%
PSC: Portland Slag Cement
60%

Slag
35%
 TYPES OF
PACKAGING

PACKAGING:
PAPPER PLASTIC

YELLOW BROWN WHITE YELLOW

SINGLE DOUBLE
STITCHED STITCHED
 MARKETING AND TRANSPORT:
• The company operates only in two states, Tamil Nadu and Kerala. It has divided
the entire market into seven zones, which in turn are divided into districts .
• The company used various modes of transport to reach its stockists. There were
four options that the company used

• Option 4, which involved direct shipping, was the most preferred option by the
company from the cost point of view.
Distribution system
Manufacturing at Dalmiapuram

R a i l / R o a d

28 Stockists
Stocks from atleast two manufacturers

7 Depots Each depot serves a Zone

Supply Chain Management at Dalmia
Cement Ltd
IMPACT OF RAILWAY GAUGE CONVERSION

Cement manufacturing
1)Product differentiation stage.
Clinker 2)Company manufactures three
Raw Material types of cement :a)OPC
manufacturing
b)PPC
c)PSC
Figure 1: Manufacturing process

7 Zones Each zone

divided
into
Kerala districts
Market

Tamil Nadu

Figure 2: Operations in market

 TRANSPORT DATA:
• Rail freight and road charges in Rupees per MT for various
destinations are given below
• Total Costs = Transportation Costs + Handling Costs
• Income & expenditure statement (31-03-1996)-(31-03-1997)
 PROBLEMS
1. Impact of railway gauge conversion (from meter gauge to broad gauge) on
Dalmia cement distribution operation-
• The company currently is using Trichy as the base to supply to districts.
• The distance for transportation is relatively less and we can see that the cost of transporting is
higher in case of rail than road transportation.
• Availability of trucks is an issue due to which the company will have to pay higher rent for truck
rentals.
• After the railway is made into broad gauge the freight container size will increase from 18.6 to
40MT

2. Cost increasing by using truck instead of railways-

• It is very difficult to get truck rates that he could use for his calculations.

3. Moving from Pack to Stock to Pack to Order-

• There is a possibility of a loss of sales/business, though there would be a reduction in cost, which may
lead to difficulty in future expansion plans because of the pack-to-order strategy. There would be a
reduction in service levels.
• The payment of loaders is based on a machine basis and this would not be correct as the capacity of each
is different and in the new strategy, utilization of machine changes according to the demand.
 SOLUTION
Solution on railway gauge conversion (From meter gauge to broad gauge):

• As the railway gauge conversion was underway, the railway line from Dalmiapuram was closed for the next six
months from December 1997.
• Then we have to build stock at their depots, so that supply to the stockists was not affected.
• As, per long time benefit is a concern when the railway track will be transformed from meter gauge to broad
gauge Dalmia Cement Ltd. used to order 40 wagons from the railways. The capacity of each wagon was 18.6
MT. Hence the total capacity which was transported through the railway line was (18.6 x 40 = 744 MT) Now
that the railway gauge was being converted to a broad gauge, the capacity of each wagon increased from 18.6
MT to 40 MT. Hence the total capacity which was transported through the railway line was (40 x 40 = 1600
MT).

Solution of getting trucks for supplying cement throughout the year:

• To get an assured supply of trucks, Dalmia could adopt the following approaches:
1. Hiring the truck is an option. Trucks could be hired on monthly basis. It would cost ₹ ₹ 25000 per month and an additional
cost of 2 per kilometer as fuel along with other variable expenses. Since the trucks would be available throughout the year, the
company could use this cheapest way of transport and reap profits.
2. Managing a fleet of their own trucks Instead of relying on others buying their fleet of trucks seems to be a lucrative
alternative. They don’t have to depend on others for their transportation needs. Problems stemming due to the non-availability of
trucks during certain seasons could be eliminated by using this option.
3. Balancing between the two alternatives Rather than deciding in a hurry, they should study the trend and collect prior data.
For the time being, they could have a mix of two; i.e. a small fleet of vehicles of their own along with a few vehicles leased or
hired. This would ensure that none of their resources are underutilized while trucks are available all through the year.
• Changing Dalmia transport policy:
1. Availability of trucks all through the year.
2. Lesser dependency on brokers.
3. Better negotiation with truck drivers.
4. Cost savings

• Changing moving from Pack to Stock to Pack to Order policy:

we define a probable solution for this problem that we set up small and medium and small
warehouses across medium and big cities and store packed cement in there. After that, we will
deliver from there as per order. And we need to grow our dealer and sub-dealers networks
across the whole country.
 TAKEAWAYS
1. Multi-modal transport system to end to end supply
2. Use RORO service to reduce the loading-unloading cost
3. Spread network of Dedicated freight corridor.
4. Increasing use of modern machinery to reduce time.
5. Spreading supply chain network.