ACC enhances logistics and supply chain management

RFID and GPS together will increase the utilisation of assets which in turn, will lead to freight savings and optimisation of resources.

ACC has reported almost five per cent savings in operations cost at its Tikaria plant, Amethi, following implementation of Radio Frequency and GPS based logistics management. The company had deployed Radio Frequency Identification Device (RFID) and Global Positioning System (GPS) in logistics operations under a pilot project. The technology was implemented at the Tikaria plant in March 2012 and was later introduced at two more units located in West Bengal and Karnataka. The company intends to implement the technology in 14 plants in two years. The company has already put GPS devices in 1,000 trucks at the three plants and the remaining 9,000 trucks across India will be covered in phases.

ACC, India's leading cement manufacturer, has a total installed capacity of 30 million tonnes pa with 18 modern cement plants across the length and breadth of the country. Cement is a capital and energy intensive industry, of which logistics forms a crucial and integral part of business operations.

Logistics forms the most critical and large component of the input cost for cement, accounting to nearly 35 per cent of the total cement sales. While ACC uses rail transportation substantially being faster and cost efficient, it also relies heavily on road transport to supply cement from its plant to almost all cities and remote towns in India.

Considering the huge costs involved in road transport as well as time and asset efficiency, ACC has embarked on a new, automated and technologically advanced journey in the field of road logistics. ACC is deploying RFID and GPS technologies and implemented several other initiatives in order to make major advancements in building efficient logistics and also usher best in class transport system. At present, ACC has undertaken a pilot project at its Tikaria plant located in Uttar Pradesh. The company has already installed GPS in 500 trucks in Tikaria. By 2013, ACC plans to install RFID across all its 14 cement plants and GPS navigation systems in 10,000 trucks.

RFID and GPS together will increase the utilisation of assets which in turn will lead to freight savings and optimisation of resources; - Fixed costs of assets (trucks) go down as the same number of trucks now ship more cement in lesser time; - There is an increase in evacuation of 15-20 per cent and betterment of service levels up to 40-50 per cent; - The technology ensures one hundred per cent safety on roads as voice enabled GPS is installed which alerts the driver on possible risk ahead;- Green and sustainable technology as using the same amount of fuel ACC will ship more cement covering more distance than before; - Better planning is ensured by the company with its stakeholders - transporter, dealer, trucker and society.

RFID plays an important role in logistics management as it tracks the historical data of the truck and time taken from gate in and gate out of the plant. It also helps in tracking the non- value- added time and measures to reduce this time. GPS, on the other hand, tracks the movement of the truck once it's outside the plant. RFID and GPS together ensure better visibility of trucks and complete transparency in the process.

ACC Ltd. has embarked on an initiative to improve the efficiency of its supply chain, which include 10,000 trucks that carry cement from its plants to sales outlets across the country.

Transportation costs account for 35 per cent of the total sale price of cement and ACC, the subsidiary of Swiss cement major Holcim, hopes to bring down this cost by 4 to 6 per cent. ACC has deployed radio-frequency identification (RFID) and global positioning system (GPS) technologies to radically change the way cement is supplied to the market.

RFID has been deployed at its cement plants in Tikaria (Uttar Pradesh), Damodhar (West Bengal) and Thondebhavi (Karnataka). Over 400 trucks have been GPS-enabled so far. Within two years, 10,000 trucks and all plants would have GPS and RFID. This project, which is in its pilot stage, has yielded satisfactory results, and a veteran logistics professional has been hired to spearhead the initiative.

Considering the huge costs involved in road transport, as well as to address the issue of time and asset efficiency, we embarked on a new journey 12 months back. Through automated and technology-enabled process we have improved the asset utilization in road logistics, said Tushar Rameshchandra Dave, Vice-President, Central Logistics, ACC.

He said RFID and GPS would together increase the utilization of assets (trucks) which, in turn, would lead to freight savings and optimization of resources.

Fixed costs of trucks will go down as the same number of trucks can now ship more cement in lesser time. A truck that was doing up to 4000 kms a month can now do 6000 kms. Apart from financial benefits, it will help in curbing pollution, Mr Dave said.

There is an increase in evacuation of 15-20 per cent and betterment of service levels up to 40-50 per cent, he added. With RFID, a truck that was taking 220 minutes to drive from the entrance to the exit gate of a plant, is now doing it in 75 minutes.

RFID tracks the historical data of a truck and the time taken to go from the entrance to the exit gate of the plant. It is also helps in tracking the non-value added time. GPS, however, tracks the movement of a truck once it is outside the plant. RFID and GPS together are ensuring better visibility of trucks and helping in complete transparency of operations, Mr Dave said.

Cementmajor ACC'sTikariaplant in Sultanpur has become the first unit of the company to implement an innovativelogisticsmanagement program called "Speed" which is aimed at enhancing productivity, increasing efficiencies and save time, fuel costs as well as enviornment.

The success of the program at the 2.6 million tonne Tikaria plant has led to the company adopting the programe at its two more cement units inWest Bengaland Karnataka and hopes to bring all 16 plants ofACCunder the 'Speed' fold in about two years time.

Speed is essentially a logistics andsupply chain managementproject which is a major part of any cement plant with hundreds of heavy duty trucks bringing in raw material and picking up cement for further distribution in the market.

Director, Logistics-North,ACC Ltd,Deepak Gulati, said "at any given point of time our Tikaria plant had atleast 500-600 trucks lined up for uploading cement. The efficient management of this huge fleet on a daily basis was a major concern. After studying various logistics projects abroad we evolved our very own program called 'Speed' and now besides saving costs which results in cheaper product to customers, we have better functioning among drivers, truck owners, customers and ACC employees. Delivery timelines are also efficiently adhered to with this project".

He said that while earlier 500 odd trucks used to be parked outside the plant gates waiting for their turn almost 110 trucks were lined up inside the plant for uploading cement, which became a big task to handle.

But now due to effective adoption of Speed there are only 27 trucks inside the plant at any point of time and only 200 trucks outside. ACC's Tikaria plant engages nearly 4,000 trucks for this exercise. Due to the speed initiative the tonnage per truck has increased increasing productivity and is time saving thus allowing trucks to make more trips to the plant in the same given time.

ACC has also deployed Radio Frequency Identification Device (RFID) and Global Positioning System (GPS) in all vehicles for effective tracking of vehicles and keeping in constant contact with drivers.

"Inward and outward transportation forms a significant share of ACC's overall costs and the Speed initiative has allowed about 5% saving in costs. With 30 million tonnes cement moved across the country by various ACC plants which engage about 12,000 heavy duty vehicles thesavingsfrom this initiative can be huge when adopted across all plants" saidDirector ACC Tikaria Plant,N Keshav.

Tikaria was the first cement plant in the country to adopt such a logistics project and would soon take it to all 16 plants of the country said, Director-Logistics,Tushar Dave. He said that the program has also led to manpower efficiency and drivers find it more convenient and comfortable to do their duty.

Supply chain excellence in India Part 1

For a cement manufacturing company in a country as vast as India, nothing is more critical than supply chain excellence, a factor that is beginning to gain recognition.

The Indian cement industry has grown at a commendable rate over the last decade, registering a compound growth of approximately 8%. However, the growth rate has slowed in recent years as a result of sluggish economic conditions throughout the country. Moreover, the per capita consumption of cement in India still remains low when compared with the global average. This underlines the tremendous scope for growth in the Indian cement industry in the long-term.

With 15 integrated plants and 14 grinding units across the country, Holcim has a major footprint advantage over its competitors in India. Holcims presence in India is established through its two major cement companies: ACC and ACC Cements Ltd.

In an extremely competitive environment amid rising input and other costs, a stringent focus on logistics costs and an improvement in supply chain efficiency will assist cement producers in getting an edge over their peers. Supply chain is an absolutely crucial element to determine the success of a cement manufacturer.

Cement distribution

Much of cement transportation in India is done through rail and roads, depending on the proximity of the plant to the market. Sea transportation is also utilised and ACC Cements has been a pioneer in this. It is the first Indian cement manufacturer to build a captive port with three terminals along the countrys western coastline to facilitate timely, cost effective and more environmentally friendly shipments of bulk cement to its customers. The company also possesses its own fleet of ships.

Road transportation accounts for a substantial portion of the distribution of cement around the country. This is primarily carried out through commercial vehicles or trucks ACC uses a large number of trucks. One of the major problems in India is that the size of trucks that carry cement are much smaller than those used in the US and Europe. This leads to efficiency problems throughout the country. Most trucks fall into the 9 t category, compared with sizes of 28 t and 32 t used in other countries.

Trucks standing in truck yard.

Supply chain excellence

ACC is investing efforts in the supply chain area to improve customer service levels, lower costs through increased operating efficiency and to make the supply chain safer for all stakeholders. In order to help offset the increased cost of fuel, ACC is focusing on improving efficiency through better use of assets. This includes improving ACCs efficiency in utilising the truck fleet and rail system. Several different projects are running to bring the strategy to fruition on the ground.

The company has been focusing on the four dimensions of the supply chain: cost, service, evacuation capacity and safety. Constantly changing its footprint is one method that ACC employs to stay relevant to its customers and improve its customer service. As the markets are changing, the company is adjusting its asset base in order to offer service in different ways for example, by providing facilities and building new locations so that the point of dispatch can be closer. There is also a need to constantly remove supply chain constraints and reduce bottlenecks, thereby improving supply chain efficiencies. The company believes that a focus on dust emission is also relevant.

In terms of safety, the country as a whole has a long way to go to reduce fatalities, especially in the area of vehicles and traffic. In general, the roads in India are in poor condition with many undulations and incomplete roadwork. Trucks are not maintained to the highest standards, leading to failure of critical components at crucial moments. The single biggest issue is that the driving community does not yet have a safety mindset; therefore, there are numerous cases of indiscipline and poor judgment whilst driving.

At ACC, the aim is to prevent fatalities during transportation of cement and the company is engaged in many projects to facilitate safe driving. The project SPARSH focuses on people, vehicles and infrastructure. It also involves working with vendors to identify risks and potential safety hazards. A big part of SPARSH relates to driver training, as well as engaging with drivers, employers and transporters in order to raise awareness. Furthermore, as not all unsafe traffic incidents are reported due to fear of reprisal, ACC has been working on improving the reporting of traffic incidents.

Strategy

Plants in India have scope for improvement in traffic flow within their premises this is very important to improve vehicle productivity. These efforts also focus on eliminating reversing and other hazards, thereby substantially improving safety.

ACC Cements is constantly evaluating its footprint by reconsidering site design. Both people and vehicles move through the plants; when operations are expanded ACC will arrange the site layout so that, where feasible, vehicles are not required to reverse. These evaluations also aim to augment capacity, which is a key factor to success.

Manual handling of cement bags with hooks is another matter of concern in the Indian cement industry. Manual handling has two disadvantages. On the one hand there is a delay as manual handling takes time and on the other hand, the use of hooks results in holes in the cement bags. A huge amount of cement leaks out of each of the bags during transportation.

Vehicle productivity in India is the lowest in the world as a lot of time is lost in loading and unloading, compared to developed countries where vehicle productivity is much higher. However, ACL is working towards reducing all vehicular delays.

India has the largest rail network in the world and caters to various industries. Around 10 000 trains run commercially on a daily basis. Therefore, opting for rail transportation offers some advantages to cement manufacturers. However, there are a number of problems that need to be addressed. For example, improving the mechanisation of loading operations would help to improve the turnaround time of trains and increase the efficiency of rail transportation as a means of moving cement.

ACCs Rabriyawas plant at night.

Addressing issues

Rising costs are a major issue for the cement industry supply chain. At ACC, an emphasis is being placed on improving efficiency, lowering costs and connecting to customers. The company is constantly revamping its plants to improve efficiency and enhance safety. When the opportunity arises to revamp a plant, ACC will contact vendors that have previously been used by Holcim worldwide in order to bring the latest equipment and methods to India and enhance production capability and efficiency.

Some of the focus areas include connecting with customers so that the right amount of cement is transported, getting the right contracts with transporters and improving rail loading.

Technologies at work

New technologies have been contributing a great deal to improving supply chain efficiency for cement manufacturers, especially in the area of transportation.

A radio frequency identification (RFID) system helps to improve visibility at every stage of plant operations, right from the truck parking stage in the yard to final exit. It has also helped to reduce turnaround time for trucks, improve vehicle utilisation and eliminate congestion at the gate of the plant.

ACC Bhavani ship at Panvel port.

Other technologies, such as GPS, web/mobile application and optimisers, are also being employed to improve logistics efficiency and safety. GPS has helped to provide real-time information about the movement of trucks carrying cement. This information is valuable for improving delivery timelines to customers.

Furthermore, ACC has been focusing on transport and vehicular safety. The company has implemented a programme to address this issue in a very serious manner. As mentioned aboved, GPS technology has been adopted to enhance customer service and fleet efficiency. It also improves the companys safety performance as there are a number of ways it can indicate whether drivers are behaving in a safe and responsible way. Every driver has a report and these reports are analysed, helping to improve safety scores. This technology has been widely used by Holcim and across India, and at present ACC considers it to be the best available technology.