Case Study: Cemex A Digital Firm In The Making

Case Study: Cemex A Digital Firm in the Making Question 1: How did digital technology transform the way Cemex ran its business? Because of the vision of the grandson Lorenzo Zambrano, Cemex moved from a very manual mode of operation to one where its processes were now done with the use of technology. With this in mind we can identify how Cemex was impacted by the use of digital technology below: (a) They were better able to manage unforecastable demand, relative to its competitors. a. All vehicles were connected to GPS tracking system b. As a result they achieved a reduced delivery time from 3hrs to 20 minutes c. Dispatchers were better able to monitor trucks d. They were able to anticipate delivery times and redirect trucks where necessary. (b) Reduction in Costs was realized as a result a. Trucks were able to deliver in shorter time frames and 35% less trucks were necessary to deliver the same amount of cement. b. Software package was used to anticipate power consumption requirements and also to facilitate use of machines during off peak hours resulting in lower electricity costs. (c) Increased revenue was realized a. Customers were now willing to pay premium price since Cemex was able to facilitate Just in time (JIT) delivery. This meant customers no longer had to have crews waiting for long periods pending delivery. b. All production facilities were linked via the satellite communications system and this facilitated better planning/forecasting c. No lost orders since orders can now be placed on the internet and not dependent on someone to take order over the phone. (d) Increased levels of customer service, better customer relations

a. Orders can now be made via the internet and tracked by customer b. This cleared up the congestion on the phone lines. (e) More prompt and decisive decision making a. Information is up to date/timely as a result of the information system being made available b. Better able to forecast demand as the CEO was able to review the performance of all 35 countries c. Problems were now able to be addressed a lot quicker and more proactively Question 2: It has been said that Cemex has refocused efforts from managing assets to managing information. Explain. In the second paragraph of the case it is noted that concrete business is an asset-intensive .business. This also illustrates the focus at the time which was on managing assets, since all its processes were manual. The fact that the sales and delivery of cement was seen as the more important arm of the business and the IT component seen as a support department is also evidence on the companys focus on managing assets. However with the change in direction the company then shifted focus and in turn spent a lot less time delivering cement relative to the time they spent making use of the information which they were able to collect with the implementation of the information systems throughout the business. Management of this information allowed them to more efficiently run the business. This is again evident in the following scenarios: (a) Power consumption was closely monitored and this information used to forecast consumption and also led to the decision to run machinery during off peak times and thus achieve a 17% reduction in power costs (b) Up to date information relative to the competitors. Whilst information for Cemex was available in 24 hours competitors were working with month old information. (c) Access to all 35 countries via the executive information system. This allowed real-time tracking of performances and identification of problems or potential problems. Being able to manage all this information in turn allowed them to proactively respond to unforeseen events and thus manage the business more efficiently. Question 3: To what extent is Cemex a digital firm?

Cemex is to a large extent a digital firm. What they did well was implement information systems which allowed them to completely transform the way their business processes were handled. This resulted in the business being almost completely managed digitally. We saw that customers now had access to order via the internet, deliveries were monitored online both by dispatchers and customers. Trucks were monitored via the GPS system and all 35 countries were linked via network to the executive information system used by the CEO. It is important to note that Cemex was able to do the following (a) Build relationships with customers and suppliers digitally (b) Business processes were all digital (c) Technology was considered the driver for the business and no longer a support department (d) The internal and external environment was monitored digitally and this allowed proactive resolution where necessary Given all this it is safe to say that Cemex are to a large extent a digital firm.