Supply Chain Management

at Dalmia Cement Ltd.

Submitted to: Prof. Rajendra Todalbagi

Section B
Group 1

Akshay S 18064
Mohith Chandrashekhar 18077
Vipul Vittal Shenoy 18087
Siddarth M 18109
Ashish B N 18114
Masoom Raza 18115
Introduction
• Dalmia is a 60 year old company which has its plant located in Dalmiapuram .
• They operate in TN and Kerala which is divided into 7 zones each having 1 depot to
serve a zone.
• Due to Raising power cost and increasing competition the company was likely to face
tremendous pressure in the future.
• The company is expected to face tremendous pressure on the profitability due to
fluctuating demands and inefficient supply chain management.
Manufacturing process

• It was quite simple and involved two operations

• Clinker manufacturing
• Cement manufacturing
• The company manufactures three kinds of cement
• 1.OPC 2.PPC 3.PSC
• Stored clinkers for sufficiently long period of time without quality being affected
• For storing cements company has 14 silos cement, It is packed in std size of 50kg
but with different packaging materials ,resulting in 10 SKUs in market place.
• Different types of packaging was offered by the company
Mode of transportation
• Company used various modes of transport
to reach its stockists.
Option Mode of Material % of material
• Option 4 involved direct shipping ,and was transport routed handled in 1996-
most preferred by from cost point of view. through 97
• Availability of wagon was not an issue, as depot
they could get one with the notice of three
days.
1 Rail+ truck Yes 45
• Company usually would send in a lot of of
40 Wagons and each wagon would have a 2 Rail+ truck No 5
capacity of 18.6 MT.
• Company usually asked for 40 wagons at a 3 Truck Yes 30
time, the cement was reaching the location 4 Truck No 20
in a day or two, where materials were
shipped to stockists or depots directly.
Transportation

• Difficulties faced in case of transportation by road

• Difficulty in determining the truck rates
• Lack of availability of trucks in the monsoon season
• Difficult to get trucks during the season of mangoes
• Company entered into annual fixed price agreements with brokers
• Brokers would inform the company in advance to make alternative arrangement of
trucks
• Difficulty faced in estimation of number of trucks the company might need on a
daily basis
1: What is the impact of railway gauge conversion
on Dalmia Cement’s distribution operations?
• Quantity of material moved per train
Increases from 744 MT to 1600 MT Meter Broad Guage
• Higher Cycle stock Guage
• Lead time Increases
• Increase in safety stock Capacity of 18.6 40
Wagon(MT)
• Increase in Inventory carrying cost

No of Wagons 40 40
Material moved 744 1600
per train (MT)
2: What should be the optimal transport mode
mix for Dalmia Cement?

• Break Even Point is 290 Km which yields Transport Cost of Rs 270.2 per MT per Km
• So for distance less than 290 km (18/28 locations), road would be optimal; and beyond 290 km (10
locations), rail would be optimal.
3: Suggest ways in which Dalmia can get
assured supply of trucks throughout the year

• Due to the shift from stocking of inventory to direct shipping from production, the
cost and effectiveness of delivery becomes a challenge
• Forecast the demand and plan accordingly.
• They can buy some vehicles so that they can deliver at least some portion without
any dependence and remaining they can use the normal truck delivery system
during non-peak periods.
• During peak periods they can go for contract truck delivey.
4: Should Dalmia change its transport policy
and manage a fleet of trucks on its own for its
distribution function?

• Owning fleet of trucks for normal demand and contracting additional trucks during
peak season
• Delivery efficiency
• Reduces dependency on brokers
• Availability of trucks throughout the year
• Additional maintenance and other miscellaneous cost is incurred
5: Why was Dalmia Cement exploring the option of moving from pack
to stock to pack to order strategy? What conflicts or barriers internal
to Dalmia would the pack to order strategy create? How should
Dalmia Cement handle these issues?

• Reduce handling and finished goods inventory cost substantially

• Internal Barriers
• Not all silos were connected to all the packing stations
• Seasonal demand issues
• Current packaging practices does not support pack to order
• Packing operations:
• Peak Demand for May 1997 (Exhibit 4)= (2033+238+20)=2291 MT
• Total Silo capacity (Exhibit 5b) =(1550+1285) = 2835 MT
• Total packing capacity (tons/hour) (Exhibit 5a) =(60+45+50+120+180) =455
MT/hr
• Time required for packing = 2291/455 = 5.04 hrs
• Transport operations:
• Assume truck speed : 35 Km/hr
• Considering the longest distance from plant to destination (Exhibit 3)
Trivandrum : 454 km
• Time taken: 454/35 = 12.97 hrs
• Total Time : 5.04+12.97 = 18.01 hrs
• Additional 6 hours of time is available for Loading and unloading and other
miscellaneous operations. Therefore we conclude that with pack to order strategy
is capable of delivering cement to stockist within 24 hrs.
Ratios
THANK YOU