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This article was published in the January issue of Global Cement Magazine in 2022.
The optimisation of distribution logistics offers significant potential for cement producers to lower their CO2 emissions in the race to net-zero.
■ Interview with Thomas Bergmans, INFORM GmbH, by Peter Edwards, Global Cement Magazine
GC: What are the major changes you have observed in terms of how the cement sector ‘does logistics’ during your career to date?
TB: When I entered the sector in 1991, logistics and transport planning moved from ‘pen and paper’ to Excel spreadsheet tools. For some years there was little change, but from 2000 to 2005 a series of important improvements came into play.
First came a major increase in the availability of data, which, for any given distributor, now doubles every 30-36 months in our industry. Alongside this, affordable computing power came on the scene. This enabled logistics algorithms to break out of the ‘computer nerd zone’ and transport planning software powered by algorithms became accessible to dispatchers, plant operators and senior management. Additionally, in the 1990s, cement producers were preoccupied with process efficiency at the plant, with distribution applied as an afterthought. Now distribution is an integral part of the process.
GC: Where did this trend first take hold in the cement sector?
TB: The early adopters were in Europe, particularly in the east, which was stretched to maximum capacity in the mid-2000s. Suddenly the critical gains that could be made were no longer at the plant, but in ensuring the product reached the client in a timely and cost-effective manner. Typical projects that Inform was involved with at the time included maximising loading facilities for greater output instead of clients investing in extra ones.
Today Inform receives enquiries from cement producers all over the world. Anywhere that service quality needs to be high, cost reduction is important or where the environmental footprint needs to be reduced, producers should be focused on distribution. And it’s not only in regions with overcapacity. Almost everywhere at the moment, we see finance directors cutting down on the number of distributors they use and optimising that smaller business opportunity. Less adept financial directors will try to satisfy all of their previous hauliers and share out the work evenly. This is not optimal for any party and the producer will end up wasting money.
GC: How is the technology changing at present?
TB: Up to around 2015, transport planning systems powered by algorithms and AI could optimise the tactical plan for the following shifts or days, plus in real-time on the day of execution. Now in the 2020s, we have entered a new phase. There is historical data available that allow machine learning algorithms to make predictions about the future.
For example, how can we predict future order growth? Past transport data may offer insights that we can overlay on external data, e.g. economy growth forecasts, changes to government policies, whether your plant is reliant on a particular subsector of the economy and so on. However, even the best data cannot model all future events, for example the effects of further Covid-19 lockdowns or the potential for an investment bubble to pop up.
At the same time, I would like to highlight that the relationship between cement producers and software companies is changing too at the moment.
Big cement players increasingly invest directly in software firms, notably the recent investment by HeidelbergCement. The connection between ‘bits
and bytes’ and ‘big mills’ is getting closer and closer.
GC: How are cement sector enquiries changing at present?
TB: I would say that we have two types of enquiries. There are those that have done a lot of research and know exactly what they want out of the system. These kinds of clients are fantastic to work with. Then, we have some clients that get ‘blindsided by the shiny stuff.’ They are like a hungry person at an ‘all-you-can-eat-buffet’ who wants to try all of the different dishes and will feel like they have missed out if they don’t have a bit of everything. Like in real life, they end up biting off more than they can chew. They all too often invest in marginal components that, for their business, will bring fairly small gains.
As Inform, we always ask these kinds of clients, ‘Why do you want this component? It contributes very little to your business case.’ Often they say ‘because my competitor has it!’ This is the wrong answer. Just because the component in question contributed something to a competitor’s business does not necessarily mean it is good for you. Inform wants to help its clients to make a good return on investment and will point out pitfalls, even if that means the client has to look hard at the project and reassess its goals. Inform may not be the cheapest option and we will ask difficult questions, but our process approach provides effective solutions and, with them, the high returns on investment that the client seeks.
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