International Cement Review: Streamlining Supply

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Maintaining adequate cement bin capacities and aggregate stockpile levels is important for any concrete producer. Inbound raw material hauling and stock level planning is often only based on order book information while outbound concrete deliveries are coordinated by means of a transport planning software based on real-time information. Combining both into a material replenishment process can streamline the entire supply chain.

Inventory is a significant and visible asset in many companies. Money tied-up in inventory has a negative impact on profits while stock-outs represent a serious threat to business revenue and customer satisfaction. Moreover, concrete plants often operate independently and just serve the customers within their region. A smart network, however, would allow concrete producers to tap the full potential of the entire organisation: shifting resources where required, preventing stock-outs in some locations and oversupplies in others.

When you enter the world of supply chain management (SCM) you will encounter a number of acronyms, synonyms and buzzwords. Common approaches are vendor-managed inventory (VMI) and material requirements planning (MRP). They both have three simple targets:

  • Materials are available for production and products are available for delivery to customers.
  • Material and product levels in store are as low as possible.
  • Purchasing, manufacturing, and delivery schedules are as accurate as possible.

VMI and MRP based on static order book information is a widely-used but too often insufficient method since it does not reflect the dynamics of the concrete business. Production and transport plans are affected by high demand variability due to last-minute orders, cancelled or delayed jobs, long truck waiting queues, truck or plant breakdowns, etc. Inbound material haulage is less time critical, but given the heavy traffic during peak delivery hours those inbound trucks further aggravate onsite congestion problems.

Figure 1 shows a simple example of a corporation with a planned daily output of 5000m3 concrete. Based on an average of 8m3 of concrete per delivery, 625 trips to customer sites are required. To replenish the material needed for this concrete output, 500 trucks of aggregates and 54 trucks of cement will have to be dispatched to the ready-mix plants of the company (based on a standard mix with 300kg cement/m3 concrete and an average of 20t of aggregates and 28t of cement per delivery). If concrete demand drops or rises by 10 per cent, a total of 55 inbound deliveries (50 aggregates and five cement haulages) are either missing or not needed for the production process.

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