Gujarat Ambuja - Redefining Operational Efficiency
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CUTTING COSTS contd...
- FREIGHT
According to analysts, the most successful of GACL's innovative strategies
was the development of a sea transportation route for its cement. At a
company meeting in the early 1990s, a Marketing Manager said, “As we all
know, Bombay is the country's largest cement market. It consumes a vast 2
lakh tonnes a month.
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The city is also 1060 kms away by rail. The
transportation and packing costs alone will be phenomenal.” Road transport
was very costly and rail transport was not feasible due to the limited
number of wagons available with Indian Railways. Just when it seemed that
the company would have to agree to bear the road/rail transportation costs,
an employee in the Logistics department said, “I can bring Bombay closer to
our plant.”
This marked the birth of the idea of using the sea route, instead of land.
The sea route would bring down the distance to 315 kms. GACL set up a
special cell to develop this idea. The company invested Rs 1 billion to set
up modern ports and freight-handling terminals at Muldwarka and Surat (south
Gujarat) and Panvel (near Bombay)
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In addition, it bought three special ships (one
designed in Singapore and the other two in India) to transport the cement.
The vessels, custom made for Indian conditions and requirements, had the
capacity to transport 2500 tonnes of
cement each.
The port terminal at Muldwarka was an all-weather port, handling ships with
40,000 DWT[5]. It was also equipped to export clinker and cement and import
coal and furnace oil. A fleet of five ships, with a capacity of 2500 DWT
each, ferried bulk cement to the packaging units from this port. The bulk
cement terminal at Surat had bulk cement unloading capacity with a storage
capacity of 15,000 tonnes.
The terminal at Panvel had a storage capacity of 17,500 tonnes. To
facilitate transportation by ship, GACL sent cement in sealed road tankers
from the plant site to the shipping terminal, where it was transferred to
silos.[6] From these silos, it was transferred into airtight holds in the
ships. At the destination, the cement was unloaded from ship holds and again
placed in silos, before being pumped into the sealed road tankers.
Customers were provided small storage tanks into which cement was pumped
from the sealed tankers by a fluidization process[7]. For customers who
preferred bagged cement, GACL arranged special packing facilities at the
unloading terminals. GACL had conveyor belts running up to the dispatch yard
for loading the trucks and wagons. A fleet of around 350 self-financed
trucks and a railway siding on the factory premises provided flexibility in
the mode of transportation.
The cost of transporting cement to Bombay worked out to about Rs 400 per
tonne as compared to over Rs 1800 per tonne by road. Since the cement was
now being moved in bulk, packaging costs were also reduced. Thus, GACL was
able to save roughly Rs 160 million annually. Besides, there was far less
wastage and spillage, and since the cement was untouched by human hand, it
of the finest quality.
GACL's shipping facilities brought many coastal markets within easy reach
and made it one of the largest exporters of cement. Because of the port, it
was now much more convenient for the company to import coal. A strong focus
on logistics management helped GACL reduce finished goods inventory levels
also. A Mumbai dealer could obtain stocks within eight hours because of the
company-owned jetty[8]. The cement was packed at a plant at the jetty itself,
at the rate of 100 tonnes per hour.
THE FUTURE
EXHIBIT I - GACL - STATE WISE PLANT CAPACITY
EXHIBIT III - VARIOUS AWARDS WON BY GACL
[5]
Deadweight tonnage (DWT) is the total carrying capacity of a ship in metric
tons, including the weights of fuel, stores and cargo.
[6]
Large containers where cement is stored till it is transferred to ships for
transport.
[7] A
process by which small size solid particles are made to behave like gases and
liquids.
[8] A
place where ships are loaded/unloaded.
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