SCMT-1

Supply Chain Management at

Dalmia Cement Ltd.
Submitted By: Debidatta(13615) | Dhananjay(13616)| Aayush(13701)|
Anmol(13704)

Supply Chain Management at Dalmia Cement Ltd

1Q: What is the impact of railway gauge conversion (from meter gauge to broad gauge) on
Dalmia cement distribution operation?
Ans:

The company currently is using Trichy as the base to supply to districts.

The distance for transportation is relatively less and we can see that the cost of transporting
is higher in case of rail than road transportation.
Availability of trucks is an issue due to which company will have to pay higher rent for
truck rentals.
After the railway is made into broad gauge the freight container size will increase from
18.6 to 40MT.

2Q: How should be the optimal transport mix for Dalmia Cement?
The following shows the calculation for the optimal transportation mix for Dalmia cement.
material
routed
through
mode of transport depot
Rail + truck
yes
Rail + truck
no
Truck
yes
Truck
no

Total tons sold in

96-97
Capacity of truck
Fixed cost for each
truck
Variable cost
Transportation
costs
Train per MT
Truck per MT
Quantity
Distance from
plant
No. of trucks
required

% of material
routed through tons of
depot
cement
bags of cement
45.00
329.85
6597.00
5.00
36.65
733.00
30.00
219.90
4398.00
20.00
146.60
2932.00

733.00
10.00
25000.00
2.00

Ernakulam Trichur
Palghat
Madurai
Trichi
Coimbatore
393.00
335.00
266.00
181.00
107.00
249.00
385.00
350.00
320.00
156.00
70.00
235.00
61.00
87.00
16.00
69.00
460.00
16.00
440.00

380.00

300.00

190.00

60.00

250.00

7.00

9.00

2.00

7.00

46.00

2.00

Material
routed
through
Mode of transport depot
Rail + truck
yes
Rail + truck
no
Truck
yes
Truck
no

Total cost (for

same demand)
224495565.52
181346442.68
134139000.00
168316705.21

3Q: Suggest ways in which Dalmia can get assured supply of trucks throughout the year.
Ans:
Dalmia cement is moving from stocking of inventory to direct shipping of product from the
production site. In such situation the timely and cost efficient availability of product become an
issue of concern.
Ways to make availability sure throughout year can be as followings
Dalmia should do a market research using past data to figure out average demand in a
given month and then can have a fixed contract for every year at a fixed price.
For additional demand fluctuations trucks can be rented at around 50% higher rate from
market as and when required.
Contracts should be made with large transportation firms that have their own fleet of
trucks can thus can provide an uninterrupted supply of trucks.
4Q: Should Dalmia Change its transport policy and manage a fleet trucks on its own for its
distribution function?
Dalmia should not consider maintaining its own fleet of trucks as it is very expensive in
maintaining and managing own mode of transportation. This will also require much management
attention, time and planning to make it work effectively. In case of seasonal uncertainty there are
chances that few trucks will remain idle and the cost of maintenance can be high.

District
4
15
7
8
9
11
12
13
20
27
14
19
1
2
3
5
6
10
16
17
18
21
22
23
25
28
24
26

Avg
Distance
trucks
from Plant Sales volume Sales Volume required
Nearest Depot
250
14
14000
1400 Coimbatore
250
2
2000
200 Coimbatore
440
61
61000
6100 Ernakulam
265
5
5000
500 Madurai
415
7
7000
700 Madurai
190
19
19000
1900 Madurai
343
6
6000
600 Madurai
180
17
17000
1700 Madurai
215
8
8000
800 Madurai
325
7
7000
700 Madurai
300
16
16000
1600 Palghat
445
14
14000
1400 Quilon
275
7
7000
700 Trichi
160
8
8000
800 Trichi
311
91
91000
9100 Trichi
120
24
24000
2400 Trichi
218
0
0
0 Trichi
315
45
45000
4500 Trichi
175
25
25000
2500 Trichi
110
21
21000
2100 Trichi
120
48
48000
4800 Trichi
171
20
20000
2000 Trichi
241
8
8000
800 Trichi
70
58
58000
5800 Trichi
60
86
86000
8600 Trichi
165
19
19000
1900 Trichi
380
87
87000
8700 Trichur
455
10
10000
1000 Trivandrum

Distance
from
Nearest
Depot
0
117
0
75
242
0
153
40
79
135
0
0
240
183
251
156
158
303
177
50
126
111
181
48
0
135
56
0

cost incurred
transport
from plant to
ation
district
total trucks expenses Total Cost
1000
73300 1400000
70056800
1000
200000
1760
10736000
1060
530000
1660
1162000
760
1444000
1372
823200
720
1224000
860
688000
1300
910000
1200
1920000
1780
2492000
1100
770000
640
512000
1244
11320400
480
1152000
872
0
1260
5670000
700
1750000
440
924000
480
2304000
684
1368000
964
771200
280
1624000
240
2064000
660
1254000
1520
13224000
1820
1820000

5Q:
Ans:
The disadvantages of moving to pack to order strategy
1. There is a possibility of loss of sales/business, though there would be a reduction in cost,
which may lead to difficulty in future expansion plans because of the pack to order strategy.
There would be a reduction in service levels.
2. It is always easier and safer to have stockiest during expansion than servicing directly from
factory keeping in mind the distances to travel.
3. The payment of loaders is based on machine basis and this would not be correct as the
capacity of each is different and in the new strategy, utilization of machine changes
according to the demand.
4. The new strategy demands scheduling the packing dynamically as opposed to the freeze
packing schedule which the current strategy uses. This may require working on developing
an apt scheduling program.
5. Since the new strategy would include stocking of cement in silos itself and no cement stock
would be packed. This means less finished goods inventory.
6. One of them is varying seasonal demand of the orders of different destination.