Case Study II: Victory Cement

It was a hot and sultry afternoon in Kolkata. The Logistics Head East of Victory Cement Mr. Arun Shanker is in a pensive mood seating at his office thinking as to how to streamline and turnaround the dispatch performance from plant. The Victory cement has come up with a state of the art cement manufacturing facility in the neighbouring districts of Kolkata and has got a capacity to produce 2.4 MTPA cement which is expected to go up to 3.0 MTPA very soon. The company wants to be a major player in terms of both volume and market share in East and thereby continuously on a spree to increase capacity either by brownfield expansion or by greenfield expansion. The company is commissioning another 1.2 MTPA grinding unit in Odisha beginning next month. The Company has in fact deployed its own fleet of 20 vehicles (10 6W & 10 12W) in its WB plant to ensure timely delivery as well as to weed out the fluctuations of fleet availability. There are other 20 no.s of 6W deployed by another dedicated transporter M/S Sumant Agrawal is also cautioning to withdraw the same because of not making adequate no. of trips and profit. These trucks especially the 6W are required to run within the short lead distance from the plant to make the operation viable. But the challenge is that ever since these vehicles are deployed the operations is yet to make break even and accumulating losses. The CFO of the organization Mr. Batra has been repeatedly following up Mr. Sarkar as well as with the Sales team advising them to ensure profitability of these trucks failing which he’ll be constrained to withdraw these trucks and put it either to the newly commissioned plant in Odisha or even may shit them to the plant near to Mumbai to cater to the dispatches of its premium product Ready to Use (RU). There are several other challenges the Plant Logistics team is facing like overall order availability which keeps fluctuating and generally skewed at the month end, undue delay and detention at the customer point, inconsistent dispatch limiting the fleet availability and transporters’ reluctance, longer loading and waiting time inside the plant and bottlenecks like road loading gets hampered when rakes are under loading etc., truckers’ not using tarpaulins during rains leading to truck availability and damages which are all impacting both logistics cost as well as Cost of Sales because of low and inconsistent despatches.

However, Mr. Shanker has very recently had an interaction with MD, CEO & CMO in the recently concluded sales conference wherein he was advised to work on consistency in despatches, increasing the despatch capability from the plant to cater to the expansion, on debottlenecking issues and making own fleet profitable. The MD has also instructed him to revert with his action plan on all these issues clearly mentioning the logistics cost reduction per MT shall be done Apart Mr. Selvarajan, CMO to whom Arun Shanker reports to also given him the green signal to seek whatever support he requires to streamline the dispatches, service level to ensure on time delivery and customer satisfaction. The CMO also advised him to do a brainstorming with his logistics and packing plant colleagues and revert with a detailed presentation incorporating the action plan to be presented to the MD, CEO & CMO together sometime next week. There are approximately 170 no.s trucks loaded per day and overall availability goes maximum up to 200 no.s. corresponding to 17 transporters at the WB plant. And there are three packers each having capacity of 240 TPH with two chutes each. However, the actual output produced by them is between 150-170 TPH and while a rake is loaded all the 6 chutes are engaged for rail loading so that the Rake loading could be completed within the stipulated free time as given by the Railways and road loading gets stopped. Typically, a full rake loading takes 7-9 hrs time and even otherwise around 350-400 MT of cement loading happens through these six chutes in an hour. There is one major cement silo available which has got a capacity of 5000 MT and another small one of 800 MT for the premium product Ready to Use (RU). The company is coming up with a third product next month which is also going to add further complexity in terms of supply and despatch planning. The Logistics Head Mr. Arun Shanker is a veteran in his field and has seen this plant from its inception however invariably facing major challenges when faced with increasing volume and further complexity in terms of product mix and supply planning. In keeping in mind the tasks ahead Shanker has visited the plant, had a detailed discussion with the plant team and just returned to his office mulling over the ways and means to do it. In order to make his plans a robust one Arun Shanker has met with Mr. Gaurav Nandan, the Strategy & Planning Head to deliberate how do the Logistics & Supply Chain in Victory cement can add value in terms of impact made with respect to the challenges as mentioned in the above paragraphs.

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Case Study: New Cement Ltd

New Cement is one of the Pioneering cement manufacturer in India having its strong presence in Eastern India. But recently New Cement is  facing a real challenge in terms of negative growth , loss of sale and EBITDA, channel dissatisfaction, brand equity erosion in it’s one of the leading sales unit known as Numero Uno  sales unit. The Numero Uno Sales Unit has got a territory known as Shivalik area which is the most potential area in the Sales Unit having a market potential of around 300000 MTs. The market share of New Cement in Shivalik area is approximately a little over 10%.The Shivalik area has got two market viz., A and B which contributes approximately 30% of the Sales Unit Sales.  District A contribute to the 65% of the Shivalik Area’s sale whereas the District B contributes 35% of it. The market consists of rural, urban and semi urban geographies. The Large Buyer, Medium Buyer and Non Trade sale consists of at least 25%-30% of Shivalik’s area especially in the urban and semi urban market of District A. The New Cement is traditionally very strong in rural and in semi urban market but have no strong presence in urban (metropolitan) market. In order to consolidate its presence in urban market the Company has come out with a Special Purpose vehicle known as Urban Developer ( UD) whose job is to increase New Cement’s footprint in urban market, engage in demand creation through various sales and customer service initiative/ activity etc. However, the vehicle is yet to stabilize in full and have to go a long way to harness the potential exists in this market. The New Cement is having one normal product Super and one premium product (Supercem) in its portfolio and have recently come up with another black complexioned premium product ( named as Premium +). There is a strong perception in market that light coloured cement (Super & Supercem) are superior in quality and market is prepared to pay a premium over dark coloured cement. However, the raw material that goes to make light coloured Super & Supercem cement have become two times costlier and hence there is an internal strategy to maximize Premium+ in a big way. You have to make strategies to change the mindset of channel, customers and your team members alike. The Company has advised you to place Premium+ (dark coloured) at a premium over Super (light coloured) cement. However, your Management is prepared to give you all support in terms of promotion, packaging, product quality etc.

 Both the market A and B is intensely competitive and characterized by the presence of all leading cement manufacturers (approximately 8 to 10 brands). There are some low priced brands like Neptune, Pluto, Uranus which have significant price difference with that of the leading manufacturers ( say, Rs. 15/- to Rs.25/- per bag in wholesale and  Rs.10/- to Rs. 20/- per bag in Retail).  There is one Venus cement, a new entrant since last over one year bringing cement from its new grinding unit from the adjacent state. These low priced brands are making a dent in New Cement’s retailer network offering them Dealership/Retailer ship and it is rapidly getting converted into these low priced brands leading to a reduction New Cement’s share of wallet. The dealer network of New Cement is dissatisfied with the current level of service and inclined to shift towards other brands including the low priced brands as they feel that these brands are giving them better profit margins. Most of the big dealers’ (volume lifter wholesalers’) are degrowing vis-a-vis last year and number of them already opted for other brands. Even amongst the leading cement brands a significant price difference exists with New Cement which is considered to be the Price leader in the market. The dealers’ of New Cement feels that the company is very rigid in its policies and dealings and off late has losing the connect with its dealer/retailers’ and customers. The end customers are basically the Individual House Builders’ (IHBs) who constitutes > 90% of New Cement’s sale. There are major service issue faced by New Cement in its warehouse in District A in terms of damage cement, cut and torn bags and improper delivery. The company keeps getting lot of complaints from it’s Dealer and Retailers’ those who are absolutely reluctant to lift cement from godown. The godown damages are ever increasing and lack of proper stock upkeeping, FIFO and godown management is leading more debits and writing off cement at this warehouse which is impacting the Sales Unit’s EBITDA. Despite its best follow ups and reminders with the C&FA the situation is not improving to a satisfactory level and the sales team had to devote a significant time in warehouse management, damage cement evacuation and in increasing godown dispatch to its dealers’. As a result the sales team is also losing focus at times, getting demotivated and the same is impacting the sales performance. The District A has degrown to the extent of 22% as compared to last year whereas the District B which has significantly grown during the last two years is also in 2% negative growth during the first seven months of the year. As against the above the market in Shivalik area has grown by 12% during Jan- July ’13. Although there are innovative Sales and Marketing tools and lucrative sales promotion schemes New Cement is having it is yet to be fully exploited by its Shivalik area sales team by rigorous communication and by doing intensive customer service and other demand creation activities which is presently a major area of improvement. The team needs an able leader and astute strategist to work on two major concerns the New Cement is facing in Shivalik area viz., Increase its channel connect and consolidate its position further amongst IHBs. The company is targeting a 20:60:20 ( 20% premium product sale, 60% normal product sale and balance 20% large Buyer/ Medium Buyer sale) product portfolio mix in the coming months to come and wants to turn around its performance in the Shivalik area by attaining at least 10% growth over last year. There are only five months of the financial year is left and the challenge is to do a complete performance turnaround within the next five month. The areas of opportunities are enhancing Urban Developer’s  performance, increased contribution through Large/ Medium Buyer segment sale, increasing Premium product sale, warehouse service level improvement, channel satisfaction, improvement in BEI ( Brand Equity Index) which requires preparing and implementing immaculate strategy and leading &  motivating the sales team by engaging them  during the balance days of the year.

Due to the poor performance shown by the area in the past 7 months, theShivalik team is demotivated and are looking for a charismatic leader who could turn around the fortunes. The Shivalikteam members are otherwise very competent and performed extremely well in the past. They were the No. 1 Area Office for consecutive 3 years in the past

You are very recently hired by the New Cement as Chief Manager to lead its Shivalik area and your job is to lead the sales and customer service teams and to do a complete performance turnaround within the next five months of the FY left.  The Regional Leadership team has given a half an hour appointment to you during which you are advised to prepare a focused strategy and a detailed action plan and present the same to convince how are you going to do the performance turnaround. The essence of success will be in the strategy and its speed of implementation against time. Your action plans should be SMART and addresses all the major challenges mentioned herein above.

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Leveraging the Technology & Digitization to Disrupt and Stay Relevant, Innovative and Creative

The Corporate World is replete with examples of many a large that have gone into oblivion like Xerox, Nokia, Kodak, Motorola, Blockbuster, Blackberry Motion, Sears etc. What made them obsolete is change in technology, innovation and digital disruption. These were all iconic brands of their time gave way to indifference to embrace change. If we dig deep in to these companies (those who missed the bus) for example, say Kodak the pioneer in the photographic film market, was so engrossed in film marketing success that despite them inventing the first digital camera it ignored the digital revolution happened through photography and instead remained focused on film market apprehending of losing it and ultimately had to file for bankruptcy. Another example could be Nokia, despite being the global leader in mobile phones (20-25 years ago) at one point of time the company ignored the software development part of the technology, that not only the voice but data, messages, photo and videos also could be sent through mobile phones leading the advent of Smart phones which Nokia ignored and kept focusing on the hardware technology alone. There are other examples of Xerox losing out by focusing on copying business alone ignoring the opportunity in digital communication which eventually is replacing paper or say about Blockbuster, the largest video rental company having large stores all across US unable to foresee the Netflix’s rising in terms of on line streaming and eventually lost out.

Contrary to this if we see the most successful companies of say 2019 the names go like Google, Amazon, Facebook, HP, Cisco, GE, MasterCard, Volkswagen, Starbucks and so on. What did they do differently that they are thriving and kicking alive? The answer is that they all have invested in research and development of technology, keeping a close track of customers/consumers’ needs and behaviors, are open to experiment new opportunity, adapting to change by offering disruptive solutions with agility and not risk averse. The companies like Amazon, Facebook, Google, Cisco all of them are in fact pioneers in all the aspects as mentioned above and have created an ecosystem of idea generation, innovation platforms and fast enough adopt new technology always which has led them to reign the business and are phenomenal brands to reckon with. It is not the question of a big or small organization but the organization/s who could sense the opportunity and leverage it by becoming the first and prime mover.

Let’s think of the unprecedented crisis and challenge we are facing now due to the advent of Corona virus (Covid 19) which has put almost all the economic activities to a screeching halt. There’s a fear for loss of lives, loss of business and even fear of unprecedented job cuts which may run in to several millions across the globe. The whole world is now waiting with bated breath as to when the much sought after Corona vaccine would see the day’s light, investing heavily in research and development, in medical and healthcare. Many a small disruption have started happening in terms of inventing small low cost ventilators, Covid 19 testing kits, e-health options like teleconferencing with doctors, further proliferation of e-commerce, e-logistics, e-learning platforms with new solutions and various other technological advancement for customer interface. The main objective is to have an increased technology and customer reach to stay alive and stay relevant now and even afterwards when social distancing perhaps may become the order of the day.

If we think it rationally, the challenge is the changing habits and behavior of people which is going to shape the future of our business. Unless the businesses are able to track such behavior changes of people, customers precisely we wouldn’t be able to come out with our new and improvised offerings in terms of products, services and solutions. It is said that our ability to see the behavior shits in people would be the key to success at this juncture. And technology has a big role to play in it e.g., starting with Covid 19 only, where Contact Tracing, a project pursued by both Google & Apple together to identify the people infected with Corona and track where are they moving. The objective is to provide protection to the community by making both the infected and the contacted individuals alert about it and advising them to go for medical help and/ or self-quarantined. Similarly google mobility data which is capturing mobility change of people by workplace, by retail and recreation and even by country during this pandemic is throwing us clear insight about how effective the lockdown is. This is really unprecedented in a sense that it is even able to monitor the closeness of contacts and the duration also with GPS & blue tooth technology. With such new technology tools we are now able to generate more information (data) and are using the data for public good. This is a combination of technological breakthrough coupled with innovation and creativity which has pivoted personal medical healthcare and safety of the humankind steering it to a new dimension.

Now since peoples’ behavior and habits are changing we do not know how it is going to shape the demand for various goods and services in future. The demand sensing thus becomes an important task for any industry, businesses going forward because with low or no demand leading to loss of revenue, loss of business the organizations have started responding with job and or pay cuts. And internally within most of the organization the strategy is to preserve cash and reduce costs. Although preserving cash could be a short run strategy there’s nothing better than income generation which would be a long run strategy. And how do we reduce costs, may be by embracing more and more technology and automation of the existing business processes which will ultimately going to impact employment, jobs at one hand but is going to make us efficient and competitive on the other. We’ve seen in the past how technology and innovation has led us to so many industrial revolutions including the Industry 4.0 which is the current day buzzword. The industry 4.0 as stated to be the latest and fourth industrial revolution which refers to transformative technology which has and is changing the course of the industry. It is basically a whole network of them like smart factories interconnected with intelligent machines, the internet of things (IoT), Big Data, Block chain, Artificial Intelligence and Machine Learning etc. which is revolutionizing both the industry and human evolution. Looking back at the industrial revolution so far, we see the first one in 1770 which has led to the introduction of hand to machines and firms to factories for the first time. This was followed by the second one 100 years later in 1870 when the usage of electricity, steam, water power etc. was making a modest beginning of automation and assembly lines in factories. Another 100 years later we had the third one (1970) when Computers, desktops etc. have come up to replace largely the routine, repetitive and time consuming jobs and thereby enabled us to rethink and reshaping our business model when the globalization was setting in. And then came the fourth one, as we call it as industry 4.0 which is a very recent origin and has revolutionized almost all the aspects of businesses like production/manufacturing, sales, supply chain and logistics, research and development, and many more. The manufacturing including production and the supply chain fields are one of the major beneficiaries of industry 4.0 initiatives so far as we mentioned above. Let us discuss these with a few and concrete examples say, predictive maintenance as implemented by the oil giant Royal Dutch Shell Plc. Shell’s predictive maintenance is driven by the Artificial Intelligence (AI) wherein the AI powered tools can precisely predict when maintenance is required for its compressors, valves and can even alert the station employees of various risks it is running. The tool can also anticipate and inform Shell about which of the vast numbers (around 3000) of oil drilling parts can go wrong, highlighting the need for replacements and their available places of storage across all Shell locations and can even trigger purchasing and shelving of such spare parts in advance and at one go. This has resulted in attaining robust efficiency in inventory management where the inventory analysis time got reduced drastically from 48 hours to 45 minutes and saved millions of dollars on account of reduced cost of moving and reallocating various inventory. Another example could be Amazon Fresh (whole foods) where by focusing on big data analytics they were able to understand the customers’ grocery buying behavior and how the suppliers are interacting with the grocers’. And subsequently with the help of these data driven logistics it has been able to create more value for customers in terms of product development, delivery and where to initiate the further changes etc.

Now coming from global to local our own Axis Bank the largest private sector Bank in India has implemented robotic automation processes and deep learning to better understand the customer behavior patterns to respond to them with clear value propositions like streamline the document processing, shorter response time, identifying events which may lead to their leaving (customer turnover) etc. and accordingly offer them with special and customized sales promotion scheme, say customer retention schemes. They are now also developing some chatbots to engage with the customers and to reduce their waiting time for service in their busy branches especially during peak hours. The field of supply chain and logistics all across industries are having innumerable examples of how AI and Big Data has pitched for performance whether it is drones making loading of cargo into ships in mid sea or an AI sensor at the warehouses are keeping a hawk’s eye on stacking heights and sending alerts when it is about to topple and injures warehouse employees thereby removing safety hazards. The use of bots for unloading, loading (from and to the shelves) and transporting in to the loading bay is also increasing and becoming popular. The overall inventory management in several industries have undergone radical changes with the advent of data analytics, machine learning and automation and contributed towards significant reduction in inventory carrying cost and lead time.

Also while we talk about generating revenue through customer reach, service, sales, branding and marketing there are umpteen example of organizations using various CRM (Customer Relationship Management) platforms to tactically ensure customer reach, sales pitch, promotion, delivery and closing the sales in terms of the targeted outcomes. These customer interface (whether external customers like consumers, influencers. opinion makers, channel partners and/or internal customers like front line sales and customer service team members, various departments, business partners etc.) in terms of application software like say, provides to plan the customer journey (Planned Journey Cycle), also provides with the required on line data to initiate dialogue with the customers, reminds them about  jobs to do during the visit, review the  targeted  milestone achievements status, checking the status of various hygiene level of requirements like in shop branding, stock at hand, updated sales, delivery and service requirements etc. The Asian Paints example is worth mentioning here, the company has made this digital integration of its channel network with the salesforce seamlessly. Today the company, it’s top management at the HQ and its salesforce can able to track and monitor the channel (dealer and retailer) performance in terms of their sale, % of target achievement, status of stock and sundry debtors, utilization of sales promotion scheme (if, any), service and delivery on real time basis. This is now replicated in many organizations cutting across the industry sectors. It would also be worth mentioning here that companies like Hindustan Unilever as learnt from them that they’ve mapped all their retail outlets in the country (those which are called Mama Papa shops and approximately 5.0 lakh in numbers) during this lockdown to have a better understanding of their buying pattern, stock movement, customer behavior, future demand etc. to effectively serve the grocer/ stationery shop ( i.e., the retailer) in terms of technology enabled tracking and monitoring of customer and consumer habits, optimism, adaptation in the changing circumstances to accurately forecast the demand, better management of inventory and also meeting the delivery and service level expectations with more value added and customized offering which otherwise would perhaps done physically.

Customer and technology are the cynosure of all our business activity and today’s emergent leadership calls for more focus on innovation, idea generation and more to come out with technology based solutions. It should strive to create an ecosystem/service oriented platform, to have more focus on basic internal functions & processes and also taking due ownership of digital skills development for it’s employees/team as that would really pave the way for leveraging the entire gamut of what industry 4.0 offers to us in terms of technological breakthrough and adoption.

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Cement: An Industry Perspective of Economic Development vis-à-vis Mitigating the Climate Change

A decade has just now ended and we’ve got in to a brand new year 2020. One of the biggest challenge our mother earth facing today is climate change. The earth is getting more than two (2) degrees warmer every year, Amazon has burnt, bush fires in Australia is wreaking havoc, Middle East, Africa and some parts of our South East Asia is witnessing rages of war, large scale deforestation, massive industrialization at the emerging economies are leading to global warming, greenhouse gas emissions and major depletion of flora and fauna at an alarming rate.

The table below shows the total global emission as 36153 MTCO2 as per the 2017 data and the share of emissions across the world where China, US and India were seen as the major three contributors leading the pack. Globally the large and heavy industries with no or low substitutes (like cement/concrete) are facing the major challenges to reduce the emissions and positively contributing towards making a greener planet earth.

Carbon Emissions Around the world

Contrary to the flip side mentioned above there are also opportunities for growth and development in terms of technology, infrastructure, human capital, innovations and various disruptions happening across these spectrums. And industries like Cement which is in the core sectors of any country’s economy is a classic case of dichotomy wherein at one hand it provides the very basis of development, building & infrastructure, real estate, housing, logistics etc. and on the other hand contributes to Co2 emissions having a major environmental impact. Today globally 30 bn. MT of cement based materials like concrete, plasters. mortars, concrete, tiles, bricks etc. is produced and consumed annually. After food and water cement is the third most item of human usage across the globe. Cement being the large global industry faces the toughest climate challenge since it has got very low substitution. Ever since Portland cement is invented in 1924 or even before that when lime and brick dusts were used in construction cement forms a major ingredient in concrete thus being responsible for the Co2 footprint. Presently cement contributes around 5-7% of the global Co2 emissions after fossil fuel and was one of the major agenda for discussion during the Paris climate change talks in 2019.

The cement industry if we take the example of India have been consciously making efforts to work around the challenges of reducing Co2 emissions. Ever since the industry was deregulated in 1989 it has progressed a lot towards making lesser carbon footprints in terms of many a disruption which has happened in production, sourcing MIC (mineral ingredients and constituents), raw materials and in pollution control measures. The industry over the years have migrated from wet process plants to semi dry process and finally to dry process plants which does the preheating of raw meal (mixture of limestone, shell, alumina, bauxite etc.) before it enters the kiln (furnace) for making clinker which is the main raw material for manufacturing cement and thus contributes to reducing the energy consumption and costs in terms of coal usage. Alternate fuels (like rice husk, soya hush, lime sludge, red mud tyre chips, rubbers, plastic, polythene, ETP sludge, waste oil etc.) or AFR as it is known is also now being extensively used these days to increase the thermal substitution rate (TSR) and in turn reduce Co2 emissions. The major breakthrough in fact happened when the industry started moving from producing Ordinary Portland Cement (OPC) to blended cements like Portland Slag Cement, to Portland Pozzolana cement (PPC) and to very recently Composite cement which uses more cementitious materials (also known as Mineral Ingredients and Constituents-MIC) like fly ash, slag which replaces the clinker usage without diluting the strength, quality and durability aspect in cement and concrete. The blended cement (Portland Slag Cement) got produced in Germany way back in 1885 and made it’s beginning in India in 1951. The Portland Pozzolana cement (PPC) is comparatively came in vogue during the last two decades as gargantuan volume of fly ash generated by the thermal power plants posed a real environmental hazard and need to be mitigated. Further research and development has brought us the Composite cement which makes use of both fly ash and slag along with clinker as per BIS (Bureau of Indian Standards) specifications. Alternatively, in many a sites or in RMX (Ready Mixed Concrete) batching plants these MICs (say, Fly Ash and /or Slag) is mixed with Ordinary Portland Cement to make durable concrete. Currently approx. 60% of India’s cement production is blended cement which is cost efficient and environment friendly cement, reducing carbon footprint and many harmful emissions, conserving depleting limestone reserves and fossil fuels and mitigating soil pollution and erosion. Moreover, to successfully dispose of several thousand tonnes of blast furnace slag generated by the country’s steel plants and the huge fly ash generated by the thermal power plants is a huge challenge which was also effectively mitigated by using it in producing blended cement and thereby achieving the dual objectives of its successful disposition and substituting it against the clinker (limestone) which is a precious resource and expected to last for not more than 40-50 years unless new deposits are found out and permitted to make use of. The efficiency & emissions are the two major midterm goal for the industry at present and both positively contributes to lessen the industry’s adverse impact on the environment. There are various other disruptions happened within the industry worth mentioning is like replacing bag filters by ESPs (Electro Static Precipitators), usage of LD slag (Linz Donawitz process), usage of pet coke, use of high efficiency boilers in captive power plants, closed circuit mill & vertical roller mill (VRM) to ensure better grinding and control of dust particles inside the mill, reduction in fossil fuel consumption through Waste Heat Recovery System (WHRS), solar power plants and alternate fuels is immensely contributing to high energy efficiency and to effectively control emissions.

Cement as a product (making a transition from commodity to product and therefore brand) is highly logistics driven and we could see that both clinkerization and grinding units near to raw material and MIC sources and thus involves a major amount of transportation of inbound raw materials and outbound dispatches of cement inventory to various warehouse, depot, project sites and to various end customers including RMX plants, Large Buyers and individual house builders. And these gives opportunity for green transportation like using of waterways to move cement and clinker, split manufacturing units near Grinding Units (MIC & Market), palletization, mobile silo and mobile packers etc. to make it near to the market (thereby reducing the transportation footprint, cycle) and thus reducing the diesel emissions to a large extent.

Although a modest beginning is already made and continuing however the magnitude of the challenge is quite big. The industry captains as a responsible corporate citizen is making relentless efforts to make quick wins’ in terms of using the supplementary cementitious materials (SCMS) for making more and more blended cements, investing in research and development to come out with green concrete, self-healing and self-compacting concrete etc., encouraging sustainable construction in terms of design, use of eco-friendly materials and robust construction practices to supplement our efforts sustainable and get going.

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Supply Chain Logistics – Are we taking the right STEP (Strategy, Talent, Execution & Performance) to deliver and remain relevant in crisis?

The pandemic is on. Ever since it has set in, the world of logistics and supply chain got disrupted. And it is true for most of the businesses, setting aside a few which is purely local, having a short supply chain and simple in operations.

It would not be out of place to mention here a prophetic statement of famous management Guru Peter.F. Drucker which reads as follows: “The purpose of a Company is to create a customer … The only profit center is the Customer “.

Customer is the focal point. They are the lifeline of a business, of an organization and even to a supply chain logistics function of an organization. As we are aware that there are predominantly two ways to make a business organization running and thriving e.g., either by increasing the income i.e., revenue or by reducing the cost and alternatively may even be doing the both unless of course there is any disruptive innovation changing the course of the product, service and industry overnight.

Let us take the example of brick and mortar industries like steel and cement which although is in the core sector of the economy yet doesn’t have any palpable difference in terms of visibility i.e., branding, specs and offering. It is still making a transition from a commodity to a product and requires a clear-cut differentiator to create and maintain the sustainable competitive advantage. And Supply Chain logistics is one such discipline which not only for optimization of costs but for creating a better customer value plays an important role in delivering that much sought after sustainable competitive advantage.

The exhibit 1 as given below illustrates a simple supply chain ecosystem. In order to further simply our understanding here we would use supply chain & logistics as one terminology although both are clearly and distinctively different where logistics caters to the physical movements (i.e., transportation) of goods and services to the end customers.

Exhibit 1

The major elements of the above supply chain logistics are basically supply i.e., raw material procurement, manufacturing and the logistics in terms of warehousing, freight & forwarding and delivery to end customers. But, there could be so many variants (models, options) which exists with respect to each of these elements e.g., warehousing say, distribution warehouses vs intermediary warehouses, freight forwarding in terms of rail, road, shipping, multimodal and delivery in terms of first mile, last mile, break bulk etc. There are various other important aspects of logistics like lead distance and time, order execution time, order delivery time, turnaround time (TAT), fill rate etc. many service level deliverables which clearly differentiates the agility and resilience of a supply chain within an organization. The primary objective of supply chain logistics as reiterated earlier is twofold e.g., value creation and cost reduction to contribute to the organizations’ bottom line and hence costs like warehousing costs, inventory carrying costs, transportation costs etc. also becomes a major driver of competitiveness and sustainability.

Now before delving further deep in to the holistic logistics solutions to drive competitiveness within the industry let us understand the nature and the challenges of commodities (transcending in to products) like cement and steel. Cement is high volume less value product whereas steel is high volume and high value product compared to cement although in logistics parlance both falls under the bulk heavy cargo category where transportation and handling often makes a distinctive difference in terms of customer serviceability and experience. Both these products are characteristically logistics driven since often the plants are set up closer to the market and since the customers do not want to commute beyond their locality to fetch the items. This is a very important aspect to be remembered while designing and developing an effective and holistic supply chain logistics strategy of an organization which is key to both survival and sustenance. Now if we talk about the challenges, the major ones are in terms of logistics infrastructure (both warehousing & transportation) and delivery since cement is prone to warehouse shelf life deterioration and steel is also prone to rusting. It also requires some customization in terms of cutting and bending and coiling before it is finally sold and delivered to the end customer.

We’ve also seen the vulnerabilities in the supply chain logistics during this pandemic. It is really unprecedented since it has impacted both the supply side as well as the demand side of the economy. To be more specific about logistics, it has impacted the warehousing and inventory management in terms of demand variability, transportation bottlenecks in terms of drivers’ and truck availability and supply side bottlenecks of product availability in terms of reduced or closing down of manufacturing operation due to social distancing, fear and uncertainty. One can not however take a solace to it that this is due to Covid 19, this pandemic. The social distancing is expected to remain and we are required to adapt to the changing environment and strategize to make our logistics supply chain more agile, resilient and customer centric. And it is not Covid alone but there could be any other similar crisis like financial or economic, natural disaster/calamity, like forest fires, earthquake, tsunami, geo political conflicts, geographical barrier like closed borders etc. which might also impede the efficiency & effectiveness of logistics supply chain at any given point of time. It is prudent therefore to embed the due risk assessment and mitigation plan in the organization’s logistics supply chain strategy to remain steadfast in its service, delivery and customer satisfaction.

The exhibit 2 as given below describes the what, why and how impact of the current crisis which could be an eye opener for us going forward.


Exhibit 2

The traditional impact of any such crisis (major or minor) is mostly with respect to cost, time, safety, service level, company policy etc. which are intrinsic and factors like competition, government policy & regulation, trade policies, bilateral agreements, fuel cost, interest rates etc. which are extrinsic to the organization. As against this traditional impact the key impacts which a pandemic like this brings forth is massive disruptions in the supply chain logistics which either makes it unresponsive or may bring it to a screeching halt and also increases demand and supply variability across the supply chain as we move further from customer to supplier which is known as bullwhip effects. Now both these intrinsic and extrinsic factors hold good for steel and cement and one such glaring example is that during this pandemic steel exports to China has gone up as the Chinese manufacturing of steel got impacted. The cement in turn is mostly domestic demand driven and witnessed a greater variability during the current crisis and also the logistics impact in transportation due to lock down, fear & uncertainty, social distancing, healthcare & safety.

In light of the above once we look at the holistic solutions to drive competitiveness within the industry like steel and cement, we are required to make a conscious choice between consistency, control and cost. Often it happens that in order to remain cost effective, competitive and value driven we adopt lean logistics practices to focus on quality, process and on customer value but in turn sacrifices our logistics agility. Hence our strategy should be to remain agile and do not compromise the responsiveness with respect to lean principles. Apart while it comes to addressing a greater and larger variability in terms of inventory management (bull whip effect) the strategy should focus on how to improve upon our demand forecasting to reduce such variability in inventories across the supply chain logistics cycle as we move further away from customer towards the supplier. The exhibit 3 clearly illustrates the concepts as we’ve explained above.


Exhibit 3

Now with respect to building our holistic logistics strategies we need to ask ourselves the question are we doing it right? The moot point here is to internally ask have we taken the right STEP (Strategy, Talent, Execution & Performance) as yet to mitigate the risk (R) and optimize the cost (C) which is the basic objective of any supply chain logistics strategy objective. Please see the exhibit 4 which clearly states what needs to be done with respect to the four pillars of strategy, talent i.e., people who could ultimately deliver the strategy, execution and thus leading to performance (measurement) of the supply chain logistics of an organization.


Exhibit 4


Finally, in order to remain relevant, competitive and responsive, any supply chain logistics should adopt either, or/and of the following e.g., (1) track & monitor changes in consumer /customer demand as that would drive constituting the primary strategy as to how do we respond to all our stakeholders in the logistics chain? (2) second we should explore reducing the supply across the chain to positively disrupt the supply chain and / or say, revisit our logistics footprint, shorten it (3) also mull over the option of moving from a complex to simple supply logistics chain, to be precise from global to local supply chain (4) strategically decide supplier switching in order to reduce supplier over dependency ( if, any) and finally (5) to go all out for technology adoption and digitization. All these would facilitate the flow of information back from end customer to the ultimate supplier, manufacturer including the supply logistics support service providers in an industry like steel and cement and thus help building the new age supply logistics chain to align, converge and compete in a VUCA (volatility, uncertainty, complexity, ambiguity) environment. A game changer in terms of leveraging our own resources and converting it in to promising future opportunities indeed.

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Ambitious business man climbing stairs to success.

Performance & Execution: Key to Successful, Individual / Business Leadership

Today’s reality is that we are living in an era marked by resource crunch, scarcity of time, multitasking, intense competition, eternal stress, complex and regulatory external environment, less of emotions and engagement. An individual trying to meet family expectation to become  more prosperous & successful, a sales person requiring to deliver his monthly budget/ target, a business organization aiming to create more stakeholder value to become the best place to work, a footballer striving to score a goal  in a derby match, a cricketer steering almost single handed winning performance in IPL matches, a Corporate honcho expected  to deliver bottom line strategy, a surgeon expected to successfully operate a critical patient to donate life, an academician immaculately delivering a lecture  as keynote speaker in an international seminar, a military  General fighting insurgency and infiltration in LOC all have them one thing in common e.g., performance execution. There are numerous other examples of such performance execution in an around us every day which we often not pay heed to. The moot point here however whether it is performance execution or performance and execution and if that be so whichever comes first. This is akin to the chicken and egg story which we are hearing since ages. Performance and Execution is complementary to each other and can be said as the two sides of a same coin. In order to perform we need to execute and unless we execute we cannot perform. And with our stretched targets, strict timelines and with the survival of the fittest we need to execute, deliver and perform religiously and relentlessly.

But how do we ensure performance delivered is execution, decide what to do as a part of our strategy that execution makes it happen?  This is true for us as an individual and for an organization as well. Of course hereinafter we’ll discuss it in terms of a business organization’s perspective. The five fundamental steps which precedes execution is (a) goal/ objective setting (b) accountability & ownership (c) engage to deliver (d) follow up (e) review and monitoring (e) further stretching our goals i.e., raising the bar. Let’s elaborate these to understand how it impacts the execution leading to performance. Goal Setting: In order to perform we need to ascertain what we need to achieve (say, execute) i.e., to set up clear goals and /or objectives which we’ll pursue. The clarity of goals for everybody in the organization is a must and it is in fact supplements the role clarity for a job which means making an employee understand what is expected out of him/her which are aligned with the overall business objective embedded in the broad organization strategy. And this goal setting has to be done in terms of defining KRAs & KPIs (Key Result Areas and Key Performance Indicators) which we are required to deliver, review, track and monitor on a regular basis to sustain our efforts to execute. Now this could be made both at macro (high level) and micro (granular level). In fact the more granular is our KPIs and action plans the more will be the likelihood of achieving the same. It is something like the entire organization is aligned in terms of its vision and mission which is then translated in to goals, strategies, action plan and last but not the least is in to seamless coordination, collaboration and co-optition (collaborative completion) to implement.  Accountability & Ownership: However this is easier said than done and requires total accountability and ownership. It is one of the key challenge today, which  if a business manager/ departmental head and or CEO handles successfully can lead to empowered teams, exceptional performance and removal of silo cultures inside the organization which often impedes performance. It is to make people assume the ownership of the job/ task internalizing it as his/her own instead of assigned or top driven and make them accountable (responsible) for their, work, action, results and the flipside of it i.e., to its consequences. Engage & Deliver: Nothing happens automatically. If having set the goals and assuming the ownership and accountability is the necessary condition for executing performance, to engage and deliver is the sufficient condition for sure. No matter whatever we do or whatever we say if all our employees having unified goals are not engaged enough they cannot deliver. This is another big challenge most of the business organizations are working with these days e.g., how to ensure that the employees are engaged effectively. An organization has to make the employees’ task interesting, meaningful & challenging, enabling him/ her with necessary resources, guidance, direction and opportunities to perform. One way of doing it could be linking it to higher/ fast track growth opportunities, rewards and recognition, giving assignment in cross functional projects or making them the change agent for new or critical initiatives. An objective and transparent evaluation of employee performance together with providing appreciative feedback also can work as a feel good factor for the employee and made him/her to remain engaged on a sustainable basis. Once this is done then delivering becomes the follow through. Follow up: However these follow through is a continuous affair and need to be done regularly and can be done let us say by doing daily work check in and work check outs. Normally check in is done at the beginning of the day to decide what we do today and check out is done preferably at the end of the day to take stock of our follow up action to ensure that we’ve made the desired progress in executing our action plans and thereby converting our goals in to strategy and implementing it on ground. This is in fact the precursor to tracking, review and monitoring of our performance. Review & Monitoring: The most important aspect in closing the performance loop is review and monitoring. A business manager /CEO would never allow this loop to keep open and squander the opportunity to consolidate further whatever quick wins have been made so far. A robust review and monitoring mechanism is an important tool in the business planning process and can work wonders in keeping the performance on track once practiced rigorously. There could be a structured and unstructured review considering the time, availability of the concerned people, criticality of the task/ project in terms of significance (urgency) and its impact on the business. An unstructured review could be done during our day to day discussions on the KPI/topic on a one to one basis or may be during conference call, telephonic discussions and visits to the work site (shop floor, customer premises, market etc.). A structured review on the other hand could be done through performance trackers, dashboards and formal review presentations involving all the stakeholders. The first one is an informal approach and the second one is a formal approach to review and monitoring. Which one should be applied is perhaps to be left to the manager and / or organization to decide in keeping in mind the frequency and importance of the review, however a mix n match of the both is seen as a rational approach these days. But merely having the review and monitoring done is far from achieving the objectives for which it is done. The progress status of our tracking, review and monitoring is then requires to be translated in to further actions wherever we are behind our prorata KPI target and revisit our target/ KPIs wherever we are ahead of our target. This has to be clearly supplemented by removing bottlenecks (if, any) distracting our performance and by quick decision making to keep our action (job) on track by reinforcing resources and motivation together. Stretching the Goals Further: Executing performance requires us to revisit the goals continuously and raise the bar. As Michelangelo said “the greater danger for most of us lies not in setting our aim too high and falling short; but in setting our aim too low, and achieving our mark”.

A god performance execution requires an organized and systematic approach to deal with the current reality by highlighting the root cause and taking concrete action on it. It is in fact a rigorous process to find out what, how and why’s of our business goals, strategies and questioning the efficacy of execution from time to time and to ensure proper follow through and accountability. The performance execution requires discipline which needs to be practiced regularly and to be made performance thy name is execution a way of our life.

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Diversity People Seminar Learning Cityscape Concept

Leadership Paradigms: Leadership Strategy vs Strategic Leadership

Leadership is the current day buzzword in today’s complex world. Right from family to corporate to sports and even to diplomacy, war and politics the word (leadership) has become an oft quoted cliché. Every day we keep talking about leadership styles, examples, seminars and leadership stories in every sphere of our life. Each one of us in fact wants to become Leaders and desire to lead. And the best part of Leadership is that one can lead from wherever he or she is irrespective of position, portfolio and/ or designations. The moot point therefore is to introspect and reflect on the why and how part of leadership. While the first (why) tries to answer that Leadership is to drive success that each one of us aspire to achieve in life whereas the second part (how) defines about the strategy and course of leadership. Instead of delving in to the much heard debate whether “Leaders are born or made” let us think how leaders could steer themselves to success. Strategy plays an important role in making Leaders successful. A leader irrespective of their cast, (or, even caste) creed, position or any other nomenclature, strategizes. It an integral part of the leadership traits and the formulation and deft execution of strategy is in fact determines the quality of leadership/leaders’. The resolving of recent Doklam plateau standoff between India & China, the introduction of Jio services by Reliance, the recent whitewash of Srilanka by the Indian cricket team and the surgical strike Indian Army did across the border are the best examples of  formulating strategy and it’s adept execution.

Now let’s elaborate the point to explore further whether it is Leadership Strategy or Strategic Leadership that made it possible. In order to do that we need to understand the difference between the two to appreciate how it contributes to leadership in terms of style, culture, function, capability, effectiveness and implementation.

The strategic leadership is the micro aspect of the Leadership which is more intrinsic to the leader as an individual, his capability and competency to formulate, translate the organizations’/ individual’s vision, strategy and align the team/followers to the achievement of its business/individual goals. A strategic leader focuses on increasing the efficiency /productivity of self+individual by creating/ and developing an environment which provides transparency, openness and also enables them with adequate resources, leadership commitment and support to achieve the quick wins.  A strategic leader must possess and exhibit not only the strategic skills but also should have other traits like motivation, holistic approach, agility, nimble footing in making decisions, allocating and optimizing resources with consistency and reliability, challenge the existing norms and must innovate to succeed. It is an integral part of strategic leadership process to interwoven both the short term as well as long term vision and mission (of the organization/individual) and put in to tactical plans to implement. Today despite the fact that strategy making is needed at all levels not all are able to do justice to it. Strategic Leaders’ are scarce resources these days which require us to optimally manage them and / or to further develop to make the leadership pipeline possible.

The Leadership Strategy on the other hand talks about the macro aspects of leadership applicable to an organization, institution, society, forums etc. e.g., what is the leadership objective, quality, structures, numbers, pipeline, grooming, retention of talents and the competencies, skill sets they do have to be able to align the organization’s/institutions’ business or other goals to attain the business objectives. The leadership Strategy emanates from the organization’s culture, vision/mission for doing the business and acts as an edifice to steer the organization to success and sustenance. The major elements of a Leadership strategy may be growth, sustain, innovate and diversify which might be exclusive and/or inclusive. The major drivers’ of an organization’s leadership strategy could be its focus areas in business and/or work, organization culture, values and ethics, quality and competency of its leaders/ manpower, organization structure, systems, processes and compliance. It is the leadership strategy which in fact effectively tries to bridge the gap between potential to performance.

It could therefore be observed and construed that despite being the two different facets of leadership paradigm both leadership strategy and strategic leadership are complimentary to each other and both are required to build on the organizational as well as individual leadership to confront various internal and external risks, challenges, conventions, aspirations to attain  performance excellence.

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Business strategy success target goals.

CAP Your Performance

We’ve just bade goodbye to an eventful year 2020 and ushered in a brand-new year 2021. The pandemic has thrown up many a gauntlet to all of us in terms of social distancing, health care safety, disruptions in supply chain, business loss, contraction of economic growth, job loss, furloughing, retrenchment and so on. Since it is now certain that the Social distancing will remain and the existing business model in many a case has to undergo radical changes in the new normal, the business enterprise and / or the corporates therefore are chary investing in Capex, Opex and / or in people. Although it is true that People only can save the organization out of this deep crisis as posed by the pandemic yet most of them have resorted to act on manpower restructuring, rationalizing characterized by right sizing or downsizing.

The moot point then is how to keep pace and adapt oneself to such changes and yet been able to keep himself /herself relevant to the organization in terms of the roles and responsibilities one is pursuing. Now this requires us to add new skill sets, understand the external environment better and closely monitor the changing customer behavior to quickly adapt to the volatile demand and deliver performance. The entire situation is characterized as VUCA i.e., volatile, uncertain, complex and ambiguous as we know and the same is accentuated by D as its prefix and suffix i.e., D VUCA D which means that D=Disruption in VUCA environment which is D= Diverse (in Diversity) in nature. *

What is that one thing therefore which can keep ourselves afloat in such a DVUCAD environment? It is our sheer PERFORMANCE which is the very basis of an employers’ expectation in the corporate world. It is a cliché to know that “Change is the only constant in this changing world” and the process, not the outcome of change is painful. In situations where organizations are adopting for a change and / or in situations / events like mergers, acquisitions, restructuring, accomplishing turnkey projects, crisis management, disruptions etc. (which is the order of the day) what we can strive to achieve and control is our performance only and not the volatility and various other extraneous factors and complexities which is shaping the events, it’s outcomes even. But HOW to focus on PERFORMANCE which can save the day for us (Leaders’) in changing times?

The way we respond to any event/situation/circumstances usually determines the outcome i.e., E+R=O (where, E=Events, R=Response and O=Outcome). It is often seen that instead of taking the responsibility for the event we squarely put the blame on it and take refuge under it. Unless we stop blaming the event for the outcome and instead accept full responsibility for it, we cannot drive performance either for self or for others say, the team members. A better understanding of the PERFORMANCE Eco System (Illustration 1 as given below) together with its Drivers’ and elements would necessarily lead us to master the art of PERFORMANCE. A closer look at a simple Performance Eco System as given in the exhibit below will help us to understand what actually drives our performance. We are all aware about that famous oft quoted concept that Performance = Potential minus Interference, which has almost become a cliché however as against the same let’s explore a different aspect of Performance which is explained as Performance = Ownership+Commitment+Accountability=Potential. Unless we take ownership and are not committed, nothing happens. The answer lies in the question how to CAP your performance? Where, CAP is Commitment, Accountability leading to performance. The Strategy House in the following exhibit lucidly explains the important pillars of the eco system as to how performance leads to potential or alternatively potential leads to performance. In Performance we want to Achieve and in order to achieve we need to be aware of what we want to achieve, aspire for it, align ourselves 100% with the goal and with the team and accentuate our efforts to take the necessary Action which is the next pillar. Now in order to initiate Action we are required to plan our action, take a pledge to proceed and review, monitor and track the progress regularly and consistently without getting distracted. And our Action taken will determine how do we Deliver? Delivering is again dependent on the skills we possess or acquire over a period of time couple with the scale of our actions we envisage and the speed of our action taken i.e., the agility of our action, decision and implementation to achieve the desired performance. However, as leaders are supposed to and should always hold ourselves Accountable for the integrity best exhibited in terms of our personal and business ethics and enable and empower ourselves towards being accountable to all our actions, consequences and the result. And finally, this integrated chain of aspiring to action to deliver with ethics and integrity convincingly leads us to our much-desired Performance which is the ultimate outcome to be standardized, sustained and spearheaded to be replicated fast both inside out and to outside in for all our stakeholders’.


Exhibit 1

To sum up we would say that the Driver of our POCAP model is accountability & commitment and the final output is Performance. And integral to the abovesaid process is three key elements of Communication, Collaboration and Coordination without which the entire eco system can not work. A seamless coordination, collaboration and coordination in terms of synergizing all our efforts is the key to an authentic leadership in terms of leveraging the true potential of an accomplished leader to deliver the much sought-after performance.

INSEAD, Cement Industry Professional, Lead Management Consultant, Sales & Marketing, Supply Chain & Logistics.

*D-VUCA-D: Leadership Altitudes, by Prof. Ian C. Woodward, INSEAD Singapore.

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