“For us, supply chain plays a sheet anchor role” – In conversation with Mayur Chhabra, JK Cement

India entered the Cement Era in 1914 when the Indian Cement Company Ltd. started manufacturing Cement in Porbandar in Gujarat. As years passed, the Indian cement industry established itself as the second largest producer in the world, accounting for over 7% of the global installed capacity. The industry, which began competing globally in the manufacturing arena, and is expected to increase production at a CAGR of 5.65% between FY16-22, driven by demands in roads, urban infrastructure, and commercial real estate, handling the logistics and supply chain operations, is no piece of cake. In this exclusive interaction with Mayur Chhabra, Head Logistics and Planning for White Cement and Wood Paints division, JK Cement, we deep dive into the heaps of the cement industry, trying to understand the logistical side of operations. This interview touches upon the supply chain challenges, the cost factor, harnessing the potential of Inland Waterways, and much more.

The cement industry in India is the second largest globally and is expected to reach 550-600 million tonnes per annum by 2025. What do you think is driving the industry’s growth?

The global cement market size was valued at USD 326.81 billion in 2021. The market is projected
to grow from USD 340.61 billion in 2022 to USD 481.73 billion by 2029, exhibiting a CAGR
of 5.1% during the forecast period. Asia Pacific held the major share of around 74% of the global cement consumption in 2021. Rapid urbanization, growing construction activities, and government infrastructure programs such as PM AWAS YOJNA have all supported the growth of the market over the past years and the current demand outlook looks bullish for the next 5-6 years.

What are some of the most critical logistical issues faced by the cement industry in India?

The supply chain plays a sheet anchor role, especially for cement organizations as the logistics cost as compared to net revenue is always on the higher side when compared with other industries. Moreover, the lack of visibility (which is now changing rapidly with the use of modern technology such as AI/ ML/ RFID/ Track & Trace etc.) and the absence of organized players both in warehousing & transportation remains a challenge. However, with the launch of the new National Logistics Policy and projects like Gati Shakti, the government is trying to ease out the ways of working and I’m hopeful that things will change soon.

Logistics cost is an area of concern when dealing with the transportation of the cement industry. What steps do you take to optimize the overall logistics cost of your operations?

As I mentioned earlier, logistics cost is a major challenge for the cement industry and it’s a different ball game altogether when it comes to the white cement and putty business. The leads are as high as more than 2000 km in certain cases. However, with the use of the Hub & Spoke model and the inception of multi-modal transport arrangements, not only are we solving the problem of stock-out situations but also saving on cost by use of more and more rail and sea modes of transportation. Moreover, we had also worked extensively on increasing our distribution footprint massively over the last couple of years to be closer to customers and reduce last-mile cost and delivery time.

This is an abridged version of the original interview published in the November 2022 issue of Logistics Insider magazine. Click here to read the complete interview.

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