Cement Supply Chain: 5 Strategies To Save Logistics Costs With AI

 

The cement industry in the United States is known to be over two centuries old and is only third to China and India in terms of the cement supply chain, manufacturing, and consumption. A major reason behind this is rapid industrialization and the onset of development projects such as roads, commercial and residential housing and infrastructure that are being sanctioned across the country. This significantly amplifies the demand for cement. 

Since cement is a low-cost and high-volume commodity by nature, a major chunk of costs incurred by manufacturers is spent on transportation, as high as 30% of the entire costs of the cement supply chain. Despite the high demand, many cement manufacturers are still falling behind when it comes to automation and digitization in the supply chain management of the cement industry. Manual and unprofitable modes of logistics form the foundation of the cement industry supply chain, driving up logistics expenses. 

By employing Artificial Intelligence (AI), Internet of Things (IoT), and automation in the cement supply chain, one can not only bring down these costs by a huge margin, but also create scope for innovation and enhance customer experience.

Why is AI needed in the cement industry supply chain?

The cement industry is riddled with manual and backdated practices, giving rise to new challenges every day that not only increase costs, but also hinder efficiency and productivity. Here are some challenges faced by the industry that can be resolved with the proper use of AI, and digitization:

1. Incompetent logistics operations

Mismanagement and inefficiency in manufacturing plants and distribution centers significantly raise the supply chain costs in the cement industry. By plastering the functional inefficacies in the supply chain and opting for smarter, automated practices, manufacturers can bring down these costs and divert those funds to increase revenue and profits.

2. Lack of visibility in the cement supply chain

Manufacturers in the cement industry must make operational surveillance a priority, owing to the complex web of supply chains spread across the globe. Giving more visibility to the supply chain enables end-to-end transparency of the entire procedure so one can be in tandem with important factors such as transport routes, customer expectations and government regulations.

3. Volatile demand patterns

The imbalance of the supply-demand cycle in the cement industry has been a point of concern for manufacturers that have only been fuelled further by Covid-19. This makes it important for operation plants to produce enough products and meet sudden demands made by customers. By accurately predicting demand through AI, businesses can stay ahead of the curve and erase the imbalance in the supply-demand chain that would otherwise cost more than just money, in the long term.

5 strategies to reduce logistics costs in the cement supply chain

Technology is no longer simply an expense, but rather a revenue driver that enables scope for innovation and higher profits. Doing more with less is the key to unlocking the right strategies that make use of AI and automation, and reducing logistics costs in the cement industry. Let’s take a look at some of these strategies.

Strategy 1 - Implementing AI-based logistics and transportation

One of the most underrated yet significant functions of AI in the supply chain management of the cement industry is optimized fleet management. Systematic fleet management, mainly transportation, is important for the uninterrupted flow of commodities - in this case, cement. By automating this process using AI and automation, one can stay ahead of fluctuating fuel costs thus increasing fuel efficiency, managing resource shortages, handling weather disruptions, predicting transport demand, and so on.

Strategy 2 - Using AI-powered demand sensing and inventory management

Demand forecasting makes use of AI to study historical data to accurately predict demand in the supply chain. This helps manufacturers produce supply as close as possible to the predicted demand, thus staying ahead of volatile market demands, streamlining the manufacturing and supply processes, enabling efficient warehouse management, reducing wastage and so on. With the help of AI-powered solutions, actionable insights can be put to use to bring down costs and improve the overall efficiency of the cement supply chain. 

Strategy 3 - Automating stock replenishment systems

Generally, the cement industry supply chain is scattered across different locations, which makes inventory management a time-consuming and expensive affair. This is where auto-replenishment systems come into the picture. By using smart industrial IoT, manufacturers can come up with customized solutions for their business needs. A thorough analysis of the inflow and outflow of stock can be made possible using cloud computing platforms, which further helps in streamlining stock replenishment, minimizing human error, and reducing resource wastage. This saves logistics costs in the supply chain.

Strategy 4 - Executing live dashboards

Transparency and real-time visibility are becoming more and more crucial in the cement industry. This industry is one that operates in a constantly changing and evolving environment that produces daily challenges such as over-ordering, bottlenecks in logistics, long holds on orders and more. With live AI-powered dashboards at one’s disposal, manufacturers can keep track of dispatch, transportation, new and pending orders, bills, and much more - thus helping them to streamline the delivery process and enable significant cost savings.

Strategy 5 -Enabling automated bidding systems

Road transportation is a big part of the cement industry supply chain. While it is a fast-growing market, it is also unorganized and volatile at the same time, making it a common pain point among manufacturers, who cannot get hold of an adequate number of vehicles when necessary, thus stalling the delivery process. By using automated bidding systems, transporters can gather under a single virtual roof and indulge in healthy competition, while manufacturers can get the best market price for the required service, whenever necessary.

With the business ecosystem moving more and more towards automation and digital transformation; AI is proving to be a valuable asset in the cement supply chain. Although the initial costs involved may be high, these next-generation technologies have become indispensable by bringing all stakeholders together through 100% transparency in all processes and increasing accuracy in demand and supply patterns - bringing down long-term logistics costs to a great extent.