The cement manufacturing industry is no stranger to challenges, and supply chain leaders in this sector constantly seek innovative solutions to navigate the complex terrain of material distribution and operational optimization. In this blog post, we delve into a remarkable transformation journey led by the Supply Chain Vice President at Eco Materials Technologies (EMT), a leader in the eco-friendly cement manufacturing industry. EMT’s collaboration with River Logic demonstrates how optimization tools can transform cement manufacturing.
If you’re a supply chain leader in the cement industry, this is a story you won’t want to miss. This blog post explores EMTs’ inspiring story of implementing Sales and Operations Planning (S&OP) and using network optimization tools to support integrated business planning.
The Initial Challenge
Cement manufacturing is a critical industry, supplying the building blocks for the construction world. However, this industry has recently been facing a significant downturn, with materials production dropping. This decline in local resources presented a pressing challenge that demanded innovative solutions. EMT, a key player in the industry, embarked on a transformative journey to find a way to efficiently plan and distribute materials, such as fly ash and cementitious products, to their markets.
The first step was optimizing the fly ash network for the upcoming 12 months, a vital move in ensuring efficient material distribution. But the journey didn’t stop there. EMT embarked on creating a Digital Planning TwinTM of their financial projections, which mirrors their business, allowing for more effective decision-making.
Counterintuitive Decisions
EMTs’ journey took an unexpected turn when they lost one of their primary material sources. Instead of hastily exiting the market, they used River Logic’s technology to evaluate the market’s value and revealed that retaining the market was possible and financially advantageous.
Expanding Horizons
With the merger of Borough Resources and Green Cement, EMT expanded its utilization of optimization tools beyond S&OP to encompass all product lines and business units, increasing the scope to include their entire business. Moreover, they’ve extended their planning horizon from 24 months to a comprehensive 5-year plan. This expansion integrates financial constraints and objectives into their strategic planning.
Challenges and Solutions
Representing the complexity of the EMT business in a Digital Planning TwinTM presented some challenges. EMT’s Supply Chain team had to overcome resistance from stakeholders who initially doubted the tool’s capabilities to model the intricacies of their business. However, they eventually managed to achieve a 95% accuracy in contribution margin, earning the tool credibility. To align reality with the software’s representation, they used various techniques to validate the model and maintain a balance between complexity and usability.
Benefits of the Transformation
The benefits of this transformation have been numerous. The robust tool now allows for real-time financial analysis, enabling swift decision-making based on data. It empowers the supply chain team to quickly evaluate changes in production, pricing, or supply patterns, offering valuable insights into their financial performance. Additionally, the ability to represent complex operations and comprehensively enhance collaboration across various functions within the company.
Improving Financial Planning
Integrating the Digital Planning TwinTM into the budgeting process ensures everyone uses the same assumptions. By planning every month instead of once a year, the team can maintain a constant line of sight to financial results. It’s not about executing the budget; it’s about executing the plan and being able to quickly respond to unforeseen events and understand the financial impact of any changes.
EMT’s journey is an inspiring example of how River Logic’s solutions can reshape an industry facing challenges. The ability to align operational and financial objectives, identify opportunities, and adapt to changing circumstances in real time has significantly improved decision-making and financial outcomes.
The success of EMT’s and their story, offers valuable lessons for businesses across various industries looking to embrace the power of digital transformation.
We encourage you to watch the entire interview for further insights into this transformation.
