Supply Chain Management of Shah Cement

Course Title: Supply Chain Management

Course Code: MKT-418
Section: 01
Spring 2022

Prepared for
Md. Anamul Haque
Assistant Professor
Department of Business Administration
East West University

Prepared by
Group Members ID

Habiba Shahadat 2018-1-10-053

Syed Saleh 2018-1-10-250

Atquia Firooz 2018-2-10-344

Sabrina Hakim 2018-2-10-062

Mehedi Hasan Abid 2019-1-10-048

Date of submission: 28th April, 2022

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Supply Chain Management of Shah Cement

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Letter of Transmittal
Md. Anamul Hoque
Assistant Professor
Department of Business Administration
East West University
Subject: Submission of term paper on “Supply Chain Management of Shah Cement”
Dear Sir,
I am here for submitting you the report on “Supply Chain Management of Shah Cement” as you
authorized us to prepare as a part of our “Supply Chain Management” course.
The report has been prepared under your effective guidance and we respectfully acknowledge
your counsel & help that you so kindly accorded to us during the course.
Working for this report during our course has enriched our knowledge and experience. I am
thankful to you for providing us such a splendid opportunity to give you the report.
It would be a great pleasure for me if my report serves the best purpose. I have tried my level
best to make the report informative and give it a presentable shape. I do believe that my tiresome
effort will help you to get ahead with this sort of venture.
Sincerely Yours,
Habiba Shahadat - 2018-1-10-053
Syed Saleh - 2018-1-10-250
Atquia Firooz - 2018-1-10-344
Sabrina Hakim - 2018-2-10-062
Mehedi Hasan Abid - 2019-1-10-048
Department of Business Administration
East West University
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Executive Summary

Supply Chain management is the network of activities where the raw material is purchased then
transformed into the usable goods and then finally delivered to the customers through the
distribution systems. Shah Cement is a company in Bangladesh and it manufactures cement and
tiles in Bangladesh. Its products include ceramic floor, design ceramic floor, ceramic wall,
homogeneous floor, porcelain floor, stair, punch wall, rustic wall, border, and decor tiles. The
company also exports its products to the North Eastern region of India. ‘Supply Chain
Management’ is the philosophy to accomplish the entire flow of a distribution channel since
supplier to the final consumer. Proper management of supply chain helps an organization to bring
success.

Shah Cement is the leading cement brand in Bangladesh for over 15 years. It’s a concern of Abul
Khair Group; one of the largest group of companies in our country. The brand has grabbed the
market share during the first year of introduction and consolidated its leadership every year with
the help of proper structured ‘Supply Chain Management’. Superior technology coupled with
focus on quality and customer service has been at the core of its success. Shah Cement is the
preferred brand of the most individual house builders as well as mega construction projects of
the country.

Shah Cement’s competitive strategy is to providing high quality products in affordable price.
And to achieve strategic fit, Shah Cement needs to structure its supply chain strategy based on
competitive strategy otherwise consumer will be dissatisfied. They have tried their best to make
the cost competitive and affordable so that they can continue to serve as market leaders.

Shah Cement has a strong distribution network through which they try to give every possible
benefit to the customers. They use ‘Distributor Storage with Carrier Delivery Network’. They
analyze all drivers and factors that how can they become more responsive as well as efficient.
They have the world’s largest Vertical Roller Mill at Shah Cement is expected to significantly
contribute in improving the quality of housing and play a critical role in the infrastructure
development of the country. They use a hi-tech software which is “Oracle” to maintain effective
communication and sharing of information.
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Table of Contents
Introduction:..............................................................................................................................................5
Supply Chain Evolution:...........................................................................................................................5
Company Profile........................................................................................................................................8
Contribution of Competitive Strategy & Supply Chain Strategy..........................................................9
Achieving Strategic Fit............................................................................................................................10
Step 1: Understanding the Customer and Supply Chain Uncertainty.............................................10
Step 2: Understanding the Supply Chain...........................................................................................11
Step 3: Achieving Strategic Fit...........................................................................................................12
A Framework for Structuring Drivers: Shah Cement..........................................................................13
Distribution Network of Shah Cement...................................................................................................14
Contribution of Technology in Supply Chain:.......................................................................................16
Conclusion:..............................................................................................................................................17
References:...............................................................................................................................................18
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Introduction:
Supply Chain is basically the total network of a company where its suppliers, manufacturers,
distributors, wholesalers, retailers, customers are connected. Supply Chain Management is the
whole process to maintain the connection among suppliers, manufacturers, distributors,
wholesalers, retailers and customers.

Shah Cement started its journey in March 2002 by Abul Khair Group and it has been the leading
cement brand of Bangladesh for 15 years. It is situated in Muktarpur, Munshiganj. It is the
largest and one of the most technologically advanced cement producing plants in Bangladesh.
The capacity of Shah Cement Company is 10 metric tons per annum. It started its journey with
the view of building better homes and infrastructures, improving quality of life across
Bangladesh. It has partnered with FL Smith with some percentage of commission. FL Smith is a
global mining company. By this partnership they run the advanced and largest Vertical Mill in
cement manufacturing of its kind. It also has its own power plant of 17 megawatt to ensure the
constant power supply. It also has the Guinness world record of recognized milestone by having
the capacity of 10 million tons production per annum. Shah cement provides to its customers
both ordinary Portland Cement (CEM-I) and Portland Composite Cement (CEM-II) which is
suitable for any kind of construction.

Shah cement has high ethical standards in business dealings. They also do many welfare
programs and by these programs it has won the recognition of responsible corporate citizen.
Shah Cement is the big proud to Bangladesh because it has taken Bangladesh to a newer
height[CITATION Sha \l 1033 ].

Supply Chain Evolution:

Before the 1950s logistics term was only considered for military terms. Before 1950 was called
the logistics era and it was called “Dormant Years” and at that time logistics was not planned in
advance or it was not a separate function. “Supply Chain Management” was established by
Keith Oliver of Booz Allen Hamilton in 1982 but it did not gain success until the 21st century.
However, this concept supports that Supply Chain Management has been in existence for many
decades.
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The Supply Chain in 1940s — Greater Mechanization

Logistics got to be exceptionally imperative amid World War II, as military organizations
required proficient supply chains at domestic and in Europe. At domestic, supply chains were
fundamental to make military equipment and supplies, whereas overseas, it was fundamental to
urge supplies and back to troops as rapidly as conceivable. The 1940s saw a union of mechanical
designing and operations investigate supply chain engineering. The advancement of pallets,
pallet dealing with and capacity frameworks moreover proceeded for the following few decades.
The aim was to utilize warehousing capacity space more effectively and to optimize racking and
format. These changes would begin streamlining the stacking, emptying, union and taking care
of merchandise, coming about in speedier transportation and distribution.

The Supply Chain in 1950s — Standardization and Containerization

In the global supply chain, the greatest revolution was the invention of the shipping container
and all the logistics and modes of transport needed to support it and the most important feature of
it is that it can be distributed or shifted easily by using any transportation. By containerization a
container can be moved by road, by railway or by ship. Moving or shifting containers are fast
and easy by standardization which means cost and efficiency throughout the supply chain.
Although shipping containers wouldn’t be fully standardized until the late 1960s, the first
shipping containers were invented during the mid-1950s and at the same time, transport
manufacturers began building vehicles that could transport these containers. The invention of
containerization was one of the main drivers in making global trade cheaper and more efficient.

The Supply Chain From 1960s to 1980s — Greater Efficiencies and Computerization

During the 1960s, product dispersion moved absent from railroads and towards trucking. The
proceeded advancement of pallets, dealing with equipment, containerization and other zones
implied that cargo transportation was more dependable. This led to the proficient transport of
time-sensitive crude materials, parts and items, indeed over longer distances. Computerization
began to gain popularity within the mid-1960s and IBM created the primary computerized
inventory management and forecasting system in 1967. In the 1960s, logistics records and
information were captured, sent and detailed through paper. Information computerization began
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to streamline logistics, and made openings in numerous regions counting more exact determined,
way better distribution center capacity, truck steering and superior stock management. The real-
time distribution center administration framework was introduced in 1975, making it less
demanding to track orders, stock and conveyance and driving to more prominent efficiencies.
Around the same time, barcodes.

The Supply Chain in the 1980s and 1990s — Further Efficiencies and Global Model

The 1980s saw supply chain stakeholders, transportation producers and more building on their
successes. In 1983, the term “Supply Chain Management” was coined, and individual computing
encouraged revolutionized the supply chain. Modern programs like adaptable spreadsheets,
mapping and course arranging made it less demanding to track costs and maximize benefits. This
was coupled with other headways counting to discuss cargo optimization, supply chain
dispersion systems and the introduction of Enterprise Resource Planning (ERP) systems. MIT
too created RFID labels to make it simpler to electronically track merchandise and shipments, a
forerunner of the internet of Things gadgets we utilize nowadays.

The Supply Chain Now — True Globalization

All of this history brings us to the present, and preceded change in worldwide supply chains. One
of the greatest impacts has been the explosion of manufacturing in Asia, with China, Japan and
Korea becoming major suppliers and exporters of merchandise. At the same time, AI and
machine learning combines with predictive and prescriptive analytics to supply way better
estimating, upgraded arrange administration and more. What’s more, the supply chain is
advancing toward a more data-driven, network-driven and collaborative supply chain
environment that drives genuine esteem and development for all participants. Of course, there
are still challenges to overcome. Customers and businesses are progressively inquisitive about
the morals of sourcing and fabricating merchandise, particularly from natural and workers’ rights
viewpoints. At the same time, supply chain supervisors require successful hazard administration
to bargain with the startling, whether that’s traditions and taxes, common catastrophes or issues
with global transport.
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Whatever the future holds, one thing is certain. If we apply the same innovation to worldwide
supply chains as we have within the past, at that point we’ll proceed to see more prominent
efficiencies, optimization and profit margins[ CITATION BLU22 \l 1033 ].

Green Supply Chain Management

Green supply chain management is basically the method of utilizing environment friendly inputs
and changing these inputs into yields that can be recovered and re-used at the conclusion of their
life cycle in this way, making a feasible supply chain.

Sustainable development has made momentous progress in establishing environmental and social
sustainability towards operations administration and the supply chain. Sustainable development
implies “Development that meets the wants of the present without compromising the capacity of
future generations” Sustainability covers three angles: economic, environmental and social
obligation. Green supply chain management (GSCM) is almost making the whole supply chain
more environmentally feasible. Companies may select to embrace GSCM for numerous
distinctive reasons: one may be constrained due to laws and directions, one may utilize GSCM to
differentiate oneself in a competitive industry by being environmentally friendly and finally one
might got to execute GSCM to stay competitive in the event that your competitors as of now
have received GSCM. With Expanding client mindfulness and administrative norms,
organizations with greener supply chain administration practices will have a competitive
advantage over companies that are reluctant[ CITATION Ani11 \l 1033 ].

Company Profile
In Bangladesh, Shah cement is the leading brand for over 15 years. The company is a part of
Abul Khair Group which started its journey in 1953 as a single product company. Today the
Group is well established and leading private sector company with its operation spanning across
several categories and businesses. It remains the market leader in most of its businesses. Shah
cement is their most popular cement brand which dominated the market during its first year of
introduction and has maintained its position ever since.
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In March 2002, Shah cement started working with a vision of making Bangladesh a better place
to live by constructing higher quality homes and infrastructure. They bringing world’s most
technologically advanced cement product to the door steps of all Bangladeshi. Their mission is to
be the trusted partner by providing solutions through innovation and sustainable practices and
create a healthy and safe environment for all stakeholders.

This industry is the largest Cement producing plant in Bangladesh, with a capacity of 10 million
metric tons per annum. Their plant is located at Muktarpur, Munshigonj, in the land intersection
of two rivers Shitolokkha & Dhaleshwari. Shah cement plant has a complete inbound and
outbound logistic system which includes its vessels a multitude of barges and bulk carriers for
supply in the market on time. From year to year, the group’s operations have expanded to cover a
wide range of activities.

Mission:

 Be the trusted partner by providing solutions through innovation and sustainable

practices.
 Create a healthy and safe environment for all stakeholders.

Vision:

Strengthen the leadership, build better homes & infrastructures to improve the quality of life
across Bangladesh.

Headquarters:

Empori Financial Center,

Level-13 Plot-6, Road-93

North Avenue

Dhaka, 1212 Bangladesh.

Contribution of Competitive Strategy & Supply Chain Strategy

Before Shah Cement “on-time on-site” service wasn’t introduced to this industry. Shah Cement
was the first company who introduced this sort of service system throughout the market. So what
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is “on-time on-site”? Whenever a customer wants the product or service in a short notice Shah
Cement makes the product highly available so that the customers can easily get the product in
their local. This is the main competitive strategy of Shah Cement. They ensure all these by
making the supply chain highly efficient. They use both road ways and water ways to carry their
product to rural areas. So that they can easily reach to the customers. That’s how they make their
products cost efficient.

Achieving Strategic Fit

To achieve strategic fit an organization need to structure its supply chain strategy based on its
competitive advantage that the company promises to fulfill. They achieve strategic fit, through
three steps.

Step 1: Understanding the Customer and Supply Chain Uncertainty

To achieve strategic fit the company needs to make consistency between customer priorities and
competitive strategy and supply chain capabilities. It will be specified by the company’s supply
chain strategy. The goal of the competitive and supply chain strategies has to be same.

 Shah Cement analyzed the market need and on the basis of the need of customers they are
now producing the three types of cement. Portland Cement which is the most commonly
used cement for a wide range of applications, Portland Composite Cement which adheres
to the European standards and gets its unique characteristics for using high-quality
clinker, fly ash, slag & limestone and Blast Furnace Cement (BFC) which is created
through the addition of blast furnace slag with Portland cement clinker and gypsum. BFC
is used to make durable concrete structures around the world. Besides that, they also
supply Ready Mix Concrete.

 Shah Cement produces 50KG bags and sells at customer desired quantities.

 Shah Cement tries their best to have shorter lead times to ensure satisfying customer
service. As cement is a durable good and is not purchased frequently so it’s important to
provide faster responses.

 Like many other products cements do not have a very high demand which is why there
are lesser verity of product but Shah Cement provides 3 different kinds of cements.
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 Product margin – Low implied demand uncertainty.

 Shah Cement always tries to make their pricing strategy very competitive and affordable.
As the implied demand uncertainty is low the profit margin is also low.

 Cement is not a much innovative product but still Shah Cement uses high technology to
produce the best products which is very innovative.

Implied Demand Uncertainty:

When an individual supply chain is trying to satisfy a portion of the entire demand then the
supply chain faces some uncertainty, this uncertainty is called implied demand uncertainty.

Shah cement has a good consumer base and they are in their maturity stage as this company have
doing business since 2002 which is a long time period. It also indicates that mature products
have less implied demand uncertainty than the new products. For Shah Cement, Product margin,
Average forecast error, Average stockout rate and average forced season end markdown is low.

Levels of Implied Demand Uncertainty:

Predictable supply and uncertain
Predictable supply demand or uncertain supply and Highly uncertain
and demand predictable demand or somewhat supply and demand
uncertain supply and demand

Shah Cement

Step 2: Understanding the Supply Chain

Shah Cement Industries Ltd. is the largest Cement producing plant in Bangladesh, with a
capacity of 10 million metric tons per annum. The cement industry is undoubtedly a logistics
driven industry and without an effective and efficient logistics system, it is not capable to thrive
in such a competitive landscape. Shah Cement has a strong and efficient logistics set-up which
helps them to deliver value to their customers. The plant is situated at Muktarpur, Munshigonj, in
the land intersection of two rivers Shitolokkha & Dhaleshwari which is equipped with both
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inbound & outbound logistic comprising of own road transport and ocean-going vessels, huge
number of cover fleets, barges & bulk carriers to supply in the market place just in time.

Step 3: Achieving Strategic Fit

In this step, an analysis of the previous stages is conducted observing if the supply chain has
achieved strategic fit between their competitive strategy and supply chain strategy. The supply
chain of the Shah Cement is highly efficient. As the demand of the cement is predictable and the
implied demand uncertainty is lower so it needs to be cost efficient. Cement industry is very
price sensitive and needs to achieve the economies of scale. Cement is not a regular FMCG
product and most of the time people don’t need buy this type of product until the need occurs.
So, if it becomes responsive in supply chain the cost will be increased and it cannot reach their
mass target customers.

Responsiveness spectrum:

Highly Somewhat Somewhat Highly

Efficient Efficient Responsive Responsive

Shah Cement
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A Framework for Structuring Drivers: Shah Cement

Competitive Strategy: Sustainable, World’s largest VRM & In time on

site 24hrs delivery

Supply Chain Strategy: Top notch responsiveness with a decent level of

cost efficiency

Efficient Supply Chain Structure Responsive

Logistical Drivers

Dedicated Own vessels, Cover

Centralized Built to Stock fleets, barges and
Product Focused bulk carrier

Information Economies of Competitive,

Leadership Scale Premium Pricing

Cross Functional Drivers

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Distribution Network of Shah Cement

Factory

Warehouse storage
by Distribution and
Retailer

Customer
Customer Customer

Product Flow

Information Flow

Cost Factors Performance

Inventory cost is higher as cement is a different product than

others, it must be stored with a variety of elements in such as
temperature. As a result, any organization's inventory may
Inventory require a significant amount of time and work to build. Using
EOQ, tries to keep the right amount of stock. This increases the
company's network effect for the company. They divide the
country into zones and operate on routes for each zone.
Transportation The common ways of transporting cement are by road or by
river. So, in both ways an organization can set up a strong
transportation
infrastructure to ensure a proper supply channel. Shah Cement
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uses own vehicles to deliver the cement around Dhaka to

minimize the cost but using third party as well to deliver outside
Dhaka to be responsive.

Facilities & Handling Lower Facility cost

Using Oracle for their supply chain management. Oracle is a

collection of the database that helps to retrieve information.
Using Oracle is advantageous for any big organization because it
has atomicity, consistency, isolation, and durability. An
Information
organization like Shah Cement needs a lot of data to operate their
day-to-day activity. Oracle helps to main the database and all the
related information to have an efficient supply chain
management.

Benefit Factors Performance

Faster Response Time, shah Cement using oracle for maintain the
Response Time
information and increase their response time.

Product Variety Product variety is low.

Product availability is very high because an Effective supply

Product Availability chain or having higher numbers of distributors are very efficient.
As products can always meet customer demand on time
Through a Strong supply chain network, products can be
Customer Experience conveniently delivered to customers, and customer experiences
can be simply tracked.
Too much difficult to track but it’s important to keep update on
Order Visibility
order.
There is a policy, if product get damaged, it can be returned in
Returnability
easy term condition with giving a positive customer Experience.
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Contribution of Technology in Supply Chain:

Organizations like Shah Cement are really focused on technological sector. As we live in the age
of technology, all businesses take advantage of it in order to gain a competitive advantage and
expand their business with ease.

Effectiveness: Shah Cement is reached to the warehouse then directly sent to the customers. The
network is simple, but it serves the company well. Cement is delivered by personal vehicles to
save money. It also saves time because it is transported by its own vehicles directly from the
facility. Data management is another crucial element to consider. Shah Cement utilizes Oracle to
manage its database and compute inventory levels in the warehouse. EOQ is used by Shah
Cement to keep the proper amount of inventory on hand. The network effect of the company is
increased as an outcome of this. They divide the country into zones and travel along routes that
are specific to each zone. It benefits the company by accelerating and decrease the cost of
service.

Database: Shah Cement also uses a particular web-based application. A web-based application is
a software package which can be accessed via a browser. All of the databases and software are
maintained on a central server, which is accessed via a network. For supply chain management,
Shah Cement employs Oracle. Oracle is a database collection that facilitates gathering of
information. Because of its atomicity, consistency, isolation, and durability, Oracle is an ideal
choice for any large corporation.
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Conclusion:
The term paper is evaluating the supply chain management that follows by shah cement company
cement. Cement manufacturing is one of a country's most important industries. If we consider
Bangladesh's point of view. Cement manufacturing is one of the country's newest and most
promising sectors. In Bangladesh, this industry has a lot of room to grow in the near future.
Consumers continue to seek higher-quality products at a lower cost. As a result, a supply chain
must be created in order to provide these services. When we look at our country's cement
businesses, we can see that, there are many renowned companies situated in our country besides
global cement companies. To compete with global corporations, our local cement businesses like
Shah cement company follow and maintain a well-developed supply chain management system.
It has the ability to maintain a good supply chain network, from gathering the best raw materials
to producing it with the most advanced technology, as well as a good and strong distribution
channel that not only makes the product available in our country, but also exports our local
cement to other countries. On the other hand, if we examine our country's development and
megaprojects, our government is providing new opportunities and potential for our cement
businesses in the near future.
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Shah Cement Official Website, https://shahcement.com/