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Cement Distribution: Objective functions and alignment

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Underscoring the vital role a robust distribution network plays in the cement sector, Indian Cement Review looks at the different parameters that affect the performance of a channel and it’s ultimate litmus test for efficiency and sustainability.

Conventional metrics in cement distribution would lead us from the factory gates to the final consumption point and to the role of efficiency in distribution with a range of intra-firm channel partners embedded in the chain from exclusivity to inclusivity, but that does not answer many questions that must be asked if a number of objective functions have to be met. The performance of a channel can be measured across multiple dimensions. The parameters that are measured usually are effectiveness, efficiency, productivity, equity and profitability of the channel. 

The indispensable element 

Distribution data among industry firms is not readily available as transparently nor are they used for benchmarking. But indirectly the data shows that in most firms as high as 25 per cent of the capital employed is in the working capital for servicing inventory and receivables alone. 

Capital and costs

The focus on logistics cost leads the industry to use inventory buffers that can effectively reduce this cost through shipment bundles, utilisation of logistics capacity and scale densities as well, with warehousing capacity as an important piece of the puzzle. The channel partners also play a role in ensuring that the logistics cost remains the primary focus at all times and thus demand aggregation must fulfill logistics cost minimisation. 

Cement supply chains starting from factory to the consumption point (almost a majority of the cases) work on the push-mode with the decoupling points as warehousing facilities or large exclusive dealerships who work as distributors to the final retail outlets in dealer shops. Vertical integration as attempted in Ready Mix Concrete supply chains (who also become decoupling points) work much better in smoothening the demand supply equation and thus closer to Just-in-Time methods as visible signs that take out a sizeable chunk of inventory holding waiting for demand aggregation. This is still a minuscule component of the overall pie, thus pull systems remain low in penetration. 

The end-to-end supply chain of cement must on the other hand streamline product concepts to market, rationalizing product portfolio and drive smart assortment plans and allocation strategies across the distribution chain. For this, a prediction of the market demand (almost on a daily basis) for each product in the portfolio while optimising inventory in a multi-echelon distribution channel comes as the most challenging task as cost effective throughput would mean logistics cost minimisation while that could raise the cost of working capital in the entire channel.

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Concrete

Cement industry to gain from new infrastructure spending

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As per a news report, Karan Adani, ACC Chair, has said that he expects the cement industry to benefit from the an anticipated US$2.2tn in new public infrastructure spending between 2025 and 2030. In a statement he said that ACC has crossed the 100Mt/yr cement capacity milestone in April 2025, propelling the company to get closer to its ambitious 140Mt/yr target by the 2028 financial year. The company’s capacity corresponds to 15 per cent of an all-India installed capacity of 686Mt/yr.

Image source:https://cementplantsupplier.com/cement-manufacturing/emerging-trends-in-cement-manufacturing-technology/

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AI boom drives demand, says ACA

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The American Cement Association projects a nearly 1Mt annual increase in US cement demand over the next three years, driven by the surge in AI data centres. Consumption by data centres is expected to grow from 247,000 tonnes in 2025 to 860,000 tonnes by 2027. With over 5,400 AI data centres currently operating and numbers forecast to exceed 6,000 by 2027, the association cautions that regulatory hurdles and labour shortages may impact the industry’s ability to meet demand.

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Concrete

GoldCrest Cement to build plant in India

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GoldCrest Cement will build a greenfield integrated plant with a 3.5Mt/yr clinker capacity and 4.5Mt/yr cement capacity. GoldCrest Cement appointed Humboldt Wedag India as engineering, procurement and construction contractor in March 2025 and targets completion by March 2027. It has signed a 40-year supply agreement with Gujarat Mineral Development Corporation for 150Mt of limestone from its upcoming Lakhpat Punrajpur mine in Gujarat.

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