Quelle: CIO USA
You wouldn´t expect to find a cement company in the pantheonof innovation superheroes---shoulder-to-shoulder with thosewho created plastic, fiber optics and Post-it notes. Thereare few industries more basic or old economy thancement. Like Clark Kent´s Superman though, the cementindustry has an alter ego that has shed its gray three-piecesuit and can leap outdated business practices in a singlebound. That alter ego is Cemex, a nearly 100-year-oldmultinational cement corporation based in Monterrey,Mexico. During the past 16 years, it has completely changedthe processes by which cement companies communicate with anddeliver to their customers. The company based its processredesign on three components: a satellite communicationssystem called Cemexnet; an overhaul of its tracking,scheduling and routing system known as DynamicSynchronization of Operations; and a digital globalinitiative that links worldwide offices via the Internet.
If you had taken a snapshot of Cemex in 1984, it would havelooked like any other regional cement company. Cemex had sixautonomous plants that rarely communicated with eachother. Managing the network of mixing plants and deliverytrucks was a nightmare. Weather, traffic and labor problemscaused almost half of Cemex´s customers to change theirorders, usually close to the originally scheduled deliverytime.
As a result, Cemex couldn´t give customers a definitedelivery time. It could only say that the concrete wouldarrive within a three-hour window. This cost customers timeand money, but it was standard practice in the industry. Upto that point, no one was able to do any better.
Out with the Old
The turnaround began in 1985, when Cemex appointed a newCEO. Lorenzo Zambrano is the grandson of the man who foundedCemex. After working his way up through the ranks of hisgrandfather´s company, he found himself at the helm of amonolithic company struggling with inefficiency and poorcustomer satisfaction, both caused by an inability toforecast customer demand.
Zambrano began Cemex´s makeover at ground zero by changingthe fundamental business strategy. In 1987, he hired GelacioIniguez as CIO, and the two sat down with the rest of themanagement team to solve the issues of efficient delivery andunforecastable demand. "At that point, there was no ITdepartment," says Jose Luis Luna, Cemex´s current CIO, whojoined the company in 1987 as the head of technologydevelopment. "Basically, there were a couple of computersthat ran accounting programs. We realized that IT needed tobe a key part of our new business strategy." Rather thanbuilding an IT department concurrently but separate from theongoing business redesign, Luna and the other Cemex officialsfocused on fundamental alignment.
Cemex´s production and delivery methods weren´t serving thecompany or its customers very well, so the executives lookedat how other companies---FedEx, Exxon and the city ofHouston´s 911 emergency system---handled similar problemssuccessfully. FedEx had created a reliable worldwide deliverysystem that successfully managed unforecasted demand. Exxon´stracking, scheduling and rerouting system efficiently handledits network of oil tankers and deliveries despiteunpredictable weather, market and politicalconditions. Houston´s 911 system had developed a way todispatch and coordinate emergency vehicles in response tooccasionally sketchy information.
New Foundation
Because Cemex couldn´t change the way its customers work,Zambrano and his IT team changed the way the company handlesunpredictability. Dependable, on-time delivery and customerflexibility are at the heart of their business, so theylooked to technology and the lessons learned from FedEx,Exxon and Houston to streamline Cemex´s processes. "We saw itwas almost impossible to deliver information in real-time,and we knew it was time to invest in infrastructure," saysGilberto Garcia, IT planning director at Cemex, who alsojoined the company in 1987.
They started from the inside out. In 1989, the companydeveloped Cemexnet, a satellite communications system thatlinked all the cement plants. The company also opened acentral office to coordinate its productionfacilities. Cemexnet made it easier for the plants to remainabreast of supply and demand. It also streamlined the flow offinancial information and other back-office functions, whichwere gradually automated.
Now that the plants could communicate, it was time to dealwith the delivery systems. During the early 1990s, Cemexinstalled a logistics system called Dynamic Synchronizationof Operations, which uses GPS technology to link deliverytrucks to a central control center. Cemex merged theindividual truck fleets and equipped each truck with acomputer and a GPS transmitter. Because dispatchers atoperations centers in Monterrey, Mexico City and Guadalajaracould see the location, speed and direction of each truck,they could make sure deliveries were picked up by the trucksclosest to each of the production plants. They also haddetailed information on traffic conditions, inventory and thecustomers´ location, so trucks could be rerouted if trafficgot too hairy and deliveries could be redirected if acustomer´s order changed at the last second.
Cemex´s global digital program, which began in the late1990s, is the third piece of the puzzle. It connects eachelement of Cemex´s worldwide operations via satellite and theInternet. An online portal lets Cemex´s suppliers,distributors and customers check their order status.
Cement on Demand
These technology initiatives have helped Cemex slash itsdelivery window from three hours to 20 minutes, dramaticallyincreasing the value to its customers. Cemex makes deliverieswithin that window 98 percent of the time. Eventually, itaims to cut the 20-minute window in half. Customers canchange their orders up to the moment of delivery at nocharge, and they get a 5 percent discount if the order islate.
Zambrano´s gamble has paid off so far. By the first quarterof 2001, Cemex´s net sales increased to $1.6 billion, up 19percent compared with last year´s first quarter. "Our growthhas been driven by the fact that we are completelyintegrated," he says. "It makes us faster and more informedthan our competitors."
That business sense is what made the company´s redesigninnovative, says David Bovet, vice president and coleader ofthe supply chain management team at Mercer ManagementConsulting, a global strategic management company. "This isnot just a good technology application," Bovet says. "It´s abrilliant business design. They have taken the ultimatecommodity product and showed that you can achievedifferentiation through service. It isn´t so much the productor the industry, it´s rethinking what the customer wants andhow you can respond to it in a way that´s economical for thecompany."
Cemex charges a premium for its services because of theefficiency it offers, though Luna is quick to note thatprices are regulated more by the market than by thecompany. Company executives say Cemex now uses 35 percentfewer delivery trucks than it did before overhauling thesystem, or "one truck for every two" used by thecompetition. Luna projects cost savings of $100 millionduring the next year on fuel, maintenance andpayroll. Cutting costs is good for many reasons, not theleast of which is that Cemex spent almost $200 million duringthe past decade on its transformation. It is starting torecoup on that investment, mostly through reduced productioncosts that Luna attributes to the IT-business redesign.
The challenge now, he says, is to keep updating Cemex´sbusiness practices to stay ahead of the game in terms ofinnovation. "The challenge is to set an innovation processthat keeps us ahead of the game in winning customer trust,"Luna says. "It´s not a matter of who has better technology,it´s a question of who does things faster."