Production and Operations Management

LUCKY CEMENT
Presented By: Mohammad Omar Arif Hassan Khan Nida Hasan

VALUE CHAIN

PRIMARY ACTIVITIES
Primary Activity Description

Inbound logistics

All those activities concerned with receiving and storing externally sourced materials The manufacture of products and services - the way in which resource inputs (e.g. materials) are converted to outputs (e.g. products)

Operations

Outbound logistics

All those activities associated with getting finished goods and services to buyers Essentially an information activity - informing buyers and consumers about products and services (benefits, use, price etc.) All those activities associated with maintaining product performance after the product has been sold

Marketing and sales

Service

OPERATIONS

Capital intensive process Produces cement for local and export markets Located in Pezu and Karachi Capacity of 25,000 tons per day Raw material are limestone, gypsum and clay

ANALYSIS OF OPERATIONS:

Lucky Cement Faced two problems:

Problem1: High Fuel Consumption and Need for Alternative Source of Energy

Problem 2: Problems in Cement Quality

PROBLEM 1

Lucky Cement requires a lot of power to operate its plant Due to the unavailability of reliable and consistent power, Lucky Cement developed 100% Captive Power Generation units for both production facilities 22 most modern and energy efficient generators have installed capacity of 175 MW.

Since the industry faces a situation where sales price will be fixed by mutual consensus, the cost of production will be the most critical factor of profitability.

Energy cost is a major component of total cost of production. Contributes at an average 40 to 45 percent towards total cost

In order to minimize this cost Lucky Cement tried to use the cheapest and most reliable source The following are the possible alternatives:

Wastes from virtually all industries, including chemical wastes, agriculture waste, healthcare waste, out-dated consumer products, industrial Municipal solid waste (MSW) Whole or shredded scrap tires

ANALYSES OF ALTERNATIVES
1st:Energy-from-waste Advantages:

Very low cost of investment. The technologies used are easily available.

The installation will reduce Lucky Cement's operational costs by 25-30 percent

Disadvantages:

The energy produced with WtE would be not of good quality and may hinder the entire process of production
Collection and process of waste was a rigorous process. The process is very harmful for labour.

One major problem is the further emission of pollutants eg Carbon dioxide

ALTERNATIVES

2nd:Municipal solid waste (MSW):

Cheap but again emission of Harmful Gases

3rd:Whole or shredded scrap tires (TDF)

Scrap tires are used as fuel because of their high heating value. Less expensive than fossil fuels and offers the potential advantage of decreasing carbon emissions.

25% more energy than coal Problem with TDF: It is a long and some times difficult process May require additional physical processing Requires high amount of initial investment

SELECTION OF ALTERNATIVES

Lucky Cement went with the installation of TDF It cost them around Rs 1 billion It allowed good quality energy to be produced with technology which was easily available aside from a strong possibility of getting a positive return on this investment. Plus it was environmentally friendly Most importantly reduce Lucky Cement's operational costs by 25-30 percent,

PROBLEM 2

Problems in Cement Quality

WHAT IS MEASURED?

Continuous analysis of oxygen (O2), carbon monoxide (CO) and nitrogen oxide (NO) in the rotary kiln; which is essential for the quality of the produced cement clinker, the efficient use of fuel, and the protection of the environment from toxic emissions.

BACKGROUND
High production costs Low standard quality Kiln requires adequate temperature & air combustion If the air is more, energy consumption and so the costs increases, and if the air is low the combustion is not sufficient resulting in poor quality cement. EPA regulations require constant monitoring of hazardous emissions

KEY OBJECTIVES
Product Quality maintained Improve operational stability.

Reduce fuel consumption

Reduce maintenance requirements. Maximize fresh clinker feed

ALTERNATIVES

Buy process control equipment and technology from Siemens Import the equipment from China

SIEMENS SOLUTION

Siemens FLK sampling system Expansion: To what extent the cement is expanded after addition of water Setting Time: Shows the time taken by cement to become solid.

Fineness Test / Blaine Test: Measures the small size of the particles in specific weights.

RESULTS FOR LUCKY CEMENT

Automated its operations Reduced energy and other operational costs

Became the leading cement manufacturer in Pakistan