Evaluation of Different Delivery Policies in the Cement Industry

Abstract

Many supply chains must change in order to capture new opportunities and adapt to new demands and new markets. This is study explains how we can improve the delivery policy in the cement industry to lead the change needed. We have studied the case where a cement company, Votorantim Cimentos, wants to sell smaller orders and seeks a delivery policy to address this challenge. To tackle this problem, we developed a methodology to analyze different delivery policies. Our methodology includes a simple heuristic to determine when each order is going to be shipped. After assigning each load to a truck we can calculate the transportation cost -- a function of the number of trucks -- and the penalty costs -- a function of the difference between the date the customer required the product and the actual delivery date. Using this methodology we run different possible delivery policies and analyze the results. Compared to the company's everyday delivery policy we achieved a solution with 77% lower extra transportation costs and 31% lower total relevant costs. We also propose a methodology to evaluate when to ship or hold an order given a set of orders.