Nigeria | March – August 2023 | Case Study
The Opportunity
Beyond Supply as Usual
In West Africa, the cement market has demonstrated substantial growth, with the market size projected to reach 84.5 million tons by 2033, more than doubling from its current size, and exhibiting a compound annual growth rate (CAGR) of 5.88%. This expansion is driven by rapid urbanization, population growth, and significant government investments in numerous infrastructure projects.
Despite a favorable long-term outlook, cement and building materials (CBM) manufacturers face significant challenges and uncertainties. West African inflation is at a historic high, labor markets are tight, and investor confidence is unstable. Persistent supply gaps due to global demand spikes and constant price fluctuations worsen these issues. Nevertheless, demand is steadily growing, necessitating a significant shift from low- to high-rate production. Implementing key capabilities for production flexibility to adapt to changing demand, while increasing fulfillment levels and focusing on efficiency in both production and the overall supply chain, is incredibly complex. This is particularly challenging for manufacturers who have operated at low rates for years and lack the infrastructure required to scale effectively and efficiently.
A Nigerian CBM manufacturer has secured a substantial contract with government officials, set to commence in three years. Despite the favorable prospects, the manufacturer faces insufficient output capabilities within his operations and likely within his supply network as well. This necessitates a quadrupling of his annual production rate and the management of development costs totaling approximately 4.5 billion USD. In dire straits, the manufacturer approached Stepchange Africa for support in addressing these significant challenges and ramping up production.
Regarding internal production components, a comprehensive 360° ramp-up scan swiftly identified significant drawbacks in the current planning of production sequences, shift allocation, and shopfloor methodologies. The initial step was to ensure balanced utilization of existing production assets, necessitating adaptations in production planning, sequencing, asset changeovers, and target settings to maximize throughput per asset with minimal downtime.
To balance production needs with labor requirements, we restructured shift patterns to allow for situation-based shift planning and initiated cross-training operators on machine operability. While reshaping the layout and logistics concept for long-term success, we implemented perfect stations, KPI setting, monitoring, and OEE calibration to achieve quick wins in production. Ensuring all machines operated at peak output levels also required the inclusion of mobile and autonomous maintenance. Establishing frozen time horizons eliminated unnecessary last-minute changes by central planning, thereby balancing production scheduling and batch sequencing.
The Solution
A multi-dimensional strategy for scaling operations
Scaling the output capabilities of an industrial system is rarely straightforward. Instead, it is a multifaceted and time-consuming endeavor that necessitates thorough consideration of efficiency within the production system itself, as well as the broader supply chain. Drawing from Stepchange Africa’s experience in ramp-up and efficiency projects, we have devised a comprehensive strategy for our client to follow, designed to help them navigate challenges and achieve a successful and stable rate increase without jeopardizing their profitability. After connecting all the dots related to the client’s capacities and capabilities, we highlighted two primary work streams:
(1) Internal production components
(2) Enablers to build the supporting infrastructure.
Despite our confidence in the effectiveness of these measures, there is little to gain without a timely supply of high-quality components from your supplier network. Given the notorious complexity of supply chains in the CBM industry, we began with an immediate analysis of projected parts availability and criticality, and driving the supplier network’s capability to match our client’s increased production rate. This capability assessment involved qualifying delivery performance, production capacities, scalability, and costs, as well as identifying bottlenecks. The application of pragmatic, low-cost measures alongside fulfillment strategies, strategic stock keeping, lead time reduction, and Operational Excellence supported our client’s ambitions, securing rate and time performance and quality across their entire supply chain. Aligning projected demand with fulfillment and lead time reduction strategies further optimized working capital, avoiding excess parts and obsolete inventory that unnecessarily bind capital.
The Impact
Cost-friendly and rapid scaling of operations
The way forward and insights provided helped our client not only quadruple production capacities within three years but also revolutionize their entire supply and shopfloor settings, all while nullifying any additional investments. It was not a lack of output capabilities that troubled our client the most, but rather inadequate shift planning, unbalanced operator deployments, non-situationally reflective production planning, unincisive methodologies, and heavily underutilized production assets that prevented a successful turnaround.
Stepchange Africa’s utilization-based approach, focusing on shopfloor efficiency and incorporating a logic-driven and decoupled sequencing of production batches, eliminated the need for capital investments. On the contrary, operational expenses were reduced by 25%, throughput time increased by 37%, and material savings reached 10%. Additionally, a streamlined supplier network with targeted actions to control lead time fluctuations through fulfillment strategies for critical parts realized working capital savings of $100 million.
