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Improving Processes Is for Everyone!

This book is about information, and many of our examples seem to showcase technology companies. However, when we talk about business processes, or the way things are done in organizations, everyone can benefit from improvements – even companies that are in basic manufacturing industries like the cement industry.

Cemex is a 100-year-old multinational cement corporation based in Monterrey, Mexico. For years, it functioned pretty much like every other cement company, with limited communication among its various plants, constant changes in order information (customers cannot pour concrete in bad weather), and difficulty confirming precise deliveries to customers due to weather, traffic, and labor problems. Needless to say, customer satisfaction is not always high in this industry.

When Lorenzo Zambrano, the grandson of Cemex’s founder, was appointed CEO, he looked for ways to improve processes. To handle unpredictable demands and changing conditions, the company realized it needed better real-time communications. It therefore implemented a satellite communication system (which they called Cemexnet) to connect all its cement plants. It also linked all offices via satellite and the Internet and created a central office for coordination. This allowed plants to be constantly aware of fluctuating supply and demand. The second main aspect of the overhaul was to develop a new tracking, scheduling, and routing system (which the company called Dynamic Synchronization of Operations). This logistics application uses GPS transmitters in each delivery truck, allowing dispatchers to allocate trucks to the plants closest to where they are at a given time. With detailed information on traffic conditions, inventory, and the customers’ location, trucks can be rerouted as needed. Finally, suppliers, distributors, and customers of Cemex can use an online application to check order status.

The results have been impressive for Cemex: decreased delivery time from 3 hours to 20 minutes (98% of the time), increased customer satisfaction, substantially increased net sales, decreased number of delivery trucks (35% decrease in the first year), and substantial cost savings overall (e.g., fuel, maintenance, and payroll).

Questions

Identify specific ways in which the new technologies at Cemex changed the following:

1. How customers do business with Cemex

2. How delivery truck drivers do their work

3. How office staff work at Cemex

4. How plant managers handle business at Cemex