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Improvement of Logistics and Supply Chain Management in the Cement

Industry in Nigeria

Article · July 2014

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Proceedings of the World Congress on Engineering 2014 Vol II,
WCE 2014, July 2 - 4, 2014, London, U.K.

Improvement of Logistics and Supply Chain

Management in the Cement Industry in Nigeria
Abimbola O Aniki, Charles Mbohwa, Member, IAENG, and Esther T. Akinlabi, Member, IAENG

 supply chain expertise also contributes immensely to the

Abstract— Worldwide, Logistics and Supply Chain play growth of logistics in such an area as information system
important roles and also contribute immensely to the economy support capabilities [1]–[2]. The lack of logistical expertise
of a nation. In this paper, research was conducted to has reduced the organization’s capacity to conduct their
investigate how logistics and supply chains are implemented in desired processes effectively.
cement factories in Nigeria, identify the problem areas and
proffer solutions. The study was conducted by administering
Furthermore, the inadequate logistical infrastructure,
well-structured questionnaires. According to the investigation,
it was confirmed that most of the investigated companies based combined with unskilled can be blamed for the great loss
their logistical system only on road-link transport system for and damage of goods experienced, especially for perishable
delivering products to their customers or end-users. products. The challenges however, also generate
Furthermore, the survey revealed that 73% of the respondents opportunities for companies with advanced logistical
prefer to continue with the road-link logistics system. Though systems and skilled employees, efficient and effective
there is railway infrastructure in the country but due to management to grow their market [2]-[4].
research finding, the rail system is obsolete due to negligence Surveying the existing interrelationship between
and poor maintenance on this logistics system. A new railway logistics and supply chain management divisions of an
infrastructure will have to be put in place for effective and
organization can help tremendously and contribute a
efficient operation; and this is going to be costly for individual
company to bear. positive input when facing the problem arising in logistics
Keywords - Logistics Management, Supply Chain Management, and supply chain in such an organization. This research was
Transportation. conducted, in order to investigate, inquire, and to open up
through the survey questionnaire; why other logistical
systems have not been actively used in the cement industry
I. INTRODUCTION in Nigeria. It is expected that the resultant findings of the
study are going to be used to address the problem.
G lobally, logistics and supply chain have emerged as
momentous growth factors in most nations; these
contribute to the economy of a nation. Meanwhile,
II. SUPPLY CHAIN AND LOGISTICS MANAGEMENT
many researchers give different definitions to logistics and
supply chain, according to their own findings. The bulk of The definitions of supply chain have been widely described
the supply-chain management research emanates from the and discussed by, amongst others, Christopher [5], Ballou
logistics and operation discipline, while some of it comes [6], Elram [7], Simchi-levi et al. [8], and The Council of
from information systems and technology, and marketing. Supply Chain Management Professional (CSCMP) [9].
Logistics is defined as the art and science of management, Information sharing is a key to the effectiveness of supply
engineering and technical activities concerned with the chain management [10]. However, they all expressed the
requirement, design, supplying and maintaining resources to importance of integration, cooperation and information
support the objectives, plans and operations [1]. Supply sharing between organizations in the supply chain network.
chain serves as a link between suppliers and end-users, but Ways to achieve a successful supply chain management
the main goal of any supply chain is to deliver the right could be the following [11]:
product, at the right time to the appropriate location. 1. To manage the resources of supply strategically in
Logistics and supply chain services; the rate of order to reduce the total cost of owning materials
technological innovation and fluctuation in consumer and services.
demand are among the factors that have increased the 2. To pay attention to market signals and align demand
dynamism of the competitive environment to which planning accordingly, across the supply chain,
organizations must respond. The shortage of logistics and ensuring consistent forecasts and optimal resource
allocation.
Mr Abimbola O. Aniki is a Lecturer at the Department of Mechanical 3. Customize the logistics network to the service
Engineering, Vaal University of Technology, P.M.B X021, requirements and profitability of customer
Vanderbijlpark.1900, South Africa. Phone: +27 16-950-9158; email segments.
abimbolaa@vut ac.za
Prof C. Mbohwa is a Professor in the Department of Quality and
4. Segment the customers, based on the service needs
Operations Management, University of Johannesburg, Bunting Road, of district groups, and adapt the supply chain to
Johannesburg, South Africa, 2006, e-mail: cmbohwa@uj.ac.za. serve these segments profitability.
Dr E. T. Akinlabi is a Senior Lecturer in the Department of Mechanical 5. Develop a supply chain-wide technology strategy
Engineering Science, University of Johannesburg, Auckland Park
Kingsway Campus, Johannesburg, etakinlabi@uj.ac.za.
that supports multiple levels of decision making,

ISBN: 978-988-19253-5-0 WCE 2014

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2014 Vol II,
WCE 2014, July 2 - 4, 2014, London, U.K.

and gives a clear view of the flow of products, B. Rail, relative costs and operating mode
services and information. The fixed costs of rail system are high; while the variable
6. Adopt channel-spanning performance measures to cost is relatively low. The fixed costs are high, due to the
gauge the collective success in reaching the end- expensive equipment requirements, such as the locomotives,
user effectively and efficiently. wagons, tracks and facilities, such as freight terminals. On
relative operating characteristics, rail is considered good on
Fig. 1 illustrates the outline of logistics and the supply chain speed, dependability and especially the capability to move
for cement production. larger quantities of freight.

C. Air, relative costs and operating mode

Fixed costs are on the lower side; but there are high variable
costs that include fuel, maintenance, security requirements
etc. The main advantages of air is speed; but it is however
limited in uplift capacity. Similarly, other modes of
transport are required to take freight to and from the
airports; thus air cannot directly link the individual
consignor and consignee.

D. Water, relative costs as well as the operating mode

Fig. 1. Supply chain for cement production [12] The fixed costs of using water as a means of transport
system are on the medium side, this includes vessels,
Transportation plays an important role in both moving handling equipment and terminals. Variable costs are low,
purchased goods from suppliers to the buying organization, due to the economies of scale that can be enjoyed from
and moving finished goods to the customers. More so, due carrying large volumes of freight. This is the main
to the important role that it plays in the supply chain. It is an advantage of the water mode, together with its capability to
obvious fact that products are rarely produced and transport large volumes of freight like air; but it cannot offer
consumed in the same location, as such; transportation is a consignor-to-consignee connectivity, and vessels are
significant component of the costs that most supply chains sometimes limited in terms of what ports they can use. It is
incur [13]. Transport is typically regarded as a non-value also quite a slow mode.
adding activity in the supply chain, although the challenges
make the assumption that it plays an essential role in the E. Pipeline, relative costs and operating mode
supply chain; and if managed accordingly, it can allow Fixed costs are high, due to rights of way, construction and
supply chains to work more effectively and efficiently. installation, but the variable cost is relatively low; and
Basically, there are different modes of transportation; but generally, this encompasses routine maintenance and
this research focuses on the major transport modes used in ongoing inspection/security. On operational characteristics,
transporting materials to the required sites for use, namely: the dependability is excellent; but this mode can only be
road, air, water, pipeline, and rail. Road transport system is used in very limited situations and prone to the danger of
the most realistic and very common means of transportation bunkering.
in the cement industry in Nigeria. However, the road
transportation in Nigeria is characterised with a lot of delays There are some circumstances due to poor infrastructure that
which results from heavy traffic, accidents and breakdowns will not allow some of the modes of transport to be realistic,
on the way. An efficient and effective transportation system such as air, water, and pipeline. But in an advanced country,
it may be used effectively and efficiently in transporting the
is needed for commerce to function in any industrialized
material and the finished articles [13].
society. Meanwhile, the products purchased by the customer
have little value for them until they are moved to the
Moreover, the logistic and supply chain system in the
customer’s point of consumption [14]. Therefore, a more cement industry in Nigeria being investigated does not only
efficient system is desirable in Nigeria. A summary of the apply to the raw material supply alone; but there is a poor
costs and the relative operating characteristics of the supply of the finished product as well, to transport the
different transport modes are here presented [15] finished product from the cement factories in the Western
part of Nigeria to the Northern part. This is very difficult,
A. Road, relative costs and operating mode due to the poor transportation infrastructure. There is no
Although the fixed cost is very low, since the physical availability of body of water for shipping, a poor pipeline
transport infrastructure, such as the motorway are in place transportation system. There is also the landing problem for
through public funding, the variable cost is medium in terms cargo planes due to the unavailability of airports in the end
of rising cost of fuel, cost of maintenance and the increasing users cities. The railway infrastructures are dilapidated due
use of road and congestion charges. In respect of operating to poor maintenance, as such, all focus is on road
characteristics, the road as a mode of transport scores transportation system and even the road facilities are not in
favourably on speed, availability, dependability and good state.
frequency; but it does not fare so well on capability, due to
the limited capacity on weight and volume. Uniquely among
transport modes, it can allow direct access to consignor and
consignee sites.

ISBN: 978-988-19253-5-0 WCE 2014

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2014 Vol II,
WCE 2014, July 2 - 4, 2014, London, U.K.

III. METHODOLOGY the companies (60%) were owned by individuals and 33.3%
A descriptive research method was adopted in this were multinationally owned. Dry process of cement
research by using a well-structured questionnaire for data production took the highest percentage lead with 93.3%
collection. It was designed to find the solution to the because it is a fast method of production and more cost-
existing problems in the aspect of logistics and supply chain effective.
in the cement manufacturing industry in Nigeria. Customers purchased their products from depots,
The questionnaire consisted of four sections: factories and wholesalers. The percentage of customers who
usually buy their products directly from the factory was
53.3%, followed by depot purchases at 40%, and wholesale
plus those who had no idea where their products were
 Section 1: provided the demographic details about
purchased at 6.7%. Respondents who preferred using road
the respondents.
to other means of logistics added up to 73.3%, and they
 Section 2: addressed the organisational information
confirmed that they had no intention of changing to another
of the cement manufacturing industries.
means of logistics for various reasons stated. Only 26.7% of
 Section 3: is focused on questions about the the respondents were willing to change to another logistics
collaborative work in the cement manufacturing system. Respondents emphasized that logistics and supply
industry with regard to logistics and supply chain chain management were extremely important in their
management. various organisations. Modularization quality was excellent
 Section 4: addressed the effectiveness, performance and many agreed that poor use of modularization led to
and information distribution in the logistics negative outcomes in the company.
environment. 78% of the respondents confirmed that collaborative
The collected data was analysed using statistical analysis working arrangements in logistics influenced customers and
software package (SPSS) and also, Microsoft Excel Ranking improved customer satisfaction, therefore being extremely
function was used to compute the rank of mean scores of influential. They found that the level of commitment by the
responses. This was based on the percentage responses to workers in different departments was excellent. Finally,
the 5-point Likert-type scale. The ranking enabled the about three quarters of the customers came back for the
importance of individual statements, problems, parameters product because of an excellent logistics system. The
and key performance indicators to be evaluated relative to respondents strongly agreed that their company had enough
each other. partners with appropriate collaborative skills to effective
logistics and supply chain systems. In terms of knowledge
IV. RESULTS AND DISCUSSION sharing and transfer within the working environment, 78%
A response rate of 25% was achieved in this study. The felt this was strongly achievable. There was strong
results showed that most of the respondents were highly agreement that collaboration procurement methods promote
educated; 6.7% held a diploma, 60% held a bachelor’s innovation and improvement on major projects. However,
degree and 33.3% had postgraduate qualifications. The effective collaboration would bring better quality of service
responses from different departments were impressive, and and collaboration not only within the working environment,
those who had knowledge about the logistics issue answered but also to collaborate with logistics expertise for better
the questionnaires. It was found that the respondents were improvement.
26 years and above in age. Women participated well in It was strongly agreed that good leadership in
answering the questionnaires. At least 73.3% were married coordinating logistics and supply chain management and
people, and the remaining 26.7% were single and divorced. involvement of supply chain leadership served as a key to
Permanent staff played an active role in answering the achieving target objectives on time. Finally, transparency
questionnaires, 80% of them responded. Finally, 73.3% between the logistics leadership and the partners was not
preferred to speak or communicate in English rather than often found in project execution, and 76.7% of the
the local languages. In this situation, 46.7% of the respondents strongly agreed with that. The performance and
respondents were Dangote cement workers while 26.7% effectiveness of communication in a logistics environment
came from Lafarge Cement factory, Ewekoro, Ogun State. was analysed, it was found that the respondents preferred to
Through the telephone conversation with a logistics adopt roads logistics systems rather than any other logistics
manager in Dangote cement, it was revealed that using link, judging by the results collected from the
trucks alone as a means of logistics reduces their rate of questionnaires. This was caused by a lack of infrastructure
delivery of large quantities to their customers at long in other logistics systems in Nigeria. Timeous delivery using
distances, so they were seriously finding alternative ways of trucks was regarded as Excellent by 90% of the respondents,
getting to their customers with larger consignments within while for the railway logistics system, it was 10% because it
the shortest possible time period. It was mentioned that had not operated for some decades. Cost effectiveness in
trucks were limited in the loads they can carry. delivery by truck was regarded as Excellent, but this is due
to the fact that the rail logistics had not been put into
Most of the members of staff of companies that operation, it was therefore rated Poor. Customer satisfaction
responded said that their company produced cement was a was rated Excellent for using road logistics because the
percentage of 66.7% while 26.7% produced cement and product got to the end user at the appropriate time.
aggregate. Most of these cement factories were situated in Although, this is subjective as delays could occur as a result
the Western part of Nigeria due to proximity to the source of heavy traffic, accidents and breakdowns on the way.
of raw material, so their logistics links were crucial to
transport their product to other parts of the country. Some of

ISBN: 978-988-19253-5-0 WCE 2014

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2014 Vol II,
WCE 2014, July 2 - 4, 2014, London, U.K.

According to the questionnaire, profit-making for truck produce cement. It is used in the construction of roads,
delivery was regarded as Good by 83% of the respondents, bridges and also in building houses and towers. The
while for the rail, it was rated Average. On the information effectiveness of the logistics system in the cement industry
sharing aspect, frequent departmental meetings enhanced is of importance to the sustainability and execution of many
the improvement possibilities of logistics in the system. building projects. The main target of this research was to
Furthermore, based on the results, every company had a find out why only trucks were used as the major means of
website in which people or desired customers could view transportation in the cement industry in Nigeria and also to
the company products and their logistics system. Finally, use the findings of this research to minimize or eliminate the
displaying of posters and pamphlets in the rural areas for likely hazards that may occur when using trucks alone as a
product advertisement was regarded as Excellent, and to top logistics system. Hazards such as, high accident rate on the
it up through media advertisement was also confirmed as road, product wastages, and traffic congestion on the
Excellent. At least 90% of the customers shared information highways are common in Nigeria. According to the survey
from these areas. questionnaire sent to different cement companies in Nigeria;
it was found that 73.3% of the respondents still preferred to
use the road link logistics system. The reason was that,
V. COMPARATIVE ANALYSIS though there is a railway infrastructure from one point to
The effective planning and management of a logistics another, even from the factory to some towns far and near,
and supply chain infrastructure is a challenge for most the rail system logistics could not be used due to the
countries. However, a nation that is operating under only obsolete infrastructure of the railway. To bring this back
one kind of logistic system is an under-developed country. into operation, new infrastructures would have to be put in
Most researchers have not deeply discussed a situation place. Furthermore, there are some works to be done
where it is suggested to the logistics and supply chain concerning the logistics system which included
practitioners to implement another means of logistics collaboration with the government and to have the
different from the existing one. Ellram and Cooper [15] in knowledge of how the modern rail logistics system is very
their paper stated that the key roles of logistics are significant in the world today. The use of only trucks for
establishing and managing the supply chain. logistics in Nigeria is not only applicable to the cement
In the investigation conducted by the authors, it was factory alone but to other factories and companies like the
revealed that in Nigeria the logistics system are purely based sugar companies, breweries and petroleum companies.
on road (i.e using trucks), so in this research, the authors Proper orientation and information about the logistics and
tried to find out why this is the case and to suggest other supply chain should be given to people in order to improve
means of logistics (air and rail) to the cement industry. Rail the logistics and the supply chain activities.
transportation is one of the cheapest means of freight This research has exposed the need for modern railway
forwarding in terms of high volume cargoes shipped over logistics and supply chain management systems in Nigeria,
long distances. Transportation expenses decrease by 20% and this can be done through the combined efforts of the
compared to road transportation [15]. But according to the government, the department of transport and the companies,
findings, the infrastructure for rail is obsolete and has been in order to have a better, effective and efficient logistics
abandoned for decades. As such, in order to revive rail system. Focusing on only one logistics system implies that
logistics system into operation, many things have to be the nation is still under-developed and not willing to
implemented. First, by having a sound framework for rail advance into the modern day of transportation systems. The
transport infrastructure with ongoing vigilant monitoring recommendation concerning this issue for Nigeria is to
arrangements. In addition, there must be good corporate establish a modern institute of logistics and supply chain
governance arrangements that ensure openness and management under the administration of the department of
transparency in the manner in which these logistics transport tasked with providing road maps to the effective
infrastructure is planned, evaluated and delivered. implementation of other means of transportation in Nigeria
The practitioners of logistics infrastructure should and to actively involve companies for them to contribute
always be ready to listen to external advice in order to their quota in order to benefit everybody and at the same
enhance the quality of logistics operation and to ensure that time have a better relief transportation system. The authors
the logistics system does generate benefits and contribute strongly believe that by putting this advice into practice, a
immensely to the economic growth of the nation. From the better transportation system will emerge in a positive way.
comparative discussion that was presented in this section, it Further study can be conducted to focus on monitoring the
is highly advisable to encourage most of the cement implementation of other types of logistics systems.
companies to use other means of logistics transportation
system which are cheaper and more efficient. Maintaining
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ISBN: 978-988-19253-5-0 WCE 2014

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
Proceedings of the World Congress on Engineering 2014 Vol II,
WCE 2014, July 2 - 4, 2014, London, U.K.

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ISBN: 978-988-19253-5-0 WCE 2014

ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online)
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