1. Supply Chain Optimization & Planning in Heracles General Cement Company
Dikos, George, and Stavroula Spyropoulou. "Supply chain optimization and planning in Heracles general cement company." Interfaces 43.4 (2013):
Scott J. Mason, PhD
Fluor Endowed Chair in Supply Chain Optimization and Logistics
Professor of Industrial Engineering

2. Scott J. Mason (mason@clemson.edu)
Company Overview
Founded in 1911
Part of Lafarge group (2013)
Headquartered in Greece
Manufactures cement from raw materials like limestone, clay and schist
Heracles General by the numbers
Type
Units
Number of manufacturing plants
3 plants at Volos, Halkis, and Milaki
Annual production capacity
9.6 million tons
Number of quarries for raw materials
10 quarries
Number of DCs 6
Road transportation fleet size
330 road tanker trucks
Scott J. Mason

3. Scott J. Mason (mason@clemson.edu)
Locations in Greece
Scott J. Mason

4. Cost-insurance-freight
Company Overview
Type of product delivery:
Cost-insurance-freight (CIF) vs. Free-on-board (FOB)
Cost-insurance-freight
Free-on-board
Delivery to customer location using Heracles fleets or contracted trucks
Pick up purchase onsite using customers own transportation
Product cost includes transportation cost
No transportation cost added to product cost
Lead time based on the delivery location, fleet availability etc.
Lead time in the range of a few hours – 1 day
Used spreadsheet for production planning, MRP and distribution resource planning
Scott J. Mason

5. Supply Chain Optimization and Planning
Developed an in-house tool Supply Chain Optimizer and Planner (SCOP)
Objectives of SCOP
Improve decision making process by synchronizing production plans, inventory control and transportation policies
Integrate planning and budgeting of supply chain operations
Global optimization and system wide cost reduction
Scott J. Mason

6. Characteristics of SCOP
Helps decision making process for
Fleet sizing and planning
Capacity optimization
Network optimization
Optimizes supply chain operations for cement and its raw materials
Provides necessary inputs for enterprise resource planning (ERP) system
Purchase raw materials
Schedule transportation
Scott J. Mason

7. Scott J. Mason (mason@clemson.edu)
SCOP Platform
Scott J. Mason

8. Basic Operations Module
Minimize cost
Bulk and bagged production costs
Hauling
Customer delivery
Cost of transportation of raw materials
Inputs
Demand forecast (Based on historical ERP data)
Planning Horizon
Production locations
Types of multimodal transportation (sea and road)
Enhance customer service level
Continuous replenishment with lower lead time
Higher penalties for no-deliveries
Scott J. Mason

9. Scott J. Mason (mason@clemson.edu)
SCOP Outputs
Generates production, fleeting, and logistics plan
Assigns customer regions to production plants or DCs
Allocate production plants to each DCs to meet demand
Production quantities at each plants
Transportation quantities to various DCs
Determines actions for procurement, maintenance, shift production planning, scheduling, and dispatching
Determine the size and number of ships needed to satisfy customer demand
Scott J. Mason

10. Scott J. Mason (mason@clemson.edu)
Advantages of SCOP
Led to centralized production planning
Cross functional and coordinated decision making
Identified opportunities to cost savings by integrating fleeting decisions into tactical decision makings
Evaluate “What-ifs” scenarios and plan for uncertainties
Decision making for multiple planning horizons
Short term planning (1 – 4 weeks)
Medium term planning (1 month – 1 year)
Long term planning (> 1 year)
Scott J. Mason

11. SCOP Performance Evaluation
Key performance indicators
Fleet efficiency
Fleet size and utilization
Fleet chartering costs
Percentage of CIF sales transported by sea to DCs before delivery
Implication of SCOP implementation
Fleet management strategy
Saturating specific ships on specific routes
Implement “right ship to right route” strategy rather than “all ships to all route” strategy
Provide a steady ship chartering requirement
Uncertainty management
Changing dispatching plan for higher demand than forecast scenarios
Simulates multiple scenarios by varying “forecast-capacity-demand”
Scott J. Mason

12. SCOP’s Organizational Benefits
Integrate decision making process across organization
Formulate strategies for optimal planning and re-planning policies
Standardized models used by both senior management and tactical planners
Enhanced communication between various departments
Replaced empirical rules or rules-of-thumb with models that helps in quantitative decision making
Scott J. Mason