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LUCKY CEMENT
Production and Operations Management
Presented By:
Mohammad Omar Arif
Hassan Khan
Nida Hasan
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VALUE CHAIN
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PRIMARYACTIVITIES
Primary ActivityDescription
Inbound logistics All those activities concerned with receiving and storing externally sourced
materials
Operations The manufacture of products and services - the way in which
resource inputs (e.g. materials) are converted to outputs (e.g. products)
Outbound logistics All those activities associated with getting finished goods and services to
buyers
Marketing and sales Essentially an information activity - informing buyers and consumers about
products and services (benefits, use, price etc.)
Service All those activities associated with maintaining product performance after the
product has been sold
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OPERATIONS
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Capital intensive process
Produces cement for local and export markets
Located in Pezu and Karachi
Capacity of 25,000 tons per day Raw material are limestone, gypsum and clay
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ANALYSISOFOPERATIONS:
Lucky Cement Faced two problems:
Problem1: High Fuel Consumption and Need for
Alternative Source of Energy
Problem 2: Problems in Cement Quality
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PROBLEM 1
Lucky Cement requires a lot of power to operate its
plant
Due to the unavailability of reliable and consistentpower, Lucky Cement developed 100% Captive
Power Generation units for both production facilities
22 most modern and energy efficient generatorshave installed capacity of 175 MW.
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Since the industry faces a situation where sales
price will be fixed by mutual consensus, the cost of
production will be the most critical factor of
profitability.
Energy cost is a major component of total cost of
production.
Contributes at an average 40 to 45 percent towards
total cost
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In order to minimize this cost Lucky Cement tried to
use the cheapest and most reliable source
The following are the possible alternatives: Wastes from virtually all industries, including chemical
wastes, agriculture waste, healthcare waste, out-dated
consumer products, industrial
Municipal solid waste (MSW)
Whole or shredded scrap tires
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ANALYSESOF ALTERNATIVES
1st:Energy-from-waste
Advantages:
Very low cost of investment. The technologies used are
easily available.
The installation will reduce Lucky Cement's operational
costs by 25-30 percent
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Disadvantages:
The energy produced with WtE would be not of good
quality and may hinder the entire process of production
Collection and process of waste was a rigorous
process.
The process is very harmful for labour.
One major problem is the further emission of pollutants
eg Carbon dioxide
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ALTERNATIVES
2nd:Municipal solid waste (MSW):
Cheap but again emission of Harmful Gases
3rd
:Whole or shredded scrap tires (TDF) Scrap tires are used as fuel because of their high
heating value.
Less expensive than fossil fuels and offers the potential
advantage of decreasing carbon emissions.
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25% more energy than coal
Problem with TDF: It is a long and some times
difficult process
May require additional physical processing
Requires high amount of initial investment
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SELECTIONOF ALTERNATIVES
Lucky Cement went with the installation of TDF
It cost them around Rs 1 billion
It allowed good quality energy to be produced withtechnology which was easily available aside from astrong possibility of getting a positive return on thisinvestment.
Plus it was environmentally friendly
Most importantly reduce Lucky Cement's operationalcosts by 25-30 percent,
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PROBLEM 2Problems in Cement
Quality
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WHATISMEASURED?
Continuous analysis of oxygen (O2), carbon
monoxide (CO) and nitrogen oxide (NO) in the
rotary kiln; which is essential for the quality of the
produced cement clinker, the efficient use of fuel,
and the protection of the environment from toxicemissions.
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BACKGROUND
High production costs
Low standard quality
Kiln requires adequate temperature & air combustion
If the air is more, energy consumption and so the costsincreases, and if the air is low the combustion is not
sufficient resulting in poor quality cement.
EPA regulations require constant monitoring of hazardous
emissions
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KEY OBJECTIVES
Product Quality maintained
Improve operational stability.
Reduce fuel consumption
Reduce maintenance requirements.
Maximize fresh clinker feed
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ALTERNATIVES
Buy process control equipment and technology
from Siemens
Import the equipment from China
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SIEMENS SOLUTION
Siemens FLK sampling system
Expansion: To what extent the cement is expanded
after addition of water
Setting Time: Shows the time taken by cement to
become solid.
Fineness Test / Blaine Test: Measures the small
size of the particles in specific weights.
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RESULTSFOR LUCKY CEMENT
Automated its operations
Reduced energy and other operational costs
Became the leading cement manufacturer in
Pakistan