Rajashree Cement: Engine on Load

Abstract

The market share for cement transportation by rail had declined from 56% to 43% over the past decade. In an attempt to arrest the sliding market share, the Indian Railway (IR) wished to focus more on customer service by expanding the scope of its offer to a third party logistics service provider. The client system was in the private sector (unlike the other major commodities carried by IR) and hence was more demanding and representative of the future orientation of industrial activity in India. Cement had to reach the retail customer, due to which the distribution side had reasonable scope for a third party logistics service provider. This case examines what the IR can do in the context of a large scale modern cement plant, called Rajashree Cement (RC) in terms of operations at a specific client site. This had implications for infrastructure, services, organization, and information systems. A new concept called Engine on Load (EOL) was being experimented by RC and the IR to improve the throughput of bulk cement from the Malkhaid plant of RC to the Bangalore market. After three months of EOL, executives from RC and IR were reviewing (1) whether to continue with the EOL system or not and (2) if to continue, what should be the terms of the contract between RC and IR. This would have implications for IR’s service levels to their clients.