CEMEX: TRANSFORMING A BASIC INDUSTRY COMPANY Case Study Questions 1. How is CEMEX Mexico providing added value to its customers? R: As cement is a commodity market, CEMEX realized that they should provide added value by developing customer services and offering solutions for the needs/wants of their customers. See Appendix 1: CEMEX - Customer Services 2. How has CEMEX developed and leveraged its strengths to enhance its market position and profitability?R: The Company was extremely successful in integrating its acquired companies by using information technology and managerial processes that it developed and proved in Mexico to drive down costs, improve/standarize operational efficiency, improve customer service, and establish the company’s brands in a commodity market. In addition, CEMEX expanded its product line, adding other building materials needed by its existing customers.
3. Are the initiatives that CEMEX implemented applicable to other economies?To other types of products? R: The Company was extremely successful in integrating its acquired companies by using information technology and managerial processes that it developed and proved in Mexico to drive down costs, improve/standarize operational efficiency, improve customer service, and establish the company’s brands in a commodity market. In addition, CEMEX expanded its product line, adding other building materials needed by its existing customers. 4. How can CEMEX provide additional value to its bagged cement customers?To its bulk cement customers?? R: The Company was extremely successful in integrating its acquired companies by using information technology and managerial processes that it developed and proved in Mexico to drive down costs, improve/standarize operational efficiency, improve customer service, and establish the company’s brands in a commodity market.
In addition, CEMEX expanded its product line, adding other building materials needed by its existing customers. Appendix 1: CEMEX - Customer Service| | | | | | | |Problem / Opportunity| Needs / Wants| Customer Service| Description| The distributors sold a wide range of construction products, such as rebar, in addition to cement. | Buy related products at better prices| Multiple Products| CEMEX realized that it could use its national scope to negotiate favorable prices for large quantities of construction materials, then sell these materials to its distributors at better prices than the distributors could negotiate directly. | Small size distributors had little name recognition.In many cases, their business practices were unprofessional. | Improve business, better serve customers, compete with big players| Construrama| CEMEX developed a retail network, called “Construrama,” and invited its largest distributors to join, forming a national chain of independent distributors.
The Construrama program provided a national brand and other benefits, such as regional and national advertising, access to insurance programs and financing. Distributors thus became part of a large network, rather than being simply a small, local business. Work stopages due to materials shortage| Managing on site inventory| Inventory Management for Builders| CEMEX did the materials planning, and updated plans according to the construction progress. This arrangement saved storage, working capital, and provided security for the constructor. It allowed builders to work with one supplier to plan their entire materials needs, and eliminated shortages. CEMEX did all the back office tracking and scheduling.
| Labor shortage, especially a shortage of qualified labor. Accelerate construction or avoid labor shortage/lack of qualified labor| Construction Solutions| CEMEX worked on construction systems to simplify construction so that labor was less critical, and construction projects could be completed more quickly. For instance, CEMEX developed a method that accelerated construction for companies building low-income housing developments. Using this method, construction firms cut their costs by about 18 percent, and reduced construction time by about half. A substantial number of CEMEX’s customers could not get any financing for their homes| Provide credit to some customers| Construcard.
| CEMEX introduced a credit card, “Construcard,” in partnership with GE Capital. This provided a revolving credit line, and required weekly payments. | Meet the poorest segment of the city| Microlending program for construction| Patrimonio Hoy. | For the poorest segment of the population, CEMEX developed a microlending program called “Patrimonio Hoy,” in which participants organized into groups.CEMEX made loans to these groups, who used the loans to purchase construction materials, and who were collectively responsible for repayment.
| Many CEMEX customers received money from family members who worked in the United States and sent funds that were used for homebuilding. | Workers doedn't want to pay for high transaction costs| Construmex. | CEMEX established the “Construmex” program to help Mexican workers in the U. S. send money back to their families to be used for construction. Workers gave their money to CEMEX in the U.
S. , and CEMEX provided construction materials to their families in Mexico. Customers had to wait in line for days at a cement plant to pick up cement| End up with the lines or at least decrease the waiting time| Planning and Logistics Management| By 2005, CEMEX Mexico had implemented powerful tools that provided visibility of product shortages and potential shortages, and was developing additional tools to provide control and visibility throughout the supply chain. There were no long lines at cement plants anymore, and CEMEX had successfully implemented a policy of delivery within 24 hours of receiving an order. |
