Cemex: a Digital Firm in the Making
Case Study 1
Cemex: A DIGITAL FIRM IN THE MAKING
1. How did digital technology transform the way Cemex ran its business?
In previous years when Cemex began, the business’ operations ran without the use of digital technology, they used telephones as a communication medium between customers and employees. However, this proved to be futile because it was very time consuming and costly to Cemex. Phone lines were jammed as customers, truckers and dispatchers tried to get orders correct causing orders to be lost. The grandson of the founder of Cemex, Lorenzo Zambrano, introduced information technology to Cemex with a system that would enable them to manage unforecastable demand better than their competitors. It was a system built to link Cemex delivery trucks to a Global Positioning System satellite which would assist dispatchers to monitor the location, direction and speed of every vehicle allowing this information to be efficient when prompted by last minute changes. Their average delivery time was reduced from three hours to 20 minutes providing them with cost savings on fuel, maintenance and personnel. They also use fewer trucks to deliver the same amount of cement than before they introduced the digital technology as a result, increased customer loyalty since customers are willing to pay premium prices to Cemex because they do not have to keep work crews idles waiting for cement deliveries to show up. Although Cemex’s production facilities previously operated independently, they introduced a satellite communications system called CemexNet which electronically links all the firm’s production facilities and coordinates them from a central clearinghouse. Now, dispatchers know the exact location, speed, and direction of all vehicles at all times and can quickly select the most optimal arrangement of trucks and mixing plant locations to fill an order. They use an extranet type system that allow customers, distributors and suppliers to place
Cemex: A DIGITAL FIRM IN THE MAKING
1. How did digital technology transform the way Cemex ran its business?
In previous years when Cemex began, the business’ operations ran without the use of digital technology, they used telephones as a communication medium between customers and employees. However, this proved to be futile because it was very time consuming and costly to Cemex. Phone lines were jammed as customers, truckers and dispatchers tried to get orders correct causing orders to be lost. The grandson of the founder of Cemex, Lorenzo Zambrano, introduced information technology to Cemex with a system that would enable them to manage unforecastable demand better than their competitors. It was a system built to link Cemex delivery trucks to a Global Positioning System satellite which would assist dispatchers to monitor the location, direction and speed of every vehicle allowing this information to be efficient when prompted by last minute changes. Their average delivery time was reduced from three hours to 20 minutes providing them with cost savings on fuel, maintenance and personnel. They also use fewer trucks to deliver the same amount of cement than before they introduced the digital technology as a result, increased customer loyalty since customers are willing to pay premium prices to Cemex because they do not have to keep work crews idles waiting for cement deliveries to show up. Although Cemex’s production facilities previously operated independently, they introduced a satellite communications system called CemexNet which electronically links all the firm’s production facilities and coordinates them from a central clearinghouse. Now, dispatchers know the exact location, speed, and direction of all vehicles at all times and can quickly select the most optimal arrangement of trucks and mixing plant locations to fill an order. They use an extranet type system that allow customers, distributors and suppliers to place