Lean transformation in the cement industry: Building a high-performance supply chain

The cement industry operates in a highly capital-intensive environment, characterized by tight margins and strong operational demands. Production efficiency, logistical robustness, and strict cost control are critical factors in ensuring sustainable competitiveness.

In a sector where small efficiency variations directly impact overall profitability, operational excellence plays a strategic role, particularly in large-scale and highly complex industrial operations.

Transforming a strong industrial legacy into a structured Lean system

With over 50 years of market presence, this Thailand-based company has built a strong legacy based on operational excellence, deep industry expertise, and decades of accumulated knowledge. As one of the leading cement producers in its market, it operates within a highly complex industrial value chain.

In such a demanding, competitive environment with clear sustainability and energy-efficiency goals, it became evident that the organization needed to evolve toward a more structured, disciplined, and improvement-oriented management model.

In this context, a Lean journey was launched across the supply chain in 2019 to establish a sustainable system for value creation and systematic waste elimination.

Breaking the limits of operational performance

Despite its strong operational legacy and market positioning, the supply chain faced structural challenges that limited performance and flexibility.

An in-depth diagnostic phase revealed operational, logistical, and financial constraints that were affecting efficiency, capital utilization, and overall responsiveness. Addressing these challenges required more than isolated improvements — it demanded a systemic transformation.

Limited performance and variability in bag production

Bag production operated at an OEE of 66%, reflecting significant losses in availability, performance, and quality. Average output was 92,000 bags per shift, below installed capacity, while brand changeover times reached 32 minutes per shift, introducing variability and reducing operational flexibility.

This combination constrained real production capacity and limited the plant’s ability to respond quickly to market demands, in an industry where operational efficiency directly impacts competitiveness.

Excess inventory and tied-up capital

Finished goods inventory stood at 30 days of demand. This level indicated an opportunity to improve flow alignment and inventory control across the supply chain.

Beyond financial impact, the excess inventory highlighted misalignment between planning, production, and actual demand, reinforcing the need for greater stability and synchronization across the supply chain.

Operational inefficiencies in bagging and loading

The loading operation showed only 48% autoloader utilization, with a strong reliance on manual intervention. Additionally, approximately 12 minutes of non-value-added activities per truck were identified, impacting overall logistics cycle time.

Machine reliability stood at 83%, reflecting availability losses that affected operational stability. In a high-volume environment, small inefficiencies accumulate, resulting in substantial cost and productivity impacts.

Low automation and high manual intervention in order allocation

Only 28% of orders were automatically allocated to trucks, requiring frequent manual intervention in logistics planning.

This dependency increased the likelihood of rework, generated overtime, and reduced operational predictability. In a highly complex system, limited automation constrained overall supply chain efficiency.

Financial structure misaligned with operational reality

The organization operated with 27 cost centers, whose configuration made it difficult to gain a clear and integrated view of supply chain economic performance.

The absence of a simplified structure aligned with operational flows limited financial transparency and data-driven decision-making.

Aligning strategy with daily execution

To address the identified challenges, the organization did not pursue isolated corrective actions. Instead, it designed and implemented a structured transformation program to build a sustainable management system.

The focus was not only on improving specific performance indicators but on establishing the discipline, routines, and capabilities required to sustain long-term operational excellence.

Building a management system driven by targets, learning, and daily discipline

The transformation began with a redefinition of how the supply chain was managed. Rather than isolated initiatives, an integrated model was designed to connect strategy, daily management, and people development into a coherent system.

Strategic alignment was ensured through a structured, objective deployment process that translated business priorities into clear operational targets. Execution was supported by a structured daily management system, which made key operational indicators visible and established a regular cadence for performance reviews.

Meetings were conducted in a dedicated visual management space — the Mission Control Room — where indicators were reviewed, deviations discussed, and actions defined and tracked in a structured manner. This model reinforced transparency, accountability, and speed of decision-making.

“It took quite a bit of time for everyone to feel comfortable raising issues, and it’s very important that our leader promptly supports and builds trust within the team.” – Outbound Logistics Manager

The Improvement Kata was introduced as a structured method for achieving target conditions through iterative experimentation and learning cycles. Coaching Kata supported leadership development, strengthening scientific thinking, discipline, and autonomy in problem-solving.

More than 40 A3 projects were conducted within this framework, embedding structured improvement into daily operations. Consistent application of PDCA ensured continuous progress, while SDCA guaranteed stabilization and sustainability of new standards.

Figure 1 – Mission Control Room session

Muda hunting as a structured Gemba discipline

A core pillar of the transformation was the systematic implementation of Muda hunting as a regular Gemba practice.

Through direct observation and detailed flow analysis, non-value-added activities were identified across production, bagging, and loading operations. This approach quantified waste associated with waiting, unnecessary movements, rework, process variability, and underutilized equipment.

Muda hunting was integrated into Daily Kaizen routines, encouraging teams to identify and address opportunities for improvement continuously.

Strengthening operational discipline through Standard Work and 5S

Standard Work was developed in critical operational areas to ensure stability and repeatability, involving teams directly in its definition and implementation.

Full 5S implementation reorganized workplaces, clarified flows, and reinforced visual management. Kamishibai audits ensured systematic follow-up of standards and strengthened leadership presence in the Gemba.

Figure 2 – 5S and visual management strengthening workplace discipline

Structured reduction of changeover time and transition to pull flow

The SMED methodology was applied to significantly reduce brand changeover times in bag production.

At the same time, the production system shifted from a predominantly “Just in Case” production model toward a Pull logic, supported by Kanban systems and Make-to-Order production.

Optimization of bagging and loading operations

Autoloader utilization was increased, improving cement bag dispatch performance. The utilization of 14 spout packers was enhanced, and non-value-added time per truck was significantly reduced.

Older, less efficient packing and loading lines were shut down, resulting in annualized cost savings and improved operational efficiency.

Automation and increased predictability in order allocation

The order allocation process was redesigned and automated, reducing manual dependency and increasing consistency in logistics planning.

Standardized processes and improved operational visibility reduced rework, lowered overtime, and increased dispatch predictability.

Financial restructuring and enhanced transparency

The cost center structure was simplified and aligned with operational reality, increasing transparency and strengthening data-driven decision-making.

“Kaizen is changing the way we work. We focus more on customer value creation and reducing inefficiency from our process.” – Logistics Operation Department Manager

Results achieved

The implementation of the Lean management system delivered measurable performance improvements and strengthened the supply chain’s organizational foundation.

The results reflect not only operational and financial gains but also a structural shift in how performance is managed, problems are addressed, and value is created across the organization.

Quantitative results

The Lean system implementation generated consistent operational and financial performance improvements across the supply chain.

• OEE increased from 66% to 82%
• Output per shift increased from 92,000 to 112,000 bags
• Approximately 27% reduction in shifts while maintaining production volume
• Changeover time reduced from 32 to 12 minutes
• Finished goods inventory reduced from 30 to 14 days
• Autoloader utilization increased from 48% to 72%
• Machine reliability increased from 83% to 91%
• Automatic order allocation increased from 28% to 78%
• Approximately THB 50 million per year in savings (around USD 1.5 million)

Qualitative results

Beyond operational and financial gains, the transformation had a structural impact on supply chain management.

• Consolidation of an integrated Lean management system aligned with strategy
• Implementation of a structured cascading meeting cadence
• Stabilization of critical processes through Standard Work and visual management
• Stronger leadership presence in the Gemba
• Development of internal capabilities through more than 40 A3 projects
• Engagement of over 200 employees in the continuous improvement journey

From improvement initiative to enduring organizational capability

This transformation was not merely an operational improvement program. It represented a redefinition of how the organization thinks, decides, and executes.

Lean required time, discipline, and trust. As daily performance visibility became routine and leadership strengthened its presence in the Gemba, problems were no longer hidden and became learning opportunities.

Beyond financial and operational gains, the true outcome was a stronger cultural foundation: more engaged teams, more present leaders, and a management discipline capable of turning challenges into structured progress.

“In the end, aside from the clear performance benefit, we could also see the team members becoming more involved and engaged.” – Outbound Logistics Manager

With this foundation established, the model developed within the supply chain will now be deployed across other operational units, ensuring methodological consistency and reinforcing operational excellence throughout the organization.

This is not a story of isolated optimization. It demonstrates that when method, discipline, and people development align, operational excellence ceases to be an objective — and becomes an enduring organizational capability.

We are committed to respecting our clients’ confidentiality. While we have altered or omitted their names, the results are genuine.