Lafarge North America
Everyone knows the white trucks with green logos. Whether you’re cruising around British Columbia, Nova Scotia or anywhere in between, it’s not uncommon to look over and find one driving beside you. Lafarge is everywhere.
Although Lafarge is a French industrial company, Canadians have had over 50 years to learn about the brand that arrived here in 1956, when the company built its first North American cement plant in British Columbia.
For those that recognise the name but don’t know what the company does, Lafarge is a construction materials business, specialising in concrete, cement, aggregates and gypsum wallboard. The company competes internationally, with its own subsidiary here in North America, which is just as successful as its global counterparts. In fact, Lafarge North America is the market leader for construction materials in Canada.
Back to the trucks.
A lot goes on behind the scenes of what seems to be an easy drive from plant to construction site. The cross-country nature of Lafarge’s operations represents much consideration in logistics, especially when multiple products are factored in. Up until recently, responsible for keeping a smooth flow of cement transportation across western North America was Jim Bergeron, Director of Distribution Strategy— more on his new role later.
A quick lesson in cement
To understand what moving cement entails, Bergeron spends some time describing the cement process.
“The way cement is manufactured is by taking limestone and crushing it until it is very fine,” he says. “Then you add some materials to it—such as iron and silica—bake the mix, add more ingredients for the right finished-product characteristics and then grind the heck out of it. Combined, they produce a product, called cement. So, all of those raw materials need to arrive at one point for mixing.”
“Once you have the cement, it’s very heavy,” Bergeron continues. “It takes up a lot of space and needs highly engineered structures to hold it. We take the finely ground material and put it in a bin on top of a scale. Trucks drive up, get a full load of the powder and deliver it to the work sites— primarily for the ready-mix concrete, oil patch, mining and pre-cast industries. A portion of Lafarge’s cement product is also packaged and sold to hardware stores.”
The finished goods are moved by truck, train, ship and barge, depending on where it needs to go. The farther the distance, the greater chance the mode of transportation won’t be truck. Once cement is received, the customers add water, sand and gravel and performance-enhancing additives to produce concrete, which is then delivered by mixer trucks to job sites.
Bergeron is involved with the inbound flow of the raw materials, including gypsum, petroleum coke, limestone, coal, silica, fly ash and iron. He also does outbound flows, organizing the choice of carrier, destination, network systems and the right staffing levels to make sure everything goes smoothly.
“The area I cover is from Kenora, over to the northwest slope of Alaska and all the way down to southern California,” Bergeron explains. “That’s four time zones, over 8 million square miles, 70 shipping locations, two countries and over 5000 destinations. It keeps me busy.”
Clearly, logistics within a multinational company is a big job. For Lafarge North America, the complexity increases when shipments travel across the border. “Dealing with U.S. customs means assuring the right product goes into the vehicle, protecting the integrity of that product while it’s travelling and completing accurate paperwork to facilitate easy movement,” Bergeron explains.
Planning is the key to fluid transportation, especially at a time when international security is a high priority. Lafarge has had to learn how to streamline the processes compared to what they were doing right after 9/11, when the movement of cargo crawled across the border. Still, Bergeron finds the amount of paper work is increasing and Lafarge is ramping up its due diligence. “By the time the product gets to the border, if it is secure and you’ve done your paperwork, it goes through relatively quickly,” he says. “If not, they will not let your goods cross.”
“The United States government is increasingly adding security conditions to ensure everything comes into their country safely,” Bergeron adds. “Recently, this has been extended to empty containers with minor amounts of retain going across border. If we send a loaded railcar across the border, there is a whole documentation process that goes into it. If I have to send an empty railcar across, currently I don’t have a process to manifest and secure any retain that might be left in the railcar. The U.S. wants that portion coming back manifested and secured, which is going to cause some grief. Most of the goods we sell originate in Canada and are destined for the U.S., so we have to have the processes in place to secure the loads.”
How technology helps
Security legislation might add work to daily operations, but technology certainly balances things out in terms of efficiency and increased accuracy.
Electronic Data Interchange (EDI ), for example, is helping Lafarge with taking orders and planning for shipment. EDI is the computer-to-computer exchange of business documents between companies, replacing the need to fax or mail paper documents. The system means less labour time, fewer errors and faster transactions. At the end of the day, EDI supports reduction in inventory levels for better use of warehouse space, fewer out-of-stock occurrences and lower freight costs due to fewer emergency shipments.
“The industry is moving to more collaborative planning systems,” Bergeron says. “We are linking our computer systems, so we can better supply our customers’ needs. We are getting updates a lot quicker and therefore planning our logistics sooner and with less variability.” To put it in perspective, Bergeron explains the design of a future building will influence Lafarge’s inbound deliveries of raw materials up to two years earlier (for large projects).
Lafarge is also making use of GPS for real-time monitoring. “It allows our customers access to information about the status of their shipments,” Bergeron maintains. “It reduces concerns about where the truck loads are and it enables them to commit to their customers more confidently. On a whole, the industry is moving to self-serve systems. We are using vendor-managed inventories, improved Customer Relationship Management (CRM) tools, and automated packaging systems. These tools are helping us plan and get the jobs done as expected by customers, suppliers and government agencies (particularly with customs issues).”
Keeping things consistent
Lafarge North America has grown largely by acquisition, resulting in the merge of corporate cultures, processes and standards. In any acquisition, it’s normal to have a learning curve before everyone arrives on the same page. Bergeron says the logistics side of the business is no different; in fact, standardization has a lot to do with his new role at Lafarge.
“In the Director of Distribution Strategy role I just accepted, I will be leading the development of a cement truck transportation policy for North America,” he explains. “This policy will include what we expect of all the carriers that do business with us. It will cover our standards in the areas of safety, sustainability, quality assurance, service levels, technology standards, and procurement approaches, to name a few.”
“Standardization is definitely changing the way Lafarge North America is doing business,” Bergeron goes on. “We understand that, in all of the product-line divisions in which we operate, there are many processes that should be the same. When a truck comes to pick up product, for example, what Personal Protective Equipment (PPE) should the driver be wearing? How should he get out of his truck? How should he safely access the hatches on the top of the truck? We need to standardize all of that. When a truck makes a delivery to a customer site, there needs to be procedures to ensure the customer is getting the experience Lafarge wants them to get.”
The call for standardization in Lafarge North America is company mandated. On the industry side, however, Lafarge is also interested in aligning the rest of its logistics to other best practices in the field. “We want to ensure that the industry is seen as taking steps to assure safe, environmentally friendly and quality-assured deliveries,” Jim says.
“We also need the legislative rules that allow us to do this efficiently. In the logistics area, these rules include standardized weight laws, drivers hours of service and competitive markets for procurement, to name a few.
Seeking guidance from the outside
Like most successful businesses, Lafarge North America knows not to navel-gaze. Management knows the value of industry associations and learning from and working with others in their field.
Bergeron is a member of the Canadian Supply Chain Sector Council (CSCSC), an organization that works with key stakeholder groups to ensure challenges are addressed and transformed into opportunities. Bergeron and his fellow members are defining what it is to be a professional logistician, helping academia establish programs to ensure that the leaders of tomorrow have the right skill sets to be successful. They also want to help companies hire logistics folks that have been properly trained.
“Logistics doesn’t have a robust definition and we need one,” he says. “Once we have that, we need formal education in institutions to train people with the skills sets and understanding to do logistics. To give you an idea, somewhere between 20 and 30 per cent of revenues we earn are spent in transportation. Yet, we don’t have a universally recognized professional designation (like lawyers, accountants and engineers do) that would allow employers to expect a certain level of knowledge and professional integrity from potential employees.”
Lafarge North America’s vast success is based on mastering every-day details, such as logistics. While the average person takes the finished product for granted—whether it’s buying cement at the hardware store or shopping at a new mall—Lafarge understands and facilitates the countless steps that make those end-products possible. The white trucks with the green logos represent just a few of those important steps.