The United Cement Company of Nigeria Ltd (UniCem)

Introduction

Background Of The Study

Inventories are items that are kept in stock for further processing or resell. Inventory is also the current amount of a product that a business has in stock. High levels of inventory or buffer inventory enables an organization to cope with surges in demand. But this would entail a considerable cost outlay, in holding high levels of inventory. Inventory management is primarily concerned with specifying the quantity and the reorder time in the manufacturing outfit. Inventory is required at different locations within a facility or within many locations of a supply network to precede the regular and planned course of production and stock of materials.

The concept of inventory or work in progress extends from manufacturing systems to commercial and service projects. Generally speaking, inventory could be said to be any work in the production process or all the work done or that has already taken place before the completion of production. The said work may have been carried out on raw materials or partially finished products, before the item leaves the production system.

As the item moves from one production centre to another, value is added to the item through processing.

The scope of inventory management refers to the balance between renewal time, inventory maintenance costs, asset management, inventory forecasting, inventory valuation, inventory visibility, inventory price forecasting, physical inventory, available physical space, quality management, replacement, return and defects. The balance of these competitive requirements leads to optimal inventory levels, which is an ongoing process as business needs change and respond to the larger environment.

It additionally involves systems and processes that determine inventory necessities, set targets, propose replacement techniques, report on the present and planned inventory standing, and manage all monitoring and reporting functions.

Material management includes monitoring equipment going into and out of warehouses and reconciling inventory balances. It may also include ABC analysis, batch tracking, cycle count support, and so on. Inventory management, the primary objective of which is to determine /control stock levels within the physical distribution system, is to balance the need for product availability with the need to minimize handling and holding costs.

The average cement industry in Nigeria spends 30 to 35 percent of the inventory value on inventory handling. Keeping a low level of inventory reduces company costs and minimizes losses from deteriorating items. Costs associated with deteriorating inventory, is easy seen in clinker that been stored in the open. Due to weathering of the clinker from environmental conditions, more clinker is required during finish grinding, thereby increasing the unit cost for cement production.

The inventory level and sales rate of a product can be used by a typical inventory manager to determine the optimal buffer stock level and the replenishment system to adopt.

About 50 million metric tons of Portland cement was produced in the Nigeria in 2017. For this amount of annual output, considering the fact that cement production follows the Line Production system, with different production centres, which have different capacities, there is the need to hold some level of inventory in-between production centres. This is further compounded by unplanned stoppages.

Therefore there is a need for carrying out an evaluation of optimal inventory management in a cement plant and this study provides a basis on that. It should be stated here that this work only considers inventory for cement production. Spares and maintenance inventories were not considered.

United Cement Plant Calabar

The United Cement Company of Nigeria Ltd (UniCem) is a private company whose core business is the manufacturing and supply of portland cement to its core markets of the South-South and South-East regions of Nigeria. The Plant 2 types of Portland cement, which are 32.5R, and 42.5N

United Cement Company was established in 2002 after Lafarge and Holcim acquired the assets of Calabar Cement Company (Calcemco). This lead to the building of a modern 2.5million metric tonnes per annum Greenfield Cement manufacturing Plant in Mfamosing, 40km north-east of Calabar, Cross River State. Prior to this time, the cement production was done in calabar. This entailed moving of raw materials from Mfamosing to Calabar.

The Mfamosing Plant, a modern production facility was formally inaugurated in May 2009.

United Cement Company in 2016 expanded her plant to 5 million metric tonnes per year.

Cement Making Process.

Cement is a hydraulic binder that reacts and solidifies when it mixed with water. Today, concrete is the primary construction material, and cement is used in this regard. Cement, a construction sets, hardens, and adheres to other materials to bind them together. Cement is hardly used on its own, except in the making of mortar, for rendering. Cement is often used to bind sand, gravel and reinforcement bars to make concrete. Cement is the most widely used material in existence and is only behind water as the planet’s most-consumed resource.

The cement production is a technologically complex process. The basic raw material to produce cement is limestone. The limestone is mostly extracted by blasting. The boulders from these blasting are fed into the crushers by heavy transport equipment.

The crushers would then reduce the limestone to the required sized for the Raw Mill. It is important to point out that the product of the Raw Mill is called the Raw Meal. And this must meet some specified size and chemical composition for burning/clinkerization in the Kiln.

To produce clinker of the right quality, the raw meal fed to the kiln must meet a specified chemical composition. For this purpose, before the limestone is ground in the Raw Mill, clay, marl, silica, iron ore, sand, etc. are added to achieve this specified chemical composition.

The obtained limestone meal, being an intermediate product, is transported to the homogenizing silo for storage. This is clearly a WIP. For most plant design, the size of this silo, is around 3 days production feed for the rotary kiln.

The Raw Meal is then fed to the rotary kiln. In the kiln, different processes occur. From the drying/ removal of water at 100°c, to Calcination, and then clinkerization. The inclination of the kiln, moves the material from one end to the other for the completion of the process. The kiln is normally inclined at 4 degrees, with an anti-clockwise rotation speed of 4 Revolutions per Minute. The product of this process is clinker, which is an intermediate product in cement making. Some companies sell clinker to grinding terminals for cement making. The clinker is then ground to produce cement. Gypsum is added in the grinding to control the setting time of the cement. Additives (limestone, slag, pozzolana, volcanic ash, etc.), are added to increase the volume of cement.

Cement Raw Materials

LIMESTONE

Limestone is a carbonate sedimentary rock that is often composed of the skeletal fragments of marine organisms such as coral, foraminifera, and molluscs. Its major materials are the minerals calcite and aragonite, which are different crystal forms of calcium carbonate (CaCO3).

Limestone has numerous uses, amongst is the use for cement making.

About 10% of all sedimentary rocks are limestones.

• It is the raw material for the manufacture of quicklime (calcium oxide), slaked lime (calcium hydroxide), cement and mortar.
• Pulverized limestone is used as a soil conditioner to neutralize acidic soils (agricultural lime).
• Is crushed for use as aggregate the solid base for many roads as well as in asphalt concrete.
• Glass making, in some circumstances, uses limestone.

IRON ORE

Iron ores are rocks and minerals from which metallic iron can be economically extracted. The ores are usually rich in iron oxides and vary in colour from dark grey, bright yellow, or deep purple to rusty red. The iron is usually found in the form of magnetite (Fe3O4, 72.4% Fe), hematite (Fe2O3, 69.9% Fe), goethite (FeO(OH), 62.9% Fe), limonite (FeO(OH)·n(H2O), 55% Fe) or siderite (FeCO3, 48.2% Fe).

Ores containing very high quantities of hematite or magnetite (greater than about 60% iron) are known as “natural ore”.

Banded iron formations (BIFs) are sedimentary rocks containing more than 15% iron composed predominantly of thinly bedded iron minerals and silica (as quartz).

The mining involves moving tremendous amounts of ore and waste. The waste comes in two forms, non-ore bedrock in the mine (overburden or interburden).

Iron ore is used for correcting the chemistry of the raw meal, in cement making.

CLINKER

In the manufacture of Portland cement, clinker occurs as lumps or nodules, usually 3 millimetres (0.12 in) to 25 millimetres (0.98 in) in diameter. Portland cement clinker is made by heating a homogeneous mixture of raw materials in a rotary kiln at high temperature. The products of the chemical reaction aggregate together at their sintering temperature, about 1,450 °C.

Aluminium oxide and iron oxide are present only as a flux to reduce the sintering temperature and contribute little to the cement strength. The major raw material for the clinker-making is usually limestone mixed with a second material containing clay as source of alumino-silicate. Normally, an impure limestone which contains clay or silicon dioxide (SiO2) is used. The calcium carbonate (CaCO3) content of these limestones can be as low as 80%. Second raw materials (materials in the rawmix other than limestone) depend on the purity of the limestone. Some of the second raw materials used are: clay, shale, sand, iron ore, bauxite, fly ash and slag.

Clinker, if stored in dry conditions, can be kept for several months without appreciable loss of quality. Because of this, and because it can easily be handled by ordinary mineral handling equipment, clinker is traded internationally in large quantities. Manufacturers also ship clinker to grinding plants in areas where cement-making raw materials are not available.

MARL

Marl is a calcium carbonate or lime-rich mud or mudstone which contains variable amounts of clays and silt. The dominant carbonate mineral in most marls is calcite, but other carbonate minerals such as aragonite, dolomite, and siderite may be present. Marl was originally an old term loosely applied to a variety of materials, most of which occur as loose, earthy deposits consisting chiefly of an intimate mixture of clay and calcium carbonate, formed under freshwater conditions; specifically an earthy substance containing 35-65% clay and 65-35% carbonate. Marl is also used in achieving the raw meal chemistry.

GYPSUM

Gypsum is a soft sulfate mineral composed of calcium sulfate di-hydrate, with the chemical formula CaSO4·2H2O.

Gypsum occurs in nature as flattened and often twinned crystals, and transparent, cleavable masses called selenite. Selenite may also occur in a silky, fibrous form, in which case it is commonly called “satin spar”. Finally, it may also be granular or quite compact. In hand-sized samples, it can be anywhere from transparent to opaque.

Gypsum plays a very important role in controlling the rate of hardening of the cement. During the cement manufacturing process, upon the cooling of clinker, a small amount of gypsum is introduced during the final grinding process. If not added, the cement will set immediately after mixing of water leaving no time for work men to form it into what they want.

GRINDING AID

A grinding aid is a specialty chemical agent used to make it easier to grind and mix cement. Specifically, grinding aids prevent cement particles from re-agglomeration, or re-adhering, during and after the grinding process. Grinding aids make it possible to streamline the cement-making process by increasing process efficiency and material fluidity. These benefits of cement grinding aid use also contribute to lower energy costs on the part of industrial mills.

The aid is generally added to the clinker at a fixed rate from 0.01% to 0.03% before entering to a finishing mill. As a result the grinding improves by 4% to 6% per 0.01% addition of aid. The aid also improved the dispersibility and fluidability of cement (powder) and weathering is delayed.

Statement Of Problem

To attain the design plant capacity, there is the need for optimum annual levels of inventory, for production activities.

Efforts to link production management with various inventory management processes result in better planning of supply chain activities and better material management. These improvements results in better utilization of fixed assets and the attainment of the plant design capacity.

Objectives Of The Study

The main objective of the study is to develop a predictive regression model that will be used to address the factors that constrain optimum annual inventory levels in United Cement Plant Calabar. The specific objectives are;

• To identify, the constraining factors affecting Optimal inventory management in United Cement Plant so as to reduce inventory variance.
• To bring forward an understanding of optimal annual inventory level.
• To analyze the level of these constraining factors on the plant inventory, individually and collectively.
• To rank the constraining factors in order to isolate the salient ones that make significant contribution to poor inventory management.

The results of the analysis and ranking will guide the plant management in designing and implementing the optimum inventory management system in place.

Scope Of The Study

The scope of this work, is limited to the prevailing inventory management policy, the evaluation of annual inventory levels of the cement plant, identification and evaluation of constraining factors on inventory management, and the establishment of optimum inventory management systems, with the aim of finding a relationship between the optimum inventory level and plant operations costs. This study is looks critically at the activities of UniCem Plc, Mfamosing, Cross River State, Nigeria, as regards her inventory management.

Research Questions

1. What are the constraining factors that affect optimum inventory production inventory levels in the operation of United cement Plant Calabar?
2. What are the effects of these constraining factors on annual cement production volume?
3. What are the effects of these factors on the production cost of the product?
4. Which of these factors is more significant than others?
5. Do these factors impact the quality of the product?