Fit-for-purpose (lean) capital expenditure strategies in a competitive cement industry.

Competitive advantages attributable to top line revenue drivers such as price point and brand recognition and corresponding premium have been fully exploited and are waning in their importance in the cement sector. A trend towards exploring alternative performance drivers, other than capital intensive technology updates, to attain a competitive advantage and improved financial returns, as measured through return on capital employed (ROCE) alternatively return on invested capital (ROIC). above, the industry is once again returning to an evaluation of technical core business drivers. In order to attain a competitive advantage and ensure an optimum use of scarce funds & resources (with an objective of rapid/flexible market presence and high operating profit respective ROIC and ROCE multipliers) a resurgence of core operational and fixed asset related business drivers, both technical and requiring a high degree of expertise, is being observed in the industry.
These technical drivers, rpviding a significant ROCE multipolying effect include:
- operational extenders,
- lean capital expenditure (CAPEX) and Fit- for-Purpose asset development,
- differentiating enablers.
The article describes a number of concepts whose implementation offers a competitive advantage and raises the value of the cement business.

Author: P.H. Heersche, H.W. Meyer

Section: Review

Keywords: capital expenditure, assets, return on capital employed, efficiency, competitive advantage