Group C1

Towards World Class In-plant Logistics: Hindustan Industries Limited

Case background
HIL plant had easy access to sea route but trucks were not easily available. Transportation services were taken care of from Bombay with only a small office at plant site. Coordination and planning between plant, Bombay and the transport representative was the key success factor for effective material movement. However, the current logistics has a long way to go before claiming optimality. Issues In bagging operation, manual registers kept track of material bagged. This is suboptimal. Computer stock was updated at the end of the shift by forklift operators who were under contract to HIL. Making contract workers do such an important task is a risky proposal. If there was a careless mistake made, it could lead to complications in terms of material accounting. Too many communication centers to handle and in parallel across Bombay, plant and the transport office for the critical truck delivery operation. Too much paper work in handling the trucks affecting the truck turnaround time. This is only going to get worse as the volume of material expected to be handled increases in the near future. A truck requirement of 1 truck/minute cannot be met with such a cumbersome procedure in addition to the limited space inside the complex, facilities related restrictions and the moderate load of the trucks. The 9 documents have to be taken through 6 departments where the driver has to stop his truck on 8 occasions.

Security check 4 mins

2 mins

Security 2.5 mins

Weighbridge Entry 1 min

6 mins

Loading 20 mins

Warehouse

Gate

3 mins

Document checking 5 mins

Documentation 10 mins

6 mins Tarpaulin tying 20 mins

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Group C1 The 82 minutes standard cycle time is budgeted to be split for various activities as shown in the above picture. However, 64/95 = 67.4% drivers stated that gate #2 as the reason for delays and 50% stated gate #3 as the 3nd delay reason just after vehicle check. Similar figures from table 9 clearly suggest that gate security checks and other security measures are eating too much into the budgeted time. There is a stark contrast with respect to the budgeted turnaround times and the actual values.

Budgeted Actual Transit time 82 mins 165 mins Loading time 20 mins 26 mins Entry gate to warehouse 14.5 mins 43 mins Other than warehouse 52 mins 138 mins The times other than warehouse times are clearly off the charts and processes have to be modified to bring them into check. CSF for HIL The compulsion of capital intensiveness produced high pressure on enhanced capacity utilization on manufacturing. In addition, due to sales tax benefit at plant, inventory cannot be held at other places. As a result, the following success factors emerged for HIL. Coordinate and reduce inventory holding at different places. Monitor stock position on a regular basis and initiate appropriate marketing decisions Monitor space utilization at HIL and other regional locations

Recommendations MIS should be used in material bagging, accounting and documentation. RFID tags or bar codes should be introduced to count the material loading electronically instead of the manual process. All the processes in the system currently operate in a series. Processes independent of each other should be taken up in parallel. One such example would be the documentation part. If the information is recorded electronically using the step mentioned above, the generated documents can be handed over to the security while the tarpaulin is being tied and the data in the documents can be cross-verified as the truck passes through the weighbridge. The number of stops for a truck should be reduced to one or two in the worst from the current figure of 8. This can be achieved through electronic accounting and reengineering of the existing processes that use centralized data stores (independent of truck movement) to access the data in parallel rather than the current direct data flow between the processes (by way of physical truck movement) situated in series. Truck availability is a major component of the process specifications of the truck dispatching process. This is external to HIL and subject to market conditions. As transport costs are paid by consumers, they are not a major concern; however, turnaround times and satisfaction of the truck drivers play a key role in achieving this. Centralize the major activities within logistics MOG, Excise documentation and settlement, truck contracting, and deployment Page | 2