Rating

Supply Chain at APR Limited

Case analysis-01
Group # 34

Section SCMT 03

[Email]
SCMT-2016

Supply Chain Initiative at APR

Limited
1 WOOD LOGISTICS PROBLEM & AREA OF FOCUS
1.1 LOGISTICS
The company has invested to increase its production capacity from 150MT to 300MT per day.
The company further plans it to increase up to 500MT per day. On an average 150 trucks will
come in per day. At capacity of 500 MT per day, the number of trucks coming in will further
increase resulting in longer waiting time leading to longer processing time. Given below is the
analysis for production capacity of 250 MT per day.
Required capacity of pulp = 250 MT per day
Wood requirement for one ton of pulp = 4.2 tons
Individual truck carrying capacity = 10MT
Total wood required = 4.2 * 250 = 1050MT
1.1.1 LOADING PROCESS
Weigh Bridge
Time required to weigh a loaded truck = 10 minutes
Number of trucks in an hour = 60 / 10 = 6
Capacity = 6 * 10 = 60 MT per hour
Time requirement to meet required capacity = 1050 / 60 = 17.5 hours
1.1.2 UNLOADING PROCESS
Weigh Bridge
Time required to weigh a unloaded truck = 5minutes
Number of trucks in an hour = 60 / 5 = 12
Capacity = 12 * 10 = 120 MT per hour
Time requirement to meet required capacity = 1050 / 120 = 8.75 hours
Chipper
Time to unload a truck = 20 minutes

Number of chippers = 2 (One for Eucalyptus and one for Casuarina)

Number of trucks in an hour = ( 60 / 20 ) * 2 = 6
Capacity = 6 * 10 = 60 MT per hour
Time requirement to meet required capacity = 1050 / 60 = 17.5 hours
1.1.3 TRANSPORTATION
One significant problem lies in transportation of wood logs inside the industry when due non
availability of chippers, the truck is sent to woodyard for unloading. This wood when required at
chippers is carried through tractors and unloading is done via labourers which includes extra
cost.

Unloading of tractor = 10 minutes

Tractor cycle = 30 minutes
Material handling cost = Rs 100/tons

This additional cost needs to be minimized.

1.2

CHIPPING AT CHIPPERS
1) Chipper 1(Casuarina)
According to likely wood chipping schedule
Total volume of chipping = 380 MT per day
Total number of hours per day = 11.5
Capacity = 380/11.5 = 33 MT per hour
Chipping required to meet the production capacity of 250 MT per day = 40% of 1050 =
420 MT per day
Chipping required to meet the production capacity of 300 MT per day = 504 MT per day
Here, the capacity of chipper needs to be increased to meet the new production demand.
2) Chipper 2(Eucalyptus)
According to likely wood chipping schedule
Total volume of chipping = 675 MT per day
Total number of hours per day = 17.5
Capacity = 675 / 17.5 = 38.5 MT per hour
Chipping required to meet the production capacity of 250 MT per day = 60% of 1050 =
630 MT per day
Chipping required to meet the production capacity of 250 MT per day = 756 MT per day
This is a serious problem as the chipper is already working 17.5 hours and still is unable
to meet the requirements.
Total capacity = 33 + 38.6 = 71.6 MT per hour
Number of hours for chipping = 1260 / 71.6 = 17.6

1.3 WOOD YARD UNLOADING

Time to unload a truck (hours) = 2
Number of trucks which can be unloaded at a time = 6
Number of trucks in a hour = ( 60 / 120 ) * 6 = 3
Capacity = 3 * 10 = 30 MT per hour
Time requirement for unloading = 1050 / 30 = 35 hours
1.4 MAINTENANCE
Another problem lies in maintenance of chipping blades. The average life of chipping blades is
6-12 hours. Casuarina and Eucalyptus had different thickness of bark with Casuarina being the
thicker one and they require adjusted changing of blades.
1.5 SOURCING
The suppliers of wood are paid on the basis of quality of wood, with lower moisture content
wood considered as oh higher quality. The price is paid to the suppliers in two ways.
1. The payment is done on the basis of moisture content in the wood.
2. Payment is done on the basis of fixed price per tons of wood independent of the moisture
content.
The suppliers were very less in the Andhra Pradesh region because of which the company has to
agree to the terms dictated by the suppliers. Supplier prefers the later method as it was better for
them. Also there was a shortage of wood in Andhra Pradesh because of which the company has
to source 20% of Eucalyptus wood from Karnataka and 20% ffrom Uttar Pradesh. This increases
the cost of sourcing for the company.
1.6 PRODUCT MIX
To produce better quality of pulp, the company aims to use Eucalyptus and Casuarina in the ratio
of 60:40 respectively for 1 ton of pulp. This proportion varied from month to month on basis of
factors like availability of wood. The proportion of Eucalyptus varied from 50% to 70%. This
variation is again a problem as it highly affects the quality of pulp.

Looking at the above calculations and analysis we can see that the major problem lies in weigh
bridge followed by Chippers. Therefore, major attention and focus should be given to these so as
to increase their capacity as they are most likely to become a bottleneck in case of production
capacity expansion.

2 OPTIONS AND RECOMMENDATIONS

Following are the conceivable options for APR Limited:

Reduce the time needed to substitute the blunt knives in chippers by providing adequate
training to the maintenance personal or by creating a more efficient chipping schedule.
This will ensure less waiting at chippers and will also align the truck arrival pattern more
adequately with the chipping schedule.
Introduce superior quality of knives to lessen the downtime of chipper. This will increase
the efficiency of chippers and will increase its processing capacity per hour.
To provide and deliver real time data updates with respect to work processes, design an
assimilated information system. This will increase the coordination between various
departments and will increase the overall efficiency of the plant.
To simplify the flow of trucks in the plant, add one more weigh bridge in the industry.
This is the major bottleneck in the system and needs to be addressed on priority basis.
Add one more chipper in the industry to increase its capacity so as to manage the
increased burden of production. Currently, the chippers are not capable of handling the
increased production capacity.
Decrease the wood raw material inventory in the silos to reduce the order quantity. This
in turn will reduce the pressure on weigh bridge, chipper and woodyard.
Increase the capacity of chips in the silos. Although, its not a bottleneck but it will help in
de-coupling the production process with the wood logistics.
Training and development for company personnel to increase coordination and efficiency.
Introduce more equipment at the wood yard to perform unloading at a faster rate.
All the above mentioned options are recommended to the company. However, on priority
basis the company should at first invest in adding one more weigh bridge and chipper in
the plant as these are the major bottlenecks in the production. With increase in capacity of
the plant, these will pose a major threat to the company as they are notr capable of
handling the increased production.