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Domain Supply Chain and Logistics

Name of the Case: Optimized Rail Outbound Logistics Planning Model

Introduction

Some genius has rightly said Logistics is all about the delivery of right product, at the right place at
the right time. Outbound Logistics for M/S Ideal Steel Company is through rail and road. At present
around 60% of the material is dispatched through rail because of lower costs. However, rail logistics
is done by partnering with Indian Railways

Background

Ideal steel company dispatches nearly 5.5 million tons of material every year out of which almost 3.3
million tons is transported through rail.
Ideal steel has the following mills for different types of products.

Now for rail dispatch the process followed is as below.


1. Everyday each mill gives their inventory to central planning team in terms of wagon load.(1
wagon is approx. 55 tons to 65 tons)
2. The inventory can go to any 40 destination railway sidings.
3. But full rake has to be formed for that particular destination railway siding. ( i.e 43 wagons
BRN,BFNS type, 45 BOST,NCON type or 59 wagons NBOX type wagons)
4. Once central planning confirms the days rake, Indian Railways hands over the full rake to
central planning.
5. Now the catch is we get a credit if we hand it over back to Indian Railways within 24 hours.
24 to 34 hours no charges. More than 34 hours there is a demurrage charge.
6. Since all the mills are at different locations, the full rake is shunted to inventory wise load at
Marshalling yard and our own locos carry them to different mills.
7. The mills are followed up for loading, documentation and finally releasing of the loaded
wagons. Which is again carried to the marshalling yard and formed to complete rake.
8. It is then handed over to Indian railways and reaches the destination railway siding.

The below sheet (Appendix I) sums up the activity done by central planning.
Only completed rakes are handed over because Indian railways takes the cost of the full rake
quantity, whether you load it fully or half. Moreover, you get a 10% rebate if you complete the rake.

Problem Statement/Challenges Faced

The challenges faced are as below


1. Loco Operation cost: The self-owned locos used for transferring the wagons till mill and back
are only 8 in numbers and involve high operational cost. Moreover, sometimes due to
increasing demand and unavailability of locos we end up paying demurrage for late
handover.
2. Loco Efficiency: The locos are operated manually and decision mechanism is on the Yard
Master at the Marshalling Yard. The loco efficiency is not fully calculated and communication
from central planning or mills on urgent requests is through intercom phone.
3. Idle freight: The Wagons are loaded with heavy coils (20 to 30 tons) and for stability of
wagons Indian railways says that the distance between two coils loaded should be _____ m
and the weight difference should be maximum 2 tons. Hence if certain mill has only two coils
of 23 ton and 24 ton then we end up loading 47 tons. Which means we send an idle freight
of 8 tons on that wagon.
4. Transshipment cost: Ex, In order to complete 43 wagons, say to Chennai, if we have 40
wagons inventory then we club 3 wagons Bangalores inventory and complete the rake.
These 3 wagon load shall be transshipped from Chennai with an additional cost. But we
confirm to send 40 wagons to Chennai at right time.
5. Mill inventory: The mill inventory if exceeds the maximum allowable inventory then the mill
stops operation and is a huge cost to company
Note: Mills dispatchable material cant wait more than 3 days
6. Stockyard inventory: The inventory send should also take care that the stockyards( near the
destination rail sidings) dont overflow.
7. Customer Delight: For central planning the mills are the 1st level customer. They have to
acknowledge their requirement of dispatch before taking care of anything else.
8. Demurrage cost vs Credit earned: Effort of the central planning team is to maximize the
credit earned by handing over before 24 hours and eliminate demurrages.

Critical Case Questions (4 in nos.)

1. Suggest a integrated planning and scheduling model considering all challenges faced
by M/S Ideal Steel. Suggest model by studying the best practices in industry and
making best use of technology (example, GPS enabled Locos and how to use them)
2. Identify the KPIs for the Central planning by benchmarking industry best practices for
the above model.
3. Suggest the best way to serve the customers with minimum idle freight and
minimum transshipment cost. Study the best practices and models used across the
industries and suggest options. How can we leverage technology and digitization to
our benefit?
4. Make the cost benefit analysis of the suggestions made.

Appendix I. Mill wise inventory of a single day


Mill wise inventory (Unit : No.of wagons [approx 1 wagon is 55 tons])
ZONE Sl No Destination A B C D E F G H I J K TOTAL
1 TKD 2 12 17 14 45
2 PRITHIALA 0
3 FARIDABAD 6 25 6 3 3 43
4 DDL 2 4 6 5 17
5 GHAZIABAD 2 2
NORTH
6 JAIPUR 0
7 KANPUR 9 6 10 10 2 37
8 CHANDIGARH 1 1 2
9 PANTNAGAR 15 17 32
10 HARRAWALA 0
11 SPC 5 24 7 7 43
12 SHALIMAR 31 12 43
13 GAUHATI 30 9 1 40
14 PATNA 5 2 1 8
EAST 15 DANKUNI 0
16 PARADEEP 0
17 HALDIA-OLD 5 12 26 43
18 HALDIA-NEW 0
19 KAPILAS ROAD (KPO) 0
20 BOISAR 26 1 32 59
21 KALAMNA 7 10 3 1 2 3 1 4 1 32
WEST 22 KALAMESWAR 0
23 INDORE 0
24 CWC-AHMEDABAD 0
25 HYDERABAD 2 2 4
26 TNVR 2 1 2 5
27 GANNAVARAM 0
SOUTH
28 BANGALORE 2 2 5 9
29 HUBLI 0
30 VISHAKHAPATNAM 0
31 HTPP, FBAD- B2B 0
32 NAVKAR- B2B 0
CONTAI
33 NAVKAR-DARCL 0
NER
34 TNVR-SFTO 15 28 43
35 TNVR-ARSHIYA 0
LOCAL 36 BIRRAJPUR 43 43
37 BEENAPOLE 0
38 RAXAUL 0
EXPORT
39 JOGBANI 7 4 11
40 ICD-BIRGANJ 12 28 3 43
GRAND TOTAL 87 82 111 80 31 37 106 12 3 18 37 604

Appendix II : Process Flow


Domain Supply Chain and Logistics
Name of the Case: Supply Chain and logistics Strategy for Pravesh Doors

Introduction
We at Tata steel are manufacturing Tata branded wood-finish steel doors by the brand name of
Pravesh. A unique Tata Group offering - Pravesh doors are durable and weatherproof. Pravesh offers
the widest range of doors to suit the needs of every consumer in the market. Tata Pravesh currently
provides technologically superior range of doors. Tata Pravesh has earned success and goodwill
amongst customers by empowering the construction professionals and individual house owners.
Tata Steel has optimized and a well distributed network for transporting its steel products (Flat
products, Long products). But with the emerging markets it also needs to develop its supply chain
logistics to deliver steel products for services and solutions segment with similar ease. To start with
Pravesh doors

Background

Currently, we have 2 manufacturing partners of pravesh doors at Hyderabad (30,000


Units/month) & Chandigarh (3,000 Units/month) and supplying to 29 distributors (East- 10, South- 5,
North- 6, West- 8) and with sales share of East- 25%, South- 45%, North- 20%, West- 10%.
Manufacturing lead time is 30 to 40 days (depending upon the type of SKU). And 1 door
weighs approx. 35 to 50 kg, and we have to wait for full truck load for dispatch to a particular
destination.
Commitment of 40 days lead time compliance is very low due to above reasons and
sometimes goes as high as 70 days. The demand is good and we need to cater to them in right
quality, right time and right place.
The doors are currently sent through covered vehicles to avoid water ingress
Current Outbound logistics: The operations of Tata Steel are spread across India with the
main steel manufacturing facilities at Jamshedpur and Kalinganagar, various Steel Processing Centers
(Local & Zonal) across the country and a Hub & Spoke network of 23 Stockyards. The diagram below
explains the outbound supply chain of TATA Steel. At present, around 65% of the material dispatches
in first leg are by rail mode and remaining 35% by road, while entire 2nd leg dispatches are via road
only.

Current Outbound Logistics for Pravesh Doors:


Problem Statement/Challenges Faced

The doors follow a very quality intensive manufacturing process, and manufactured with
maximum care for customer satisfaction. They are powder coated for better look and
vacuum pressed for better performance. Packing damages or poor handling might increase
costs acquired due to rework, returns and of course customer dissatisfaction.
For capturing a higher market and induce a need for the doors we need to serve the
customer with minimum lead time.

Critical Case Questions (4 in nos.)

1. What strategy should Tata Steel think of for integrating supply Pravesh doors (or
similar to white good products) along with existing products? Study the best
practices for handling, transportation and warehousing of these kind of products.
2. How to serve the customer better with minimum lead time, best packaging, and
minimum cost?
3. Should we follow the TOC model / Build up distributor stocks / or some other model
for best results, please show the analysis, assume the data?
4. How do we leverage technology and digitization for above solutions?
Domain Ferrous Scrap Recycling
Name of the Case: Organizing Collection & Sales of Household Scrap

Introduction

As India is progressing towards becoming an advanced economy, peoples mind-set is undergoing a


sea change. With the advent of consumerism and increased disposable incomes, Indians in the
middle income category are not only buying more but are willing to discard early as well leading to
higher waste generation in turn. Being wary of the situation, the Government has issued various
waste handling & disposal guidelines such as End-of-Life Vehicle (ELV) policy, E-waste Policy,
Construction & Demolition (C&D) Waste Management Policy, etc. All this put together has opened
up a plethora of opportunities in the Recycling space in India.

From a steel majors point of view, access to raw materials like Iron-ore and coking coal continue to
be a key differentiator and a source of competitive advantage. However, the changes in the Indian
mining industry landscape and environmental concerns are likely to make steel industry look at
increased scrap consumption for steel making in India.

Globally, this trend is already visible with a majority of the developed economies consuming higher
amounts of scrap as a raw material for steel production.

Hence, there is a need to explore the Indian Ferrous Scrap Industry and identify suitable
opportunities for a steel major as Tata Steel. The challenge, however, is that the Indian scrap market
is largely unorganized and highly fragmented.
Background

Ferrous scrap comes from various sources. Some of the most common ones include Large Industries
& MSMEs, Household, ELVs / Old Automotive, Railway, Ship Breaking, etc.

Glossary of Scrap Types:

Home (Captive) Scrap


- Clean virgin scrap generated during steel making process
- Is usually re-melted within the same Steel making plant from where it was generated

Industrial (Prompt) Scrap


- Clean virgin scrap generated while using steel for making finished goods
- It is generated in various industries such as Pipes & Tubes, Automotive, LPG Cylinders, etc.
- This scrap is usually sold by the generating industry for direct re-use or for melting at the
Steel Furnaces

Household / C&D Scrap


- Obsolete scrap generated at Households or during Construction & Demolition activities
- Comprises of an assortment of metallic which is old & rusted and need to be segregated
- Has an elaborate supply chain of peddlers & scrap traders wherein the Ferrous scrap is sold
to Steel Furnaces for melting

Ship Breaking
- Obsolete scrap generated during ship breaking; mostly generated at Alang in Gujarat
- Comprises of both re-rolling and melting scrap
Railways Scrap
- Generated at Railway works during repair & maintenance of coaches, old railway tracks, etc.
- Comprises of both re-rolling & melting scrap and is mostly sold through auctions

ELV (Automotive) Scrap


- Obsolete scrap generated from dismantling old vehicles
- ELV scrap includes the hulk of the vehicle, the engine, the gear box, etc.

Each of these scrap types have their own life cycles, disposal mechanisms, collection chains & re-use
methods. Hence, the Household Scrap Industry is very different from the Ship Breaking Industry
which in turn is very different from the Industrial Scrap industry and so on.

Problem Statement/Challenges Faced

- Mapping the complete supply chain including the number of the players at each level, their
value add potential, irreplaceability, margins, pain points, etc.
- Non-ferrous material such as Copper, Brass, etc. need not be focussed on
- To make the analysis sharper, participants can focus on any metro / tier 1 city and
extrapolate their findings for the rest of the country
- Teams are encouraged to carry out primary research to understand the household scrap
value chain
- Case Solution should be submitted in power point format along with Excel File containing
the financial projections for the business model.

Critical Case Questions (4 in nos.)

1. Analyse the various global models for collection & processing of Household Scrap especially
in the BRICS countries. Benchmark the Indian Household Scrap collection & processing
model vis--vis Global models and identify good practices suitable for India.
2. Study the Indian Household scrap market and segment the same based on Volume,
Processing Required, Chemical composition, Aggregation model & subsequent End-use. Also,
study the existing models and prepare win-win value proposition for Modern Retail Channels
& E-commerce players like Croma, Big Bazaar, Amazon, Flipkart, etc.
3. Prepare roadmap for aggregation and processing of Household Scrap
4. Propose a process flow for collection of scrap from such disaggregated sources on a digital
platform and present a business case with financials for the business model.
Domain Supply Chain Logistics
Name of the Case: Value maximisation in By-products by buffer management and supply
chain optimisation
Introduction:
Industrial By-products Management Division (IBMD) of Tata Steel is responsible for
management (collection, processing (if required), consumption/sales/disposal) of by-
products generated in Jamshedpur Steel works. The by-products include
Blast Furnace slag
Metallic recovered from Steel slag (various SKUs)
Non-Metallic recovered from Steel slag (various SKUs)
Pooled Iron
HR / CR scrap
Miscellaneous items (e.g. e-waste, etc.)

These items as per the properties are consumed internally at various stages of Steel making
(like LD slag non-metalic in Sinter making, Pooled iron & clean scrap in Steel making as
scrap charge).
Background
The rate of generation of the by-products can be estimated based on the iron / steel making
plans by the Blast furnace and steel shops and rolling mills. Similarly, the rate of internal
consumption is also estimated by the same process. The difference between the generation
and consumption is sold to customer via auctioning / direct sales.
Problem Statement/Challenges Faced
All the items that are internally consumed or sold outside fetch a value based on timing of
sales and quality parameters (like Fe content, shape, size, etc.) of the by-products.
Presently, the selection of order in which the SKUs are selected for internal / external is
manual and happens on reactive basis.
Also, the stock at various levels / sales plan is primarily based on the frequency / safety
threshold at the storing points, impacting the overall profitability of the unit.
Critical Case Questions (4 in nos.)
1. What is the quantity that needs to be kept at various touch points SKU wise. (Very
high, high, medium and low).
2. What is preferential order/sequence in which the by-products should be consumed
internally and sold to outside customers?

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