Reducing road logistics cost through TAT optimisation
India has witnessed a huge transformation over the past few decades - the earlier decades were about meeting needs; now it's about aspirations. Every organisation-big or small-has changed their way of doing business. Also every institution while on its growth journey, made lots of change in the process flow through continuous improvements within the organisation. Indian cement industry, being the best example, has evolved significantly during the last two decades, going through all the phases of cyclical growth process.
Cement is a vital building material that demands well-organised distribution and timely delivery. Thus, logistics in cement industry plays an indispensable role to decide the competitive advantage or disadvantage for a company. Also, logistics cost is one of the highest cost elements and contributes 25 to 30 per cent of total spend in cement industry.
In view of these facts, logistics has enormous potential to deliver cost savings while simultaneously impacting customer satisfaction through improvements in service levels. Logistics, therefore, has emerged as a function of critical importance in cement business at par with manufacturing and marketing. Indian cement industry depends heavily on two modes of transportation-rail transport or road transport-to cover the domestic areas and the mode of transportation is an important consideration when planning the shipment process. Besides the costs, the urgency of the shipment is also evaluated when determining the form of transportation.
So, when, we have merits of rail transports than demerits also exist like not all places are covered by trains. Trains cannot do door-to-door delivery and it's not suitable for short distances. Because of these, in the last 15 years, the percentage of rail has really come down and with the increasing number of grinding units in the country, the rail coefficient in respect of cement may even go further down.
Though, a lot of initiatives are being taken by the Indian Railways to increase rail traffic by creating world-class rail infrastructure with advanced technology and knowledge by the way of dedicated freight corridors, which, surely, will increase the efficiency, but as a project, will take another two years for completion. So it will take time for increasing the rail share.
On the other side, road is more flexible and can reach the actual place of loading and consumption point. In present scenario, road carries about 65-70 per cent of cement volume. Even in case of rail freight, last-mile connectivity is ensured by using road transport only. Thus it is paramount to ensure that issues hampering road transport are looked into and addressed as road will continue to be the backbone of cement distribution.
Shree Cement-being one of the largest cement manufacturers in India-has the lowest logistics and distribution cost among the entire major cement players of India. This is because Shree Cement realised early that logistics costs can come down through increasing efficiency only and if we'd chased cost in isolation, by just working for cost reduction, then it would not have been possible to reduce or control cost in an inflationary world. With negotiations, we would have only arrived at the lower prices but not at a best cost. Thus, the cost can be reduced only by increasing the efficiency.
For example, to work-out the truck freight to a particular destination, the right cost should take into account like all the statutory duties, toll taxes, fuel cost, tyre cost and other allied cost, cost of vehicles, turnaround efficiency. But the costs, which are actually borne by trucker, can be optimised up to certain minimum limit but cost can be sustainably reduced only by increasing the efficiency in truck turnaround time. Typically, trucks wait for hours to enter and move out from the plant premises as well congested bays during peak loading hours, resulting into high turnaround time, which directly and indirectly increase dissatisfaction among the drivers and fleet owners and ultimately, increase in the logistic cost as well. So, here the challenge is to keep drivers and fleet owners satisfied to ensure smooth fleet availabilityfor right time delivery as well as to keep optimum freight cost.
At Shree Cement, with above in mind and to find out ways to improve and reduce the turnaround time, regular surveys and feedback session are conducted with all concerned stakeholders/departments viz., packing plant, security, truck drivers, fleet owners/transporters, logistics and IT/ERP. Once data and feedback is collected, a drill down study is done to diagnose various activities in the plant, which are either unnecessary or can be automated or can be streamlined.
Over the past few years, with the help of data analytics, process reengineering and with the advent use of IoTs and robotics, we have been trying to give the best experience to drivers and fleet owners. Below, we are highlighting some of the best work done in this direction.
TAT segregation: Segregation of duties (SOD) is a basic building block to increase control and enhance efficiency. For TAT, multiple departments are involved and functioning of each has impact on TAT. First thing, we did was to divide TAT into multiple stages with the help of RFID-based IOT system, whereby data of actual time start getting generated as to when a truck is reaching at which stage. Further, the roles and responsibility of each stage was allocated to concerned department and Turnaround time made the most important key performance indicator (KPI) for logistics, security, packing plant and IT/ERP.
With the help of real-time actual data, it is made possible that if, a truck crosses a particular threshold time at any stage, concerned process owner, of each stage, can take real-time action to mitigate time loss. With this, it is made possible to identify bottleneck at each of the stage and one by one step taken to increase efficiency and to provide seamless experience to drivers. And firstly, to make drivers happy following steps taken:
Drivers on wheels: Drivers has hesitancy to interact with Security or multiple agencies inside plants. But as there are multiple check points inside plants, for security in-out, packing plant in-out, commercial documents section, etc., driver has to get down of truck and interact and get the documents cleared. As a policy at SCL, it is strictly followed that driver should remain inside his truck and the activities such as security in-out are made automatic with help of ERP-RFID-based system and NPR (number plate recognition) integration. Also, boom barriers are installed to avoid unauthorised entries. This has helped minimum interaction of drivers with security, but even after this security features are enhanced.
Information sharing with drivers: Drivers has to continuously ask transporters and logistics if his truck is called for loading or he has to go from one window to another to know where he has to park truck at packing plant for loading, etc. This use to annoy him a lot. In order to enhance driver's experience, all these and many other information's are now being shared on his mobile, so that he do not have to interact with logistics, transporters and packing plant operators.
Stacking /loading pattern: Earlier, driver use to report at packing plants window to know to get the loading/stacking pattern for his truck but as each truck has unique dimensions it was not possible for loading operator to decide on its own the stacking pattern. To solve issue of getting stacking pattern every time, a simulation is made in ERP itself based on algorithms of dimensions of truck, type of material and quantity to be loaded. Thus, when truck driver report at loading bay, he has the stacking pattern designed on the basis of simulation.
Commercial papers and E-way bill: This activity, though, uses to take only five to six minutes but was a major hindrance in TAT improvement due to queuing effects. Drivers use to wait at windows for long to get the commercial papers and E-way bill. But with the use of RPA-robotics process automation tool and third party application for E-way Bill, commercial papers are generated automatically and are handed over to drivers while truck goes out and driver remain seated in his truck.
Congestion/traffic management: Inching along in snarled up traffic isn't great for anyone's stress level, but when a truck driver is stuck in traffic, it's not just a matter of annoyance but a matter of financial impact to the company. Earlier, when decision for truck calling for loadingwas taken, it was on demand priority basis and ignoring number of trucks inside plant, material running at bays, etc. whichuse to increase congestion inside plant and drivers use to get restless due to unnecessary slow traffic movement. But, a system is made where trucks are called on the basis of material running at loading bays, number of trucks at each of the plant stage and orders pending along with ensuring that trucks number inside plant is kept at minimal.
Above all practices has helped in reducing in-plant TAT by considerable number, which ultimately has helped in increasing the driver's satisfaction. Now, drivers force their fleet owners to take material from SCL which has helped in attracting market based return logistics trucks. But the advantage of the other side of this story is that drivers or outsiders remain for very less time inside plants and thus, helps to void any IR issues or theft problems.
Saving time - wasted in orders advice and allied activities: Clinker movement is dedicated with fixed origin-destination pair. In order to increase satisfaction of transporters and fleet owners only thing that can be done was increasing the earnings per truck. This can be done either by decreasing the cost or by increasing the revenue. SCL came out with a unique solution for this as under:
Limiting trucks and limiting fleets: The time wasted by truck in getting the order has impact on trips made during the month. Lesser the time wasted for order, higher the trips made and ultimately higher profitability. For reducing the time, number of trucks was fixed for each lane based keeping average trip time at lowest levels, so as to save time for getting the orders and wasting time in yards. At unloading destinations, RFID based ILMS system and automated weighbridges have helped in seamless movement with minimal time. Work done at loading sites, as illustrated above in TAT segregation, too has helped in reducing overall TAT. With fixed fleets and minimum TAT at both loading and unloading site, and minimum waiting time, trips per month have really improved by 15-20 per cent and ultimately resulted in higher asset utilisation.
Automations for getting order advice: As trucks are fixed, orders are fixed and order size for a trucks are fixed, so as and when the truck enter the plant, the registration of the truck is done automatically, so no waiting at entry gate. Apart from this, the transporter is not required to collect order advice from logistics and allocate to driver, as it is done automatically, thus a small time saving here also added to efficiency. But, we have reached onlyhalf way of journey as there is always room for improvement. A lot of initiatives are being taken for using chat bots, simulation techniques and mobile-based applications for further streamlining the TAT.
ABOUT THE AUTHOR:
Yogesh Mehta is a renowned logistic professional and is known for administrating Shree Cement's overall logistic function. After completing his CA course, he joined Shree Cement and assisted Management in steering company from 0.5 MT to 40.3 MT in 25 years. Gradually, with hard work and sincerity, he has set examples by giving high focus on data analytics and new technologies from the very beginning of his career.