You are on page 1of 13

WAGON LOAD BUILDER TO REDUCE IDLE

SUBMITTED BY:
FREIGHT IN RAIL TRASNSPORTATION IN
TATA STEEL
1|Page

Contents
Outbound Logistics Network ............................................................................................................... 2
CSD Despatch Process .......................................................................................................................... 3
Rail Freight: .......................................................................................................................................... 4
Despatch Planning: ............................................................................................................................. 5
Vehicle Placement: ............................................................................................................................. 5
Loading/unitisation and Weighment: .................................................................................................. 5
Problem Description: ............................................................................................................................ 6
The LP Model Formulation ................................................................................................................. 8
MODEL OUTPUT AND COMPARISON ......................................................................................... 8
ACTUAL LOADINGS ....................................................................................................................... 8
LOADINGS RECOMMENDED AS PER MODEL .......................................................................... 9
Conclusion and Way Forward. .......................................................................................................... 10
Appendix ............................................................................................................................................... 12
2|Page

Outbound Logistics Network


The Customer Service Division is responsible for out bound logistics (OBL) & warehousing of finished
goods and ensuring on time delivery of damage free products and documentation to customers. Hub
and spoke supply network comprising 22 warehouses served through rail; road and waterways are used
to handle outbound logistics. CSD delivers its services through Planning, Transportation &
Warehousing. The Customer Service Division translates customer orders into physical deliveries. This
is to be done at the lowest possible cost whilst maintaining the promised delivery conditions. CSD along
with Marketing & Sales is the face of Tata Steel to its customers. Delivering goods & services as per
our promise involves a strong customer orientation. CSD manages a large number of interfaces across
the supply chain including Customers, Marketing & Sales, Production, External Processing Agents, and
Procurement etc. Management of these relationships is the key to the success of the business.
The challenge for CSD and Tata Steel as a whole is to meet consumer expectations such as:
Reduction in Lead times
Commitment to order fulfilment
Information transparency
Flexibility to respond to customer requirements
Quality of Delivery
So, to maintain our position as preferred supplier, major focus areas for CSD would be to scale up its
service offerings and to maintain decisive competitive edge. Some of the initiatives taken up by CSD
to meet customer expectations are:
Stockyard Expansion Plan
Network Redesigning
Customised Transportation
IT Implementation
Business Objectives and Strategies:
Improving customer service by focusing on Due Date Performance
Reduction in delivery system cost
Establishing system for capturing and reducing customer claims.
Infrastructure development plans to align with Tata Steels growth plans
One of the most important key performance indicators for CSD is total delivery system cost or cost to
serve customers. TSL outbound logistics cost was around Rs 2801 / ton in the financial year 2015. There
was massive cost reduction exercise that was undertaken at the beginning of FY16 and as a result the
cost reduced to Rs 2545 / ton in FY16 and currently the cost is ~Rs 2390 /ton. The top management has
given an aspirational target of Rs 2000 /ton. Apart from cost CSD is committed to improve safety
performance, supply defect free steel to customers and reduce of lead time, vehicle turnaround time and
thereby reduction of inventory.
To achieve these business objectives, the planning and scheduling activities of outbound logistics are
most critical activity.
Tata Steel has two major plant locations and each plant has mills. Mills are categorized into two
subgroups based on type of items that they are producing. These groups are FP and LP. FP is Flat
products (Coils and Sheets) and LP is Long products (TMT steel bars and Wire rods)
3|Page

Plant Jamshedpur has six Mills. Following three mills produce FP items. Hot Strip Mill (HSM), Cold
Rolling Mill (CRM), Thin Slab Caster (TSCR). Following three mills produce Long Products: Merchant
Mill (MM), New Bar Mill (NBM), Wire Rod Mill (WRM). There are External Processing Agents across
India for producing various Flat and Long products. Newly commissioned Kalinganagar Plant at
Odisha has single mill which produces FP product coils
Equipments/Vehicles are categorized into three types
1. Wagons.
Six types of wagons and each wagon have different dimensions and chargeable capacities
Rake can consist of 43/45/54 number of wagons
Rakes availability at each location is provided
Wagon loading rules are defined by railways and has to honor those rules

2. Trailers
Four types of trailer and each trailer have different carrying capacities

3. Special Vehicles
Used for delivery of high quality material which are recognized by TDC No and not all vendors
are have these vehicles.

22 Stockyards are there across the county. Service or business is divided into four regions North,
South, East and West. Network divided into different clusters. Clusters are defined based on regions
and each cluster will have set of predefined destination. Business is predefined or allocated to some
transporters in each of the clusters.
Three Types of modes are presently modelled Rail, Sea and Road. Transit time for Rail routes
are available only for destination locations where rake is allowed.
TDSC matrix is provided for 1st leg with all possible route/cost and second leg cost details
provided, combination of both first leg cost and second leg cost provides total freight cost.
Second leg movements will help in consolidation opportunities at stockyard (Hub) which may
decrease total freight cost/idle freight cost.
Despatch should not happen for customers whose credit and waybills are pending.
All business related constraints related to equipment, customer, transporter, mill loading,
stockyard unloading, wagon loading rules are provided
Delivery will be done directly to customer using Road/Rail or it should be done through
stockyard and then to destination.
Special Orders will be identified using items which are marked as special items and these orders
should be dispatched using special vehicles. Parcel movements and Less Than Truckload
movement are not required for Tata Steel business.

CSD Despatch Process


CSD is responsible for outbound logistics and warehousing of finished goods and ensuring on-time
delivery of damage-free quality products to the customers.
Operation Size
It handles around 15Mn tonnes of Yearly despatch and to fulfil the same it has about 20+ transporters
with 25k vehicles at its disposal. There are two types of Products-Flat and long coming out of 10 Mills
and 1 Central Hub. CSD operation is divided into 11 zones or clusters. It has 23 Stockyards and 7 Hub
locations. It has more than 32000 SKUs handling more than 10000 B2B customers and 2Mn+ B2C
customers.
4|Page

In short its main responsibilities can be enumerated sequentially as follows:


1. Planning
2. Order Creation
3. Rail/Road Placement
4. Loading
5. Documentation
6. Vehicle Tracking
7. Freight Payment
Below is an account of the As-is Despatch process

Rail Freight:
Railways constitute about 65% of the total freight. There are 6 types of wagons on offer and each wagon
has different dimensions and chargeable capacities. Each rake may contain about 43/45/54 number of
wagons and each wagon may have 60-66 tonnes of capacity depending upon the type of wagons.
Increasing Rail freight is among the top priorities of TSL. An account of the planned despatches through
railways is given below.

Below is an account of the zonal distribution of rail transport pan India.


5|Page

Despatch Planning:
Daily meeting for Rake formation is done in consultation with Mills Shipper and Rail Execution and
Planning team. Then the Despatch plan is made and communicated to all stakeholders. Then the Rail
execution team gives indent to the railways with the tentative wagon requirements.
The despatch planning process is followed by the STO/DO creation

Vehicle Placement:
The rakes are offered as per indent. Then a team is sent to Tata Yard for capturing the wagon number
manually. The Loco is sent to the TATA yard. The rakes enter the mills from Gate No,s 1/2/3.

Loading/unitisation and Weighment:


There are 2 loading points per mill and 2 cranes are deployed for loading in every mill. The whole
process of loading should ideally take 10 hours.
Below is an account of the Loading process
6|Page

Problem Description:
Tata Steel is the integrated steel plant located at Jamshedpur and Kalinganagar. It primarily produces
two types of Products-Flat and Long products. The Flat products comprise mainly of Cold and Hot
rolled coils and sheets, and the Long Products comprise mainly of TMT rods, Wire-Rod etc. The
delivery of these products to the customers is fulfilled through two Modes-Rail (comprising 65% of the
total freight) and Road (comprising 35% of the total freight).
The Rail mode is fulfilled by Indian Railways through rakes comprising of various rake cadres like
NBOX, BOST, and BRN etc. Each rake consists of wagons of different types and has various carrying
capacities. The railways charges freight on the basis of the maximum capacity of the wagons and not
on the actual weight of the goods loaded. Thus it is in the interest of Tata Steel to optimize the wagon
loadings and minimize the idle freight per wagon. For e.g. the HR coils are of various weights ranging
from 15 to 28 tons and they need to be loaded into wagons cadres of various capacities (e.g. 60, 62,
64...tons).
The total idle weight% had decreased from 9.4% in 2015 to 8% in 2016. But YTD idle weight % in FY
17 is 8.5%. In order to achieve the best performance of FY16 of 7.3% it is of utmost importance to
focus in areas in which the idle weight can be minimized. There are areas such as Central Hub and
JCAPCPL where the coils in the wagons are loaded on a hit and trial basis without any prior basis of
optimization. Thus it adds to idle freight as often it leads to the requirement of extra wagons for loading
a set of coils (which could have been loaded in fewer wagons had they been assigned as per optimized
calculations). A particular area of focus is the loading of HRC as it can be seen from the below table
that the idle weight % in case of HRC is the highest.

Product %Idle weight(FY16)


HRC 11.8
HRS 9.1
CRC 9.3
CRS 3.7
TMT 1.2
WR 5.8
Billet 1.2

Idle Weight (%) - Overall Steel


12.0%
9.4% 8.6% 9.6% 9.6% 10.2% 9.7% 10.1% 8.6%
10.0% 8.5% 8.7% 8.1% 8.2%
8.0% 7.6% 7.7% 7.7% 7.3% 7.3% 7.5%
8.0% 9.3%
8.3% 8.4%
6.0% 7.1% 7.7% 6.8%
6.2% 6.5%
4.0%
2.0%
0.0%
FY15 FY16 FY'17 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
YTD

YEAR FY'16 FY'17

The monetary impact of the idle freight can be seen as below.


7|Page

Idle Freight (Rs. Lakh) - Overall Steel


11388 1214
11500 11100 1117 1500
911 835 955 811 819 907 1120963
11000 808 1000
10500 1013410134 578 737 1116 1024 1053
10000 644 652 855 890 906 902 500
700 719
9500 0
FY15 FY'16 FY'17 FY'17 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
YTD Proj.

YEAR FY'16 FY'17

The performance of various units in terms of idle freight can be seen below. It can be clearly seen that
the performance of JCAPCPL and Central Hub is the worst.

Department KPI FY'15 (Act) FY'16 (Act)

Overall % 9.4% 8.0%


Rs. 11388 11100
Lakh
HSM % 15.1% 15.1%
Rs. 3915 4577
Lakh
TSCR % 13.9% 8.8%
Rs. 3685 2672
Lakh
CRM % 7.8% 7.5%
Rs. 1911 1704
Lakh
JCAPCPL % 19.5% 17.4%
Rs. 662 929
Lakh
WRM % 10.1% 8.3%
Rs. 658 579
Lakh
LD SHOP_NO.1 % 1.6% 1.4%
Rs. 179 186
Lakh
Central Hub % 14.8% 11.5%
Rs. 44 184
Lakh
TSPDL-CR % 4.9% 14.6%
Rs. 81 131
Lakh
MERCHANT % 1.4% 0.9%
MILL Rs. 100 82
Lakh
NBM % 1.1% 0.4%
Rs. 154 55
Lakh
8|Page

So the challenge is to formulate a way that can assign the HR coils suitably to wagons such that the
total idle freight is minimized.

The LP Model Formulation


Below is the formulation of the above described assignment problem.
Let,
i=coil number, ranging from 1 to N
j=wagon number ranging from 1 to M
xij= coil i assigned to wagon j, where xij can have values of 0 or 1
wi= weight of coil i
cj=carrying capacity of wagon j
Objective function: min ( (cj-xij*wi)) over i=1 to N and j=1 to M
The above Obj. fn. is subject to the following constraints:
1. For any coil i, xij=1, over j=1 to M, (i.e. any particular coil i can be assigned only once to a wagon)
2. For any wagon j, xij<=3, over i=1 to N, (i.e. any particular wagon j can be loaded with a maximum
of 3 coils)
3. For any wagon j, wi*xij<=cj, over i=1 to N, (the sum of the weights of the loaded coils in any
particular wagon should be lesser than equal to the wagon carrying capacity)
The above assignment problem is an integer programming optimization problem which can be solved
in the lingo modelling language and the assignment data can be loaded back to excel for ready perusal.

MODEL OUTPUT AND COMPARISON


The above mentioned model has been tested against the historical data of loadings.
Below is the table depicting the loadings of HRC to wagons for delivery to destination Faridabad on
9/02/2017. The data has been downloaded from SAP. The right most column denotes the idle weights
of the wagons. The total idle freight was 364 tonnes and the idle weight % was 13.22.

ACTUAL LOADINGS
WAGON WAGON TOTAL WAGON
NUMBER TYPE WAGON CC COIL WEIGHTS LOAD IDLE WEIGHT
W10491 BOXN 64 20.52 20.54 20.52 61.58 2.42
W107348 BOXN 64 27.41 27.53 54.94 9.06
W11096 BOXN 64 22.43 24.14 46.57 17.43
W110983 BOXN 64 23.33 28.093 51.423 12.577
W111802 BOXN 64 23.55 23.38 46.93 17.07
W115086 BOXN 64 28.133 28.241 56.374 7.626
W118015 BOXN 64 27.973 23.61 51.583 12.417
W119234 BOXN 64 15.26 22.51 23.38 61.15 2.85
W121787 BOXN 64 17.05 20.57 20.6 58.22 5.78
W123599 BOXN 64 20.511 20.766 20.923 62.2 1.8
W126394 BOXN 64 23.42 23.43 46.85 17.15
W127820 BOXN 64 20.74 20.957 20.79 62.487 1.513
9|Page

W128535 BOXN 64 23.89 24.01 47.9 16.1


W15969 BOXN 64 27.8 27.8 55.6 8.4
W165135 BOXN 64 20.586 20.683 20.899 62.168 1.832
W165234 BOXN 64 28.085 26.454 54.539 9.461
W197069 BOXN 64 20.5 20.916 20.936 62.352 1.648
W23767 BOXN 64 26.5 26.81 53.31 10.69
W25367 BOXN 64 27.008 27.88 54.888 9.112
W25763 BOXN 64 27.23 27.35 54.58 9.42
W32129 BOXN 64 28.075 30.3 58.375 5.625
W35073 BOXN 64 20.46 20.51 20.71 61.68 2.32
W41163 BOXN 64 23.46 23.46 15.26 62.18 1.82
W44294 BOXN 64 28.162 26.503 54.665 9.335
W45721 BOXN 64 20.85 20.901 41.751 22.249
W47864 BOXN 64 20.692 20.807 20.828 62.327 1.673
W48619 BOXN 64 27.51 27.53 55.04 8.96
W57658 BOXN 64 26.43 26.63 53.06 10.94
W58013 BOXN 64 27.02 27.45 54.47 9.53
W584 BOXN 64 27.65 27.72 55.37 8.63
W59222 BOXN 64 20.867 20.903 20.93 62.7 1.3
W69578 BOXN 64 19.68 20.65 20.68 61.01 2.99
W69902 BOXN 64 27.02 19.68 46.7 17.3
W75275 BOXN 64 28.094 26.371 54.465 9.535
W75856 BOXN 64 23.408 23.471 46.879 17.121
W76569 BOXN 64 20.664 20.991 21.011 62.666 1.334
W78272 BOXN 64 18.08 20.63 21 59.71 4.29
W88360 BOXN 64 20.46 20.49 20.49 61.44 2.56
W91028 BOXN 64 20.759 20.804 20.957 62.52 1.48
W97584 BOXN 64 20.863 20.889 21.071 62.823 1.177
W981163 BOXN 64 20.811 20.915 20.942 62.668 1.332
W82417 BOXN 64 19.8 26.7 46.5 17.5
W823167 BOXN 64 15.26 18.08 33.34 30.66

LOADINGS RECOMMENDED AS PER MODEL


Below is the output of the model. It can be seen that the total idle weight in this case is 289 tonnes and
is just 10.5% as compared to 13.22% earlier. The savings was achieved because of judicious
allocation of the coils which led to requirement of 2 lesser wagons (the last two in the table)
WAGON WAGON TOTAL WAGON
NUMBER TYPE WAGON CC COIL WEIGHTS LOAD IDLE WEIGHT
W10491 BOXN 64 28.094 28.133 56.227 7.773
W107348 BOXN 64 20.903 20.915 20.93 62.748 1.252
W11096 BOXN 64 27.53 28.075 55.605 8.395
W110983 BOXN 64 20.991 20.957 21 62.948 1.052
W111802 BOXN 64 20.52 22.43 21.011 63.961 0.039
W115086 BOXN 64 18.08 23.33 22.51 63.92 0.08
W118015 BOXN 64 23.42 23.43 46.85 17.15
10 | P a g e

W119234 BOXN 64 23.46 23.471 46.931 17.069


W121787 BOXN 64 23.55 15.26 23.89 62.7 1.3
W123599 BOXN 64 26.5 24.01 50.51 13.49
W126394 BOXN 64 26.503 26.63 53.133 10.867
W127820 BOXN 64 26.7 26.81 53.51 10.49
W128535 BOXN 64 27.35 27.02 54.37 9.63
W15969 BOXN 64 27.51 27.23 54.74 9.26
W165135 BOXN 64 27.41 27.45 54.86 9.14
W165234 BOXN 64 27.65 27.72 55.37 8.63
W197069 BOXN 64 27.8 27.8 55.6 8.4
W23767 BOXN 64 27.02 27.008 54.028 9.972
W25367 BOXN 64 26.43 26.454 52.884 11.116
W25763 BOXN 64 26.371 24.14 50.511 13.489
W32129 BOXN 64 23.46 23.408 17.05 63.918 0.082
W35073 BOXN 64 15.26 23.38 23.38 62.02 1.98
W41163 BOXN 64 20.957 20.942 21.071 62.97 1.03
W44294 BOXN 64 20.916 20.923 20.936 62.775 1.225
W45721 BOXN 64 20.889 20.901 20.899 62.689 1.311
W47864 BOXN 64 20.867 20.863 20.85 62.58 1.42
W48619 BOXN 64 20.759 20.807 20.804 62.37 1.63
W57658 BOXN 64 20.692 20.683 20.71 62.085 1.915
W58013 BOXN 64 20.664 20.65 20.6 61.914 2.086
W584 BOXN 64 30.3 28.241 58.541 5.459
W59222 BOXN 64 20.511 20.586 20.54 61.637 2.363
W69578 BOXN 64 20.51 20.49 20.49 61.49 2.51
W69902 BOXN 64 19.8 19.8 44.2
W75275 BOXN 64 19.68 27.53 47.21 16.79
W75856 BOXN 64 20.74 20.63 20.46 61.83 2.17
W76569 BOXN 64 28.162 23.61 51.772 12.228
W78272 BOXN 64 20.46 20.5 20.52 61.48 2.52
W88360 BOXN 64 20.57 20.766 20.68 62.016 1.984
W91028 BOXN 64 27.973 27.88 55.853 8.147
W97584 BOXN 64 20.811 20.828 20.79 62.429 1.571
W981163 BOXN 64 28.085 28.093 56.178 7.822
W82417 BOXN 64 N/A N/A N/A
W823167 BOXN 64 N/A N/A N/A

Conclusion and Way Forward.


Thus from the above results it can be concluded that the implementation of the LP optimisation model
will be beneficial and aid in reducing the idle freight. It led to a straight away reduction of around 3%
in idle freight. Implementation of the same in loading HRC can bring down the idle weight % of HRC
from current 12% to the overall average of 8%.
11 | P a g e

Thus it is recommended that the above model be implemented in the areas such as Central Hub and
JCAPCPL where the idle weight% are particularly high.
The LP model is under preliminary trial stage and shall be customised and made user friendly for
ready perusal across all areas.
12 | P a g e

Appendix
Lingo Code
!DEFINE THE RELEVANT PRIMITIVE SETS AND ATTRIBUTES;
SETS:
wagonset: wagoncoilcount, wagonloadlimit;
coilset: coillimit;
LINK(coilset,wagonset): coilweights, coilassignments;
ENDSETS
!DEFINE THE OBJECTIVE FUNCTION;
MIN=@SUM(WAGONSET(J):WAGONLOADLIMIT(J)- @SUM(COILSET(I):
COILASSIGNMENTS(I,J)* COILWEIGHTS(I,J)));
@FOR(LINK(I,J):@BIN(COILASSIGNMENTS(I,J)));
!DEFINE WAGON CONSTRAINTS;
@FOR(WAGONSET(J): @SUM(COILSET(I):
COILASSIGNMENTS(I,J))<=wagoncoilcount(J));
@FOR(WAGONSET(J): @SUM(COILSET(I): COILASSIGNMENTS(I,J)*
COILWEIGHTS(I,J))<=wagonloadlimit(J));
!DEFINE COIL CONSTRAINTS;
@FOR(COILSET(I): @SUM(WAGONSET(J): COILASSIGNMENTS(I,J))<=COILLIMIT(I));

DATA:
!IMPORT DATA FROM EXCEL;
WAGONSET,COILSET,wagoncoilcount,wagonloadlimit,COILLIMIT,COILWEIGHTS=@OLE('
E:\FARIDABAD.xlsx');
@OLE('E:\FARIDABAD.xlsx','COILASSIGNMENTS')=COILASSIGNMENTS;
@OLE('E:\FARIDABAD.xlsx','wagonloaddata') = @WRITEFOR( LINK( I, J) |
COILASSIGNMENTS( I, J) #GT# 0: WAGONSET(J),COILSET(
I),COILASSIGNMENTS(I,J)*COILWEIGHTS(I,J));

ENDDATA