Reduction in logistics expenditure by optimization of network and … · 2019-09-23 · 1 Reduction in logistics expenditure by optimization of network and route to serve without

1

Reduction in logistics expenditure by optimization of

network and route to serve without compromising on

service levels

Team Members

Jagjit Singh – Chief CSD

Anil Harshana – Head Surface Transportation

Pankaj Kumar – Head Physical Distribution

Subrata Basak – Head Logistics System

Nikhil Maheshwari – Sr. Network Analyst

R Krishna – Chief Sales Planning

Nina Singh – Head Transportation

Slide Tata Steel 2

1

5

500

81K 28

110

First Integrated

Steel Plant in Asia

Over 28 Million tonnes

of Steel Produced p.a

Providing customized

solutions across 5

continents

One of the few steel

industries to feature in

FORTUNE500

Conglomerate with over

81,000 employee

110 Years of Successful

operation

2

Slide Tata Steel

About Customer Service Division & logistics (CSD)

3

TSL Steel outbound Supply Chain Model

C

U

S

T

O

M

E

R

Plant

Jamshedpur

Kalinganagar

Hubs

Delhi, Kolkata,

Chennai, Nagpur etc

Loading Points

HSM, CRM, NBM

TSCR, WRM etc

Port

Haldia, Dhamra,

Paradip

SPCs

BMW,

Hemnil etc

Stockyard

2nd Leg – Road Execution

1st Leg – Rail & Road Execution


1st Leg – Rail &

Road Execution

2nd Leg –

Road

Execution

2nd Leg –

Road

Execution

1st Leg –

Rail &

Road

Execution


Responsibility

Agency responsible for delivering right Finished Steel to Customer at right time and right cost

FG Steel is divided into three segments in Tata Steel

1. Auto Segment – Catering to Auto Customers like Maruti

2. IPPE Segment – Catering to Industrial Products, Projects and Exports

3. BPRS Segment – Catering to Branded Products & Retail Solution Customers

Note: SPCs are Steel

Processing Centers which

provide customized

solutions to customers

Slide Tata Steel

INDEX

4

Section 1 • Project Background and Purpose

Section 2 • Project Framework

Section 3 • Project Stakeholders and Project Team

Section 4 • Project Overview

Section 5 • Project Walkthrough

Slide: 5-11

Slide: 12-21

Slide:22-28

Slide:29-36

Slide:37-67

3

Slide Tata Steel

Project Background and Purpose

5

This segments deals with

TSL approach to project planning at Annual and Long Term basis

Segregation of projects into Policy Management and Daily Management at TSL level

Selection of projects at Departmental level and their relative prioritization

Goal and expected benefits of our project

Identification of measures for success of project

Slide Tata Steel

1.01 TSL Approach to Project Planning(General)

Project selection within organization

6

Elaborate Project Selection Framework following ‘Top – Down’ Approach

Team Responsible

for Selection of the

project

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

In Financial year in ABP planning - cascading of KPIs from MD to Division to Departments

Rolling Long Term Plan is made for 5 year horizon to cater to long term requirements of the company, Long

Term Plan cascades from MD level to Departmental Level

4

Slide Tata Steel

1.02 Project Identification Process at TSL(General)

Need for Project identification within organization

7

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Heinrich Triangle is used to

identify projects addressing

major issues

Strategic aspects cover

identification of projects as a

means to achieve policy items

every financial year

Slide Tata Steel

1.03 Project Selection Process in TSL(General) Project prioritization within organization

8

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

GB GB –

High Value

GB –

High Value

GB GB GB –

High Value

SIP SIP SIP

Impact on Policy

Lo

gic

al A

pp

roach

Basic Medium High

Lo

w

Med

ium

H

igh

Logical Approach

High : Advance problem solving

competence under complex

situations

Medium : Typically data driven

analysis combined with field

knowledge

Low : Knowledge experienced

based

Impact on Policy

High & medium : Project

emanating from prioritized BO&S

Low: Projects emanating from

DM Issues

Note: GB – Green Belt

DM – Daily Management

BO&S – Business Objectives & Strategy

5

Slide Tata Steel

1.04 Project Selection (Specific) Project prioritization within organization

9

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

CSD Annual Savings Target - 90 Cr

Division savings target

600 Cr

MD Savings Target-

3200 Cr

KPI cascading DICE Score was used for assessing ease of implementation

Project Prioritization Matrix considers DICE score, Potential and Department Priority for ranking of Projects

Project Prioritization

**Network Optimization was identified as Top Project in Department Note - Lower the DICE score,

better the probability of execution

Sr. No Project Title Potential

(In Cr) DICE Score

Dep Priority Final Rating

1 Outbound Logistics cost reduction via Network Optimization 30 15 9 A

6 Reduction in rail idle freight using club loading at Central Stockyard in Jamshedpur 4 16 9 B

3 Reduction in sub optimal dispatch cost 20 17 9 C 9 Reduction in contract rates in stockyards 5 17 8 D

Duration

(Time) Integrity

Commitment

(Sr. Management)

Commitment

(Team) Effort

D I C1 C2 E

DICE Score = D + (2xI) + (2xC1) + C2 + E

DICE Score Range

7-13 Win Zone

14-17 Worry Zone

18-28 Woe Zone

DICE Score for our Project

= 3 + (2x2) + (2x1) + 2 + 4

= 15 i.e.(Worry Zone)

Slide Tata Steel

1.05 Project Goals and Benefits Expected Goals & Benefits

10

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Company Objective

• Savings of 3200 Crs

Division Objective


Department Objective


Segment Objective


Project Goal alignment

Current :

Freight as % of Cost

To Produce

9.05%

Desired:

Freight as % of Cost

To Produce

8.7%

3.8% reduction

in freight per

ton cost

Departmental

Goal

Expected Goals & Benefits

1.3% reduction

in freight per

ton cost

Project

Goal

6

Slide Tata Steel

1.06 Project Success Measures Efforts to address the gap

11

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Success Measures Elimination in inter stockyard flows for

Flat Products

Elimination in non Hub and spoke movement in

Long Product

Routing of customers to most optimum stockyard

Faster Inventory turn around

Reduction in carbon footprint by 5%

Increase in direct dispatch to customer from mother mills by

15%

Impact in service level, loss of sales and production at customer end due to unavailability of material Issue in implementation of ideas i.e. conflict of KPIs or resistance to change

1. Alternative routes mapped in case of emergency 2. Phasing of idea implementation - Ramp up plan 1. Commitment from Top Management taken 2. Idea syndication and re assurance of service levels

Mitigation Risk

Delay in negotiation of contracts for handling and transportation Failure to supply vehicles in line with demand as proposed by Project output

1. Extension of existing contracts in case of exigency 2. Monthly MIS to procurement for expiring contracts 1. Increased road capacity by 5% 2. Increase number of transporters 3. Risk Purchase in short term and change in business share in long term

Slide Tata Steel

Project Framework

12

This segment deals with

Why this project was taken up, what was the methodology of project

What were the in scope and out of scope elements and assumptions undertaken

Risks associated with project and their countermeasures

Budget for the project

7

Slide Tata Steel

2.00 Project Framework (1/2)

13

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

PROJECT STATEMENT

Optimization of dispatch network resulting in savings of Rs 30 Crs leading to reduction in per ton freight by ~Rs 30.

The project will address 1/3rd of Departmental savings KPI of Rs 90 Crs.

PROJECT TYPE : Process Improvement

Define --- Measure ---Analyse ---Improve ---Control

ASSUMPTIONS/EXPECTATIONS PROJECT SCOPE

1. Customer demand pattern does not change

significantly

2. Either we have the dispatch capacity for the proposed

network or we can create one

3. Transporters will place vehicles as per sales pattern

4. Willingness of customer to accept a change in network

node

BUDGET (Financial and/or Resource Constraints)

Item Financial/Resources

AIMMS Software 1 Cr

Coding in AIMMS 720 Man hours

IT System Developments 436 Man hours

Handling tools and tackles 1 Cr

Revisiting of handling and

transportation contracts

Trucks and trailers

In Scope Out of Scope

All Stockyards

Both Flat and

Long Products

For direct dispatch

to customers -

Only IPPE &

BPRS segment

targeted

Direct dispatch to

Automobile

customers

All SPCs

Note:

- SPCs are Steel Processing Centers of TSL which

provide customized products to customers

- IPPE is Industrial Products, Projects and Exports

- BPRS is Branded Product Retail Solution

Slide Tata Steel

2.00 Project Framework (2/2)

14

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

PROJECT SCHEDULE

RISK MANAGEMENT

Phase Deliverables Apr-17 May-17 Jun-17 Jul-17 Aug-

17 Sep-17 Oct-17 Nov-17 Dec-17 Jan

Onwards

Define

SIPOC

Project Charter and schedule

Team formulation

Financial benefits estimation & Setting baseline

Measure

Quick wins identification

Data collection

Analyse

Identify & prioritize potential causes

Verify critical root causes

Simplify network structure

Project risk evaluation and mitigation

Improve

Develop possible solutions

Execute solutions at pilot level

With positive results coming up increase the pace of

implementation

Control

Modification of SOPs

Training to concerned people on SOPs

Management of Change(MOC)

Holding Gains

Weekly MIS on different levers

Weekly review by Project Champion

Monthly review by Steering committee

Plan

On Time

Delayed

Risk Title Mitigation Plans Impact in service level, loss of sales and production at customer end due to unavailability of material

1. Alternative routes mapped in case of emergency 2. Phasing of idea implementtaion - Ramp up plan

Issue in implementation of ideas i.e. conflict of KPIs or resistance to change

1. Commitment from Top Management taken 2. Idea syndication and re assurance of service levels

Failure to supply vehicles in line with demand as proposed by Project output

1. Increased road capacity by 5% 2. Increase number of transporters 3. Risk Purchase in short term and change in business share in long term

8

Slide Tata Steel

2.01 Concise Project Statement A brief summary of Project

15

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

2445 2350

Outbound

Logistics

Freight

Cost per Ton

FY’17 Target

Difference : ~95Rs/T

Enabler : Freight reduction

by 90 Crs

Project Statement

Optimization of dispatch network resulting in savings of Rs 30 Crs leading to reduction in per ton freight by ~Rs

30. The project will address ~1/3rd of Departmental savings KPI of Rs 90 Crs.

Network Optimization Project

– ~30 Rs/T impact

KPI

TSL Long Term objective

- To be lowest cost steel manufacturer

Procurement Cost

Production Cost

Freight Cost

Levers

Targeted

Project Potential

Slide Tata Steel

2.02 Project Type

16

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Why DMAIC

Network Optimization is a complex process considering number of factors influencing it

Requirement of data based analysis to decide the most optimum network

Root causes identification and solution implementation required

Define Measure Analyze Impact Control

Structured problem solving approach

Phase wise implementation

Building long term sustainable solutions

Cause - Solution Matrix

Project Type: Process Improvement

Methodology : DMAIC

9

Slide Tata Steel

2.03 Scope of Project Boundary of Project

17

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

In Scope

Out of scope Out-bound Logistics

All Stockyards

Both Flat and Long Products

For direct dispatch to customers –

only IPPE & BPRS segment targeted

Outbound Logistics

Direct dispatch to Automobile

customers

All SPCs

In Scope Out of Scope

Note : BPRS is Branded Products & Retail Solutions

IPPE is Industrial Products, Projects and Exports

SPCs are Steel Processing centers of TSL

C

U

S

T

O

M

E

R

Plant

Jamshedpur

Kalinganagar

Hubs

Delhi, Kolkata,

Chennai, Nagpur etc

Loading Points

HSM, CRM, NBM

TSCR, WRM etc

Port

Haldia, Dhamra,

Paradip

SPCs

BMW, CRC-West,

Hemnil etc

Stockyard


1st Leg – Rail & Road Execution


1st Leg – Rail &

Road Execution

2nd Leg –

Road

Execution

2nd Leg –

Road

Execution

1st Leg –

Rail &

Road

Execution


Slide Tata Steel

2.04 Assumptions/Expectations

18

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Customer demand pattern does

not change significantly TSL Marketing & Sales

Either we have the dispatch capacity

for the proposed network or we can

create one

CSD and

Procurement Team

Transporters will place vehicles as

per sales pattern CSD and

Transporters

Willingness of customer to accept a

change in network node CSD and

TSL Marketing & Sales

Assumptions/Expectations Responsibility

1. Confirmation taken from VP M&S for

FY’17 figures to be representative

2. Any deviation has to be reported by

M&S to take corrective actions

1. Revisited all Transportation and

Handling contracts

2. Increased road capacity by 5%

3. Increased number of transporters

1. Enforcement of Contract administration

2. Risk purchase in case of emergency

3. Modification of share of business in long

term

1. Syndication with Customers and CAMs.

2. Reassurance of service levels

Countermeasures

10

Slide Tata Steel

2.05 Project Schedule/ High Level Plan

19

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Phase Deliverables Apr-

17 May-

17 Jun-

17 Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Jan Onwards

Define

SIPOC

Project Charter and schedule

Team formulation

Financial benefits estimation

Setting baseline

Measure

Quick wins identification

Data collection

Analyse

Identify & prioritize potential causes

Verify critical root causes

Simplify network structure

Project risk evaluation and mitigation

Improve

Develop possible solutions

Execute solutions at pilot level

With positive results coming up increase

the pace of implementation

Control

Modification of SOPs

Training to concerned people on SOPs

Management of Change(MOC)

Holding Gains

Weekly MIS on different levers

Weekly review by Project Champion

Monthly review by Steering committee

Plan

On Time

Delayed

Slide Tata Steel

2.06 Budget (Financial/Resource)

20

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Item Financial/Resources Planned

Date

Actual Date

AIMMS Software 1 Cr May’17 May’17

Coding in AIMMS 720 Man hours June’17 June’17

Handling tools and tackles 1 Cr June’17 July’17

Revisiting of handling and

transportation contracts

Trucks and trailers June’17 June’17

IT System Developments 436 Man hours July’17 July’17

11

Slide Tata Steel

Tata Steel follows ERM framework In which all departmental risks are captured and mitigation plan against each

risk is mapped

Salient Features

Risk Velocity : This gives an indication of risk playing out and impacting the business

Risk Classification(A,B,C Type) : This helps in prioritizing risks within department, division and company level

Departmental risks are reviewed by Chief in departmental monthly review meetings and also by Top

Management of the company depending on the severity of the risk

2.07 Risk Management

21

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Risk Title Early Warning

Indicators Velocity

Risk likeliho

od

Risk impact

Overall Risk

grading /

Priority

Class Mitigation Plans Responsibilit

y

Impact in service level, loss of sales and production at customer end due to unavailability of material

1. Communication from M&S about possibility of material shortage at customer end 2. Unavailability of trailers by transporters

3 3 4 12 B

1. Alternative routes mapped in case of emergency 2. Phasing of idea implementation - Ramp up plan

M&S, CSD and Planning

Issue in implementation of ideas i.e. conflict of KPIs or resistance to change

1. Delay in idea implementation 2. Noise from concerned agencies

2 4 2 8 B

1. Commitment from Top Management taken 2. Idea syndication and re assurance of service levels

Idea Champion &

CSD

Enterprise Risk Management(ERM) Framework of Tata Steel

Slide Tata Steel

Project Stakeholders and Project Team

22


Identification of stakeholders and their importance in execution of project using various tools

Project Champion guidelines

Selection of Project Team and its preparedness

Team routines to assess the impact and execution of project

12

Slide Tata Steel

3.01 Stakeholders and their Identification(1/2)

23

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

All Stakeholders were identified through SIPOC framework

Supplier Input Process Output Customer

1. IT Team - R

2. Procurement - M

3. Transporter - I

4. Production Planning - R

5. Finishing & Dispatch - R

1. Dispatch Team – M

2. Project Champion - A

Timely delivery

of correct material

1.Trailers - R

2. Rakes - R

3. Containers - R

4. FG Steel Products

5. SFTO - R

S I P O C

1. M&S - I

2. Customer –

(B2B & B2C) - I

Approver Resource Member Interested Party

Top Management whose

approval is essential for

project sign off

Experts whose skills are

required for execution of

the project

The execution

team

Agencies which needs to be

updated on the developments

X for ARMI

X for Internal

X for external

1. Steering committee - A

2. Lead Centre Committee- A

Color coding

Slide Tata Steel

3.01 Stakeholders and their Identification(2/2)

24

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Power Grid Matrix

Keep Satisfied

Steering Committee

Lead Center Committee

Manage Closely

Project Leader

Project Team

Project Champion

Customer

Monitor

Procurement

Keep Informed

M&S

Transporters

Level of Interest

Level

of

Po

wer

Low High

Lo

w

Hig

h

Stakeholder Prioritization using Power Grid Matrix

Note : Power Grid matrix is adapted from Mendelow, A.L.(1981)

Project Team and Project Champion will work on the project keeping Steering committee informed about the

progress of the project

Expiring contracts under Procurement to be reviewed regularly

13

Slide Tata Steel

3.02 Project Champion

25

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Directions given by Champion

Leverage the opportunities provided by GST

Do not compromise on Customer Service Level

Initially target wastes in the system

Test capabilities before full scale implementation

Idea syndication with all stakeholders –

Bottom up approach

Project Kick-off meeting by Project Champion

Individual project discussion with Project Team

Weekly reviews conducted to assess the project implementation

Monthly reports sent to Steering committee and Champion for feedback and support

Chief CSD &

Logistics

Communication and review by Idea Champion

Slide Tata Steel

Skill Set Project Steering

committe

Lead Center

Committee

Project Champion Project

Leader

Project Team

Managerial Y Y

Project Management Y Y Y

Decision making Y Y Y Y

Conflict & Change management Y Y Y Y

Problem solving Y Y

TQM Methodology

7 QC Tools Y Y Required

AHP & Advanced Analytics Required Required

Others

AIMMS – Linear Programming Required Required

Team Building Y Y Required

Achievement orientation Y Y Required

Enterprise Risk Management Y Y Y Y Required

DICE & Prioritization Matrix Y Required Required

Management of Change Y Y Required Required

3.03 Project Team Selection

26

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Training Plan for Team

Skill Set Training Recipient Timeline

7 QC Tools Project Tam April 2017

Advanced Analytics Project Leader & Team April 2017

Achievement Orientation Project Tam April 2017

Team Building Project Tam May 2017

Enterprise Risk Management Project Tam May 2017

Skill Set Training Recipient Timeline

DICE &

Prioritization

Matrix

Project Leader & Team May 2017

AIMMS – Linear

Programming

Project Leader & Team June 2017

MOC Project Leader & Team June 2017

14

Slide Tata Steel

3.04 Team Preparation

27

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

ERM Workshop 7QC Tools & Advanced Analytics

AIMMS Workshop Team Building

Slide Tata Steel

3.05 Team Routines

28

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Routine/Communi

cation Plan

Agenda Frequency Means/Medium Timings

Steering Committee

review

Status update

Support required

Monthly Office / Video

Conferencing

15-20th of

Month

Lead Center Review Status update on major KPIs,

Policy level issues

Monthly Office / Video

Conferencing

22-25th of

Month

Champion Review –

Impact Center

Review

Status update

Issues if any

Project Timelines

New challenges

Weekly Physical / Video

Conferencing

Every

Wednesday

Team Internal

Review

Update on new developments Twice weekly E-Mail/ Office Tuesday and

Friday

Review with

suppliers

Performance Fortnightly E-mail/VC 1st & 3rd

week of month

External Customers Quality and dispatch issues Monthly VC/Office/Mails 2nd Week of

month

Internal Customers Quality and dispatch issues

Monthly VC/Office/Mails 1st Week of

month

15

Slide Tata Steel

Project Overview

29


Methodology followed in the project

Usage of tools in different phases of project

Team preparation for different tools

Dealing with different risks associated with the project

Slide Tata Steel

4.01 Project Approach

30

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

TYPE OF PROJECT: Process Improvement

DESCRIPTION OF PROJECT APPROACH:

This project used DMAIC process : Define, Measure, Analyze, Improve & Control

Define Measure Analyze Improve Control

SIPOC

Project Charter

and schedule

Team

formulation

Financial

benefits

estimation

Setting baseline

Quick wins

identification

Data

collection

Identify & prioritize

potential causes

Verify critical root

causes

Project risk

evaluation and

mitigation

Develop possible

solutions

Execute solutions

at pilot level

With positive

results coming up

increase the

pace of

implementation

Simplify network

structure

Modification of

SOPs

Training to

concerned

people on

SOPs

Management

of Change

(MOC)

16

Slide Tata Steel

4.02 Tools Used Throughout Project

31

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough


SIPOC – To

Identify

stakeholders

ARMI –

Level of

support of

stakeholders

Power Grid

Matrix –

Stakeholder

Prioritization

DICE – To

quantify

ease of

implementati

on of

Projects

Prioritization

Matrix -

Project

prioritization

within

department

Trend Chart – To

see current level

of performance

Ishikawa – To

Understand the causes

for high freight cost

Regression - Freight

calculation using

existing freight

data(Input to AIMMS)

AHP : For prioritization

of software

Linear Programming –

For network Analysis

Pareto – Identification

of top levers

Impact- Control

(Prioritization)Matrix -

Prioritization of levers

for cost reduction

Brainstorming -

To formulate

action plan for

implementation

and

acceptance

from all

stakeholders

Management

of Change –

To ensure

adoption of

new system

by concerned

stakeholders

Slide Tata Steel

4.03 Tools Output at different stages

32

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough


SIPOC –

Stakeholders

identified

ARMI –Role &

support of

stakeholders

Power Grid

Matrix –

Stakeholder

Prioritization

DICE – Projects

ease of

implementation

quantified

Prioritization

Matrix –

Ranking of

Projects Using

DICE, Savings

potential &

Departmental

Priority

Trend Chart

– We could

see current

level of

performance

Ishikawa - Probable

causes for high freight

cost


calculation

AHP : AIMMS software

selected


Cost reduction

levers(Root Cause)

Pareto – Identification

of top levers

Impact- Control

(Prioritization)Matrix -

Levers Prioritization

for cost reduction

based on impact &

ease

Brainstorming –

Feasibility and

implementation

of levers

including

acceptance

from all

stakeholders

Manage

ment of

Change

(MOC) –

Irreversi

bility of

adopted

process

Note :Highlighted in green color is the output of tool

17

Slide Tata Steel

4.04 Team preparation for tool usage

33

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Note : TSL has TQM department which provides trainings on tools like TOC, Green Belt, SIPOC etc

TSL also has tie up with colleges like XLRI Jamshedpur which impart Managerial Knowledge

Training for SIPOC,

Regression, Ishikawa,

ARMI, Pareto,

Prioritization Matrix and

Power Grid matrix was

organized internally by

TQM department of

Tata Steel

For AIMMS and DICE

training, external

experts were called

Slide Tata Steel

4.05 Dealing with project Risk

34

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Adverse impact on service levels

Market side assumptions on demand may change

1. Alternative mapping already placed

2. Phase wise implementation

Syndication with M&S on FY’17 actual data being

representative

Mitigation Risk

Failure to supply vehicles in line with demand as

proposed by Project output

1. Increased road capacity by 5%

2. Increase number of transporters

3. Risk Purchase in short term and change in business

Share in long term

Delay in procurement of AIMMS software 1. Procurement to expedite the contract formulation

2. Weekly review by Project Champion

3. Monthly review by Steering Committee

Issue in implementation of ideas i.e. conflict of

KPIs or resistance to change

1. Commitment from Top Management taken

2. Idea syndication and re assurance of service levels

18

Slide Tata Steel

4.06 Encountering and Handling resistance as a risk

35

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Unwillingness to adapt to

change in the network

Transporters unwilling to

invest in new routes

M&S discussion

with Customers

Monthly review

meetings

Identification Resistance

None None

Renegotiation of contracts

by Procurement would be

cumbersome

Monthly review

meetings

None None

1. Assurance of service levels

2. Phase wise implementation

1. New transporters incorporated

2. Relaxed Service Level Agreement

Resolution

None

1. Team building exercise conducted

2. Prioritization of contracts

depending on the volumes

None

External - Customer

External

Suppliers

Stakeholder

Steering Committee

Internal Suppliers

Project Team

None

None

None

Lead Center

Committee

Slide Tata Steel

4.07 Stakeholder involvement in Project

36

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Stakeholder

Involvement Frequency

Steering Committee Review and Project

update Monthly

Project Champion Review and Direction

Setting Weekly

Project Team All communications Daily

Internal Stakeholders Inputs & concerns Monthly/Need based

External Stakeholders Inputs & concerns Monthly/Need based

D M A I C

D M A I C

D M A I C

D M A I C

D M A I C

Low Medium High

Stakeholder engagement scale

Phase Engagement

Lead Center Committee Review and Project

update Monthly D M A I C

19

Slide Tata Steel

Project Walkthrough

37


Need for this project

Data gathering and analysis of problem

Approach taken for formulation of solution

Implementation of solution and its impact

Tracking improvements and communication to relevant stakeholders

Slide Tata Steel

5.00 Project Walkthrough (1/3)

38

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Business case: In FY’17 freight cost per ton for Tata

Steel was Rs 2445. As per BO&S in FY’18,

Departmental top KPI was reduction in freight cost by Rs

90 Crores resulting in reduction in per ton freight by ~ Rs

95. Freight cost is impacted by network route, different

handling rates at stockyards and mode of dispatch i.e.

rail, road & sea (also combinations of modes).

Problem Statement : In order to reduce freight cost by

~Rs 90 per ton, one of the key enablers was network

optimization. If we would continue with the same network

design then on yearly basis this leakage of cost due to

sub optimal routing would continue and the impact would

increase significantly due to impact of diesel price

escalation in road contracts and also due to increase in

output for Tata Steel Kalinganagar plant

Goal : Reduction in freight accrued by ~Rs 30 Crores

by exploiting network optimization lever

In scope:

All Stockyards

Out of scope:

All SPCs

Direct dispatch to Auto Segment

Financial Benefits : 30 Crs in FY’18

Team Members/Potential Team Members

Name Role

Jagjit Singh Project Champion

Nikhil Maheshwari Project Leader

Pankaj Kumar Team Member

Anil Harshana Team Member

Subrata Basak Team Member

R Krishna Team Member

Phase Apr-

17 May

-17 Jun-

17 Jul-17

Aug-17

Sep-17

Oct-17

Nov-17

Dec-17

Define

Measure

Analyse

Improve

Control

Project Plan

20

Slide Tata Steel


39

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Supplier Input Process Output Customer

1. IT Team

2. Procurement

3. Transporter

4. Production

Planning

5. Finishing &

Dispatch

1. Dispatch

Team

2. Project

Champion

Timely

delivery

of correct

material

1.Trailers

2. Rakes

3. Containers

4. FG Steel

Products

5. SFTO

S I P O C

1. M&S

2. Customer –

(B2B & B2C)

Steering & Lead Center committee

Project Scope

Stakeholders identification using SIPOC

High

Stakeholder Prioritization using Power Grid

Matrix

In Scope Out of scope

Slide Tata Steel


40

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough


SIPOC – To

Identify

stakeholders

ARMI – Level

of support of

stakeholders

Power Grid

Matrix –

Stakeholder

Prioritization

DICE – To

quantify

ease of

implementati

on of

Projects

Prioritization

Matrix -

Project

prioritization

within

department

Ishikawa – To

Understand the

causes for high

freight cost


calculation using

existing freight data

AHP – Prioritization

of software


For network

Analysis

Pareto –

Identification of top

levers

Prioritization Matrix -

Prioritization of

levers for cost

reduction

Brainstorming -

To formulate

action plan for

implementation

Managemen

t of Change

– To ensure

adoption of

new system

by

concerned

stakeholder

s

21

Slide Tata Steel

5.01 Data driven project flow: Define (1/17)

41

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

CSD Annual Savings Target - 90 Cr

Division savings target

600 Cr

MD Savings Target-

3200 Cr

KPI cascading DICE Score was used for assessing ease of implementation

Project Prioritization Matrix considers DICE score, Potential and Department Priority for ranking of Projects

Project Prioritization

**Network Optimization was identified as Top Project in Department Note - Lower the DICE score,

better the probability of execution


(In Cr) DICE Score

Dep Priority Final Rating

1 Outbound Logistics cost reduction via Network Optimization 30 13 8 A

6 Reduction in rail idle freight using club loading at Central Stockyard in Jamshedpur 4 16 9 B

3 Reduction in sub optimal dispatch cost 20 16 9 C 9 Reduction in contract rates in stockyards 5 14 8 C

Duration

(Time) Integrity

Commitment

(Sr. Management)

Commitment

(Team) Effort

D I C1 C2 E

DICE Score = D + (2xI) + (2xC1) + C2 + E

DICE Score Range

7-13 Win Zone

14-17 Worry Zone

17-28 Woe Zone

DICE Score for our Project

= 3 + (2x1) + (2xC1) + 2 + 4

= 13 i.e.(Win Zone)

Slide Tata Steel

5.01 Data driven project flow: Measure(2/17)

42

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

In FY’17 per ton freight cost varied between Rs 2308 and Rs 2574 with avg cost of ~Rs 2445

Departmental objective of reduction in per ton freight cost by Rs ~95 through cost reduction of Rs 90 Crores

2470

2523

2487

2378

2408

2464

2499

2308

2409

2574

2347

2479

500

1000

1500

2000

2500

3000

Rs

per

To

n

FY’17 - Freight Cost(Rs per Ton)

Current Scenario:

Freight as % of Cost To Produce

9.05%

TSL Long Term objective

- To be lowest cost steel manufacturer

Procurement Cost

Production Cost

Freight Cost

Levers

Targeted

22

Slide Tata Steel

5.01 Data driven project flow: Measure - Complexity in TSL supply chain(3/17)

43

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Complexity in TSL Outbound Supply Chain

24 stockyards pan India

13 million ton Finished Goods delivered

Avg. distance travelled for 1 T dispatch – 870 Km

No. of possible routes from TSL to Customer ~ 600

Handling rates are different at each Stockyard

2 Production Plants i.e. TSJ and TSK

8 Mother Mills i.e. HSM,TSCR, WRM etc

60,000 unique SKUs

31 product types

Different types of railway wagons and different

axle load type trailers

TSL FG Steel Material flow Pan India

SPC Warehouse Siding

Slide Tata Steel

5.01 Data driven project flow: Analyze(4/17)

44

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

High

logistics

dispatch

Cost per

ton

North west

CA/HA has 90% share

as a customer from

Patna stockyard

Ishikawa Diagram – Cause identifier

Taxation issue i.e.

CST & VAT

Production constraints

Customer lifting

material from

specific stockyard

Rakeability for

Patna, Guwahati

and Bhubaneshwar

Rake availability

Road volume

commitment

Inter stockyard

transfer

Customer –

Plant Mapping

Taxation issue i.e.

CST & VAT

Production constraints

Rake

availability

Inter stockyard

transfer

Rakeability

for

Bangalore

Different

wagon types

i.e. BFNS,

BFNSM etc High special Road

volumes –Expensive

Road volume

commitment

High idle freight in

Flat products

Customer lifting

material from

specific stockyard

Diesel Price Variation

Clause for road

transportation


Clause for road

transportation

SFTO,

Container

and Indian

Railways

South East

Rakeability for

Jaipur, Chandigarh

& ludhiana

Inter stockyard

transfer

High idle

freight in Flat

products

Different wagon types

i.e. BFNS, BFNSM etc

Taxation issue i.e. CST & VAT High special Road

volumes –

Expensive

Road

volume

commitment

Customer lifting

material from

specific stockyard

Multiple handling –

Quality issues Diesel Price Variation

Clause for road

transportation Inter stockyard

transfer

Taxation issue i.e.

CST & VAT


Clause for road

transportation

Taloja region is

served from Nagpur

Customer lifting material

from specific stockyard

Rakeability for

Ahmedabad & Gujarat

region

Rake availability

Others

Others

Others

Rail

Road

Road

Rail

Rail

Rail

Road

Others

23

Slide Tata Steel

5.01 Data driven project flow: Analyze (5/17)

45

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Objective

• Reduction in freight cost by optimization of current network and route to serve

Requirement for

Analysis

• End to end mapping of all possible routes and freights from TSJ and TSK to Customer

Constraint

• In system freight was only available for routes currently operational

Resolution

• Linear Regression was used for calculation of unknown freights, x variable was distance and Y variable was freight in Rs per Ton

Slide Tata Steel

5.01 Data driven project flow: Analyze – Regression(6/17)

46

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Methodology adopted

Linear Regression was conducted for calculation of freight using distance as the independent variable,

distances were broken into different Km slabs i.e. 0-50 Km, 50-200 Km etc. and the output from each

regression was used for calculation of unknown freight for that particular Km range

Regression Output for 200-500 Km Range

200-500

Regression Statistics

Multiple R 0.94257

R Square 0.888438

Adjusted R Square 0.886867

Standard Error 94.37539

Observations 73

df SS MS F Significance F

Regression 1 5036024 5036024 565.4188 1.5365E-35

Residual 71 632376.7 8906.714

Total 72 5668400

CoefficientsStandard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%

Intercept 100.8068 44.56399 2.262068 0.026756 11.948699 189.6648593 11.94869898 189.6648593

X Variable 1 3.057363 0.128577 23.77854 1.54E-35 2.80098893 3.313737855 2.800988933 3.313737855

SUMMARY OUTPUT

24

Slide Tata Steel

5.01 Data driven project flow: Analyze – Programming Approach(7/17)

47

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Approach for

Strategic/Long Term Plan

Approach for

Operational Plan for

this project

Consider only current stockyards

Calculate Freights for all possible routes

Use optimizer for optimizing with

current infrastructure capabilities only

Holistic View -Consider other possible locations

where TSL can have a stockyard in addition to

existing ones

Calculate Freights for all possible routes

Built in flexibility for different Scenario

Analysis

Use optimizer for optimizing future

volumes and possible locations

Subset of

Strategic Plan

This project deals with optimizing current stockyards

and route to serve

We wanted to build flexibility for analyzing potential

future volumes and stockyards

We also wanted Capability for scenario analysis

Slide Tata Steel

5.01 Data driven project flow: Analyze – AHP - Selection of Optimizer Software(8/17)

48

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Pair wise comparison at criteria level

Solver

Capability Interface Deployment Language

Priority Vector

(V0)

Solver

Capability 1 3 2 3 0.45

Interface 1/3 1 1/2 1/2 0.12

Deployment 1/2 2 1 2 0.26

Language 1/3 2 1/2 1 0.17

Sigma xi 2.17 8.00 4.00 6.50

Pair wise comparison at alternative level

Solver Capability IBM AIMMS Lindo Priority Vector(V1)

IBM 1 1 2 0.40

AIMMS 1 1 2 0.40

Lindo 1/2 1/2 1 0.20

Sigma xi 2.5 2.5 5

Interface IBM AIMMS Lindo Priority Vector(V2)

IBM 1 1/2 3 0.334

AIMMS 2 1 3 0.52

Lindo 1/3 1/3 1 0.14

Sigma xi 3.33 1.83 7

Deployment IBM AIMMS Lindo Priority Vector(V3)

IBM 1 1 2 0.40

AIMMS 1 1 2 0.40

Lindo 1/2 1/2 1 0.20

Sigma xi 2.5 2.5 5

Language options IBM AIMMS Lindo Priority Vector(V4)

IBM 1 1/2 1/2 0.20

AIMMS 2 1 1 0.40

Lindo 2 1 1 0.40

Sigma xi 5 2.5 2.5

V1 V2 V3 V4

Final

Scores

IBM 0.400 0.334 0.400 0.200 0.358

AIMMS 0.400 0.525 0.400 0.400 0.415

Lindo 0.200 0.142 0.200 0.400 0.227

Rank Software

1 AIMMS

2 IBM

3 Lindo

Criteria wise evaluation was carried out

followed by options based on the given

criteria and subsequently final ranking

was done. AIMMS software was finalised

based on the ranking score which was

arrived using sum-product of V0 with

V1, V2, V3 and V4

Priority Vector(V0)

0.45 0.12 0.26 0.17

25

Slide Tata Steel

5.01 Data driven project flow: Analyze – Linear Programming (9/17)

49

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Linear Programming Objective Function

Network cost Optimization by selecting the least cost route to serve the customer without impacting service levels

Formulation of Logic

For this project modeling was done considering the AS-IS infrastructure and Demand

Solver used is CPLEX

In order to reduce complexity and optimization time of CPLEX, 378 clubbed customer locations were defined

comprising of all customer demand locations

Distance of 378 customer clubbed demand location was mapped with 27 stockyards and both Plants

i.e. TSJ and TSK

Linear regression analysis was carried out for calculating freights for all possible routes using the available set

of data (distance was calculated using google maps)

Coastal rates were taken from TSL Shipping Team

Constraints on wagons type, customer requirement of special vehicles was not taken into the logic as it

was out of our control

Constraints of handling at stockyards and rates were taken from SAP

Differential handling rates are applicable at stockyards depending upon the threshold quantity handled

Slide Tata Steel


50

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

AIMMS - Linear Programming Modeling

26

Slide Tata Steel


51

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

AIMMS - Linear Programming Modeling

Slide Tata Steel


52

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

AIMMS - Linear Programming Output Screen Shot

SPCs

Stockyard to Customer Tab – It shows which customer location to be served from which stockyard for eg :

system suggests Bhiwadi to be served from Palwal stockyard

Plant to Customer Tab – It shows which location to be served from Plant directly and by which mode

Stockyard to Cust Plant to Cust

27

Slide Tata Steel


53

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

CUSTOMER NAME Source Current SYD Location Proposed

SYD/Siding Volume

Current Cost (Cr)

Proposed Cost (Cr)

SKM STEELS LIMITED TSJ Nagpur TALOJA Boisar 24,933

38 33 NARESH STEEL TSK Nagpur TALOJA Boisar 23,097

ROHIT & COMPANY TSJ Nagpur TALOJA Boisar 16,112 ROHIT & COMPANY TSK Nagpur TALOJA Boisar 15,430

SKM STEELS LIMITED TSK Nagpur TALOJA Boisar 14,056 M/S.DHARAMVIR & BRO TSJ Ludhiana LUDHIANA Ludhiana 27,254

46 42

SANGEETA STEEL CORP. TSJ Ludhiana LUDHIANA Ludhiana 17,768 FAIRDEAL STEELS PVT.LTD. TSJ Ludhiana LUDHIANA Ludhiana 17,534 M/S.DHARAMVIR & BRO TSK Ludhiana LUDHIANA Ludhiana 10,659

PUNJAB AGRO TSJ Ludhiana LUDHIANA Ludhiana 9,331 BHAGWATI STEEL SALES TSJ Ludhiana DERABASSI Chandigarh 9,063 BHAGWATI STEEL SALES TSK Ludhiana DERABASSI Chandigarh 7,791

FAIRDEAL STEELS PVT.LTD. TSK Ludhiana LUDHIANA Ludhiana 7,544 SANGEETA STEEL CORP TSK Ludhiana LUDHIANA Ludhiana 6,578

PUNJAB AGRO TSK Ludhiana LUDHIANA Ludhiana 6,233

Example : Output of AIMMS broken down at idea/lever level

AIMMS output is at customer location level

We then break it at specific customer level

Difference in cost for current route vs proposed route is calculated

Above table shows customer level breakup for Astrum (Branded Hot Rolled Coils) material to Taloja and

Ludhiana Region – These are categorized under Direct Dispatch to customer Lever

Slide Tata Steel

5.01 Data driven project flow: Analyze – Summary & Prioritization (14/17)

54

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Code Description

a Direct dispatch eastern region

b Direct dispatch to ASTRUM customers

c Direct Dispatch TSPDL

d Elimination of Inter-stockyard movement in flat products

e Elimination of Inter-stockyard movement in long products

f Closure of stockyards

g Others

Pareto - Idea Level drilldown breakup for levers using AIMMS Output

Impact-Control Matrix

f. Closure of Stockyards

b. Direct dispatch to Astrum Customers

c. Direct dispatch to TSPDL

d. Elimination of Inter-stockyard move

-ment in flat products

e. Elimination of Inter-stockyard mov

-ement in long products

a. Direct dispatch to Eastern Region

Hig

h

Impact

High Low

Lo

w

Impact

Co

ntr

ol

g. Others

High Low

Lo

w

Hig

h

Impact

High Low

Lo

w

28

Slide Tata Steel

5.01 Data driven project flow: Improve/Implement (15/17)

55

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Lever Identified using AIMMS output Max Value (In

Cr)

Direct Dispatches to East region from Jamshedpur 11

Direct dispatch to Astrum customers 15

Direct dispatch to TSPDL 7

Closure of stockyards( Ghaziabad, Dehradun, Hubli, Varanasi and Patna ) 7

Reduction in inter stockyard flows (Both Flat and Long) 8

Rerouting of customers between stockyards to save on stockyard handling and freight cost 2

Targeted

Brainstorming session with all

stakeholders

To discuss and check the

feasibility of idea suggested by

AIMMS output

Identification of enablers for

ideas and removal of roadblocks

Phase wise roadmap for

implementation of ideas

Slide Tata Steel

5.01 Data driven project flow: Improve/Implement – Idea Process Cycle (16/17)

56

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Input

Sanitization

Software

Modeling

Output

Analysis

Idea :

Customer

Product

Location

Stockyard

Capacity

Assessment

Syndication

with M&S

Will pricing

philosophy

change

Customer

picks the

material or we

supply it

Impact on buffer

design and order

triggering

philosophy

Syndication with

Production

Planning

Build

transportation

capacity

Idea 7

10 4-7

3-5 2

7-10 2-3

1 6-7

3-5 10-30

Stage

Days

29

Slide Tata Steel

5.01 Data driven project flow: Improve/Implement (17/17)

57

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Lever Identified using AIMMS output Implementation Strategy

Direct Dispatches to East region from

Jamshedpur

Postponed due to customer reluctance, inventory

constraint in Jamshedpur and road capability for month end

sales requirement

Target Tata Astrum brand (Branded Hot Rolled

Coil) for direct dispatch to customers

Phase wise implementation :

1st phase - Astrum Taloja region customers

2nd phase - Astrum Ludhiana and Hyderabad

Target Tata steel subsidiaries like TSPDL(buying

as a customer) for direct dispatch

Sync with TSPDL and implement ASAP

Close Ghaziabad, Dehradun, Hubli, Varanasi

and Patna Stockyard

Patna and Ghaziabad stockyards can not be closed

due to resistance from major customers

1st Phase: Hubli and Dehradun

2nd Phase: Varanasi

Reduction in inter stockyard flows Sync with Sales planning and implement ASAP

Faster Inventory turn around Implementable along with other levers

Rerouting of customers between stockyards to

save on stockyard handling and freight cost

For rerouting of customers to different stockyard target only

customers with significant volumes and high savings in

freight

Slide Tata Steel

5.02 Solution Validation (1/2)

58

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Current :

Freight as %

of Cost to Produce

9.05%

Desired:

Freight as

% of Cost to Produce

8.7%

1.2% reduction

in freight per

ton cost

Goal

Expected Goals & Benefits

Project Prioritization Matrix


(In Cr) DICE Score

Dep Priority Final Score Final Rating

1 Outbound Logistics cost reduction via Network Optimization 30 13 8 1.6 A

6 Reduction in rail idle freight using club loading at Central Stockyard in Jamshedpur 4 16 9 1.8 B

3 Reduction in sub optimal dispatch cost 20 16 9 1.8 C 9 Reduction in contract rates in stockyards 5 14 8 1.8 C

30

Slide Tata Steel

5.02 Solution Validation (2/2)

59

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Current flow Proposed Flow

Jamshedpu

r

Kalinganagar

Nagpur SYD

Taloja

Boisar

Jamshedpur

Kalinganagar

Nagpur

Taloja

Boisar

Source Mode

Stockyard TDSC (Rs/Ton) Savings

Current Propose

d Current

Propos

ed Rs/Ton Rs Cr

TSJ Road Nagpur Direct 4550 3900 650 0.5

TSJ Rail Nagpur Trans-ship in Boisar

3970 3560 410 1.5

TSK Road Nagpur Direct 4650 4000 650 0.1

TSK Rail Nagpur Trans-ship in Boisar

4140 3560 580 2.8

Overall 4.8

Customer

Naresh

SKM

Rohit & Co

Overall

Slide Tata Steel

5.03 Solution Justification (1/2)

60

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Benefits of AIMMS outweigh the cost

ROI can be recovered within a month of

project implementation

AIMMS Cost

– 1 Cr

Network Optimization

Potential Benefits –

Rs 30 Cr

Road freight reduction post GST due to reduction

in transit time

Planned Output Unplanned Output -

Rs 4 Crs savings in road transportation

freight contracts

Road freight reduction example

31

Slide Tata Steel

5.03 Solution Justification (2/2)

61

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

225 223

Pre : Only Delhi was Hub

for Long Products

Post : Delhi and Palwal

Created as Hubs for Long

Products

Redesigning of Hub & Spokes in North region For

Long Products

Unplanned Output –

Redesigning of Hub & Spoke for Long products

- Value Rs 2 Crs in FY’19

Unplanned Output –

Implementation of Forward Charge Mechanism –

Value Rs 7 Crs in FY’19

Slide Tata Steel

5.04 Results

62

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Lever Savings In

(Cr)

Elimination of Inter stockyard Flow except for Hub and spoke for Long Products 5.5

Stockyard closure – Dehradun, Hubli and Varanasi 4.5

Direct dispatch to TSPDL (as a customer) 5.8

Astrum Direct dispatches 7.1

Freight contract negotiation post GST due to reduction in transit time 4

Rerouting of customers to most optimal stockyard 2

In transit inventory reduction 1.1

2445

2322 2408

2454 2500

2300

2348

2233 2246

2258 2329

2181 2294

2310

FY'17 FY'18 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18

1700

1800

1900

2000

2100

2200

2300

2400

2500

2600

Rs/

To

n

Total Freight Cost/Ton

Apex Objective CSD Objective KPM UOMActual

FY17

Target

FY18

Actual

FY18

Respo

nsibilit

y

PQC

DSM

E

Monitori

ng

Frequen

cy

Strategy KPM UOMActual

FY17

Target

FY18

TDSC Rs/Ton 2445 2350 Rs. Cr. 100 90Chief

CSD&LC Monthly

Achieve improvement savings through

SHIKHAR 25Saving

S02.c. Reduction in

despatch cost

Reduction in Total

Delivery System Cost

(TDSC)

BO&S of

Chief for

FY’18

Savings

Accrual in

FY’18 – Vetted

by Finance

Department

TDSC

Trend

FY’18

32

Slide Tata Steel

4269

1718

4964

3515

2880

710

6 0 0 0

809

171 5 0 0 0 0 0 0500

100015002000250030003500400045005000

FY'17avg

Aug Sep Oct Nov Dec Jan Feb Mar

Qty

per

mo

nth

(In

T)

Stockyard Closure

Hubli Stockyard Dehradun Stockyard

Hubli Dehradun

7700

21000

1551 160

400 308 309 271 345

197

7164

5818 8952 11765

6712

3889 4562

4400

0

5000

10000

15000

20000

FY'17Avg


Qty

per

mo

nth

(In

T)

Inter Stockyard Transfer

FP interstockyard LP interstockyardFlat Product Long Products

2972

7813

6480

10222 10158

11297

9878

7200

9756

1000

3000

5000

7000

9000

11000

FY'17Avg

Aug Sep Oct Nov Dec Jan Feb MarQ

ty p

er

mo

nth

(In

T)

Astrum Taloja Direct Dispatch

9250

17918 19445

27201 28441

39210 40207

28166

38517

7000

12000

17000

22000

27000

32000

37000

FY'17Avg


Qty

per

mo

nth

(In

T)

TSPDL Direct Dispatch

5.05 Maintaining the Gains (1/3)

63

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Slide Tata Steel


64

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

34

32

31

43

32

33

34

57

0

10

20

30

40

50

60

Val

ue

in L

akh

Inventory Savings

721

1327

1936

1528

1124

1646

0

500

1000

1500

2000

FY'17 avg Nov Dec Jan Feb Mar

Qty

in T

Astrum Hyderabad Direct Dispatch

FY’17 Avg. distance travelled for 1 T dispatch -

870

FY’18 Avg. distance travelled for 1 T dispatch –

830

Reduction of 4.5% in CO2 emission due to

reduction in distance travelled

826

1581

2002

6227

4870

6035

4571

4783

5124

0

2000

4000

6000

8000

10000

12000

FY'17avg


Qty

in T

Astrum Ludhiana Direct Dispatch

33

Slide Tata Steel


65

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough

Management of Change

App development for elimination of inter stockyard transfer

Capability Development- Central Hub storage area allotment for Long Product for

Varanasi stockyard closure and open up Bay4(open yard storage) for operations

Change in orders triggering from regional warehouse to plant warehouse(Central

Hub) for Varanasi Stockyard closure

SOP modification

SOP for new Hubs and spokes and subsequent implementation of order triggering

Central Hub SOP change for handling n storing

Training

To all the staff of Central Hub for modified SOPs

To Planning members for logging orders on central hub

To M&S for logging direct orders

Note: Central Hub is a small stockyard within Tata Steel Jamshedpur

Slide Tata Steel

5.06 Project Communication(1/2)

66

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough Monthly MIS to Steering Committee Monthly Lead Center Review- MOM

34

Slide Tata Steel

5.06 Project Communication(2/2)

67

Project

Background

& Purpose

Project

Framework

Project

Stakeholders

& Project

Team

Project

Overview

Project

Walkthrough Weekly Review by Project Champion Management Review of Transporters Performance

Slide Tata Steel 68

Thanks

Reduction in logistics expenditure by optimization of network and … · 2019-09-23 · 1 Reduction in logistics expenditure by optimization of network and route to serve without

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