Problem Statement: To make the supply chain of the company capable to efficiently &

economically enable transportation of 12 million tons of iron ore from the mine to ports &
smelters/iron & steel manufacturers

Typical value chain for supply from mine site to destination

Transportation
Loading at Mine from Mine to Unloading at
Site Port/Domestic Destination
Customer

Considerations for arriving at suitable revamped supply chain model:-

•Availability - supply of trucks, wagons, engines, barges
•Capital expenses needed to develop infrastructure (at loading & unloading points)
•Operating cost on Rs per km per ton basis
•Bottlenecks (roads, railway sidings, local issues, regulations) in infrastructure & normal functioning of each
mode of transport at the increased scale
•Transit time to destinations
•Customer preferences, if any (in case of domestic customers)
Assumptions
•Shipment of cargo is not the miner’s responsibility. Only Free-On-Board (FOB;
INCOTERMS 2000) costs considered for exports. Hence, factors like port wise vessel
availability, possibility of shipment to same destination from multiple ports, shipment
costs, transit time from Indian ports to destination ports is not considered
•Possibility of pipeline transportation of iron ore (pelletized) is ruled out, due to high
initial capital outlay involved, requirement of a on-site beneficiation plant, regulation
involved in land leasing, interstate issues etc
Framework to Approach the problem would need an understanding of the following:-
Step Info Needed Information
source
1 Monthly production estimate for next 6 months
2 Blocked infrastructure (eg entry/exit gates for trucks, weigh bridge at Director of
mine) used in supply operations at mine location over next 6 months Transport
3 Port wise expected exports; Customer& region wise supply in
domestic market. Port wise, customer wise & hub wise* estimate of
supply via rail/road/waterways (if possible)
*Hubs for stocking material at locations where demand for several
customers can be aggregated to consolidate supplies. Secondary
transportation from hub to customer location can be arranged.
4 Study current infrastructure & supply chain process to identify
bottlenecks for scaling up supply capabilities, along with associated
costs & potential savings to arrive at recommendations – Details on
next slide
Maximum possible supply quantity from mine through rail, road &
waterways, depending on availability of modes of transport, given
requisite infrastructure
Additional infrastructural requirement – land, loading points/gates,
equipment, manpower – to support proposed model

5 Time required to ramp up

6 Makeshift options (may be costlier) to support increased supply while
planned ramp up of supply chain capabilities is underway

Loading at Mine
Site
•Area available for loading of
iron ore - increased prodn of
33333 tons per day
•Infrastructure available &
additional requirement – land,
loading points/gates, equipment,
manpower
•Exits available at mine &
infrastructure required to exit
additional buffer
• Availability of railway siding
at/near the mine – with
maximum loading capacity per
day
Transportation
from Mine to
Port/Domestic
Customer
•Quantity exported vs sold domestically
•Quantity transported through road & rail for
both export & domestic
•Possibility of minimum & maximum regular
availability of trucks & railway rakes & the
desired notice period
•Chances of pilferage – rail vs road
•Possibility of clubbing requirement of
domestic customers supply in a particular
region to supply through rail
•Maximum possible supply of iron ore to ports
through rakes
•Transit time for both rail & road to ports
•Transportation cost per km per ton for both
rail & road
•Sensitivity of prices for rail & road
•Possibility of transportation through
waterways (using barges) from mine or from
midway to/near ports or for domestic
markets/customers
• Infrastructure present & needed to assess
weighment loss in cargo due to in-transit
evaporation
Unloading at
Destination
•Availability of stocking plots –current&increased exports
•Possibility of taking new plots for increased exports
•Can we get a better bargain for rents of plots & unloading
& loading services for iron ore at plots
•Availability of railway sidings & infrastructure near plots
for unloading iron ore
•Level of congestion at railway sidings & for road transport
near port
•Quantity of iron ore which can be shipped out of the 3
ports individually – rates of loading; can we drive a better
bargain from the port authorities for increased quantities
•Which port can give the most benefit in terms of
maximum possible shipment + storage costs +
demurrage/detention costs (with given level of port
congestion)
•Explore impact presence of unscrupulous elements
at/near port & their influence on the transportation
•What quantity of iron ore which can be shipped out of
the 3 ports individually – rates of loading; can we drive a
better bargain from the port authorities for increased
quantities?
•What is the port wise maximum possible shipment,
storage costs, demurrage/detention costs ?
•Are there any current or possible legal restrictions on any
of these modes, like underloading of trucks etc
Other information needed
•Chances of pilferage – rail vs road - & preventive measures
•Possibility of clubbing requirement of domestic customers supply in a particular region to supply through rail
•Customer preferences for modes of transport, if any (in case of domestic customers)