Logistics Knowledge Sharing

Annu Anjan
SIROHI – Distribution Cost

1. Primary Freight - Freight from Plant

2. Cost of Clearing and Forwarding Agent (Handling Cost)

a) Unloading into Godown
b) Loading from Godown
c) Crossing %

3. Secondary Transportation - Freight from

Dump

4. Packing House Cost - Cost of Packing

5. Packing Material Cost - Cost of Bag

SIROHI – Handling Cost

Cost of Clearing and Forwarding Agent (Cost of CFA)

a) Unloading into Godown

b) Loading from Godown
c) Crossing %
d) Commission / Profit Margin

Particulars UOM Rate Actual Rate

Unloading into Godown Rs./MT 40 28
Loading from Godown Rs./MT 40 40
Crossing % % 30% 30%
Commission/Profit Rs./MT 10 10
Total Handling Charges Rs./MT 90 78
SIROHI – Effect of Diesel Price Increase / Decrease

In Case Diesel Price had reduced

a) Previous Diesel Price - Rs.70/litre

b) Current Diesel Price - Rs.67/litre
c) Change in Diesel Price - (-)Rs.3/litre
d) Decrease in Diesel Price - 4.29%

e) Current Freight - Rs.700/MT

f) Decrease in Freight - 40% of 4.29%
- 1.714%
g) Reduction in Freight - 1.714% of Rs.700/MT
- Rs.12/MT
h) Revised Freight - Rs.700/MT –
Rs.12/MT
= Rs.688/MT

Similarly, if there is increase in diesel price, the freight will increase as per
above formula
SIROHI – Rake Firing Ratio – At Rail Siding

What is Firing Ratio?

Firing Ratio is the percentage of quantity fired from rail head. That is
direct dispatch from rail head.

It is recommended to have a high firing ratio, because this would help

in reduction of cost through reduced movement of cement from rail
head to godown.

What are the factors responsible for high firing ratio?

 Good Order from Sales Team before rake is placed.

 Availability of trucks so that movement is faster.
 Efficient unloading practice by labours.
SIROHI – Freight Rationalization

Procedure of Freight Rationalization

1. Take list of destinations, their distance from plant and the freight. Sort the data
with distance on ascending order.
2. Divide the freight with distance, which will give you PTPK (per ton per
kilometer).
3. Plot XY Graph, with Distance on X axis and PTPK on Y Axis and get the
graph.
4. Right click on the graph. Click on Add Trendline.
5. On Type menu select Power Graph. On same window there is Option menu.
Click on Option menu. Check the two boxes;
a. Display equation on Chart.
b. Display R-squared value on Chart.
6. Go to your excel working file. The curve value will be obtained by the equation
on Chart.
The Curve value will give you the exact the freight that has to be there for a given
distance. The ups and downs in the graph have to be minimized and all the points
should theoretically be on the trendline.
SIROHI – Freight Rationalization

PTPK Curve

PTPK
20.00
18.00
16.00
14.00
12.00
f(x) = 36.1365313572101 x^-0.408813386538648
10.00 R² = 0.820546390321489
8.00
6.00
4.00
2.00
0.00
0 200 400 600 800 1,000 1,200
Thank You!