Web based real-time DSS for Cement Supply Chain and Logistics

Pramodh George MBA Student, Department of Business Administration

College of Engineering, Trivandrum 695016, India pramodhgeorgep@gmail.com

Dr. Suresh Subramoniam

Associate Professor, Department of Business Administration College of Engineering, Trivandrum 695016, India

sureshsubramoniam@gmail.com

Dr. Krishnankutty KV Professor, Department of Business Administration College of Engineering, Trivandrum 695016, India

krishnankuttykv@gmail.com

Abstract

Importance of an online DSS in inventory management for cement Industry is growing as almost one percentage of sales is lost due to the damage of the cement either in warehouses as is the case of an apex cement company in South India whose net profit is nearly 10 percent of sales. Lack of a scientific system for timely decision making poses difficulty due to additional wharfages, storage space and even damage due to improper storage. The proposed system helps in recording, analyzing and monitoring cement inventory with specific reference to damaged cement at various cement warehouses. Presently, managers of cement companies do an audit in their warehouses and prepare individual report about the status, manually. For the proposed real-time DSS in this study, webpage is developed using ASP.Net with SQL Server for database as back end support. DSS is built using ASP.Net Technology based on .Net Framework 3.5.

Introduction Indian cement industry ranks second in world after china

consisting of 139 large cement plants producing 168.29 million tonnes of cement, which is 7% of the world production.[1] Export of cement to other countries is mainly done by container ships. Some cement plants have railway stations within it as rail is preferred for long distance transportation. One percent of the sales turnover is lost due to mismanagement at warehouses because of non availability of information on a real-time basis as in DSS. One percent out of ten percent profit explains the potential productivity improvement due to the deployment of such a system.

Literature Review

A scientific system for decision making is very important in cement logistics. Basic idea on how a decision support system need to be designed is available very much in literature.[2, 3] ERP systems are too costly for some companies and that Indian 3PL is in its early stage of development.[4] From the literature review, it is seen that intelligent control systems which embeds various processes so as to improve the operational efficiency in cement industry

are used widely in India.[5] Wide deployment of Distributed Control Systems (DCS) to realize the real-time monitoring and controlling of the cement production.[6] Also, literature shows how well simulation techniques can be used prior to implementing the costly real-time ERP solutions.[7] The complexity apart from cost involved in implementing such ERP solutions are also subject matter of discussion in literature.[8] Myriads of ways exist for using information systems to improve productivity in Management.[3] There exists DSS for supply chain performance measurement and supply chain game simulators developed by earlier researchers in the literature.[9, 10]

Low cost involved in the development of such DSS when compared to ERP solutions have only prompted the authors to take up the development and deployment of such a real-time DSS. Microsoft technologies are made use of in this study for the development of such a system as depicted below.

Description of elements and functioning of the system A goods train having 42 wagons each having 61.5 metric

tonnes is called full rake. If the number of wagons is less than 42, it is called as half rake. Rail Receipt (RR) is the formal document required by the receiver for opening the wagon once it reaches the destination. RR is send through a third party in person to the destination site. He/she hands over the RR to the Clearing & Forwarding Agent (C&F) . C & F Agent submits the RR to the Railway office and gets the clearance.

Once C&F Agent gets the clearance from the Railway Office, he/she can open the wagon and unload the cement. Cement loading & unloading is done by trade union members. Their usual working time is from 10 AM to 6 PM beyond which they charge overtime wages to the tune of 50% higher than normal charges. C&F Agent maintains depots at main locations. Dealers need to do the payment to the company via cheque/online payment/direct deposit to company’s account. Once payment is done they get the acknowledgement from the company. Dealer approaches C&F Agent with the cash paid acknowledgement so that C&F Agent can deliver the cement.

In certain cases company delivers the cement to the dealer on credit which is to be paid back within 7 days. This facility

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is available only for credit-worthy dealers. Dealers will be distributing the cement to sub-dealers after deducting their commission and Sub-dealers will in turn send it to the customers. Payment usually happens in cheque or in cash. Cement transporting trucks are usually 10 or 16 or 21 tonne capacity. Bulk Cement is transported in special trucks with 16 or 30 or 40 tonne capacity. Usually cement in bulk quantities are send directly to the customer. Trucks are used to send cement to areas were proximity of railways is less.

Truck drivers will be having the invoice from the company which are to be produced to the C&F agents. Another copy of the invoice will be given to the concerned person at checkpost in the state border, if any. Tracking the inventory and bill generation usually done using ERP Packages of Microsoft, SAP or ORACLE. Dealers & sub-dealers will have their own godowns for storing the cement which will be maintained by themselves. Once a truck arrives in the depot of the C&F agent, one of the following happens for which charges are different:

i. the cement will be stored in godown; ii. Otherwise the truck will be directly send to the

customer so that handling charges can be saved. iii. the cement bags will be loaded into small trucks. Company will pay the cost for maintaining the depot and

depot staff to the C&F Agent. They also give training to the C&F employees on the ERP solutions implemented by the company. Computer, internet and required software for the inventory mangement are installed at the company’s expense at the C&F depots. Company also provides various promotional items to the dealers, subdealers & trade union workers in order to maintain good relationship.

DSS is built using ASP.Net Technology based on .Net Framework 3.5. Coding in the ASP.Net is done using VB.Net. AJAX tools are used to enhance the performance of the webpage to a certain extent. SQL server is used as the database server and JavaScript is used for certain functionality on the client side scripting.

Inventory Management at Railhead Employees of C&F agents will be present at the Railway station when the cement wagons arrive. Those dealers who need cement on that day will be requested to collect the cement directly from the wagon depending upon the quantity and distance. Trucks will be arranged in order to fill the depots of the C&F agents. Remaining cement kept on the wharf will attract heavy wharfage. Also delay in having sufficient trucks will result in demurrage. There are situations where company need to pay wharfage, demurrage, halting charge & over time charges for a single rake arrival. Usually employees find it difficult to take a decision whether to rent a temporary godown or not.

Decisions need to be taken by the C&F agent when a wagon arrives in the railhead are as follows:

i. What quantity needs to be send to the depots? ii. What is the space availability in each depot under

a specific Railhead? iii. What is the optimum number of trucks in order to

reduce the demurrage & wharfage?

iv. Whether temporary godown is required or not? If so, what is the economical temporary godown on rent available?

v. What is the area of the temporary godown? This clearly depicts the requirement for such a DSS

exclusively for its use at the C&F Agent. DSS main data entry Webpage

Select a district from the drop down list (say, Thrissur) as in Figure 1. Then second dropdown list will display the depots which come under the district ‘Thrissur’. Please select a depot (say, Thrissur) then it displays the railheads which are linked with ‘Thrissur depot’. It displays the total capacity and status of selected depot in read only mode. User has to enter the utilized capacity of the depot. Press tab button so that space availability in that depot will be displayed in read-only mode.

Figure 1 Webpage for input parameter entry

Enter the number of wagons which are expected to arrive in the railhead (say, Ollur). Then press the tab button so that it displays the quantity of cement arrived at the railhead in metric tons. Also, it calculates all the total space currently available in all depots under this particular railhead. Then enter the current demand from customers in that railhead on the day of the wagon arrival. The system displays the quantity of the cement in excess after filling all depots and satisfying the customer demands.

Enter the number of trucks for the transportation of the cement along with average capacity of trucks. Then, enter the expected time for which the remaining cement is on the wharf. Also enter the expected rent for 1000 sq. ft. of the temporary godown and the average time required for the round trip to supply the cement to various destinations. Proceed to click on the submit button. It redirects into the decision webpage.

Decision Support System displays the time required for the shipment. It suggests whether one should go for the

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temporary godown or not. The optimum number of trucks in order to reduce the demurrage will be displayed along with optimum area and economical rent of the available temporary godown space. It shows the possible wharfage & demurrage which needs to be paid. Damaged stock analysis

Damaged Cement details can be entered from various depots and data can be easily exported to excel sheets by the managers of the company at a later stage, if needed. This saves time and cost and brings transparency and accountability to various processes. Figure 2 shows input webpage for damaged cement details in transit.

Figure 2 Input Webpage for damaged cement details

Decision Output Webpage

Figure 3 Webpage displaying various DSS decisions

Figure 3 displays the critical decision outputs, namely, expected wharfages and demurrages to be paid, additional trucks of 10 Tons capacity needed, time required for shipment in hours, optimal temporary godown space in square feet and cost in Rupees needed along with other useful information to tackle the situation

Working of the Decision Support System Time allocation for clearing the cement bags from the wagon depends on number of wagons.

Figure 4 Flowchart for time allowed for wagon clearance Time allowed for wagon clearance is computed based on

the number of the Wagons arrived as per Figure 4. Wharfage Calculation.

Wharfage is calculated based on how much cement is kept on the railway platform after the allowed time. Wharfage is charged is rupees hundred per hour per wagon. One Wagon is assumed to carry 61.5 metric tons. So, wharfage is the product of extra time for which cement is kept on wharf and (100/61.5 or 1.626) as shown in Figure 5.

Figure 5 Flowchart for wharfage computation

Calculation of Extra-time for wagon clearance

Extra time required for clearing the wagons once rake has arrived at the platform is an important factor for calculating the demurrage. For example, if 42 wagons arrived on a day, allotted time is 9 hrs and suppose if it took 11 hrs for clearing the wagon, then the extra time is 2 hrs. Average time for the round trip means average time required by a truck to deliver the cement to the site and return back to the railhead. It is inclusive of the loading and unloading time. But the caculation becomes complicated when the average time for round trip increases. In that case, it is required to calculate the total quantity of cement which is need to be transported per hour by the collective effort of all the trucks. The ratio between total quantity to be transported to total quantity transported per hour by all trucks gives the total time requirement. Figure 6 shows flowchart for computation of extra time needed for clearing the wagon.

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Figure 6 Flowchart for extra time computation

Demurrage Calculation Demurrage is the penalty given to the railways for the

delay caused in clearing the wagon. It is charged as rupees hundred per wagon per hour. Suppose the average time for the round trip for a truck is 1 hr. Let the allowed clearance time be 5 hours. Loading time in this case is 10 minutes. Suppose there are 21 wagons and 21 trucks. After 10 minutes first trip will start. It will reach back in one hour. Since average time for round trip includes the loading and unloading time. In this case, all the 21 trucks will empty the wagon in 4 hr 10 minutes. That is the reason why adjusted time is taken as the difference between extra time required and average time per round trip with 0.5 added along with it as shown in Figure 7. Maximum loading time for a truck is assumed to be half an hour that is why 0.5 is added to the time difference.

Figure 7 Flowchart for demurrage cost

Temporary Godown Rent Computation

In certain situations, in order to reduce various penalties company will opt for a temporay godown so that it increase the space for storage. Reducing the production capacity of the cement is expensive. Also, the assumption is that wharfage need to be paid atleast three times in a month in a railhead. Since, wharfage is paid mainly because of non availability of space in the depots, break even point reaches when the temporay godown cost is equal to three times the wharfage cost. As per standard condition maximum of 350 metric tons of cement can be stored in 1000 square feet. So suppose, if the remaining quantity is 700 metric tons, 2000 sq.ft. of temporary godown for storage becomes a necessity. This is how temporary godown cost is calculated as the product of

cost per 1000 sq.ft and wharf ratio number as depicted in Figure 8.

Figure 8 Flow chart for temporary godown rent Temporary godown requirement decision

As discussed earlier, temporary godown is economical as long as temporary godown rent is less than three times the wharfage. So if temporary godown cost is less than three times the wharfage it is better to opt for the temporary godown else we decline to opt for it as shown in Figure 9.

Figure 9 Flowchart for Optimum Temporary Godown Area Google Analytics

Google Analytics is the enterprise-class web analytics solution that gives rich insights about website traffic and its marketing effectiveness due to its powerful, flexible and easy-to-use features. With Google Analytics, it is possible to write better-targeted ads, strengthen marketing initiatives and create better websites.

For using Google Analytics, it is required to write the JavaScript in all the web pages which are to be tracked. Using this, it is possible to know more about the user like from which cities they hail from, how much time they spend each web page, the type of browsers they use to view the website and so on as shown in Figure 10.

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Figure 10 Google Analytics on DSS between March 7th to

May 9th 2011. Advantages of the proposed system

Though Enterprise Systems exist for the cement supply chain and logistics which gives quantities at warehouse on real time, it is difficult to find a system which incorporates a DSS for the reduction of wastage in the form of spoilt cement or reduction in storage/transportation costs. This only has prompted the authors to think in a different direction to develop a web based DSS which will track actual quantities at the warehouse on a real-time basis and suggest decisions like whether to send the cement arriving on platforms to be stored there itself paying wharfage, to be send to the customers directly or to be send to the warehouse for storage. This trade-off has many implications like reduction in transportation charges and loss arising from improper storage for longer periods than intended depending on the storage used. The above ground makes the web based real time DSS suitable for a greener supply chain or logistics. It is obvious that proper monitoring & elimination of the possibility of getting damaged cement will improve the operational efficiency. An effective DSS will help to scientifically manage and optimize the logistics cost. Considering more variables in the proposed DSS will improve accuracy of the system. Moreover, integrating the SQL server database with other ERP solutions used by the company will make data more reliable. Customers always look for the quality of the product rather than their price, especially in the case of products like cement. Quality of the cement bags need to be improved so that it becomes more eco-friendly. Logistics record book will help to improve the transparency and accountability of the logistics department. As India is an emerging economy, infrastructure development plays a crucial role in sustaining the nation’s growth which is supported by the cement exporting companies.

Conclusions and recommendations It is advisable to use the more AJAX tools in order to

improve the performance of the DSS. As audited data is manually entered into excel sheet which incurs time & cost, web application in the DSS which helps the C&F agents at various depots to directly enter the inventory details at regular

intervals into online database can be a boon. This data can be exported to excel sheets at a later stage for analysis purposes which avoid the redundant work of creating excel sheets, manually. It also helps to create customized reports about the inventory status at various locations thereby saving time. Usually, cement comes in goods wagons at the railway station and from the railway station it will be send to depots by trucks. Decision making is done by experienced C&F agents. But in the case of a new C&F agent, it will result in huge penalties to be paid to the railways. Decision Support System will help to optimize the logistics cost. Scientific system for decision making has been developed and implemented using the web technologies in this study. Google Analytics can be utilized so that an idea about the usage trend of the web application DSS can be got without much additional effort. A good logistics record book helps to improve the transparency and accountability of the various activities carried out by the logistics team too. Dealer prioritization based on data analysis helps to focus on the major customers. Study of the market share of the various cement companies in Kerala reveals that customers prefer the quality of the product rather more than the cost of the product. In short, this online DSS will help to save time and cost for the various activities in the company, simultaneously.

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5. Johan Claasen, Neville Fre win and Tony Lange , “Integrated and Intelligent Plant wide control system for cement and lime plants”, IEEE-IAS/PCA 43rd Cement Industry Technical Conference, April 2001.

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