SHIV SHAKTI

International Journal in Multidisciplinary and Academic Research (SSIJMAR)

Vol. 2, No. 2, March-April (ISSN 2278 – 5973)

Reduction of Demurrage Cost for Inward Rakes through Material

Reallocation in an Integrated Steel & Power Industry – A Case Study

Soupoarno Mukherjee1
Akhilesh Jha2
Randhir Kumar3

Abstract
Delay in the rake unloading at a typical steel industry is a very common problem in Indian steel manufacturing
companies. This delay very often leads to demurrage cost. Thus, detention time of rake material unloading is a
very critical parameter and plays a significant role in raw material cost. This paper involves critical analysis of
various activities of rake unloading process through Wagon Tippler and shifting of material to various stock
yards in a typical integrated steel & power industry of India and subsequent identification of various sources of
unnecessary delay in the process. The study was carried out for about two months to identify various factors
that lead to delay. Data were collected by field observation through continuous work sampling and from log
book data maintained by concern department. In the first step, the necessity of any additional resources for the
raw material unloading process with the help of continuous work sampling was investigated. In the second step,
different reasons for delays were identified and categorized into twelve groups. Among these twelve groups of
delay, four major groups contribute 60 – 80% of delay. Further, various corrective measures were proposed for
reduction of these sources of delay through material reallocation in raw material stock yard and subsequent
modification in infrastructure for shifting of material to different stock yards considering maximum resources
availability in the rake material unloading process. The outcome of this research helped the management of the
company for initiating necessary planning and corrective actions to minimize unnecessary delay in the rake
material unloading process and reduces or eliminates the demurrage charges.
Keywords: Continuous work sampling, Material Reallocation, Demurrage cost, Wagon tippler, Case Study.

1. Department of Management Studies, Indian School of Mine, Dhanbad (Jharkhand)-826004, India, email
ID:- [email protected], contact no: +919777445332
2. Department of Management Studies, Indian School of Mine, Dhanbad (Jharkhand)-826004, India,
[email protected], contact no: +919907185578
3. Department of Management Studies, Indian School of Mine, Dhanbad (Jharkhand)-826004, India,
[email protected], contact no: +919907185579

1
www.ssijmar.in
1. Introduction
Raw material handling has potential to become the next governing element of corporate strategy
to create value for customers, generate cost savings, enforce discipline in marketing efforts and
extend the flexibility of production.

In other language, material handling is loading, moving and unloading of materials. To do it

safely and economically, different types of tackles, gadgets and equipment are used, when the
materials handling is referred to as mechanical handling of materials. Since primitive men
discovered the use of wheels and levers, they have been moving material mechanically.

A material handling as such is not a production process and hence does not add to the value of
the product. It also costs money; therefore it should be eliminated or at least reduced as much as
possible. However, the important point in favour of material handling is that it helps production.
Depending on the weight, volume and throughput of materials, mechanical handling of materials
may become unavoidable. In many cases, mechanical handling reduces the cost of manual
handling of materials, where such material handling is highly desirable. All these facts indicate
that the type and extent of use of materials handling should be carefully designed to suit the
application and which becomes cost effective.

2. About the Department

Presently, some of the inward raw material Rakes are weighed at In-Motion weigh-bridge and
thereafter, wagon‟s brake pressure is released. The rakes are then divided into two to three lots
and each lot is placed on same or different wagon tippler for material unloading. The Existing
flow process chart of Rake placement to Rake drawn out is shown below :

2
www.ssijmar.in
 EXISTING FLOW PROCESS CHART OF RAKE PLACEMENT TO RAKE DRAWN OUT (INWARDS TRAFFIC)
For Raw material unloading from wagons, the various steps between Rake placements to rake handover to railways have been shown
below:
Rake Placement time starts when the Rake is placed at Carriage & Wagon (C&W) staff gives „fit‟
Line No. 1/2/3/4/5/6/8 and Railway loco is detached. memo to Asst. Station Master - KDTR for
withdrawal of unloaded Rake.

Railway Liasoning Supervisor informs Rake Detail to

Plant Control, Unloading logistics section.

Unloading Logistics section asks for JSPL loco for

placement of Rake (part or full). In the mean while,
In case, some wagons are identified „unfit‟ or
brake pressure is released. The rake is placed at Wagon
„sick‟, it is repaired, if possible. Otherwise,
Tippler.
detached from the Rake. Marshalling is done by

When the unloading starts, time is noted by unloading C & W staff, if required.

Logistics section & informs Railway Logistics.

Inspection done by Railway C & W staff after

Unloading completion time is informed by unloading
Engine on Train.
Logistics to Railway Logistics.

Release memo is issued to CGS, KDTR by

Rake formation of wagons is done by loco section at
Siding Supervisor of Railway Liasoning.
nominated line by Railway Logistics.

3
www.ssijmar.in
The loaded & empty rail wagons are being placed on line # 1, 2, 3,4,5,6 & 8. And line # 7 is kept
clear for free passage of railway Loco Engine.
There are 3 Wagon Tipplers (WT#1, WT#2 & WT#3) which are used to tipple the raw materials
brought in through the rail wagons. The different types of Material unloaded are Iron ore (Tensa
fines, Tensa size, Sarda size), Limestone, Coal, Dolomite, Clinker, HBI, Mn ore, Pellets, etc.

Materials unloaded at tipplers are shifted to different yards through belt conveyor circuits. There
are four yards for material storage viz. RMH-1 yard, MBF yard, DRI-II yard and RMH-III
yard. Material stored in different Yard and Schematic outline of material flow from tipplers to
different yards and thereafter to different user department is as shown Fig 1:

Fig 1: Material flow & Inventory System

4
www.ssijmar.in
RMH-III yard has a storage capacity of around 3.5 Lakhs Tonnes and rest of the yards has
storage capacity of around one Lakhs Tonnes. The Yard-wise existing facilities provided for
inward material unloading is shown Table 1:
Table 1: Yard wise unloading facility
Yard Equipment (Nos.)
Yard Connectivity Material User Deptt.
Yard Stacker cum Bucket
Stacker Reclaimer with Tippler (Major)
Reclaimer Animator

DRI-II 1 WT1/WT2/WT3 DRI-II

Sinter Plant, BF-I & II, Power

CHP & MBF 1 1 WT1/WT2
Plant
DRI-I, Nalwa, Cement Plant,
RMH-I 1 4 WT1/WT2
SAF, SMS-II & III, BF-I & II

RMH-III 1 2 1 WT1/WT2/WT3 BF-II, LDP, Sinter & Coke Oven

3.

3. Methodology
We have conducted the detailed Study of the Rake-In to Rake-Out cycle time of Inward Rakes of
Raw Materials. The venture has been carried out based on 48 Hrs. of Continuous Work Sampling
and Assorted past data and other information provided by the department.
Based on the data for the month of Jul‟11 -Sept‟11 we classified the Total Rake-In to Rake-Out
Cycle time into different sub-components and tried to explore the area where the actual problem
exists. The following Table 2 better depicts this objective:

Table 2: Time duration for different activities between Rake-in to Rake-out

5
www.ssijmar.in
From the above table, we observed that the most probable reason for increased demurrage
charges include the prolonged unloading time. At the same time we can also say that once the
unloading time increases, the total detention time also increases. Thereby we emphasized to
control the total unloading time and suggest methods to reduce it.

3.1 Collection of data

For collection of data we used following method:
 Exhaustive study of RMH department to understand whole process.
 Collecting data from field observation.
 Collected some secondary data from Logistics Department.

Apart from this we did a continuous work sampling to determine the necessity of another set of
Wagon Tippler & Conveyor to unload the inward raw materials.

4. Study of Existing System and Interpretation

Based on the past data of nos. of Inward Rakes per month, it is observed that the average number
of Inward Rake per month during FY‟ 2006-12 has increasing Trend and is shown Fig 2:

Fig 2: Average number of Inward Rake per month during FY‟ 2006-12

On the basis of 48 Hrs. of Continuous work sampling conducted for all the three Wagon
Tipplers, the utilization of each Tippler are as shown in Table 3:

6
www.ssijmar.in
 Table 3: Observation from Continuous work sampling

S.no. Description WT#1 WT#2 WT#3 OVERALL

(a) Total Observation Time (In Min.) 2880 2880 2880 8640
(b) Tippler engaged Time(In Min.) 2340 1485 1095 4920 ( From Time Study)
(c) Tippler engaged Time( % ) 81% 52% 38% 57% (c) = (b)/(a) *100
(d) Tippler Idle Time(In Min.) 540 1395 1785 3720 (d)=(a)-(b)
(e) Tippler Idle Time( % ) 19% 48% 62% 43% (e) = (d)/(a) *100
(f) Time for which Wagon is Placed but the Tippler is not working (In Min.) 1395 375 300 2070 ( From Time Study)
(g) Time for which Wagon is Placed but the Tippler is not working ( % ) (48%) (13%) (10%) (24%) (g) = (f)/(a) *100
(h) Effective Working Time Of tippler (In Min.) 945 1110 795 2850 (h)=(b)-(f)
(i) Effective Working Time Of tippler (In Min.) 33% 39% 28% 33% (i) = (c ) - (g)
(j) No. Of Rakes Unloaded 4 3.33 2.67 10

It was observed that the when average number of rake unloaded was 5 per day, the tipplers were
found to be idle for around 43% of time. Thereby we suggest that 8 rake per day can be
unloaded per day smoothly. Hence it is clear that existing Tipplers are sufficient for
material unloading purpose.
It was further observed that in 24% of time, the Tipplers are not working, although the Wagons
were placed in the Tippler Shed. Further detailed break-up of this 24% time is shown in Table 4:

Table 4 : Break-up of Ideal time for Wagon tippler

DELAY % CONTRIBITION
Belt circuit jam 40% (10%)
Hopper cleaning and maintenance 29% (7%)
Common route material 22% (5%)
Stacker not available 5% (1%)
Line busy 4% (1%)
TOTAL 100% (24%)

This Forced Delay can be eliminated / reduced by improving the planning and maintenance
process to the yards & appropriate corrective action.
Apart from this we have also analyzed the data provided by the Department to identify the
various delay reasons. Based on the data for the month of Sept‟11, we have observed that 80 %
of the delay is due to 5 major reasons viz. Common route, Stacker problem, Belt circuit
maintenance or jam, all tipplers engaged, Line problem as shown in Table 5:

7
www.ssijmar.in
 Table 5: Reasons for Delay

Delay Sept'11 Oct'11 Overall

common route material 35% 64% 55%
Stacker problem 15% 9% 11%
belt circuit maitenance or jam 13% 5% 8%
All tripler engaged 10% 6% 7%
Hopper cleaning and maintenance 6% 6% 6%
Weighment Delay 5% 3% 4%
Line problem 7% 1% 3%
Lot placement delay 1% 4% 3%
power off 2% 1% 2%
Stacker maintenance 3% 0% 1%
Load cell maintenance 1% 0% 0%
Rain 1% 0% 0%
TOTAL 100% 100% 100%

Based on the Continuous Work Sampling & past data analysis ( for the month of Sept’11 &
Oct’11 ), we observed that Common route Problem, Stacker problem and Belt circuit Jam
are the major delay reasons for Demurrage. We have conducted further detailed analysis to
identify the basic cause of these problems and suggested effective solution towards this.
PROBLEM 1: COMMON ROUTE PROBLEM
CAUSE: When several rake of same type / same route/ same yard material arrives, most of the
time stacker is unavailable and increases the total detention time of rakes beyond 8 hrs.
ANALYSIS: It was observed that around 80% of common route problem is due to Iron Ore
(Tensa Fines & size), Limestone & Iron Ore ( Sarada BF) which are unloaded at RMH-III yard
mainly and is shown in Table 6:
Table 6: Material wise delay due to Common route problem

8
www.ssijmar.in
 As per the existing unloading practices of different Inward raw materials at different
yards, it was analyzed that most of the materials which are the reasons for common route
material delay belongs to A and B yard of RMH-III.

It was also observed that presently Iron Ore, Lime stone, Pellets, Dolomite & Coal in
RMH-III are provided with only 1 stacker & 1 recliamer.

SOLUTION:
1) To solve above problem, additional stackers were required. However, it is seen that the
RMH-III Yard has not adequate space to adopt one more stacking facility.

2) From detailed analysis we suggest an option that we can re-allocate the material of RMH-
III Yard, so that around every material of RMH-III Yard would get 2 stacking &
reclaiming facility. Following Fig 3 & Fig 4 are the existing & proposed layout of RMH-
III Yard:

Fig 3: Existing layout of RMH – III yard

9
www.ssijmar.in
 Fig 4: Proposed layout of RMH – III yard
With the implementation of this proposed layout of RMH-III yard, there is a subsequent increase
in the availability of number of Equipment in the RMH-III Yard and is shown in Table 7:

Table 7: Equipment Availability of RMH-III Yard

EXISTING PROPOSED
Type Of Material
Nos. of Stacker Nos. of Reclaimer
Nos. of Stacker Nos. of Reclaimer
Coking Coal 1 2 2 2
Anthra PCI 1 2 2 2
Tensa fines 1 1 2 2
Imported Limestone 1 1 2 2
Rajasthan Limestone 1 1 2 2
Dolomite 1 1 2 2
Iron Over Size 1 1 2 2
Pellet Iron 1 1 2 2
Sinter Fines 1 1 1 1

3) At present although all tipplers are connected to RMH –III Yard, but at a time material from only
2 tippler can be received at a time as there is only 2 belt between JH – 1 & JH – 2. Also RMH-III
yard has only 2 Stacking facilities. Thereby if we want to increase the system flexibility and
further reduce the common route delay, we suggest providing an additional conveyor belt circuit
between JH - 1 & JH - 2 and converting the Recliamer – 3 into Stacker cum Reclaimer.

10
www.ssijmar.in
The following Fig 5 shows the existing and the modified (proposed) connectivity circuit for
unloading different raw materials of RMH-III yard

Fig 5: Existing and Proposed layout of RMH – III yard

This suggestion will reduce the overall delay due to common route material problem by stacking
any three dedicated materials of RMH-III Yard simultaneously.
PROBLEM 2: STACKER PROBLEM
CAUSE: At DRI-III yard there is a single Stacker cum Reclaimer. Once this Re-claimer gets
engaged in re-claiming raw material to user dept., the unloading action is interrupted. Similarly
in RMH-III yard, when common route material comes, there is a shortage of staking facilities
ANALYSIS: It was observed that around 71% of common route problem is due to Iron Ore
(Tensa Fines & size) and HBI and is shown in Table 8:
Table 8: Material wise delay due to Stacker problem

11
www.ssijmar.in
SOLUTION:
1) Through detailed analysis we observed that around 40% of the Stacker problem was due to
Iron Ore (Tensa Fines & Size), for which we again suggest the same solution as we have
already given for solving the common route problem in RMH-III.

2) We observed that around 30% of the Stacker problem was due to H.B.I which is mainly
concerned with DRI-II yard where there is a single Stacker & Reclaimer. To reduce the
stacker unavailability delay in this area we would like to suggest that stacking of HBI can be
done in the vacant space of MBF Yard ( when needed), from where this raw material can be
shifted to concerned user department through road.

PROBLEM 3: BELT CIRCUIT JAM

CAUSE: It occurs mainly in rainy season due to wet materials which causes the jam in belt
circuit and partially due improper maintenance. However maintenance gang is unable to take
care of different propellers & impellers causing propeller jam leading to material
spillage/overflow and sometime damages the belt.
ANALYSIS: It was observed that Belt Circuit Jam is another delay reason and generally it takes
place in rainy season. It can be reduced by taking proper corrective & maintenance actions. we
observed that Belt circuit jam is mostly during rainy season. However this delay can be
controlled by taking proper maintenance & corrective actions of Belt circuits.
SOLUTION:
1) Vibrator system below Chute‟s should be modified & proper smooth plates should be
added.

2) Preventive Maintenance of belt circuit should be done accordingly.

5. Conclusion
After the detailed system study, it is concluded that existing system is sufficient to unload 240
rakes per month i.e. There is no further requirement of another wagon tippler. The reallocation of
raw material in the stock yard will increase the rate of shifting raw material to the stock yard

12
www.ssijmar.in
from the unloading point and thus the total detention time from rake-in to rake-out for inward
rakes will be reduced.

6. References

 Lockamy, J.F. Cox (1994), Reengineering Performance Measurement, Irwin Professional

Publishing, Burr Ridge, IL
 Nelly, M. Gregory, K. Platts(1995), Performance measurement system design: a literature
review and research agenda, International Journal of Operations and Production
Management Vol. 15, No.1, PP 80–116.
 Adem Golec, Harun Taskm (2007), Novel methodologies and a comparative study for
manufacturing systems performance evaluations, Information Sciences, Vol. 177, PP 5253–
5274
 Barnes, R.L.,(1980) “Motion and time study”, Design and Measurement of work, 7th Edn.,
John Wiley and Sons, New York.
 Barnes, Ralph M. (1957). “Work sampling ” (New York and London, John Wiley, 2nd Edn.,)
 C.H. Falkner, S. Benhajla (1990), Multi-attribute decision models in the justi.cation of CIM
systems, The Engineering Economics Vol.32, No. 2, PP 91–114.
 H. Lee, W. Kwak, I. Han (1995), Developing a business performance evaluation system: an
analytic hierarchical model, The Engineering Economics, Vol. 40, No. 4, PP 343–357.
 ILO Work study.
 Industrial Engineering and Production Management by Martand Telsang, page 27-88.
 Mundel, M.E., (1978) “ Motion and Time study”, 5th Edn., Prentice Hall, Englewood Cliffs,
N.J.
 Niebel, B.W., (1976) “ Motion and Time study”, 6th Edn., Richardo Irwin Inc. Homewood
III.
 P. Kueng(2000), Process performance measurement system: a tool to support process-based
organizations, Total Quality Management, Vol.11, No.1, PP 67–85
 S. Adams, J. Sarkis, D. Liles(1995), The development of strategic performance metrics,
Engineering Management Journal, Vol. 7, No.1, PP 24–32.
 Work sampling by Robert E. Heiland and Wallace J. Richardson.

13
www.ssijmar.in